Like every other country, Ukraine is facing a Covid-19 crisis, but with the added complication that its electricity market is failing to deliver.
In March 2020, Ukrainian electricity demand fell by 7%, because of the Covid-19 lockdown. At the same time, power exports to Hungary, Slovakia and Romania surged by over 50% in the first quarter of 2020 from the synchronised Burshtyn region of Ukraine. This was because wholesale electricity prices outside Ukraine are far more attractive. To protect the country’s heavily indebted energy sector, the government imposed a 65% tariff on coal and electricity imports from Russia on 1 April 2020. Meanwhile, household, commercial and even industrial prices remain regulated with caps, despite an opening-up of the electricity market last year.
In its letter to President Zelenskyy, EURACOAL looks to the future and asks the Ukrainian government to stick with market-based solutions and electricity market liberalisation, rather than return to a failed system of central planning. As agreed in its Association Agreement with the EU, Ukraine should implement the EU Third Energy Package and did introduce the necessary legislation with a start date of 1 July 2019.
Protectionist measures are not working and Ukraine’s largest energy company, DTEK, has had to idle the big Pavlohradcoal mine. Energy companies, including SOEs, are not receiving enough income to operate. The State Company “Guaranteed Buyer” (responsible for subsidising household tariffs and renewables) has massive debts to the nuclear and renewable power companies (estimated at UAH 8.7 billion or EUR 300 million).
Part of the problem is that cross subsidies and over-generous feed-in tariffs for renewable energy sources have pushed up electricity prices such that huge debts have built up in the energy system. The government has responded by retrospectively reducing feed-in tariffs. A fairer solution would be to introduce an auction system for renewables. Electricity prices caps should be replaced with social support for those on low incomes. The caps mean heavy industry benefits from unfair subsidies. Unfortunately, the government has reduced social support intended to help with utility bills – this will lead to more debt.
A Just Transition Fund is very much needed if the EU, with the agreement of member states and the European Parliament, is to complete the huge transformation to a climate-neutral continent. Under the European Green Deal, many member states need to make great changes to their economies as they are no longer viable under current EU rules for energy systems and the even greater efforts envisaged in light of more ambitious climate targets for 2030. Investments will be required and so the European Association for Coal and Lignite (EURACOAL) welcomes, in principle, the proposals contained in the European Commission’s communication of 14 January 2020 for a Just Transition Fund (COM(2020) 22 final). The promise of linking the new fund to existing Structural Funds as part of a Just Transition Mechanism to lever €30 billion or even €50 billion of investment is especially welcome. In this respect, public consultation on the proposed amendments to the Common Provisions Regulation is perhaps even more important than this consultation on the Just Transition Fund.
1. Focus on the regions that are really affected
As supporters of the Coal Regions in Transition initiative of the European Commission, members of EURACOAL likewise insist that the energy transition is fair and based on solidarity, leaving no one behind and not impoverishing those regions where many livelihoods depend on coal. Here, it is important to note that the list of 108 coal regions eligible for support includes regions with little or no connection to coal and omits regions with coal mines, power plants or heating/CHP plants where unemployment can be significantly above average, such as the Ruhr and Saar regions of Germany, the Lubelski region of Poland and Varna province in Bulgaria (European Semester 2020 Country Report Annex D, Overview of Investment Guidance on the Just Transition Fund 2021-2027 per Member State). However, we note that the eligibility analysis by the Commission services is stated to be “preliminary”, so these omissions can be corrected to ensure that no regions are left behind which is the Commission’s aim.
2. A fund with enough firepower
The Just Transition Fund is a necessary support measure for a journey which is going to be both costly and difficult in the time available. Therefore, EURACOAL believes that the fund must be backed with a larger budget. The proposed €7.5 billion is really only a fraction of what will be needed. For example, in Germany, the government has agreed to support the transition away from coal with a €40 billion allocation to federal states with coal regions. This will allow regions to prepare for deep, structural change, creating new jobs where old ones are lost. In Poland, the cost of transforming just one company – the largest hard coal producer – is estimated at €44 billion. The European Commission should reflect on the true size of the challenge that lies ahead and ensure that the necessary investment requirements match its policies. Greater financial firepower will be required, dedicated to transforming the coal sector rather than merely an extension of the Structural Funds and Cohesion Fund. This particularly applies in view of the stark contrast between increased ambitions and investment resources: on the one hand, according to the European Commission’s assessment, achieving the current 2030 climate and energy targets will require a “yearly additional investment of around EUR 260 billion” (COM(2019) 285); on the other hand, the European Green Deal Investment Plan (EGDIP) or Sustainable Europe Investment Plan (SEIP) will generate, in a best-case scenario, only €100 billion per annum for the even more ambitious 2030 targets that may be proposed later in 2020.
