Silver prize winner!

King Coal wants to keep his crown

This subsidy, mysteriously named ‘the capacity mechanism’ was designed to maintain Poland’s dirty coal-based energy system. It will use the public’s money to invest in coal-fired plants - keeping them running well past their viable life-time!

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The capacity mechanism means power plants get paid twice - once for feeding electricity into the grid and once for claiming their ability to feed it in the first place. In theory this subsidy is open to competition in Poland, but it is clear to many independent experts that it’s just another mechanism for channelling money into coal.

A recent report shows that between 1990 and 2016 the Polish government contributed nearly €53.5 billion directly to the coal-based energy sector and mining industry - or €460.6 billion if you count all the costs to people’s health and damage to the natural environment. Conservative estimates (not even counting health and environmental costs) show that if the government continues with its current approach and including also the capacity mechanism, between 2017–2030 the coal mining and power sectors will absorb over €36 billion. According to the regulatory impact assessment capacity mechanism alone till 2027 will amount to net €6.3 billion of subsidies (WiseEuropa estimates that this category will reach over €8.9 billion by 2030).

Businesses and households will have to pay additional fees on their electricity bills to cover the capacity market. The biggest financial burden will be carried by small and medium businesses, paying out €3.5 billion, and households at €1.6 billion. According to some experts the final costs of the capacity market could be even higher.

Coal plants are already struggling to comply with air pollution limits, and air pollution is having toxic effects on health in the country. Polish coal plants are cause around 5 000 premature deaths per year as well as other health as well as other health impacts like chronic bronchitis, asthma and also generate massive external health costs.[1]

Poland’s energy sector is over 80% dependent on coal, and more and more of it is being imported, mainly from Russia. While the Polish government claims that they are acting to safeguard energy security, the truth is the capacity market is only deepening problems for Poland’s energy system. This was clearly visible in August 2015. High temperatures, low water levels (necessary for cooling the blocks in coal plants) combined with planned summer renovations led the energy system to the point where the system operator imposed power restrictions on the biggest companies. At the same time in Germany there was an energy surplus, mainly thanks to solar!

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[1]Source: Europe Beyond Coal, calculations based on 2015 emission data https://beyond-coal.eu/data/ , also see Europe’s Dark Cloud Report http://www.caneurope.org/docman/coal-phase-out/2913-dark-cloud-report/file

 

 

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Find out more about Greenpeace Poland and their work on coal via the links below:

  • Read about a report showing Poles pay €2 billion of coal subsidies annually
  • A Superbiz news article on the same report (in Polish)
  • An update on proposed EU restrictions to subsidies to coal, gas and nuclear.

Follow @Greenpeace_PL on Twitter and @greenpeacepl on Facebook.

 

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Credits and acknowledgements

Graphic design: Mark Bitter, BITTER design, www.markbitter.de

Web design: Olov Källgarn, Pixelengine www.pixelengine.se

Financial support: This project has been realized by the helpful support of the KR Foundation and the European Commission LIFE program

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