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Coal-rich Poland faces winter of energy discontent

https://www.dw.com/en/coal-rich-poland-faces-winter-of-energy-discontent/a-62759074

Poland uses 10 million tons of coal a year to heat households — a whopping 87% of all coal consumed in EU homes in 2019, according to the Warsaw-based independent think tank Forum Energii. About half of this is extracted domestically, while Russia used to make up about 40%, or 3.9 million tons a year.

But Poland has banned Russian coal imports since April and now the country is scrambling to find new sources.

“They used Russian coal because it was cheaper. Polish coal is very expensive to mine, because it is buried very deep,” Piotr Siergiej, a spokesperson for environmental group Polish Smog Alert, told DW.

Aleksandra Gawlikowska-Fyk of Forum Energii said Russian coal is also used by heating plants in the eastern part of Poland where it cannot be simply swapped for Polish coal. Russian coal is of higher quality containing less sulfur, she told DW.

Part of the problem is that Poland, finally and reluctantly, agreed to phase out coal in order to meet the EU’s carbon emissions targets. In November 2021, Poland also made a pledge to the COP26 Climate Conference in Glasgow to exit coal and stop building or investing in new capacity.

With wholesale prices now over 2,000 zlotys ($430, €420) per ton, plus transport and distribution costs, many Polish users are expected to fall into energy poverty when the winter arrives, meaning they can no longer pay their heating bills. At risk are those on the lowest incomes.

The government plans to give end-users a one-off cash subsidy and is ordering state-owned coal companies Weglokoks and PGE Paliw to cofinance cheaper coal for Poland’s poorest. But experts believe this isn’t enough and may not go where it is most needed.

Barbara and Witold Walesa — a retired couple who lives in the small town of Deblin, 100 kilometers (60 miles) south of Warsaw — have recently shifted to natural gas as their main fuel source for heating. They use coal only as a top-up reserve when they need it.

“It’s up to about 2,500 zlotys, about four times higher than last year,” Barbara told DW. “We are probably OK, but some won’t be when it gets cold.”

Reserves running low
These days, Poland has the lowest coal reserves since World War II. Stockpiles — which rose to a high of 8 million tons during the pandemic — almost halved to 4.4 million tons in August, according to data from Poland’s Industrial Development Agency.

The country’s largest producers, including the Polish Mining Group (PGG), have reportedly been selling off their reserves and don’t have adequate supplies of coal ahead of peak use this winter, according to data published by the Polish energy-market regulator URE recently. Now they are trying to renegotiate their long-term contracts with the country’s energy utilities.
“Polish power plants have already started to reduce production, which has contributed to a decline in electricity exports. In July, for the first time in many months, Poland was a net importer of electricity,” Bartlomiej Derski from the energy publication Wysokie Napiecie told DW.
Expensive new sources and costly handouts
Poland is busy looking to buy coal from Colombia, Australia, South Africa and Indonesia at wholesale prices of 2,000 zlotys per ton, plus transport and distribution costs. But experts doubt enough coal can be procured in the few months before the heating season starts.

“Polish mines cannot increase production in a few months, it’s impossible,” said Piotr Siergiej, and Bartlomiej Derski added that Poland has “no other choice” but to “import coal from countries where it can be bought.”

Efforts to boost coal imports, however, are hampered by limited transport capacity as Poland’s Baltic Sea ports and cross-border railway links are currently clogged with military and food shipments to and from neighboring Ukraine.

To help the country’s more than 38 million population during the coming winter, the government in Warsaw is planning to offer households a one-off payment of 3,000 zlotys. Coupled with other relief measures, the package is estimated to cost a total of 23 billion zlotys.

Piotr Siergiej believes the package is “unfair” and will create “even more social conflict” as the allowance is not indexed to people’s incomes. Moreover, it’ll stoke coal price inflation. “Prices will get higher as coal sellers raise prices because of more money in people’s pockets, but still limited supply,” he said.

He now expects an ordinary household to pay 12,000 zlotys for about 4 tons of coal it normally needs for the heating season, of which only 25% is covered by the state subsidy. Apart from that, about 80% of Polish households won’t get any support because they don’t use coal.

“I can only assume there is a very strong coal lobby in government circles,” he added.

What are the alternatives?
The Polish government is also thinking about lifting a 2020 ban on the worst-quality coal, seeking to suspend restrictions on its domestic production for 60 days. In addition, it has “authorized” people to forage for firewood in forests.

“If the winter is frosty, the amount of garbage incinerated in homes will probably increase. Some households will probably also burn more wood,” Derski said, adding that the fuel supply for Polish power plants might also depend on the energy situation in France.

“With the shutdown of nuclear power plants in France, demand for gas and coal increased significantly throughout Europe. If they return to work, Poland will be able to import more electricity from abroad and thus reduce coal consumption in domestic power plants.”

Speeding up Poland’s coal phaseout
But Poland’s coal supply problems are not just due to decreasing domestic production. Siergiej said there has been a lack of strategic long-term planning in the sector, with the government acting “chaotic and ad hoc, from wood burning to subsidies.”

“The decision of the government to introduce an embargo on coal imports from Russia in April was not preceded by analyses. Politicians did not realize that coal supplies to households cannot be replaced quickly and easily,” he argued, noting that domestic boilers require larger pieces of coal than those burned in power plants.

Gawlikowska-Fyk said that “adequate imports” of coal for household should have been started “many months ago.” The current supply problems, however, could serve as “an argument for a speedier coal phaseout” and could eventually turn Poland into “one of the biggest markets for heat pumps in Europe.”
Source: DW

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