3. Capitalise on existing value chains
EURACOAL strongly recommends, having in mind the dilution of funds proposed across all 27 member states and across many industrial sectors, to prioritise the coal regions with coal mines, power plants or heating/CHP plants as these will be the ones most affected by the transition. Here, the full extent of the coal industry value chain should be appreciated. Assets, infrastructure and especially human capital linked to the coal industry cannot simply disappear without replacement. New economic activities must be created, building on the assets, skills and knowledge that the coal regions have at their disposal. The de-industrialisation of these regions is not an option. Large coal mining and energy utility companies have always supported the development of local communities and those represented by EURACOAL want to continue in this role by gradually diversifying their activities to establish new jobs in new industrial activities. For example, former miners and power plant technicians are highly skilled in the operation and maintenance of any equipment. At the same time, these companies have land holdings that allow them to invest in renewable energy sources such as solar photovoltaic parks or wind farms, not to mention the geothermal potential of former mine workings. These companies should be included in the transition, not as a remote stakeholder, but as a strong partner in Territorial Just Transition Plans that deliver results in co-operation with the regional authorities. These plans cannot ignore post-mining tasks related to the rehabilitation of former coal mine and power station sites and other inherited liabilities, some of which will continue in perpetuity. Here, it is justifiable that the companies and regional authorities who bear the cost of these tasks receive specific support for this aspect of the transition.
4. Allow the fund to be fully levered
The question of state aid intensity should not be ignored. The Just Transition Fund is not a regular structural fund based on regional policy rules. It exists in response to issues arising from the energy transition, so the need for a strong energy component cannot be overlooked. Thus, EURACOAL supports the suggestion, already raised by many stakeholders, to follow the lead of the European Investment Bank which allows lending up to 75% of an energy project’s value in its recently revised lending policy. Higher intensities of state aid should now be considered by the EU. This would allow the European Commission to lever a much greater impact in the coal regions and so help deliver a popular transition.
5. Solve state-aid issues
Finally, member states that choose to provide state aid for the closure of coal mines or coal power, heating or CHP plants, for example to compensate operators for foregone profits where they cannot continue to extract coal or sell electricity on the market, should not be prevented by state aid rules designed for fair market competition. The energy transition is not market driven, so these rules are no longer appropriate. However, EURACOAL agrees that member states should demonstrate any compensation is proportionate and does not go beyond the loss of profit and additional costs faced by power plant or mine owners due to any premature closures. Any state aid which is not related to an economic activity, in particular aid for early retirements or reskilling, or aid to finance public infrastructure, should also continue to be permitted.
MEP Grzegorz Tobiszowski hosted an evening event dedicated to the coal industry in transition, bringing together eight fellow MEPs with members of the European Association for Coal and Lignite, prior to the launch of EURACOAL’s latest publication.
Invited guest, Mr. Lou Hrkman who is the Deputy Assistant Secretary at the US Department of Energy, spoke about his government’s approach to coal, after remarking that, “the US has no greater friends than Poland and the EU”. The current US administration supports innovations that will reduce GHG emissions from coal to zero, he said, while improving the efficiency and reducing the costs of power plants. He offered the new Allam cycle as an example of a power plant with zero emissions – it supplies pure CO2 to the oil industry and even produces water, he added. Work on smaller, modular power plants will lead to cheaper units that many coal-using countries can rely on to supply heat and power while meeting their Paris Agreement commitments. He wished the EU well with its “just transition”, but said that this was diametrically opposite to the US approach, with its focus on preserving jobs and using fossil fuels in a positive way to enhance economic growth and security. He cited the US oil and shale gas boom which had allowed the US to become energy self-sufficient. For coal, he predicted the 21st century would bring new opportunities, with products made from coal, such as new construction materials and hydrogen for transport. He concluded that, “technology and innovation by the private sector is much better than heavy regulation and taxes”.
Referring to the European Commission’s proposal for a European Green Deal, MEP Grzegorz Tobiszowski (ECR, PL), a former Secretary of State in the Polish Ministry of Energy, highlighted the importance of the proposed Just Transition Mechanism for the coal regions. He went on to explained how Poland’s Energy Policy to 2040 responds to current EU climate and energy policy with several new, state-of-the-art coal power plants being commissioned in Poland, as well as plans for a new coal gasification power plant (IGCC). This will be built near Lublin in partnership with Mitsubishi Hitachi Power Systems of Japan. Thanks to biomass co-firing, Mr. Tobiszowski said it would meet the recent EU emission performance standard of 550 gCO2/kWh.
