Poland seeks to nationalize coal plants so companies can finance green investments
Warsaw’s energy transition proposals will require state aid approval from the European Commission, which is expected to insist on a coal exit date
The Polish government plans to nationalize dozens of coal-fired power plants and use public money to keep them running to allow state-owned energy companies to invest in greener alternatives.
The State Assets Ministry’s proposal is part of negotiations between the government and energy companies to restructure the struggling coal sector.
Under the plan, 70 lignite coal units, which produced more than half of Poland’s electricity in 2020, will be purchased by the state and handed over to a single National Energy Security Agency (NABE) managed by the state.
In a statement, the ministry said it would enable a “gradual and long-term transformation of the energy sector” by replacing coal with low-carbon, green sources. In 2020, Poland’s share of electricity produced from coal fell below 70% for the first time.
The merger of the coal assets into a single entity is designed to give three public energy companies – PGE, Enea and Tauron – fiscal space to develop clean energy sources.
Jacek Sasin, Polish Deputy Prime Minister and Minister of State Assets, said banks were reluctant to finance companies with carbon-intensive assets in their portfolios. He added that the pollution allowances required by the European Union to burn coal had become more expensive than the coal itself.
Sasin said the EU’s climate policy and its goal of reducing emissions by at least 55% by 2030, compared to 1990, had created “a huge challenge for the Polish electricity sector”.
The Polish Council of Ministers is expected to discuss the proposal before a broad social and inter-ministerial consultation.
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Aleksandra Gawlikowska-Fyk, an analyst at the Energii Forum, told Climate Home News that the proposal was “a step in the right direction” if it allowed energy companies to invest in clean energy.
But the plan lacks critical details on the need for a coal phase-out, she said, leaving all climate considerations aside.
Pawel Czyżak, head of energy and climate research at the Warsaw-based Instrat Foundation, told Climate Home that without a date to exit coal for power generation, taxpayer money could be used for “Keep these plants running forever,” a prospect he described as “worrying.”
“The government is completely neglecting the climate angle. Its energy strategy and plans are still incompatible with EU climate policy, ”he said.
The proposal would require the approval of the European Commission under EU state aid rules.
Czyżak said it was a critical time for Brussels to force Warsaw to agree on a coal exit date. A categorical rejection of the plan could be used by Poland to blame the EU for rising electricity prices, he warned.
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At the same time, the Polish government is seeking approval from the Commission to provide state aid to its coal sector, with a deal between the government and mining unions due to be finalized this week.
The government previously agreed to continue subsidizing charcoal production until 2049 – an exit date for activists and pundits is far too late.
“The government will fight on two fronts and I think it will be impossible to get Commission approval for both. It won’t be a good Sunday speech, ”Robert Tomaszewski, a senior energy analyst at Warsaw-based think tank Polityka Insight, told Climate Home.
Tomaszewski said Brussels was unlikely to give the green light to Poland’s restructuring proposal for coal-fired power plants without a date to shut down old and inefficient factories.
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Under the current rules, old coal-fired power stations in Poland are eligible for support under an energy capacity agreement approved by the European Commission. But the arrangement ends on July 1, 2025, when most existing factories will lose critical funding.
Without it, old and inefficient factories would have to operate with high losses. About half of the Polish coal fleet was operating with negative margins in 2020.
“Inevitably, NABE will have to shut them down,” said Tomaszewski – a sudden halt that will force investments in alternative energy sources to fill an impending capacity gap in the power system.
In February, the government approved a plan to reduce the share of coal in the power mix to 56% by 2030 through the deployment of offshore wind power and onshore wind and solar power.
A recent analysis by the Instrat Foundation revealed that the share of coal-fired electricity in Poland could drop from 70% currently to just 13% by 2030, without compromising the country’s energy security.
In this scenario, 76% of electricity demand could be generated by renewable energy sources by 2030 and coal combustion in power plants would end in 2035.