The Polish government is suffocating over a coal problem of its own making

“Poland stands on coal.” The slogan, which has been coined for a long time by the current nationally conservative Polish government, is now returning to the country like a boomerang. But the politicians did not mean by this that there is one large deposit under the whole of Poland, but rather that Polish energy and the economy rely to a large extent on coal.

Due to the effects of the Russian war in Ukraine, the term “coal crisis” is now widely used in Poland. The country already introduced an embargo on the import of Russian coal in April, but its import from Russia accounted for about half of household consumption. About 3.5 million family homes are heated with coal in Poland.

But filling a hole in the market now costs something. “In 2020, Russia accounted for 17.8 percent of world coal exports. After the embargo, customers have to shop elsewhere. Coal producers are abandoning the initiated decarbonization and trying to extract as much as possible,” Gazeta Prawna quotes Anna Senderowicz, an analyst at the Polish bank PKO BP.

According to the government, there is no danger of problems with coal supplies for large customers. However, it is different for the small ones, who are looking for lower quality coal.

Households in trouble?

These are mainly the aforementioned households that heat with coal. “It will be cold in the houses, garbage will be added to the boilers and air pollution will worsen again,” – this is the prediction of the liberal portal due to the rising prices and lack of raw materials for the Polish winter months.

The Business Insider Polska server writes that even though the state assures that power plants and heating plants are safe, energy companies are worried. Coal supplies for the winter are contracted, but the power plants are not sure that they will actually arrive. That is why coal is being used sparingly and, despite the summer heat, the output of power plants is “throttling”.

The Polish media also reported on the problems of the new unit of the Jaworzno thermal power plant, which is supposed to be one of the pillars of Polish energy security. The power plant has problems with the supply of coal of sufficient quality, and because of this the unit is now standing.

Other large power plants, such as Pole, Bełchatów or Turów near the border with the Czech Republic, also stopped the blocks on Thursday. The reasons can be different – from the lack of coal to the lack of water in the rivers for cooling.

According to the newspaper Dziennik Gazeta Prawna (DGP), heating plants also have problems, as they often do not have a prescribed reserve for 30 days in advance. The heating industry is now missing up to 2 million tons of coal, and heating plants are buying it at high prices.

In addition, the demand for coal is also increased by the failure of gas supplies to Europe, which led to a return to coal-fired power plants in Germany and Austria.

“Coal War in Government”

The Polish government therefore entered the game. However, its steps against the energy crisis are chaotic and accompanied by internal disputes in the government.

The DGP paper even wrote about a “coal war in the government” in which ministers blame each other on who is to blame for the coal shortage. Some blame the state-owned mining and energy companies, others the prime minister and climate minister, who should have underestimated the situation. At the same time, the warning came immediately after the beginning of the Russian invasion.

“The situation is tragic. Energy and coal companies are completely unprepared. 3-4 million tonnes of coal may be missing,” the DGP quoted a government office source as saying recently.

Shortly after, the Onet server wrote that Prime Minister Mateusz Morawiecki ordered state companies to quickly purchase 4.5 million tons of coal for households. If the raw material can be purchased, it should arrive in Poland by the end of October.

For example, conservative commentator Łukasz Warzecha blames the prime minister for acting months after the introduction of the embargo on Russian coal, which Poland announced back in April. “Under normal conditions, with respect for the rules of political responsibility, such a thing would be enough to cause the resignation of the head of government,” he writes in the daily Rzeczpospolita.

Warm up, recommended the prime minister

Last week, Morawiecki also advised Poles to take advantage of state support and have their homes insulated before this year’s heating season. Last week we wrote about the warning of Polish politicians about worse times here.

In June, due to the coal crisis, the government quickly pushed through a law to allow people to buy three tons of coal at a guaranteed price. It was lower than the market price, which the state was supposed to compensate the sellers.

After the fiasco, a new surcharge

But the program ended up being a fiasco because the vendors refused to participate in it. According to them, the compensations are too low and do not correspond to the reality of the market, and moreover, coal was not available.

The government therefore came up with another solution that is unique to the Law and Justice party – a one-time financial contribution. The proposal, which has already been passed by the lower house of parliament, will allow people burning coal to reach a contribution of 3,000 zlotys (about 15,500 crowns).

People should receive the money already next month. The state reserved 11.5 billion zlotys, almost 60 billion crowns, for contributions.

The director of the Forum Energii think tank believes that such a step does not solve the problem. “There are two problems: high prices and a lack of coal. Posting won’t fix it. If someone has to pay 15,000 zlotys because the average household uses 5 tons of coal per season, his main concern remains where to buy coal,” DGP Joanna Maćkowiaková-Panderová quotes.

She described the state contribution as “throwing money out of a helicopter”. He considers it a mistake that the state is still dependent on coal.

The opposition has already taken up the issue. “The PiS government has not taken care of renewable energy sources, so that we can gradually and safely, with the future of people working in the mines fully secured, move away from coal,” says a short clip published by the Left group.

“The PIS government introduces laws, which it annuls after two weeks, and claims to give Poles money to buy coal. The problem is that no amount of money can simply buy something that doesn’t exist,” adds the opposition.

According to Climate Minister Anna Moskwová, three million tons of Russian coal were imported to Poland from January to April. “By mid-July it was another three tons. We have signed contracts for another 7 million. It is mainly coal from Colombia and Indonesia. Around 30-40 percent will go to Polish households,” said the minister.

The biggest challenge for Poland now is how to actually deliver the raw material to the country. Coal arrives in Poland by sea, to which the ports in Szczecin, Gdańsk and Gdynia have to adapt.

“We have never carried out such a large logistics operation before. It’s a complicated process. We are implementing optimizations to increase the capacity of the ports,” explained Moskwová. She assured that the ports have capacity.

The recipe for the coal crisis could seemingly be to increase mining directly in Poland. Although about 55 million tons of coal are mined annually in the country, only 7 million tons are suitable for households and other small customers. 12 million tons go to smelters as coking coal, 27 million to power plants and 10 million to heating plants.

“Coal production cannot be increased by leaps and bounds, because investments in mining are time- and financially demanding. A more significant increase in production can be expected in two to three years, provided, of course, that a decision is made on large investments in mines,” says Anna Senderowicz, an analyst at the Polish bank PKO BP.