The First Vice President of EURACOAL, Mr. Vladimír Budinský, presented MEPs with a preview of the association’s latest report: “Coal industry across Europe”. As EURACOAL’s flagship publication, it provides a snap shot of the coal and lignite mining industry and the influence of EU policy on the coal sector as a whole, including power generation. With many facts and figures, it covers not only the EU, but also Energy Community countries. According to Mr. Budinský, future editions – this being the seventh – should cover the US and Russia as both are major coal exporters and of growing importance to meeting EU coal demand.
Participants agreed that coal will be used for several decades to come: here in Europe and in the US. While the volumes used in EU member states will surely decline to meet political targets, the rest of the world will continue to rely on the “black stuff”. Technology will allow the use of coal in new and better ways, which is what the Coal FIRST initiative (Flexible, Innovative, Resilient, Small, and Transformative) aims to show under the leadership of Deputy Assistant Secretary Hrkman. He offered to partner with the EU on clean coal technology development by informing MEPs and working towards a Coal FIRST project in say Poland.
Energy Summit 2019 on “the conditions for a sustainable energy transition” took place in Warsaw on 1-2 October 2019, organised by the Polish Ministry of Energy, EURACOAL and the Polish Mining Group (PGG). Coal industry leaders from across Europe participated to discuss topics of importance. The summit was opened by Mr. Tomasz Rogala, President of EURACOAL and Chairman of the Board at PGG – the biggest hard-coal producer in Europe.
The Polish government was well represented by Mr. Krzysztof Tchórzewski, Minister for Energy, Mr. Adam Gawęda, Secretary of State and Government Plenipotentiary for the Restructuring of Coal Mining as well as Mr. Gawęda’s predecessor, MEP Grzegorz Tobiszowski, who now sits in the European Parliament where he is a member of the influential industry committee (ITRE). For family reasons, the Polish Prime Minister, Mr. Mateusz Morawiecki, had suspended his pubic duties at the time of the summit, but sent a letter of support.
The discussions were divided into four thematic panels:
natural environment and climate change,
security of raw materials supplies,
society and human capital, and
industry expectations for the energy transition.
These allowed those present to give their views of the measures needed for a safe and secure energy transition. Two views were repeated often.
Firstly, a call for some kind of protectionist measures to guard against carbon leakage, perhaps in the form of a carbon-border tax to create a level playing field for those European industries which must complete on the global market. If EU companies continue to pay ever-increasing fees related to environmental and climate policies, then their competitiveness will be lost. To survive, companies will be forced to move their production out of the EU which will then become more dependent on imported products, often made with little concern for the environment or climate. Such an outcome would not only undermine EU standards and policies at home, but also hamper their contribution to global objectives.
The second important view expressed by participants was that the energy transition needs to be a just transition. This means that it must take into account:
the different starting points of each EU member state, based on their particular histories and legacy infrastructure;
the magnitude of the efforts needed to transform the energy sector;
the time that the sometimes massive social changes will take; and
the financial support needed for investments in diversified energy sources, smart grids and energy efficiency.
This social dimension of the energy transition was highlighted by both industry representatives and trade unionists. All agreed that change should be achieved without pushing up electricity prices as this would damage industrial competitiveness and add to the existing problem of energy poverty. This point resonated with colleagues from Germany who face a coal phase-out by 2038 and its replacement with renewable energy sources. The latter have proven costly in countries such as Denmark where electricity prices are more than double those in Poland, according to Mr. Piotr Woźniak, President of the Polish gas company PGNiG.
In the closing session, the EURACOAL President, Mr. Tomasz Rogala, presented the meeting’s declaration which sets out the conditions for a sustainable energy transition. It is available here in Polish and English.
The climate challenge requires global solutions with similar ambitions everywhere.
A carbon-neutral EU economy by 2050 is highly ambitious: the necessary technologies need to be developed and deployed, and carbon-leakage risks need to be clearly addressed.
Without large-scale energy storage, conventional thermal power generation will still be needed.
To gain public support and to maintain EU competitiveness, solutions have to be affordable.
EU member states should remain free to choose their own (different) energy mixes.
Coal’s contribution today:
The EU coal sector has reduced its CO2 emissions by over 47% since 1990, thus helping to meet targets in the UNFCCC Paris agreement. No other sector has done as much.
The extraction and use of coal is linked to over 200 000 high-quality, well-paid direct jobs, as well as indirect jobs at suppliers.
Coal contributes to affordable and competitive electricity prices and thereby to EU prosperity, reinforcing the EU as a place to do business.
