Commission Report (2002): Poland

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 14: Energy

Progress since the last Regular Report

Since last year's Regular Report, Poland has made some progress with regard to transposition and implementation of the acquis. The restructuring and privatisation process has not advanced at the same pace as in previous years.

With regard to energy policy in general, the Council of Ministers adopted the biannual Energy Policy Outlines in April 2002. This sets out further changes in the energy sector and evaluates the progress made so far to achieve the objectives of the Assumptions of Energy Policy in Poland until 2020.

With regard to security of supply and in particular oil stocks, the law amending the Act on national reserves entered into force in January 2002. Poland has made steady progress towards the required level of 90 days.

As regards the issues of competitiveness and the internal market, progress has in general been moderate. As regards legal transposition however, a number of amendments were made in July 2002 to the Energy Law allowing to make further progress in alignment with the acquis in this sector.

Concerning electricity, in January 2002 the market was opened to customers with a total annual purchase of more than 10 GWh produced in the country. Thus, about 51% of the Polish market is now open for domestically produced electricity. A significant part of the Polish market (52%) is still covered by long-term agreements between Polish Energy Grids (PSE) and electricity producers. An appropriate mechanism for dealing with these contracts has not yet been implemented. The transaction volume of the Warsaw Power Exchange has fallen rapidly since the introduction of a day ahead balancing mechanism and the relationship between these two functions is now unclear.

There has been little progress in restructuring the gas sector and in implementing the strategy for privatisation of the gas sector, adopted in May 2001. The diversification of gas supplies has not progressed, despite the contracts signed in July and September 2001 with Denmark and Norway, as these still need to be approved by the government. A new programme for restructuring and privatisation of the gas sector was adopted in August 2002.

In the oil sector, only limited progress has been achieved. The privatisation of Rafineria Gdanska and Polish Oil Concern (PKN Orlen) is ongoing in spite of delays.

The situation in the coal sector is characterised by continued restructuring, although the pace of restructuring appears to have slowed over the reporting period. Productivity has increased to 700 tonnes per worker; this output remains lower than in other significant coal exporting countries. The level of debt is still very significant and is estimated at about 20 billion PLN (EUR 5.4 billion).

In the field of energy efficiency, the Government adopted several ordinances aimed at transposing the acquis on European efficiency requirements for household equipment and hot-water heater boilers. Within the National Energy Conservation Agency, the establishment of a new Centre for Energy Efficiency in Industry is planned.

With regard to renewable energy, the Government introduced in 2001 an obligation to purchase electric energy produced in co-generation with heat from unconventional or renewable sources.

As regards nuclear energy, Poland currently does not operate nuclear power plants. As regards nuclear safety, however, there are a number of activities involving the use of nuclear materials, which give rise to some radiological concern, namely the operation of the high flux pool-type Maria research reactor (30 MWth) at Swierk; the storage of spent nuclear fuel at Swierk; the disposal of institutional radioactive waste in the Rozan repository; and uranium mining activities. All these issues are currently being addressed by the Polish authorities.

In January, a number of implementing decrees to the new Atomic Law of November 2000 were issued. The new law provides for a clearer separation of responsibilities between the National Atomic Energy Agency (NAEA) as the regulatory authority, and the different operators of the Swierk nuclear centre. The new act creates the framework for the introduction of Euratom safeguards. Five new regulations out of twenty-five concerning basic safety standards have so far been issued.

Overall assessment

With regard to security of supply, Poland needs to continue its efforts towards achieving the required level of oil stocks, including the construction of new storage space. Further steps need to be taken to ensure that the Agency for Material Reserves becomes fully operational for its tasks as regards oil stocks.

As regards the internal energy market, a reasonable level of alignment with the internal energy market acquis has been achieved. Poland has, inter alia, opened up its domestic market for competition. Further efforts are however required to bring the legislation fully in line with the acquis, including the adoption of the necessary secondary legislation as a follow-up to the July 2002 amendments to the Energy Law, and taking into account the conclusions of the European Council in Barcelona. In addition, cross-subsidies and import restrictions for EU companies have to be eliminated upon accession.

