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Cablegate: Poland Intensifies Emissions Diplomacy

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RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHHM RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHMA RUEHPB RUEHPOD RUEHROV RUEHSR RUEHTM RUEHVK
RUEHYG
DE RUEHWR #1271/01 3081656
ZNR UUUUU ZZH
R 031656Z NOV 08
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC 7252
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHZN/EST COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0766
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 03 WARSAW 001271

SIPDIS

TREASURY FOR STEPHEN WINN, COMMERCE FOR MIKE ROGERS, ENERGY
FOR ED ROSSI

E.O. 12958: N/A
TAGS: ECIN EMIN ENRG SENV PL
SUBJECT: POLAND INTENSIFIES EMISSIONS DIPLOMACY

REF: A. WARSAW 1086
B. BRUSSELS 1686

1. (U) Summary: Recent robust Polish diplomacy on climate
change issues has raised the country's profile in the EU's
internal energy and climate debate and spotlighted its role
as host of the 14th Annual Conference of the Parties to the
UNFCCC (COP-14) in December. In visits to Madrid, Paris,
Berlin, Brussels and Beijing over the past month, PM Tusk has
rejected any EU climate change package disruptive of the
coal-based Polish economy; he has moved to solidify a
"blocking minority" against such a package in Brussels; and
he has invited leaders of EU member states comprising that
minority to a November summit in Warsaw. He also has
referred to China, with its own coal dependence, as an ally
in the approaching COP-14.

2. (U) Though recent, such Polish diplomatic engagement is
rooted in long-term domestic economic and political
calculations rather than new aspirations for regional or
international leadership. Compared to western European EU
member states, there is a measurably lower level of public
concern in Poland over climate change issues, but a higher
aversion to dependence on Russian energy supplies, Poland's
only perceived alternative to carbon intensive coal. The GOP
continues to assert its support for EU and UNFCCC energy and
climate policies, but until it diversifies its energy
supplies and becomes more competitive in its energy
efficiency, these prevailing economic and political factors
within Poland will limit the scope for agreement on emissions
caps with its EU partners. Poland risks losing whatever bets
it places on a European coal-based alliance(s) to political
horse-trading in Brussels. End summary.

===================================
EMISSIONS DIVIDE OLD AND NEW EUROPE
===================================

3. (U) Since joining the EU in May 2004 as the largest of the
newer EU economies, Poland's 38.5 million people have enjoyed
annual economic growth rates of over 5%. Among the resources
Poland brought into the EU were its vast coal reserves, which
are the largest of any member state. According to World Coal
Institute statistics from 2006, Poland is the world's eighth
largest coal producer. Its coal reserves are concentrated in
the Upper and Lower Silesia regions of southwestern Poland
near the Czech and German borders. Together these two
regions have more working coal miners than the rest of the EU
combined. Poland generates over 95% of its electric power
from coal--a higher percentage than any other industrialized
country except South Africa, and far more than the US (50%),
Germany (47%), the UK (44%), Italy (14%) and France (under
4%). Poland's central and eastern European EU neighbors--the
Czech Republic, Slovakia, Hungary, Romania and Bulgaria--all
rely on coal for well over 50% of their electricity.

4. (U) French President Sarkozy's EU energy and climate plan,
which he aspires to see enacted by the end of the current
French EU presidency, mandates a 20% cut in EU emissions by
2020 from 1990 levels. The plan sets CO2 emissions quotas
for all EU member states and a full auctioning of emissions
permits for the electric power sector by 2013. The plan cuts
Poland's requested emissions quota by 27%; as such it has
serious implications for Poland. Piotr Serafin, Under
Secretary of the GOP's Office of the Committee for European
Integration, has said, "For Poland, the current (French)
proposal is still more a threat than an opportunity." In a
meeting with econoffs, Serafin said he foresees many Polish
electric power plants being forced to close under the plan,
since they will be unable to afford the emissions permits
required in order to continue operating. He also predicts
electricity rate increases of up to 70% for Polish consumers
based on emissions caps alone, and a doubling after necessary
modernization investments (more than 40% of Poland's
coal-based power plants are at least 30 years old).
Emphasizing these concerns in an early October press
conference in Cordoba, Spain with PM Zapatero, PM Tusk said,
"The nations of the EU cannot adopt decisions today that will
contribute to an increase in the price of energy." At
subsequent meetings with President Sarkozy in Paris and
Chancellor Merkel in Berlin, he restated these Polish
objections to the French plan.

WARSAW 00001271 002 OF 003

===================================
An Alliance of Coal-Based Economies
===================================

5. (SBU) By the October 14-15 EU summit in Brussels, Tusk had
forged an alliance with the Czech Republic, Slovakia,
Hungary, Romania and Bulgaria to delay passage of the French
plan (all of which share to some extent a reliance on coal
and a sensitivity to dependence on Russian energy supplies).
Once Italy, which under PM Berlusconi is expanding its
coal-based power generation, joined the Polish diplomatic
effort, the alliance became a "blocking minority" under the
EU's complex weighted voting rules. Said Tusk, "We don't say
to the French that they have to close down their nuclear
power industry and build windmills. Nobody can tell us the
equivalent." (NOTE: Polish officials privately admit their
skepticism that the alliance will hold as political
horse-trading picks off smaller members).

