On Monday (February 22nd 2021) the Czech government announced their intention to file a lawsuit in the EU Court of Justice against Poland’s plan to “expand the mining” at Turow, saying it can endanger the drinking water for up to 30,000 people living in the Liberec Region. Frank Umbach at EUCERS argues such a lawsuit sets a dangerous precedent that could stand in the way of regional cooperation and achieving the EU’s climate goals. Instead, the Czech Republic, Poland and Germany should support regional energy and lignite clusters as well as transnational energy strategies. Umbach sets out the arguments on all sides, the evidence, as well as the considerable challenges that coal phase-out faces in all three nations. No one has yet found the ideal solution to replacing coal while maintaining energy stability and security, and at the same time maintaining the jobs, livelihoods and communities affected. Only dialogue and coordination will do it, says Umbach. If successful it could become a model for other regions. [Published in conjunction with ongoing webinar series sponsored by PGE]

The threat of a lawsuit comes at a time when both governments need to revise their energy and coal phase-out strategies in the light of the European Green Deal (EGD) and EU’s newly agreed emission target of 55 percent emissions reduction by 2030 compared to 1990 levels instead of the previous 40 percent emissions reduction objective. Both sides are amidst professional and diplomatic negotiations for some time but could not reach any joint compromise up to now.

While the impatience in difficult and lengthy negotiations is understandable, a lawsuit could set a dangerous precedent for other bilateral energy conflicts and competing national interests between EU-member states. Regardless of the positioning and substantive justification, those lawsuits can hinder rather than fasten the implementation of the EGD, its 55 percent reduction target and the various national coal-phase out strategies.

The bilateral lawsuit also highlights the major problem that EU member states still tend to develop their national energy policies and strategies by overlooking both the potential impacts on neighbouring countries as well as opportunities for regional energy cooperation.

While the German Energiewende has also been agreed and designed without informing Brussels and Germany’s neighbours, the present government has designed a hydrogen strategy that wants to deliberately create transnational and regional hydrogen clusters such as between Nord-Rhine Westphalia (NRW) and the Netherlands as well as Belgium. It will not only reduce potential costs but also reduce national political rivalries and bureaucratic hurdles.

Addressing the water supply concerns in the Czech Republic

The fall of groundwater levels and the fear that whole villages in the Liberec Region are running out of water is certainly a fear which needs to be addressed. But at the present stage, it appears that the reasons are not so clear. While some Czech sources have claimed that the falling groundwater levels are due to the ever-expanding mining on the Polish side, Poland has also referred to the unusual drought of the last years in Czechia. Even Czech sources have admitted, there is no evidence that the lignite mine has any impacts on water levels in the Zittau Basin and the Liberec Region.

In 2018 the Czech water supply management assured the residents of Uhelná, which is allegedly exposed to the mine’s harmful activities, that water would be supplied without any problem. In 2020, the Czech water management institute claimed that the country was suffering from the worst hydrological drought in more than 300 years.

Nevertheless, to address those fears, the Turow mine is also constructing a preventive filtration screen with a length of more than 1 kilometre in the border area. It is designed as an additional barrier against a potential inflow of water from the Czech Republic towards the mine. Already in 2017, the expansion of the mine water treatment plant was completed, equipped with a sludge dewatering installation. Also numerous other technical measures have been adopted for environmental protection.

Moreover, the Polish town of Bogatynia has repeatedly suggested providing the Czech partner with water from the Polish sources and at the Polish prices, which are lower than the Czech ones. But Czech officials have apparently never expressed any real interest in the proposal.

Regardless of the positioning on both sides, the water issue highlights that both sides are forced to negotiate a compromise which substantially solves the issue.

Fostering regional cooperation and energy clusters between Poland, the Czech Republic and Germany

While the Visegrad countries (Czech Republic, Hungary, Poland and Slovakia) have already benefitted from their energy and foreign policy cooperation, a return to more renationalisation of energy policies would be even more counterproductive than in the past given the huge challenges for achieving the EGD-objectives and targets.

It would also disregard the manifold energy infrastructure connections which had been built during the last decade and have bolstered their national and regional energy security. Furthermore, the EU has introduced the 70 percent interconnector availability target under the Clean Energy Package for its member states as it will enhance energy security and resilience within the internal energy market.

Moving from net-electricity exporters to importers

Increasing regional energy cooperation and developing a common strategy for the lignite triangle might become even more important as both Germany and the Czech Republic may become net-electricity importers instead of being currently net-electricity exporters. Thus, Germany’s new energy and climate policy decisions in 2020 have partially not been coordinated again in Brussels and with its neighbouring countries prior of its decision. Berlin did not really analyse whether it will be able to compensate its lack of electricity supply by importing it from its neighbouring countries.

In addition to the Czech Republic, also France might struggle not to rely increasingly on net electricity imports due to the uncertainties of the future of nuclear power. Thus, both Germany as well as the Czech Republic would be well advised to enhance their energy cooperation and coordination with Poland and other neighbouring countries in their own strategic long-term interests. But even Poland – at least temporarily – could become a net electricity importer, throughout the year, due to the intermittency problems.

