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Donald Tusk at the Forum

Poland is always a great place to visit and this was especially true this month at the Economic Forum in Krynica as the sun shone and news broke that Prime Minister Donald Tusk was to step down to become the leader of the European Council.

Last year Poland celebrated 25 years since the fall of communism and it is now 10 years since it entered the EU. The fact that one of its most popular leaders is now set to take the helm of the Council is for many a fitting tribute to the fact that so much has changed in this great country in such a short time. But rapid change can, at times, be unwelcome and there is one aspect of Poland’s integration into the European Union that is progressing at a rather slower pace than many might wish: its acceptance of the need to tackle climate change.

In Poland, climate change is not considered to be a genuine threat with many overt climate sceptics occupying prominent positions in political life. Tusk, it seems, is a moderate on this issue and his party has a reputation for far greater pragmatism than the leading opposition party. The dominance of coal in the energy mix and the fact that much of the energy sector remains in public hands means that Poland has been slow to accept policies designed to clean up. Poland has been a strong opponent of increased European climate ambition and firmly believes the EU should only continue to bind its emissions when the US, China and other competing economies take on similarly binding targets. However, if one adopts a cup half full attitude, there are definite signs of green shoots that suggest this hard line approach may be beginning to soften.

The decline of coal? 

Although it seems coal is inseparably intertwined with Polish national identity, coal production in Poland is no longer the reliable source of cheap power it used to be. Deep mining, which dominates in the country, is expensive and some mines are losing out to cheaper imports, over half of which now come from Russia. I heard one projection, that as costs increase, coal production in Poland will decline by 40% by the middle of next decade.

Lignite mining is competitive and there is still plenty of it – but this problem is not unique to Poland, neighbours Germany are also addicted to it and arguably, until they show any sign of weaning themselves off, why should Poland? In any case, as Poland opens its energy sector up to market forces, the economic arguments against coal may start to have an influence over more political considerations.

So if coal no longer guarantees energy independence in Poland, the new question is what can? The answer is diversification. A new LNG terminal is set to open in Poland next year, gas storage capacity has been expanded and a number of companies are still pursuing fracking for gas. A new deal has been signed to build a nuclear plant (though this may take a very long time) and a new law to support renewables has also been introduced (which some fear, however, is fatally flawed by excluding smaller players). This push for diversity has even lead to a world first of applying fracking technology to coal seams to extract methane for combustion.

Part of this drive to diversify stems from frustration that the electricity grid in Poland is not as robust as many would like. Parts of Poland experience power shortages and temporary power cuts – distributed renewables, particularly in rural areas offer for some a way of literally taking power back into your own hands. And though there appear to be hardly any politicians at a national level who are willing to state support for low carbon policies and no supportive political party, Waldemar Pawlak, ex-Leader of the minority coalition party, the PSL (Polish People’s Party – ‘the agricultural party’), now advocates small scale decentralised renewables for farmers.

Interestingly, to Poland’s great annoyance Germany has been using its eastern neighbour’s grid to transport excess power from North Germany to South, without any of the benefits of reduced energy prices being felt in Poland. Poland therefore is installing ‘phase shifters’ to protect its grid integrity, forcing Germany to complete its domestic transmission line and, in the interim, to export Westwards (coal and renewables excesses displacing gas capacity in the Netherlands instead). Though Germany may for many represent a beacon of green, clean energy policy, for their neighbours this is not at all obvious and they resent having technology choices dictated to them. Time will tell whether this push for lower carbon energy independence will take off but there are clear signs of growing momentum towards change.

Shared interests for UK and Poland

To return to EU policies and climate ambition, it is important to note that Poland has considerable cut its emissions across all sectors since its baseline year of 1988 (the year communism came to an end) but it has also played a pretty obstructive role in discussions about future ambition. As it develops and diversifies its economy, increasing its efficiency, more emissions savings are very likely to be achieved, that will most likely reduce its current dependence on coal. They will, however, in doing this adopt an ‘all of the above’ low carbon technology approach. This is quite similar to the UK’s position, certainly a lot closer than Germany’s and this means the UK could be well placed to work with Poland to help shape the detail of the next EU energy and climate package.

There is much the two countries’ governments agree on:

  • the need for flexibility in technology choices (including gas and nuclear).
  • the need to focus on least cost abatement.
  • the need for a proper EU industrial strategy that protects competitiveness and rewards genuine investment and not just reduction in production levels.
  • a potential focus on carbon intensity instead of just renewables and energy efficiency.

However, there remain significant differences:

  • Poland does not believe the EU should lead internationally, and recently opposed reaching an early agreement on a 40% unilateral emissions target for 2030.
  • Poland believes it has received an unfair deal under the ETS (despite the concession it has been given) and would prefer to see it scrapped or replaced.
  • Poland wants to able to bank forward all its so-called ‘hot air’ (spare emissions rights that accrue from the 1988 baseline) significantly reducing ambition.
  • Poland is general sceptical of the need for Carbon Capture and Storage (CCS) but, interestingly, is more open to Carbon Capture and Utilisation.

It remains to be seen whether the UK can help to broker a compromise with Poland that would enable a clear way forward in EU climate and energy policy, but as things stand at the moment there appears to be definite potential to make progress.

Click here to read Sandbag’s more detailed report on Poland in the Emissions Trading Scheme.

 

Further information:

Bryony spoke at the following events during the Economic Forum

  • European 2030 Climate Framework
  • The EU Climate Policy vs. Competitiveness and Innovativeness of Member State Economies
  • Energy Security Based on the Energy Mix

Images from Flickr used under a Creative Commons Attribution 2.0 Generic License