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Weekly data: Polish plan to nationalise coal plants unlikely to push energy transition

Poland is proposing to nationalise coal plants, but whether the move would speed up or delay the country’s coal exit is unclear.

The Polish government has proposed taking over hard coal and lignite-fired power plants, and lignite mines from the country’s main state-controlled utilities Enea, PGE and Tauron. The units would be integrated into a new legal entity called the National Energy Security Agency (NABE) by the end of 2022.

Steam and smoke rises from the Belchatow Power Station located in Rogowiec in central Poland. (Photo by Omar Marques/Getty Images)

This comes amidst increasing awareness of how frail and financially unsustainable the coal sector is in the country. Most recently, coal-mining companies received at least €212m ($256m) in bailouts and the Polish Mining Group, which represents national coal mines, has asked for €1.5bn in government support due to the Covid-19 recession.

The government claims the merger will lift the burden of coal from the state-owned utilities and free up fiscal space for them to develop clean energy sources. Under the plan, the agency would only spend money on existing power plant operations and would not invest in expanding coal power.

However, exactly what the government means when it says the new agency will enable a “gradual and long-term transformation of the power sector” is unclear. No phase-out deadlines have been declared for the plants over and beyond the existing national commitment to phase out coal by 2049.

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The lack of decarbonisation commitments is out of step with EU climate goals. For the EU to achieve its 55% emission reduction target in 2030, electricity generated from coal across the bloc has to fall to 55 terrawatt hours (TWh) in the next ten years, says Climact, a Brussels-based environmental consultancy. Poland’s new energy strategy for 2040, adopted in February, foresees the country alone producing around 75TWh of electricity from coal in 2030.

Analysis by Polish think tank Instrat, highlighted in Energy Monitor’s Weekly Data, shows Poland could decarbonise its energy system much faster than the government proposes.

It presents a scenario where the share of coal in electricity decreases from 72% in 2020 to 13% in 2030 as power plants are gradually decommissioned. Only five units would be kept on standby with limited generation until 2040.

Polish mining companies are already experiencing significant financial losses with demand for coal in electricity generation on a downward slope, underlines the think tank. It projects a decrease from 36 million tonnes (mt) of demand in 2019, to 10mt in 2030 and 5.9mt in 2040.

 

Mirela Petkova

Mirela Petkova is a researcher based in Sofia, Bulgaria.