2022-04-09

Is the Green Dream postponed by Ukraine’s wake-up call?

Poland signaled last Monday that it wants to use coal to produce electricity after 2049 to bolster its energy security, underscoring the challenge the European Union faces in its goal of achieving climate neutrality by mid-century. The nation wants coal-fired power plants to be an “additional stabilizer” of its energy system, Deputy Prime Minister Jacek Sasin said during a meeting with miners in the southern city of Katowice on Monday, Bloomberg reported. Poland along with the rest of the EU is seeking to bolster its energy security after Russia’s invasion of Ukraine. Russia is the bloc’s primary supplier of natural gas, often seen as a bridge in the transition from fossil fuels to green energy. The conflict has upended energy markets and caused a rethink of policies. Sasin’s comments mark a change in plans by the conservative government. Two years ago, it reached a historic agreement with mining unions to close the last thermal coal mine in 2049. He also said a plan to place Poland’s coal-fired power plants under the guidance of a state entity may need to be revised, after the spike in gas prices. And the Green Dream postponed as of now.

In the power sector, gas-to-coal switching has the biggest potential to lower gas demand. According to the International Energy Agency, record-high gas prices caused coal-fired power plants in northwest Europe to increase their output by 20% year-on-year in the fourth quarter of last year. Gas-fired generation fell by more than 7% in the same period. The subsequent price hikes since the start of the Ukraine conflict have only added to this trend. Currently, there are legal barriers to fully reaping the gas substituting potential of coal. These caps can easily be removed at the expense of short-term climate pain.

Global demand for Russian energy, food, and other vital resources has allowed Putin’s regime to provide support to the ruble by demanding purchases be made in Russia’s currency. The result has been the value of the ruble returning to its postwar standing and stabilizing a financial sector bearing the brunt of Western sanctions. What should concern the West the most, however, has been the geopolitical response to the West’s actions. The Russian government has created a list of “friendly” and “unfriendly” countries, leveraging access to its commodities in exchange for neutrality over the Ukrainian conflict. The Kremlin’s response has been supported by the West’s own increasingly aggressive positions towards countries willing to prioritize the interests of Ukraine over that of their own people. The result has been an increasing number of significant, non-European countries refusing to submit to the demands of Washington (Mexico, Brazil, and India among others).

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