State-owned energy companies are behind the disinformation campaign on electricity prices. And they themselves earn from emissions trading

A few years ago, when the PiS government was starting to change the judiciary, black billboards appeared on the roads with messages attacking judges. They wrote about an “extraordinary caste” and laid the groundwork for government action against the judiciary. As it turned out, the campaign was supported by the Polish National Foundation and PR people associated with the government.

A new billboard campaign was launched in January this year. This time it is aimed at the European Union and climate policy. The biggest energy producers stand behind it – state-owned companies that are dramatically lagging behind in the green transformation.

As part of the campaign, billboards with the slogan: “The European Union’s climate tax is as much as 60 percent of the cost of energy production” appeared in Polish cities. And below it: “EU climate policy = Expensive energy; High prices”. Advertisements can also be found on the Internet, e.g. in the media belonging to the state-owned Orlen.

The advertisements said that it was a campaign of “Polish power plants”. Its website explains that these are state-owned companies that are the country’s largest energy producers. These are the companies Tauron Wytwarzanie, Enea Wytwarzanie, Enea Połaniec, PGE GiEK and PGNiG Termika. Billboards are – according to the description – “an educational and information campaign on the costs of electricity production”. We sent questions to the authors of the campaign, including about its costs and we are waiting for a response.

The campaign – as experts say – is based on manipulation. Think-tank estimates that the campaign not only disinforms, but “what is worse, it brings a lot of damage – it distracts from the fundamental problems of the Polish energy sector. It distances us from solutions that can effectively stop the price increase”.

How much do we actually pay for emissions?

First of all, no “climate tax” is 60 percent. our electricity bills. The campaign does not say it directly – the slogan concerns “energy production costs”, and therefore costs incurred by power plants. However, not everyone is aware that on the electricity bill, these costs are only a part, and there are also numerous fees, margins, etc. Meanwhile, a simple message (especially with the second slogan about “expensive energy”) may suggest that it is different and that it is 60 percent. the bills we pay are due to the “climate tax”. In fact, it was 15 percent. last year (including about 30 percent).

This “climate tax” is CO2 emission allowances, which, inter alia, power generators have to buy under the European ETS. It works on the “trade and limit” principle – that is, a given country has a specific and gradually reducing pool of allowances that some entities (including power plants) have to buy if they emit carbon dioxide. This makes, on the one hand, activities that emit a lot of CO2 (such as burning coal) less and less profitable, and on the other – generates funds for a green transformation (more on that in a moment).

Over the past few years, these prices have risen sharply – from around EUR 6-7 per tonne in 2017 to around EUR 80 at the turn of 2021 and 2022. As Polish companies mainly generate electricity from coal, they have to buy a lot of emission allowances. However, this does not directly translate into the price of electricity for households. As he explained in an interview with Gazeta.pl, the increase in the price of CO2 emission allowances may translate into more expensive electricity for households, but it does not have to.

– It is influenced, among others, by The Energy Regulatory Office and it, to some extent, can agree to the increase. Whether he will do it – it depends again not only on economic but also potentially political arguments – he said and added – In Poland, energy costs are borne by industry rather than individual recipients. Of course, this may ultimately result in higher prices for products or services.

In addition, even if expensive allowances may be a large part of the costs for coal-dependent producers, they are less (though not at all) visible in the accounts. The industry portal explains this. On energy bills for households, we have not only the price for energy, but also a number of fees – subscription fees, network fees, etc. According to the calculations of “High Voltage”, in 2021 the costs of emission allowances accounted for 15 percent. costs incurred by households. This year it will be more, about 30 percent. But still not 60, as the campaign of state-owned companies might suggest.

The portal also points out that even in countries where the emissions trading system does not operate (Turkey and Serbia), electricity prices have increased significantly. The causes of expensive energy are complex –

The state earns billions from emission allowances

Secondly, the “climate tax” that the campaign is about does not go to the EU coffers. Labeling the cost of CO2 emission allowances as an “EU climate tax” might suggest that this is money we pay to Brussels and we don’t know what’s happening to it. It’s not true – or at least the first part.

Funds from the sale of emission allowances go to the state budget – therefore the Polish government earns on them. In 2021, with record prices, the budget inflow was also record-breaking – it earned PLN 25.2 billion. This money should go primarily to the energy transformation – the more we become independent from coal, the less we will have to pay for emission allowances.

“High Voltage” also draws attention to the “record margins” of energy producers and the fact that in 2021 some people showed profits for the first time in a long time. And the entire industry earned much more than a year earlier.

The Tauron Group – to which one of the companies behind the campaign criticizing the emission fees belongs – alone … hundreds of millions of zlotys in 2021. As we read in its financial report for the three quarters of 2021, the company “recorded a positive effect of PLN 439 million due to the restructuring of the portfolio of CO2 emission allowances and the sale of surplus allowances.” Thanks to this, the company gained PLN 1.6 billion on emissions trading.

We pay for politicians’ mistakes

Although the scale of costs for households and the allocation of money in the campaign are manipulated, the fact is that we are paying more and more for emission allowances. The question is who is actually responsible for it.

Climate policy did not start yesterday, and the rising prices are to be blamed by the authorities and companies, which against it do not abandon coal. Suddenly emerging campaign may suggest that the fee imposed out of the blue by the mythical Brussels oppresses Poles. However, climate policy, including the ETS system, is also created by the governments of the Member States, including Poland. And this is about both the PO-PSL government and the PiS government.

Politicians and state-owned companies have known for years that the goal of climate policy is to reduce emissions. That, therefore, the costs of CO2 emissions will increase. This policy – and the price of allowances – has accelerated in recent years, but this is not an unexpected development. If previous and current rulers had operated in accordance with this policy, we would now be producing less electricity from coal and paying less for the associated greenhouse gas emissions.

“Consumers could pay less for electricity if Poland earlier started to reduce emissions and diversify its mix. Climate policy in the EU has been implemented since 2005, and at the UN forum since 1992.” – underlines the Forum Energii.

Now politicians from the ruling camp say they want to protect the climate, but also take into account the social costs. However, you have to remember that this is a fresh change. Back in 2018, during the climate summit (!) In Katowice, Andrzej Duda said that Poland would have enough coal for 200 years. Even before coming to power, PiS criticized the previous PO-PSL government for the fact that it succumbed to the EU in terms of climate and did not “defend coal” (although in fact it did not carry out actions adequate to the problem of climate change).

According to a new report by the Ember think-tank and the Europe Beyond Coal initiative, state-owned energy producers in Poland – and thus the companies behind the campaign aimed at the EU – are the biggest brakes to the green transformation in the EU. Out of 21 analyzed energy producers, three companies from Poland are planning to end coal combustion at the latest: PGE, Tauron and Enea (they do not have their departure dates from coal, so the report adopts the date 2049 – then the government plans to end hard coal mining in Poland). This means that neither of them intends to achieve zero-emission energy production by 2035, or even shortly thereafter. Polish companies are listed as delaying transformation in Europe. PGE (which includes Turów and Bełchatów power plants) is the second – after German RWE – largest emitter of CO2 from coal combustion. However, Germany plans to end the use of this fuel in the 1930s, and Poland – several years later. The company has declared that it will achieve climate neutrality by 2050, however, there are no intermediate goals (for 2030 and 2040) compatible with such a path of transformation.