6. (U) Moving to solidify this Polish-led minority, Tusk has
since invited leaders of the blocking minority countries
(except Italy) to a November summit in Warsaw for talks on
revisions to the French plan which would raise CO2 emissions
caps for electric power utilities and shift to a gradual
introduction of auctioned emission permits from 2013 to 2020.
Post will report on this summit septel.

7. (U) In his speech on sustainable development at last
week's Asia Europe Economic Summit, PM Tusk included what MFA
contacts described to Econoff as having "major parts" on an
alliance of "coal-based economies" within the EU and a
similar alliance with China at the COP-14. Press reports
quoted Tusk saying, "I expect that in China we will find an
ally for the global climate talks. We are in a similar
situation due to our coal-based economies. We cannot allow
fighting climate change to destroy them." Econoff and poloff
have scheduled a follow-up meeting with MFA for more details
and will report septel.
=========================================
Public Opinion: Climate Change vs. Russia
=========================================

8. (SBU) The COP-14 scheduled for Dec 1-12 in Poznan is
expected to attract approximately 10,000 attendees from 190
countries. However, what awaits them in Poland is a country
with a level of public interest in climate change issues that
is measurably lower than almost anywhere else in the EU.
Polish media rarely report on environmental issues in
general, and coverage of recent pre-COP 14 environmental
ministerial meetings in Warsaw was negligible. According to
Eurobarometer research conducted from March through May 2008,
50% of Poles view climate change as the most serious problem
now facing the world, compared to 74% of Swedes, 73% of
Finns; 71% of Germans, Danes, and French; 69% of Austrians,
66% of Dutch, 61% of Belgians and Spaniards, and 57% of
British. In fact, among all EU residents, only Italians
(47%) and Czechs (45%) show less concern than Poles over the
issue.

9. (SBU) Poles do care about climate change, but they place a
much higher priority than western Europeans on averting any
increase in the country's dependence on Russian energy
supplies. GOP leaders view this as a bone fide national
security issue, supported by public opinion polls in the wake
of Russia's recent military incursion into Georgia that show
65% of Poles are afraid of Russia. Poland currently obtains
70% of its natural gas from Russia. While gas accounts for
only about 12% of Poland's energy needs (compared to over 60%
of Germany's), Poles view these supplies as inherently
unstable, subject to politically motivated price hikes and
service cuts (like those used against the Baltics, Ukraine
and Belarus in recent years), or to delivery shortfalls as
Russian oil and gas production declines. GOP leaders are
unbending in their opposition to German participation in the
planned Nordstream project for transporting Russian gas by
undersea pipeline directly from Russia to Germany, and often
cite this as a reason they resist investing in gas
interconnections to the West.

10. (SBU) Nevertheless, in the absence of rapid advances in
clean coal technologies, Poland has no readily available

WARSAW 00001271 003 OF 003


alternative to natural gas for modernizing its power and
other energy intensive sectors. The GOP continues to pursue
a number of plans--so far without concrete success--to
diversify the country's oil and gas imports. These include a
pipeline from Norway through Denmark that to date has
attracted scant investor interest, a Liquified Natural Gas
(LNG) terminal project on Poland's Baltic Coast; and
membership in a regional consortium to build a 1,200 MW
nuclear power plant in Lithuania that remains a distant goal.
Poland's natural gas utility PGNiG has been aggressively
seeking alternative sources of supply. They have reportedly
made investments or at least made contacts as far afield as
Pakistan, Venezuela, Nigeria, Libya, Iraq, and even Iran
(though they have committed to support sanctions regimes
against Iran as reported in reftel). More recently, the
Minister of the Economy has organized a "Summit on Sectoral
Cooperation" just before the COP-14 for his counterparts from
the major emitting countries and representatives of their
heavy industries (steel, aluminum, cement). Also, Piotr
Serafin's office, which closely tracks climate change and
emissions cap legislation in the U.S. Congress, has requested
post's assistance in making US cap & trade experts available
to GOP policy makers.

=======
Comment
=======

11. (U) PM Tusk's intensifying diplomacy on climate change
has compelled recognition of Poland's policy prerogatives in
the EU, but these remain on a collision course with Sarkozy's
zeal to see "Europe set an example" on the issue. In the
short term, Poland's blocking minority may thwart the French,
but only as long as it holds together in the face of pressure
from the rest of the EU--which still supports the French
plan. Regardless of whatever solidarity emerges from Tusk's
coal-based alliance summit in Warsaw next week, or from any
partnerships with the Chinese or others at the COP-14,
Poland's diplomatic efforts can ultimately only buy time in
the face of the inevitable. One way or another, it will have
to raise the efficiency of its most energy intensive economic
sectors and move away from dependence on coal, a natural
resource that has long fueled not only its economy but its
hope of energy self-sufficiency and its national pride.

ASHE

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