Fossil fuel subsidies from Europeade carbon market

The policy brief examines Article 10c of the EU ETS Directive, which allows lower-income Member States in Central and Eastern Europe to grant free emission allowances to the power sector provided they invest the equivalent value in energy system modernisation. The author argues that this mechanism has largely subsidised coal power and fossil fuel infrastructure rather than diversifying energy mixes, citing examples in Poland, the Czech Republic, and Romania. It highlights failures in transparency, public consultation, and additionality, specifically noting investments in the Belchatow power station. The brief recommends that the post-2020 revision implement a competitive bidding process for all investments, exclude coal from eligibility, and ensure open public consultation to align the mechanism with EU decarbonisation goals.

• Article 10c of the EU ETS Directive has been used primarily to subsidise fossil fuel capacity rather than diversifying energy sources, with 90% of investments in 2013 benefiting the upgrading and retrofitting of existing fossil fuel infrastructure.
• In Poland, 82% of investments under Article 10c focus on fossil fuel capacity modernisation, including the Belchatow lignite-fired power station, which is the second largest fossil-fuel power station in the world.
• Substantial portions of national plans in the Czech Republic and Romania support coal and fossil fuel production, contradicting the goal of reducing coal's share in electricity production.
• The implementation of Article 10c is characterized by a lack of transparency, with national investment plans often being vague, inaccessible, or available only in national languages.
• Public consultation processes for investment decisions have been inadequate, with some countries providing very short windows for comments or omitting contentious projects from public documents.
• There is a significant risk that Article 10c supports 'business-as-usual' investments that would have occurred regardless of the derogation, violating the principle of additionality.
• The EU ETS revision for the post-2020 period proposes extending the Article 10c derogation for ten lower-income states, potentially handing out up to 680 million allowances with a market value of up to €17 billion.

APA

Carbon Market Watch (2016). Fossil fuel subsidies from Europeade carbon market. https://carbonmarketwatch.org/wp-content/uploads/2016/04/Fossil-fuel-subsidies-from-Europes-carbon-market-final-web.pdf

Chicago

Carbon Market Watch. Fossil fuel subsidies from Europeade carbon market. 2016. https://carbonmarketwatch.org/wp-content/uploads/2016/04/Fossil-fuel-subsidies-from-Europes-carbon-market-final-web.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=Fossil fuel subsidies from Europeade carbon market |date=April 2016 |url=https://carbonmarketwatch.org/wp-content/uploads/2016/04/Fossil-fuel-subsidies-from-Europes-carbon-market-final-web.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatch2016fossil, author = {{Carbon Market Watch}}, title = {{Fossil fuel subsidies from Europeade carbon market}}, institution = {Carbon Market Watch}, year = {2016}, month = apr, url = {https://carbonmarketwatch.org/wp-content/uploads/2016/04/Fossil-fuel-subsidies-from-Europes-carbon-market-final-web.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }