Renewable lobbies, including the Polish Wind Energy Association (PWEA), have said the proposed draft bill, currently before the Polish parliament, would undermine the GOs market in Poland. They argue that renewable energy companies would not find it profitable to register and sell GOs with such a significant tax burden, potentially leading to a market collapse. This, in turn, could have a detrimental impact on the competitiveness of Polish industrial enterprises in foreign markets, as many rely on GOs to demonstrate the carbon footprint of their products.

Traders and market participants have also voiced their criticism, highlighting the lack of reasoning provided by the government for the tax. They argue that if renewables firms are forced to bear additional mandatory transaction costs and fees, they might even incur losses on the sale of GOs.

With the entire revenue from GOs being taken by the state, it is anticipated that suppliers will be discouraged from participating in the market, resulting in a lack of liquidity. For example, an electricity distributor who purchased GOs from a renewables producer for PLN 10/MWh (EUR 2.23/MWh), and then sold them to an energy-intensive customer for PLN 15/MWh, will be obliged to transfer a write-off of PLN 14.55/MWh. Therefore, each GO will lose PLN 9.55/MWh.

Market impact

If the new law restricts the availability of domestic GOs Polish industrial firms,will be compelled to source them from foreign markets, including the EU AIB markets.

This could have a bullish impact on AIB GOs, as Poland canceled approximately 21TWh of GOs during the last disclosure period (April 2022 – March 2023). The graph below illustrates the monthly issuance, cancellation, and price information of Polish GOs.

Poland, although not an AIB member, has received acceptance for its GOs from Lithuania, according to the latest AIB survey. Furthermore, countries such as France, Norway, Sweden, Switzerland, and Finland have exported GOs to Poland using the Ex-domain cancellations.