Poland’s – and EU’s biggest coal lignite producer, Kompania Weglowa, is seeking nearly US$400 million to restructure, of which around a third could come from public funds.
Poland’s newly formed government faces a battle with local authorities over future opencast coal mines.
In a struggle with big implications for the Eastern European country’s stance on climate change, regional chiefs are resisting Warsaw attempts to impose lignite extraction.
Such resource grabs destroy forests, farms and homes, they said in an open letter to chief geologist Mariusz Jedrysek on Friday.
“We call for a radical change in direction of development of the Polish energy sector,” they wrote. “Our country has so far only been betting on outdated coal technologies, neglecting the innovative energy efficiency sector, renewable and distributed energy resources, becoming uncompetitive and singled out in Europe.”
The conflict was teed up by the previous administration, with the release of a “White Book” ahead of November’s general election. Produced by the Polish Geological Survey, it advised reserving large swathes of land for potential mining.
That meant blocking any non-mine development over lignite – brown coal – reserves that could prevent it being dug out in future. It signalled the government was planning for mine expansion as international and EU climate targets demand a fossil fuel phase-out.
“Somebody is crazy enough to think about opening mines in 10-20 years, even though we are living in a completely different reality,” said Kuba Gogolewski of campaign group Development YES, Open-Pit Mines NO.
It provoked strong reactions, with around 8,000 consultation responses. Objections were as much about the way it recommended overriding local democracy as the coal-based strategic direction.
On taking over the top geology job, Jedrysek distanced himself from the contentious document, promising to throw it in the bin.
But signatories of the open letter, including four local chiefs, farming association Our Home and environmentalist group Greenpeace, were not satisfied. “These declarations, although valuable and mood-calming, do not however close the case,” they wrote.
The new government, like the old, is supportive of Poland’s ailing coal industry. Providing 90% of electricity and around 100,000 jobs, the sector has political leverage even as it crumbles financially.
Squeezed by rock bottom coal prices and high labour costs, existing miners are turning to the state for bailouts. The country’s – and EU’s – biggest producer, Kompania Weglowa, is seeking nearly US$400 million to restructure, of which around a third could come from public funds.
A credible rescue package would cut 30-50% of jobs over the next few years, said Maciej Bukowski, president of the Warsaw Institute of Economic Studies (WISE). “The government is trying to balance the need for restructuring with the need to retain political support among miners.”
Warsaw needs to get European Commission clearance for any state aid to the coal sector. Brussels competition chief Margrethe Vestager has said she will only approve cash to smooth a phase-out of failing mines.
It comes at a time of heightened tensions, with the EU investigating a Polish government crackdown on media and the judiciary.
The proposed bailout applies to hard coal, which is extracted from deep mines at high cost. Lignite is a different story.
A low quality form of coal, lignite is cheaper to scoop out of surface mines, but not worth transporting. In Poland, the vast majority is burned at onsite power stations, under the ownership of utilities.
Existing strip mines will be depleted around 2030, WISE’s Bukowski told Climate Home, leaving those power plants stranded. What happens next “is a very large question mark”, not yet widely debated.
Greenhouse gas emissions from power plants are covered by the EU’s emission trading scheme. Generators must hold allowances equal to their carbon output – buying permits above their free allocation.
Poland has won concessions for its electricity sector, largely shielding it from the costs to date. But they will become increasingly exposed to the carbon price, which is expected to rise as EU targets tighten.
A price of €30 a tonne of CO2 (up from €6 today) would render dirty lignite plants unprofitable, Bukowski said.
Warsaw’s energy policy decisions have wider reverberations. A coal-dependent Poland has traditionally seen climate action as a threat. It fought hard for loopholes in the EU2030 climate package and is holding up EU efforts to ratify an extension to the Kyoto Protocol carbon-cutting treaty.
If they can find alternatives, Polish politicians will be less beholden to a diminished coal lobby.