On Monday, 7 March 2022, the Polish Mining Chamber of Industry and Commerce (GIPH) celebrated its 30th anniversary at the Silesian Philharmonic in Katowice with an awards ceremony and concert. The Vice Minister of State Assets and government plenipotentiary for energy and mining transformation, Piotr Pyzik, joined MEPs, members of the Sejm, officials and representatives from science and industry, as well as the President of EURACOAL, Vladimír Budinský. The concert was overshadowed by events in Ukraine where Russian aggressors have created a humanitarian crisis that Poland especially is responding to with great compassion.
Mr. Budinský delivered his speech in Polish (English translation below):
Drodzy przyjaciele, górnicy polscy,
W tych historycznych dniach, kiedy w Niemczech i w Unii Europejskiej obserwujemy, dzięki agresywnej napaści Rosji na Ukrainę, nagłe przebudzenie z fałszywego snu, że rosyjski gaz może zastąpić europejski węgiel, z tego miejsca, tu w Katowicach, w sercu europejskiego górnictwa węglowego, wzywam Komisję Europejską:
Zakończ wojnę z węglem!
Wzywamy zakończenie wojny przeciw ważnemu sektorowi przemysłu, który zapewnia Europie niezależność i bezpieczeństwo energetyczne. Węgiel jest i jeszcze przez długi czas będzie ważnym surowcem na świecie i nie ma powodu, dla którego nie miałoby tak być w Europie. Technologie, które są potrzebne do uzyskania niskiej emisji z gazu, istnieją również w przypadku węgla.
Dlatego jeszcze raz apeluję do rządów państw Unii Europejskiej i Komisji Europejskiej: Zakończ wojnę z węglem!
Jedynym krajem, który wciąż walczy o węgiel w Brukseli, jest Polska. „Jestem w sercu Polakiem.”
Dear friends, Polish miners,
In these historic days, when in Germany and in the European Union we observe, thanks to Russia’s aggressive attack on Ukraine, a sudden awakening from a false dream that Russian gas can replace European coal, from this place, here in Katowice, in the heart of the European coal mining industry, I call on the European Commission:
End the war on coal!
We call for an end to the war against the important industrial sector that gives Europe its independence and energy security. Coal is and will be an important resource in the world for a long time to come, and there is no reason why it should not be so in Europe. The technologies that are needed to achieve low emissions exist also for coal.
Therefore, I once again appeal to the governments of the European Union member states and to the European Commission: End the war on coal!
The only country that is still fighting for coal in Brussels is Poland. “I am a Pole at heart.”
The hashtag #StandWithUkraine expresses our feelings, but what can we as individuals actually do to help the people of Ukraine in this time of deep crisis in Europe? Colleagues working for DTEK, our member in Ukraine, are on the front line, working with the army to ensure critical infrastructure is operational. To secure Ukraine’s electricity supply, ENTSO-E must urgently synchronise the now isolated Ukrainian power system with the EU system.
As refugees pour out of the country – women and children escaping the war now being fought by their husbands and fathers – Poland, the Czech Republic, Slovakia, Hungary and Romania are working to accommodate what will quickly become millions of people, each needing food and shelter. This will be a huge undertaking involving many other countries: some have already simplified their visa systems.
EURACOAL member companies, such as Polska Grupa Gornicza in Poland, are providing support through fundraising among employees, collection of medical supplies and equipment, and also crucial help with a special psychological assistance programme. The mining and energy industry shows its unity.
The whole of Europe is at one with Ukraine, terrified by what is happening now and worried about what might happen next. We must all prepare for the worst and hope for the best. The coal sector is well placed to help wean Europe off its heavy dependence on coal, oil and gas imported from Russia. That is our mission.
On 14 July 2021, the European Commission adopted a package of proposals to deliver on the targets agreed in the European Climate Law and so revolutionise the economy and society for a fairer, greener and more prosperous future. Known as the “Fit-for-55” package, it aims to make the EU’s climate, energy, land use, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared with 1990 levels. Europe would then be on the way to becoming the world’s first climate-neutral continent by 2050 – making the European Green Deal a reality.
Today, EURACOAL responds to this important package of legislative proposals which will have a dramatic impact on coal production and use across the EU:
On 13 July 2021, the ІV International Coal Conference “Coal regions of Ukraine: just transition and coal mining – Ukrainian and international experience” took place at Academy DTEK in Kyiv. More than two hundred experts from Ukraine and EU countries discussed the coal industry transition. Representatives of the Ukrainian government and large businesses, leaders of trade unions and directors of regional authorities joined thematic sessions on:
Achieving carbon neutrality and leveraging opportunities for coal communities
Coal mining in the context of the green energy transition, and
Just transition for the coal regions – possibilities for economic diversification of mono-towns.
