Polish NGOs appeal to the decision makers to stop capacity mechanisms from subsidising coal and enable clean energy transition in Poland

13 November 2018

On the eve of the trilogue meeting on the capacity market scheduled for 13 November, Polish social organizations working for environmental and climate protection appeal to Ministers and MEPs to ensure that the power mechanism is not used to support the construction of new coal-fired capacities such as the planned Ostrołęka C power plant in Poland.

Full content of the letter sent to the decision-makers:

In view of the upcoming trilogue meeting on the Electricity Market Regulation we, the undersigned, a coalition of social organisations working for climate protection and just energy transition in Poland, appeal to you to ensure that the capacity mechanisms remain a last resort solution and that they no longer subsidise coal plants.

Meeting the Paris Agreement goals regarding climate protection will require European countries and OECD members to close their coal-fired power plants before 20301. This means that investments in lifetime extension of coal power stations will not be amortised. For this reason, as well as due to the shrinking of domestic coal reserves, rising CO2 prices and the fact that renewable energy sources are becoming cheaper and cheaper, further subsidizing coal will only result in even higher costs for Polish taxpayers. They will be paid by Polish businesses, local governments and households. Higher energy prices will translate to lower competitiveness of the Polish economy and the deterioration of the economic situation of Polish families. Capacity payments for coal means another financial burden for a large group of citizens who are already struggling with energy poverty.

Moreover, we would like to draw your intention to the fact that Polish state-controlled companies Energa and Enea intend to use the capacity mechanisms to subsidise a new 1 GW coal plant Ostrołęka C. The construction of Ostrołęka C is unreasonable both for the country and the region itself. It has no economic justification and poses a threat to people, the climate, the environment and the energy system. It is estimated that this power plant will emit approx. 6 million tons of CO2 annually over its 40-year lifespan2. Utilities involved in the project indicated in their official statements that it can be pursued only with the capacity payments3 as otherwise, according to analysts, Ostrołęka C will be permanently and deeply unviable4 and could result in EUR 1,7 billion loss5. It will block innovative solutions, including the construction and maintenance of renewable energy sources, cross-border energy interconnectors and innovative energy services6. Ostrołęka C will also pose a serious threat to public health. Air pollution caused by its operation can cause severe health impacts including up to 2,000 premature deaths and health costs estimated at up to EUR 690 million7.

In the light of the above we call on you to ensure that:

    The carbon intensity criterion of 550 g CO2/kWh must apply immediately to all plants.
    Polish capacity market is designed to maintain the status quo in the country’s coal-based energy system. It is estimated that until 2030 it may cost Polish taxpayers up to EUR 14 billion. A vast majority of this estimation would be spent on the life-time extension of existing coal-fired plants and possibly building new coal plants like Ostrołęka C. To fulfil the Paris Agreement, the EU, including Poland, needs to phase out coal and accelerate the clean energy transition. Therefore, as a first step, it is crucial to end subsidies to both new and existing coal plants.
    Definition of the new generation capacity is clearly set at the start of commercial production after the new Electricity Market Regulation comes into force. EU Commission proposal and the Council general approach differentiating 550g CO2/kWh application timeline between generation capacities based on the time of their ‘final investment decision’, creates a legal grey area that could lead to even more new coal investments being subsidised with capacity mechanisms. The European Parliament proposal to use the moment of the start of commercial production provides a clear cut-off point and eliminates the room for misinterpretation.
    The Electricity Market Regulation provisions on capacity mechanisms must apply immediately to all existing capacity mechanisms and concluded contracts.The Council’s General Approach introduces an exception for the already approved capacity mechanisms. This would exempt the Polish capacity market from the new rules, thus forcing Polish citizens to continue to subsidise an archaic coal energy system for more than a decade to come. This would also distort the playing field between Poland and its neighbouring Member States as well as hinder clean energy transition.

We hope that with the COP 24 Climate Summit in Katowice approaching, EU will prove that it is serious about the commitments made under the Paris Agreement to end subsidising coal with the capacity mechanisms, and that you will show your support to the above postulates in the upcoming trilogue meeting.

On behalf of the signatories of the letter

Radosław Ślusarczyk President of the Association Workshop for All Beings (Pracownia na rzecz Wszystkich Istot)
Fundacja Frank Bold (Foundation Frank Bold )
Fundacja „Rozwój Tak – Odkrywki Nie” (Foundation Development Yes – Open-pit Mines No)
Fundacja Zielony Instytut (Foundation Green Institute)
Stowarzyszenie Ekologiczne Eko-Unia (Ecological Association EKO-UNIA)
Stowarzyszenie Ekologiczno-Kulturalne „Wspólna Ziemia” (Ecological and Cultural Association ‘Common Earth’)
Stowarzyszenie Pracownia na rzecz Wszystkich Istot (Association Workshop for All Beings)
Towarzystwo dla Natury i Człowieka (Society for Nature and Man)
Towarzystwo na rzecz Ziemi (Society for Earth)
Związek Stowarzyszeń Polska Zielona Sieć (Alliance of Associations Polish Green Network)

1 A stress test for coal in Europe under the Paris Agreement
2 Banktrack: Ostroleka C coal power plant
3 The last coal power plant in Poland may be only wishful thinking
4 Ostrołęka C - next steps for the Europe's last coal power plant
5 Ostrołęka C: Burning More Money Than Coal
6 The risk analysis related to the Ostrołęka C Power Plant development
7 Adamkiewicz Ł., Health impacts of the Ostrołęka C power plant, 2017, based on the valid IPPC, in Polish