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The Warsaw Voice » Business » April 8, 2009
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EU Injects Billions Into Power Plan
April 8, 2009 By W.Ż.    
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European Union leaders meeting at a summit in Brussels March 20 agreed to pump billions into energy projects under an ambitious plan to stimulate the bloc's crisis-hit economies. Poland stands to gain around 330 million euros.

The plan, put forward by the European Commission Jan. 29, calls for stimulating the EU economy by providing 5 billion euros from the EU budget for investment projects in individual member states. Most of these will be projects in the energy sector claiming a total of 3.98 billion euros.

"We can say with satisfaction that this is the first practical financial dimension of the idea of energy security that Poland has supported from the first days of its active involvement in the EU," said Polish Prime Minister Donald Tusk after the Brussels meeting. He added that he was specially pleased with a decision to include the Nabucco Gas Pipeline in the program. At the summit EU leaders agreed to assign 200 million euros for the project.

The Nabucco Gas Pipeline is of strategic importance to Poland because it will carry natural gas from Iran, Azerbaijan, Russia or eastern Turkey to Austria via Bulgaria, Romania and Hungary. Nabucco is meant to be an alternative to Russia's monopoly on natural gas deliveries to Central and Eastern Europe. Work to build the pipeline, which will be about 3,300 km long, is scheduled to begin later this year, with completion planned for 2012. The project will cost about 4.6 billion euros.

Several key Polish projects are expected to benefit from the EU program. These include the Bełchatów power plant, which is expected to receive about 180 million euros in EU funds, and the LNG terminal in ¦winouj¶cie, to which 80 million euros has been assigned.

However, industry insiders are worried that Polish energy producers will be affected by an EU directive that seeks to toughen EU standards for sulfur dioxide, nitrogen oxide and particulate matter emissions. Under the directive, from 2016 Polish producers will no longer be able to use coal to generate energy without applying high-efficiency desulfuring, denitrification and dust removal systems.

According to the Polish Power Plants association, the new rules will affect 269 power plants, combined heat-and-power plants and heating facilities in Poland. The costs of adapting to the new requirements are estimated in the billions of euros, which would mean further growth in energy prices. As a result, the directive may lead to a situation in which power facilities with a total capacity of 7,000 megawatts will have to be withdrawn from operation in Poland, the association says. Many other units will be decommissioned due to natural wear and tear. As a result, Poland could lose a total of 15,000 megawatts, or half its current capacity, according to the association.

Industry insiders say Poland needs to be given at least until 2025 to implement the new rules. By spreading the directive's effect over time, the government would find it easier to deal with the financial burden, and it would also be able to prevent energy prices from going through the roof.

Under a long-term energy policy drawn up by the economy ministry, by 2030 hard coal and lignite are expected to account for no more than 50-60 percent of all energy generated in Poland, over a third less than today. The government wants to increase the amount of energy produced from renewable sources and natural gas and launch a nuclear power program. As a result, coal will no longer account for more than 90 percent of the country's energy balance, though it will remain the main fuel for the energy sector. Poland's large coal resources are specially important from the perspective of energy security, experts say, because the country imports 70 percent of its gas supplies and 95 percent of its oil supplies. To reduce carbon dioxide emissions resulting from coal use, Polish energy policy makers are encouraging producers to switch to clean coal technology.

At the same time, the authorities are determined to press ahead with a nuclear power program. On Jan. 13, the government approved a resolution whereby Polska Grupa Energetyczna (PGE) energy corporation will build one or two nuclear power plants by 2020.

In terms of legal regulations, Poland is prepared for the development of nuclear power engineering, experts say. The public's attitude to nuclear power is also changing. Surveys show that the percentage of those in favor of launching a nuclear power program in Poland is growing now that memories of the 1986 Chernobyl disaster in neighboring Ukraine have faded.
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