Coal’s contribution tomorrow:
Coal is a partner for electricity generation from renewables: existing coal power plants respond flexibly to the ups and downs of wind and solar power.
Under the EU ETS, the coal sector will continue to reduce its emissions, cost-effectively. Accordingly, the EU emissions trading system should remain the only instrument used to drive down CO2 emissions in the power sector.
Coal’s contribution the day after tomorrow:
EURACOAL supports a climate and energy policy based on accelerated technological progress through near-term research, innovation and entrepreneurship within a non-discriminatory, technology-neutral, competitive market place that delivers a wide portfolio of sustainable, low-carbon solutions which consumers are willing to pay for.
Coal’s contribution to progress will be reliable and affordable electricity from power plants that are now cleaner than ever before. The coal sector is already pushing forward new energy storage options; new processes that supply clean hydrogen; and a circular-carbon economy that allows any carbon-based material, including plastic wastes and woody biomass, to be recycled into new products, without carbon emissions.
This week in Poland, Katowice hosts the XI European Economic Congress, the largest such event in Central Europe.
The first day included an interesting debate on “Power and power generation – revolution, regulations and market”. Panellists, including the EURACOAL President and Chairman of the Board of the Polish Mining Group (PGG), Mr. Tomasz Rogala, expressed their views on rising energy prices, the roll out of renewable energy sources (RES) and power-sector investments, as well as on the overall security of Europe’s energy system. Other speakers included Mr. Žygimantas Vaičiūnas, the Lithuanian Minister of Energy, Mr. Krzysztof Tchórzewski, the Minister of Energy in Poland, and not forgetting Mr. Dominique Ristori, the Director-General for Energy at the European Commission.
Mr. Vaičiūnas spoke on Lithuania’s similarities with Poland as the country diversifies energy supply with new interconnectors between Lithuania and Poland, a LNG regasification terminal and innovative projects on the use of LNG in industry and transport. Mr. Tchórzewski emphasised that Poland was in a difficult situation due to the its dependence on coal, linked as it is to past decisions on the development of the Polish energy sector. He explained that Poland, unlike Hungary, Lithuania and Czechoslovakia, never developed nuclear power. In 1990, when Poland regained its independence, 99.5% of the country’s electricity came from coal. Since then, Poland has led Europe to reduce CO2 emissions, but remains in a transition that will take time – by 2040 coal’s share might still be 30%, according to the government’s strategy. Mr. Ristori responded that the Commission recognises Poland’s different situation, noting the importance of helping Poland with renewables and a “just transformation”, especially in Silesia as mines close. He underscored the importance of a long-term, decarbonisation strategy in order to push forward competitive European technologies.
EURACOAL President Rogala raised several issues:
Changes in Europe that reminded him more of political revolution then evolution. He noted that coal production in the EU had fallen by 65% since 1990 (on an energy basis). He stressed that the ongoing political revolution meant far-reaching pressures on the indigenous coal industry, resulting in coal imports growing to 166 million tonnes in 2018 and coal mining jobs leaking out of Europe. “This builds up some kind of distrust towards state authorities and EU bodies that manage the policy”, he lamented.
Referring to the huge use of coal globally, the EU’s negative trade balance with China and generally weak climate and environmental laws outside the EU, he was concerned about European industrial competitiveness. As a country at the EU’s border, he remarked that Poland was acutely aware of these issues. He called for some kind of border tax on products from countries with less strict climate mitigation measures.
On clean coal technologies, the efficiency and performance of modern coal power plants was impressive, he continued. Yet, an energy transformation was in progress, so he confirmed that PGG was on track with two exciting, new projects already submitted to the European Commission for support under the Coal Regions in Transition Platform initiative.
Mr. Rogala concluded with an appeal for a balanced, cautious approach to the transformation: a transfer of value into the EU and not the transfer of companies and jobs out of the EU.
Today in Brussels, the EURACOAL President, Tomasz Rogala who is also Chairman of the Polish Mining Group (PGG), spoke alongside Signe Ratso, Deputy Director-General for Research and Innovation in the European Commission, at a seminar on the future of coal and steel research supported by the Research Fund for Coal and Steel (RFCS).
Mr. Rogala spoke on the importance of the coal industry’s value chain and his belief in clean coal technologies. Following the experience gained with a full-scale carbon capture and storage (CCS) project at the Boundary Dam coal power plant in Canada, he showed that the specific costs of second-generation CCS technologies should be 67% lower (per tonne of CO2). Separately, his own company was making progress with coal gasification as an alternative to conventional combustion processes – fully supporting the circular economy.
