Resolve ETS1, Postpone ETS2: Poland and Czechia Open a Joint Front on EU Carbon Pricing

Poland and Czechia agreed on Wednesday to push for changes to the EU’s Emissions Trading System and to seek a further delay to ETS2, the planned carbon market for road transport and heating fuels, citing pressure on households and industrial competitiveness, according to Carbon Pulse. For companies covered by the EU ETS and the buyers and investors watching European carbon policy, the joint stance puts two Central European governments on a coordinated footing against the bloc’s current carbon pricing trajectory.

What Tusk and Babis agreed in Warsaw

Czech Prime Minister Andrej Babis said on Wednesday that Prague and Warsaw would defend shared interests in the EU, after talks with Polish Prime Minister Donald Tusk and the conclusion of a bilateral internal security pact, according to Polska-IE. Babis said the two countries were aligned on the EU’s carbon pricing plans, arguing the bloc should settle the future of its existing ETS1 scheme and delay the planned ETS2.

“The only thing that can help our companies immediately is resolving ETS1 and postponing ETS2. And in this respect we fully agree,” Babis told a joint news conference in Warsaw, according to Polskie Radio. He said Poland and Czechia would defend their interests in the European Council, which brings together the leaders of the EU’s 27 member states.

Tusk matched the message. “Today we both confirmed that Poland and Czechia will cooperate very closely, and I think we will convince other countries of the region on ETS and ETS2. Our economies cannot be condemned to suffering and losses,” he said, according to Energetyka24, which reported his remarks in Polish. Tusk added that the two sides aim to hold joint intergovernmental consultations before the end of this year.

Why ETS2 is the pressure point

Babis framed ETS2 as a direct hit on living costs. The scheme would “only worsen” citizens’ lives, he said, and the European Commission must recognise that Central Europe has energy-intensive industry and different conditions from countries such as Spain, according to Polska-IE. Carbon Pulse reports the two governments cited pressure on households and industrial competitiveness as the grounds for seeking both ETS reform and a further postponement of the new market, according to Carbon Pulse.

The political machinery behind the stance is also being revived. Babis welcomed that the Visegrad Group was “functioning again” and thanked Tusk for an invitation to a joint government meeting, saying both sides would seek a date this year, according to Polska-IE. That suggests the bilateral position could be broadened into a regional bloc ahead of Council discussions.

The trade relationship behind the alignment

The carbon market front sits on a dense economic relationship. Poland has been Czechia’s third-largest trade partner since 2018, and about 900 companies with Czech capital operate in Poland, according to Polska-IE. Babis cited Skoda Group’s supply of 37 metro trains to Warsaw, a contract worth about PLN 1.3 billion (EUR 296 million), as an example of the ties.

From the Polish side, Tusk noted that Czechia is Poland’s second most important export partner, with exports from Poland to Czechia worth nearly PLN 100 billion, according to Energetyka24. He also stressed the importance of agriculture and EU support for the sector, describing Poland as a key country for the continent’s food security.

Energy policy tensions run in parallel with the alignment. Czech news agency CTK noted that Babis’ government is pushing an extraordinary tax on refineries, which would hit Orlen’s Czech unit Orlen Unipetrol hardest, with supporters in parliament citing a similar measure in Poland as an argument, according to Polska-IE.

Implications for compliance buyers and market participants

For companies covered by the EU ETS, the joint position adds two coordinated member states to the group pressing Brussels to revisit the system’s design, with the European Council named as the venue. Any reopening of ETS1 rules would affect the allowance supply and compliance costs on which industrial procurement and hedging strategies are built.

For fuel suppliers and the wider market, the demand to postpone ETS2 introduces fresh uncertainty over the timing of a new compliance demand pool covering road transport and heating fuels. The explicit framing of ETS2 as a household cost issue, rather than a technical design question, signals that the political debate will centre on affordability and competitiveness, not on market mechanics alone.

Investors should also note the regional dimension. Tusk’s stated aim of convincing other countries in the region, reported by Energetyka24, and the revival of the Visegrad format both point to an attempt to build a blocking or amending coalition rather than a two-country protest.

What to watch

Source: CarbonMeld — independent carbon credit market intelligence. Document-based quality scores and assessments across all major registries: carbonmeld.com

The first signal is whether Poland and Czechia convert Wednesday’s rhetoric into a formal position in the European Council, where Babis said both countries would defend their interests, according to Polskie Radio. The second is the planned joint intergovernmental consultations, which Tusk said the two sides want to hold this year, according to Energetyka24. The third is whether other Central European governments join the push, turning a bilateral front into a regional one with real weight in Council voting arithmetic.