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Three lessons from Poland’s exceptional coal region

Seven out of 44 European coal regions are located in Poland and although Upper Silesia is the most well-known among them, another region becomes prominent in the just transition process.

Polish private utility ZE PAK – a complex of lignite mines and power plants located in Eastern Greater Poland (Wielkopolska) shrank in the last five years almost twice. Its coal production fell from 12 to 6 million tonnes of lignite, electricity and emissions accordingly, installed capacity declined from 2,6 gigawatts (GW) to 1,2 GW.

As indicated in the Instrat & WWF report, the employment reduction by more than 60 per cent to now less than 4,000 people within the last decade was a necessary consequence of that process. The value chain around the lignite economy shrank so much that there are almost no relevant subcontracting companies around the utility – part of them went bankrupt.

coal region
Source: Hetmański M., et al., Just transition in Eastern Wielkopolska: diagnosis & guidelines, report by Instrat for WWF Poland, 2021, http://instrat.pl/en/jt-eastern-wielkopolska.

Success story – a promising candidate

In many ways, this case is not a success story, especially for the entire local community, at least yet. Reduction of well-paid jobs in a region with still agricultural and industrial profile affects not only the workers and their families but has broader consequences. Reducing the purchasing power in the region and thus the demand for products and services are the macroeconomic consequences for the whole region.

It also affects the local communities, which struggle with declining income from different mining concession taxes and fees. Many of them still receive as much as half of the municipality budget from the local mine, which is set to close two-thirds of its operations within less than the next two years. The capacity of regional governments to sustain the quality of life and a relatively high level of public services, combined with an outflow of younger generations, seem to be doomed to fail.

So why the Eastern Wielkopolska region is becoming the hot topic on the Polish and also Central and Eastern European scene? There is a usual set of instruments applied already in the region to respond to the challenge of just transition. The typical one is the coal-to-clean transition which has already resulted in the replacement of some lignite power plants by other technologies like wind, solar and biomass. It is also implemented through retrofitting programs aiming at decreasing the energy demand and reducing energy poverty. Finally, new investors are attracted offering new jobs among which the most impressive in terms of scale is one of the top world battery producers which created 200 jobs with the prospect to enlarge this number up to 600 in coming years.

From zero to net-zero

But Eastern Wielkopolska went beyond the usual response applied in other coal regions. The region moved ahead by pledging to achieve Net-Zero by 2040 – a decade before the EU-wide goal. This is all the way more significant as Poland remains so far the only EU Member State to refrain from declaring climate neutrality until 2050.

By doing that, the region will make the case for other, not only Polish coal regions as some of the resources (financial and technical assistance) are at the disposal of the European Commission and the Polish government has limited prerogatives in that domain. Moving ahead sends a clear signal to the national and international decision-makers and financing institutions.

Both the utility and regional authorities have recently joined the Powering Past Coal Alliance, becoming the first Polish member of the international club of businesses and governments that commit to a Paris-agreement compatible coal phase-out date. The European Commission and other potent organisations are able to support the region, but their response needs to be visible and tangible if the process is to be replicated by other regions.

Private sector to the rescue

To explain the local context of that case – ZE PAK is the only Polish private energy utility, without any control of the government. The owner of the utility is not bound much by internal political pressure, mostly from trade unions or state-controlled energy companies. Despite its recent very controversial announcement to consider a partnership in a nuclear project in Kaliningrad, it is still one of few industrial actors keen to choose ambitious decarbonisation projects in Poland such as developing a green hydrogen hub, which is regarded as too risky for the management boards of state companies.

From the European perspective, this is a promising story for coal-to-clean transition and avoiding the carbon lock-in, which seems to be an overwhelming barrier in the Polish energy transition. Though ZE PAK did make some improvements in terms of dialogue with social partners, it has space in the next few years to prove how social goals will be prioritised.

So what are the three key factors that enabled the Eastern Wielkopolska region to move two steps ahead? Firstly, it is the private ownership of the company, which allows to look for business opportunities without too many political constraints. Secondly, it is the political will of the regional authorities which positioned themselves in contrast to the central government in terms of climate neutrality ambitions. Thirdly, it is the attitude of trade unions which, without political leverages blocking the progress in regions like Silesia, decided to move along with the company and regional authorities.

This oped has been written in cooperation with Michał Hetmański.

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