February 25, 2015 / 5:14 PM / in 4 years

Polish PM says no case for early reform of EU carbon market-letter

* Poland says also represents seven other nations

* Britain, Germany want early reform

BRUSSELS, Feb 25 (Reuters) - Poland’s prime minister has asked the European Commission to stick to the original start date for reforms to the EU Emissions Trading System (ETS), a day after members of the European Parliament backed earlier action.

In the letter to President Jean-Claude Juncker, dated Wednesday and seen by Reuters, Prime Minister Ewa Kopacz said she was writing on behalf of the leaders of Bulgaria, Croatia, the Czech Republic, Cyprus, Hungary, Lithuania and Romania, as well as Poland.

A committee of the European Parliament voted on Tuesday to launch a Market Stability Reserve to take away some of the surplus carbon allowances that have depressed prices in 2018, compared with the Commission’s proposal of beginning the reform in 2021.

The parliament’s amendment still needs to be followed by further negotiation and endorsement from member states.

Britain and Germany have led the push for early reform to encourage more investment in low carbon energy.

But Poland, whose economy depends on highly polluting coal and energy-intensive industry, says there is no case to act earlier than 2021.

In her letter, Kopacz said removing allowances from the market could have “considerable economic, social and financial consequences for member states as well as for the industry exposed to a risk of carbon leakage”.

Carbon leakage refers to the risk that polluting industry will move outside Europe where costs are lower, although the Commission and parliamentary amendments have sought to tackle that risk through exemptions.

The Polish prime minister also says the knock-on effect on energy prices from a stronger carbon market could aggravate energy policy.

“I expect the European Commission would confirm its coherent position and in the end stick to its own proposal,” the letter concludes.

The price of carbon allowances on the ETS is around 7 euros ($8) a tonne compared with all-time highs of more than 30 euros reached in 2006. ($1 = 0.8801 euros) (Reporting by Barbara Lewis; Editing by Ruth Pitchford)

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