Poland and the Czech Republic: How to “Renewable” the Energy Mix?

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Tento článek je součástí Special reportu: Czech-Polish visions on the future of the EU

In both Poland and the Czech Republic, coal is the main pillar of power generation. For Poland, it stands behind around 80% power generation. In the Czech Republic, coal’s share in the energy mix is twice lower due to the rising role of nuclear energy.

Both countries have been also observing a decline in the share of coal in favour of gas and renewable energy sources (RES). This, to a small extent, is associated with a decrease in greenhouse gas emissions – good news especially to Polish citizens, as according to the infamous WHO pollution list 36 of the 50 most polluted European cities are in Poland.

Poland: No energy strategy, just an ad hoc mode

Poland’s energy mix is dominated by coal. Poland has the least diversified energy mix in the whole EU. All Polish governments after the democratic transition as of 1989 has been defending coal’s role in the Polish economy, including the present one. Only a year ago Polish energy minister Krzysztof Tchórzewski said that not only Poland will not resign from coal but also that it’s share in the 2050 energy mix might be as high as 50%.

However, Polish coal is uncompetitive compared to imports from outside Europe. Thus, the volume of imports is rising. And especially from Russia. It pays, as even when transport cost is counted, Russian coal is around 20% cheaper than the local. And of a better quality. This situation is geopolitically ambiguous, taking into account Polish strong voice in favour of EU’s energy independence from Russia, especially in the context of Nord Stream 2.

Additionally, today almost 60% of Polish energy infrastructure is over 30 years old. Considering the plans to reduce emissions included in the Paris Agreement and the EU energy and climate strategy, half of them should be closed by 2035. Some experts still consider clean coal technologies, however, to apply them we still need to have coal first, which – as above – comes in rising volumes from abroad, not from Polish national mines. So, it’s actually contrary to the political narrative on basing Poland’s energy safety on our national treasure – coal.

„One should strive to reduce its GHG emissivity by developing less emission-producing sources: gas and renewable (RES) with the obligation to ensure stable supplies at the base. This means that one hundred percent of RES should not become a target,“ said Wojciech Jakóbik from BiznesAlert.pl.

“If Poland doesn’t diversify its energy mix until 2050 we will only reduce our CO2 emissions by 7%. In the diversified scenario, we will cut our CO2 by around 62% and in the RES scenario about 80%. So, it is important for our membership of the EU but also because of other reasons to diversify our power mix,” added Joanna Maćkowiak-Pandera from the energy-focused Polish think tank Forum Energii.

Despite government’s declarative attachment to coal, in fact its extraction has been reduced systemically for years – and this process continues. And it will continue further, in favour of natural gas, RES, and who knows – maybe nuclear energy.

This “who knows” part is a clue to the major problem of the Polish energy strategy, i.e. for its lack. Poland has been in an ad hoc mode for years now justifying it with the unexpectedness of the global energy market, swift technological development and external requirements like the international climate agreements powered in a large scale by EU ambitions for reducing emissions of greenhouse gases, increasing EU’s competitiveness on the global energy market, and – at least on the declarative level – increasing energy safety and independence.

Polish government has been struggling with creating the energy strategy for several years now – to no end. The nuclear power as its key element has been a recurrent leitmotif tested in public announcements. However, it would be a challenge because of the far-reaching timeframe for construction, costs and the source (source country) of technology. On the other hand, whatever will be decided will require costly investments and so far still foreign technological input.

According to the Energy Ministry and government’s declarations, this strategy should be finished by the end of this year. Creating it is of the utmost importance, as only knowing a clear vision energy companies will be able to plan investments in Poland. Without it also it will be difficult to assess the success of Poland as of the host country for this year’s international climate summit COP24. Furthermore, any strategy plan for 2030, „will strengthen the debate and make Poland focus on that goal. And, finally, a planned and organised energy transformation costs less than uncoordinated modernisation,“ noted Joanna Maćkowiak-Pandera.

The Czech Republic: Nuclear rise

Lignite is the main pillar of power generation in the Czech Republic. Last year, around 42% of electricity was produced in brown coal-fired installations. This should change in the future. Due to exhaustion of coal reserves, mining limits and environmental regulations, the sector will see a gradual decline in the upcoming three decades.

