Prepared for presentation at the Open Meeting of the Human Dimensions of Global Environmental Change Research Community, Rio de Janeiro October 6-8, 2001
Panel: National Responses to Climate Change
Energy dimension of climate change policy in the economy in transition -
the case of Poland[1]
by Mirosław Sobolewski (BSiE)[2], Zbigniew Karaczun (PKE)[3] and Andrzej Kassenberg (InE)[4]
ABSTRACT:
The Kyoto Protocol (KP) obliges the developed countries to reduce the emissions of six greenhouse gases by 6-8% in 2008-2012. In order to achieve this, the Parties should implement appropriate policies and measures, as indicated in Article 2 of the Protocol. Most of the recommended measures refers to activities within energy sector; they include:
· enhancement of energy efficiency;
· development and increased use of new and renewable forms of energy;
· progressive reduction or phasing out of market imperfections, fiscal incentives, tax and duty exemptions and subsidies.
The purpose of this paper is to identify and discuss problems arising at the interface of environmental and energy policies in a transition economy as they relate to formulation and implementation of climate change policy. The case of Poland is examined in the paper, however many observations and conclusions are relevant to other countries of Central and Eastern Europe (CEE).
Poland ranks as one of the biggest CO2 emitters among CEE countries. The high GHG emission levels reflect the material- and energy-intensive structure of the economy shaped under central planning system. The socio-economic changes, which came after collapse of the communist bloc had a significant impact on environment and environmental policy. The initial economic recession and the subsequent process of restructuring of energy intensive branches of industry led to lower demand for energy. A distinct drop in CO2 emissions accompanied this, in particular at the beginning of the 90. Since 1993 the Polish economy has been demonstrating quick growth (4 to 7% of GDP per annum) accompanied by a slightly decreasing GHG emission. This is caused by rationalisation of energy consumption, technical and technological progress and liberalisation and deregulation of energy market. As a result Poland is on a track to meet its commitments under UNFCCC with current (and projected)GHG emission significantly below the base year level.
Authors observe that Poland, certain to meet its existing international commitments does not pursue an active policy specifically aiming at CO2 emissions abatement. Improvements concerning emissions remain the side effects of energy policy and other environmental and economic considerations which enjoy higher priority in official policy. However, expanding the horizon beyond the first commitment period of the KP (2008-2012) suggests that current policy does not guarantee that favourable tendencies in CO2 emission will be sustained. This leads to a conclusion that in a long-time perspective Poland will have to engage in a more active climate policy. The structure of current GHG emission indicates that the energy sector is where the greatest effects can be achieved (in addition, attention should focus on this sector because of other environmental and health considerations). Having reviewed opportunities for further reduction of GHG emission and possible policies and specific abatement measures in energy sector authors give particular attention to prospects of development of renewable energy sector in Poland.
TABLE OF CONTENT
1. INTRODUCTION
2. LEVELS AND STRUCTURE OF GHG EMISSIONS IN POLAND
3. THE NATIONAL POLICIES OF ESSENTIAL SIGNIFICANCE FOR GHG EMISSION LEVELS
Demonopolization of the energy sector
Changes in the structure of primary energy consumption
The reform of the mining industry
The thermo-modernization program
4. CRITERIA FOR EVALUATION OF POLICIES AND MEASURES
Formal criteria
Environmental criteria
Economic criteria
Social criteria
5. RENEWABLE ENERGY DEVELOPMENT AND EXAMPLES OF GOOD PRACTICES
Examples of good practices
The use of biomass in a heating system – the Ceynowa District Hospital in Wejherowo
The use of waste wood for energy generation in urban conditions – the Town Sanitation Company in Otwock
The use of landfill gas for energy generation purposes – the disposal plant at Gdańsk – Szadółki
The use of solar energy and the heat pump in the heating system of a school at Blizne
6. CONCLUSION
BIBLIOGRAPHY
1. INTRODUCTION
The aim of the United Nations Framework Convention on Climate Change (UNFCCC) is to stabilize greenhouse gas concentrations in the atmosphere in order to prevent dangerous man-made impacts on the climate system of our planet. The Kyoto Protocol obliges the developed countries to reduce the emissions of six greenhouse gases by 6-8% on an average in 2008-2012. Furthermore, in order to achieve the required reduction levels, the Parties should implement appropriate policies and measures, as indicated in Article 2 of the Protocol. The recommended measures include, e.g.:
- enhancement of energy efficiency in relevant sectors of national economy;
- research on, and promotion of, development and increased use of new and renewable forms of energy;
- progressive reduction or phasing out of market imperfections, fiscal incentives, tax and duty exemptions and subsidies in all GHG emitting sectors;
- encouragement of appropriate reforms in relevant sectors aimed at promoting policies and measures (P&M) which limit or reduce emissions of GHG.
