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A second chance for coal regions in the energy transition

At the end of June, the European Commission launched the Just Transition Platform (JTP), a tool to help Member States accessing over 150 billion euros of funds. In particular, the online Platform will provide technical and advisory support for public and private stakeholders in coal and other carbon-intensive regions, with easy access to information on funding opportunities and sources of technical assistance.

“Our Green Deal ambition is to demonstrate a new model for inclusive transformation based on a just transition,” commented Executive Vice-President for the European Green Deal, Frans Timmermans.

“As we rebuild our economies and societies, we owe it to our children and grandchildren to grasp the opportunity to build a more sustainable future. With the Just Transition Platform, we can start making this a reality.”

Specifically, a platform for coal regions in transition has been created, to assist European Union countries and coal regions tackling the challenges related to the transition to a low carbon economy. It aims to support public administrations and other relevant stakeholders by connecting them, delivering technical assistance and providing supporting resources.

Who is on track…

A historic moment for the Czech Republic. After fifty-three years of operation, the 440 megawatts (MW) Prunéřov I coal power plant is now shutting down. Czech utility company ČEZ, owner of the plant, is continuing to pursue its strategy of a gradual transition to low- or zero-emission production of electricity, based on renewable sources.

“The location should, however, continue to serve as an important base for modern and environmentally-friendly energy trends in the north of Bohemia,” said Otakar Tuček, director of the Tušimice and Prunéřov power plants. “A steam-gas cycle like the one operated by ČEZ in Počerady could come into consideration, or a conventional gas boiler room […]. Other possibilities include solar parks on the plots of land left after the demolition work, for example instead of the cooling towers. Various battery storage sites for electricity, large hot water storage tanks have also come under consideration.” 

On the other hand, the country that has made the most impressive progress in accelerating its coal phase-out is Greece. As underlined by László Szabó, Director of the Regional Centre for Energy Policy Research (REKK), Greece set out its revised National Energy and Climate Plan (NECP) to leave only 660 MW of lignite capacity after 2023. Greece also has higher renewables penetration complemented with natural gas-based technologies in its energy portfolio.

Additionally, Hungary became the first country within the Central and Eastern European region to pass a law that confirms climate-neutrality by 2050 as a legally binding obligation. The country is planning to phase out coal-fired electricity generation by 2030 to help reduce emissions and tackle climate change.

Last year, President János Áder announced that Hungary will increase its solar power capacity ten times by 2030 and 90 per cent of its electricity production will be carbon-free.

“By 2030, Hungary will be one of the few Member States that will not only be able to meet the targets of emission reduction in the non-ETS sectors such as transport, building, waste management and agriculture but is expected to meet them even earlier,” claimed Péter Kaderják, Minister of State for Energy and Climate Policy.

Hungary’s plans to phase out coal-fired generation would require the transformation of the Mátra Power Plant, which today provides for 17 per cent of the country’s electricity. The plant management set out several options for the transformation of the facility including a 500-MW combined cycle gas turbine power plant (CCGT), solar units, processing communal waste into energy and electricity storage technologies.

…..and who is not

Yet, the most coal-dependent country in CEE is still Poland. The share of coal and lignite in the country’s electricity generation amounts to almost 80 per cent, with the draft Energy Policy to 2040, aiming to reduce it to 60 per cent by 2030.

“As a country, we certainly have to make efforts to gradually reduce our dependence on coal and develop new technologies, while prioritising renewable energy sources”, said Michał Michalski, President of the Management Board and CEO of Polenergia, the largest Polish, independent and vertically integrated energy group.

Several Polish companies agree that some changes must be made. In this regard, major oil refiner and petrol retailer PKN ORLEN has concluded the acquisition of ENERGA Group, which comes with the Ostrołęka power plant, supposedly one of the last coal-fired thermal power stations in Poland. Early in May, the company confirmed its decision to move further with the investment only under the condition of switching the plant to gas-based technologies.

However, Poland may take 25 years to phase-out coal, much later than what envisioned by the European Green Deal.

“Coal exit is not realistic by 2030,” said the CEO of Poland’s top power producer PGE, Wojciech Dabrowski, quoted by Bloomberg, pointing to energy security requirements and the need to have backup power generation capacity when the wind doesn’t blow and the sun doesn’t shine.

According to Mr Dąbrowski, additional EU funds are necessary to support the energy transformation in the most sensitive areas. 

“At least 80 per cent of the Just Transition Fund should be made available to coal regions because they are facing the greatest challenges,” he emphasised during an online debate about the JTP and the European Green Deal.

Also, Serbia is holding on to coal as a strategic pillar of its energy mix as coal production increased by 5.3 per cent on an annual basis in the first four months of 2020. Moreover, President Aleksandar Vučić announced a 500 million euros investment in the development of the Radljevo-Sever open-pit coal mine in the Kolubara mining basin.

Also, state-owned power utility Elektroprivreda Srbije (EPS) signed a preliminary agreement with PowerChina for the construction of the Kolubara B thermal power plant, a project that appeared to be history after the European Bank for Reconstruction and Development (EBRD) abandoned the project in 2013 citing its policy shift away from coal. But two years ago, the idea of the new bock was revitalised by the Minister of Mining and Energy.

Clean potential of coal

Although coal must die, coal regions don’t need to. On the contrary, they can play an active role in the energy transition.

Currently, coal accounts for about a fifth of the total electricity production in the EU. It is also a significant economic driver, providing jobs to around 230,000 people in mines and power plants across 31 regions and 11 countries. Within Central and Eastern Europe, the coal regions actively participating in the EU initiative are the ones located in Poland, the Czech Republic, Romania, Greece, Slovakia and Slovenia.

According to the Clean energy technologies in coal regions report, coal regions do not have to stay behind in the frame of a continued economic and social evolution. The clean energy potential in coal regions can enable them to be active participants in the energy transition and move, in many cases, from a single- to a multi-industry model. Coal mines located in the coal regions in transition could become attractive locations for conversion into the wind and solar PV sites and facilitate the regional transition.

Poland, for example, appears among the leading countries when it comes to offshore wind potential.

“Access to the Baltic Sea offers fairly good wind conditions and, with the Polish shipbuilding sector looking for new business opportunities, this creates the right momentum,” Aleksander Szpor, Head of the climate and energy team at the Polish Economic Institute, wrote for CEENERGYNEWS.

Furthermore, as the EU’s climate bank, the European Investment Bank (EIB) aims to encourage cities and regions in Central and Eastern Europe to keep reducing their carbon emissions, supporting new industries that do not hurt the climate.

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