The Coal Dilemma
August 1, 2014
Jarosław Zagórowski, CEO of coal producer Jastrzębska Spółka Węglowa (JSW) and Vice-Chairman of the Board of Directors of Central Europe Energy Partners (CEEP), talks to Witold Nieć.
There’s a lot of speculation in the media about the potential benefits and costs of the planned free trade agreement between the United States and the EU. Meanwhile, during the recent European Economic Congress in the southern Polish city of Katowice you said that, even if this agreement is signed, the U.S. administration will be reluctant to deepen energy cooperation with the EU. Why’s that?
Without a doubt, the United States and the European Union already work very closely together economically. This type of cooperation will bring mutual benefits. It’s mainly about jobs and employment expansion. The discussion about free trade between the United States and the European Union has been going on for nine years. In this regard, it is necessary to pursue a more active policy. I’m not entirely convinced that cheap energy in Europe, obtained via cheap gas imports from the U.S. will be in the interests of the United States. After all, it will worsen their competitive advantage, which has been built so effectively thanks to energy prices.
So far, virtually all discussions about energy in Europe have taken place between politicians and environmentalists. Changes can be seen, but are they significant enough to say that industry is finally being listened to? Are its arguments being treated seriously?
It is a fact that a very long debate on energy policy in the European Union took place between EU officials and environmentalists. Nobody listened to entrepreneurs. That’s why CEEP was established as the first industry organization in Central Europe to represent the interests of energy and energy-intensive sectors in this region at the European Union level. Together, it is easier to support the integration process in the energy sector and energy-intensive industry in Central Europe within the framework of a common EU policy. I’m afraid that the issue of the security of energy supply will soon be an important topic of concern for many governments in the EU. By eliminating conventional sources of energy generation, we make economies dependent on the security of energy supplies, which are vulnerable to political developments, and when it comes to production sources, we expose ourselves to the risk of unstable production caused by bad weather conditions, for instance.
In Poland’s case, regardless of the not very favorable EU policy towards coal, coal will still figure prominently in the country’s energy mix because of the historical development of the Polish energy system, which has always been based on indigenous resources of coal and lignite. A weak, poorly managed energy policy may lead to a further deterioration in the EU’s industrial competitive advantage. This, in turn, is causing the relocation of both production and jobs outside the EU and leading to conflicting goals. A poorly applied environmental policy is not conducive to the competitiveness of industrial development policy in the EU. It can also stand in opposition to social policy. However, I believe that all objectives will eventually be reconciled.
How has the situation in Ukraine influenced the debate on energy security in Europe? Do you think the developments in Ukraine can help demystify coal and put an end to the discussion about decarbonization?
Indeed, we now have a heated debate on the situation in the Polish mining industry. A few problems have multiplied, such as low prices on world markets for both coal and coke. Then, there is another situation with regard to defining energy policy in the context of the energy mix and the energy security situation. It is good that such a debate occurred, because the problems faced by the Polish mining industry have to be somehow solved in the end.
Will the situation in Ukraine make the European Union look more favorably at Polish coal? I do not know, but I hope so. Without a doubt, we can see that the Polish government is looking at Polish coal in a different way, treating it as a stabilizer of the energy system and a guarantor of security.
It seems that the EU should better explain that the policy of decarbonization should not be really understood as the elimination of carbon from the energy mix but more as a reduction of CO2 emissions. Coal can be made more environmentally friendly by increasing the efficiency of energy systems and by the implementing new burning technologies that minimize CO2 emissions.
Today in the U.S., energy for industry costs half of what it costs in Europe. Do you think we can reach a similar level of prices in Poland or Europe?
I would not be so optimistic. I do not think that having energy prices in Europe at the same level as in the U.S. is an important issue for the United States. I think the EU must work on energy prices on its own, and not wait for someone to help it, because, as I said, despite all the political correctness, everyone actually builds their own competitive advantage in order to protect jobs for their citizens. Globally, only the EU—due to additional fees imposed on energy prices (CO2)—exercises a policy of exporting jobs outside its borders.
I believe that the problem of global warming should be handled by other means than by an increase in energy costs in Europe, and it certainly should be done on a global scale.