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Cablegate: Codel Boucher's Meetings with Polish Ministries Of

VZCZCXRO7360
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHWR #0393/01 0881258
ZNR UUUUU ZZH
R 281258Z MAR 08
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC 6200
INFO RUCNMEM/EU MEMBER STATES
RUEHKW/AMCONSUL KRAKOW 2048
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 03 WARSAW 000393

SIPDIS

SIPDIS

STATE FOR EUR/NCE LLOCHMAN, BPUTNEY

E.O. 12958: N/A
TAGS: ECON ETRD ENRG SENV EU PL
SUBJECT: CODEL BOUCHER'S MEETINGS WITH POLISH MINISTRIES OF
ECONOMY AND ENVIRONMENT


WARSAW 00000393 001.2 OF 003


1. (U) Summary: On March 20, a visiting delegation of six
U.S. Members of Congress met with Rafal Baniak, Under
Secretary in the Polish Ministry of Economy, and with

SIPDIS
Minister of Environment Maciej Nowicki. Given Poland's heavy
dependence on coal, the Polish government is scrambling to
respond to the European Union's "3x20" objectives. Polish
policy will focus on energy saving, diversification,
modernization of power plants, introducing devices to control
SO2, NOx and particulate matter, and introduction of clean
coal solutions. Polish scientists are researching coal
gasification, and the Polish government is working to
identify potential CO2 storage sites, as well as drafting a
national conservation strategy for industry, housing and
transport. Currently, Poland is allocating emissions permits
based on benchmarks for a given industry's efficiency. It
has serious concerns about the potential economic effect of
EU proposals for the period 2013-2020. End summary.

2. (U) Congressman Rick Boucher led the delegation, which
included Representatives Fred Upton, Tammy Baldwin, Albert
Wynn, Nick Rahall and Dan Lungren. They were accompanied by
Under Secretary Bud Albright, from the Department of Energy,
and Marty McGuinness from the Office of White House
Legislative Affairs.

-------------------
Ministry of Economy
-------------------

3. (U) At the Ministry of Economy, Under Secretary Baniak
stated that Poland has the largest coal reserves in Europe.
Ninety percent of Poland's electricity comes from coal -- 58
percent from hard coal and 36 percent from brown coal.
Congressman Boucher noted that the United States is also
dependent on coal for energy generation. The United States
has enough coal reserves to last 200-250 years. While the
U.S. is importing natural gas, and the amount will climb, gas
is not available in sufficient quantity to replace coal. The
United States has a long-term commitment to coal, but the
Congress is also developing a policy of mandatory controls on
emissions. Rep. Boucher stated that the United States needs
a policy on carbon separation and emissions sequestration,
and to support federal research and development to perfect
the technologies. He noted the current focus is on carbon
separation, including integrated gasification, a chilled
ammonia application and combustion technology. He noted that
these three technologies are competing for market share, and
should be available commercially within three to five years.
He added that sequestration presents a greater challenge.
Work is being done to identify storage media for CO2 and then
"characterize" it -- map it out, pressurize it with CO2, and
then monitor for five to eight years to ensure the site's
integrity and that there is no leakage of CO2. Congressman
Upton stated that U.S. energy needs will grow by 40 percent
by 2040, and demand will exceed generation within 12 years.
Yet, in 2007, no new sites for coal generation were started
in the United States. Investors in the U.S. are all waiting
for clean coal technology to come online before building new
coal sites. Under Secretary Albright noted that the Bush
Administration is committed to the issue, and has spent USD
37 billion on climate change.

4. (U) Under Secretary Baniak noted that last year the EU
agreed to "3x20" objectives: reduce emissions by 20% (30% if
an international agreement is reached); reduce energy use by
20%, and achieve 20% of renewable energy in its energy
supply. Poland is now working to incorporate clean coal into
its energy policy. Poland is trying to identify possible
sequestration sites. However, at this time the Polish
government has no funds to do so, although it is hoping for
support from the European Commission. Poland wants big
Polish companies in the pilot program the EU is preparing.
Under Secretary Baniak explained that Polish entrepreneurs
have announced four large projects, and Polish scientists are
trying to perfect traditional methods of gasification, and
are also working on underground gasification. The Polish
government is also interested in possible synergies between
coal and nuclear power. For example, one could have a single
complex that included nuclear energy, a petrochemical plant
and a clean coal plant. Under Secretary Baniak saw
developing such a facility as a 15-year project, with five
years needed to get to the testing phase, and costs still
unknown.