At the forum of the Convention, discussion is underway concerning the relations between P&M and the activities implemented in the framework of so-called flexibility mechanisms (Joint Implementation, Clean Development Mechanism and emissions trading). Most Parties to the Convention indicate the key importance of the application of appropriate P&M at the national level for achieving the long-term goals of the Convention.
In particular, it is important to implement such measures in the countries of Central and Eastern Europe. Although it is now the only group of countries, which have distinctly reduced their greenhouse gas emissions, their fast economic growth may soon reverse this favorable trend. They also need new technologies to cope with competition on international markets.
The purpose of this paper is to evaluate the instruments of climate protection policy as used with respect to the energy sector in Poland. The paper is divided into six sections including introduction:
- Section Two which directly follows the introduction contains basic information on Poland’s commitments in the scope of climate protection, describes the structure of greenhouse gas emissions and gives information on the environmental pressure of the energy sector in Poland;
- Section Three gives information on measures which contribute to, or aim at, climate protection. Particular attention is paid to measures related to the transformation and restructuring of the energy sector (including mining) which are of a special significance for long-term greenhouse gas emission trends;
- Section Four discusses the criteria applied by the authors for evaluating the instruments to reduce greenhouse gas emissions as proposed in the Second National Communication of Poland. By applying these criteria it was possible to indicate the benefits associated with the use of renewable energy as a measure allowing to reduce GHG emissions and meet, at the same time, other environmental and social objectives;
- Section Five characterizes in greater detail the Polish policy for the development of the sector of renewable energy sources. This Section also describes several examples of the practical implementation of investment projects to use renewable energy sources;
- Section Six contains conclusions and recommendations.
2. LEVELS AND STRUCTURE OF GHG EMISSIONS IN POLAND
As a Party to the Convention since 1994 and the Signatory to the Protocol since 1998, Poland undertook to implement all its commitments under these agreements, including reducing emissions in the first commitment period by 6%. Its results in reducing these emissions to date place Poland in the group of countries, which have achieved the greatest reduction of greenhouse gas emissions. Detailed information on the emission levels and activities to protect the climate are forwarded on a regular basis to the UNFCCC Secretariat.[5]
Despite the fact that climate policy is not a priority in the light of the national needs[6], on the international scene, Poland joins actions to make the climate negotiations more dynamic and belongs to the group of countries supporting the quick entry into force of the Kyoto Protocol and launching of a consultative process on the development and implementation of the best practices leading to reduced emissions.
Poland is a country with significant greenhouse gas emissions. When acceding to the Convention as a country with economy in transition, Poland enjoyed the privilege of certain flexibility in its choice of the base year, choosing 1988 (instead of 1990), which was the last year before the economic breakdown. Ever since CO2 emissions systematically fell so that the CO2 release levels in 1998 (the last year for which a full emission inventory was taken) were lower by almost 30%. Just as large a drop in emission levels came for methane (see Table 1). Such a significant reduction of emissions was initially a result of an economic recession and then an effect of radical, comprehensive economic reforms initiated in 1990, leading to deep changes in the structure of the Polish economy.
