March 10, 2020 (02:12)

Closure of coal industries in Central and Eastern Europe within the framework of “energy transition”

On March 2, 2020, a closed expert meeting called “Increasing Renewable Energy in Central Europe”, organized by the British Government and the COP26 Organizing Committee, was held at the Embassy of the United Kingdom in Vienna, Austria, at the level of representatives of the governments of Central and Eastern Europe, and was aimed at discussing aspects of closure of coal industries of Central and Eastern Europe within the framework of “energy transition”.

 

COP26 is the 26th session of the 2020 UN Climate Change Conference (UNFCCC) to be held from 9 to 19 November 2020 in Glasgow, United Kingdom. The event, organized on March 2, 2020 at the Embassy of the United Kingdom in Vienna, is one of a series of preparations for the UNFCCC COP26.

 

During the meeting it became clear that the level of progress made by the individual country in the framework of “energy transition” (modernization of national economies based on the use of energy sources with low greenhouse gas emissions and further achievement of carbon neutrality), becomes a factor of competitiveness and economic feasibility of Central and Eastern European countries, including countries bordering the EU.

 

The UK remains the leading energy transition country and benchmark for the Eastern European countries among the major industrial countries in Europe, which in the period from 2012 to 2020 reduced the share of coal generation in electricity production from 40% to 3% and intends to close the last of 4 currently operating coal-fired thermal power plants in 2024. According to Matt Webb, UK Government’s Business, Energy and Industrial Strategy (BEIS) representative, zero carbon emissions across the UK are expected to be achieved by 2050.

 

In turn, the Austrian side, according to Dr. Michael Losch, Director General for Energy of the Federal Ministry for Climate Protection, Environment, Energy, Mobility, Innovation and Technology of Austria, intends to completely shut down its coal industry by 2020 by consistently implementing a strategy to replace coal-fired power generation with wind farms and solar renewable energy. To date, as a part of energy transition, Austria has reached 34% of the share of RES in total energy consumption in the country (the recommended target for the EU is set at 20% in 2020), and there are intensions to provide 46-50% of RES by 2030 (32% is foreseen at the level of EU) and at the same time national electricity needs are expected to be fully covered exclusively through the generation of renewable sources.

 

In these circumstances, the Austrian side believes that the integration of its well-developed national electricity market with neighboring EU member-states (primarily the Czech Republic, Slovenia, Hungary and Slovakia), which continue to use coal as energy, may require additional costs and may complicate the Austrian energy process because of the need to compete with cheaper electricity in terms of production process, but with a high level of carbonization.

 

At the same time, since 2015, internationally, within the framework of the EU Common Energy Policy, the UK and Austria have consistently advocated the refusal from coal generation in other European countries, the legislative regulation of such plans (preventing the cancellation / postponement of terms due to government change) and the increase of economic pressure on coal enterprises (in 2019 the EU Emissions Trading System, ETS substantially increased the cost of greenhouse gas emissions to EUR 25/ tonne, which could significantly reduce the profitability of coal generation).

 

The Energy Union Strategy Paper, published in February 2015, is a European Commission’s priority program for reforming the European energy sector aimed at creating an efficient, integrated, innovative and decarbonized EU energy market.

The objectives of the program are, first and foremost, to reduce CO2 emissions by 43% within the ETS sector and by 30% outside the ETS sector as compared to 2005 (ETS – Emissions Trading System, an emissions trading system introduced in the EU in 2005, which includes energy and heating, energy-intensive sectors of economy and provides for significant fines for excess emission allowances), reaching 32% of the EU energy sector share by 2030 and carbon neutrality of the European economy by 2050.

 

Since 2015, 15 EU member-states have committed to close their coal industries.

 

According to Pieter de Pous, senior policy advisor to the UK E3G Energy Transition Agency, the potential of Central and Eastern Europe to replace carbon production with renewable energy is significantly higher than the 10-year National Energy and Climate Plan, NECP.

Thus, according to the expert, Poland’s potential allows to reach 39% of RES in the country’s energy balance by 2030 (the Polish NECP provides for 21% of RES); the Czech Republic is capable of providing 28% of RES in the energy sector (NECP provides for 20.8%); 27% of RES can be provided by Slovakia, with the planned 19.2% of RES under the NECP; 25% of RES can be provided by Hungary, with the planned 21% of RES under the NECP.

 

The expert associates the existing imbalance, first of all, with the misuse of EU climate funds, the shortcomings of the legislative base for the development of RES, the orientation of political elites to the interests of the traditional energy lobby, the unwillingness to implement innovative projects at the municipal level.

 

This is evidenced by the data on the distribution of the share produced from alternative sources of electricity by types of RES facilities in the countries of Central and Eastern Europe, which are shown in the table. Traditional hydropower and biomass burning technologies are preferred.

 

 

 

 

 

 

 

It is expected that in the medium term, in the course of closure of coal industries by more developed European countries (UK, France, Austria, Sweden, Italy), the political and economic pressure on less developed countries of Central and Eastern Europe will increase, creating conditions for refusal from coal generation in the EU member-states, through the borders of which Ukraine implements the process of integration of the Ukrainian energy markets into the single European gas transportation system ENTSO-G and the ENTSO-E electricity system.

 

To date, European think tanks, among the EU’s direct energy partner countries, rank Ukraine as the third most coal-dependent country after Turkey and the Russian Federation, however, Ukraine is ranked the first in terms of cross-border cooperation with the European Union. The interconnectivity factor is important in assessing the level of security and stability of energy supplies to European consumers.

 

 

 

In such circumstances, Ukraine, among other EU energy partner countries, draws the most attention of Brussels in the context of reorganization and further closure of its coal industry.

 

The process of modernization, gradual reduction of coal generation and complete replacement of coal TPPs by 2050 in a socially acceptable way, as defined by the “Concept of green energy transition of Ukraine till 2050” (adopted on January 21, 2020 by Ministry of Energy and Environmental Protection of Ukraine) may not meet the expectations of the European side and become an important factor in integrating Ukraine’s energy markets with European, fostering energy goods and services trade, as well as increasing the share of foreign players in the energy markets of Ukraine.

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