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    EU Approves Polish Coal Support Package

Summary

Brussels has approved an amended Polish plan to provide some $1.55bn of state support to alleviate the closure of coal mines by 2018. However investors are continuing to fund coal's expansion in the Polish economy.

by: Mark Smedley

Posted in:

Natural Gas News, Europe, Carbon, News By Country, EU, Poland

EU Approves Polish Coal Support Package

The European Commission (EC)nhas approved an amended Polish plan to provide zloty 5bn (€1.25bn or $1.55bn) of state funding to alleviate the impact of closing coal mines by 2018.

The EC said the support package was in line with EU state aid rules, as potential distortions to competition would be limited. It previously approved a Polish support package to shut uncompetitive coal mines in November 2016.

The EC judged that the latest package will ease the closure process by providing financial support to workers who have lost, or will lose, their jobs due to the closure of the mines. It will be used to fund severance payments, compensatory pensions and social security benefits for these workers until 2023, and also be used to secure mine shafts and decommissioning of mine infrastructure, and on environmental remediation.

Despite the mine closures, Unfriend Coal, an environmental alliance that includes Greenpeace, said February 7 that European insurers – including Allianz, Aviva, Generali and Munich Re – are continuing to back the growth of Poland’s coal industry. It said that Polish companies plan to build 10 gigawatts of new coal power plants – including 3.2GW already in construction – and to develop new open-pit mines holding 3.2bn metric tons of lignite (brown coal). Its report, published February 8, said that European insurers had invested more than €1.3bn in Polish coal companies and signed at least 21 contracts underwriting existing operations.

Major Polish power generator PGE, one of those featured in the report, was one of a number of companies delisted from the Norwegian Oil Fund last year for not having significantly reduced their coal use in line with the bank’s investment criteria. 

Poland still generated 81% of its electricity from coal in 2015, according to World Bank data. Main gas firm PGNiG produced 4.4bn m3 in 2016, mainly in Poland but the country is heavily dependent on imports for its gas, principally from Russia's Gazprom. That means that policymakers tend to resist a reduction in coal's role in the economy, both for energy security and socio-economic (rather than environmental health) factors.