19 May 2020

Looming cancellation of Ostrołęka C coal plant shows new coal is dead in EU

WARSAW, 19 May 2020 – The future of coal has darkened considerably this week, with energy company PKN ORLEN announcing that it will not invest in Ostrołęka C as a coal-fired project. Ostrołęka C is the last of the new coal plant under construction in Poland, and the decision is a critical blow to its future. Meanwhile, lignite utility ZE PAK has announced it will lay-off 237 miners at its Adamów open pit mine, underlining the need for fair, just transition measures to support communities and workers as coal inevitably declines.

State-owned utilities Enea and Energa, halted finance for the EUR 1.2 billion, 1GW coal-fired power plant in February 2020, citing difficulties in obtaining external financing (1), and the changing policy landscape resulting from the EU Green Deal. PKN ORLEN became the majority stakeholder in Energa in April, and has now confirmed (2) that it will only invest in Ostrołęka C if the project moves away from coal to gas.

It will be only the second time a coal plant under construction in Europe has been scrapped, with Germany’s Westfalen D being the first in 2015 (3), and will come after years of warning by independent think-tanks Instrat (Warsaw) and Carbon Tracker (London) that the project was not economically nor technically viable.

“ORLEN and Energa have a mess on their hands with Ostrołęka C. Thankfully the project’s imminent demise means European efforts to tackle the climate crisis will become a little easier, but switching to fossil gas instead of renewables is not a good thing. It means we still have a challenge ahead to get onto a pathway compliant with the UN Paris climate agreement,” said Diana Maciąga, campaign leader for Polish NGO Workshop for All Beings. “The end of Ostrołęka C should send a chill down the spine of Poland’s coal industry and government, as neither seem prepared for the inevitable end of coal. This combined with ZE PAK’s announcement of more mine worker layoffs demonstrates the urgent need for a plan and support to help coal communities justly transition to new and better jobs in renewable energy, and other areas determined by the communities themselves.”

“Energa and Enea took a reckless gamble and lost. This financial and reputational cost should serve as a cautionary tale for any other promoters of new coal in any form in Europe and beyond,” said Michal Hetmanski, researcher from Warsaw-based think tank Instrat. “The European Green Deal sets a clear path towards climate neutrality by 2050, and a 2030 coal phase out at the latest is needed to get us there. European institutions, including the European Investment Bank, have pledged to support the transition from coal to renewable energy systems, and it is clear plants like Ostrołęka C have no place in the EU’s plans.”

ENDS

Contacts:

Diana Maciąga, Stop Ostrołęka C Campaign Leader, Workshop for All Beings [email protected], +48 502 646 890

Michal Hetmnski, Researcher, Instrat.

[email protected],  +48 513 748 019   |  +49 157 5699 3045

Alastair Clewer, Communications Officer, Europe Beyond Coal

[email protected], +49 176 433 07 185

Notes:

1. Energa and Enea have been unable to secure financing for Ostrołęka C despite winning a capacity market auction, which would have secured payments for fifteen years into the future. ING Bank Śląski, mBank, and Poland’s largest state-owned bank, PKO Bank Polski, have all pledged not to support the project. Enea also lost two legal cases that were put forward by ClientEarth. The court ruled the decision to proceed with the project invalid and demanded the company publish documents that would explain how the plant would be profitable. https://www.clientearth.org/press/climate-victory-companies-put-polands-last-new-coal-plant-on-ice/
2. https://ir.energa.pl/en/pr/514035/current-report-no-41-2020
3. In December 2015, RWE announced that unit D of the Westfalen coal plant, under construction at the time, would not be completed. The reason cited was that it was no longer economically feasible to do lengthy and expensive repairs to make it operable. Previously, there had been serious problems with the steel used for the boilers, including hydrochloric acid getting into the boiler tubes.
4. ZE PAK had assumed it would continue to excavate coal from its Adamów open pit mine until 2023, and obtained an extension of the concession for the facility to do so. However, its pre-coronavirus economic analysis has fallen apart with the reduced electricity demand, and continuing operations at the mine would cost approximately EUR 15 million, which ZE PAK says it cannot afford. It also cannot guarantee that coal excavated from the mine would be sold because of rapidly decreasing demand from coal power plants. ZE PAK says the layoffs will be carried out between 1 July and 31 October 2020. 
5. Instrat, 2030: Analysis of the border coal phase-out year in the energy sector in Europe and Poland, Instrat Policy Paper 01/2020. www.instrat.pl/en/2030-en-info

About: 

Europe Beyond Coal is an alliance of civil society groups working to catalyse the closures of coal mines and power plants, prevent the building of any new coal projects and hasten the just transition to clean, renewable energy and energy efficiency. Our groups are devoting their time, energy and resources to this independent campaign to make Europe coal free by 2030 or sooner. www.beyond-coal.eu