Coal-rich Poland faces a winter of energy discontent | Business | Economic and financial news from a German perspective | DW


Poland uses 10 million tonnes of coal a year to heat households – 87% of all coal consumed in EU homes in 2019, according to the Warsaw-based independent think tank Energii Forum. About half of this is mined domestically, while Russia accounted for about 40%, or 3.9 million tonnes per year.

But Poland has banned imports of Russian coal 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 extract, because it is buried very deep,” Piotr Siergiej, spokesman for Polish environmental group Smog Alert, told DW.

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

Part of the problem is that Poland eventually and reluctantly agreed to phase out coal in order to meet EU carbon emissions targets. In November 2021, Poland also committed at the COP26 climate conference in Glasgow to phase out coal and stop building or investing in new capacity.

With wholesale prices now above 2,000 zlotys ($430, €420) per tonne, plus transport and distribution costs, many Polish users are set to fall into fuel poverty as winter sets in, which means that they will no longer be able to pay their heating bills. The most vulnerable are those with the lowest incomes.

The government plans to give end users a one-time cash subsidy and orders state-owned coal companies Weglokoks and PGE Paliw to co-finance cheaper coal for Poland’s poorest people. But experts say that’s not enough and may not go where it’s needed most.

Barbara and Witold Walesa – a retired couple who live in the small town of Deblin, 100 kilometers (60 miles) south of Warsaw – have recently switched to natural gas as their main source of heating. They only use the coal as a supplementary reserve when they need it.

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

Barbara Walesa from Deblin in Poland in front of her charcoal oven

Barbara Walesa and her husband Witold said they won’t be using their charcoal oven much this winter due to high coal prices

Reserves are dwindling

Today, Poland has the lowest coal reserves since World War II. Stocks – which peaked at 8 million tonnes during the pandemic – almost halved to 4.4 million tonnes in August, according to data from the Polish Industrial Development Agency.

The country’s largest producers, including the Polish Mining Group (PGG), have reportedly sold off their reserves and lack sufficient coal supplies ahead of peak usage this winter, according to data released recently by Poland’s market regulator. of ERU energy. . Now they are trying to renegotiate their long-term contracts with the country’s energy utilities.

“Polish power plants have already started to reduce their production, which contributed to a drop in electricity exports. In July, for the first time in many months, Poland was a net importer of electricity,” said said Bartlomiej Derski of energy publication Wysokie Napiecie. DW.

A coal miner monitors a machine grinding coal from a wall about 1,000 meters below the surface of the KWK Pniowek coal mine in Poland

Polish coal is of high quality and used for coking in steelworks

Expensive new sources and expensive documents

Poland is seeking to buy coal from Colombia, Australia, South Africa and Indonesia at a wholesale price of 2,000 zlotys per ton, plus transport and distribution costs. But experts doubt that enough coal can be bought in the few months before the start of the heating season.

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

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

To help the country’s more than 38 million people over the coming winter, the Warsaw government plans to offer households a one-time 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 that the package is “unfair” and will create “even more social conflict” because the allowance is not indexed to people’s income. Moreover, it will fuel the inflation of coal prices. “Prices will rise as coal sellers raise prices due to more money in people’s pockets but still limited supply,” he said.

He now expects an ordinary household to pay 12,000 zlotys for around 4 tonnes of coal they normally need for the heating season, only 25% of which is covered by the state subsidy. Apart from that, about 80% of Polish households will not receive any help because they do not use coal.

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

What are the alternatives ?

The Polish government is also considering lifting a 2020 ban on the worst quality coal, seeking to suspend restrictions on its domestic production for 60 days. Moreover, he “allowed” people to look for firewood in the forests.

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

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

Accelerating the phase out of coal in Poland

But Poland’s coal supply problems are not only due to the decline in national production. Siergiej said there was a lack of long-term strategic planning in the sector, with the government acting “chaotically and ad hoc, from burning wood to subsidies.”

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

Gawlikowska-Fyk said “adequate imports” of coal for households should have been launched “several months ago”. The current supply problems, however, could serve as “an argument for a faster phase-out of coal” and could eventually make Poland “one of the biggest markets for heat pumps in Europe”.

Edited by: Uwe Hessler

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