Poland deputy prime minister Jadwiga Emilewicz: “It was not our choice at the end of the 1960s to invest more and more heavily in coal” © Wojciech Olkusnik/EPA

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Any EU plans to use revenues from the bloc’s emissions trading scheme to fund its post-coronavirus recovery would be “absolutely unacceptable” to Poland, the country’s development minister has said.

EU leaders are set to discuss the commission’s €750bn “next generation EU” recovery package at a summit on Friday, and the European Commission has identified the carbon trading scheme — which it is planning to expand to cover new industries such as shipping — as one of a number of sources of cash to help repay the debt needed to fund the recovery package.

However, in an interview with the Financial Times, Jadwiga Emilewicz said Poland was strongly opposed to using expanded ETS revenues to help repay the bloc’s borrowing, arguing that increasing the burden from carbon taxes would unfairly hit Poland’s economy, which generates close to 80 per cent of its electricity from coal.

“With ETS, it is very difficult,” she said in an interview with the FT, arguing that rising carbon permit prices, which increased sixfold between 2017 and 2019, were making Polish companies uncompetitive, and that the country should not be punished for a coal sector that was a legacy of centrally-planned decisions made in the Soviet Union.

“It was not our choice at the end of the 1960s to invest more and more heavily in coal and to run power plants based on coal,” Ms Emilewicz said. “It was decided in Moscow that we would be excluded from building nuclear power plants, whereas Czechoslovakia or Hungary could do that. So the Polish situation is really unique, and that history matters in this moment.”

Instead, Ms Emilewicz, who as well as holding the economics portfolio is also one of Poland’s deputy prime ministers, said the EU should find other ways of boosting its revenues — such as by introducing a tax on digital platform companies, which Poland has long lobbied for, or by removing barriers in the single market, especially for services. Poland has previously argued that lifting barriers in the single market could boost EU gross domestic product by up to €300bn annually. 

EU officials estimate the ETS scheme could provide up to €10bn a year for the bloc’s coffers and see it as one of the most realistic sources of new funding. But Ms Emilewicz’s comments underscore how difficult the negotiations over new ways for the EU to raise its own money, which will require unanimity among member states, are likely to be.

Poland’s Europe minister, Konrad Szymanski, told the country’s state news agency PAP on Wednesday that the talks on the recovery fund and the EU’s next multiyear budget were likely to be the “hardest in the history of the EU” as the interests of member states had “never been so contradictory”.

Poland is in line to be the third highest beneficiary of the EU’s recovery fund, which will be composed of €500bn in grants and €250bn in loans. According to Polish media reports, Poland's share is set to be €37.7bn in grants and €26.1bn in loans.

Ms Emilewicz said Warsaw believed the balance between grants and loans was “good enough” and that she did not think it was necessary to attach conditionality to the loans, as some northern European countries have demanded.

“It's definitely not the time for saving money. If we don’t take actions very decisively, then [the EU] can lose our position as an economy which has a chance of having any say in the global economy for the next decades,” she said.

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