Could Poland’s coal industry be on brink of collapse?

Trade unions at Poland’s biggest coal group, state-owned PGG, warned on Friday that the industry would collapse because of falling demand if the government did not help.

Poland, which is heavily reliant on coal-fuelled power stations for its energy, is the only European Union member state not to have pledged to achieve zero carbon emissions by 2050.

But in the face of growing EU pressure to reduce emissions, the governing Law and Justice (PiS) party has encouraged investment in solar energy and offshore wind farms.

The increasing share of clean energy in power generation, falling demand for electricity since the start of the coronavirus lockdown and coal imports have heightened problems for the coal industry.

PGG asked unions this month to accept a cut in hours and pay of up to 20 percent for three months, which would make the company eligible for government help.

The unions initially rejected the proposal but later said they would accept it if management presented a restructuring plan for PGG that would guarantee jobs. PGG said it would need to have reliable demand forecasts for such a plan, which is all but impossible under the current circumstances.

“Today our industry needs help, otherwise it will collapse,” the Solidarity trade union, the biggest in PGG, said in a letter sent to Prime Minister Mateusz Morawiecki.

“The unions feel confident. I don’t think that the management will be able to lower the salaries without the unions’ consent,” said Robert Maj, an analyst at Ipopema Securities.

In 2019, the average salary at PGG, which employs about 40,000 workers, stood at 7,850 zlotys, PGG said. This is nearly $1,870 at the current exchange rate.

A spokesman at the State Assets Ministry, which supervises coal mining, was not immediately available for comment.

Poland was at the end of last year left out of a 2050 climate neutrality agreement after hours of summit haggling with three Eastern European member states which demanded more funds for economic transition and support for nuclear power.

The Czech Republic and Hungary eventually dropped their resistance after winning a guarantee that nuclear energy would be recognised as a way for EU states to reduce greenhouse gas emissions. Poland remained against.

“Poland will be reaching climate neutrality at its own pace,” Morawiecki told reporters after the marathon talks in December.

 

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