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The Warsaw Voice » Special Sections » June 17, 2010
Energy Security Conference
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Energy Security Is a Priority
June 17, 2010   
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Joanna Strzelec-Łobodzińska, undersecretary of state at the Ministry of the Economy, talks to Andrzej Jonas and Andrzej Ratajczyk.

Last year the government approved a document entitled Poland’s Energy Policy Until 2030 spelling out a long-term strategy for the energy sector’s development. What do you think is the most important thing today for ensuring Poland’s energy security? Would this involve issues of energy balance, the state of the power grid or perhaps the country’s obligations stemming from the energy and climate package?
It is hard to compare all these issues. But the problems of the energy balance and the state of the power grid have something in common—the need for huge spending on network infrastructure and the redevelopment of the energy generation segment. We also need to remember that the climate package, if it continues in its present form, could be more painful for Poland than other member of the European Union. This is due to Poland’s energy mix, namely the fact that the Polish energy sector relies on coal, which is available domestically. On the one hand, Poland is the most secure European country in terms of energy, because even if, theoretically speaking, we were cut off from external energy deliveries, the economy could continue to function. On the other hand, if the Polish energy sector has to meet the obligations set down in the climate package, the picture is not so optimistic anymore.

We keep pointing out that one of our priorities is to limit the energy sector’s environmental impact. This priority is reflected by the government’s energy policy. On the other hand, we think that the Polish economy, like many other European economies, will be unable to cope with such a radical change to its energy agenda.

Does this mean that Poland will be unable to meet the terms of the package, known as “3 x 20”—limiting carbon dioxide emissions by 20 percent by 2020, reducing energy consumption by 20 percent, and increasing the contribution of energy from renewable sources to 20 percent?
Poland is capable of meeting all these requirements, but if Polish producers have to pay an extra environmental tax resulting from the purchase of carbon dioxide emission rights, we will have one of the highest energy prices in the European Union. And that won’t change, because even if we launch nuclear power plants in the future and increase the role of renewable energy, we will still be left with Europe’s greatest contribution of coal to the energy balance.

Poland is not against the climate package. We will accept any goal it sets down. But we want the road to that goal to be adapted to the capabilities of individual countries. I think we need further discussion in the EU on changing the approach to the climate package.

What proposals does the Polish government have?
Poland’s key suggestion is to introduce a combined benchmarking/auction system instead of purchasing all carbon dioxide emission rights in the power sector by auction. Benchmarking involves finding the most effective technology in the EU for a given type of power plant—for example, coal-fired plant—and granting rights for free to anyone using such technology. If we assume that the best coal-fired power plant can have about 50 percent efficiency and that those currently in operation are about 30 percent efficient, this means that 20 percent of generation efficiency could be achieved through modernizing coal-fired power plants across the country. The level of carbon dioxide emissions in power plants based on the most advanced available technology would be the benchmark. And, if someone decided to build such a plant, they wouldn’t have to buy carbon dioxide emission rights. On the other hand, all older and less advanced plants would buy rights up to the level of the most modern one. This would stimulate the introduction of the most modern technology. This principle would apply not only to coal-fired but also gas-fired power plants.

This kind of philosophy would be acceptable not only to the EU but also other countries around the world that today are skeptical about climate protection policies. It promotes modernization without the need for a radical change of energy sources.

Are there any plans for increasing the role of renewable energy?
Under the climate package, the proportion of “green energy” should grow to 20 percent in 2020, but in Poland’s case this requirement has been reduced to 15 percent. Our calculations show that it can be done. The energy policy guidelines include a forecast of how much energy will be produced from different sources. The conclusion is that the fastest development will be in wind energy and biogas plants.

Modernizing the power sector requires huge expenditure. Can investors in Poland’s energy industry expect any incentives or preferential treatment?
Investors in conventional energy generation cannot enjoy any special incentives. It’s the market that has to decide if a project is attractive or not. Wherever generation costs are higher by definition, as is the case with green energy, such incentives are available, including in the form of the tradable green certificates system. We are working on modifying these to make them even more attractive.

What about the development of clean coal technology?
Fingers crossed that researchers find ways to apply these technologies. For as long as these technologies are still in the laboratory, it’s hard to evaluate how they can be used in the Polish energy sector.
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