Environment Winter Package 17 May, 2017 11:00 am   
Editorial staff

Challenges of Winter Package (INTERVIEW)

We are talking to Aleksander Galos on how the EU’s winter package will impact the Polish energy sector and industry. Galos is a solicitor, partner at Kochański, Zięba and Partners Law Firm and head of the firm’s Energy, Natural Resources and Chemical Industry Practice. When it comes to the winter package, the public debate mainly focused on the 550g/1kWh limit on emissions, which may pose a risk to Polish coal power plants. However, the document offers a wide array of solutions that will probably have a massive impact on the economy. What other regulations does it propose and aren’t they more important that the emissions cap?

Aleksander Galos: In my opinion, from the Polish perspective, the 550gCO2/1kWh rule plays a key role, because in some sense Poland is its addressee. No other EU country will be impacted by it as much as Poland. Of course, other regulations in the package are equally important and in some aspects, even revolutionary. Nevertheless, some countries may voice their concerns, especially when it comes to regulations that tighten integration and develop a common energy market. For instance, the CEO of 50Hertz Transmission, a German grid operator, quite explicitly distanced himself from propositions regarding the integration of grid operators.

It seems that other Member States will focus on different regulations, that may be troublesome for them, but the 550gCO2/1kWh issue will not be a problem from their perspective. I am under the impression that Poland is being left alone with this problem, at least for now. We should ask whether this was done on purpose, or if it is just a coincidence.

This regulation is often portrayed by the media as surprising and sudden. Looking from a legal perspective, is there a hidden agenda here?

This principle can be scrutinized at different levels: political, procedural, or purely legal. Each of these can be considered separately, but the full picture is available only if we take into consideration all three. In my opinion, the authors of this article do not really want it to enter into force. Common sense suggests that it is possible, perhaps even probable that it will play a role in the negotiation process with Poland. I am personally wondering why at the last moment, the lawmakers drastically and categorically de facto opposed one member state by introducing the new 550gCO2/1kWh measure, which had not been consulted on earlier.

Perhaps this is about the regulations which determine the European Commission’s participation in shaping the Member States’ energy mix. Would winning negotiations on scrapping the 550g rule force us to give up on the EC issue?

I cannot rule out that this is the case. However, why would it be about Poland only, other countries would be affected by this regulation as well? They could be opposed to such a big appetite for quick integration. Actually, 550g has yet another effect. It unequivocally stigmatizes our country and its development plans. At this moment it seems this is related to the wider negotiation context. The EC has some doubts about plans of the Polish coal-based energy sector. Specifically, it is concerned about support mechanisms for coal power plants, as it is making a lot of effort to move away from such energy sources. Their proposal is a major obstruction to that kind of thinking.

Is this how the EC wants to intervene in the Polish energy policy?

I think yes.

Is this legal?

On the EU level – yes, provided everybody agrees. We need to remember that a few weeks ago a new voting method in the Council kicked in. The Niece Treaty rules are no longer valid, which means the Member States cannot use a veto. In other words, if other states agree to such solutions, which interfere with energy policy, they will be legal. Since only Poland is against this, the odds are high that the regulation will be adopted.

It seems Poland is alone. If Warsaw wanted to press ahead with a different model, or remove the regulation, it would have to find supporters. This can be done in exchange for concessions. On the outside, it looks like there is no support from our partners, even from the closest ones, e.g. the Visegrad Group. The majority perceives the 550 g rule as a kind of decarbonization, as something that can be done.

Only Poland is against decarbonization in the EU?

At this moment, my observations of the other countries lead to such a conclusion.

Summing up, if this is just a negotiation tactic, a ploy to back us into a corner, is the EC putting a gun to our head to force decarbonization on us?

I suspect they are not putting a gun to the head, just showing they have one, and they are ready to use it. The Commission is very pragmatic, the officials want to close deals instead of creating new conflicts. They are very goal-oriented. It cannot be ruled out that this is their way of exerting negotiation pressure on Poland, the question is what for.

It seems unrealistic to believe we could give up coal entirely, so perhaps the goal is to reach a compromise, at least from the EC’s perspective. For instance, our yes to modernizing 200 MW coal units, would be some kind of a solution for the transition period that would satisfy the EC’s political and economic expectations. On the one hand, their lifespan would be limited, but on the other they would be replaced with capacities accepted by the EU.

Would this compromise mean that Poland agreed to partial decarbonization?

It would mean Poland is accepting some steps that eventually lead to it. This is not about backing us into a corner, this is more about forcing Poland to tidy up its energy policy documents. We have an existing and binding strategy that the current government does not support, we have Morawiecki’s plan, which offers solutions for the energy sector, but in a general way. However, we do not have a single and valid strategic document.

This might be yet another reason why the EC is showing Poland, in a radical way, that it does not know what our energy industry plan is. The Commission sees this as a problem. I am not trying to defend it. I am just trying to demonstrate that currently the EC needs to rely on political statements that sometimes change, such as those on nuclear energy. A strategic document would be an advantage that they may want to create, especially that the government announced its preparation. This might be one of the issues.

We also need to remember that we have a lot of time, because this does not have to be solved within one or two months, or half a year. This is an EC proposal, so decisions will be made by states. A certain framework is on the table, but the final draft will be negotiated by government leaders. Considering what I said earlier about the new voting rules in the Council, which necessitate some kind of a consensus, this situation is comfortable from the EC’s perspective. It allows it to shift responsibility for the final shape of the project. The EC proposes certain solutions, but will accept every decision made by European leaders. This is why it is important for Poland to win allies and secure a majority, instead of staying in a minority and putting everyone else in an uncomfortable situation.

Interview by Wojciech Jakóbik