Mr. Rogala used the opportunity to launch a new publication of the EU-supported CoalTech2051 project, “Changing the face of coal: an outline strategic research agenda for future coal-related RTD in the European Union” and present a short video on coal from the European Coal and Steel Community treaty signed in 1951 to the modern clean coal technologies that will be needed between now and 2051.
Thanks to Europe’s largest coking coal company, JSW, participants at the seminar could experience a virtual reality application (VR MINE) for training operators of mining equipment such as coal shearers in a simulated underground mine.
In her opening remark, Signe Ratso highlighted the importance of the coal and steel industries, they being part of Europe’s industrial base which employs 36 million people: 300 thousand direct jobs in the steel sector and over 230 thousand in the regionalised coal sector. She looked towards “breakthrough innovations” as these will be fundamental for a cleaner, healthier, more prosperous planet and will allow the European Union to be a leader on climate change mitigation. In this respect, she was pleased that a political agreement had just been reached on the content of the proposed €100 billion Horizon Europe RTD programme that will run from 2021 to 2027.
Research will be vital to solve the challenges facing the coal industry, notably decarbonisation to meet the targets of the UNFCCC Paris Agreement. In the steel industry, over capacity, unfair competition, falling demand and decarbonisation are all big challenges. The use of hydrogen for steel making, coal gasification for the polygeneration of power, multifuels and chemicals, and alternative uses of coal are all seen by the European Commission as important. Carbon capture and storage (CCS) will be critical, especially as over one quarter of global energy comes from coal, Ms. Ratso observed.
To help explain her thinking, she quoted Jean Monnet, “We are not forming coalitions of states, we are uniting men.” Hence, social fairness would be needed when modernising the industrial regions of Europe in what she called a “just transition”. With a certain optimism, the recalled that 2019 was the 500th anniversary of the death of Leonardo da Vinci. The European Commission wants to replicate his spirit in its RTD strategy as part of a new European Renaissance, she concluded.
The renowned architect, Philippe Samyn, brought another perspective on how Europe should innovate. In summary, he believes that steel can be used more effectively by using less of it and gave examples of beautiful, light-weight building designs where grammes of high-quality steel mattered, not tonnes of heavy steel sections. He was critical of EU building standards, specifically insulation standards which had led to, “indecent, sick buildings spreading like a cancer over Europe and unnecessary certificates of all kinds”. Instead of energy efficient buildings with sealed, double-glazed windows in thick, ugly walls which used far more material than needed, he spoke of energy self-sufficiency. Super-light buildings with heat pumps was the future, he said, agreeing that a new Renaissance was already in progress where no innovative ideas should be dismissed, especially by ill-informed officials.
In his summing up, the Director for Industrial Technologies in DG Research, Peter Droell, insisted that future innovations must fit with the EU’s overarching climate policy objective of decarbonisation. Here, he noted that the reducing cost of technologies such as CCS was good news as many options would be needed. He wanted the coal research community to feel as engaged with saving the planet as did the school children who campaigned each week in Brussels.
The Polish coal industry was a major sponsor of the UNFCCC COP24 climate conference held in Katowice during the first two weeks of December 2018.
On 13 December, EURACOAL members joined a panel on coal gasification in the Polish Pavilion, chaired by Prof. Stanisław Prusek of the Central Mining Institute (GIG).
He explained that coal gasification was not a new idea, with more than fifty years’ development including intense activities during World War II and the apartheid years in South Africa.
Mr. Waldemar Łagoda of the Polish Ministry of Energy presented Poland’s latest draft energy strategy. Poland’s heavy dependence on coal will decline, but coal-based power generation will remain important as electricity demand increases. He said Poland should not be punished for this, noting that the country had already reduced its CO2 emissions by 30% since 1990 when 98% of power generation was based on coal. Pollutant emissions have also decreased significantly. The energy mix for power generation will continue to change, with coal’s share declining from today’s 77%-78% to 32% in 2040, according to the strategy which is open for consultation. The growth in low-carbon energy sources – nuclear and RES – will allow average emissions to fall to 550 gCO2/kWh in 2035, requiring new infrastructure and new approaches to energy storage, coal gasification, syngas production and hydrogen use.
EURACOAL President, Tomasz Rogala, believes that coal gasification is a logical approach in a world that uses 7.5 billion tonnes of coal each year. Talk in Europe of phasing out coal seems unreasonable, he said, presenting gasification as the right response for four reasons:
Investment in gasification responds to market signals and the increasing pressure to cut emissions from fossil fuel use.
Poland’s heavy reliance on coal means investment to reduce net emissions from the energy sector is essential to fight climate change.
New investments, supported by the EU Coal Regions in Transition Platform, can have positive benefits for the local economy, jobs and the environment.
