The new Polish government will not just resist ambitious EU climate targets, it will also increase the role of the State in the energy sector, write researchers Kacper Szulecki (University of Oslo) and Andrzej Ancygier (Climate Analytics) . The conservative Law and Justice Party that has been swept into power intends to create a Ministry of Energy, which will take control of the major Polish energy companies, note the authors. The likely new Minister of Energy, Piotr Naimski, views energy policy primarily in terms of foreign policy rather than economics or the environment. However, his ability to effect real changes may run into practical limitations as a result of the lack of energy expertise within the party.
Poland is known as a major veto player in EU energy and (especially) climate policy. That is likely to get even worse in the coming years, as centre-right party Civic Platform (PO) will be replaced by the conservative “Law and Justice” (PiS) party after the elections of 25 October.
While in opposition, PiS, in Europe associated mostly with its founder and leader Jarosław Kaczyński, tended to simply oppose all of PO’s energy policies. The only issue where the two parties agreed was in their opposition to the EU’s climate and energy package, reform of the ETS (Emission Trading System) and the EU’s 2050 Low Carbon Roadmap, but their ways parted when, in October 2014, Prime Minister Ewa Kopacz struck a deal with the other European leaders and supported the EU’s 2030 energy and climate targets. Not surprisingly, many analysts predict that a new government, which is now being formed, will make EU negotiations of energy and climate issues even bumpier than they already were.
Minister of Energy
But that’s not the only change that we may expect to occur. PiS will also try to take much more control of the energy sector. The party has said it intends to create a Ministry of Energy. At this moment, there are at least five ministries that have different degrees of responsibility and influence in energy issues, with the ministries of Economy and the Treasury playing the most important roles. The new super-Ministry aims to bring energy governance issues together. It wants to reduce the importance of the Ministry of the Environment and take over its competences in EU and international climate policy.
Poland’s new Minister of Energy will almost certainly be Piotr Naimski. He has been involved in politics since his student years, when he openly opposed the Communist regime, and has been one of the founders of the legendary dissident Workers’ Defense Committee (KOR) in the 1970s, as an activist of the Solidarity trade union. Biochemist by training, Naimski left the lab after 1989 to deal with security matters, both in practice – as the head of the state security apparatus in the early 1990s – and as a political analyst. One of his major interests is energy security, which he understands as supply independence from Russian gas (not an uncommon view in Poland, of course).
Naimski has recently authored a book under the telling title “Energy and Independence”, where he argues that since the fall of Communism Poland’s sovereignty has gradually been “extinguished” due to dependence on Russia. This is rather symptomatic for the way energy policy (or rather – politics) is perceived among Polish conservative politicians and experts. Poland and Europe are viewed through the lens of geopolitics and security. Energy policy is an important foreign policy tool, and there is little place for economics, markets, much less environmental concerns.
The new Ministry would take control over companies in the energy sector defined as “strategic” for Polish energy security, many of which are currently under the jurisdiction of the Ministry of Treasury
Naimski has said that the role of the Ministry of Energy would be to “coordinate governmental actions related to energy and energy resources”. For him this is necessary as under the current governance setup Poland is “unable to react to the challenges brought by the European Union and the external world”. When meetings of energy ministers are held in the EU, he said, “Poland sends the economy, environment and treasury ministers in turn. We need to have those issues coordinated in one hand in the government.”
The new Ministry would take control over companies in the energy sector defined as “strategic” for Polish energy security, many of which are currently under the jurisdiction of the Ministry of Treasury. Those companies would be used by the government to devise an effective energy policy. A PiS manifesto from 2014 lists the types and names of such “key companies”, including infrastructural companies (Gaz-System), energy companies (the four power producers, the refinery companies PKN Orlen, Grupa Lotos) as well as other important and large players in different sectors.
Save the mines
Another key policy idea of PiS is to integrate the state-owned power utilities with coal mines. The mines are in a dire economic situation; combining them with utilities may help finance their modernisation or simply help them survive, by using the profits of the relatively profitable – despite significant write-downs – energy companies. Naimski suggests that “there should be a link between the producer of coal and the power generator, with the marketable product being electricity and not necessarily” the fossil fuel from which it’s produced.
In practical terms, this “functional link” could be reached through long-term supply contracts or capital ties, or the energy companies could simply merge with the mines, taking their coal without actually paying for it at market prices. This option was already explored by the previous government but its implementation was forestalled by the unwillingness of the profitable energy companies to take over the burden of the coal mines, many of them on the brink of bankruptcy.
