A strong EURACOAL voice at the European Economic Congress in Katowice

European Economic Congress, Katowice, 14 May 2018

At the 10th European Economic Congress, held on 14-16 May 2018 at the International Conference Centre and Spodek in Katowice, many important issues concerning the mining and energy sectors were discussed. Alongside the Polish Energy Minister, Krzysztof Tchórzewski, and the Deputy Energy Minister, Grzegorz Tobiszewski, participants on the key panels included, Tomasz Rogala, CEO of Polska Grupa Górnicza (PGG – Polish Mining Group) and President of EURACOAL, as well as the First Vice President of EURACOAL, Vladimír Budinský and Janusz Olszowski, the President of the Polish Mining Chamber of Industry and Commerce (GIPH) which is a member of EURACOAL. Thanks to them, the voice of the coal was loudly heard during the European Economic Congress.

“Energy industry in Europe: dilemmas and challenges”

On the first day of the Congress, EURACOAL President Rogala participated in a panel on the dilemmas and challenges faced by the energy industry in Europe. Other participants on the panel included the Energy Minister, members of the European Parliament and leaders of Polish and international energy companies. The mechanics of capacity markets, digitalisation, decentralisation of power generation, decarbonisation of the economy, the challenges of the energy transition and many other hot topics were debated.

“In the energy industry, we are facing a lot of challenges, which concern Poland as well as all the other European Union countries. It is hard for us in this race. We were occupied countries in Europe, our development was delayed. Therefore, treating us now equally with others in terms of requirements is not really fair. We truly intend to follow. We hear accusations of being reluctant about RES. It is not the case. We are simply much poorer than you, in the old European Union.”
Energy Minister Tchórzewski

Mr. Tomasz Rogala, CEO of Polska Grupa Górnicza (PGG – Polish Mining Group) and President of EURACOAL (left); Polish Minister of Energy, Mr. Krzysztof Tchórzewski (centre) and MEP Claude Turmes (Greens/EFA, LU) with a copy of his “Energy Transformation” book at his feet.

Minister Tchórzewski compared the costs of renewable energy sources (RES) with those of health care which are incurred by citizens in the form of taxes. He noted, however, that conventional, thermal power generation must be ready and available when RES do not work. This, however, means that conventional plants no longer run all of the time at “base load”, so they cannot earn enough to cover their costs. This gap has to be filled. He added that a way to do this is with capacity markets, which solves the problem of a back-up reserve for RES and allows implementation on a broad scale.

“If we are heading towards a direction where coal is not the main source of energy, post-mining areas need to be restructured. This required huge funding, with at least a 50% share of subsidies from the EU programmes.”
Energy Minister Tchórzewski

The EURACOAL President, Tomasz Rogala, reminded everybody that EU member states have nuclear power, RES and fossil fuels, with a very significant production of lignite (383 million tonnes in 2017).

“Last year, coal imports in to the EU were at the level of 173 million tonnes, with Spain and the Netherlands seeing an increase by over a dozen percent in the consumption of these fuels. The power demand grew to such an extent that, last year, more electric power had to be produced from solid fuels. 173 million tonnes of coal had to be imported. This coal created jobs outside Europe, while its combustion and its impacts were located in Europe. Whether such an approach is justified is an open question.”
EURACOAL President Rogala

He explained that countries that have developed quickly with coal, are not giving up on coal as a source of cheap energy.  In spite of China’s huge domestic coal production – 3.5 billion tonnes or half the world’s total – the country also imports coal.  Import demand there and elsewhere is met by Australian, Indonesian, Russian and South American producers.

“We are appealing for prudence, for arranging solutions in a reasonable time, so that it is profitable for European producers and does not result in the imports of hundreds of millions of tonnes of coal in to Europe.”
EURACOAL President Rogala

At the same time, he addressed the trilemma of marrying climate action with energy security and economic afforability.

“As for the trilemma, after two days of blackouts, it would become clear which part of the triangle is the most important.”

Showing a modern smartphone, the head of EURACOAL made everybody aware:

“Fast-developing countries do not give up on coal as a source of cheap energy. We all have these devices, made in countries that do not have such low-emission standards. We, as EURACOAL, would like you to think about that.”

He emphasised the fact that impressive emission reductions had already been reached and the latest technologies allow coal to be used in environmentally safe ways. He agreed that RES are beyond question, but depend on huge subsidies.

“If they are effective, they will simply supplant coal; it will be up to consumers.”
EURACOAL President Rogala

“How to ensure Poland’s energy security in the medium and long term?”

Mr. Tomasz Rogala, CEO of Polska Grupa Górnicza (PGG – Polish Mining Group) and President of EURACOAL (left) and the Polish Minister of Energy, Mr. Krzysztof Tchórzewski (right), European Economic Congress, Katowice, 15 May 2018

On the second day of the Congress, topics related to energy and mining industries were further discussed by speakers on a panel devoted to Poland’s energy security in the medium and long term. Both Krzysztof Tchórzewski, the Energy Minister and Tomasz Rogala, CEO of Polska Grupa Górnicza and EURACOAL President, participated.

“Securing energy supplies and system stability are the priorities in the country’s long-term energy policy. Poland is developing dynamically, its energy demand is growing, while at the same time the existing reserve capacity is not sufficient. Therefore, it will be necessary to create new sources and to modernise existing ones, in order to secure a stable supply consistent with increased demand.”
Energy Minister Tchórzewski

The panel participants also emphasised the role of building energy security for the country and care for the environmental aspects of the energy industry.

“Nuclear power will, on the other hand, significantly reduce the level of energy sector emissions by counterbalancing the emissions of the coal sector, which is the basis of our energy supply system.