Comparing the Turów lignite mine

Poland’s PGE GiEK (owner of the Turów lignite mine and power plant) wants to use its available lignite deposits to continue lignite mining operations in its Turow open-cast mine until 2044. A dozen years ago a decision had been made to build a state-of-the-art lignite-fired power generation unit to fulfil the strictest emissions requirements applicable in the EU. The planned exploitation of the deposits will be carried out in an area half the size than that granted to the mine in the original licence.

According to PGE, both the lignite mine and the power plant implement and comply with the EU’s most stringent emission, environmental protection, and care about the region standards. The mine is the industry leader in terms of pro-environmental measures. The power plant received an adjustment to the BAT conclusions for units 1-6 in 2019 and an integrated permit for unit 7 in 2020 for meeting all standards required by the EU regulation.

The Czech argumentation is also somewhat ambiguous regarding the regional dimensions: At a distance of approximately 120 km on the Czech and German sides of the border, much larger lignite mines are still operated: in the Northern Bohemian and Sokolov Lignite Basins in the Czech Republic and in the Lusatian Lignite Basin in Germany.

Actually, the Czech mines’ output is five times that of the Turów mine and the German mines extract almost ten times more lignite than the Polish mine.  In both cases, the deposits are also owned by Czech private capital. In the Lusatian Basin, the Czechs operate four power stations that rank among the five dirtiest in Europe. In the near future a completely new open-cast mine is to be opened in the Lusatian Basin – its size is comparable to that of the open-cast Bełchatów lignite mine.

The Czech Republic and its Coal Industry

The Czech electricity market is largely based on nuclear and lignite, whilst the share of intermittent RES is still low. Coal plants are currently generating around 40% of electricity. The government position is based on the assumption that nuclear power rather than RES will replace lignite in the mid-term perspective. A national commission on its coal future has recommended a political compromise by phasing out coal by 2038 (like Germany) last December. But the Czech government parties have still failed to agree on the proposed year.

The countries’ lignite reserves are estimated at 737 million tonnes. The Czech opencast mines are mainly located in the north-western part of the country, near the German border. The North Bohemian Lignite Basin and the Sokolov Basin are the two largest lignite mining centres. Four active mines in an area of 1,400 km2 stretch between the towns of Kadaň, Chomutov, Most, Cieplice and Ustí nad Labem, all of which are located in the Ustí nad Labem region. They supply fuel to the nearby power stations in Ledvice, Tušimice, Prunéřov and Počerady.

The bigger challenges of coal phase-out strategies

While the Polish government was the only EU member states which officially expressed its reservations towards the EGD, Poland meanwhile has more wind power capacity in place than Denmark. Polish energy companies have accelerated their efforts for expanding RES (particularly offshore wind power). But they are also facing challenges over public and local support for onshore wind power and need to address NIMBY-attitudes in its regions. In 2019, Poland was still dependent on 70 percent of coal in its national energy consumption.

It is also constructing the largest photovoltaic plant in Central and Eastern Europe in Pomerania (Northern Poland) with a capacity of 203 MW. The project will supply around 153,000 households with green electricity and reduce at least 5 mt of CO₂ emissions over 30 years. The government plans envisage an expansion of renewable power capacity by 65 percent from 2019 to 2024 with offshore wind power projects as a top priority. Together with other windfarms in nearby Denmark, Germany and Lithuania, Poland could become a linchpin to connect green power across the Baltic Sea.

But the Greenpeace demand to phase out coal already by 2030 overlooks the manifold challenges and the overall costs of the energy transformation and decarbonisation efforts.

For coping with the socio-economic challenges of a coal-phase out, the European Commission launched a ‘Coal Regions in Transition Initiative’ as part of the ‘Clean Energy Package’, which offers technical and financial support for the transition and economic diversification as well as the workforce reskilling. The initiative covered 41 coal regions in 12 EU member states.

Germany’s coal phase-out problems

For analysing the challenges of Poland’s coal phase-out, a comparison with Germany’s coal phase-out is indicative. In Germany, its share of RES in its electricity mix went up to 40 percent in gross power production in 2019. By 2030, it intends to increase this share up to 65 percent. But the present share of RES represents just 17.5 percent in its total energy consumption, which needs to be raised up to 30 percent by 2030. Alongside of the coal phase-out by at latest 2038, the German government plans the building of two new gas power plants to replace the shortfall of regulated energy for intermittent RES.

Germany’s new climate protection plan 2050 envisages for the energy industry a decrease in its emissions (compared to 1990) by 62 percent in 2030, 70 percent by 2040 and 80-95 percent by 2050. But coal still accounted for some 28 percent of the country’s power production and almost 21 percent of primary energy consumption in 2019.

Poland still needs fossil-fuel power plants for guaranteeing baseload stability and security for the intermittent RES as long as electricity cannot be stored in large scale at affordable prices (batteries only offer a shot-term solution for a flexible operation). Even in Germany, over 95 percent of the electricity demand needs to be covered by conventional power plants when no sun and wind is available as otherwise neither baseload nor electricity supply security are guaranteed.

