“In my opinion, it is not the right path for us – all Poles – to subsidize expensive electricity through our taxes and very low wages. Electricity is expensive because the European Union came up with the idea of taxing our greatest national asset, which is coal – both lignite and hard coal. We should throw this policy in the trash and begin an energetic investment policy in lignite mines. (…) We must use our resources so that we have cheap electricity – not only for the average ‘Kowalski,’ but above all for industry. Climate policy is destroying our economy,” said Dr. Cezary Mech, an energy market expert, economist and former deputy finance minister, in an interview with Niezalezna.
In Germany, the government has just announced a return to coal, even though our western neighbors had previously been promoters of restrictive climate policy. What does this mean for Poland? How should we behave now?
“I would not count on Germany here, because their actions will be tailored to their own needs. We must end this absurd attempt to save the climate. No one in the world is doing it. And we cannot destroy our own assets and make production in Poland several times more expensive than in the country that is the most expansionist because it uses cheap coal-based energy – China. That is what we should focus on. We should implement what we have promised many times – namely, recognize that the certificates and coal taxation – ETS1 and ETS2 – are illegal. We should throw them into the trash without waiting for Germany to loosen anything in Europe for whatever reason and under whatever conditions.”
Another issue – in your opinion, should the government of Donald Tusk provide real support to energy-intensive industries? More mines are collapsing, the JSW Group is on the verge of bankruptcy, and the steel industry is in a disastrous situation. Should the government ensure preferential, fixed energy prices for energy-intensive sectors? Trade unions are proposing such a solution.
“In my opinion, it is not the right path for us – all Poles – to subsidize expensive electricity through taxes and very low wages. Electricity is expensive because the European Union decided to tax our greatest national asset – coal, both lignite and hard coal. We should throw this policy in the trash and begin an energetic investment policy in lignite mines. We should create an economy of scale. We should also not abandon coal power plants, as we did for example in Ostrołęka, incurring billions in losses. Meanwhile in China, as many as 86 new hard coal mines are opened in a single year. We must use our resources so that we have the cheapest electricity – not only for the average ‘Kowalski,’ but mainly for industry. Over the last 20 years, two-thirds of our GDP growth has been linked to exports of industrial production. Yet instead of taking advantage of the fact that electricity from lignite costs only one fifth of the standard price, we are taxing this sector instead of developing it. Moreover, we are causing mines to close when we should be opening them and investing in them. We should use the newest mining technologies, but not tax them with what effectively amounts to a 100 percent climate tax. In such a cost structure, in low-energy-intensive industry 40 percent of the final product price is electricity, in moderately energy-intensive sectors 50 percent, and in the most energy-intensive industries as much as two-thirds of the product price is the cost of electricity. When we destroy our own competitiveness with such absurd solutions, while Chinese production – with energy prices four times lower – can push us out of every market, this becomes a suicidal policy. Moreover, we do not have the climate or the historical attractions that Italians or Spaniards have, which would allow us to change our business model.”
Exactly…
“Because then we could transform the country into an economy based solely on services. However, even if we had such a comfortable situation, we must remember that wages in services are 30 percent lower than in industry. Therefore the fundamental issue – for the entire political class – is to abandon these climate absurdities. At the same time, with a shortage of young people, directing defense spending toward extremely expensive foreign weapons – whether from Germany or other allies – will end badly. In this respect, we should repeat the maneuver we carried out before World War II and rely exclusively on our own Central Industrial District.”
Let us change the topic slightly. In connection with the current global situation – the Iranian-Israeli-American war and rising energy prices – how should industry cope?
“This conflict is largely generating an energy crisis for the world – and of course also for Poland. It means that the Strait of Hormuz, through which 20 percent of global oil production passes, is closed. That means the world has 20 percent less access to this resource. The same applies to gas – as much as 20 percent of global production passes through this strait. That means less gas will be available on the market. This also creates a crisis. It also shows how absurd our policy is. We – just like Russia – could have been the main beneficiaries of this misfortune if we had invested in lignite. We would have the cheapest energy and could now sell it to everyone at high prices. Instead we pursue green policies – both in wind energy, despite not being a particularly windy country, and in solar energy, despite not being highly exposed to sunlight. As a result, we will have energy prices twice as high as those based on fossil fuels. Evidence of this can be seen in the bills paid in ‘green’ California compared with neighboring ‘coal-based’ states. Moreover, to compensate for the huge fluctuations in wind and solar output, we buy expensive foreign gas and convert coal plants into gas plants, as was recently done in Dolna Odra.”
Last week, the government and local authorities signed an agreement to begin construction of gas power plants in Rybnik and Gryfino, where in Rybnik alone around 400 people will lose their jobs because operating the plant will require only about 10 percent of the current workforce.
“Gas prices have already risen by 50 percent and it will get even worse. Instead of taking advantage of the fact that we could be almost self-sufficient based on our own cheap extraction – including deposits abroad owned by PGNiG – we unnecessarily burn 3 billion cubic meters of expensive foreign gas and even boast about it. In the current energy crisis we will be hit asymmetrically because we favor foreign interests. The world will lose on average 20 percent of production. We, however, have located as much as 55 percent of our oil imports in the Middle East. Already now, due to the lack of modernization of power plants, we have an energy gap of 10 percent, and it will get worse. Nuclear power will not save the situation because it is capital-intensive – as much as 80 percent of the electricity price consists of capital costs. Delays in building our nuclear power plant of 5-7 years will double its costs. When the contractor we selected finishes the investment, it will most likely already be delayed by roughly that amount.”