The experts agreed that a successful transition of Ukraine’s coal regions heavily depends on the engagement of public authorities, local communities, international partners and corporate businesses.
Mr. Denys Shmyhal, the Prime Minister of Ukraine, noted that by sharing the values of the European Green Deal, Ukraine is taking meaningful steps towards its energy independence while reducing greenhouse gas emissions, gradually phasing out fossil fuels and lowering the carbon intensity of its industry. At the same, he envisaged a social transition of those towns and cities that depend on coal mining and coal-fired power generation. “We are actively discussing with the EU, the World Bank and other partners the just transition of our coal regions, following the example of the EU’s Just Transition programme. A complex just transition policy for the coal regions is being elaborated on the country level. Our task is to implement the necessary incentives to enable these regions to become attractive places for investment and to design a comprehensive plan for creating new jobs, as well as to bring new opportunities for small and medium business development,” stressed the Prime Minister.
Mr. Stanislaw Tillich, the German Federal Government Commissioner for Structural Change in the Ukrainian Coal-Mining Regions, said, “In August last year, we signed the German-Ukrainian Energy Partnership with the Ukrainian Government to share the experience in transformation of coal industry in our country.” This five-year, €35 million programme will support Ukraine’s decision to embark on transition, “because such a decision concerns both coal miners and the necessary societal support for decarbonisation.” He suggested exploring firstly the development potential and prospects for the mining regions, to include reskilling workers and identifying risks.
President of EURACOAL, Mr. Vladimír Budinský outlined the European Green Deal, including the impact on the coal sector of new legislative proposals to be published the following day (the Fit-for-55 package of 14 July) which would mean further change for all coal regions across Europe. Coming seventy years after the start of the European Coal and Steel Community was established in 1952, this change offered new prospects for the coal regions as power generation switched away from coal combustion. Mr. Budinský advised Ukraine “to focus on the future, innovate as quickly as possible, diversify your generation portfolio, invest in people, and keep all options open.” On the energy transition – which he said was a jump into the unknown – Mr Budinský could not predict the energy system of 2050, but promised it would be better, “just as our energy system today is better than it was in 1952 when King Coal dominated.”
According to Mr. Ildar Salieiev, CEO of DTEK Energy, his company has been supporting coal communities to develop road maps for a just transition over the last three years or more. “DTEK fully shares the European values”, he said. With the support of DTEK Energy, Dobropillia became Ukraine’s first coal city to follow a path of economic diversification and he pointed to the more than forty projects aimed at creating new jobs in various sectors of the local economy: from construction to services. Mr. Salieiev added that the Dnipropetrovsk region was following the same path, again with DTEK’s support.
The EU Methane Strategy, published by the European Commission in October 2020, covers several areas of human activity.
For the energy sector, the focus is on fugitive emissions from oil and gas production, supply infrastructure and end use, rather than from coal mining. In light of the international nature of emissions from EU energy-supply chains, this is the right approach and the strategy should be used as a tool in climate diplomacy. In the case of methane from coal mines, EURACOAL highlights in a new position paper several actions at the EU level that would further encourage the mitigation of this methane, turning an environmental issue into a clean energy resource.
EURACOAL submitted its position paper with a letter to the European Commission in which we warn against measures that risk slowing new investment in clean technologies. Current proposals to revise the “Aarhus Regulation” would delay transformation of the EU energy sector as interest groups seek to challenge new developments of all types. Why? Because every project could be argued to have a climate impact, and any NGO could claim to represent the environment.
EURACOAL supports equal access to justice. However, access should only be granted to those directly affected. Extending justice to all under climate law risks opening a Pandora’s box whereby literally anyone can claim harm caused by others.
Secure planning procedures
To transform the EU energy sector and economy, we need faster investment procedures, not slower ones. EURACOAL has urged the European Commission to begin a process to renegotiate the UNECE Aarhus Convention at the international level, so that a better balance can be found between access to justice and a secure planning framework for clean-tech investments.
The European Commission’s Coal Regions in Transition Platform initiative includes a number of activities of relevance to the research community. EURACOAL has been a partner in the EU-supported CoalTech2051 project which has developed a future coal-related research strategy with input from many stakeholders.
This report details the strategy and gives examples of research projects that are already pushing the boundaries to deliver new solutions that can better position coal and the coal regions for the future.
Imagine an energy system where the electricity that powers our cars came from the solar panels on our roofs, while our buildings are kept warm with heat from a nearby factory, and the factory is fuelled by clean hydrogen produced from offshore wind turbines. With the European Commission’s new hydrogen strategy (COM(2020) 301), this vision of an hydrogen ecosystem can be reality. Continue reading EURACOAL joins Clean Hydrogen Alliance→
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.