Bituminous coal reserves in Poland have exceeded 3.5 million tons in July. A year earlier it was 1.179 million tons. The surplus, which offers security, has been made possible thanks to warm winter, savings and emergency purchases. Russian coal has disappeared and is unnecessary. It has not been revealed what will happen to coal subsidies – writes Wojciech Jakóbik, editor-in-chief at BiznesAlert.pl.
Poland was the first country to impose an embargo on Russian coal in response to Russia’s invasion of Ukraine. The president’s signature on the relevant legislation was submitted on April 14, 2022. The EU embargo came into force on 10 August 2022. This means that countries outside Poland had more time to gather supplies for the winter using Russian fuel, and Poles had to obtain emergency supplies from around the world.
Emergency purchases made by PGE Paliwa and Węglokoks were announced on August 15. In July 2022 coal reserves amounted to 1.179 million tons against 1.466 million in June. In September 2022, they continued to drop to 1.024 million tons, to increase significantly in October to 1.435 million tons until they peaked in December at 2.173 million tons. This was possible thanks to a mild heating season and savings resulting from record prices caused by the energy crisis that lowered demand, and emergency deliveries that upped supply.
In April 2021, after the 2020 pandemic, Poland had 5.557 million tons saved up. The end of the 2021/22 heating season brought 1.268 million tons of hard coal reserves in April 2022. Stocks in April 2023 reached 1.930 million tonnes, close to the level of April 2018, when there were 1.816 million tonnes and their level was not affected by the pandemic or the energy crisis. Thus, it can be considered that the intervention, in addition to temperature and savings, allowed us to finish the 2021/22 heating season with stocks at a usual level.
The 3.542 million tons collected in July 2023 is lower than the 4.924 million tons collected in July 2021 and the 7.888 million tons collected in July 2020, when declining demand in the wake of the pandemic and the accelerating climate policy suggested an excess of coal and smaller purchases. Stocks in July 2019 reached 4.537 million tons and in July 2018 only 2.138 million tons. The surplus after the last heating season is therefore not unusually high compared to historical data.
Poland still derives about 70 percent of its energy from coal, including hard coal. The regulation of the Minister of Climate and Environment of November 2022 obliges producers of energy from bituminous coal to maintain stocks in the amount equal to three days of consumption in the case of obtaining fuel from a nearby mine, fifteen days if it comes from a landfill closer than 10 km and twenty days if it comes from a greater distance. Poland’s decision to be the first to impose an embargo on Russian coal was made for political reasons, because the main political parties argued over carts filled with coal that were coming to our country despite the war in Ukraine. Emergency deliveries were delayed by several months, but still justified. If it were not for the warm winter, the stocks might not have been enough without the emergency purchases, as their record low level in the 2022 summer was due to the embargo.
High coal stocks in July 2023 suggest that there will be no need for a government intervention this heating season, and stocks at power plants and heating plants should be sufficient. However, much still depends on the temperature outside the window and the amount of coal saved. On September 4, the price of coal on the ARA exchange reached USD 118.75 per ton against USD 108.1 a month earlier. However, it is worth recalling that on July 5, 2022, it cost USD 320.15 per ton, and on July 5, 2021 – USD 119.1 per ton. The current level is therefore close to that before the Russian invasion of Ukraine and seems to be normalizing. It is not clear whether the coal allowance introduced in 2022 of PLN 3,000 for purchases of up to three tons of coal per household will be maintained in the 2023/24 heating season. „Currently, the situation on the energy raw materials market has stabilized – energy sources are available at acceptable and stable prices,” said Minister of Climate and Environment Anna Moskwa, as quoted by the Polish Press Agency, adding that the government was still analyzing the situation. A decision about not subsidizing coal purchases would be politically unpopular, so it may be announced after the election, but it will be justified if the market situation improves further.