Poland to separate state coal assets to boost investment in lower emission energy

Poland’s government has approved plans to move state-owned coal mines and power stations to a separate entity. The aim is to help the state energy firms that currently own the assets to more easily find financing for low- and zero-emission investments.

However, while some analysts have welcomed the move, others have raised concern over how it will be financed, the government’s decision to avoid scrutiny by the competition office, and the market power of the newly formed entity that will hold the coal assets.

This week, the cabinet adopted a document entitled “Transformation of the electricity sector in Poland”, announced Jacek Sasin, who serves as both deputy prime minister and minister for state assets.

The plans foresee the establishment later this year of a new entity, the National Energy Security Agency (NABE), which will purchase coal assets from existing state-owned energy firms PGE, Tauron, Enea and Energa.

Those assets are substantial: Poland still generates around 70% of its electricity from coal; the Bełchatów coal-fired power station – located in the centre of the country and owned by PGE – is the largest in Europe and the continent’s biggest single emitter of CO2.

The purpose of shifting coal to a separate entity is to help other energy firms more easily obtain financing for investment in cleaner forms of energy, notes business news service WNP.

This is “a great idea for energy companies, because they would finally no longer be associated primarily with coal”, Paweł Puchalski, an analyst at Santander Brokerage, told WNP. “After the establishment of NABE, energy companies will be able to take out significant loans for new investments.”

“The transfer of coal-based generation assets to NABE will accelerate the transformation towards renewable energy” but also allow those coal assets to keep running “until new investments in low- or zero-emission generation units are delivered”, said Artur Michałowski, acting president of Tauron.

However, the plans have also been met with concern from other quarters. In its announcement this week, the government noted that it would use its legal right to exempt the establishment of NABE from assessment by the competition authority. It also removed from an earlier draft mention of notifying Brussels.

“Circumventing the [competition authority] would not be a good signal,” Wojciech Kukuła of ClientEarth Polska, an environmental law charity, told Dziennik Gazeta Prawna. He also warned that the European Commission may still intervene if it believes the terms of the transfer of coal assets are not guided by market principles.

WysokieNapiecie, an energy news service, notes that NABE would have enormous market power, accounting for around 55% of electricity generation. In response to such concerns, the government says that it has measures in place to monitor the market and that NABE’s market power will decline over time.

Trade unions at Tauron have also argued that NABE’s dominant position on the market will lead the European Commission to reject the plans, reports WNP. They have called for the creation of two or three smaller entities, rather than the single NABE.

WysokieNapiecie also notes that financing for the plans is still unclear. In particular “it is not known how much the state treasury – that is, taxpayers – will have to pay to buy the coal-fired power plants”.

The government, however, remains confident that the plans will proceed and succeed. “The establishment of NABE will contribute to guaranteeing energy security in Poland, while ensuring the necessary availability of power in our country’s energy system,” said the prime minister’s office on Tuesday.

Main image credit: Jakub Wlodek / Agencja Wyborcza.pl

Daniel Tilles

Daniel Tilles is editor-in-chief of Notes from Poland. He has written on Polish affairs for a wide range of publications, including Foreign Policy, POLITICO Europe, EUobserver and Dziennik Gazeta Prawna.