Poland to Bring Up Coal Mines Survival, Russian Gas With EU

  • EU's Arias Canete arrives in Warsaw for two-day visit Thursday
  • Agenda also includes carbon-market reform and climate goals

Poland will seek to stop the Russian push for expansion of the Nord Stream natural-gas pipeline and to win the European Union’s assurances for the future of its coal industry when the bloc’s energy and climate chief Miguel Arias Canete arrives in Warsaw today.

Arias Canete, who oversees EU policies ranging from gas-supply security to the emissions-trading system, known as ETS, is scheduled to meet Polish energy and environment ministers during a two-day visit. The agenda also includes EU climate plans for 2030 as the European Commission prepares a draft law on how to divide the burden of a 40 percent greenhouse gas-reduction target among member states.

Poland’s new ruling party has signaled since the October election that energy and climate policies are at the heart of its EU agenda and that it will fight for concessions for the nation, which depends on coal for more than 80 percent of electricity production. The tension between the government and the commission has grown after the executive arm of the 28-nation bloc yesterday took a first step to discipline Poland for ramming through laws that politicize the constitutional court and national broadcaster.

“We will want to discuss, among others, coal, effort sharing, ETS and Nord Stream 2,” Poland’s minister for EU affairs Konrad Szymanski told Bloomberg.

Coal Industry

The government seeks to save the nation’s ailing coal mines, which employ almost 100,000, and wants the most polluting fossil fuel to remain the main source of electricity for at least 30 years, at odds with the EU strategy to deepen carbon-dioxide cuts. As part of a new global climate deal, 195 nations agreed in Paris last month to limit the growth of temperatures caused by greenhouse gases.

Under the agreement, pollution from burning fossil fuels must be equal to those absorbed by planting trees and the facilities for capturing carbon for permanent underground storage. Poland, where forests cover almost 30 percent of its territory, wants the EU to take into account the sector in its 2030 climate law.

The government has to persuade the EU that it needs more time to adjust its coal industry, Energy Minister Krzysztof Tchorzewski said. The choice of Poland as Arias Canete’s first destination after the Paris climate conference is a signal that he takes Poland’s concerns seriously, according to Tchorzewski.

“Coal should be used as long as there are reserves,” he told Bloomberg. ‘If we were to start walking away from coal our gross domestic product would shrink by 10 percent by 2030. One can’t convince people to support that. Energy from coal is cheapest.”

The government’s plan to restructure the coal industry needs to get the green light from the commission, which has the right to block state aid that is aimed at keeping unprofitable businesses alive. As the price of coal tumbled to the lowest in at least eight years, Polish mines are struggling with costs, much of which was inherited from the pre-1989 communist era. Their combined loss for the first 10 months of last year was 1.69 billion zloty ($422 million).

Gas Pipeline

While coal is Poland’s biggest own source of electricity, it imports most of its gas -- used mainly by chemicals producers, refineries and individual customers -- from Russia. The country was OAO Gazprom’s fourth biggest customer in the EU in the first nine months of last year, behind Germany, Italy and the U.K., buying about 10 billion cubic meters.

Poland is one of the most vocal opponents of the push by the Russian gas exporter to expand a natural-gas pipeline that circumvents Ukraine. It has warned that the Nord Stream-2 project, which Gazprom is pursuing with western European companies ranging from Germany’s EON AG to Paris-based Engie, would hurt energy security in eastern Europe and undermine the bloc’s energy union strategy aiming to diversify energy-supply sources.

Gazprom, EON, Engie, Royal Dutch Shell Plc, OMV AG and BASF SE signed an agreement in September to expand Nord Stream by 55 billion cubic meters a year, which would double its capacity. Russia currently ships about a third of its Europe-bound gas via Ukraine, down from about two-thirds in 2011, when the Nord Stream pipeline under the Baltic Sea started supplying Germany directly.

The Nord Stream 2 project is a “real security threat for the Europe,” Ukraine Foreign Minister Pavlo Klimkin said at a press briefing in Vienna today.

“Certainly we believe that Nord Stream 2 is economically nonviable and purely political,” he said.

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