31. March 2021Crucial Months Ahead for Coal Transition in Silesia, Poland

Background

Silesia is the largest hard coal mining region in the EU with more than 70 thousand workers employed in the mines. The region produces both steam and coking coal and is characterised by high concentration of energy-intensive industry. For more than three decades, Silesia has been undergoing a socio-economic transition driven by the broader industrial restructuring and decentralisation of the Polish economy. While the productivity of the traditional coal-related industries has increased, both employment and physical output have decreased. At the same time, the region has seen robust growth in a new manufacturing base.

Unemployment and poverty rates are low compared to other Polish regions, although the benefits of growth and costs of restructuring are not distributed evenly across the region. Furthermore, air pollution problems, related mainly to coal-based individual heating installations in residential buildings, significantly decrease the quality of life in the region. Silesia has also seen a major demographic decline, sometimes referred to as a brain-drain that concentrates in traditional mining communities.

A two-fold transition planning process

Silesia is in the middle of preparations for the final steps in its transition away from coal. The preparations are split into two parallel processes, with one focused on regional development policy and another on the closure of coal mines.

The first process is driven by regional authorities based on the framework provided by the European Union. In January 2021, the Polish government has presented the draft of the Partnership Agreement, which specifies how it intends to spend the funds available under the EU Multiannual Financial Framework 2021-2027. According to the draft, the Silesian region will receive EUR 2.8 bn to be spent via the Regional Operational Programme financed by the European Regional Development Fund and European Social Fund Plus as well as an additional EUR 2 bn via Just Transition Fund (JTF).

 

Source: WiseEuropa

The Silesian Marshal Office has already presented the proposed allocation of funds within the regional operational programme and is the first Polish region to declare specific priorities for the Territorial Just Transition Plan which will guide the use of resources from the JTF. In both cases, the EU funding will support a broad set of measures aimed at strengthening and diversifying the regional economy as well as improving quality of life in the region, including projects specifically focused on green transition as well as supporting reskilling and revitalisation of post-industrial areas.

 

Source: WiseEuropa

The regional authorities have prepared a dedicated webpage which provides information on the JTF process. The draft of the Silesian Territorial Just Transition Plan is expected to be presented in April 2021, and the final version should be approved by the end of June 2021.

 

Phasing out coal mining

The second, parallel process involves the mining unions and the national government, which have been negotiating the agreement on the future of the sector since September 2020.  The hard coal mining sector in Silesia is facing permanent problems with profitability driven by low mining productivity and increasing labour costs, which led the Polish government to consider launching a major restructuring effort in the second half of 2020.

This met with strong opposition from the mining unions and the launch of the negotiations on the future of the sector. The central point of the negotiated agreement is the establishment of the new subsidy scheme which would cover the price difference between domestically produced and imported hard coal used in the energy sector. The scheme would allow extending the timeline of mining closures to 2049. The remaining points of agreement include social protection for the miners losing their jobs, support for “clean coal” technologies and other measures to boost the domestic demand for hard coal. The deadline for reaching the agreement has been postponed several times, and the talks are currently entering the final stage. Still, further delays are possible given the contentious topics of wage indexation rules and employment guarantees in the sector.

The subsidy scheme will need the approval of the EC, which is unlikely given that the state aid for maintaining operations of hard coal mines was phased out completely in 2018 in line with the Council decision from 2010. It is thus highly likely that the discussion on the mine closure in Silesia will need to start from scratch within the next few months. In the meantime, other regional stakeholders were mostly excluded from the talks between the government and the unions, while further decisions on the restructuring of the energy sector and limiting the production of electricity from coal were delayed.

This increases the challenge of developing an effective Territorial Just Transition Plan for Silesia. The planning process is further complicated by uncertainty regarding the total amount of funds available from the JTF for Poland. The provisions regulating the Fund state that the Member States which do not commit to implementing the objective of achieving a climate-neutral EU by 2050 will receive only half of the allocation from the JTF. Up to date, the Polish government has not clearly committed to this objective.

Major challenges remain

The current situation in Silesia highlights the challenges of reconciling different stakeholder positions in the just transition planning process. The next few months will be crucial, as expectations and needs of workers in the mining sector will need to be reconciled with the broader regional development agenda and the European climate and energy policies, but also state aid regulations.

 

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Authors

Aleksander Śniegocki
Head of the Energy, Climate and Environment Programme
WiseEuropa