Gasification results in increased efficiency and offers a way to recycle waste materials which contributes to a more circular economy
Mr. Rogala called for a broad coalition of the coal sector with municipalities, regional stakeholders, the chemical sector and consumers. He envisages a six-year plan to bring gasification alive at PGG sites such as Ziemowit and Jankowice. He concluded his positive message by noting how a country with one of most competitive economies in the world has embraced coal gasification, namely China.
Prof. Aleksander Sobolewski from the Institute for Chemical Processing of Coal (IChPW) in Zabrze spoke on the global development of gasification technologies, suggesting that the 550 gCO2/kWh emission performance standard (EPS) proposed by the European Commission as part of its Clean Energy package means that commercial gasification with fuel cells (IGFC) must be developed. He opined that the concept of decarbonisation was wrong: carbon will be needed by the chemical and other industries in the future, so policy should focus on low-emission technologies such as polygeneration for power and ethanol production with zero emissions and CO2 sequestration in useful chemicals.
Prof. Prusek added here the achievements in gasification at the Central Mining Institute (GIG) in Katowice, including the results of analysis used to select coals for gasification. He observed that fluidised-bed reactors were the most suitable for PGG’s gasification projects, a view confirmed by Mr. Wojciech Książkiewicz representing the US technology company SES. Mr. Paweł Górski of Węglokoks Energia expressed his hope that Enea would go ahead with its IGCC project and said that Węglokoks itself was planning a small project that should achieve the 550 gCO2/kWh EPS.
During the discussion panel, Prof. Sobolewski said that the necessary research had all been done. What was needed were political decisions based on the feasibility studies now underway. Mr. Rogala agreed, explaining that technology development is part of everyday work in his mines where equipment becomes more and more automated with the transformation to Industry 4.0. PGG, he said, would pursue all options at its sites, including solar PV, but progress with coal gasification was a must in Poland.
Impressions from COP24
Greenpeace in action
The Japanese Pavilion sponsored by Panasonic
The Indian Pavilion
The Polish Mining Group PGG sponsored COP24
UN delegate greeted by a Polish coal miner
Russia’s green mosaic
African Union Commission – just one of many empty stands
MEP Jadwiga Wiśniewska (ECR, PL)
Welcome to Poland
Marc Morano prepares to deliver coal to Greenpeace
Spodek and main entrance to COP24
Monument to the Scouts of September
The Indonesian Pavilion
The Polish Pavilion
The Indian Pavilion with high-tech robots
The Katowice Pavilion
To the Polish Pavilion
Black to Green transformation in Katowice
Black to Green transformation in Katowice
The eco-friendly German Pavilion
JSW coal company sponsored COP24
Former US Vice President, Al Gore, calls for climate action (again)
AQUA CO@L sparkling mine water by PGG
Scott Foster, Director – Sustainable Energy Division, UNECE and Dr. Lin Hongyu, Director of Cooperation Bureau, Global Energy Interconnection Development and Cooperation Organization (GEIDCO) speak on the “deep transformation” of the energy system through electricity
An empty press conference with the Minister of Investment and Development, Jerzy Kwienciński, to announce Poland’s intention to join the UN Global Compact Government Group on corporate social responsibility
The Nordic Pavilion
The Thai Pavilion
The South African Pavilion
The German Pavilion
The People’s Seat used by Sir David Attenborough
US delegation presents the Coal FIRST R&D initiative before NGOs protest: (L-R) Steve Winberg, Assistant Secretary for Fossil Energy at the US Department of Energy, Patrick Suckling, Australian Ambassador for the Environment, and Rich Powell, Executive Director of the ClearPath Foundation
On 30 November in Katowice, ahead of COP24, the Secretary General of EURACOAL spoke on behalf of members at the annual political dialogue of the Coal Regions in Transition Platform.
EURACOAL fully supports the platform and notes the good progress made by the European Commission in less than one year. Members are active with concrete project proposals, and the secretariat in Brussels is busy compiling a coal research agenda that fits with the European Commission’s long-term climate strategy, proposed just two days before the dialogue.
Twenty-two EU member states still use significant volumes of coal – each measured in millions of tonnes per year. EURACOAL represents coal users in these countries, but especially coal producers in the eleven member states that mine coal – 464 million tonnes in 2017.
The European coal industry has been in decline for decades. That decline has slowed recently (see p.34 in EU coal regions: opportunities and challenges ahead, EC Joint Research Centre report EUR 29292 EN, 2018), but will speed up again with the mine closure plans now proposed by industry. No other sector has contributed as much in terms of CO2 emission reductions since 1990. Economics has driven this decline – beginning with competition from North Sea gas in Western Europe and the collapse of uncompetitive industry in Eastern Europe.