Nuclear power should be the choice for the future. At least according to the State Energy Policy, the main strategic document which outlines the development until 2040. By that year, nuclear power plants should produce at least 46% and up to 58% of electricity. Construction of new nuclear blocs is therefore crucial, as the existing units do not have sufficient capacity. At the moment, nuclear stands for 33% of power generation.

By 2035, one new nuclear reactor should be built in the location Dukovany, and up to three new blocs should follow later. But the decision-making process on how projects will be financed is falling behind schedule. Results of the governments’ deliberation should have been announced in spring 2018, but it is now expected that it will only happen at the end of the year. Until then, a public tender for the selection of technology supplier cannot be launched.

“Czech authorities may even come to a decision that in a second round, they will not opt for a public tender. In such case, the “Finnish” way [investment by a consortium of energy and industrial companies] is not realistic. But a “Hungarian” scenario could be viable,” energy security analyst Tomáš Vlček from the Masaryk University in Brno told EURACTIV.

Indeed, the possibility to build the new bloc under an intergovernmental agreement with a selected partner has become one of the options often mentioned in the political debate. It seems to be mainly promoted by those who support the idea that Russian Rosatom should be chosen as the technology supplier. Whether such scenario would also solve the issue of financing (Hungarian project Paks II should be financed through a loan from the Russian state), remains a question.

If the strategy based on nuclear energy fails in the Czech Republic, the focus could shift towards natural gas. This source raises concerns in terms of energy security, as it would mean higher reliance on external natural gas resource. The Czech Republic practically does not produce its own gas and is completely dependent on supplies of Russian gas.

On the other hand, the country is well connected to the western markets (practically all of the gas comes through the western route) and the ongoing liberalisation of the EU market plus the development of the global LNG market gives good hopes for the future. The Czech Republic is also an important transit country which secures its position in terms of energy security.

Nord Stream 2

It is also one of the reasons why the Czech government remains neutral towards Nord Stream 2. “The project is not problematic for the Czech Republic, as the position of a transit country will be preserved and maybe even strengthened,” Martin Jirušek, Vlček’s colleague from the Masaryk University explains.  So, on that the views of the two analysed countries – Poland and Czechia – are contrary.

Poland is against the construction of the Nord Stream 2 gas pipeline and treats this project as a political venture, unlike Russia and Germany that declare that the gas pipeline is just pure business. When critical infrastructure, strategic energy source and general EU-Russian relations are taken into account it is however difficult to turn a blind eye to the political dimension of the project.

Poland demands that the gas pipeline project is fully in line with the EU law. „We can say that we have a lot of support from many countries, not only being convinced by our arguments, but that also see harmful intentions for European solidarity on the part of the gas pipeline and diplomacy around it,“ said Poland’s Deputy Energy Minister Michał Kurtyka recently.

Still, the utilisation of natural gas is perceived as expensive (due to the fuel costs), and does not comply with the EU efforts to reduce greenhouse gas emissions and air pollution, Pavel Farkač from the Confederation of Industry of the Czech Republic says.

Outlook for the future

“We see the combination of nuclear and renewable sources with a balancing role of fossil fuels in a limited scope as the optimal electricity mix,” Farkač told EURACTIV.

Some stakeholders and experts believe that the renewable sources could play a more important role, but the official policy of both countries remains conservative – what is pointed out is a relatively low exposure to the sunlight and insecurity of supply.

Still the share of renewables will have to correspond to European policy. The 27% of RES in gross final energy consumption by 2030 was originally proposed by the European Commission. However, the Council of the EU and the European Parliament reached an agreement in June 2018 on an EU-wide renewable energy target of 32%. In 2016, the share of renewables amounted to approximately 15% in Czechia and 13,5% in Poland (c. 70% from biomass). Until the end of this year, all EU member states should draft their national plans for meeting the EU climate goals.

Whatever they are, it is also vital for the EU to ensure that the post-2020 Multiannual Financial Framework supports all European countries in delivering decarbonised economy and just energy transition.