Table 1. Changes in the GHG emission levels in Poland in 1988-1999 (according to the IPPC’96 methodology) in thousand tons
thousand tons / [ % of 1988 quantity]
1988 / 1990 / 1991 / 1992 / 1994 / 1993 / 1995 / 1996 / 1997 / 1998 / 1999CO2 / 477 584
[100] / 381 482
[79,8] / 367 689
[77,0] / 372 311
[78,0] / 372 293
[78,0] / 363 980
[76,2] / 348 926
[73,1] / 373 202
[78,1] / 362 300
[75,9] / 338 095
[70,8] / 329 739
[69,0]
CH4 / 3 141
[100] / 2 801
[89,2] / 2 588
[82,4] / 2 474
[78,8] / 2 467
[78,5] / 2 432
[77,4] / 2 458
[78,3] / 2 252
[71,7] / 2 279
[72,6] / 2 335
[74,3] / 2 250
[71,6]
N2O / 70
[100] / 63
[90,0] / 52
[74,3] / 50
[71,4] / 50
[71,4] / 50
[71,4] / 54
[77,1] / 54
[77,1] / 54
[77,1] / 52
[74,3] / 75
[107,1]
Source: „Environmental Protection 2000”. Central Statistical Office (GUS), Warsaw 2000, and own calculations.
The high greenhouse gas emission levels reflect the material- and energy-intensive structure of the economy, which took shape after World War Two. In that period, the heavy and mining industries developed impetuously. The central planning system, artificially low energy prices and the lack of incentives to improve the productivity of the economy caused the growing waste and incessantly increasing demand for energy – the total primary energy consumption in 1950-1980 grew fivefold. In the period the strongly centralized electric energy generation sector emerged, using for the most part abundant domestic deposits of hard coal and lignite (frequently with low calorific value and high sulfur content). Its isolation from the world market saved Poland, just as the other economies of the Communist bloc, from the perturbations connected with fuel crises in the 1970s, but the side effect of that process was the persistence of the unchanged structure of energy consumption. As at a result, on the threshold of the 1990s Poland had one of the highest per capita CO2 emission levels.
The socio-economic changes, which came after 1989, as the market economy was established and so were real energy prices, brought distinct effects in the sphere of environmental impact. The economic recession in the early 1990s and the subsequent process of restructuring of much energy intensive branches of industry led to lower demand for energy. A distinct drop in CO2 emissions accompanied this, in particular in 1988-1991. During 1992-2000 the Polish economy showed quick growth (from 4 to 7% of GDP per annum), with stable (and even slightly falling) greenhouse gas emission levels. This tendency is favored by the rationalization of energy consumption, the development of the services sector at the expense of the traditional branches of industry, by technical and technological progress.
It seems likely that the stabilized GHG emission levels, despite the economic growth and the rising GDP, will be maintained in the upcoming years. The long-term predictions of greenhouse gas emissions[7] indicate that Poland will not have any substantial difficulty to meet its commitments under the Kyoto Protocol (i.e., it will not exceed the mean annual emission level of about 449 million t of CO2) in the period 2008-2012. All the scenarios considered predict such a situation: the business as usual, the worst case and the best-case alternatives, with the latter envisaging dynamic economic growth. In such a situation, it should be expected that Poland’s climate policy will continue to be based on the synergetic effect of the restructuring programs implemented in the different sectors of the economy and will be limited to actions so-called “no regrets” activities. Such actions often coincide with the P&M range recommended by the Kyoto Protocol (fuel conversion, energy saving and enhanced energy efficiency, replacement of energy intensive technologies, changes in fiscal policy etc.).
Despite the deep transformations related to the economic transition, the sectoral structure of greenhouse gas emissions in Poland did not change over the over decade and it is still characteristic of the economies in transition (see Fig. 1). The power generation sector remains the largest source of carbon dioxide emissions. In 1998 the emissions from this sector amounted to almost 185 million tons. Major sources of greenhouse gas emissions also include industry (73.5 million tons) and the commercial and residential sector. Transport emissions (28 million tons) represent only 8.3% of total CO2 emissions (in the OECD countries, the contribution from this sector is usually 20-30%), but they show a tendency to grow quickly[8]. At the same time, large amounts of CO2 are captured from the atmosphere as a result of the forest management in Poland and changes taking places in land development and use. It is estimated that the so-called “sinks” absorb as much as about 35-40 million tons a year.
Fig.1. CO2 emissions in 1998 in Poland by sectors of the economy
Source: After “Environmental Protection 2000”. Main Statistical Office (GUS), Warsaw 2000 and the authors’ own calculations.
