On September 9, 2015, the Act of 12 June 2015 on Greenhouse Gas Emission’s Allowances Trading System entered into force in Poland. This new Greenhouse Gas Emission’s Allowances Trading System Act will replace the previously binding Act of 28 April 2011 on Greenhouse Gas Emission’s Allowances Trading System. The introduction of a new law is related to the necessity to transpose the EU legislation, changing the EU Emissions Trading System (EU ETS) with respect to its third phase (2013-2020).

EU ETS was established by Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003, establishing a scheme for greenhouse gas emission allowance trading within the European Community and amending Council Directive 96/61/EC.

In the nearly 10 years after its release, Directive 2003/87/EC has been amended several times and supplemented by a series of executive acts. The changes were mostly focused on the extension of EU ETS for new industries (types of activities) and on strengthening the incentives to reduce greenhouse gas emissions by changing the rules of allocation of emission’s allowances and reinforcing the control mechanisms of the EU institutions over the functioning of the system in the EU Member States. Directive 2003/87/EC as amended essentially changed the EU ETS in its third phase (2013-2020), introducing the distribution of emission allowances via auctions.

Previously, the Polish law was not in fact reflecting the way the EU ETS operates in its third phase (2013-2020). The new Greenhouse Gas Emission’s Allowances Trading System Act is supposed to cure this implementation gap. It provides a number of regulations regarding allocation of allowances and their management. In particular, it provides detailed rules on free allocation of allowances to the energy sector as a reward for made investments. Moreover, the new rules on monitoring and surrendering allowances were introduced.

The new law also creates the possibility of selling the emissions allowances on a national auction platform operated by the companies operating on the regulated market. After the United Kingdom and Germany, Poland is one of three EU Member States where the national auction platform was introduced instead of the European auction platform. In order to operate the Polish auction platform, one needs to obtain the authorization of the Polish Financial Supervision Commission and be chosen as an operator in a tender procedure.

Moreover, under the new provisions, all entities holding so-called greenhouse gas emission permits which are obligatory for the installations participating in the EU ETS need to file an application for a new greenhouse gas emission permit within 12 months from the entry into force of the new law. Based on the new law, after the lapse of 12 months, the operation of the installation for which no new permit was obtained will not be lawful. Therefore, failure to submit an application for a new greenhouse gas emission permit within the said period may lead to the suspension of the installation’s operation and a fine of PLN 50,000.