-----------------------
Ministry of Environment
-----------------------

WARSAW 00000393 002.2 OF 003

5. (U) At the Ministry of Environment, Minister Nowicki
stated that Poland was heavily polluted in 1989, accounting
for 10-12 percent of Europe's SO2 and particulate matter.
Today, SO2 is 38 percent of 1989 levels, particulate matter
is 23 percent of 1989 levels and N02 is 63 percent of 1989
levels. (NO2 levels shrunk less because of an increase in
the number of cars in Poland). Greenhouse gas emissions are
only 65% of 1988 levels, but GDP is 159% of what it was in
1988 so the economy has grown while the environment has
become cleaner.

6. (U) Minister Nowicki explained that Polish policy to
2020 will focus on: energy saving; diversification;
modernization of power plants; introducing devices to reduce
SO2, NOx and particulate matter; and introduction of clean
coal solutions. The government is preparing a national
strategy for conservation in industry, housing and transport.
Regarding diversification, the most promising sources of
renewable energy are wind power and biomass (especially use
of waste food and straw as a local energy source). Minister
Nowicki expects a boom in windfarming in northern Poland. He
noted that Spanish and Danish firms are eager to invest in
Poland. The problem will be transmission, because existing
lines could not handle the amount of power expected to be
generated. Poland has little geothermal potential because
its thermal water is less than 100 degrees, which is enough
for heating, but not sufficient to generate energy. Poland
has some natural gas deposits, but because of high nitrogen
content it can not be put in pipelines, although it can be
used locally. Looking further ahead, Minister Nowicki
stated, "For me, solar will become the main source of energy
in the world."

7. (U) Minister Nowicki stated that 50% of Poland's power
plants are more than 20 years old, and will need to be
replaced in the next 10-15 years. He reiterated Poland's
interest in gasification of coal, stating that current high
oil prices make this a good time to invest in gasification
and liquid coal fuel. He stated that the United States has
the most experience with coal-bed methane, which Minister
Nowicki had wanted to introduce to Poland at the beginning of
the 1990s, but this was blocked by the opposition of coal
miners. Poland is conducting an inventory of possible
storage sites for CO2, but Nowicki believed it will be hard
to find enough suitable locations, and stated that coal mines
are not good storage sites because of the soil structure.

8. (U) Representative Boucher asked about Poland's
experience allocating emissions permits. Minister Nowicki
replied that for 2008-2012 Poland had wanted permits for 288
million tons of emissions, but received only 208.5 million.
Polish industry could have gotten by with 250 million tons,
but if the economy continues to develop at the current pace,
in four or five years they will need 280 million tons. The
shortfall in permits is thus a serious problem. The former
PiS-led government had proposed across-the-board cuts.
Minister Nowicki, in contrast, pushed a system based on
benchmarks for a given industry's efficiency. He noted, for
example, that the cement industry already had invested
heavily in modernization. Because there are few emissions
savings left for the industry to squeeze out, if the industry
got fewer permits its only option would be to produce less.
The gap in the market would be filled by less-efficient
producers in Ukraine and Belarus, resulting in a net global
rise in CO2. Minister Nowicki stated that the situation will
be much tougher in 2013-2020, when the European Commission
has proposed that there be no free allowances and that all
allowances be purchased at auction beginning in 2015. He
said that if a permit to emit 100 tons costs EUR30, that
would add up to EUR4-5 billion/year, leading to a 50-70
percent rise in energy costs. Given this prospect, Poland is
working to change the European Commission's approach.

9. (U) Congressman Upton asked about conservation measures.
Minister Nowicki replied that Communist-era buildings were
heat-inefficient, with little insulation. He stated that
with remedial treatment it is possible to reduce the energy
consumption of such buildings by 77 percent. He stated that
further savings are possible by insulating transmission
lines. Representative Rahall asked whether the political
will to change exists in Poland. Minister Nowicki noted that
energy had been very cheap under the Communists, and that
mentality was hard to change. He cited the Climate Change
conference in Poznan in December as a chance to raise public
awareness.


WARSAW 00000393 003.2 OF 003


10. (U) The delegation did not have the opportunity to
clear this cable before departing Poland.
ASHE

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