Europe’s Coal Heartland Starts Talks on Phasing Out the Fuel

Source: By Maciej Martewicz, Bloomberg • Posted: Wednesday, July 29, 2020

Discarded coal sits heaped outside the Murcki mine near residential property in the Silesia regional city of Katowice, Poland.

Discarded coal sits heaped outside the Murcki mine near residential property in the Silesia regional city of Katowice, Poland. Photographer: Bartek Sadowski/Bloomberg

Poland’s government started discussions with utilities and powerful mining unions about speeding up the country’s green transformation, only to hit the first hurdle within hours.

Deputy Prime Minister Jacek Sasin’s proposals were met with skepticism on Tuesday, forcing the European Union’s most coal-dependent country to pivot its approach. The government said it would now set up a task force with industry partners to iron out the path toward a coal-free future.

The specter of a prolonged tug of war, and continued lack of clarity over exactly what was offered, pushed investors away from Warsaw-listed utilities, with the WIG Energy index dropping as much as 3.8%.

“It would be a waste of time to discuss the document, which the unions don’t approve,” State Assets Ministry spokesperson Karol Manys told state news agency PAP after Sasin’s talks with the miners.

Coal in Decline

Polish 2020 electricity production from coal is set to be lowest on record

Source: PSE grid operator

The government has kept quiet about the details of its plans for the sector, which local newspapers reported include a target to stop thermal coal production by 2036, the idling of two mines this year and 6.75 billion zloty ($1.8 billion) in state aid and subsidies.

Hours after the discussions started, the State Assets Ministry said it hadn’t formally presented a plan as it wasn’t a final draft. Now, the government and unions will work jointly prepare an acceptable solution.

Sasin spoke with PGG SA, the EU’s biggest producer of the fuel, and its unions about going green. The move highlights the policy U-turn made by the government, which won power in 2015 after vowing to keep the Poland running on coal for the foreseeable future.

U-Turn

But as the dirty fuel has became increasingly expensive due to rising prices of carbon emissions and strict EU policies, the government has embraced renewable energy. While it’s unrolling one of the continent’s largest offshore wind projects, it’s alone among the EU’s 27 nations in refusing to sign up for the bloc’s 2050 climate neutrality goal.

For the government, the time looked to be ripe to begin the restructuring process, with no major elections scheduled for the next three years. The mining revamp is also a step in the cabinet’s plan to reshape the entire energy industry and planned leading role for oil group PKN Orlen SA.

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According to Trigon Dom Maklerski SA analyst Michal Kozak, the investors’ reaction was negative because the whole overhaul process may take longer than expected and the state’s plans remain unknown.

“I still think that the restructuring of the energy industry will happen, because it’s inevitable,” Kozak said by phone. “But working out the plan for the mining industry may take weeks, if not months.”

(Updates with results of negotiations starting from first paragraph)