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Speeding up the energy transition in CEE – interview with Grzegorz Zieliński, Director, Head of Energy Europe for the EBRD

Grzegorz Zieliński will be one of the speakers of the Budapest Climate Summit, to be held on 7-8 October 2021.

In 2020, the European Bank for Reconstruction and Development (EBRD) committed to raising the proportion of its green finance to more than 50 per cent by 2025. This year, in June, during its Annual Meeting, the Board announced that the Bank will, from the end of 2022 align all its activities with the goals of the Paris Agreement, aiming to accelerate decarbonisation across its regions, supporting them to reach net-zero emissions by mid-century.

CEENERGYNEWS spoke with Grzegorz Zieliński, the new Director, Head of Energy Europe for the EBRD about the Bank’s long-term plans and its activities in Central and Eastern Europe.

“We don’t have a specific target for the region but the bank is working within certain parameters,” Mr Zieliński says. “If you look at the EBRD as a whole we are talking about 11 billion euros worth of projects, narrowing down to the region something like 2.5 billion euros and out of these between a quarter and a third should go into energy. We do not have a precise figure to give but we look at bankability and additionality and above all at the green energy transition.”

Mr Zieliński started in his new role on 1 July 2021, but he is no novice.

“This is a new job for me but the sector is not,” he begins. “I joined the EBRD in 1998 and almost from the start, I have joined the energy team.”

“If we look back at the late 2000s when we were financing the first renewable projects in CEE, like wind farms in Bulgaria and in Poland, I can see that things have changed both for good and for less good, but they moving in the right direction. Now it is about scaling up the green transition of the energy sector.”

And for him, this is something that applies to every country where the EBRD operates, including Poland which still relies 70 per cent on fossil fuels. Or countries like Albania, which is producing energy almost exclusively from hydro but still needs to import electricity and most of these imports are fossil fuels based energy.

“I think that in every single country I will look after in my new role there is some space for reforms, acceleration of energy transition, reduction of GHG emissions, greater integration of renewables in the energy sector, promotion of energy storage, a full alignment with the Paris agreement and so on,” he underlines. “What is going to be my plan or aspiration is to do as much as possible and as fast as possible to speed up the energy transition for the entire region taking into account all local circumstances.”

Indeed, according to him, the countries most advanced in transition are those who joined the EU during the first stage of enlargement back in 2004, but then the countries like the Western Balkans or Ukraine have all different challenges.

“We need to make differentiations,” Mr Zieliński points out. “However, the big question is can renewable energy replace fossil fuels and why? Because renewables are cost-competitive and they are cheaper than fossil-fuelled power generation. But when?”

“Greece is taking very ambitious steps wanting to quit fossil fuels by 2025, it is extremely ambitious. Can they do it? Yes, and the EBRD will support Greece on this journey. Poland, however, needs to pace itself and give itself more time for the transition. So we have different scenarios, more ambitious plans, less ambitious, more realistic, less realistic.”

And the EBRD wants to do everything it can to make this transition period short.

“For example, through scaling up the financing for renewables and for distribution and transmission grids which need to be strong enough to facilitate the connection of new renewable capacity, but also cross border trading especially when the role of intermittent renewable energy will increase,” Mr Zieliński explains.

He goes on to outline the biggest challenges of the region which include the electrification of all the aspects of the economy apart from the power sector, so transport, logistics, reduction of GHG in urban areas as cities are some of the largest GHG emitters.

“In this regard the EBRD green cities initiative is tackling energy efficiency of urban transportation, thermal energy efficiency improvement in buildings, creating new green spaces and spending up the digitalisation,” he says. “Energy-intensive industry, like cement production or steel manufacturing are finding it more difficult in Europe to compete with cheaper imports from countries that have not implemented stringent environmental requirements. We are not talking about imports from Western Balkans which have EU membership aspirations and already comply with a lot of requirements, but more about imports from China for example.”

“A carbon tax can have a positive impact on these industries and can help them to become greener, allowing them to electrify themselves more and invest in their own sources of energy.”

In particular, he mentions Hungary, a country where there is a huge development of solar energy under the current support system.

“We used to support onshore wind in Hungary in the past and now we hope that solar will make a meaningful addition to power generation capacity in the country,” Mr Zieliński explains. “If we look at countries that might have gone through difficult times in the past, there is the Czech Republic which has gone through a very painful experience of retroactive changes in feed-in-tariffs. It now needs to come up with a new wave of RES and solar has a huge potential. Indeed, Albania has seen some of the most competitive auctions for new solar plants with prices south of 30 cents per kilowatt-shout (kWh). It is really a remarkable achievement and shows how competitive RES can be. Onshore wind will remain a dominant source of RES for the countries further north. But we see more and more interest in solar in countries like Lithuania and in storage. Also, floating offshore wind technology in Greece may provide new opportunities, while the traditional offshore in the Baltics states and Poland look very promising.”

With all these projects to support and the pledge to align all its activities with the goals of the Paris Agreement, the question arises spontaneously: does it mean an increase in green financing or ceasing to finance fossil fuels projects at all?

For Grzegorz Zieliński, the big question of ceasing fossil fuels is gas, not oil and coal.

“There is no question that the long term ambition is to quit gas,” he says. “The question we are asking is this: is new gas-fired generation required to accelerate the development of renewables? It is a valid question so that’s why we prefer to talk about gas rather than just ignore the subject.”

“If a new installation in a given location can actually result in acceleration of the green energy transition, then those projects could potentially still proceed.”

Here, Mr Zieliński is not talking about the most advanced transitioning countries.

“We will likely not finance gas-fired power generation in Latvia but perhaps we will be able to do so in the troubled countries in the Western Balkans, there might be an appealing and convincing case for new gas-fired power generation if they help the overall transition of the energy sector,” he concludes. “The direction is very clear, stop fossil fuels altogether, coal and lignite yes but we shall keep a window open for gas at least for now.”

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