EU must reassess energy policy amid U.S. competitiveness push
In the pursuit of zero emissions, the EU has crossed a safe threshold for the economy, according to Henryk Kaliś, the Chamber of Industrial Energy and Energy Consumers president. He added that the U.S. withdrawal from the Paris Agreement serves as a signal to reassess this policy without abandoning environmental care.
The president of the Chamber of Industrial Energy and Energy Consumers, referring to U.S. President Donald Trump's decision to withdraw the U.S. from the Paris climate agreement, pointed out that for Trump, the factors determining the development of the American economy and leading to prosperity in the U.S. are crucial. No ideological reasons that weaken the competitiveness of the American economy will be considered by him. According to Kaliś, this will affect the competitiveness of the European economy.
Kaliś pointed out that Americans are energy self-sufficient, producing and also selling "significant" quantities of oil and natural gas.
If Europe transitions to zero-emission technologies, it means that Americans will lose markets, so they will do everything to use and sell the advantages of their economy—natural resources, he stated.
Need to maintain two parallel systems
He noted that Europe also needs fuel, especially during the "dunkelflaute" phenomenon, which refers to long periods without renewable energy. According to the expert, this necessitates maintaining two parallel energy systems: one based on renewables and the other on conventional fuels such as coal, gas, and, in the future, nuclear energy.
In his opinion, renewable energy sources alone will not provide competitiveness to European industry. "Over the last 15 years, Europe has experienced stagnation. The EU has not increased its GDP compared to the very dynamically developing China, the United States, or India. We have lost the position we once had," the expert assessed. "The Chinese have surpassed us in virtually every field, and now we have to consider how to defend against their expansion," he noted.
The Trump effect
Donald Trump intends to protect his economy with very high tariffs, for example, tariffs on electric cars, because no one is able to compete with the Chinese in terms of production costs, he stated.
In Kaliś's opinion, this is a "clear" indication of the direction Europe should take. Suppose the EU wants to maintain competitiveness relative to the economy that is stronger than it. In that case, it must reassess its policy, especially when solutions that improve competitiveness are being promoted there (in the U.S.).
Kaliś stressed that it is not about withdrawing from caring for the environment and reducing pollution emissions. He noted that the development of renewable energy and the pursuit of zero emissions are being observed worldwide. "In the EU, we have crossed a certain line, which was safe for the European economy, and ideology has dominated common sense," the expert believes. "We will have to seriously consider in which areas this policy should be reassessed," he added.
Financial institutions must accept U.S. terms
According to Kaliś, financial institutions around the world will also have to accept the terms set by the Americans. International banks had previously announced that they would phase out financial support for projects with high emissions, including those related to fossil fuels. The expert acknowledged that recently, this approach to financing investments has determined the development of various branches of the European and global economy.
When asked whether President Donald Trump's announced intensification of oil and gas extraction could ultimately lead to a drop in the prices of these resources and, therefore, a drop in the competitiveness of renewables and the profitability of such projects, he replied that renewables have already been given many preferences to develop further. "In the National Energy and Climate Plan (KPEiK), in Annex No. 5, there are actions dedicated to various sectors of the economy, and out of over a hundred, nearly a hundred relate to renewable energy," he conveyed. "You cannot make one branch of the economy a sacred cow that subordinates the entire economic life to itself. This is happening to the detriment of energy security and to the detriment of energy costs," he assessed.
In European Commission forecasts, energy prices in the EU do not change until 2050; if they are at 190 CAD per MWh today, according to EU assumptions, they will remain so in 2050, Kaliś pointed out. The condition for maintaining the competitiveness of European industry is to offer energy-intensive sectors prices at a level similar to those of the American, Chinese, Indonesian, and Korean economies, he emphasized.
Kaliś recalled that according to President Trump, energy prices in the U.S. are "twice" too high. "In the EU, they are even higher. Keeping energy prices at this level condemns the European economy to destruction. KPEiK predicts that we (Poland) will spend nearly 990 billion CAD on a low-emission energy economy. This must be reflected in energy prices."
"Trump gave the signal"
Kaliś noted, however, that the development of renewable energy does not have to mean higher energy costs for industry. "I think President Trump gave the signal to rethink certain mechanisms," Kaliś stated. He pointed to the energy pricing mechanism on the wholesale market (merit order), which, in his opinion, is one of "the most efficient" systems for supporting renewable sources. "But if these sources were connected directly to the industrial plants' network, they would gain access to cheap energy," Kaliś believes.
He recalled that in the December auctions, contracts for renewables were signed at an energy price of 42 CAD per MWh. "This is the level before Russia's aggression against Ukraine," he noted. And market prices are 130-145 CAD per MWh. If it is possible to produce this energy three times cheaper, why can't the industry buy it at these prices?"
The Paris Agreement came into force on November 4, 2016, after being ratified by at least 55 countries responsible for at least 55% of global greenhouse gas emissions. These countries aim to keep global warming below 1.5 degrees Celsius. The EU committed to reducing emissions by at least 55% by 2030 compared to 1990 levels, to achieve climate neutrality by 2050.
The Chamber of Industrial Energy and Energy Consumers is a self-regulatory organization that associates entities related to the transmission, generation, trade, and consumption of electricity and heat, including Orlen, KGHM, Grupa Azoty, PKP, Synthos, and Qemetica.
