Polands renewable strategy

The long road to nowhere

Andrzej Ancygier, 16 Dec 14
Fourteen years ago, the Polish parliament approved a strategy for the development of renewable energies – the first of its kind in Eastern Europe. Since then, however, Poland has fallen further and further behind in European climate policy. This situation could change, but requires additional impetus from the EU.

On 9 July 1999, the Polish parliament voted on a resolution that had the potential to become a milestone in the country’s development of renewable energies. The resolution obliged the Polish government to adopt ambitious medium and long-term expansion targets for the renewables sector. It also called for conditions to be created that would also allow smaller players, communities and individuals to invest in decentralised energy plants.

Following a brief debate, the resolution was adopted with 395 votes in favour and only five against. Today, fifteen years on, Poland has made no progress whatsoever.

In fact the country has actually taken a step back, as it is now banking solely on coal and its plans for nuclear power. There is currently a draft in parliament for a renewables feed-in law, and the government has presented it plans for up to 2050. But also in the inaugural speech of the new Prime Minister Ewa Kopacz development of renewable sources of energy was not mentioned at allAbout a year after the 1999 resolution was adopted, the government presented the draft of a strategy for the expansion of renewables to parliament.

According to this strategy, the proportion of solar, wind and bio energy in Poland’s energy mix was to triple to at least 7.5 percent by 2010, and to almost double that share again by 2020. The driving factors behind these ambitious goals were climate change, energy security and ambitious targets in other countries – particularly Austria and Germany. Poland did not want to be left out of the renewables revolution. This strategy was also adopted in parliament by a large majority.

But after that nothing much happened, and Polish energy and climate policy has taken a very different direction since then. In negotiations with the European Commission, the new government put forward a 2010 target of only 3.6 percent. The Commission insisted that the target laid out in the country’s previous development strategy be upheld, but only thanks to an NGO that translated the document adopted by the previous parliament and sent it to Brussels. Ultimately, the 2010 target was not achieved – mainly due to a lack of necessary tools.

In 2003, without providing a reason, the government rejected a proposed Renewable Energy Sources Act that included the introduction of feed-in tariffs for smaller plants and close cooperation with German companies in special economic zones. Instead, billions were invested in outdated coal mines and planning began for the construction of a nuclear power plant.

Nuclear dreams

The change in policy in early 2000 was primarily due to the new government’s close ties with the trade unions. A larger share of renewables would have reduced demand for coal, leading to job losses for miners. The fact that a far higher number of new and more secure jobs could be created in the renewable energy sector was of no interest to the workers’ representatives. These “jobs of the future” had no proponents in the trade unions, which were largely dominated by coal miners.

However, the most important shift came about in 2006 and 2007 with the consolidation of the energy sector, which saw numerous small energy companies merge into four large “energy groups”. This was intended to make large investments easier to finance and implement. All four energy groups are largely state-owned, but it is the very close relationship between the largest of these groups, the Polish Energy Group (PGE) and the government that has had the greatest impact on Polish energy policy.

PGE is entrusted with special tasks such as constructing Poland’s largest coal-fired plant in Opole and implementing the country’s nuclear programme. The latter project is the responsibility of Aleksander Grad, who swapped his job as treasury minister for the significantly better paid position of head of PGE EJ within a matter of days. PGE EJ is the subsidiary of PGE responsible for the construction of Poland’s first nuclear power plant.

Plans to build a nuclear power plant in Poland were first announced in the inaugural speech of former Prime Minister Jarosław Kaczyński in 2005. But it was his successor Donald Tusk who attempted to implement them. Within three years, Tusk’s liberal-conservative government had established the legal foundation for the plans to go ahead.

It also founded a special department within the economics ministry that was tasked with realising the nuclear programme. Once again, the close ties between PGE and the government became blatantly obvious when Hanna Trojanowska, a long-serving employee of PGE, was appointed head of the department.

However, they did not want to construct the plant against the will of the people, so a more than EUR 2 million advertising campaign was launched promoting nuclear power. The campaign presented nuclear as a safe and cheap energy source that would also guarantee Poland much higher energy security.

The campaign proved a success: since 2011 support for nuclear power has risen from 40 to 64 percent. Only a few high-ranking representatives of PGE were not keen to jump on the nuclear bandwagon, for example Krzysztof Kilian – an old friend of Donald Tusk who took over as president of the management board of PGE in 2012. After voicing concerns about the cost effectiveness of the nuclear programme, he was forced to step down.

In the meantime, further steps have been taken towards making Poland’s nuclear power dream come true. In September 2014, a consortium of the largest energy companies was created in an attempt to cope with the high costs. Shortly afterwards, a contract was signed with the British company AMEC, which is to advise the PGE Group in various fields, particularly those related to safety and technology selection. Only the question of costs remains unclear. The government and PGE may well advertise nuclear power as the cheapest source of energy, but they have so far failed to produce any concrete figures.

