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The Warsaw Voice » Business » September 2, 2011
Business & Economy
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Energy Sector Needs Investment
September 2, 2011   
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Poland can enhance its energy security by pursuing renewable energy and drilling for shale gas.

The energy sector in Poland is facing a number of major challenges, needing to meet growing demand for energy, become independent of imported oil and natural gas, urgently modernize energy infrastructure, and restrict the sector’s negative impact on the environment. The challenges have been addressed by the Poland’s Energy Policy Until 2030 document compiled by the Economy Ministry.

The new energy policy proposed in the document changes Poland’s attitude to the use of domestic energy resources. The country’s energy security will be founded on domestic resources, coal in particular, so that the production of electricity and, to a large extent, heat can become independent of deliveries from abroad. As for oil, liquid fuels and natural gas, the document proposes to ensure a greater diversity of energy technology rather than just different directions where energy is imported from, which “energy diversification” has stood for until recently.

Forecasts regarding Poland’s ability to satisfy future domestic demand for electricity indicate that output needs to be increased. At the same time, due to the obligation to curb greenhouse gas emissions, Poland has to seek low-emission technology to produce electricity. According to the Economy Ministry, Poland will use all available technology to produce energy from coal, providing the technology leads to lower air pollution and significant CO2 emission cuts.

For the time being, Poland’s largest energy corporations—PGE, Tauron and Enea—are not planning to build any new power plants or units in the near future and the first major projects in this area cannot be expected before 2015-2016. Until then Poland will need energy sources to meet users’ energy needs. Sources which are quick to build and capable of satisfying recipients’ demands include projects in what is known as pro-consumer energy. This includes low-output sources such as photovoltaic cells, wind and water and gas devices.

The crisis in conventional power engineering and the nuclear disaster in Japan have strengthened the significance of renewable energy, wind energy in particular. A report released by the European Wind Energy Association indicates that the renewable energy sector will continue to develop at a rapid rate. According to forecasts, in 2050 half of Europe’s demand for electricity will be satisfied by wind farms. The report predicts that by 2020, most EU member states will at least triple the power output installed at wind farms to a total of 230 gigawatts (GW), which will account for 15.7 percent of total electricity production. The report also lists Poland as a country whose wind energy sector may significantly contribute to the European energy sector.

Poland is believed to have vast deposits of shale gas which may also significantly improve the energy security of Poland and the entire region. In April, the Energy Information Administration in the United States announced that Poland had 5.3 trillion cubic meters of extractable shale gas, the largest reserves of all 32 European countries where a search for shale gas had taken place. According to the Energy Information Administration, such amounts of gas could suffice to meet Poland’s demand for natural gas for another 300 years. If these estimates are accurate, Poland could become a major shale gas producer. Proven deposits of conventional gas in Poland total around 140 billion cubic meters. If gas consumption continues to run at the current level, that will only be enough for around a decade. If found and subsequently extracted, shale gas would radically change the situation in Poland and the region as a whole.

According to Deputy Prime Minister and Economy Minister Waldemar Pawlak, shale gas mining might become the alternative of choice to coal mining in Poland and other countries in Central and Eastern Europe, as it would help curb CO2 emissions and improve the quality of the environment. Shale gas also presents a major opportunity to alter the energy balance in both Poland and other countries in the region. Henryk Jezierski, the deputy minister of the environment and the chief geologist of Poland, has said that the Polish government is determined to find shale gas in Poland and then start mining for it. However, the absence of the right tools is a major obstacle for shale gas extraction to develop in Europe. Poland’s shale gas deposits are 3,000 meters underground, which is deeper than in the United States and makes the process far more expensive. According to Jezierski, shale gas extraction will not begin in Poland on an industrial scale sooner than 10 to 15 years from now. Until then Poland will need to find funds for shale gas-related projects and devise regulations adapted to the new situation in the mining industry.


Commentary
Dag Nilsson, attorney at law, Schoenherr:
Many of the provisions of the new geological and mining law are significant in relation to the practical aspects of the exploitation of shale gas in Poland. For example, proceedings for the granting of permits should be accelerated now thanks to restricting the number of people having the status of a party. Entrepreneurs who have obtained permits for the production of shale gas may request the buyout of real estate in the mining area. The new law also shortens the time during which authorities are obliged to decide on projects and sets a two-year term to introduce areas with mineral deposits into local zoning plans.

Unfortunately, entrepreneurs should be aware of the fact that the new law has not taken care of some aspects which constitute a problem under the current law, such as transferability of rights and obligations under a mining usufruct agreement, which remains unregulated. Hence, the business will have to continue to rely on the practice of the authorities in this respect. Since in Poland there is currently only shale gas exploration but no mining, it is unclear what the practice of the authorities will be in relation to the unregulated issues when mining begins. Since, besides the geological and mining law, the mining of shale gas is also regulated by other laws (for example, in relation to environmental protection), their amendment would be welcome as well.
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