Jobs and livelihoods

The socio-economic challenges of Poland’s coal phase-out are much more challenging than Germany’s. In all Polish regions some 100,000 jobs rely on coal (Europe: 237,000 directly and up to 452,000 indirectly). The heavy concentration of the hard-coal region of Silesia makes a rapid coal-phase out and a switch to a different employment structure even more problematic In the Silesian coal mining regions alone, 40,000-78,000 jobs are at stake.

By comparison: The German coal phase-out for all 18,000 jobs being affected and the concerned regions will officially cost at least around €50bn. It does not include various other subsidies needed for building new electricity production capacities based on renewables and resulting baseload-capacities. Altogether, the total costs of the German phase-out could be more than €80bn until the complete phase-out by 2038.

Demands that Poland, which emits one third of the CO₂ emitted by Germany, should decommission its mines and lignite-fired power plants much earlier, are not realistic as the following Turow example highlights.

Regional importance of the Turow lignite mine and power plant

The Lignite Mine and the Power Plant located in Turów are also among the largest employers in the region and the entire Lower Silesian Voivodeship. The total number of employees dependent on the Turów Lignite Mine and local Power Plant complex accounts to 4,710. Direct employment in the Turów Lignite Mine, the Turów Power Plant, their subsidiaries, and cooperating entities ensures a stable livelihood for about 60,000-80,000 people, including employees’ families.

In the years 2018-2020, the Turów Lignite Mine co-operated with around 1,450 suppliers and the Turów Power Plant with around 1,400 suppliers. The job losses of Poland’s planned coal phase-out in Silesia could amount to 50% of the current workforce in the region by 2035 (i.e. 40,000). Given that the Turow Coal Mine and Power plant paid more than EUR 33 million tax and fee payments, it is hardly surprising that last summer more than 30,000 signatures were collected from local inhabitants – and even nearby communities in the Czech Republic and Germany – under a petition in defence of the further operation of mine and power plant.

Germany’s Energiewende is not a model for Poland

The Polish state cannot follow the German model of the Energiewende and its coal phase-out strategy as it is too costly and not affordable for an economically much weaker Polish state. According to independent German and international experts, the German Energiewende-strategy has often proved inefficient and extremely costly (up to more than €300bn spent since 2000) as it is still not achieving some major objectives of its defined policy (massive cost overruns, targets for CO₂-reduction and energy efficiency by 2020). Germany’s electricity prices are the highest in the OECD countries, which leads to huge subsidies for Germany’s energy-intensive industries as otherwise they would not be internationally competitive to survive.

Furthermore, despite billions of Euros as state aid for the hard coal regions since 2006 (and already before) and for ending all hard coal production in Germany by the end of 2018, the former coal mining communities in Nord Rhine Westphalia are hardly economically thriving. Lower life expectancy, the worst child poverty rates and huge municipal debts above the country’s average are only some of the major challenges the coal mining regions have still to cope with.

New clean energy jobs aren’t enough

While expanding RES creates many new jobs, they are not compensating as much for jobs in former coal supply chains, ranging from mines to power plants and the chemical industry, where coal is a basic raw material for its needs. Many jobs in the renewable industry are still heavily subsidised in one or another way. Even worse, Germany’s leading solar power industry almost collapsed against the much more subsidised Chinese industry, also benefitting from lower labour costs. Industry experts now fear that the German wind power sector could experience the same fate.

The argument that the overall costs of RES and batteries have dramatically decreased over the past decade is an important economic factor for accelerating renewables development. Since 2010, the costs of solar PV has decreased by 70 percent, wind by 25 percent and battery costs for electric vehicles by 40 percent. According to Bloomberg New Energy Finance (BNEF) in 2020, solar and wind costs might further drop 71 percent and 58 percent respectively by 2050. By 2040, cost reduction by large-scale production and intensive research could also make batteries up to 70 percent less expensive than today.

But as the German Energiewende experience also teach us, the more a country expands its RES base, the greater the role affordable short- and longer-term storage of electricity will play in ensuring grid stability as well as decreasing the mounting hidden costs of expanding renewables.

Thus, the arguments about the declining costs of RES and its rising competitiveness towards fossil fuels and nuclear do not take into account a number of hidden (or ‘systemic’) extra costs for the modernisation of grids, rising grid interventions and the subsidised back-up of conventional power plant capacities for grid stabilisation and baseload stability.

Strategic common perspectives

All three countries – Czechia, Poland, and Germany – are facing huge and costly energy transformations as well as a national coal phase-out in the years and decades ahead. As all three national energy and electricity systems of Poland, the Czech Republic and Germany are interconnected, it would be better to address the new challenges of decarbonisation and the energy transformation with a common perspective and design regional energy clusters for transnational cooperation.

Germany should also support trinational energy cooperation by offering its past and present experiences as well as best practices from its coal phase-out strategies for Poland and the Czech Republic. This could be a model for other countries and an important contribution for implementing and achieving the mid- and long-term objectives and targets of the EGD by 2030 and 2050.

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Frank Umbach is Research Director at the European Cluster for Climate, Energy and Resource Security (EUCERS)