Warsaw, 20th December 2018
Energy prices threaten the competitiveness of the Polish economy – report by the Union of Entrepreneurs and Employers
High electricity prices constitute a threat to our economy, and to avoid high price increases in the future, Poland needs a systemic plan for an energy transformation – according to the report by the Union of Entrepreneurs and Employers published on 20th December 2018 under the title “Energy prices threaten the competitiveness of the Polish economy”.
For several weeks now, news services have been almost dominated by reports of rising electricity prices. Public concern is perfectly understandable, because higher energy prices are a problem for both households and Polish companies in terms of their competitiveness of. At the moment, it is difficult to accurately estimate the scale of future increases, which result primarily from the increase in coal prices and CO2 emission allowances, but without a shade of doubt, the authorities are faced with a serious strategic challenge, especially in the context of growing demand for energy.
“The problem with Polish energy has two dimensions,” claims Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers. “First of all, our energy mix is not adjusted to the global climate policy, which we cannot oppose just on ourselves, whatever it is we would like to do. The system of emissions trading is a tool for limiting the role of coal, meanwhile about 80% of electricity produced by us still comes from this raw material. Secondly, our coal-powered energy generating units are outdated, which also translates into a high emission coefficient the Polish power industry.”
Experts of the Union of Entrepreneurs and Employers emphasise that the increase in electricity prices is a direct consequence of the strong dependence of the Polish economy on electricity produced from coal whereas the EU emissions trading system decreases the profitability of this type of power plants. Pursuant to the above facts, a systemic plan for energy transformation is needed in a strategic perspective, taking into account the substitution of high-emission coal units with gas power plants, wind farms, biomass and biogas units or photovoltaics.
Therefore, in the face of rising energy prices, it is of key importance to plan a long-term transformation of the Polish energy sector from a model based almost entirely on energy coming from coal, towards a mix that takes into account to a much higher degree renewable energy sources and low-emission generation units. Meanwhile, presently, the main idea of the government to fight increasing prices is a compensation program for individual clients and entrepreneurs. As we can read in the report, there is a serious fear that its implementation will only postpone the abrupt increase in electricity prices for all recipients and constitutes “squandering” of funds that could be allocated to investments in renewable energy sources.
“The compensation system is a temporary solution, unreasonable in the long term, because without fundamental changes in the structure of the Polish power industry, price increases will take place anyway,” concludes Cezary Kaźmierczak. “Owing to that, our short-term recommendation, “for right now”, would be to cut down on the levies that condition the price of electricity, for instance, in the form of a reduction in excise tax.”
The authors of the report highlight in its summary the fact that increases in energy prices may lead to a rise in the prices of goods and services, and consequently to inflation. Therefore, an average citizen will feel the results of price increases the most, not only when footing the electricity bill, but also while shopping for groceries. Bearing in mind also the fact that electricity prices determine the operating costs of companies and are an important factor when making decisions about investing in a given country, improving the general condition of the Polish power industry is becoming one of key strategic challenges for the coming years in Poland.