Paweł Olechnowicz, Chairman of the Board of Directors of Central Europe Energy Partners (CEEP)

The public debate about the future of the energy sector in Europe is unfolding slowly, but even now one can see that it will be one of the most difficult – and most important – arguments of the coming years, not only in the EU, but also globally. This issue touches on several complex factors which are sometimes correlated, and sometimes contradictory. The united Europe is looking for an operational model which would allow it to thrive in a multi-polar world of fast-growing new economies and the fierce competition they create. It is my fear that this debate, which puts the fate of Europe on the line, is excessively concerned with abstract theories and lofty ideas, and lacks pragmatism, hard facts and reliable figures. It is not too late to retrace our steps to the beginning and once again pose the strategic question, What should Europe be like in the future?

The effect of globalisation

Energy prices have one of the most important roles to play in the debate. Even though the indicators differ across individual segments of the economy, energy costs are a common basic factor in the prices of goods and services in all of them and are a necessary cost that has to be incurred to deliver goods and services to the market. In a global environment, where every fraction of a percent counts when it comes to prices, businesses that have to pay 50% more than their competitors for energy cannot last. And yet, not everyone seems to acknowledge this fact. Europe is fighting the good fight for the quality of life on our planet and is the global leader in energy-saving technologies, developing new energy sources and reducing greenhouse emissions. Europeans expected that the rest of the world would not only applaud the effort, but also follow our lead. Sadly, this has not been the case. The narrow interests of individual countries have taken precedence over the good of the planet – and while we adopt stringent CO2 emissions restrictions, other do so only partially, if at all. This produces a curious result. Less than 10% of the global population – the citizens of Europe – bear the brunt of self-assumed responsibility for stopping climate change and reducing greenhouse emissions. In other words: for the future of Earth. The rest of the world is less eager to join in and only pretends to be taking action. The proportions are wrong and this state of affairs is impossible to maintain. We cannot afford to be dreamers who threaten the economic development and prosperity of their own society in pursuit of grand ideas. Europe is already losing the international battle for industrial production, even though it has only just begun reducing its pollution and emissions. But what will happen if it continues on this path? The economic crisis will deepen, the unemployment rate will increase and social tensions will become more extreme. This is not idle speculation, this is something we will start to notice in a few years, and experience with growing intensity. Even now, European manufacturers are moving production of energy-consuming products to the US, where energy prices for the industry are 50% lower than in Europe.

In the next few years, thanks to the low prices of natural gas, the petrochemical sector will spend USD 95bn on investments in America. By 2025, a million new jobs will have been created there. Large European companies, moving their fertilisers, plastics, and steel production to the United States, are open about the reasons for this – energy is too expensive in Europe. Research conducted by the Accenture consulting firm showed that 58% of business leaders do not believe that in the next three years, European industry will be able to compete with its rivals from the USA, Eurasia, and Asia with respect to costs. The EU Commissioner for Energy, Günther Oettinger, warns: “If we do not react to the growing disparity in energy prices between Europe and the competition from the rest of the world, in ten years we will not able to compete with them at all.” President of the European Council, Herman van Rompuy, speaks in a similar tone and emphasises that rational energy prices are the key to keeping factories and jobs in Europe. He warns that it is impossible to compete with foreign companies that pay half the European price of energy.

A known problem

 Central Europe Energy Partners is enjoying increasing expert authority. It was founded upon an initiative of Grupa LOTOS, with which it has already been tackling this problem for several years. The organisation warns that if we maintain unrelentingly strict CO2 emissions reduction targets, the inequalities in development between the EU's new members and the old member states will become more acute. One cannot decree the sudden abandonment of coal energy in favour of renewable energy, because this will result in a collapse in supplies, not to mention disastrous consequences for the competitiveness of European industry. In the world today, there are 1,199 coal power plants currently under construction, most of which are located in India and China. In Europe, 51 such power plants are being built; after their connection to the power system, the increase in generation capacities will amount to 9,500 MW in Germany, 4,100 MW in Italy, and 3,500 MW in the Netherlands. Coal is still the foundation of power generation, and comparatively, Poland's abundance of coal casts the country in a very poor light. It should also be noted that the decision to expand the CHP Plant in Opole pertains to less than five percent of the total demand for electricity generated in Poland. If we were to assume that the share of coal-generated energy decreases from its current 90% to 60-70% in 2030, then the difference between the 5% contributed by the CHP Plant in Opole and the Polish demand of 60-70% would still be huge, with the trend to remove this gap is not very noticeable. No reasonable person can argue with the need for reducing greenhouse gas emissions and switching to less environmentally harmful power generation systems. However, this process cannot be rapidly and forcefully accelerated without regard for the consequences of doing so. Coal-based power generation should be modernised, not eliminated. It remains an important and constant aspect of the energy security policy in many European states, and this fact must always be taken into account – both politics and economy are the arts of realism. In our modern, common Europe, everyone has to be accountable for everything, and this rule should also apply to the whole world. Let’s hope that the upcoming COP19 Climate Convention in Warsaw will show as much unanimity as possible, not only on concern for the future of our planet, but also the relevant steps to be taken in this regard.