Poland's power plans worry environmentalists

BRUSSELS (Reuters) - Poland's plans to give away tens of millions of carbon emissions permits to new power stations are drawing criticism from environmentalists, but the European Union's climate chief says she is not worried.

The disagreement highlights Poland's problems in aligning its high-carbon economy with the EU's ambitions to cut carbon dioxide emissions from power plants and heavy industry.

Environmental campaigners WWF estimate that Poland's power stations would probably get free permits for 33.6 million tonnes of carbon emissions each year on average, close to the entire annual emissions of countries such as Norway or Slovakia.

"Poland's plans, if realized, would amount to billions of euros in subsidies for new power plants, locking more coal into the Polish energy mix for decades," said WWF campaigner Mark Johnston.

"If this deal goes ahead, Europe's coherence on climate would take another blow," he said.

European Union climate commissioner Connie Hedegaard is not worried about the situation for the time being, but the decision still faces scrutiny from the EU's other 26 member states, her spokeswoman said on Tuesday.

Ministers agreed in December 2008 that from 2013 all EU power producers would be forced to pay for permits to emit each tonne of carbon dioxide -- the main gas blamed for climate change.

Poland and several eastern European allies had opposed the move, saying it would be too costly for their carbon-intensive, coal-powered economies.

In return for dropping their opposition, they were allowed to grant up to 70 percent of those permits for free in 2013, gradually reducing the number to zero by 2020.

The concession also applied to plants that were "physically initiated" by the end of 2008 -- a term that most people assumed to mean "already under construction."

Now Poland is seeking to broadly reinterpret the definition of "physically initiated" to include sites that were under preparation, a move that could allow the construction of up to 15,000 megawatts more of new capacity -- equivalent to more than 10 average-size nuclear power plants.

A spokeswoman for Poland's environment ministry confirmed that the move could lead to 15,000 megawatts of new power capacity, half of Poland's peak electricity demand.

"Physical initiation" as understood by the Polish law and confirmed by Hedegaard applies if geological documentation is prepared, or the area is occupied for construction, or the land has been leveled, the environment spokeswoman added.

The European Union's executive Commission appears to be treading carefully, following a bruising legal clash with Warsaw over Poland's national carbon emissions quota, which was only settled in April.

Poland is also seen as a key opponent to possible EU plans to deepen carbon emission cuts over the next decade to 30 percent below 1990 levels, compared to 20 percent today. A row at this stage could hamper those discussions.

Johnston said Poland was going against the spirit of EU climate legislation by exploiting its ambiguities.

"EU lawmakers included an end-2008 cut-off date for good reason," he said. "Investment decisions taken after that date must not be swayed by the expectation of millions of free pollution tickets, which otherwise operators would be required to buy."

(with additional reporting by Gabriela Baczynska in Warsaw, editing by Jane Baird)