Poland faces a serious challenge when it comes to climate neutrality by 2050, mainly due to its coal-based energy system and limited alternative options. The most coal-dependent country in CEE is struggling to transform in an economically and politically secure manner. At the same time, the European Green Deal and the crisis related to COVID-19 are offering opportunities to escape forward.
There are three new areas where emerging perspectives are presenting themselves. Firstly, gas imports are soon to be strongly diversified leaving the prices to the market rather than politics. This will be possible thanks to the Świnoujście LNG terminal and the forthcoming construction of the Baltic Pipe – a new import route of gas from the North Sea. Gas at the market price will allow replacing coal in the electricity and heating sectors but, more importantly, it will reduce political pressure from Russia on Poland and other neighbouring CEE countries which can be supplied from the Polish gas infrastructure. Gas also remains an important factor in balancing the intermittency of wind and solar power.
Secondly, it is about the EU’s rising interest in hydrogen, possibly an attractive long-term option in Poland. Despite limited capital and R&D resources, smart planning could ensure that Poland would follow the leaders like the Netherlands, France or Germany and find its own niches in the hydrogen supply chains. New projects in Poland are currently testing storage solutions, the application of hydrogen in mobility and so on. With further projects, one could think of hydrogen and gas blending in the transmission network, the use of hydrogen in heating or steel production as it is foreseen in some of the scenarios prepared by the European Commission. Green hydrogen could be produced in dedicated RES in Poland, but not necessarily. In a longer perspective, this could be provided from distant places where RES conditions are more favourable, for example, North Africa for PV.
It leads to the third area, which includes an increasing efficiency of offshore wind. 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. Additionally, there already exist a number of domestic companies with established positions among suppliers for this type of RES.
To be fully seized, each of the three opportunities requires changes in the functioning of the main players – state-controlled energy companies. The first step, already discussed in public debate, is to shed coal assets from vertically integrated companies to improve their credit ratings. Such a measure will help them to better use the available opportunities to finance their transition. The second step would be to develop their energy services together with a growing retail market of renewables. The third step would be to go global with its services and to look for acquisitions and mergers in pursuit of know-how in the energy transition. This step should also allow some market openness to competition to slow down the expected growth in energy prices.
In many areas of the energy transition, Poland is looking for partnerships with US companies – gas supplies and the nuclear sector being the most important ones. It concerns areas where European technologies or perception of risks is deficient from the Polish perspective. Yet European partners remain the primary actors not only due to the common EU policy framework. European companies which are global leaders in low-emission technologies are already involved in developing all major energy projects planned in Poland. The containment of Chinese and Russian investors in this regard is not accidental.
What Poland needs in a longer-term is closer coordination of plans with its neighbours in projects such as the North-South gas corridor or electricity supplies. CEE countries are central in this regard as proven by their recent collaboration relating to the creation of the Just Transition Fund or defending natural gas as a transition fuel. New investments, for example, the ones from the PCI list, are to keep the energy costs in CEE as low as possible while moving away from fossils. With new opportunities put on the table in the new EU financial framework and anti-crisis packages, the carbon-neutral transition becomes more realistic and may provide a trigger for coal-based energy countries.