Coal still the King

Piotr Naimski (Adrian Grycuk, CC BY-SA)

In September, Poland said it would ratify the global climate deal only after it gets EU assurances on investment in coal-based power plants. Poland will meet its CO2 target, says Piotr Naimski, Minister responsible for Poland’s energy policy.

The 28-nation EU is under pressure to join the Paris agreement that set an ambitious goal last year to curb rising temperatures. To come into force it needs to be ratified by at least 55 parties, accounting for 55 per cent of global emissions.

Successive Polish governments have tried to restructure the mines, which are mainly in Silesian, but most efforts have been thwarted by unions intent on maintaining the country’s 100,000 mining jobs. Poland gets almost 90 per cent of its electricity from coal.

With the government’s encouragement, the three biggest publicly traded utilities have agreed to spend as much as PLN1.5bn (EUR347.3m) on a stake in a restructured mining company called Polska Grupa Gornicza (PGG). Five banks and a state company will get PGG bonds in place of loan payments (more).

CE Financial Observer: Is the government keen to reduce headcount in the coal industry and if so how would you square this with the powerful mining unions?

Piotr Naimski: We want to transform, not restructure our domestic coal sector. The words we use are important: restructuring is a byword for job losses. There is no necessity for job cuts.

Why is coal at the center of the government’s plans?

A focus on coal is not ideology, but common sense, for safety and security of electricity supply. We want cleaner coal, new technologies and will reduce threats to the system, from photo-voltaics and wind power, which are uncertain and have resulted, for example, in Germany in periodic overloads.

Coal produces about 90% of electricity, where do you want it be in 10 years?

What we want is an integrated and above all stable framework and energy mix. Cogeneration makes up 15 per cent of total electricity production now, with coal making up the rest. We want to focus on this and build on our strengths, for example via existing integrated heat and power systems in major cities.

The government having decided to base its strategy on coal, gradually wants to implement cleaner technology into the production process and reduce CO2 emissions, which will be 25-30 percent lower than now, although I can’t say when.

Renewables

A new law that took effect in the summer that could kill competition from land-based wind farms by raising setback requirements tenfold and increasing tax burdens. The law took which effect on July 15 also allows extended shutdowns for turbine inspections and could lead to a fourfold increase in taxes for all land-based wind farm operations.

An energy analyst in Warsaw told the EU Financial Observer that: “instead of subsidizing renewables, the government is taking on new costs – that is to say coal-related costs including maintenance of mines, costly production, pollution, rolling out of new clean technologies. While subsidies to renewable were largely predictable and well controlled, the cost of “investment” into coal seems to be a big unknown…”

CE Financial Observer: Moody’s said recently new laws on renewable energy will hinder growth in renewable energy and endanger the country’s ability to reach its binding EU target by 2020. How do you respond?

Piotr Naimski: By 2020 we will have built 10-12 Mw coal-fired or cogeneration plants, including at Opole and Kozienice. We will meet our CO2 targets.

Unfortunately, Poland is still a lot less affluent than Germany and we can’t afford to subsidize renewables as they have. The average per household cost of electricity is 4-5 percent in Germany of overall outgoings and in Poland about 10 percent. Germany has subsidized its renewables industry to the tune of 500 billion euros, but 2/3 of all costs are still placed on the end-user. We can’t burden Polish end-users like that. We are not interested in repeating the Spanish model.

The Germans have kept prices artificially low in this way and sometimes have to sell over the border to us at lower prices, undercutting local producers. But Germans also don’t want to import any power from outside. So, each country must choose its path. The targets – EU energy security and reductions in emissions – are clear, just we each have to decide how best to achieve them.

The new Windfarms Act has been attacked by industry players who say it slams the brakes on Poland’s burgeoning wind power industry. What is your answer to them?

The new law on renewables will of course mean less wind and photovoltaic and more biomass. We want a slow and gradual reordering of the energy mix.

As for biomass, this could also mean big investments from outside Poland, why not? Investors in wind power were in effect highly subsidized and now they will operate, or not, if they can compete on the domestic market.

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