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Friday, 30 March 18
EXPLAINING POLAND'S COAL PARADOX - FORBES
 In the U.S. coal is succumbing to market forces despite the Trump Administration’s push to support the industry. Abundant, cheap and cleaner natural gas together with ever more efficient and increasingly affordable wind and solar continue displacing coal in electricity generation. But to assume this is the general worldwide trend would be a serious mistake. In fact, even in the heart of “renewable-friendly” Europe, coal is and most likely will continue to be a fuel of choice. Despite coal’s obvious shortcomings that include high CO2 content and local air pollutants, Poland projects that in 2050 coal will still constitute 50% of its energy mix. The strong commitment to coal expressed most recently in the government’s program for the hard coal sector, is driven by host of factors that include social, electoral and policy considerations. As a general statement, it is important to understand the powerful role these factors play in the fuel mix across different countries.
Currently, Poland tops the EU list of biggest coal energy producers, and coal continues to dominate the energy mix in Poland (50%), accounting for a whopping 80% of electricity generation. Going forward, the country is looking into expanding coal production through investment in multiple new mines, including those producing lignite. These plans correspond with power-generation and district heating investments in new plants or expansion of existing facilities.
At the same time, Poland has been behind the EU schedule in implementing the mandated share of renewables energy sources (RES) in the Polish energy mix. The government has also been visibly slow with implementing the 2015 law on renewable energy sources, which in contrast to many EU countries, includes coal as part of the renewable energy mix via coal-biomass based cogeneration.
On the surface, the Polish government’s strong commitment to coal is removed from the realities of the current EU policy direction and market conditions. It goes against the trends in most OECD countries where a less-CO2 intensive energy mix includes increases in RES and natural gas while phasing out coal. Additionally, by pursuing coal Poland opens itself to disputes with the EU that can include substantial monetary fines. Moreover, Polish policy seems to contradict the government’s recent commitment to fight high levels of smog in many cities.
However, a deeper dive reveals that the pervasive use of coal in Poland cannot be explained in strictly environmental or market terms, or even in reference to the EU policy direction.
Coal takes a special place not only in Poland’s energy mix but also in the nation’s collective heart. The coal industry has been traditionally revered, if not romanticized, and much of this continues today. As reported by Poland’s Public Opinion Research Center (CBOS) in 2016, miners in Poland are respected at levels (82%) comparable to university professors (80%) and more than medical doctors (74%) or teachers (71%).
Miners have also enjoyed high salaries and pensions, often several times higher than the national average. In addition, they are highly organized within politically influential trade unions. The government is well aware that any decision that endangers the future of mining will meet with substantial protest, as exemplified by the events of 2015 when miners threatened to end the government of Ewa Kopacz, then Polish Prime Minister. A new law to restructure Poland’s largest mining company was met with widespread protests by miners and their unions, who saw the law as a prelude to the closing of four mines in the Upper Silesia region. Negotiations that ensued resulted in the government’s strong commitment to keeping all mines open, effectively assuring the mining jobs that could have otherwise been eliminated.
Thus, any policy that could potentially limit coal and negatively affect mining jobs can have immediate negative consequences for the incumbent government as well as serious electoral implications. There are 55 seats (out of 460 seats) in the Sejm (the lower chamber of the parliament) and 13 (out of 100) in Senate (the upper chamber of the parliament elected in Upper Silesia – the region historically known as “the kingdom of black coal.” Additional “coal” seats are dispersed around the country where lignite is mined. When compared to prospective EU disputes and/or fines, electoral and public support considerations are more immediate and can directly affect chances of survival for any incumbent government.
Intertwined with socio-political consideration is the second major issue that explains coal’s strong position and commitment to coal going forward – energy security. In Poland, the concept of energy security is viewed predominantly as low dependence on Russia, and it is at the top of government and general public priorities. Domestically available coal offers predictability and peace of mind at a time when renewable energy is still at the very beginning of its development, a potential nuclear power plant is still in discussion stages, and the majority of natural gas consumed in Poland needs to be imported from abroad, primarily from Russia.
Recognizing the geopolitical consequences of dependence on Russian gas, Poland has diversified its pool of natural gas providers, thanks to the newly built LNG terminal in Swinoujscie. But, LNG imports are intended to back out Russian gas rather then provide substitute for coal; so they are unlikely to push out coal in the same manner domestically available natural gas has in the US. In fact, part of the planned expansion of LNG imports into Poland is designed to capitalize on Poland becoming a hub for LNG distribution to other European countries.
Coal policy is a difficult balancing act for Poland. It needs to take into account immediate electoral, social and energy security considerations as well as the country’s commitments as a member of the EU. Poland receives substantial EU subsidies, including €27.4 billion for the Program on Infrastructure and Environment that stresses low-emission economy and environmental protection in addition to infrastructure development and energy security. Those funds could potentially be at risk going forward if Poland does not live up to its stated RES and emissions obligations.
The situation is also difficult for the EU more generally, as it highlights the tensions and different priorities between “high income Western Europe” and “middle income Central and Eastern Europe”. To be truly successful the EU has to understand the heterogeneous needs and priorities of its members. Strict RES development goals not adjusted to local needs, combined with potential fines and reprimands for noncompliance are unlikely to achieve the climate and decarbonization goals the EU has established. Instead rigid rules could push countries like Poland where government’s skepticism towards the EU is already high, toward a non-EU future. The issue seems to have been considered by the EU, which has recently committed €1.25 billion ($1.55 billion) to assist the Polish government with mine closures that could address some of the hardships such closures could have for the affected population. One might suspect substantive help provided to coal-dependent regions – including re-training and unemployment compensation – could alleviate some of the social and electoral considerations. Also, support toward less carbon-intensive energy sources that could be developed domestically – such as biogas – could facilitate a less coal-intensive future. Lastly, research toward and potential development of capture and storage solutions and/or coal gasification could accommodate some of Poland’s reliance on coal while minimizing its negative externalities, such as CO2 emissions and smog.
Source: Forbes
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Tuesday, 27 March 18
SHIPPING MARKET ANALYSIS - GERRY LATHROP
With the almost complete phase out of Tier II new-building slots on our door step, along with the plethora of emissions related articles seemingly ...
Friday, 23 March 18
RIO TINTO AGREES SALE OF HAIL CREEK AND VALERIA TO GLENCORE FOR $1.7 BILLION
Press Release: Rio Tinto has entered into a binding agreement with Glencore for the sale of its entire interests in the Hail Creek coal mine and th ...
Wednesday, 21 March 18
CHINA'S RAW COAL OUTPUT UP IN 2017, FIRST GROWTH SINCE 2014 - XINHUA
China’s raw coal output rose in 2017 due to rebounding demand and high-quality capacity, according to the National Bureau of Statistics (NBS) ...
Wednesday, 21 March 18
MARKET INSIGHT - CHRISTOPHER T. WHITTY
President’s Trump administration proposed tariffs on steel and aluminum imports in an attempt to target China and Europe among others. Earlie ...
Tuesday, 20 March 18
SHIPPING MARKET ANALYSIS - GEORGE LAZARIDIS
It has been a chilling start to the week for the global economy, with the vast majority of stock exchanges noting a fair drop, after a series of se ...
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- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- The University of Queensland
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- GMR Energy Limited - India
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Indonesian Coal Mining Association
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