The brown-out last summer showed the extreme vulnerability of an energy system based almost exclusively on coal and lignite, particularly in a country whose surface water resources are on a par with a country like Syria
However, it might be the only option to save the mines while by-passing the EU’s new state-aid constraints. PiS promised the mining unions that it will revive the coal sector, but cannot simply go for a bailout, so it may go ahead with the plan. This may be easier when new management has been put in place in the state owned enterprises, as is often done in Poland when a new party comes to power.
All of this signals a clear shift from the market orientation which PO maintained (albeit with some limitations). PO had committed to the EU’s unbundling and other energy market regulations. The question is to what extent PiS will do the same. Naimski has stated that under the oversight of the new government, energy companies will be more efficient, and will serve the interest of the state, not just the respective company: “Those companies have a role to play not only as economic entities but as instruments of the Polish state”.
When in opposition PiS blamed the ruling coalition for not doing enough to safeguard Poland’s energy independence and protect the coal sector at all costs. Coal miners’ unions were an important part of the bottom-up force that helped PiS gain the upper hand in the industrial Silesian region. The new president Andrzej Duda, who took office this Summer, formerly an MEP and member of PiS, was quoted as saying that Poland’s coal resources could “serve the country for the next 200 years”. Piotr Naimski called coal the “blood in the veins of the Polish economy”.
However, the commitment to coal will present the new government with some problems. In the current global energy landscape, with abundant and cheap coal, Polish indigenous resources find it difficult to compete. The EU’s decarbonisation push is not helping either. Coal is also becoming unpopular in other ways. President Duda, not long after assuming office, signed the long awaited “Anti-Smog Bill”, opening the road for a gradual phase out of all coal-based household heating. Air quality has been a problem, especially in southern Poland, for years. A recent European Environment Agency report listed six Polish cities in the bottom ten in Europe regarding smog and particle levels. This is due mostly to the use of low quality lignite in the residential sector.
Interestingly, PiS is much more positive about distributed, small-scale renewables than its predecessors of the PO
Some coal-miners described the Bill as contributing to the adverse environment that the coal sector has to face, although the economic impact for Polish mines would be limited. But the smog issue did fuel widespread protest and initiated a wider debate on the role of coal, which seems slowly to spill over to the power sector as well. The brown-out that the Polish power sector had to endure last summer as a result of water shortages showed the extreme vulnerability of an energy system based almost exclusively on coal and lignite, particularly in a country whose surface water resources are on a par with a country like Syria. Throughout August some 1600 companies had to reduce their energy consumption during the day, and energy shortages in the system reached 2GW.
If not, then what?
The question is, what alternatives to coal does the new government have? Other technologies also have their problems. Naimski is in favour of nuclear energy. He wants to continue the costly programme that PO embarked on, which aims at building two nuclear plants of 3GW each by the late 2020s.
But the nuclear programme has for years been moving very slowly if at all. At the moment it is still not clear who will build the first plant, who will pay for it, where it would be built and when exactly. The only certain thing is that the bill for the preparations since 2009 has run up to several million zloty. Although Naimski may be convinced of the necessity to push the project forward to achieve long-term energy autarchy, he might meet strong opposition within the party and in society.
Shale gas, once considered the magical “silver bullet” to solve Poland’s gas import dependence problem once and for all, looks like a merely hypothetical solution. All major foreign developers have left.
Poland’s position for the upcoming COP21 climate conference in Paris is also a mystery
Interestingly, PiS is much more positive about distributed, small-scale renewables than its predecessors of the PO. The PiS party program even refers to prosumerism as an important component of domestic energy production. This might be thanks to the internal lobbying of Piotr Gliński, who will likely become a deputy PM in the new cabinet. Gliński was once a founder of the Polish “Greens”, though he never actually joined the Green Party.
But this does not mean that renewable energy developers now face a Golden Age. On the contrary, the only renewable technology that has seen significant deployment in Poland – wind power – is considered the arch-enemy by many “Law and Justice” politicians. Some of them have already suggested introducing legislation banning the construction of wind turbines within three kilometers of the nearest housing. Since such areas – if they exist – tend to be nature preserves, this would de facto mean a moratorium for wind power in Poland. For PiS, the preferred technologies are small-scale PV and geothermal – a preference of the influential radio broadcaster Radio Maryja (Radio Holy Mary), to whom PiS owes a lot of electoral support.
It is something of a ritual in Poland that when a new party or coalition comes to power it “cleans” the staff of every public institution down to the level of janitor. That was certainly the case when PiS first took office in 2005, and that is what we might expect to see by the end of this year in Poland.
But this spells trouble for the party’s capacity to actually govern the energy sector. After long years in opposition, PiS does not have much expertise to deal with the technical aspects of energy governance at home or in the EU. Its self-proclaimed energy experts offered very little detail on their policy ideas during the campaign.
