Journal of Energy Security

Poland’s energy strategy has been systematically reviewed and amended every four years since the late 1990s. It is a strategy that outlines the main direction(s) of the country’s energy policy for decades to come. Documents prepared by the Polish government in 2009 provide the latest version of the nation’s energy-and-security policy. The strategy forecasts future fuel/energy demand projections and provides a detailed plan of activities aimed at achieving its strategic energy goals. As it stands, Poland's energy policy to 2030 is not only the government’s vision but also a coherent plan of action. The 2009 strategy addresses, on the one hand, the requirement to meet growing energy demand with stringent requirements for the development of sustainable resources (and to meet the long-term objective of zero-emission based economic growth) and, on the other hand, efforts to reduce import dependence on external fuel suppliers.

Domestic coal reserves are of vital importance for the Polish economy. Poland is the biggest hard coal producer in the EU. Nearly all of its generated electricity (around 92-94%) comes from coal-fired power plants fueled principally by hard coal and lignite. This is primarily due to Poland’s vast domestic deposits of coal. According Poland’s National Energy Strategy, the country’s energy mix is going to change over the next two decades due to the rise in the use of renewables, natural gas and nuclear energy. At present, due to the significant role of coal in the Polish energy mix, Poland ranks the lowest among the EU – 27 countries in terms of its level of energy import dependency. Poland’s energy import dependency level is 14.7%, while the EU – 27 average in 2004 was 50.1% according to Eurostat, the European Commission statistical agency. Eurostat defines energy import dependency as the extent to which a country relies upon imports in order to meet its energy needs. At the same time Poland’s use of solid fuels has declined from 75% of total primary energy supply in 1990 to 58% as of 2004.

The situation for import dependency for oil and gas is decidedly different than it is for coal. Poland imports nearly 90% of its crude oil and 66% of its natural gas. Its main supplier remains Russia. Poland’s amount of Russian energy imports in the past was higher than it is today largely because of a consistent policy of supplier diversification over the past decade. For example, in 1988 Russia held a dominant position in the Polish gas import market, but by 2008 Russian imports were being augmented and challenged by alternative imports into Poland from Central Asia. However, Russia's prevailing dominance over the Polish gas import market continues as a result of the Soviet legacy gas transport infrastructure, which was designed to transmit fuels from the East to Poland. The heavy reliance on external supplies of gas to Poland remains a threat to the security of energy supply to the nation. According to a public opinion poll carried out by Ernst&Young in January 2010, a year after the Russian-Ukrainian gas dispute, most of the respondents aged between 40-49 with university diplomas (62%) felt that the security of gas supply to Poland was in danger.

 

The dominant position of coal in the Polish energy mix is a challenge especially in light of efforts to limit CO2 emissions. The post-Kyoto world energy order demands a tightening of restrictions on overall GHG emissions. The actual pressure to reduce these emissions is even greater when one considers that the majority of past Polish CO2 emissions’ reductions came from a decline in economic activity over the period of economic transition, including the collapse of energy-intensive industrial sectors. Therefore, even though Poland has so far significantly reduced CO2 emissions, it’s been said that the reductions that have been achieved have been of a passive character, reinforced by the negative economic position in which the country found itself in 1989. Thus many experts think that the coming years will be a test for Poland on how actively the country can reduce its emissions even further.

 
Polish energy policy goals to 2030

 

Polish energy policy to 2030 includes a set of basic targets. Among them are:

Poland’s energy policy goals are not mutually exclusive. These goals might be divided into two groups that directly and indirectly reflect Polish energy policy priorities. One group of goals addresses energy security. This category covers the first four of the above mentioned priorities. But energy security is not simply a goal; it is a strategic objective which other priorities indirectly serve. Progress on energy efficiency for example, sometimes called the sixth energy resource, influences energy security on the demand side by reducing the amount of electricity or fuel used to achieve a specific output, be it heat, power, or consumption. This is why energy efficiency is often thought of as the cheapest way of increasing energy security. Of course, energy efficiency gains can be stimulated through innovation or can be savings-driven. Steps toward energy efficiency, particularly if introduced as a result of technological advances, can be collectively beneficial for an entire economy even if they are initially small in scale at the point of consumption.

Another priority that indirectly addresses the energy security issue is connected to the wider use of renewables, especially biofuels. Renewables play a part in the diversification of the energy mix as greater amounts of energy (in the form of electricity or heat) become available from domestic resources. Moreover, a wider use of biofuels will reduce demand for imported petroleum products. In 1994, volumetric share of bio-ethanol in gasoline (motor gasoline, abbreviated as mogas) consumed in Poland accounted for 0.37%, which had risen to 2.06% in 2008. While seemingly incrementally insignificant, the increased use of biofuels does point in the right direction for bolstering Poland’s national energy security.

The last priority, which indirectly shapes the energy security of a given country, is the creation of competitive energy and electricity markets. As Pierre Noel, a noted expert on energy security at Cambridge University states, “markets are consumers’ first line of defense.”  The absence of competitive energy markets across Central and Eastern Europe has historically skewed markets towards dependence on the region's historical supplier, Russia; secondly, the period of economic transition challenged these same markets to decouple generation from transmission and distribution providing more competition along the entire energy supply chain.      

