In the near future, Law and Justice (PiS) is expected to submit a bill to the Sejm aimed at withdrawing Poland from the EU Emissions Trading System (ETS). The initiative is reportedly based on procedural flaws in the creation of the system, which, according to PiS, was adopted in violation of the unanimity principle.
“Without cheap energy, we will all become poorer, and Polish families will be condemned to poverty. That is why we are speaking clearly today. We are leaving the ETS, which was introduced illegally, and we invite all countries to leave the ETS as well,” said Prof. Przemysław Czarnek, PiS’s candidate for prime minister.
The 20th anniversary of the ETS has prompted many countries to assess the system’s impact. The results are far from encouraging when viewed through a macroeconomic lens. The European Union has lost ground in energy-intensive sectors of the economy, largely because the emissions trading system has hit the energy sector particularly hard. As a result, electricity prices in the EU are now three times higher than in the United States and six times higher than in China. This has translated into a declining share of global trade for the bloc.
Twenty years ago, Europe accounted for 16 percent of global steel production. Today, that figure has fallen to just 7 percent. Europe’s share of the chemical industry has also halved, dropping from 28 percent to 14 percent. According to critics, this points to a broader trend: EU policies are contributing to the deindustrialization of the continent.
Prices keep rising
It is not difficult to determine who has benefited from Europe’s declining industrial output. China now accounts for half of global steel production and 45 percent of the global chemical industry.
According to many commentators, one of the key mistakes of the ETS was allowing financial institutions to participate in the market. As a result, emissions trading has become vulnerable to speculation. Until 2018, carbon prices remained relatively low at around €10 per tonne of CO₂. However, prices then surged dramatically, tripling between 2018 and 2020 and later reaching up to €95 per tonne. In February 2023, prices briefly exceeded €100. While 2024 brought some temporary relief, prices climbed back to around €90 at the beginning of February.
“Something is going very wrong. This is supposed to be a simple instrument designed to regulate the market and encourage businesses to decarbonize. It was meant to be a spur used to make the horse run faster. (…) In the current form of the ETS, we as the jockey have given up the spur. We have taken an axe out of the saddlebag and started hitting the horse over the head with it. And now we are surprised that it is not running any faster,”
said Marek Lachowicz, an expert affiliated with Solidarność and the Warsaw Enterprise Institute.
PiS proposal
Poland is paying a particularly high price for this policy. Businesses and households spend an additional PLN 33 billion annually on energy bills. Divided by the population, that amounts to nearly PLN 900 per person each year.
Part of this money flows into the state budget, but not all of it. Last year, approximately PLN 17 billion was transferred out of the country. Experts do not know exactly where these funds ended up, but there are indications that they have become the subject of speculation on international markets.
It is therefore no surprise that the ETS has become a major political issue in recent years, with politicians competing to offer solutions. PiS is expected to present its proposal soon, reportedly having found a legal pathway to withdraw from the system.
“The draft bill is based on a ruling by the Constitutional Tribunal of June 10, 2025, which unequivocally stated that EU regulations concerning the EU ETS amounted to bypassing the constitutional procedure for transferring powers to the European Union, thereby violating Article 90 of the Polish Constitution. Furthermore, those regulations were adopted by qualified majority voting in the European Council, whereas they should have been adopted unanimously by that Council, since determining the structure of each member state’s energy mix falls within its exclusive competence,”
explained PiS MP Zbigniew Kuźmiuk.
One complication is that the Constitutional Tribunal’s ruling has not yet been officially published, and Prime Minister Donald Tusk has repeatedly delayed doing so.
For now, PiS has submitted a separate bill titled “A Fair Electricity Bill”, which would require energy bills to clearly indicate how much consumers pay as a result of ETS-related charges.
“Today we are fighting to ensure that our children and grandchildren do not live in extreme poverty. If we fail to stop the deindustrialization of Europe, and we will not stop it unless we secure cheap electricity comparable to that available in China or the United States, our children and grandchildren will face extreme poverty. That is where deindustrialization leads,”
Prof. Czarnek stressed.
Government seeks reforms
The current government has adopted a more moderate approach toward the ETS. According to the government, withdrawing from the emissions trading system would effectively amount to leaving the European Union itself.
Instead, Warsaw is seeking to reform the system and revise its rules. Last week, Poland joined a joint appeal signed by six countries from the region. The initiative’s author, Czech Deputy Prime Minister Karel Havlíček, proposed that the European Commission increase the number of free CO₂ emission allowances available to industry.
This idea has surfaced repeatedly in recent years. However, a major policy shift appears unlikely. The European Commission continues to prioritize the goal of climate neutrality, which underpins all initiatives associated with the Green Deal.
Moreover, the Commission has raised its ambitions even further, seeking a 90 percent reduction in carbon dioxide emissions by 2040.
As a result, although countries such as France and Italy have also called for substantial reforms, Brussels appears determined to maintain pressure on member states. To that end, it is developing additional leverage, including the expansion of conditionality mechanisms tied to the allocation of EU funds.
From 2027 onward, not only recovery funds under the National Recovery Plan (KPO) but also financing under the Common Agricultural Policy may become dependent on compliance with rule-of-law requirements.