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Report: Poles pay €2 billion of coal subsidies annually and may pay even more

Raport / Publikacja - 19 września, 2017
Nearly €53.5 billion is the amount Poles contributed directly to the coal mining industry and the coal-based energy sector between 1990 and 2016. Together with the so-called external costs, the hidden bill for coal soars to the whopping €460.6 billion. The most recent analysis by the economic think-tank WiseEuropa shows that if the current energy policy in Poland is maintained, the coal subsidies will increase even more in the coming years, by at least 30%.

Economists from WiseEuropa in their report entitled “The hidden bill for coal 2017. Support for mining and coal-based energy sector in Poland – yesterday, today and tomorrow” state that in 1990–2016 we were contributing €2 billion annually on average to the coal power and coal mining sectors, which does not include the so-called external costs associated with the deteriorating health and degradation of the natural environment. If these costs are added to the hidden bill for coal, it turns out every Pole paid as much as €446 on average every year to support the coal power sector.

Aleksander Śniegocki, Energy and Climate project manager at WiseEuropa and co-author of the report, said:

“Coal is still treated by some decision-makers as a national treasure of strategic significance for Poland’s prosperity. Meanwhile, coal mining constitutes only 1% of the Polish GDP and its share in the overall output is constantly decreasing. At the same time, the amount of support granted to the domestic coal sector is high and will increase even further.”

The conservative estimates produced by WiseEuropa on the basis of the available data show that if the government continues its current energy policy, in 2017–2030 the coal mining and coal power sectors will absorb over €36 billion (this amount does not include e.g., external costs). This way the average annual support for coal will amount close to €2.6 billion a year, up by 30% compared to the previous quarter of the century. This is certainly bad news for the transition prospects of Polish energy sector, which in over 80% depends on climate-killing coal.

Anna Ogniewska, Climate and Energy campaign coordinator at Greenpeace, said:

“The mining industry as well as the coal power sector benefit from direct financial support documented in official reports as well as favourable laws, which allow them to transfer a significant portion of the costs onto the society. To make matters worse, instead of investing more in renewable energy sources and energy efficiency, the government is planning to introduce more coal power subsidies.”

The costs of coal that the Polish society will incur in the coming years will also be financed by the capacity market. This is yet another support instrument that is being currently prepared by conservative government of PM Beata Szydło. The proposed capacity payment, which will be added to the electricity bills, means another net €6.3 billion of subsidies received by energy companies until 2027. An analysis of the impact of the new regulations offers the conclusion that the energy sector will mainly be funded by small and medium enterprises (contributing €3.5 billion) and households (€1.6 billion). Experts object that this way, instead of modernising the energy sector, the capacity market will deepen Poland’s dependence on coal, which more and more often is imported, mainly from Russia.

“The capacity market is a short-sighted solution. It will not solve the problems of the energy sector and it may actually exacerbate it, especially in terms of Poland’s dependence on imported coal and energy shortage during the summer demand peak,” added Anna Ogniewska from Greenpeace.

"The hidden bill for coal 2017" - media brief

"The hidden bill for coal 2017' - report