EU faces economic pressure in zero-emissions race, says expert

The president of the Chamber of Industrial Energy and Energy Consumers, referring to U.S. President Donald Trump's decision to withdraw from the Paris climate agreement, emphasized that for Trump, the factors that drive the development of the American economy and lead to prosperity in the U.S. are critical. He does not prioritize ideological reasons that weaken the competitiveness of the American economy. According to Kaliś, this will impact the competitiveness of the European economy.

Kaliś pointed out that Americans are energy self-sufficient — producing and also selling "huge" quantities of oil and natural gas.

If Europe transitions to zero-emission technologies, Americans will lose markets, so they will do everything to leverage and sell the advantages of their economy—natural resources—he stated.

He noted that Europe also needs fuels, especially during the dunkelflaute phenomenon, meaning long periods without energy from renewables. According to the expert, this means the necessity to maintain two parallel energy systems: one based on renewables and another 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 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.

Donald Trump intends to protect his economy with very high tariffs, for example, tariffs on electric cars, because no one can 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. "If the EU wants to maintain competitiveness relative to an economy that is stronger than it, it must reassess its policy, especially when solutions that improve competitiveness are being promoted in the U.S."

Kaliś stressed that this is not about withdrawing from environmental care or 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 that 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.

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 for further development. "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 130 euros 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 Poland will spend nearly 3 trillion zlotys 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 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 with an energy price of 145 zlotys per MWh. "This is the level before Russia's aggression against Ukraine," he noted. "And market prices are 450-500 zlotys per MWh. If it is possible to produce this energy three times cheaper, then why can't the industry buy this energy at these prices?" he asked.

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.