In a perfect world, wind power and solar PV would now be replacing coal. Sadly, they are neither fully competitive nor reliable. Better, more economic alternatives to coal will come along in good time. In the meantime, we have to make the best use of what we have. The EU Emissions Trading System will take care of carbon emissions and the coal industry can operate under its ceiling. There is no need to import natural gas to replace coal. The backup to renewables, the security of power supply, and the virtual storage of electricity can all be provided by coal power plants that are already built or are being built. No more big, new coal plants are needed, only an electricity market that properly rewards power plant availability. The Polish government has stated that the hard coal plants now under construction are the country’s last.
Europe should celebrate that the energy transition can be safe and secure, because we have coal in our “back pocket”. It will be a while before we can rely on 100% renewables, not least because they cannot deliver when needed; at least not until large-scale energy storage technologies are widely available.
As and when coal mines close, land must be restored and new jobs created. There is no hurry; it takes years to plan and implement land reclamation projects, after decades of mining. If we hurry, then these plans become impossible to execute, because the revenue from mining is not there to fund them.
The problems in Europe are nothing compared with elsewhere: 94% of coal is used outside of the EU (measured on an energy basis) and its use is growing for electricity generation. More and more people are benefitting from that. We must offer better ways to use coal, with lower CO2 emissions. If we do not, then our own climate action will be futile.
EURACOAL supports the inclusion of Ukraine in the Coal Platform. Pilot projects have been identified by the Ukrainian Ministry of Energy in the Donesk and Lviv regions. By sharing our experience, we can help transform these industrial regions of Ukraine.
R&D into new technologies will be crucial there and elsewhere, such as the gasification of coal with wastes to produce liquid fuels that can be stored and used to meet demand peaks. In the US, the coal industry and the government are looking to build smaller, more flexible, more efficient coal power plants. In Japan – also a big coal user – hydrogen from coal catches the imagination of what is possible and what is needed to reduce CO2 emissions.
There is much to do under the Coal Platform. EURACOAL hopes that politicians, policymakers and their advisors can all agree that those who work hard in the EU coal industry – over a third of a million – deserve our respect. Their days might be numbered, but they will see us through a few more decades of harsh winters to come.
Addressing the third working group meetings of the Coal Regions in Transition Platform in Brussels on 5 November 2018, EURACOAL President Rogala advised that, when talking of change in the coal mining sector, the conversation must reflect the importance and maturity of this sector’s value chain.
The Coal Platform is an initiative of the European Commission to assist regions who wish to transition away from coal.
Throughout the coal mining sector, he explained, engineers operate and maintain technically advanced equipment on a daily basis, while scientists search for ways to improve production processes and coal utilisation. Thus, the economic value to society as a whole goes beyond the supply of energy to include the creation of knowledge and competences.
According to Mr. Rogala, coal mining jobs in the Silesian region of Poland are well paid, exceeding average salaries there by 50%. During the transition, he expressed his concern that any new jobs would be less well paid. He also noted that municipalities are very dependent on local taxes and would suffer if income from the coal mining sector were to be lost. For example, in the first nine months of 2018, €575 million was paid in local and national taxes by his own company, the Polish Mining Group or PGG. The company has an annual turnover of over €2.6 billion, employing 42,000 people plus over 3,000 contractors. Beyond that, there are some 150,000 jobs at suppliers of equipment and services. Mr. Rogala estimated that equipment purchases alone were worth €220 million each year. He called for a socially responsible transformation, warning against the erosion of industry in regions such as Silesia as this could undermine citizens’ trust in authority and ultimately lead to radicalism.
On a positive note, he presented what is probably the largest welding shop in Central and Eastern Europe, part of the PGG group and employing skilled welders and machinists with all the latest equipment on a floor area of over 2 hectares. By developing such competencies – from design, production, finishing, supply and erection – PGG will be able to diversify and compete in new sectors such as automotive, rail and construction. Mr. Rogala expects this business to grow strongly in the short to medium term.
He concluded with a list of recommendations on the importance of the value chain linked to coal mining. This ensures stability and provides an opportunity for businesses to diversify into new areas in support of a successful transition with lower risks. The alternative would be costly, he said. The University of Economics in Katowice has calculated that over €50 billion would be needed simply to replace lost jobs in coal mining with jobs in other mature industrial sectors, such as automotive.
Responding to strident criticism from the many green NGOs present, EURACOAL President Rogala was open to a discussion on how coal could be replaced, but observed calmly that there were no viable alternatives currently on the table – only promises and rhetoric.
