The European Union Emissions Trading System (EU ETS) is the cornerstone of Europe’s strategy to reduce greenhouse gas emissions in the most cost‑effective manner.

From 2013, the auctioning of quotas will become the basic method of quota allocation and will replace the current system in which the majority of quotas are allocated for free by governments.

The electricity generation sector will in theory have to buy all of its emission quotas. Yet, experience has shown that power plants have been able to pass the costs of emission quotas on to their customers even when those quotas were allocated to them for free.

However, certain Member States will be able to derogate temporarily from this rule for their existing power plants. As a result, what is termed the ‘10c rule’ will spare power plants where the ‘investment process was physically initiated’ before 31 December 2008.

This derogation affects 187 facilities in Poland. The total value of free credits applied for is EUR 7 billion.

EurActiv Brussels conducted an investigation in order to determine whether the Polish plants for which the derogations had been introduced actually existed. For example, the Polish Government applied for free credits worth EUR 33 million for its coal power plant in Łęczna, which is located close to the Ukrainian border. This plant was described as being ‘under construction’. However, having arrived at the location, the EurActiv journalists found that the supposed site of the plant contained nothing but grass, fields and forest paths. There were no buildings, no facilities and no visible signs of activity at the given coordinates. Twelve other ‘phantom plants’ might have been identified in Poland.