The EU was a strong bridge-builder in the Paris climate talks, but could have pushed for even more, had one of its members not decided to spoil the party, writes Andrzej Ancygier.
Andrzej Ancygier, is a postdoctoral research fellow at the Hertie School of Governance and an Energy Expert at Climate Analytics. This article is based on the conclusion of the policy paper Polish Energy Sector: Preparing for New Challenges.
Never before has the Polish government been so out of sync with the global developments in the energy sector. While billions of people around the world were celebrating the adoption of an ambitious climate agreement in Paris last Saturday, the Polish new ruling elite is doing its best to turn back the clock and anchor the country even deeper in the fossil fuels age. The global transition towards a low carbon future that has already begun in the other countries remains unnoticed in Warsaw.
Every year, at the beginning of December, Polish coal miners celebrate their patron, Saint Barbara. This year, the new Polish President, Andrzej Duda, and his Prime Minister, Beata Szyd?o, joined the celebrations to pay their debt for the miners’ strong support during the lengthy election campaign. Part of this included President Duda’s declaration to the miners that “coal is the basis of Poland’s energy independence, and no one has the right to take it away from us”, and that talking of decarbonisation in a country whose energy sector so greatly depends on coal was a heresy.
On her side, Prime Minister Szydlo reassured there would be enough money for the survival of the state-owned coalmines. This, however, is not at all guaranteed, as the inefficiency of the Polish coal mines, and a drop in global coal prices have driven the Polish mining industry to the brink of bankruptcy. The sector generated losses of almost €400 million in the first three quarters of 2015. Even subsidies to the sector, amounting to €24 billion between 1990 and 2012, couldn’t prevent it from accumulating debts to the tune of almost €4 billion in December 2015.
By the end of the third quarter 2015, there were 6.2 million tonnes of unsold coal, equivalent to almost 10% of the yearly coal extraction in Poland. To pay the coal miners’ salaries in the coming months, Prime Minister Szydlo announced that a government agency would purchase the unsold coal from the state-owned mining companies.
At the same time, the Polish government seems to have missed the changing sentiment about coal among its people. According to a poll from the beginning of December 2015, 61% of Poles think that the country should in the coming 20-30 years slowly decrease the role of coal in the Polish economy and develop other sources of energy. In another poll from early October, 92% of Poles supported the development of renewable sources of energy.
The world is moving forward
Whether the Polish government wants it or not, Poland will be affected by the global trends in the energy sector. The rapidly decreasing cost of renewables has led to a significant increase in their installed capacity. With 130 GW of new installations in 2014, renewables accounted for almost half of the net additions to the world capacity in the power sector. According to Bloomberg New Energy Finance, this share is due to increase to 70% in the period 2012-2030.
The Paris Agreement adopted by governments around the world this Saturday (12 December) will only accelerate this trend. More than 195 countries have committed to hold “the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels”. The addition of the 1.5°C target requires much faster emissions reduction much sooner. Complemented by at least $100 billion of annual financing to developing countries, largely for mitigation, the Paris Agreement will help poorer countries leapfrog the fossil era and build their economies on renewable energy.
With renewables becoming an increasingly attractive option for many countries, the coal glut on the global markets will worsen and the price of coal will decrease. This in turn will increase the costs of subsidising the industry to keep it alive. This is a dangerous path for Poland, as European legislation forbids subsidies for the coal industry, and continuing to do so would put Poland on a collision course with the EU.
Poland’s choice: get on board or be left behind
President Duda is going down a blind alley if he keeps relying on coal without any plan for moving away from fossil fuels. This will be harmful not only for the environment, but also for the Polish economy. At the same time, with declining costs of renewables and the need to replace ageing Polish power plants, there has never been a better time to move to low-carbon sources of energy.
For new technologies and industries to develop, three ingredients are of decisive importance: scientific base, money and predictability. Due to its focus on natural science and access to European funds, Poland commands over the first two. What is largely missing is predictability.
The current Polish government faces an important choice now: Either it will initiate and embrace the unavoidable change towards a low-carbon economy in an organised and successful manner, securing a prosperous future for its country and its citizens, or will it be remembered as the government that closed its eyes to the changing world and condemned its country to backwardness for decades to come.