Poland signs new coal phase-out agreement at COP26

Chetan Patel

04-Nov-2021

LONDON (ICIS)–Poland, one of Europe’s largest consumers of coal, joined a coalition of 190 countries and organisations committing to phasing out use of the fuel by 2030s and 2040s at COP26 on 4 November.

The announcement came as part of the international “coal to clean power transition statement” released by the UK presidency of COP26.

Until now, Poland had one of the slowest coal phase-out plans in Europe with a date of 2049 set earlier in the year. The country also remains one of the most dependent on the fuel by 2030 due to a lack of ambitious phase-out.

According to ICIS long-term analytics data, Poland’s share of electricity generation from coal and lignite by 2030 is expected at 18%. This is beat only by the Czech Republic, which has coal at 23%.

While the date was expected to be brought forward, the new target announced on Thursday remains rather vague and a lot less ambitious as previously hoped. According to the UK government press release, the deal states phase-out in the 2030s for larger economies and 2040s for developing economies.

According to an official climate ministry spokesperson, Poland will be aiming for 2040s despite its economy being ranked as the 21st globally in terms of gross domestic product (GDP).

The new announcement effectively fits with the existing announcement, although ICIS data suggests that the market may phase out coal earlier than this.

CARBON COSTS AND NUKES PUSH COAL OUT

Beyond the Paris Agreement and what transpires out of COP26 and the latest agreement, ICIS base case forecast suggests that the Polish coal and lignite phase-out will be completed by 2045.

In fact, coal and lignite generation falls to just 4.3TWh as early as 2035 and 2TWh by 2040.

In its climate energy policy to 2040, Poland set out plans to move away from coal by placing emphasis on offshore wind and nuclear energy.

According to ICIS base case forecast, the first nuclear reactor is expected to be brought online by 2034, which explains the large drop in coal and lignite use in the power sector. This falls even more in 2035 once the second reactor comes online, despite capacity still standing at 8.6GW in the same year.

Beyond nuclear expansion the bullish trend expected in carbon prices is also a driving factor behind early market-driven phase-out of coal.

Even before the first nuclear reactor, Poland is expecting to see a decrease of 59TWh in annual coal and lignite generation between 2025 and 2030. This is driven largely by rising carbon costs which sees switching between coal to gas, as gas asserts itself as the primary source of electricity generation in the country.

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