Energia - Środowisko
Dodatek promocyjno-reklamowy do "RZECZPOSPOLITEJ".
13 września 2005 r.

Policy and Practice

Adam Szejnfeld - Chairman of Sejm Committee on the Economy

In every country national energy policy, included in government programs, should have its respective timeframe, of at least 20 years, should encompass all sectors of the fuel-energy complex and should take into account solutions which guarantee energy security. These principles apply also for Poland.

The aim of a good energy program in Poland should be to improve competitiveness, stimulate market growth - and thus facilitate rationalization of costs and prices - and, as a result, to increase competitiveness of the entire economy. Taking into account the structure of energy supply sources in Poland, achievement of national energy security goals should be a priority. In today's world of mass concentrations and fierce competition on international markets, the energy program should envisage at least two important directions, and namely: an increasing role of energy efficiency and an increasing role of market and competition. This will also entail a change of consumer's position on the Polish market. But it is important that the program should envisage a shift from the "manual steering"-type of policy from the state ownership's position to regulatory policy.

Bearing in mind the above, what we deal with in Poland right now is an extremely strange situation. Take electricity sector, for example. It should have become a norm by now that in light of the importance of national energy security issues, the government should prepare, as has already been said, firstly a long-term strategy and only then, within the framework of this strategy, should it implement consolidation and privatization processes. What we are witnessing, however, is a reverse situation. The chief mistake in thinking about changes in the electricity sector consists in greater consideration for the companies' rather than client's interests. The biggest challenge for future governments, therefore, will be liberalization of the electricity market, for it is market that is the best quality verifier and it is competition that is the best price regulator. In order to achieve this, it will be necessary to solve the problem of long-term contracts, create conditions for the development of energy stock exchange, increase network investments, including cross-border networks, and promote energy from renewable sources. In view of the forecasted electricity supply shortages, we should start thinking about future investments without categorically excluding, in my mind, the idea of nuclear energy.

Crude oil and gas markets face different problems. Similarly, however, the best remedy for the ailments of these two sectors would also be depoliticisation by means of privatization, although this might pose a greater challenge compared to other sectors. In my opinion, however, there are no justifiable reasons to consider any sectors, branches or even single companies so strategic for the national security to allow us to exempt them a priori or to curb their privatizing. What should be left for the state authorities, or remain under their rigorous influence, is transmission. Diversification of oil and gas supply sources, functionally and financially unbundled transmission as well as ensured storage capacity for large volumes of gas, crude oil and other fuels are vital prerequisites for national energy security. Unfortunately, during recent transformation years in Poland we have achieved poor results in this field. Polish storage capacity for gas and fuels has not been increased to the level required by the EU. Nor have new gas and oil pipelines been constructed. Not even domestic production has been increased. Will the new government be able to make up for all this? Yes, but not in the course of one term of office and provided that there will be full determination for fulfilment of these aims. An additional challenge and necessity will be implementation of an appropriate foreign policy. In the area of oil and gas trade, factual and economic issues are not the only contractual criteria. Warming relations between Poland and its neighbours, especially those in the East and West, as well as taking up government talks on oil and gas purchases from sources other than Russia, will constitute the main challenges for the new government.

Equally important for the national energy policy is the future of mining industry, especially hard coal industry. Unfortunately, in spite of very good results of the last dozen or so months, we should not be over-optimistic. The current boom on international markets will not last forever and the Polish coal mining industry should by now be past the process of transformation and restructuring. Unfortunately, what we have witnessed in recent years is the "slowing down" of changes, which can have dire consequences in the mid-term perspective. For example, liquidation of unprofitable mine pits has been halted and former coal-mining companies are still being capitalized and included in "Kompania Węglowa" company. In this situation, in order to prepare for downturn in the economy, the strategic goal for the new government and the company's management board should be to go back to the changes aiming at a significant reduction of coal production costs.

Regardless of whether we talk about electricity, oil, gas or mining sector, the problem of privatization is always popping up. Privatization, restructuring and functional supervision of the state should become necessary fundamentals of the future government policy. State ownership supervision over the energy sector should be limited and substituted by other forms of surveillance such as regulatory supervision (Energy Regulatory Office), operational supervision (Transmission Systems Operators) and antimonopoly supervision (Office of Competition and Consumer Protection). The state should provide legal basis for the principles and procedures of these types of supervision, however its role should be limited to executing the law and safeguarding social interest. In this context, it should be noted that rational privatization of energy sectors should not stand in conflict with energy security and that it should lead to depoliticisiation and liberalization of energy sectors.

In light of continuous increase in oil prices on international markets, we should also take into account - though not solely in short-term strategies - the development of alternative energy sources. Thus, a return to energy production from processed coal should not be excluded. As well as that, renewable energy, including biomass, should begin to play a greater role and production and usage of biofuels ought to be increased. Yet, although domestic possibilities in this field are ample, they are seldom used. Finally, the CO₂ emissions trading system and allowance allocation is expected to play a significant role soon. By and large, what Poland needs now is a greater cohesion between (energy) policy and practice.

www.szejnfeld.pl