The energy policy of moving towards sustainable development also bolsters national energy security. The strategic policy implications of sustainable-development policy directly support reducing the negative impact of energy use on the environment and, inter alia, support energy efficiency measures and the broader introduction of renewables.

Poland’s energy strategy manifests itself mainly in the form of legal instruments that shape the energy sector’s regulatory environment and of other instruments more international in character through adhesion to EU directives or by abiding by recommendations from the International Energy Agency.

In the Polish case, actions that influence both energy security and sustainable development can be distinguished by the following concrete actions: power diversification through the construction of nuclear power plants; development of an LNG terminal; and the increased investment in energy efficiency measures on the residential level.

Nuclear power
Poland has had a 40 year history with nuclear power. The first plans for the construction of a Polish nuclear facility date back to 1971 when the government debated on building a plant either in Żarnowiec or Klempicz. The reasons behind the location of these plants reflected favorable hydrological, seismic, geological and demographic conditions in these two areas. These facilities were initially scheduled to be brought on line in the year 2000. However, with a lack of social acceptance for such an investment on Polish territory in the wake of the Chernobyl disaster of 1986, these plans were tabled. More recently, the concept of adding nuclear power to the Polish energy mix was revived in 2005 and has been subsequently included in the nation’s overall energy policy strategy. Social resistance to nuclear power has lessened, and local communities are actively competing for power plant installations in their regions as such plant development is viewed as an opportunity for employment creation. This latest endeavor has, however, also languished due to the lack of a detailed plan of action. In 2009, the Government appointed a Special Envoy for Polish Nuclear Energy, who is responsible for introducing nuclear energy to into the Polish energy mix. Present plans for the introduction of nuclear are found in the following table.

As of this writing, all of the required regulatory procedures (among others: environmental impact assessment, investment, nuclear waste management and a public communication/outreach program) have been drafted. They will next be submitted to the Cabinet of the Polish Presidency. Due to the lack of qualified staff, steps have also been taken to train those who will work as nuclear engineers and implement these plans. The influence of nuclear power on Polish energy security is readily understood. Thanks to the introduction of this new electricity generating capacity, Poland’s power generating sector will be more diversified. Yet against the backdrop of a projected rise in demand for electricity and a lack of investment in the repair and construction of new generation and transmission facilities, even with new nuclear power Poland may still fail to meet its increasing internal demand.

LNG
Construction of the LNG terminal in Świnoujście is a Polish answer to the question of heavy reliance on single supplier for natural gas. Initially, there were two coastal locations taken into consideration as possible LNG terminals: Świnoujście and Gdansk. The ultimate selection of Świnoujście as the site was based on an overall cost assessment. In Swinoujscie property values are legally regulated and therefore less subject to market price manipulation than in Gdansk, making land acquisition costs more predictable.
 
The Świnoujście terminal will be put into operation in 2014, with initial operating capacity of 5 bcm/year, which might be extended to 7.5 bcm/year in 2020 on the basis of reported demand. Poland’s state natural gas delivery monopoly PGNiG S.A. has already contracted gas volumes for the LNG terminal from Qatar, 1.5 bcm/year (after re-gasification) that will be imported on the basis of a long-term contract. The terminal will initially operate at 30% of its design capacity. The terminal has also garnered interest of the European Union, which perceives it not only as an important tool for increasing Polish energy security but also as a possibility for the Baltic states to diversify their gas supply through the Polish terminal. As a result, the European Union decided to co-finance this investment by granting roughly 8 million Euros from the European Energy Plan for Recovery fund.

Resources deposits
Poland’s strategy on resource deposits attributes special importance to the role of domestic fuels. This refers not only to coal but to natural gas as well. Coal is considered a fundamental building block for Polish energy security. Bearing this in mind, Polish authorities have decided to make fossil fuel use as environment-friendly as possible. With the help of the European Union, one of Europe’s new carbon capture and storage facilities will be located on the premises of the Polish lignite mine in Belchatow. This post-combustion facility will use advanced amine technology and will be put into operation in 2015.
 
Natural gas exploration is also being carried out across the entirety of Poland. In 2009, exploration and prospecting work (including geophysical surveying) was carried out by the PGNiG Group in three areas of Poland: the Carpathian Mountains, the Carpathian Foreland and the Polish Lowlands, where it has already drilled 27 wells, including 19 exploration and 8 appraisal wells. The PGNiG Group has been involved in projects on the Norwegian Continental Shelf since 2006 as part its strategy designed to increase the production of natural gas and crude oil outside of Poland. Production from the Skarv/Snadd/Idun fields is expected to be launched in the second half of 2011. PGNiG's average annual gas production is estimated to reach 0.5 bcm, while its oil production should reach 400,000 tons from the Skarv/Snadd/Idun fields in the first few years. The real challenge is the absence of physical transport infrastructure to deliver additional gas volumes to Poland, as currently there is no infrastructure directly linking the Norwegian Continental Shelf with Polish customers.

Energy efficiency: double potential