“A European strategic long-term vision for a prosperous, modern, competitive and climate neutral economy by 2050 – A Clean Planet for all” presented by the European Commission has initiated a broad debate about defining the way Europe should be developing in the 2050 horizon. The Polish Electricity Association (PKEE) fully agrees with the idea of an EU policy assuming innovative and low-emission economy developed in line with the principles of sustainable development.A Clean Planet for All - A European long-term strategic vision for a prosperous, modern, competitive and climate-neutral economy", As the Polish Electricity Association (PKEE), we fully agree with the EU's policy idea of an innovative and low-carbon economy developed under conditions of sustainable development.

The representatives of the Polish power sector are actively working to challenge the effects of climate change. Over the last ten years, Poland has increased fourfold its electricity production from renewable sources (RES), reduced the share of coal-based fuels in its energy mix - from 95 percent to 77 percent, while at the same time reducing the greenhouse gas emissions level by nearly 30 percent with respect to obligations resulting from the Kyoto Protocol. This, among others, has contributed to the improvement of Poland’s emissions to the gross domestic product (GDP) ratio. Additionally, the substantial reduction of emissions achieved in Poland in other sectors, numerous ecological and environmental initiatives as well as other forms of activity such as the adoption of the Katowice Rulebook at the COP24 in December 2018, implementing the Paris Agreement – underline the huge commitment of our country to the promotion of pro-climate initiatives.

The postulate to develop a costs and benefits mechanism

According to the estimates by the European Commission, implementing the strategy will require an increase in spending to 2.8% of the European Union’s GDP, translating to EUR 520 to 575 billion a year in total for the entire Union’s economy. However, it is worth stressing that in its strategy published in November the European Commission did not present the costs to the individual Member States. In the opinion of the Polish Electricity Association, credible analysis of the proposed scenarios will be possible after the Commission presents the financial burdens expressed on the national levels, and not only on the pan-EU level. For the Polish power sector alone, the estimated financial investments will amount to EUR 215 billion over 2020-2045, including EUR 68 billion related to the cost of purchasing the CO2 emission allowances. At the same time, it needs to be pointed out that the above amounts do not include the expenditures relating to the extension of the transmission and distribution networks. We see a real necessity to develop a mechanism for sharing the costs and benefits related to the implementation of the vision of the EU low-emission economy. We point out the urgent need to develop a detailed map of burden sharing and elaboration of concrete dedicated solutions. The postulated mechanism could involve, among others, a new European Union’s budget envelope and significantly increased - proportionally to the new reduction ambitions – Modernisation Fund, Innovation Fund and the solidarity pool in the EU Emissions Trading System (EU ETS). For the Polish energy sector alone, the estimated financial outlays will amount to around EUR 215 billion between 2020 and 2045emissions, including €68 billion related to the cost of CO₂. At the same time, it should be stressed that the amounts indicated do not include expenses related to the development of transmission and distribution networks. We see a real need for a mechanism to share the costs and benefits associated with realising the EU's vision of a low carbon economy. We point to the urgent need to create a precise burden-sharing map and to make the dedicated solutions more specific. The proposed mechanism could include, inter alia, a new envelope in the EU budget and a significantly increased - in proportion to the new reduction ambitions - Modernisation Fund, Innovation Fund and solidarity pool in the EU Emissions Trading System (EU ETS).

The issue of establishing a global CO₂

We would also point out that changes leading to climate neutrality should take place in an evolutionary manner so as to ensure stable conditions for the transformation of the European economy and not to disturb its growth conditions. This need arises first of all from the different starting points of individual Member States in pursuit of emission reduction targets. The achievement of climate neutrality by individual EU countries will be possible at different times. Therefore, the EU's ambition to achieve zero CO₂ net, will require obtaining - in some states - a negative emissions. In this context, it is worth stressing that the strategy does not sufficiently address the implementation of new technological solutions and innovations related to emissions absorption.

The electricity sector will be increasingly challenged by growing trade with third countries where generators do not bear the costs of climate policy and RES support schemes. They are thus not subject to the Winter Package regulations. The Commission's strategy also fails to take into account the fact that the costs of emissions from countries outside the ETS should be taken into account in the case of goods and services imported into the European Union. The Polish Electricity Association deems it appropriate to introduce a tax on imports of CO₂ (carbon border tax). PKEE is also convinced that only a global approach to the problem carbon leakage is capable of bringing real benefits in terms of reducing harmful emissions on a global scale.

Different starting points and equitable transformation

On principles similar to the EU ETS, appropriate regulations could counteract the creation of preferential conditions for the economies of those countries which are not making measurable and effective efforts to reduce emissions. In view of the European Union's small share in global carbon dioxide emissions of around 10%, unilateral action by the Community in this area is not, unfortunately, capable of bringing about a significant improvement in the situation on a global scale.

Appropriate arrangements should be put in place only after a sound impact assessment has been carried out economic (including financial) and social (not only for the European Union in general, but with reference to the specific features of individual Member States and the diversity of European regions). In addition, the results of the discussions in the framework of the Platforms of Mining Regions in Transition and determination of financing adequate to needs. This will be possible not earlier than after the first evaluation of the provisions of the so-called "Winter Package". This evaluation must reflect the total costs of achieving the new targets at Member State level.

Due to the different starting points of the countries and the structure of their energy mixes, the burden of economic transformation will be distributed unevenly across the member states, indicating the need to develop a fair mechanism for burden and benefit sharing among the EU countries. In this context, the Polish energy sector - due to independent conditions - will be exceptionally exposed to the loss of competitiveness resulting from the necessity to incur further significant investment costs in new generation capacities and operational costs - related to the purchase of emission allowances.

The Polish energy sector is part of European and global changes that are setting a new direction for the sector's development. A low-emission economy is our common goal. We just have to make sure that the pursuit of this goal has a real, effective and safe dimension for Member States and energy consumers.

DOWNLOAD FILES