In 2017, Poland produced 380 metric tons of carbon dioxide equivalent (MtCO2e), making it the third-largest economy in the European Union, emitting more than 800 grams of carbon dioxide equivalent per euro of GDP. Although there are multiple paths to achieving production neutrality by 2050, the McKinsey report sets out a possible cost-effective economic path that Poland could take to achieve this goal.

The starting assumption is that by reducing greenhouse gas emission levels by 91% from 2017 to 2050 and increasing carbon sinks to reduce the remaining 9% of emissions, Poland could achieve carbon neutrality by 2050. Five sectors – industry, transport, construction (mainly heating), agriculture, and energy – are the main emits of greenhouse gases in the country and a considerable number of them use coal as their primary fuel. The shift from fossil fuels to renewable energy will be a major challenge for the country. Currently, coal dominates the Polish energy sector, with a 77% share in electricity production in 2018, the largest source of greenhouse gas emissions.

In addition, the demand for electricity is expected to grow by more than 50% by 2050 thanks to the increase in economic activity, mainly GDP growth. Electrification of processes such as the rapid adoption of electric vehicles, heat pumps in buildings, and electric furnaces in the industry would add another 50% to this growth. Compared to today, therefore, the demand for electricity is expected to double. However, Poland’s energy heritage is aging: about two-thirds of the installed coal capacity is over 30 years old. With a possible service life of up to 60 years, these assets should be replaced by 2050. In addition, further investment in the production capacity of new energy is needed to cope with the expected increase in electricity consumption. This would create an opportunity to replace fossil-based power generation with zero-emission generation capacity.

By 2050, three key changes are likely to be needed to achieve full decarbonization.
• coal production is expected to decline by almost 95% from 2020 to 2050;
• renewables should be more present in the Polish energy mix, with wind and solar energy accounting for about 80% of total power supply in 2050;
• gas is expected to play a leading role in the transition period, covering up to 20-25% of demand from 2025 to 2030 with an important system balancing role thereafter.

In 2017, the industrial sector was responsible for 22% of emissions (91 MtCO2e), mainly concentrated in the production of fuel, cement, chemicals, and steel. According to analysts, from 2017 to 2050, the growth of the Polish industry should lead to a 19% increase in emissions if no action is taken. This industrial expansion could then be used as an opportunity to install low-emission equipment since the industrial sector could potentially reduce emissions by 97%. This reduction can be achieved by implementing different decarbonization levers: energy efficiency improvements, heat electrification, and carbon use and storage (CCUS) technology.

Also in 2017, the Polish transport sector issued 63 MtCO2e and was responsible for 15.3% of the country’s emissions. Road transport accounted for 98% of emissions, while rail and national aviation together accounted for 2%. Analysts suggest that the transport sector should almost completely de-carbonize (with a reduction of 99%, or 62 MtCO2e) by 2050 in order for Poland to achieve climate neutrality. The technology option to transform the transport sector involves replacing internal combustion vehicles (ECI) with battery electric vehicles (BEVs) and, in the case of trucks and buses, hydrogen-based alternatives such as fuel cell electric vehicles (FCEVs).

In turn, construction accounted for 17% of emissions (70 MtCO2e), of which 84% were from the residential sector and 16% from the commercial sector. Efforts to reduce emissions in buildings fall into two main categories:
• the energy efficiency of structures could be improved through retrofitting of buildings with better insulation to reduce energy consumption for both heating and cooling;
• high-emission fuel sources could be reduced by replacing boilers and stoves with low-carbon alternatives.

Agriculture accounted for 10.6% of the country’s emissions (44 MtCO2e). Methane and nitrous oxide generated 75% of the total, mainly applying inorganic fertilizers to the earth, the cultivation of organic soils, and enteric fermentation from dairy products and beef cattle. Carbon dioxide, caused mainly by the fuel consumption of agricultural equipment, contributes to the remaining 25%. The industry has several options for decarbonization:
• low-emission land management;
• switching to low-carbon fuels for agricultural equipment;
• reduce enteric fermentation.

Full decarbonization will require additional capital expenditures for the transformation of mobility and the upgrading of energy infrastructure and building stock. To achieve this goal, total investment in the Polish economy from 2020 to 2050 is expected to increase by €380 billion, an average of around €13 billion per year. At the same time, operating costs are expected to decrease by 75 billion. Forecasts see the trade balance improving structurally, as the country is reducing its fossil fuel imports by 15 billion a year. At this point, analysts indicate how a portfolio of five low-carbon economic assets can bring economic benefits to the country. This portfolio could involve the development of a number of areas:
• production of BEV components,
• Baltic offshore-wind development,
• industrial-scale production of electric heat pumps,
• production of electrified agricultural equipment,
• R&D and implementation of CCUS technology.

The combination of these activities could increase Poland’s GDP by 1-2% and create from 250 thousand to 300 thousand jobs. It is possible that government and citizens may overshadow climate change in the face of the short-term needs of a post-pandemic economic recovery. This could lead to a review of planned investments, commitments made, and regulatory approaches. In fact, investments in a carbon-neutral infrastructure could significantly promote job creation in the medium to long term, accelerating the reconstruction of the economy through innovation.