Commission´Decision On Reduction Of Carbon Emission Allowances Annulled

The European Commission's decision to reduce carbon emission allowances by 26.7% in Poland's National Allocation Plan for 2008-2012 ("NAP") has been ruled invalid by the ECJ Court of First Instance ("CFI").

The CFI upheld Poland's appeal, ruling that the Commission had exceeded its powers by questioning the data presented by Poland and using its own calculations to set a lower limit.

The reduction has been particularly unfavourable for Polish power plants and coal-fired combined heat and power plants, causing them to buy additional allowances to make up the deficit and to increase electricity prices to pay for them.

The full implications of the CFI's judgment are difficult to assess at this stage, but could lead to a review of the NAP and a claim for damages. In addition, the Commission has two months to appeal against the judgement to the ECJ.