Methane emissions, represent about 14% of total greenhouse gas emissions (expressed as CO2 equivalent). Total methane emissions in 1998 exceeded 2,336,000 tons. The most important sources of methane include: volatile emissions from fuel use (822,000 tons), emissions from waste landfill (870,000 tons) and those from the so-called intestinal digestion occurring in the agricultural sector (534,000 tons).
The structure of greenhouse gas emissions (Fig. 1) indicates that the energy sector is where the greatest effects can be achieved in reducing CO2 emissions. The energy efficiency in Poland is still significantly lower than in most OECD countries, indicating opportunities for further substantial reduction of greenhouse gas emissions in this sector. In addition, attention should focus on this sector because of additional environmental considerations.
Although in the 1990s the modernization of the energy sector began it still exerts substantial impact on the natural environment including not only CO2 and other noxious emissions but also such adverse impacts as geomechanical and hydrological transformation of soils, disturbances of the water regime caused by the mining activities and heavy pollution of surface waters (with saline mining waters and cooling waters from power plants discharged directly into rivers). The mining and energy sector is also the source of about 49% of all the industrial waste generated every year in Poland. However, the most important impact involves air pollutant emissions. As already mentioned, the energy sector in Poland is responsible for about 55% of total CO2 emission; in addition, it emits more than 63% of total amounts of sulfur dioxide, 41% of nitrogen dioxide and about 30% of dust. Therefore, it may be said that the actions within the energy sector will be of fundamental significance for the successful climate protection program in Poland. In the light of the data on the magnitude and scope of the impact of that sector on the environment the best practices in policies and measures to protect the climate implemented within the energy sector would not only contribute to the reduction of greenhouse gas emissions but also will support the achievement of other environmental objectives.
3. THE NATIONAL POLICIES OF ESSENTIAL SIGNIFICANCE FOR GHG EMISSION LEVELS
In Poland, the main public administration authority responsible for the implementation of the provisions of UNFCCC is the Minister of the Environment. The subsidiary body, which was established in 1999, is the Climate Convention Implementation Office situated at the National Fund for Environmental Protection and Water Management (NEF). Unfortunately the climate policy is not of priority significance for the Polish Government, an example of which may be the lack of the national strategy on GHG emission reduction. Nor has a specific action program been formulated to address the requirements of the Climate Convention. Some elements of climate policy were contained in limited form in the National Environmental Policy adopted by Parliament in 1991. In 2000, a thorough review of the goals and tasks of state policies in the fields of environmental protection and sustainable development have been completed. As an effect of this work, the Council of Ministers adopted The Second National Environmental Policy, setting out new priorities, also with respect to climate protection issues. This document contains several direct references to the issues of global climate change and the need to take action to reduce greenhouse gas emissions. Among other things, it envisages:
Poland’s active participation in addressing global environmental problems, including in particular the actions at the Climate Convention forum, which has been included among priority international agreements;
ratification of the Kyoto Protocol as a short-term priority of the environmental policy;
the implementation of the requirements of the Kyoto Protocol, the halving of energy intensity of the national product and the wide introduction of the best available techniques in the scope of energy efficiency and renewable energy sources (these goals are medium-term priorities to be implemented by 2010);
the development of the national strategy on greenhouse gas reduction and enhanced energy efficiency (as an element of the implementation program for the Second National Environmental Policy – NEP);
the larger number of pollutants covered by actions aimed at reducing their emissions, to include, among others, such greenhouse gases as methane, HCFs, PFCs and SF6.
To date, the adoption of the aforementioned goals has not been translated into the implementation, in the practice of environmental protection, of specific legislative measures to minimize greenhouse gas emissions. The only instrument of active climate policies is still the fee for CO2 and methane emissions, in place since 1993, which are levied on economic entities. However, the very low rates of these fees (about 0.045 USD/t for both CO2 and CH4) are not sufficient incentives to encourage them to undertake investment projects to reduce emissions of these gases. Therefore, it is difficult to fully recognize these fees as an element of active climate policies, nevertheless, the existence of even small fees for CO2 and methane emissions, along with the obligation to monitor their emissions by the largest industrial plants, may significantly facilitate the introduction of more effective instruments of climate protection in the future. At present, the most important instrument of the national environmental policy, which may be used to implement investment projects to reduce greenhouse gas emissions, is the system of preferential credits and grants provided by the environmental funds (mainly NEF and EcoFund).