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How Will Poland's Energy Transition Be Financed?

With the Extinction Rebellion protests spreading around the world, climate change is now top of the EU agenda. In particular, the EU is beginning to seriously ask how it will be able to finance its target of being a carbon neutral zone by 2050.

Flag of Poland - Image Pexels

As it stands, there are two primary methods through which the EU aims to finance its climate goals. The first of these methods is vita the Multiannual Financial Framework - or MFF - 2021-2027. This is a document that sets out the framework for allocating the EU budget for those years. The second method is a sustainable finance initiative. This initiative is designed to funnel private sector financing towards climate change objectives.

Coal Power

As one of the few nations in the EU that still uses a lot of coal power stations, Poland is one of the nations that the EU is most closely focused on in its efforts to achieve carbon neutrality. The question of how best to manage and fund Poland's transition from using fossil fuels to building renewable energy infrastructure.

If Poland is going to meet some of the more ambitious targets that the EU has set itself for decarbonisation, it is going to need some assistance from centralised EU funding. It will require investment in carbon technologies and more efficient gas-based power plants. The technology to achieve carbon neutrality already exists in the EU. Check out the Biogas Plant from Xergi for an example of the kind of technology that the EU hopes will enable economies like Poland to rapidly transform their energy production.

Gas Stations

For Poland specifically, gas-fired power plants seem like the most logical stopgap for Poland to use between their existing coal power stations and the eco-friendly renewable power plants of the future. These gas-fired plants emit much less than their coal-based equivalents, three times less in fact.

Gas will also be able to replace the coal plants in Poland in terms of the amount of electricity that they generate. This means they will be able to meet the current demands of the Polish economy while moving them in a much greener direction in the long term.

Investment

The big question now is how the EU can encourage the kind of investment in Poland's energy sector that will be needed to see to complete the necessary transformations to be a part of the EU's drive to carbon neutral status. Poland's per-capita GDP is one of the lowest in the whole EU, which is at the heart of the anticipated difficulties in transforming the Polish energy sector over the next several years.

The picture is further complicated by expected regulations that will apply to the MFF, in addition to separate regulations relating to sustainable financing. The Polish energy sector needs investors that are willing to take a risk and bet on a sector that currently looks like it is in trouble.

Of course, the current political situation in Poland adds to the complexities of their economic performance. Uncertainty is never healthy for markets; just look at the UK. Poland is arguably running out of time to take its next steps.

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