Europe has set itself very strict GHG emission standards, largely to the detriment of its economic development. And in the context of the Ukraine crisis it is worth remembering that the stronger the economy, the better it can be protected, writes the Grupa LOTOS CEO.

The upcoming EU summit will be a particularly important and strenuous one. The central theme of the gathering will be the next climate package and related regulations affecting the energy sector – two areas fraught with conflicting interests, both in Europe and globally. Poland has been quite active on the climate front recently, one example of this activity being the 2013 world climate summit to which it played host. If the debate of EU leaders, to be held later this week, produces sensible and pragmatic solutions, this will count as another success for Poland.

Slow growth for Europe

Obviously, the EU has had many reasons for satisfaction in the past five years, but a vast legacy of issues are yet to be resolved by the incoming Commission. The most pressing ones are soaring unemployment rates, youth unemployment in particular; fiasco of the re-industrialisation policy; loss of Europe's competitiveness to other industrialised countries around the world; increased reliance on energy imports; and the financial turbulences suffered by many EU member states.

These issues are unfolding against the backdrop of a stagnating convergence policy, with the per capita GDP in the UE-15 remaining three times the figure in Central Europe (UE-11) for the past few years. Of this long list of problems, one is crucial: how to prevent energy prices from rising, considering that in the EU they are already on average twice as high as in the competing global economies. This question is a priority the EU should address before any other.

Any strategies and subsequent implementation measures demonstrating the bloc's commitment to climate protection must be subject to painstaking analysis. The cost of energy is passed on to the prices of products and services, with the heavy burden of energy pricing having a dampening effect on the EU's competitiveness. Although the two goals – climate protection and economic growth – do not need to be at odds, they are hard to marry. A lot of good sense and steely resolve are needed to draw a road map encompassing the energy sector and climate governance that would permit each of these realms to develop without one harming the other.
Europe has an extremely positive record in the short history of caring for the future of life on Earth. Although its share in global GHG emissions is a mere 11%, it has adopted very strict emission standards, a decision that is apparently harming the economic growth dynamics of the entire European Union, which is expanding much slower than its potential would suggest. Growth indicators, employment rates, and measures of competitiveness and expansion on external markets are all below achievable levels. The situation looks even grimmer inside the EU. Economic growth in the UE-11 states which rely on coal as the main fuel for their energy sectors is additionally hampered by emission limits.

We are dealing with an EU-wide problem, and we are dealing with growing problems in the individual member states, which divide Europe into two worlds developing at different speeds and, thus, widen the gaps within the community instead of closing them. As a global leader in environmental governance, the EU should first and foremost concentrate on passing its enthusiasm to the world's other major economies instead of further tightening its internal regulations. A perfect occasion will be the next year's climate summit in Paris.

Coal and more

The developments in Ukraine have accelerated the discussion on EU security in recent months. As purely military aspects of security are being considered in the context of defence cooperation within NATO, an old truth needs to be remembered: economic strength is directly reflected in defence capabilities. The stronger the economies of the European Union, the greater the ability to protect it. It is a straightforward interrelation which cannot be escaped.

Great credit is owed to Prime Minister Ewa Kopacz, who during her visit to Paris firmly reiterated Poland's unequivocal position on climate and energy. The new Polish Prime Minister stated that long-term objectives of the climate strategy must not harm the Polish economy or generate additional burdens to energy consumers as this would have a direct adverse impact on the country's competitiveness and GDP and, consequently, on Poland's ability to grow its defence potential, which is to be built largely with the capabilities and experience of domestic firms.

It is important to note that during the upcoming summit we will not be alone in our position on sustainable growth. Diplomatic sources and the media clearly speak of support for the Polish stance from the Visegrád Four, Romania and Bulgaria. This consensus is not only political in nature, but it also has a business foundation built for over four years by Central Europe Energy Partners, bringing together energy companies from the Czech Republic, Lithuania, Romania, Slovakia and Poland. It was thanks to such initiatives as meetings organised by CEEP between Central European business communities with the energy commissioner Günther Oettinger that we have been able to work out a compromise on key matters. Today this compromise is finding its reflection in top-level meetings between representatives of the EU member states.

To a large extent, the Polish power and heat generation sector relies on coal, and this argument has to be taken into account by the EU institutions and governments of other EU countries. But coal is not the only fuel in the Polish energy mix. Poland produces sizeable quantities of natural gas (4.6 bcm in 2013, almost 30% of domestic demand), increases its oil output by the year, and invests in renewables.

In the energy policy until 2050 being currently drafted by the government there is also a place for shale gas and Poland's first nuclear power plant. This demonstrates that although coal is bound to stay our key fuel at least until 2050, we are diversifying the energy mix, which will have a beneficial effect on the national economy in the long run.

In the world today, there are over a thousand coal power plants currently under construction, most of which are located in India and China. In Europe alone around 50 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. Evidently, coal is there to stay as the main source of energy not only in Poland but also in Europe and globally. With investments in new generating units in Opole and Jaworzno, Poland, too, is looking to coal as the cheapest energy source. But what is more, we are investing in climate protection as well, opting for the most advanced low-emission technologies in building new CHP plants. And this forms the cornerstone of sustainable development.

Why so expensive

It would be hard to put it better. For many years the European Union has had problems with economic growth, new job creation and competitiveness on international markets. We want to be competitive. We must be competitive. And this goal can be attained, provided that energy prices are lower. European firms pay three times more for electricity and four times more for gas than their US peers. Whatever the cause, this status quo cannot be sustained in the long term. The costs of climate protection should not be limited to a single continent, because our planet is a whole and we all should take care to ensure that its balance is not threatened by human activity. With this assumption, the new climate package, to be approved by the European Council at its next meeting, needs to be analysed rationally. In 1990–2020, the EU is to cut carbon emissions by 20%, with an extremely ambitious target of 40% (compared with 1990 levels) set for the following ten years. This part of the strategy should be thoroughly revisited and complemented with measures that safeguard security of countries like Poland, which will be using coal for power and heat generation in the decades to come. It is not only about elementary justice (which by the way should be kept in the EU's spotlight), but also about ensuring sustainable growth for the entire European Union. What needs to be curbed is carbon emissions and not the share of coal in the energy mix, a fuel which greatly contributes to the energy balance in Europe and globally.

The debate on the climate and energy package is a good opportunity to look at indicators and phenomena that help understand the complexity of the situation. As it turns out, the poorest member states are the best performers in reducing emissions: in 1990–2011 Lithuania and Latvia managed to cut their carbon footprint by 57%. At the same time, the Netherlands and Italy achieved 8% and 6% reductions, respectively, while Spain and Portugal actually increased their emissions by 24% and 19%, respectively. On a per-capita basis, the EU's largest CO₂ emitter is Luxembourg, the bloc's wealthiest nation, with an annual intensity indicator of 21.75 tonnes of carbon emissions per person.

Poland, which attracts such profound interest in discussions on how to reduce carbon emissions, produces 8.42 tonnes of CO₂ per capita. Since 1990, we have curbed CO₂ emissions by 30%, by far exceeding the standard under the climate legislation currently in force. In view of the complexity of the presented issues, what counts most is for European leaders to have a vision, goodwill and resolve.

Technical advancement is making human presence less of a nuisance to the environment, although not everywhere in the world is this awareness as widespread as in Europe. And here is great room for progress. If all inhabitants of our planet start to treat climate issues as responsibly as the people of the European Union, we can achieve the results we are aiming for faster and fairer.