“In ten years’ time, the demand for energy in Poland will be 20% higher than today. Coal will still play an important part in the energy mix. The importance of scattered, prosumer power suppliers will also increase.

“For many years, the consumption of coal will grow, as we are commissioning new power units. Kozienice requires 2 million tonnes of coal annually, then two units at Opole and one at Jaworzno. New power plants are at least 20% more efficient and they meet the latest emission standards. As for the old plants, we are not shutting them down yet. After 2021, when we do close down the old units, the demand for the raw material will start decreasing to the level more or less close to that of 2017.”
Energy Minister Tchórzewski

He added that Polska Grupa Górnicza is currently able to sell all the coal that it produces.

There is no respect for numbers …

Mr. Tomasz Rogala, President of EURACOAL and CEO of Polska Grupa Górnicza (PGG – Polish Mining Group) at the European Economic Congress, Katowice, 16 May 2018

The host of the panel, Michał Niewiadomski from the „Rzeczpospolita” newspaper, asked Mr. Rogala how the coal business should be managed if, as the Minister says, more coal will be needed for the new power units, but Poland will not be able to produce it, unless it invests in new seams.

EURACOAL President Rogala emphasised that it is worth looking back a few years when the main message was that less coal would be needed as other energy sources would replace it, so production cuts were prepared. He reminded participants that, not so long ago, coal producers were pressed to reduce plans for new faces at coal mines, because that was the trend. Today, it is different, he said.

“Now, we are in 2018, and in 2017 coal imports to Europe were 173 million tonnes. Like Poland, other countries increased imports, some by 30%. What does this tell us? It tells us that we are poor at planning in Europe. If 173 million tonnes were divided among a number of coal mines, it would support about half a million jobs that are currently outside the EU, while the environmental burden remains within Europe. We more often use slogans than numbers. The coal mining sector, where investments are for two to seven years, must know what the demand will be for coal. If, in two or three years, there were to be a period of over-supply with low prices which caused a reduction of production at PGG and the closure of say ten million tonnes of production capacity, nobody could simply reverse that within a couple of years. We seem to have a lack of respect for the numbers.”
EURACOAL President Rogala

He pointed to the fact that sudden changes in demand for energy cannot be compensated for by the mining sector as its fixed costs are high in relation to its variable costs.

“We have to sell our whole production output, rather than increasing inventory, because preparing a stockyard for five million tonnes of coal costs a billion złoty which we cannot afford. Changes in energy demand should be covered by sources with low fixed costs.”
EURACOAL President Rogala

He also warned against attributing a too high economic value to emotions which, as he put it, are wrapped up in words such as “green” and “modern”.

“Coal regions in transition: the Silesia region – vision and projects”

Mr. Vladimír Budinský, First Vice President of EURACOAL at the European Economic Congress, Katowice, 15 May 2018

The panel on coal regions in transition, notably the vision and projects in the Silesia region, was dedicated to issues such as regional development plans, advanced coal technologies, e-mobility potential and wind power. Speakers included Vladimír Budinský, First Vice President of EURACOAL, and Grzegorz Tobiszowski, the Deputy Minister of Energy. The whole panel agreed that co-operation within the European Union, both in the fields of financing and law, was a precondition for the modernisation of the Polish mining industry. According to the experts, current climate policy assumptions do not mean that the world will move away from coal.

“However, projects related to new technologies will be supported: export of knowledge on those technologies to countries where coal is mined with a low level of technological knowledge will also be significant.”
EURACOAL First Vice President Budinský

Deputy Minister Grzegorz Tobiszowski added that a perfect opportunity to present investments in Upper Silesia, that can be a model for other mining regions in Europe, will be at the UNFCCC COP 24 organised in December 2018 in Katowice.

“It is a challenge that has combined the national administration with local administrations which sit at the table together with the European Commission. We will receive a certain framework from the Commission that our projects have to fit within. By mid-June, we will have filled in this framework with our projects and we already have several dozen of them, so we are now trying to combine them.”
Deputy Energy Minister Tobiszowski

“Polish coal – the perspective to 2030”

On the third day of the Congress, there was a discussion on the role of coal in the economy and power generation, as well as on the new technologies that will secure mining for the future.

“The term “Polish coal” was not accidentally chosen for the Congress and the perspective to 2030 was not accidental either. We did the right thing to shift the emphasis to vision, as the perspective is a vision, and since we are talking about vision – what should it be? We are no longer asking “if” but “how”. If coal mining is such hard work, then we should not be doing it in an unfair, inefficient way and without seeing any sense in it. Therefore, it is important to talk about perspectives. Since 1989, we have not had any theses about how much coal we need on the Polish market. Because of that, it was hard to plan any investments.”
Deputy Energy Minister Tobiszowski

Tomasz Rogala, CEO of Polska Grupa Górnicza and President of EURACOAL, spoke about maintaining the current levels of production – whether it was possible and under which conditions.

“The key is stability, which is built mainly through the long-term contracts that we have proposed to the market and a price corridor that gives us information on our long-term revenues. The long term is needed so that the company can be transformed and adjusted to future conditions. Some customers bought imported coal, because it was cheaper, and then, when prices increased, they turned to PGG and demanded their needs be met.  What is really important is predictability and the ability to maintain profitability as a consequence of good planning.”
EURACOAL President Rogala

Panel participants also talked about the role of coal in the world.

“The global trends are clear. Opposite to the opinions of some media pundits who say that coal is a relic, coal is doing fine globally. In the last few years, coal production in the world reached about seven billion tonnes and increased by about 200 million tonnes in 2017. As for lignite, its production has been stable for many years now at around 800 million tonnes per year.”
Janusz Olszowski, President of the Polish Mining Chamber of Industry and Commerce (GIPH)