Without questioning the validity of the energy transformation, coal will be an element of the energy mix for a long time. A sudden departure from it may reduce the emission intensity of the Polish energy sector, but at the same time have disastrous economic consequences, especially in the short term. How not to throw the baby out with the bathwater and transform energy in a way that is both ecologically and economically sustainable?
- The quotations of the domestic coal price index PSCMI1 (for the energy sector) have remained at the level of approximately PLN 30/GJ or slightly above since the beginning of the year. As for the PSCMI2 index (for heating), there was a clear drop from nearly PLN 45/GJ to just over PLN 28/GJ.
- Importers, taking advantage of the shortage of coarse coal for individual customers, sift out from the imported raw material the assortment for retail sale and the fine assortment (usually 0-10 mm fraction) for industry.
- The effect is that the importer sells coal to individual customers with a high margin, and at the same time can offer industrial customers much more favorable prices than for domestic raw materials.
- Therefore, if we were to look myopically only at the cost of the raw material, it would be more profitable to import the entire necessary volume from places where its extraction is much cheaper than to maintain domestic extraction, but this is quite risky and irresponsible, as shown by the situation on the domestic market in the fourth quarter of 2022 year, when coal in a Polish port cost up to PLN 80/GJ.
The past year was marked by declines in the domestic energy sector. The sector produced just over 163 TWh of electricity, i.e. 6.58 percent. less than a year earlier. By 3.44 percent energy consumption also decreased.
There was also a record drop in energy production from coal (by 22 TWh), but this raw material is still a key element of the national energy mix and is responsible for 61%. electricity production in Poland (39.7% hard coal, 21.3% brown coal).
Although the amount of energy produced from renewable energy sources continues to grow, it is clearly visible that despite its gradual marginalization, coal will be an important element of our energy mix for many years to come. In 2023, local mines extracted 48.4 million tons of hard coal – including 36.4 million tons of thermal coal. Over 90 percent of this volume went to the domestic market, mainly to power plants and combined heat and power plants. Coal imports to Poland reached 16.9 million tons in 2023. At the same time, at the end of the year we had over 13 million tons of domestic raw material stocks. It is worth recalling that in December 2023, China extracted approximately 414 million tons of coal, i.e. as much as all of Poland in the last 7 years, and in the entire year 2023, mining in China amounted to over 4.66 billion tons, i.e. approximately as much as Poland since Edward Gierek was the First Secretary of the PZPR Central Committee – says Sławomir Wołyniec, president of the management board of V-Project/
The Polish energy industry is only moving away from Polish coal because it is expensive
The Polish energy industry is already largely moving away from Polish coal, but not from coal in general, because the demand for imported raw materials is still high. Why, despite access to Polish coal, does the energy sector willingly use imported coal? The answer is price.
Challenges related to mining, such as the depth of deposits or technological issues, translate into lower efficiency of Polish mines. As a result, last year domestic coal was significantly more expensive than imported coal.
The quotations of the domestic coal price index PSCMI1 (for the energy sector) have remained at the level of approximately PLN 30/GJ or slightly above since the beginning of the year. As for the PSCMI2 index (for heating), there was a clear drop from nearly PLN 45/GJ to just over PLN 28/GJ. However, it is difficult to compare them with the ARA index, i.e. coal imported to the ports of Amsterdam-Rotterdam-Antwerp, which in the first quarter of 2023 slightly exceeded PLN 40/GJ, and at the end of the year it was below PLN 20/GJ. Open-pit mining will always be more competitive than deep-sea mining, explains Sławomir Wołyniec.
Coal for home heating is the most expensive in 2024
Moreover, importers, taking advantage of the shortage of coarse coal for individual customers, sift out from the imported raw material the assortment for retail sale and the fine assortment (usually 0-10 mm fraction) for industry.
The effect is that the importer sells coal to individual customers with a high margin, and at the same time can offer industrial customers much more favorable prices than for domestic raw materials. Therefore, if we were to look myopically only at the cost of the raw material, it would be more profitable to import the entire necessary volume from places where its extraction is much cheaper than to maintain domestic extraction, but this is quite risky and irresponsible, as shown by the situation on the domestic market in the fourth quarter of 2022 year, when coal in a Polish port cost up to PLN 80/GJ. Domestic mining at a level that meets the country’s needs means independence and security of the energy industry, heating industry and Poles – adds Sławomir Wołyniec.
2049 is the last year when Polish coal will be mined
We can radically transform the energy sector towards low-emission, e.g. by closing all mines. Without prior security for production from renewable energy sources, nuclear energy, hydrogen, energy storage, etc., this would be too hasty. The lack of domestic coal would mean the need to increase imports.
However, according to the assumptions of the government’s strategic documents, we still have some time for transformation. Abandoning coal mining in Upper Silesia, where 82% of raw material production is to take place by 2049, mines, among others, are to be closed down earlier. in Greater Poland.
However, this means that it is necessary to take action now to prevent the degradation of mining regions, where entire districts often depend on mines.
Closing all mines would mean the need to retrain nearly 74,000 mining workers. Domestic raw material would also disappear from the market. In this context, it is particularly important that almost all coal from Polish mines goes to the domestic market. If power plants or heat and power plants don’t buy it, it remains in storage. Reconciling the interests of all parties is a challenge faced by subsequent Polish governments and local government authorities in Upper Silesia.
Windmills at sea will provide us with electricity, but not with district heating
According to calculations by Wysokinapiecie.pl, last year the record for generating electricity from renewable energy sources was once again broken in Poland. The portal estimated that over 40 TWh, or 27 percent, was generated from renewable sources. entire Polish production. Without a doubt, renewable energy is the direction in which our energy industry is heading. The most popular sources, i.e. wind and sun, to be profitable, however, must be built where the wind and sun constantly power the installations.
When it comes to electricity, distance doesn’t matter. It can be transmitted even hundreds of kilometers from the source. However, the situation is different with heat energy that must be produced on site, because the heat loss increases rapidly with each subsequent kilometer of transmission. This means that we cannot assume that we will give up coal overnight. We can, of course, imagine that we will all heat ourselves using electricity, e.g. heat pumps or advanced radiator systems, but these solutions are currently much more expensive than system heat. Moreover, it would involve huge power consumption on cold days and it is doubtful whether power plants could cope with it – says Sławomir Wołyniec.
Can coal be an element of the green revolution in Poland?
Considering the pace of modernization, especially in the heating sector, it is worth approaching the move away from coal sensibly. Gradually reducing its share in the energy mix in favor of renewable energy does not have to mean completely abandoning this raw material.
During the transition period, this may be dictated by economic reasons, but in the long term, coal may still play an important role in stabilizing the energy system. Energy obtained from renewable sources is subject to the risk of instability.
Generation from renewable energy sources sometimes leads to overload of the network, which is not yet fully adapted to it. Storing the energy generated in this way also remains a challenge.
An additional difficulty is that the largest generation, e.g. from photovoltaics, occurs on clear summer days. It is therefore worth taking into account the stabilizing role of energy obtained from the combustion of fossil raw materials.
All the more so because even though CO emissions2 related to coal combustion cast a shadow on this energy source, innovative solutions are still being developed, such as CCS (Carbon Capture and Storage) technologies, coal gasification, or the “clean coal” method, which are intended to make the combustion of this raw material more environmentally friendly. Their use seems to be a kind of compromise while achieving fully sustainable energy generation technologies – sums up the expert.
