The Polish government has signed a deal with mining unions for the use of public funds to support miners during Poland’s phaseout of coal over the coming decades. But legal experts warn that the plan could be rejected by the European Commission for violating rules on state aid.
Last September, the government agreed with unions to close all coal mines by 2049. In late April, they set out more details on severance pay, job guarantees and assistance to the southern coal region of Silesia.
On Friday, the two sides met in the city of Katowice to sign a “social contract” that includes a guarantee of work until retirement so that employees at closing mines will be transferred to others or given a severance package of 120,000 zloty (€26,800).
The deal also outlines the annual indexation of salaries – by 3.8% in 2022, 3.5% in 2023, 3.4% in 2024 and 3.3% in 2025 – as well as the order of mine closures.
The agreement includes plans for a “Silesia Transformation Fund”, which will use public funds to subsidise the region’s transition away from the coal industry, which directly employs around 80,000 people and sustains many related businesses.
“This is a document that we all never wanted to sign,” said Jacek Sasin, the minister for state assets, who represented the government at Friday’s conference. “I do not feel any satisfaction today.”
“We have wound up here because of the climate policy of the European Union,” added Sasin, who also serves as deputy prime minister. He said that the EU’s carbon trading scheme was to blame for the rising costs of coal, and had left Poland with “no other choice” but to seek alternative energy sources.
Poland currently relies on coal for around 65% of its energy generation, by far the highest figure in the EU. That number has been declining in recent years, but the government, under EU and market pressure, recently outlined an ambition to reduce it to as little as 11% by 2040.
Through the pandemic, the coal industry has plunged further into the red, with the state-owned Polish Mining Group (PGG) – which is the largest hard coal producer in the EU – reporting a loss of 2 billion zloty (€446 million) in 2020. The company received a €220 million government loan under the temporary coronavirus state aid rules in April.
However, the social contract signed on Friday will now need to be approved by Brussels. Lawyers from ClientEarth, a climate NGO, believe that the use of state aid may not be deemed lawful by European regulators.
“The negotiations have been quite surreal,” said Wojciech Kukuła, a lawyer from the organisation. “All involved are burying their head in the sand and pretending to not see the writing on the wall.”
“ClientEarth’s analysis argues that this clashes with EU laws on state aid, which make it clear that granting aid to operational coal mines is not an option,” he said in a statement shared with Notes from Poland.
He added that the European Commission was also seeking to align competition rules with the European Green Deal and the goal of climate neutrality by 2050 (a target that Poland is the only member state not to sign up to), making EU approval for the state aid “even more unlikely”.
“Ultimately miners, their families and society will be left with the chaos created by the government,” said Piotr Wójcik, an energy expert at Greenpeace quoted by Gazeta Wyborcza. “Domestic coal mines will be closed much faster than the current year 2049. Therefore, the agreement signed today is a bluff,” he said.
Polish governments have historically been reluctant to take on miners, who have over the decades amassed a number of professional privileges. Past scraps have led miners to hold destructive demonstrations in Warsaw, organise underground strikes and block train tracks.
Main image credit: Krystian Maj / KPRM (under public domain)
Maria Wilczek is deputy editor of Notes from Poland. She is a regular writer for The Times, The Economist and Al Jazeera English, and has also featured in Foreign Policy, Politico Europe, The Spectator and Gazeta Wyborcza.
