Polish Industry: Coal Key to Competitiveness
Coal is definitely important for Poland, and its dominance as a fuel for power generation does not look to diminish, according to speakers at the 25th Economic Forum in Krynica-Zdroj, Poland.
In a session there entitled “European Industrial Policy – A Global Challenge”, a representative of Poland's coal industry, Mr. Jerzy Podsliado, President of the Board, Weglokoks S.A., said that while in 20-30 years the energy sector may be completely different than it is today, it is no doubt that coal will still be used as a source of energy production.
He offered, “Today, the best way to reduce CO2 emissions is to replace the old power plants with new ones which generate many fewer greenhouse gasses per energy unit – this is the best way to decrease those levels and maintain the competitive advantage of the European Union's industry.”
According to him, this was one of Poland's main arguments at a climate summit in 2014: “We said 'let's go for the coal, but with new technologies - new, more efficient facilities; let's generate energy from coal, but let's produce it in a clean way.'”
How, Mr. Podsliado asked, can coal be replaced by any other material in places like China or India?
“If we want to fight against CO2 emissions – because we have to – we have to change our approach completely, our philosophy of how the global economy operates,” he opined.
One problem, he pointed out, is the planned obsolescence of things like white goods, which now are no longer produced to run for 20 years instead of five. “The whole philosophy of our activities has to be changed in order to actually combat CO2 emissions,” said Mr. Podsliado.
The fundamental issue is the balance between industrial policy, climate and energy policies, according to Ms. Grazyna Henclewska, Undersecretary of State, Ministry of Economy, Poland. “We talk about synergy and not about the superiority of one policy over others. We truly have a program prepared for low emission industry in Poland, but we are saying that we cannot make it happen at the cost of competitiveness of the whole economy; we will reduce emissions and we are doing it already. We've reduced energy consumption, material consumption to good effect, but we want to follow a tempo that will not disrupt the economic growth of Poland,” she said, adding that it and other member states will need to develop greater competitiveness levels in preparation for the Transatlantic Trade and Investment Partnership (TTIP), a trade agreement to be negotiated between the European Union and the United States.
Mr. Grzegorz Kinelski, Vice-President of the Management Board for Commercial Affairs, ENEA S.A. Poland. The company, he explained, is now building an energy facility in Kozienice, Poland – a huge investment. Mr. Kinelski was asked if the energy produced there would be competitive on the market, considering the innovative technologies to be used there in the burning of coal.
Mr. Kinelski said, “It's 1,150 megawatts of power, so it's a huge brown coal-burning unit whose efficiency will be 75% with far less emission of CO2 – 30% less. It meets the stricter requirements of the future European Union regulations.”
This, he added, not only considered lesser CO2 emissions, but also other gasses and metals, like chlorine emissions in water. There is a basis, said Mr. Kineski, for energy resources based on coal, who explained that ENEA is developing wind power, but it wasn't sufficient.
“When we talk about re-industrialization, to give a chance for industry to rebound, industry is really the stable base of the economy and allows for far better momentum to weather economic crisis; an economy based just on services is not capable of that.”
Industry, he added, needs a continuous supply of traditional energy.
The session moderator queried Alan Riley, Professor of Law, City University London, how much the British public supports a cleaner climate and lower CO2 emissions given the potential higher cost of such measures. “Does the society agree to pay higher bills for electricity?” Meanwhile, a nuclear plant is being built and some coal-fired plants are still in operation in the UK.
Prof. Riley explained that there is an understanding in the UK that engaging in renewables development is valuable, despite subsidies, and that there's enormous potential.
Citing a paper by Citibank called “The Energy Revolution Will Not be Televised,” he said that, for example, solar has begun to transform into a freestanding, subsidy-free energy source that will likely play an enormous role in the southern hemisphere – an example of how renewables are changing.
The bigger problem, he cited, is that policymakers obviously have a huge problem with the broader population seeing higher energy bills, as well as the competitiveness issue in the context of energy costs. “The UK is unlike France and Germany; industry gets hit very hard with energy costs as well as consumers, whereas in France and Germany they protect their industrial base.”
Prof. Riley recalled that when European climate change policy was formulated in 2006, there were a number of assumptions, like the ever-increasing oil price. “No one expected the shale revolution to happen, or the oil prices to be where they are today.”
The Energy Union, he said, will bring about a transformation of the European energy and climate change policies: “Not the objective, but how we get there. We will see a greater focus on value for money from subsidy; a greater focus on putting money into R&D rather than into existing renewables; and a greater promotion of CO2 reduction in existing fossil fuels. So I think we're going to see a change in the way we approach it over the next few years to reflect the economic changes going on globally in the global energy markets.”
In that context, Prof. Riley said he sees an opportunity for the coal industry in Poland to explore carbon capture and storage (CCS). “The fundamental difficulty for coal is that, frankly, it has a short future unless we deal with CCS.”
While he conceded that CCS is expensive, he said that extra CO2 produced from CCS could be used for enhanced oil recovery, so that by creating a tax regime that gives credits to coal-fired power power stations, those facilities would essentially receive a subsidy for performing CCS. The cost of that, he explained, is covered by the increased royalties from the additional royalties from the oil or gas fields using the CO2.
“Once you get to a stage where can create something which economically works and you have a number of CCS power stations around Europe, what you can do then is drive down the cost of CCS and make it economically worthwhile.”
Prof. Riley suggested that Poland should discuss such strategies with the UK, which has offshore oilfields that could use that CO2.
Mr. Podsliado dismissed that proposal for CCS, calling it “science fiction in Polish conditions” because of price and the ground “being like Swiss cheese.”
Meanwhile, he was quick to point out that only recently had the US started addressing climate change, while others are hampering European Union policy and have much higher capita emissions per capita. “We believe we are the voice of reason here,” he said. “Let's lower the CO2 emissions, but do it in a reasonable, sound and well-planned way – let's not be hysterical about it, because the results of of such policy can be different than we planned.”
-Drew Leifheit