Press release: 7 December 2020
Poland’s energy sector shakeup would torpedo EU climate targets – report
The Polish government’s provisional plan to restructure the country’s coal assets will bring it far out of line with the European Union’s climate commitments, a new report by environmental law charity ClientEarth and think-tank Instrat has found.
Coal still counts for about three-quarters of Poland's electricity production and Poland's largest utility PGE still generates about 80% of its power from coal.
But Poland is under growing pressure from markets and the EU to get out of coal as fast as possible.
State-run PGE has come up with a plan to hive off its coal-fired power assets. According to leaks, the restructure would see PGE merge with peers Tauron and Enea after offloading their coal assets into a new, separate state entity.
In their new report, environmental experts at ClientEarth and Instrat warn that the restructuring plan does not make sense from either a climate, legal or economic perspective and believe it needs major changes to bring it in line with the latest EU policies.
Pawel Czyzak, an economist from Instrat, said: “The restructuring plan is not only inconsistent with EU climate policy and relatively unambitious in terms of closing coal assets, it will mean multi-billion losses for the state.”
The report showed that if the plan is implemented, Poland would still be generating 92.2 terawatt hours (TWh) of electricity from coal – more than five times more than it should according to the new EU climate policies.
And while PGE would gain 31 billion zlotys from offloading coal assets, the Polish state would lose 26.5 billion zlotys as it would also take over the debt of PGE’s coal unit.
ClientEarth lawyer Wojciech Kukuła said: “Keeping coal artificially afloat prevents Poland from properly tapping into its renewable energy potential. Favouring fossil fuels like this costs the state – and taxpayers – a great deal of money, while jobs could instead be being created in the renewable sector.”
ClientEarth experts additionally warn that the restructuring plan may also clash with EU State aid and competition laws.
Kukuła added: “Poland’s energy market is already extremely concentrated. The proposed mergers would result in a near total monopoly which may be unlawful. It’s hard to imagine how this could benefit consumers, in a country where electricity prices are already the highest in Europe.”
A recent report by think-tank Ember found that Poland’s wholesale electricity prices are now the most expensive in the EU.
Notes to editors:
Environmental lawyers ClientEarth have long been at work trying to move Poland away from climate-damaging coal and towards cleaner sources of energy.
The charity won two legal cases over the construction of a new coal plant, Ostrołęka C. Since then, the joint sponsors of the plant Enea and Energa have announced they will suspend funding to the plant over economic concerns, due to changing market circumstances triggered by climate policy, and the continued flight of global capital away from coal.
ClientEarth is currently engaged in a court case against the operators of the Bełchatów plant, the country’s biggest power plant, based on its climate harm and wide-ranging environmental impacts. In a landmark decision this September, a judge demanded the operators of the plants negotiate with our lawyers to swiftly reduce its impact on climate.
In a report published last July, ClientEarth and economics think-tank WiseEuropa zoomed in on public subsidies granted to Poland’s energy sector. They found that the massive financial support from the government, nearly €1.6 billion per year, does not boost the development of green energy as most of it goes to coal plants.
ClientEarth is a charity that uses the power of the law to protect people and the planet. We are international lawyers finding practical solutions for the world’s biggest environmental challenges. We are fighting climate change, protecting oceans and wildlife, making forest governance stronger, greening energy, making business more responsible and pushing for government transparency. We believe the law is a tool for positive change. From our offices in London, Brussels, Warsaw, Berlin and Beijing, we work on laws throughout their lifetime, from the earliest stages to implementation. And when those laws are broken, we go to court to enforce them.