At a conference in Berlin, one government representative quoted construction costs of EUR 4,000 per kilowatt (KW) installed, but was unable to explain, on request, how this number had been calculated. If the figure is accurate, the total cost for the planned three-gigawatt nuclear plant would amount to EUR 12 billion.

Not only for this reason, most government representatives admit in private talks that they don’t believe the nuclear project will ever be realised. PGE has a long list of more urgent investments. And the government, too, currently has another problem demanding its attention.

Russian coal

On 1 October 2014, there were noisy scenes outside the Polish parliament building in Warsaw when miners congregated there to lobby for their interests with whistles, loudspeakers and sirens. Most of the protesters were employees at Kompania Węglowa – Poland’s largest coal company and the biggest employer of miners in the country, with over 62,000 workers across 13 coal mines.

Despite receiving billions of euros in direct subsidies since 1990, only two mines which belong to this enterprise are profitable. The reasons for this are a lack of courage to shut down the unprofitable coal mines and invest in the modernisation of the others, coupled with the low price of coal on the global market. Ultimately this has led to Poland becoming a coal importer: In 2013 almost seven million tonnes of coal arrived in Poland from Russia, while the same quantity of Polish coal lay in unsold heaps. The miners called for trade barriers to importing coal from other countries and protested against any plans to shut down mines, even those that were not turning a profit.

The date and location of the miners’ protest was not chosen at random; it occurred at the same time that the newly elected Prime Minister Ewa Kopacz was delivering her inaugural speech inside the building. And the message was received: “Polish miners must be protected against unfair competition,” said Kopacz in her speech. “I will do everything in my power to make the Polish mines profitable.”

One option, she said, would be to fund “modern coal technologies”, but added that this should not result in any mines being closed. However, despite sympathies towards the miners, annoyance is growing in Poland over the constant subsidies that the coal industry receives. Marek Szczepański, professor at the University of Silesia in Katowice, remarked ironically that in the future miners will be paid to extract stones merely to avoid further protests.

The new prime minister addressed many topics in her government statement, but the expansion of renewable energies was not among them. Nevertheless, two important documents are in fact currently being discussed that will play a decisive role for the future of renewables in Poland. The first is the draft of the Renewable Energy Sources Act. This current version is already the fourth to be presented by the government since 2011, but despite fierce criticism, it is the first to be debated in parliament. In contrast to the other drafts, it includes a significant amendment to the funding system.

From 1 January 2016, without any pilot schemes, the current certificate-based funding system is to be replaced by calls for tenders. The calls for tenders should be technology-neutral, with only a differentiation being made between plants under and those over one megawatt.

One particularly controversial regulation, however, applies to operators of plants with a capacity of up to 40 kilowatts. As of last year, these plants are allowed to feed electricity into the grid without any large bureaucratic hurdles. In return, however, they were to receive only 80 percent of the average stock exchange  price from the previous year – around six cents for every kilowatt-hour fed into the grid.

Due to strong criticism in the end this amount was increased to 100 per cent. But that is still far less than the large companies, who not only receive 100 percent of the average electricity price for their power, but also green certificates that are currently worth EUR 30 to 40 per megawatt-hour (MWh). When asked why private individuals are discriminated in comparison to large companies, a representative from the ministry had no answer.

The second document currently discussed in Poland is the draft of Polish energy policy up to 2050, which was presented by the government in August. On reading the document, it soon becomes clear how much has changed since the strategy for the development of renewable energies was adopted in 2000.

Despite the rising proportion of imported coal, the Polish coal industry’s dire economic situation and the increasingly noticeable effects of climate change, black coal and lignite are to remain the pillars of Poland’s energy independence. Renewable energies are also to be expanded in the future, but only because this is being demanded of Poland by the EU – as is emphasised several times in the document.

The policy outlines three scenarios. In the scenario that is most favourable for renewable energies, a minimum of 20 percent of the country’s energy is to come from renewable sources by 2050. If Poland’s 2020 target of 15 percent is taken into consideration, this would mean a five-percent increase within 30 years.  

Europe’s influence

While other factors prevailed 15 years ago, the recent expansion of renewables in Poland has been mainly down to pressure from Brussels. The former Prime Minister Donald Tusk, who will become president of the European Council in December, has already stated that Poland will meet its targets for 2020, but “no more”. This line was recently confirmed by a government representative, who said that without a binding EU target for 2030, Poland will probably no longer have a funding system for renewable energies after 2020. However, there are an increasing number of key players emerging in Poland who do not agree with this policy.

In a survey conducted among local authorities, 85 percent of those who participated were in favour of increased funding for solar energy and 65 percent called for more funding in the wind energy sector. Only 18 percent of the country’s mayors support further development of lignite mining, and 19 percent are in favour of nuclear development.

Numerous politicians are also increasingly voicing the need to follow the German model and construct a decentralised system of plants through the municipalities and prosumers. It is a shame that Brussels is not providing the necessary impetus right now, as without pressure from the EU, the historic moment of 9 July 1999 will remain merely a comment in the margin of Poland’s history.

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