A recent report commissioned by the Polish Chamber of Commerce (PCC) and big players in the power and mining sectors[ii] claims that if Poland were to contribute to an EU goal of 80% greenhouse gas reductions by 2050, the costs in 2030 could amount to 22 billion PLN (€5.3bn) per year, about half of their profit. The implication is that climate policy will be a drain on the economy and government should apply the brakes.
Digging into the analysis reveals what has been ignored in coming to this conclusion: the wellbeing of Poles. No account is taken of the tremendous health benefits from cutting coal pollution, the cessation of coal imports and subsidies, or of the economic boost the economy would experience by investing in growing sectors like renewable energy and efficiency.
Coal pollution imposes huge costs on society
Moving away from fossil fuels leads to a reduction of the externalities[iii] of conventional energy, such as the cost of public health care, water treatment, forest diseases and reduced yields. For every kilowatt hour of energy produced in Poland, where the average price for households is about 0.60PLN (€0.15), the dependence on coal leads to 0.80PLN (€0.19) of external costs[iv].
In 2009, the European Environment Agency (EEA)[v] estimated the external costs of the biggest Polish power plants and industrial plants at 45-79 billion PLN (€11-19bn) per year. These losses well exceed those attributed to annual climate policy costs in the PCC report (13 billion PLN, €3.1bn). The number one polluter in Europe is the Belchatow
Power Station and number ten is Turow power plant. In 2009 they imposed a cost on Poles of between 9 and 16 billion PLN (€2.2-3.9bn) in external costs. Both facilities are owned by one of the sponsors of the PCC report, the Polish Energy Group PGE.
Coal power is supported by imports and subsidies
The lack of appropriate climate policy reduces the Polish energy security and continues import dependency. Polish coal imports have grown each year since 2008, and in 2011 reached around 15 million tonnes[vi]. The PCC report does not refer to the subsidies the coal sector receives from the state budget. In 2010 alone, the value of these subsidies amounted to about 2.8 billion PLN (€680m). Although mining is historically important to Poland, the industry is now smaller than the internet/web economy, which has reached 3% of GDP[vii].
The PCC report has questionable legitimacy
The methodology and research assumptions of the PCC report have not been published, so there is no substantive basis to verify the calculations, which should therefore be treated with caution. EnergSys’s expertise in conducting economic studies has been criticised in the past[viii]. Their previous[ix] report on 2030 climate policy and the impact of proposed EU low carbon regulations on the Polish economy and energy sector presented estimated costs of climate policy drastically different from all other macro-economic analysis on this topic (World Bank, European Commission, Institute of Structural Research). The costs presented by EnergSys were four times higher than those from the World Bank, for example[x].
It is a substantial coincidence that the claims presented in the PCC report conform entirely to the interests of the large corporations who want to maintain an outdated, centralized energy system. Climate policy would contribute to the development of distributed energy, based on local renewable energy resources, which would threaten the dominant market position of centralised coal producers. The report is a blunt lobbying weapon which overlooks anything but the narrow interests of a small group.
There is another Poland trying to emerge from the smoke
The PCC report ignores the benefits of innovation to improve the economy through the development of innovative distributed energy. Climate policy is an opportunity to create hundreds of thousands of new jobs in small and medium enterprises operating in the renewable energy and energy efficiency sectors. For example, a recent report[xi] on thermal renovation efforts and the labour market shows the potential to create 250,000 net new jobs.
Now is the time for Poland to invest in the clean energy economy, building new opportunities and saving money while protecting its citizens from health risks.In Poland’s renewables sector, the increase of Installed wind power in 2010 in Poland was 455 MW, nearly doubling national wind capacity.[xii]. The Gdansk shipyard has changed its production profile and now off-shore windmill pylons are a core business, at the same time conserving jobs[xiii]. In solar heating, the Polish company Watt is producing highly efficient collectors sold the world over [xiv]. The company is increasing its capacity, creating more jobs.
[i] Preliminary assessment of the impact of the establishment of emission reduction targets by 2050 document, the European Commission Roadmap for electricity sector, the economy and households in Poland, System Studies EnergSys Sp. z o.o. 2010. http://www.kig.pl/aktualnocim/2560.html
[ii] The Polish Chamber of Commerce (PCC), TAURON Wytwarzanie SA (Tauron Generation SA) and PGE Górnictwo i Energetyka Konwencjonalna SA (PGE Mining and Conventional Energy SA).
[iii] Eurostat, Energy price statistics, http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Energy_price_statistics
[iv] EN35 External Costs of Electricity Production. European Environmental Agency, 2008 http://www.cire.pl/rynekenergii/podstawa.php?smid=207
[vi] Poland: Inventory of estimated budgetary support and tax expenditures for fossil fuels. OECD. Paris, 2011.
[vii] Boston Consulting Group, Polska Internetowa, http://www.bcg.com.pl/documents/file78280.pdf
[viii] Instytut Badań nad Gospodarką Rynkową, Ewaluacja Raportu 2030, The Gdansk Institute for Market Economics, Report 2030 evaluation
[ix] Raport 2030, EnergSys. http://www.pkee.pl/attachments/article/22/PKEE_Raport_2030_Synteza_rekomendacje_2008_06_30.pdf
[x] Transition to a low emission economy in Poland, World Bank http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/0,,contentMDK:22839437~pagePK:146736~piPK:146830~theSitePK:258599,00.html
[xi] Wpływ kompleksowej termomodernizacji na rynek pracy w Polsce, Central European University and FEWE , Katowice 2011.