Data
License: All rights reserved. Credit: Will Rose

What would the cost of a new push for coal in Poland be?

Christine Ottery
EU Energydesk editor. Previously worked for the Guardian and New Scientist.
License: All rights reserved. Credit: Greenpeace

A new study by thinktank Warsaw Institute for Economic Studies (summary in English here) found Polish subsidies for coal amounted to 170 bn PLN (£33.7bn) between 1990-2012.

Including externalities - such as health impacts from coal plant emissions - the cost of Polish coal is comparable to current renewable costs. But the Polish Prime Minister recently claimed that not pushing forwards a Renewables Law has “saved Polish families billions of Złotys”.

The research comes out amid fears of a new 'gas war' with Russia, which has led Polish PM Donald Tusk to call for the ‘rehabilitation’ of coal in Poland and the EU. 

Last year the country imported 60% of its gas from Russia and though Poland already gets some 90% of its electricity from coal the Prime Minister is keen to shore up the industry despite calls for cuts to Poland's carbon emissions.  

Increasing amounts of coal is imported from Russia, China and the US. In fact Poland's former state geologist predicted that within the next 15 years the majority of coal burnt in Poland will be from imports rather than domestic supply. 

How much does coal cost?

Subsidies to the coal industry over the years have been substantial. Poland has spent around 170 bn PLN (£33.7bn) on support for coal power cumulatively between 1990 and 2012, according to a report by the  Warsaw Institute for Economic Studies for Greenpeace.

Key: The grey wedge is coal mining and energy production subsidies, the orange is support for co-firing, the blue line is subsidies for old hydropower and the green is support for renewables

 As you can see in the graph above, in comparison renewables subsidies have been tiny slice of this - but they only began in 2005.

Between 2005 and 2012 the coal mining and energy production industry received subsidies of 69 bn PLN (£13.7bn), whereas the renewables industry (excluding old hydro) received 7 Bn PLN (£1.4) - in other words coal received over five times more subsidies.

The industry has also benefited from a range of indirect subsidies.

 

This means that since 2005 coal subsidies have been much higher than before - around 6bn PLN per year. The subsidies, which had been previously composed of mining subsidies were also now more diverse including free EU carbon trading certificates, certificates for co-firing biomass and other EU subsidies.  

The total amount of coal subsidies in total was about 0.5% of GDP per year in 2005-2012.

State subsidies to coal miners’ pensions are also significant with the state spending 2.9 bln PLN (£570m) per year in 1990-2012 to provide pensions to miners who often suffer in later life as a result of their work. 

Costs to consumers?

In 2012, each Polish citizen supported the coal industry by paying 93 zloty (£18) as part of their bills. This paid for free emissions allowances, stranded costs of long-term contracts termination, and green certificates for co-firing biomass in coal plants - in total adding up to two-thirds of the financial subsidies the coal industry receives.  

In addition, they also contribute to mining restructuring costs and the special social security system for miners out of their taxes/ state support.

In what other ways do Poles pay for coal?

The report concluded that taking into account the 'external' costs coal power in Poland is nearly as expensive as renewables subsidies.

Externalities in this context mean the huge health and environmental costs associated with emissions from coal plants (modeled from data on NOx, SOx, fine particles etc emitted - but not CO2 and global warming).

Key: black = coal subsidies; red = coal subsidies and externalities; blue = old hydro subsidies; green = renewables subsidies.

Support for the production of electricity and externalities by source of energy in 1990-2012 (in PLN'10/MWh)

Taking these into account each Polish citizen pays on average 899 PLN (£180) per year (2012 figures) in externalities from the coal industry, according to the Warsaw Institute for Economic Studies analysis - around half of these are from health-related impacts. 

Read more on coal-related air pollution:

These externalities have been decreasing as emissions standards have been rising. But they are still among the highest in Europe, as Poland has some of the most heavily polluting plants in Europe, including Belchatow, the highest emitting power plant in the economic bloc

Excluding externalities renewable energy in Poland is still more expensive than existing coal plants - which have largely paid off the costs of construction.

The costs of new domestic coal plants would be more expensive than onshore wind today, according to a study by the German Frauhnhofer institute and a separate report by the UK government. In future high carbon emitting generation is likely to face rising costs linked to the carbon emissions it produces.

What about climate change?

Of course, there are also carbon emissions to consider - which will cause a future economic cost. Poland has 56 power plants running and emitting some 152Mt (Megatons) of CO2 a year.

According to a Greenpeace analysis, if Poland embraced energy efficiency and renewables, by 2050 it could reduce its CO2 emissions by 16% (on 2010 levels). In this ‘Energy Revolution’ scenario CO2 emissions would fall from 309 million tonnes in 2010 to 36 million tonnes in 2050 - making Poland’s CO2 emissions 90% below 1990 levels.

But Poland has attempted to water down or at least postpone the decision on the new European 2030 climate and energy proposals announced in January – and it was the only country to openly oppose targets for carbon reductions.

Green NGOs are calling for binding 2030 targets of at least 55% emission reductions, 45% renewable energy and 40% energy efficiency - which Poland opposes. 

And jobs?

Poland's coal industry is deeply embedded in the economy and has a strong trade union movement.

As environmental law firm Client Earth's Polish policy officer Michał Olszewski told Energydeskpolicies supporting Poland's coal and lignite industry could come from a fear that the workers - dependent on the industry for their jobs - will revolt. 

There are tens of thousands of coal miners working in Poland, many of them in the Upper Silesia region in the south-west of the country.

Taking into account the rest of the sector it means the coal industry provides a livelihood to around 100,000 Poles.

The same can't yet be said for Poland's incipient renewables industry (which employs around 34,000). A Greenpeace study which found policies to halve coal use by 2030 through a greater investment in renewables and efficiency could generate employment similar to current levels in the coal industry, however these may not be in the same region or require the same skills. 

*Additional reporting: Iwo Łoś, Greenpeace Poland climate and energy analyst

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