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Press release: 28 May 2021
The Polish government and representatives of Polish trade unions are today signing a deal to reform the coal industry. But new analysis by environmental law charity ClientEarth argues that the deal is unlikely to get the European Commission’s seal of approval due to State aid compliance issues.
After months of negotiation, the two parties have agreed to maintain hard coal mining operations until 2049 through State aid to be granted to fund the current operations of unprofitable state-owned mining companies, including the Polish Mining Group – the largest coal mining operator in Europe. But the agreement hinges on this State aid being deemed lawful, which ClientEarth believes is unrealistic.
Poland is under growing pressure from markets and the EU to get out of coal as fast as possible. With the coronavirus crisis, Poland’s coal industry – which has been struggling financially for years and has been generously subsidised by the state – is now on a precipice.
ClientEarth lawyer Wojciech Kukuła, who authored the analysis, said: “The negotiations have been quite surreal – all involved are burying their head in the sand and pretending to not see the writing on the wall. Not only is this agreement artificially keeping the dying coal industry afloat, it’s also very unlikely to be approved at EU level.”
The new agreement with miners relies on the assumption that the EU will agree to further subsidies for the mining industry from Polish taxpayers' money. But ClientEarth’s analysis argues that this clashes with EU laws on State aid, which make it clear that granting aid to operational coal mines is not an option.
Additionally, the European Commission has started examining the climate impact of State aid measures in order to align competition rules with the European Green Deal and the goal of climate neutrality by 2050. This makes it even more unlikely that the EU will approve Poland’s new agreement with miners.
Kukuła added: “It’s not the first time that Poland has knocked on the EU’s door asking the bloc to subsidise its coal mines. But the government’s time would be better spent thinking about a fair transition for coal regions and coal workers.”
Read ClientEarth’s new analysis here.
Environmental lawyers at 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. The new owners will not be going ahead with a coal-fired power plant on the site.
ClientEarth is currently engaged in a court case against the operators of the Bełchatów coal plant, the country’s biggest power plant, based on its climate harm and wide-ranging environmental impacts. In a landmark decision last September, a judge demanded the operators of the plant negotiate with our lawyers to swiftly reduce its impact on climate.
In a report published last December, ClientEarth and think-tank Instrat argued that 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.
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.
Under the last State aid programme for the Polish mining sector, negotiated in 2018, the sector is set to receive almost €3 billion in subsidies up to 2023. In April, the Polish Mining Group received a €220 million loan from the Polish government under the temporary coronavirus State aid rules.
ClientEarth is a non-profit organisation that uses the law to create systemic change that protects the Earth for – and with – its inhabitants. We are tackling climate change, protecting nature and stopping pollution, with partners and citizens around the globe. We hold industry and governments to account, and defend everyone’s right to a healthy world. From our offices in Europe, Asia and the USA we shape, implement and enforce the law, to build a future for our planet in which people and nature can thrive together.