With their insistence on gas security (although natural gas makes up only some 13% of Poland’s primary energy mix), PiS politicians have virtually ignored the power sector. When Naimski referred to it, e.g. when he uttered support for the construction or expansion of coal plants, his argument was that “they are needed, otherwise we will have to import Russian electricity”. This while not a single interconnector between the countries exists and their power systems are not synchronised.
It was the same with EU policy. Although throughout the election campaign, PiS politicians targeted the European Energy and Climate Package, they never went into any details. There was never any reference to EU ETS reform or to actual targets, or whether the already adopted 2020 Package or the still to be specified 2030 Framework was the problem. Naimski, who has consistently opposed any merging between climate and energy policy, suggested, adopting some EU-lingo, but without much meaningful content, that Poland will re-negotiate the “package” and strive for an “opt-out” from climate policy, like the one the UK and Denmark got for the common currency.
It seems then that to actually run the system and the entire bureaucratic machine (power regulator, TSO, ministerial departments, etc.), PiS will have to rely on the current staff. This suggests that institutional inertia might tone down any spectacular reform that the conservatives have promised.
Out of steam
This could apply even more at the EU level. Getting to grips with EU policy making took “Civic Platform” some years. They only recently mastered coalition building and bargaining in the European Council to the extent that it matched Poland’s political weight, and at times were even able to punch slightly above it. That’s just the political side. The legal and administrative nitty-gritty side of EU energy policy requires an army of experienced civil servants. The only experience PiS has had with EU institutions during the last couple of years was through its MEPs. Of the two that did work on energy issues – Konrad Szymański and Paweł Kowal (not a member of PiS, but of its electoral coalition partner, Poland Together) – the former seems to have retired from politics and the latter was crossed out from the electoral list by Kaczyński himself.
The new government and president in Warsaw will no doubt do everything in their power to obstruct Nord Stream 2
Under Donald Tusk and Ewa Kopacz as PMs, the Polish government did only what was necessary to meet the minimal EU obligations and not a pinch more. This is probably what PiS will also end up doing, once its jingoist anti-climate rhetoric runs out of steam, and confronted with EU and economic realities.
The ongoing process of shaping a new “Energy Union” might be crucial here. Although conservative MEPs criticised the Commission’s Energy Union Roadmap for watering down the initial proposals put forth by Tusk, and creating a “façade Union”, Poland still has a very significant stake in the project. As long as Maroš Šefčovič and Claude Juncker are able to keep the current agenda, with energy security and decarbonisation as part of the same framework, it might be too costly for Poland, as much as PiS regrets it, to use its veto.
In the meantime, however, climate policy skepticism and open climate denialism will again become the prevailing rhetoric in Polish politics. Just a day after the parliamentary elections, President Duda refused to ratify the Doha Amendment establishing the second commitment period of the Kyoto Protocol, arguing that its “socio-economic implications for Poland” were not clear enough” and that the agreement had too strong implications for Polish economy to allow it.
Poland’s position for the upcoming COP21 climate conference in Paris is also a mystery. It is not certain when the new government will be installed and if that will have an impact on the delegation sent to Paris. But as the number of UNFCCC experts in Poland is rather limited and the EU target of “at least 40% emissions reduction” has already been adopted by the Council of Ministers, there is not much that the new government will be able to do to hinder the negotiations. Naimski did suggest that a “failure of the Paris Summit would be in Poland’s interest”, but whether Poland will actively seek to derail the process or just passively watch remains to be seen. The main challenge will begin when the overall EU emissions reduction target will have to be divided between the member states.
For the moment, the new government’s key energy policy concern will probably be the proposed Nord Stream 2 pipeline. The first Nord Stream under the Baltic sea was considered a blow for Poland’s energy security. The then-Foreign Minister, Radek Sikorski, compared the German-Russian deal with the 1939 Molotov-Ribbentrop pact. Emotions aside, the way the initial project was handled by the German government and business has indeed been a watershed for bilateral relations with Poland in the energy sector. Since then, it became clear for the Poles that when energy is concerned, Germany can never be fully trusted. At least this is what many ministerial energy experts and civil servants can be heard saying in private. The new government and president in Warsaw will no doubt do everything in their power to obstruct Nord Stream 2, and relations with Germany will remain tense, especially if the German side again turns a blind eye to Poland’s concerns.
Kacper Szulecki is an assistant professor at the Department of Political Science, University of Oslo, working on energy and climate policy. He is also an editor of the Polish political weekly “Kultura Liberalna” (http://liberalculture.org/). Email: Kacper.email@example.com
Andrzej Ancygier is a researcher at Climate Analytics and the Hertie School of Governance. He also lectures on European integration and environmental policy at the New York University in Berlin. Email: firstname.lastname@example.org