The market was not able to switch overnight on its own to coal imports from outside Russia. It was necessary to engage the visible hand of the state to distribute the coal across the country. We could not afford a delayed reaction from market right before the heating season – says Deputy Minister of State Assets Karol Rabenda in an interview with BiznesAlert.pl.
BiznesAlert.pl: The EU embargo on coal from Russia is already in force. How does Poland ensure the security of supply?
Karol Rabenda: Since the beginning of this year, with the intensification after the outbreak of the war, we have taken measures to close the gap on Russian coal. We imported 6 million tons by the end of July. It was mainly thermal coal, as well as coal for households and heating in medium and smaller cities. After the Prime Minister’s July decision we upped the import of coal for households, the energy and heating sectors. By November, we had already imported 10 million tons of coal. By the end of the year it will be about 14 million tons. This secures Polish demand.
Why didn’t we introduce the Prime Minister’s plan in February?
The state owned companies have been working on this since the beginning of the year. Six million tons arrived by the middle of the year, without additional decisions. The PM’s decision made things easier, as money from the state budget could be used, as there were no business reasons to buy coal for stocking during the summer holidays. We were aware of the situation on the global and local market. We knew that private entities that supplied coal to individual customers largely relied on fuel from the Russian direction. The market was not able to switch overnight on its own to coal imports from outside Russia. It was necessary to engage the visible hand of the state to distribute the coal across the country, and this was done at the right time. We could not afford a delayed market reaction before the heating season.
Before the heating season, we heard that there would be a shortage of coal, and now we hear that there may be too much. What does the data say?
This is the rhetoric of the opposition. First, it was about scaring people that there would be no coal, now the problem is that there is too much. Along the way, we heard that coal does not burn. Well, coal is here and it burns, and the final result will of course be visible after the heating season. We do not know what temperatures will be, how much coal will be needed for district heating, what will be the supply of renewable energy. We have taken pre-emptive action, so that there are no problems in these difficult realities of war and Vladimir Putin’s economic aggression. We have coal, so there will be no shortage of energy and heat either in Polish power plants or in the homes of Poles.
Do we need coal saving programs?
The crisis is a good incentive to save in general. However, we are not forced to save for fear of shortages. We have ensured security of supply. We introduced the rule whereby one can buy up to 1500 kg of coal distributed by the government before the New Year’s and then the same amount after. We are making this rule more flexible. There is no need to introduce additional regulations, but the less coal we consume, the more will we annoy Vladimir Putin.
Has the government introduced guidelines for power plants to use less coal?
There are no such guidelines. We operate under the regime set by Polskie Sieci Elektroenergetyczne (PSE – Poland’s grid operator – ed.). Repairs and downtime are planned. This is not a system-wide problem. But, of course, we try to keep a rational approach to coal consumption, how much energy should cost, what stocks we should maintain. We want to manage coal economically.
The level of coal reserves in power plants and heating plants is expected to increase by an average of 40 percent. Why?
This change has been designed to improve energy security. This is the reason why the level set by the regulation will be increased. At present, only one power plant does not have the reserves set by the stricter standards, but this is temporary and the reserves will be replenished. We have enough coal for this season, but we are already thinking about the next one. Let me stress once again – a higher level of stocks will increase energy security. We live in a time when we need to be prepared for various events, including possible disruptions in supply. Next year, it will certainly be easier to build stocks in power plants and combined heat and power plants, including those with limited logistical capabilities.
Coal imports to Poland were also carried out through ports in other countries. Will we need them again?
We imported record amounts of coal to Poland, which meant we had to use the capacity of Polish ports almost at its maximum. That’s why we used ports in other countries. Today, all countries with access to the sea compete for access to transhipment slots. Next season, this pressure may be smaller, one of the reasons being the fact that we will have more time to act, also in the Czech Republic or Austria, i.e. countries without access to the sea. We are already well trained. I hope that next season we will only need to use Polish harbors. The other directions are helpful, but they also have bottlenecks. That means extra cost and time.
How will the private coal market in Poland survive after abandoning the Russian raw material?
These companies will have to make a business decision. The question is whether they will be able to efficiently switch to imports from outside Russia. The war in Ukraine may last a long time. Sanctions on Russian coal may stay with us for longer. Price stability, even at a higher level than before the war, should provide such an opportunity. If this does not happen, the entities under the control of the Ministry of State Assets will ensure the supply of coal to Poles also in the next heating season. Coal imported from Russia by private entities was cheaper, but it was not the only option. It was popular because of the business relationships built over the years. We had to replace this system within a few months.
Is domestic mining an alternative?
If we count the extraction of coal in Polish mines for household needs in the amount of 3 million tons with the prospect of increasing to perhaps 4 million tons, then even with greater efficiency, we will still need to get almost equally as much from external markets. Just not from Russia. Even if we increased the domestic extraction, the issue will not be solved completely. We will see whether after the current crisis the trend of phasing out coal in households will accelerate, or slow down. We do not know the answer to this question today. It seems that consumers will be phasing out coal even faster. So, over time, the demand for coal may decrease. One thing is certain – coal will be the basis of our energy security for a long time to come. Today it has become apparent that we were right when we decided not to get carried away with the notion that it’s best to drop coal almost overnight. But it remains to be seen how much we will be investing in mining.
Interview by Wojciech Jakóbik