Climate change mitigation efforts gained its momentum in October, when European Union jointly ratified the Paris Agreement to limit global warming. At the same time the debate in Poland is ongoing over the need of a comprehensive energy strategy until 2050. Although the EU countries share common interests, they face different challenges.

EU has made an important progress towards a low carbon future, but now it will be interesting to follow, how this step will be further converted into concrete actions in energy-intensive countries, which are part of the Paris Agreement. So far, little progress has been made there. Poland is one of the examples, as it holds extensive hard coal and lignite resources and earlier climate-related discussions saw resistance from the country.

Over 80 per cent of the country’s economy is based on electricity produced by domestic coal-fired power stations. Moreover, a huge coal-mining sector (with over 100,000 thousand miners) has a long history of state aid mechanisms supporting collapsing mines. Earlier this year, a research paper commissioned by The Greens in the European Parliament highlighted Polish exposure to carbon bubble risk, somewhat revealing lack of comprehensive state policy and decisive efforts on climate.

Climate challenge and complexity of the situation was even more clearly seen during the engagement dialogues conducted earlier this year by Engagement International with selected entities among the Top 100 Climate Change Contributors. The project included Polish energy companies. Our focus is on management of climate change related risks and impacts. During the course of the engagement we found out that carbon emission mitigation strategies cover mostly energy efficiency programs and development of renewables. To date, however, the latter has highly depended on availability of the state support within that area.

The companies demonstrated that climate change is part of risk management. But in business decision-making the focus was rather on compliance with legislation and regulatory laws than on actual risk assessment processes. Furthermore, the Paris Agreement has not caused any direct implications to the Polish companies’ strategic direction, yet. It is worth highlighting that one of the companies, we engaged with, is part of the RESPECT Index, a responsible companies index developed by Warsaw Stock Exchange.

Lack of coherence between the EU and Polish legislation is one of the existing problems. Another issue often raised by the experts is internal regulatory environment and climate policy. These two have a key impact on selection of business models in the energy sector due to high financial investment with the prospect of return over a long period of time. Moreover, Poland is considering option to ensure its energy security and the issue is also relevant and widely discussed among the Visegrad Group.

bill-90886_640So, in which direction will the strategy evolve? There is a strong consensus that a new approach and strategy is needed as the situation in the sector is getting unpredictable. There is also an increasing pressure from the financial markets indicating slowdown in investment in the energy sector and difficulties in financing future investments. Currently, the National Centre for Strategic Studies is working on developing a document comprising an overall energy strategy for Poland. Its key objectives concentrate on the use of domestic non-renewable and renewable resources to energy production, increased independency in import of resources, and improved energy efficiency at all levels starting from production of fuels to energy consumption.

Interestingly, despite large own coal deposits, Poland is not the leader in energy generation based on coal and lignite and is not the biggest CO2 emitter in the EU (based on 2013 data). The latest report by the Polish Electricity Association, titled Polish power sector getting the facts straight, also draws attention to the fact that Poland reduced CO2 emissions by over 30% as compared to its Kyoto Protocol obligations.

Poland managed to negotiate its most important demands to became included in the climate agreement, like the one that specifics of national economies will be taken into consideration. As a result, the UN climate deal actually guarantees further use of the country’s coal resources. Lowering CO2 concentration in air will be achieved mainly in two ways – by reducing emission using the new technologies and by greenhouse gas sequestration by forests, informed Minister of Environment after ratification. Next months will show to what extent cohesion will be reached. Nonetheless, there will be a pressing need for business to adapt for future scenarios. The Paris Agreement will enter into force on 4 November 2016.