EU faces economic crossroads amid zero emissions drive

The president of the Chamber of Industrial Energy and Energy Consumers, referring to US President Donald Trump's decision to withdraw the US from the Paris Climate Agreement, emphasised that for Trump, the factors crucial to the development of the American economy that lead to prosperity in the USA are key. He will not consider any ideological reasons that might weaken the competitiveness of the American economy. According to Kaliś, this will impact the competitiveness of the European economy.

Kaliś observed that Americans are energy self-sufficient, producing and selling large quantities of oil and natural gas.

If Europe transitions to zero-emission technologies, it means American markets will contract, so they will do everything to capitalise on the advantages of their economy—natural resources—he stated.

He noted that Europe also requires fuel, especially during the 'dunkelflaute' phenomenon, which is long periods without renewable energy. According to the expert, this indicates the need to maintain 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 ensure the competitiveness of European industry. Over the last 15 years, Europe has experienced stagnation. The EU has not increased its GDP compared to the 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 must consider how to defend against their expansion. "

Donald Trump intends to protect his economy with very high tariffs, such as those on electric cars, because, he stated, no one can compete with the Chinese regarding production costs.

In Kaliś's opinion, this is a "clear" indication of the direction Europe should take. Kaliś stated, "If the EU wants to maintain competitiveness relative to an economy stronger than it, it must reassess its policy, especially when competitiveness-enhancing solutions are being promoted there (in the USA)."

Kaliś stressed that it is not about withdrawing from environmental care and reducing pollution emissions. He noted that renewable energy development and the pursuit of zero emissions are being observed worldwide. "In the EU, we have crossed a certain line that was safe for the European economy, and ideology has overtaken common sense," the expert believes. "We will have to consider in which areas this policy should be reassessed seriously," he added.

According to Kaliś, financial institutions worldwide will also have to accept the terms set by the Americans. International banks previously announced they would phase out financial support for high-emission projects, including fossil fuel-related ones. The expert acknowledged that this approach to financing investments has recently determined the development of various sectors 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, hence a drop in the competitiveness and profitability of renewables, 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 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 £113 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 emphasised.

Kaliś recalled that according to President Trump, energy prices in the US 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 £576 billion on a low-emission energy economy. This must be reflected in energy prices."

Kaliś noted, however, that the development of renewable energy does not have to mean higher energy costs for industry. "I think President Trump signalled to rethink certain mechanisms," Kaliś stated. He highlighted 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 £28 per MWh. "This is the level before Russia's aggression against Ukraine," he noted. And market prices are £86-96 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 4 November 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 to achieve climate neutrality by 2050.

The Chamber of Industrial Energy and Energy Consumers is a self-regulatory organisation involving entities related to the transmission, generation, trade, and consumption of electricity and heat, including Orlen, KGHM, Grupa Azoty, PKP, Synthos, and Qemetica.