The difficult transition to a low carbon energy sector is strikingly apparent when looking at the Polish market. However, as the participants at the 5th Energy Forum, held this year in Sopot, Poland, displayed – some market actors are more willing to make this transition than others.
The reason that I mention Poland as a challenging place to make this transition is the country’s almost total reliance on coal. Over 90%. The advantage of traveling to another country for a conference is that you can learn a lot about that country’s energy sector. And not just by the statistics, but by talking to the different officials from government agencies and companies. What I took away, whether correct or not, is a strong resistance from established companies and some government institutions about the purpose of moving towards a low carbon economy. In a way, for Poland, under the present energy mix, reductions may seem pointless. That is moving from 94% dependency to 60%, is like switching from a vodka martini to vodka and orange juice. Are you really going to feel the difference in the morning?
I would argue yes, the short term health benefits from the additional orange juice, can lead to further reduction in alcohol over the long term. If you don’t start at some point, then you’ll never make it.
On another note, the organizers of the conference were not only kind enough to invite me but also to have me moderate the session on the Modernization of the Energy Sector in Central Europe. They arranged a great, and diverse panel, which proved really successful in assessing some of the key aspects of the market developments in the CEE region and how some of these aspects can be applied to the Ukraine and Russia. Interestingly for me, Mr. Khotey from the State Property Fund of the Ukraine outlined how the country was preparing to privatize some of its energy companies, and notably distribution companies. I previously did on a study on this topic for USAID examining the efforts in Bulgaria, Romania and Macedonia.
It was also mentioned by one of the speakers that role of the energy regulator was to ensure the interest of the consumer, which for him, is connected to low prices. On this point, I would also have to take issue, as not only is it in the interest of the consumers to pay a fair price, but also ensure that the energy system is transformed over the long term. While there are different regulatory philosophies, ensuring that consumers benefit from low(er) carbon energy sources is essential.
Energy prices and coal are interlinked for Poland. There is no doubt that renewable energy when priced against coal, with no carbon pricing, is more expensive. However, if CCS technology is priced in with the cost of coal, then the opposite is true – coal becomes more expensive than renewable energy. So if Poland is waiting for CCS technology, in order to ensure the place of coal in the country’s generation mix, and to maintain cheap generation, the consumers will be footing an even higher bill in the future. Therefore, as distasteful as it is in the short term, switching to vodka and orange juice, will not only improve your health, but save you money as well.