Polish Briefing 31 January, 2019 9:00 am   
COMMENTS: Mateusz Gibała

Polish Briefing: The state of the energy sector is the most important problem of Poland’s economy

What goes on in Poland on the 31st of January.

The state of energy is the most important problem of the Polish economy

Former Minister of Economy prof. Janusz Steinhoff took part in an expert panel devoted to fossil fuels in Poland that took place in the Supreme Audit Office. There he pointed on the necessity of leaving the Polish power industry away from coal monoculture and expressed a positive attitude towards changing the direction of Polish gas policy towards the diversification of supply sources.

Steinhoff reminded that the fact that a document such as the energy strategy was published is positive: – Poland has to answer the question about the future of its energy, the maintenance of coal monoculture is unsustainable. Forecasts of rising CO2 emission prices have a dramatic impact on electricity prices in Poland. We have an average of more than half the CO2 emissions from the EU average. This influences the standard of living of citizens and the competitiveness of the economy. This is the biggest economic and social problem. These problems have to be solved. It can not be assumed that in Silesia we will extract the same amount of coal as currently, because there will be less and less of it, and this will affect the costs. We will be an ever larger importer of coal, and the lack of involvement of the Polish government in seeking a foreign investor for the Polish mining industry is also puzzling. I am afraid that PGG will not have the money to invest. If coal prices fall, PGG will be unprofitable, and it must be remembered that hard coal mining receives aid through transfers to the pension system – he said.

Restructurization of the mining sector

Steinhoff reminded that Polish mining underwent very difficult social restructuring processes: – Since 1999, 300,000 people have left the industry. These processes must be carried out consistently and sensitively, but they can not be stopped. It would be irrational and irresponsible if we would maintain the dominance of solid fuels. We have to go away from this and support the diversification of the mix, and while ensuring energy security, we need to ensure that prices are competitive and develop cross-border connections. Where there is no competition, there is no incentive to reduce costs. In state administration, you can not mix two orders: ownership functions and legislative functions, it always hurts the economy – said the former Minister of Economy.

He also stressed that one should positively assess what has been happening in Polish gas policy for 10 years in terms of becoming independent from one supplier, which in his opinion had a good impact on the market: – PEP 2040 is one of the most important government documents of this term. The increase in energy prices will, however, influence the standard of living. Polish industry may be less competitive. At the moment, sophisticated regulatory functions are replaced by a crude ownership policy. We should decide whether we will build a nuclear power plant that has pluses and minuses; wind and photovoltaic are getting cheaper. The proceeds from CO2 emission allowances, of course, remain in the Polish budget, but they should be allocated for the restructuring of the power system – he said.