Coal Country

As William Shakespeare, the four hundred and fiftieth anniversary of whose birth we mark this year, wrote: “Affection is a coal that must be cooled; Else, suffered, it will set the heart on fire.” Perhaps. But when it comes to affection for coal, the Polish prime minister’s heart if not on fire is certainly smouldering. Which is more than can be said for Polish coal itself.

Poland’s largest coal producer Kompania Weglowa which has restarted operations after a break in production owing to mounting stockpiles of unsold coal, currently at five million tonnes, is facing declining demand, falling global prices, and lost Euro 240 million on sales of coal in 2013. Prime Minister Donald Tusk, who has repeatedly championed coal as an energy source (please see Black Rock) said that coal is a key factor in the government’s programme of energy diversification and his idea of an EU energy union. “From the point of view of the Polish government, coal has to be a strategic foundation for energy security in Poland,” which requires very sophisticated tactics, both in relation to the EU and importers of coal. He said that he wanted to find a way to make Polish coal competitive so that “Promoting and protecting Polish hard coal is not just a slogan.”

The government wishes to eliminate “dishonest” imports and to “ensure compliance with quality standards so that Polish coal does not fall victim to dishonest or ambiguous operations involving imported coal,” the prime minister said. “We also want to check if there are any illegal operations involving VAT or other mechanisms that make Polish coal less competitive, or more expensive,” Tusk also said. It’s those foreigners again. The state will also review fiscal burdens on domestic coal production, the PM said, and in order to increase the share of domestic coal in retail sales, Poland will set up a national coal repository, to selling Polish coal to retail customers at lower prices.

What these means in practice is more state control since in his view Poland and Europe must put energy security ahead of corporate profits and be ready to pay a price for domestic energy resources (after all, one man’s subsidy is another man’s higher cost). Which is all very well in theory but, as we have seen from the UK experience, where a cack-handed energy policy has resulted in higher prices, no long term planning, subsidies to landowners who despoil the few reaming green spaces with ugly wind turbines and nothing that even vaguely resembles energy security. Let’s hope Poland is able to do better – it would be hard to do worse.

Warming (pun intended) to his theme, Donald Tusk said that energy security and a sense of responsibility for the community means a necessity properly to set borders on “individual egoism and on profit chasing”. Drawing on the lessons of the recent banking crisis, he said that the pursuit of quick profits without long-term vision “is a temptation whose inalienable element is a dramatic finale.” Instead Poland must engineer “a rehabilitation not only of Polish coal, but also a rehabilitation of everyone who works hard, is not a financier, doesn’t know the nuances of global finance, but works hard every day” for energy security to become a fact.

Needless to say, an element of “I told you so” crept in with Tusk citing the rise of energy security as a policy topic in Europe as constituting a vindication of the Polish stance on climate policy within EU circles in recent years: “Today we see clearly, and the Ukrainian problems show us clearly, that we, Poles, were largely right in calling for the proper proportions in arguments for protecting the environment and for energy security.”

Be that as it may, energy diversification – which of itself leads to greater energy security – is clearly a sensible idea. Tusk is right not to neglect what lies beneath the ground in coal country.

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