On 9 October at the European Parliament in Brussels, MEP Jadwiga Wiśniewska hosted trade unionists, industrialists and Secretary of State Tobiszowski for a conference on the Polish way to a clean environment. This aims to replace the concept of “decarbonisation” with one of “climate neutrality” whereby CO2 emissions are balanced by CO2 absorption in forests. EURACOAL was represented by President, Tomasz Rogala at this sequel to an earlier event in Katowice, Poland. He spoke on the climate challenge, balanced by the need to maintain energy security and economic competitiveness in the European Union.
Bringing together the mining trade union Solidarność, OPZZ (All-Poland Alliance of Trade Unions) and the Trade Union Forum (FZZ) with professionals from SITG (Association of Mining Engineers and Technicians), the think-tank Górnictwo OK (Mining OK) and coal mining companies, the conference aimed to influence the Parliament position in the lead up to the UN COP24 climate conference in Katowice.
Speakers called for a serious reflection on climate policy and its impact on future generations. Grzegorz Tobiszowski, Secretary of State in the Polish Ministry of Energy, said that,
“We should put more emphasis on the primacy of economic competitiveness and the development of modern, clean coal technologies, because we in Europe are slowly losing our leading position.”
He spoke on the need of a common, global effort on climate, which he felt was lacking after the US withdrawal from the Paris Agreement and Canada’s withdrawal from the Kyoto Protocol back in 2011.
MEP Wiśniewska described the Paris Agreements as “a climate constitution for the globe”, but as with any piece of legislation, it can only work if fully implemented with verified efforts by all countries. A current resolution of the Parliament calls for a “zero-emission” EU economy by 2050 which she saw as too restrictive. Given the negative perception of those that do not fully support such ambitious climate goals, her decision not to sign the resolution was a political risk.
Solidarność leader, Kazimierz Grajcarek, explained that the trade unions do not act “against” anything, adding that,
“We want to live in a clean environment. The problem is that when speaking about the climate, people and science are very rarely mentioned.”
From the University of Economics in Katowice, Dr. Magdalena Wójcik-Jurkiewicz presented a study on the cost of energy transition in Silesia. With a new job requiring an average of PLN 1.2 million (€280 000), the cost of replacing 200 000 lost jobs in mining would reach around PLN 200 billion or €50 billion. Dr Paweł Bogacz of the AGH University of Science and Technology, representing the “Mining OK” initiative, spoke about the impossibility of using only renewables during the energy transition; energy security demanded reliable sources such as coal which also happens to contribute to the national economy.
The event was well attended with numerous MEPs including: Vice-President Zdzisław Krasnodębski; the Former Polish Minister of Foreign Affairs, Anna Fotyga; Ryszard Legutko; Czesław Hoc; Urszula Krupa; and Prof. Adam Gierek from the Committee on Industry, Research and Energy.
A common statement by the Polish trade unions on the costs and benefits of climate policies was published alongside the events in Katowice and Brussels (click images to download in Polish or English). The unions call for a full assessment of all climate-related policies to date in terms of ecological effects and socio-economic impacts.
At the request of the National Energy and Utilities Regulatory Commission of Ukraine (NEURC), EURACOAL has given its opinion on an official coal-pricing methodology introduced in 2016. The coal price is used when setting regulated electricity tariffs in Ukraine.
The EURACOAL report concludes that the choice of marker price is correct, the “all‑publications index (API) #2 is a transparent and appropriate measure of the import parity price for coal in Ukraine. The transport cost add-on in the so-called Rotterdam+ price formula is an approximation that accounts for the higher cost of delivering coal to ports in Ukraine compared with to ports in northwest Europe. Adding a transport cost delta to the indexed price to arrive at an import parity price means that future variations in coal and transport costs can be captured.
The API #2 coal price index is a combination of the prices reported independently by two commercial providers of coal-market information in the Argus/McCloskey Coal Price Index Report. Specifically, API #2 reflects the price of steam coal imported into northwest Europe at three major ports: Amsterdam, Rotterdam and Antwerp (ARA). The collection and reporting of the underlying price data is trusted by market participants around the world and the methodology used is fully specified and properly scrutinised.
Ukraine’s coal import needs are slightly complicated by the requirement for low-volatile coal, such as anthracite, at some Ukrainian power stations. The international market for such coal is shallow, with few marker prices. Given the difficulty in establishing a fair market price for this coal, a premium could be added to the steam coal price marker to cover the additional cost of importing low-volatile coal.
In conclusion, EURACOAL’s overall assessment of the NEURC coal-pricing methodology is positive.