Carbon conflict

Poland looks set to appeal against the European Commission's decision to cut its carbon-dioxide (CO2) emission permits. The EU reduced Poland's emissions cap for 2008-2012 by 26.7 percent to 208.5 million tonnes a year. "This decision has a negative impact on us and there is a large chance that we will take it to the European Court of Justice," a government source told Reuters.

The EU's emissions trading scheme sets caps on the amount of CO2 that factories, power plants and oil refineries can produce. Companies that exceed their limits can buy permits, while those that emit less carbon can sell them. The EC has reduced nearly all the proposed 2008-2012 caps submitted by EU members so far, after data from 2005 showed governments had given away too many permits for 2005-2007, causing a crash in carbon prices last year. Only Britain, France and Slovenia's proposed limits were accepted.

The Polish government says the EC has not considered the country's position as a developing economy trying to catch up with richer countries and is instead treating it like a fully developed nation. Poland's high level of economic growth and production should require a higher cap of emissions permits, says a government agency dealing with carbon emissions. "We cannot agree to such a reduction," the agency said in a statement. "It may cause a rise in energy prices, block Poland's economy and take away its chances to develop."

A Commission spokesperson denied any discrimination against Poland and said the reduction would encourage a low-carbon economy. (Reuters)