The paper presents the impact of the reformed EU ETS (Emission Trading Scheme – ETS in

the European Union) on the currently operating market for trading in CO2 emission allowances.

The new Directive introduced a number of changes aimed at tightening the climate policy, which

the Polish energy sector based mainly on hard coal may mean an increase in the costs of electricity

production, and thus an increase in the cost of the entire economy.

The main goal of the changes is to achieve one of the objectives the European Union has set for itself,

i.e. the reduction of CO2 emissions by 40% until the year 2030. These assumptions are the result of

joint arrangements of the EU countries under the Paris Agreement on climate change adopted in 2015.

The Directive introduces a new market stability reserve mechanism (MSR) which, according to its

assumptions, is designed to ensure a demand and supply balance of the ETS. Bearing the balance in

mind, it means the reduction of excess allowances, which, although their number is decreasing, it is

decreasing to slowly according to EU legislators, still oscillating around 2 billion EUA.

The paper also draws attention to the rigorous assumptions adopted in the new Directive, aimed at

increasing the price of CO2, that is the costs in electricity production. Due to manually-controlled

prices, are we doomed to high CO2 prices and therefore the prices of electricity? What are its estimated

maximum levels? Will the new assumptions encourage the Member States to switch to lowcarbon

technologies? Can they weaken the economies of countries that are currently based mainly

on coal energy sources, and strengthen countries where green energy is developed?

The aspect of climate change in the modern world is one of the broader issues of global social and economic policy. Climate change implies a modification of the business environment, especially the energy sector. Any change in the conditions in which the company operates is the cause, the effect of which becomes its financial situation during the relevant period. Therefore, climate policy will play an increasingly important role in shaping the energy of the future. At present, energy companies are taking measures to process primary energy from fossil fuels, in particular coal, in an efficient and environmentally friendly way. The article presents the impact of international climate agreements on the energy and coal industries. The latest agreement signed in Paris defines a global plan to minimize the dangerous effects of global warming on the climate arising from carbon emissions. The most important outcome of the agreement was the unification of many countries with a common goal. The European Union played a key role in signing the first legally binding agreement in the world, which is also a forerunner in the carbon trading system: EU ETS (European Union Emission Trading Scheme) The US-based CO2 emissions trading system has become a model for the European Commission. In addition, the article highlights the correlation between the EUA ( European Union Allowances) and “ARA coal” prices as well as the role of the coal market in price formation of emission allowances.