Polish RES Law Acknowledges that Green Certificates are State Aid

While the Commission communicated to the Polish Government in 2013 that it considered the Polish Green Certificates to be state aid, requiring notification of the Commission and approval under the 2008 guidelines, the Polish Government has repeatedly denied this fact.

Now in the new law on RES, Article 39.2 requires that certificates and other forms of support be added together to determine if the state aid limits on support for an individual project would be exceeded. This reflects the fact that the Polish Government has known for years that the Green Certificates are state aid. The Commission has decided that green certificates are state aid in every case before it (earlier based on the substitution fees in various Member State laws and later on the certificate as a valuable asset itself). See DOUBLING DOWN ON A JUNK POKER HAND: THE POLISH GOVERNMENT APPARENTLY INTENDS TO IGNORE ITS TREATY OBLIGATIONS ON STATE AID, Mott's Blog, June 7, 2014 (detailed references and links included).

Since the certificates are state aid, they must be approved by the Commission under the 2008 guidelines. Those guidelines are very particular on the need to levelize the support across technologies based on the cost of production. Nothing in the new guidelines affects this legal obligation which runs from the date of the Polish law in 2005 to now. 

Failure to reauthorize the Green Certificates and adjust their value will require that the recipients refund the support. This is not a theory or a possible outcome, it is European law.[1] The same law requires that the government, being guilty of an unfair trade practice, reimburse those damaged by the unfair competition (those who receive diluted support due to over-compensation of co-firing and old hydro).[2]  Throw into this mix that fact that the auctions in Poland are still tied up in a legal and regulatory quagmire and you can safely predict that this will be a huge political issue. If it breaks before the election, due to a Commission announcement then we will see some real fireworks. If it breaks later, we can expect some folks in the new government whose knowledge of energy policy is limited to saying "coal" four times while waving their arms to be over-matched by the circumstances.   


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[1]Notice From The Commission, Towards An Effective Implementation Of Commission Decisions Ordering Member States To Recover Unlawful And Incompatible State Aid (2007/C 272/05).

[2] The Commission explains: “As part of their role under Article 88(3) of the Treaty, national courts may also be required to uphold claims for compensation for damage caused to competitors of the beneficiary and to other third parties by the unlawful State aid (70 ). Such damages actions are usually directed at the State aid granting authority. They can be particularly important for the claimant, since, contrary to actions aimed at mere recovery, a successful damages action provides the claimant with direct financial compensation for suffered loss.” 2.2.4. Damages claims, par. 43, supra, (2007/C 272/05).