Whereas Poland has reached a certain level of transparency and legal harmonisation concerning the electricity market, the development of a competitive electricity market has not progressed and proves to be difficult as a result of residual long term contracts. The restructuring of the gas sector needs urgently to be enhanced. Plans to restructure the Polish Oil and Gas Company have been delayed several times. Poland should increase its efforts to improve the transparency of the sector. Restructuring in the coal sector continues to be very important for the further development of the Polish energy sector.

Despite the efforts made in the last years, the situation in the coal sector remains difficult and a fresh impetus is required.

Privatisation in all energy sectors has not advanced as most of the previous privatisation programmes were suspended. New strategies are being developed, the adoption of which needs to be accelerated. Delays in privatisation may hamper the ability of the privatised firms to adequately prepare for the planned opening of the market.

As regards energy efficiency, Poland has advanced its legislative approximation. Poland has also made first steps to strengthen administrative capacity in this field. Nevertheless, further efforts are required to complete the reinforcement of the administrative organisation, reduce the high energy intensity and to ensure a level playing field for renewable energy resources. With regard to renewable energy, Poland needs to continue its efforts to promote their increased use and to meet its planned objective of increasing the share of electricity produced from renewable resources to 7.5% in 2010.

With regard to administrative capacity at central level, the energy sector is supervised by the Department of Energy in the Ministry of Economy. The coal sector falls however within the responsibility of the Department of Industry Restructuring. The Ministry needs some reinforcement as regards personnel and their training in order to ensure that tasks related to preparing for accession can be fulfilled properly.

In June 2001, the Council of the European Union took note of a Report on Nuclear Safety in the Context of Enlargement. Although Poland does not generate electricity from nuclear power sources, the Report contains recommendations of relevance to Poland with regard to other nuclear installations, including the safe management of radioactive waste and spent nuclear fuel, and the operation of research reactors. During the first half of 2002, a special Peer Review on nuclear safety assessed the progress made by candidate countries in implementing all the recommendations. This exercise, conducted under the auspices of the Council, resulted in a Status Report published in June 2002, which concludes that Poland has accepted and adequately addressed all the recommendations contained in the June 2001 Report on Nuclear Safety in the Context of Enlargement.

The management of spent nuclear fuel and radioactive waste will need continued attention. The Nuclear Atomic Energy Agency and the Radioactive Waste Management Plant need to be strengthened. Poland will need to ensure compliance with Euratom requirements and procedures. In this respect, due attention will need to be given to preparing the implementation of Euratom Safeguards, in particular regarding the reporting of nuclear material flows and inventories directly by the persons or undertakings operating nuclear installations or storing nuclear material. This includes small holders like universities, hospitals and medical practises. It should be noted that Poland has concluded a Full Scope Safeguards Agreement with the IAEA.

Conclusion

In its 1997 Opinion, the Commission concluded that, provided efforts were maintained, Poland should be in a position to comply with most of the then existing EC energy legislation in the medium term, adding that matters such as the adjustment of monopolies including import and export issues, access to networks, import barriers for oil products, energy pricing, emergency preparedness (including the building up of mandatory oil stocks), state interventions in the coal sector, and the development of energy efficiency needed to be closely followed. No major difficulties were foreseen for compliance with Euratom provisions.

Since the Opinion, progress has been made, although not consistently. Most notable has been the advances with regard to oil stocks, some improvement of energy efficiency, nuclear issues, and the gradual development of administrative capacity. Progress in implementation, in particular as far as transformation of the gas and coal sub-sectors is concerned, has significantly slowed down. Overall, Poland has achieved a good level of alignment with the EC energy acquis.

Negotiations on this chapter have been provisionally closed. One transition period has been granted to Poland in relation to the build up of oil stocks (end of 2008). Poland is generally meeting the commitments it has made in the accession negotiations in this field.

In order to complete preparations for membership, Poland's efforts now need to focus on ensuring full and timely adoption and implementation of legislation in this area, in particular with regard to the internal energy market (notably gas) and on strengthening the administrative capacity of the newly established bodies. The restructuring of the sector also warrants due attention, as does the progressive building up of oil stocks.

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