Poland turns to fossil soul mate Trump as coal output flags

“Whenever you need energy, just give us a call,” US President Donald Trump said on a visit to Poland in the summer. Now, with winter setting in, Warsaw is taking him up on the offer. Poland’s state coal trader Weglokoks is to due receive its first ever shipment of US coal imminently and industry sources expect state or private buyers to take at least three more cargoes over the next seven months, even though Europe as a whole is shifting away from the most carbon-intensive energy source.

With both countries led by fossil fuel advocates, the benefits are mutual. Poland has to meet a shortfall left by the failure of national mining giant PGG to achieve its production targets, while US miners are relying on export growth as power utilities at home switch to cheaper, cleaner alternatives. Poland’s government, which like the Trump administration is championing its national mining industry, came to power in 2015 promising energy self-sufficiency for the European Union’s biggest coal-burning nation.

Energy Minister Krzysztof Tchorzewski rejects any suggestion of crisis due to the problems at PGG, even though smaller traders have often queued for coal in recent weeks. “A psychosis related to coal shortages has appeared on the market,” he told reporters. “I can say that this winter no one will be cold in their homes because of a lack of coal.” Tchorzewski declined to comment on possible imports and PGG, the EU’s biggest coal miner which accounts for almost 60 percent of Polish output, has yet to announce its 2017 production data.

However, the pledges of national self-sufficiency made by Prime Minister Beata Szydlo - a miner’s daughter - are under strain as PGG will miss its 2017 target of 32 million tons by 4 or 5 million tons, industry sources say. Last year the companies that now form PGG mined 33.5 million tons out of Poland’s total output of 57.2 million. The shortfall will be relatively small in 2017 but is likely to grow in years to come.

The Navios Helios, a vessel which has brought the 73,616-ton shipment for Weglokoks from Baltimore, is waiting off the Baltic port of Gdansk and will probably enter the harbor today afternoon, a port spokeswoman said. Until now, only private importers have bought coal cargoes from the United States, and the industry sources say the Weglokoks purchase proves the trend is gathering momentum. “Everyone is trying to buy US coal. If you have coal now, you’re the king,” an executive at one Polish mine said.

Common cause with Trump Europe is playing a leading role in United Nations action to limit global warming. Talks on implementing the 2015 Paris climate agreement are underway in Germany and scientists say world carbon emissions are set to rise this year to a new record, dashing hopes that they had already peaked. Since Szydlo’s nationalist Law and Justice Party came to power, Warsaw has been at odds with the EU over several issues, including environmental standards. Poland will host next year’s round of U.N. climate talks in the southern city of Katowice - the center of the coalproducing Silesia region and PGG’s home.

In promoting a national coal industry and trying to preserve jobs in traditional heavy industries, Poland can appear to have more in common with Trump than its western European partners. However, while Trump has decided to pull the United States out of the Paris agreement, Warsaw is staying in. The government of Silesian-born Szydlo has opposed EU policies to reduce carbon emissions as they set binding targets, but backs the Paris deal as it did not impose specific obligations on signatories.

Warsaw does share at least one EU energy aim in seeking to avoid dependency on Russia, which has in the past curbed gas supplies piped via Ukraine to countries including Poland. The EU’s answer is to reduce energy consumption but Poland, which relies on coal to produce 80 percent of its electricity, is simply seeking alternative sources to Russia. Trump is eager to oblige. “America stands ready to help Poland and other European nations diversify their energy supplies, so that you can never be held hostage to a single supplier,” he said on his visit in July. Polish imports of US coal have already leapt more than 500 percent in the first half of this year, figures from the US Energy Information Administration show.

Huge and inefficient Warsaw is banking on coal even more than Washington. Despite Trump’s incentives, US utilities are shutting coal-fired plants and shifting to gas, wind and solar power. By contrast, Poland is building three new coal power stations. But Polish mines are suffering from years of underinvestment. PGG has yet to prove it can meet the demand of power generators and some district heating plants on which many homes rely for winter warmth.

Previously known as Kompania Weglowa, the company was saved from bankruptcy when state-run utilities bailed it out in 2016. It merged with another ailing coal firm, KHW, this year. Chief Executive Tomasz Rogala blames what he says are temporary problems on cost-cutting, but it is unclear how much investment will increase. Analysts at the state-run ARP agency, which monitors the Polish coal market, expect imports this year will definitely exceed the 8 million tonnes reported in 2016. Some private analysts believe the figure could be as high as 10 million. This comes at a cost: European coal prices are around $85 a tonne, just below their highest level since June 2013 due largely to Chinese demand. —Reuters