Developing by inhibiting

Poland’s Plan for Responsible Development is supposed to help Poland escape economic stagnation. But the money recieved from the EU has mostly been spent on upgrading coal plants, and attempts at building renewable plants have fallen flat. Michał Olszewski takes a look.

Wind farm near Zagórze, Poland

Wind farm near Zagórze, Poland (Photo by Zwiadowca21, edited, CC BY-SA 3.0)


It is hard to deny the diagnosis underlying the Plan for Responsible Development endorsed by Beata Szydło’s conservative government. As a rule, trails leading towards the future are blazed by think tank experts, whereas politicians tread carefully a few steps behind. This has also been the case here. The Law and Justice government took note of what economists have been discussing for many years: Poland faces a middle income trap which may lead to economic stagnation in the near future. To make matters worse, we must add into the mix weak institutions, demographic misery, and the absence of economic ‘locomotives’ able to pull the market into a bright future. The plan was supposed to show how to escape these traps.

One of the economic areas that has long called for change is the power sector. The situation in Poland is not yet catastrophic: electricity is usually delivered to end users without problems and power plants operate smoothly. However, this cannot mask the fact that the huge sums of money that Poland received from the European Union to transform its power sector have been spent mostly to maintain the primacy of the coal sector. The best example relates to the funds from free carbon emission allowances. The money should have been spent primarily on making a transition from coal to, say, co-generation or natural gas power stations. However, Poland has spent those sums on upgrading its coal-powered power plants. The outcome? According to a recent study by the Ministry of Development, more than 85% of power generated in 2014 came from coal. This might be labelled a success because the respective rate in early 2000s was well over 90%. However, it can also be seen as a disaster: Polish coal is too expensive and the excessive attachment to this commodity, viewed almost as a symbol of Polish independence, aggravates Poland’s dependence on Russia in the sphere of energy. This paradox is easy to explain: it is more profitable for owners of fuel warehouses to import cheaper, high-calorie coal from Siberia than to buy expensive coal from Polish mines.

The Plan for Responsible Development does not show how the government intends to get out of this energy deadlock. It is instead a concoction of wishful thinking and mismatched ideas. The idea of nuclear co-generation is the best example here: by 2020, the government wants to get ready to build Poland’s first HTR reactor, which is to have a thermal capacity of 200–350 MW. The idea is for the unit to supply heat to industrial installations. However, this technology will not be ready for many years to come, and is also extremely expensive. As such, it will not solve the problems of the obsolete and coal-dependent power sector. Poland’s first attempt at building a nuclear power plant ended in failure: the estimated costs exceeded the funds available from the central budget, and, as a result, the previous government quietly retreated from the project.

The current government declares its support for renewable energy sources and, at the same time, it expects not to exceed its commitment under the EU’s Europe 2020 strategy in any way. This stems from scepticism about renewable energy sources, which is commonly found among Polish mainstream politicians, regardless of their views: left-wing, right-wing and centrist parties alike are afraid of renewable energy. In this context, the idea of investing in electric vehicles, as announced in the Plan, only plays an image-building role: while these cars might improve the quality of air in Polish cities, they will not change the structure of power generation across the country since coal is still expected to play a major role here.

At first glance, the declaration that energy efficiency will be boosted looks very promising. At the moment, Poland’s primary energy consumption is 19% higher than the EU average. The problem is that if we go into to the finer details of the plans, it seems that they go beyond improving various indicators. The National Fund for Environmental Protection and Water Management has focused mostly on the energy efficiency of church buildings and museums, where it plans to spend at least EUR 120 million in the coming years. Meanwhile, the most important area where improvements are needed is housing, both single- and multi-family buildings. This is where serious savings can be achieved.

Two pieces of news published in September provide the best commentary on the Plan. During the Economic Forum in Krynica, Deputy Prime Minister Mateusz Morawiecki (who is also, as the Minister of Development, responsible for the Plan) said that the government would not make excessive investments in renewable energy sources since they are still too expensive. Hence, politicians want to wait because, in five years’ time, when the new EU financial framework begins, the price of photovoltaic panels will certainly have reduced by half. A pressing question arises: is Mr Morawiecki using a modern laptop or an old Atari? Well, computers will get even cheaper in a few years’ time so why not wait? Is that funny? Not quite. The statement made by Morawiecki, one of Poland’s leading politicians, seems logical until we ask about the degree of technological progress that other countries will have reached by that time. This announcement means that Poland will be lagging even further behind in terms of modern technologies.

The other piece of news came from Świętokrzyskie province. A renewable energy park, the first of its kind in Poland, was supposed to be built on the territory of a former sulphur mine. However, it will not be established. Because of the changes in the financing of renewable energy sources introduced by the new government, such investments have become too risky. The investor backtracked, and a project worth nearly EUR 100 million totally collapsed. And this is by no means an isolated case: the Polish renewable energy industry has been decimated by new, unfavourable regulations.

These sad examples are mentioned not simply in the spirit of complaint. However, if we place the lofty and smooth-sounding Plan side by side with the realities of the last few months, we can see that the allegedly innovative idea to grow Poland’s economy begins with steps that are stifling renewable energy sources and fossilising the status quo. This is a very bad omen for the power sector and for Polish citizens, who continue to be dependent on large-scale power generation.

 

Michał Olszewski (born 1977) – journalist, reporter, writer. For more than twelve years he worked for Gazeta Wyborcza and Tygodnik Powszechny, where he concentrated mostly on environmental issues. He is engaged in a Krakow-based campaign against air pollution.

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Michał Olszewski

Michał Olszewski (born 1977) – journalist, reporter, writer. For more than twelve years he worked for Gazeta Wyborcza and Tygodnik Powszechny, where he concentrated mostly on environmental issues. He is engaged in a Krakow-based campaign against air pollution.

2 Comments

  1. heinbloed says

    Thanks for the good article!

    How high is the current electricity price for households, are there already economical incentives for plug-and-play PV systems?
    And if so – what do these guerilla PV systems cost in Poland?

    The EU plans to allow all households to buy their PV system in the supermarket and plug it into the next household socket.
    Such an approach would undermine the existence of the coal power plants so I can imagine the coal Mafia/government isn’t to keen to see this happening: they would not be needed.

    Are there already cross-border projects planned similar to Denmark/Germany?

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