Page 31 - BNE_magazine_03_2020 wellness

bne March 2020 Central Europe I 31
Poland’s largest coal miner facing risks when downturn strikes
Wojciech Kosc in Warsaw
Polska Grupa Weglowa (PGG), the largest coal mining company in Poland and the European Union, is unprepared for a market downturn,
a report by the state audit body NIK said on January 31.
The core of PGG’s problems is the falling efficiency of coal production concurrent with rising costs, NIK said.
Created in 2016, PGG was the Law and Justice (PiS) government’s answer to then mounting problems of Polish hard coal mining. An industry of some 100,000 people, the coal sector is also politically powerful in Poland.
Poland generates around three-quarters of its electricity from burning hard and lignite coal. Warsaw has been slow to embrace the EU’s decarbonisation drive, arguing its starting point is very different from any other member state’s. Poland
is the only EU country that did not agree to the bloc’s 2050 carbon neutrality goal.
The creation of PGG “enabled continued operation of most mines, but high fixed costs of production and deteriorating efficiency of production indicate missing the strategic goals of creating the company,” NIK said.
PGG was profitable in 2017 and 2018
thanks to the favourable economic situation and rising coal prices, NIK said. The company also received PLN3.4bn (€791.3mn) in new capital in 2016-2018.
“At the same time, fixed costs remained high and kept increasing, with wages constituting their dominant part, independent of the company’s performance,” NIK also said.
“In the years 2016-2018, a 13% increase in average remuneration coincided with a 2% decrease in the annual production efficiency per employee,” the audit body said.
EU proposes slashing Poland’s coal transition money to €1bn
Wojciech Kosc in Warsaw
Poland’s share in the EU’s just transition project – a plan to help the bloc end the use of coal as a source of energy – should be cut in half to €1bn unless Warsaw signs up to the 2050 climate neutrality goal, President of the European Council Charles Michel proposed on February 17.
The proposal opens a new front in Poland’s battle with Brussels over climate policy. Poland is the only member state not to have agreed to 2050 as deadline for achieving climate neutrality. With nearly three-quarters of its electricity produced by burning emissions-intensive hard coal and lignite – the most in the EU – Poland wants a longer timeline and more support for the transition. Warsaw has long argued that it needs special treatment when
it comes to climate policy because of a much less advantageous starting point.
Poland was originally to receive €2bn from the Just Transition Fund (JTF), which is a part of the larger Just Transition Mechanism (JTM) that Brussels hopes will mobilise a total of €100bn for facilitating a move away from coal, burning which is one of the main sources of carbon dioxide emissions that cause climate change.
The EU plans to reinvigorate its climate policy in the coming years to remain global leader of the push to limit warming to below 2°C by 2100, compared to the pre-industrial era. There also is a growing
citizen movement in the bloc, demanding politicians act bolder and faster.
“For member states that have not yet committed to a national objective of climate neutrality by 2050, access to the Just Transition Fund will be limited to 50% of their national allocation,” Michel said in his proposal.
The proposal will be up for discussion in the EU summit on February 20 that will focus on the bloc's next budget for 2021-2027.
“Poland was originally to receive €2bn from the Just Transition Fund (JTF), that Brussels hopes
will mobilise a total of €100bn for facilitating a move away from coal”
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