Coal Profile: Poland
Ecoal, Vol 75, August 2011
Poland consumes 77 million tonnes of coal per year, which makes it the 10th largest coal consumer in the world and the 2nd largest in the EU, after Germany. 92% of electricity and 89% of heat in Poland is generated from coal and according to the official Polish Government Energy Policy Strategy, coal will remain the key element of the country's energy security until at least 2030.
Although Poland's electricity mix is expected to become more diversified over the coming years, with the first nuclear power plant scheduled for 2022 and rising interest in shale gas exploration, coal is perceived by policy makers as a strategic energy resource for the country's energy security and its consumption is not expected to decline over the next two decades.
Historical Perspective
Historically, Poland has been an important producer and exporter of coal. In the 1970s Poland became the biggest coal producer in Europe and until 1979 was also the second largest coal exporter globally, after the USA.
During the economic transition of the 1990s, Poland used regulated coal prices as an inflation anchor. In fact, while the prices of most products were set by markets, coal prices were frozen to prevent hikes in electricity prices. Given the important share of manufacturing and heavy industry in Poland's economy at the beginning of the 1990s, stable electricity prices were key to a smooth economic recovery.
Between the 1990s and 2000s, the coal industry underwent major restructuring, which led to the early closure of many coal mines and a sudden decrease in production output. In fact, due to this restructuring process, Poland's coal production has spiralled into a steady decline. More recently, coal imports exceeded exports for the first time in history.
Today Poland's coal industry is among the most competitive in Europe, providing jobs to over 100,000 people in the country. Poland is now the 9th largest hard coal producer in the world and the largest coal producer in the EU. It is also the 8th largest coking coal exporter in the world.
Coal Industry in Transition
The coal industry in Poland is still largely state-owned. However , government plans are to privatise most of its coal assets in the coming years. A few months ago the largest coking coal producing company in Europe - Jastrzębska Spółka Węglowa - debuted on the stock exchange and it is now expected that other companies will follow in 2012. Apart from large coal producers, Poland is also home to a number of equipment manufacturing companies, which have been successfully marketing their products overseas.
EU Environmental Regulations
As a member of the EU, Poland is part of the EU's Emissions Trading Scheme, aiming to reduce the EU's greenhouse gas emissions and to stimulate the deployment of low-carbon energy technologies. Poland is also bound by the Energy and Climate Package which sets renewables and emissions reduction targets for 2020. However, Poland is also known to be the main advocate of a balanced approach towards reducing GHG emissions in Europe as it fears negative economic impacts.
Given that 60% of Poland's CO2 emissions are covered by the EU ETS, in comparison to the EU average of 40%, Poland is expected to bear a disproportionally high cost for mitigating EU's CO2 emissions.
A recent report by the World Bank - "Transition to low-emissions economy in Poland" concluded that the EU climate policy will cost Poland 1% of its GDP every year until 2030 and 2% of its GDP each year for the next 10 years. Abatement measures are also expected to have a negative effect on employment, with an employment loss of up to 7.4% between 2015 and 2030.
In June 2011, the Polish Government decided to block the European Commission's Low-carbon Roadmap for 2050. The proposed Roadmap sets intermediary emissions reduction targets up to 2050, aiming at an EU-wide emissions reduction target of 80-95% by 2050 and a specific target of 93-99% greenhouse gas emissions reduction for the power sector.
As a result of Poland's veto, the EU will not be able to showcase the 2050 Roadmap in the run-up to the forthcoming UN climate talks in Durban - a strategy it intended to undertake to encourage other countries and regions in the world to commit to ambitious GHG reduction targets.
Not the Only Coal Country in the EU
While Poland has demonstrated overt leadership on the 2050 Roadmap, it cannot be assumed that it is the only country in the EU concerned with the direction of EU climate and energy policies. Many other European countries rely on coal for electricity generation. Germany obtains over 40% of its electricity from coal and is its largest consumer in the EU. Coal also accounts for over 40% of the electricity mix in other countries, such as the Czech Republic, Bulgaria and Romania and provides 29% of the EU's electricity.
Clean Coal Technologies
Poland will host one of the EU's flagship CCS demonstration projects in Belchatów - the largest thermal power station in Europe and one of the largest fossil fuel power plants in the world. CCS will be demonstrated at an 800 MW unit and will be co-financed by the EU through the European Economic Recovery Programme (EERP).
There is also a great potential for high efficiency coal power plants in Poland as the current average efficiency rate stands at 36%, in comparison to the EU average of 38%. The current state-of-the-art technology allows efficiency rates of around 45%. This could allow a reduction of 20% in CO2 emissions if old power plants were replaced by modern lower emissions technology.
In fact, Poland's most efficient power plant has recently been built in Łagisza. The new 43% efficient boiler replaced an old one which was only 35% efficient. As a result CO2 emissions were reduced by 28% and nitrogen oxide emissions by 71%.
More than 50% of the power stations in Poland are over 25 years old, and approximately 25% have been in operation for over 30 years. This presents a great opportunity for Poland's old power plants to be replaced by newer and significantly more efficient power stations.
