Ph.D Dissertation in Sociology and Social Anthropology MAKING A MARKET: THE PROBLEM OF POLISH CARBON IN EU CLIMATE POLICIES By Aleksandra Lis Central European University in Budapest Supervisors: Alexandra Kowalski, CEU Balazs Vedres, CEU CEU eTD Collection Dissertation Submission date: 31 May 2012 1 Introduction ................................................................................................................................ 4 Facts and Figures on the European Union Emission Trading Scheme ................................ 14 Power Sector and the Electricity Market in Poland ............................................................. 23 Polish Trade Unions in the EU ............................................................................................. 36 Roadmap of the Dissertation ................................................................................................ 40 Chapter 1. Embedding or Performing Emission Trade? .......................................................... 43 Introduction .......................................................................................................................... 43 Defining Markets and their Embeddedness.......................................................................... 50 Embedding Emission Trade in Organizational Fields .......................................................... 56 Translating Emission Trade Through Actor-Networks ........................................................ 69 Complex Embedding of the ETS Organization - Some Methodological Considerations .... 77 Data collection ...................................................................................................................... 82 Chapter 2. Between Markets and States: A Fuzzy History of Emission Trade........................ 87 Introduction .......................................................................................................................... 87 How Economics Met Environmentalism ............................................................................. 92 From the Bush Administration to the Kyoto Protocol ......................................................... 97 Emission Trade for an Economy in Transition .................................................................. 101 Failed Experiments of a Too Early Action ......................................................................... 103 Europe Commits Itself to GHG Emission Reductions ....................................................... 107 Failure of the European Carbon Tax and the Search for a New Policy Tool ..................... 110 Catching up with Missed Opportunities – EDF Lobbies BP ............................................. 112 Europeanizing Emission Trade – on the Way to Installing Emission Trading Scheme in the EU ....................................................................................................................................... 117 Poland in the EU – EU ETS as an ‘Imposed Solution’ ...................................................... 122 Conclusions ........................................................................................................................ 128 Chapter 3. Between Calculation and Metaphors: Accounting for Carbon and Challenges to an Economic Frame .................................................................................................................... 131 Introduction ........................................................................................................................ 131 The PRIMES Model for an Average EU Economy ........................................................... 133 Challenges to Economic Framing of Carbon Dioxide: the East-West Divide ................... 143 Challenges to Economic Framing of Carbon Dioxide: Carbon as a Historical Thing ....... 151 Conclusion .......................................................................................................................... 154 Chapter 4. Poland in the New ETS: Mobilizing Networks Across Fields ............................. 160 Introduction ........................................................................................................................ 160 Organizing Polish Lobbying .............................................................................................. 161 Dynamics and Structure of the Polish Lobbying Network ................................................ 169 Conclusion .......................................................................................................................... 184 Chapter 5. Methods of EUAs’ Allocation: Negotiating the Project of the European Carbon Market .................................................................................................................................... 186 Introduction ........................................................................................................................ 186 Alternative allocation methods and internationalization of the Polish network ................ 189 The IFIEC-method: Industrial Project of the ETS ............................................................. 193 CEU eTD Collection IFIEC Method vs. Full Auctions: Justifying Through Boundary Making ......................... 198 Polish Coal vs. Russian Gas: the IFIEC-Method Revised ................................................. 205 The Competition State vs. the Re-Distribution State ......................................................... 211 From Expert to Political Negotiations: the October to the December 2008 EU Summits . 218 Conclusion .......................................................................................................................... 225 Chapter 6. Trade Unions: Confused in Climate Action ......................................................... 227 Introduction ........................................................................................................................ 227 The European Trade Union Confederation Responds to the Commission’s Proposal....... 230 2 Contention within the European Union Movement ........................................................... 235 Between Environmental Goals and Labour Interests: an International Meeting in Katowice ............................................................................................................................................ 244 Negotiation Failure and the Fragmentation of the European Labour Movement .............. 252 Conclusion .......................................................................................................................... 260 Conclusion .............................................................................................................................. 264 Literature: ............................................................................................................................. 276 CEU eTD Collection 3 Introduction In August 1986, an image of the Cologne Cathedral half-submerged in seawater appeared on the cover of Der Spiegel. The title read: DIE KLIMA-KATASTROPHE (the climate disaster). It was an alarming image with an alarming diagnosis, which galvanized the German and European public and provoked debates on the humans’ responsibility for the condition of our planet. The 1990s saw political efforts to install an international regime of emission reductions; however, simultaneously, a growing opposition began to question the humans’ impact on the global climate. In the 2000s, another image captured public imagination. It was a polar bear floating on a piece of ice across the Arctic See. The bear was lonely, lost and helpless, and remains the symbol of climatic changes even today. Over the last three decades, with a rise and fall of the feeling of urgency, companies and governments around the world started to reduce greenhouse gas (GHG) emissions. The Kyoto Protocol was the major international step in climate action and an outcome of political and economic negotiation between the rich North and the poor South. After numerous crisis moments, twists and turns, negotiations under the United Nations Framework Convention on Climate Change (UNFCCC) in Kyoto resulted in the establishment of a global cap-and-trade system to reduce GHG emissions. Individual countries committed to reduce their emissions up to certain historical levels. However, today scientists clearly show us that countries need to reduce much more GHG emissions than they have done so far. But the political will is weak. The future of the Earth’s condition is again uncertain. Without the U.S. willing to commit to reduce its GHG emissions, and with countries like China and India defending their rights to carbon intensive development, hopes to stop global warming are fading away. CEU eTD Collection However, while America and Asia still hesitate to act against global warming, Europe is trying to show to the world that it is determined to reduce its GHG emissions. The European Union Emission Trading Scheme (the ETS) was established by the ETS Directive in 2003 and became operational in 2005. Its prime goal was to regulate GHG emissions in the EU Member States and to make sure that the European Community was able to comply with the Kyoto target. The 4 ETS covers around 11,000 industrial installations in the EU. On the ETS, permits are issued and granted to companies to allow them to emit carbon dioxide. These permits are called the European Allowances (the EUAs) and, between 2005 and 2012, they were granted