Poland seeks extra carbon market cash for green shift

By Kate Abnett

BRUSSELS, Oct 20 (Reuters) - The upcoming revamp of the European Union's emissions trading system (ETS) should redirect more revenues to poorer countries needing support to cut greenhouse gas emissions, according to Poland, the EU's biggest hard coal producer.

At meeting of EU environment ministers in Luxembourg on Friday, Poland will propose changes to the system of allocating ETS permits and the creation of a new "energy solidarity fund" to support low-income countries, according to a Polish government paper seen by Reuters.

"What we need is the EU ETS that drives investments to regions and sectors located in less wealthy member states with reduced levels of capital," the document said.

It also pushed back against an idea, which EU countries have agreed to explore, of using emissions trading revenues to boost the bloc's next joint budget.

The EU ETS puts a price on pollution by forcing power plants and factories to buy permits to cover emissions. Each country is allocated permits, which it can sell or hand to some sectors for free.

The EU's executive Commission is due to propose a major overhaul of the ETS next year to help deliver a more ambitious target to cut emissions by 2030.

That target is still being negotiated by EU countries, which must all agree. Carbon-intensive states are demanding more economic analysis on how a tougher target would affect them, and want guarantees the EU will provide funds to help them.

Warsaw has said climate goals must not aggravate "energy poverty" among those worst-off.

Poland, which depends on coal for more than 70% of its electricity, also said a "modernisation fund" for poorer EU countries, or ETS revenue set aside for green investments, should be expanded as the COVID-19 pandemic had increased investment needs in the sector.

The Luxembourg meeting of the bloc's 27 environment ministers is due to take place in person on Friday despite much of the continent restricting public events and daily life as coronavirus infections surge anew. (Reporting by Kate Abnett, Editing by Gabriela Baczynska and Mark Potter)