The future of Poland's 'last coal plant'

Elektrownia Ostrołęka B w Ostrołęce
Court win in world-first climate risk case puts future of Poland's Ostrołęka C coal plant in question.


The future of Poland’s ‘last coal plant’, Ostrołęka C, hangs in the balance following a court ruling.

The District Court in Poznań held that the company resolution authorising construction of the €1.2bn, 1GW coal-fired power plant, a joint venture between two Polish energy companies, Enea and Energa, was legally invalid.

This should prompt a major rethink by the companies and their boards, and could spell the end for the costly project, which still lacks over PLN 3 billion in necessary financing.

Excellent result

The ruling represents a major step in the shareholder lawsuit, the first of its kind, brought by ClientEarth.

Peter Barnett, a ClientEarth lawyer, said: “This is an excellent result for Enea’s shareholders and for the climate. The plant is a stranded asset in the making, facing clear and well-documented financial risks.

“Companies and their directors are legally responsible for managing climate-related risks and face potential liability if they fail to do so. Enea and Energa should lay this project to rest before it incurs any further costs to the companies and their shareholders.”

ClientEarth brought the legal case against Enea over the Ostrołęka C project in October 2018, based on evidence that it poses unjustifiable financial risk to shareholders.

Polish energy market experts had long raised questions over the plant’s economic viability and failure to secure financing. The €1 trillion global asset manager Legal & General Investment Management, which is invested in both Enea and Energa, expressed “serious concerns” about the project and has written to the two companies with four other major institutional investors.

Unnecessary burden

The plant is exposed to the risks posed by the plummeting cost of renewables and rising carbon prices. Since late 2016, when the plans for the plant’s construction were resumed, EU carbon prices have soared fourfold from below €6 to nearly €30 per tonne

At Enea’s joint venture partner Energa’s latest general meeting on 25 June 2019, shareholders further interrogated the economic viability of the project. Despite maintaining that it is viable, Energa admitted that "the scale of the investment poses a significant challenge to the closure of its financing".

The company also confirmed concerns about delays, indicating that Ostrołęka C will face at least eight months of financial penalties for failing to deliver electricity it has committed to under the Polish capacity market – where a major share of its expected income comes from.

While the case has been ongoing, key players in the Polish energy industry, including Tauron and PGE, have been looking into alternative and cheaper avenues of producing energy – like wind power.

Head of ClientEarth Poland Marcin Stoczkiewicz said: “This is a clear signal and major opportunity for the companies, and for the industry at large. Pursuing this project puts an unnecessary burden on the state and taxpayers and is in no way necessary for national energy security.

“Enea and Energa need to look at what the future of energy is in Poland. There is vast employment potential in cheaper, domestic renewables.”

This Author

Brendan Montague is editor of The Ecologist. This article is based on a press release from ClientEarth. 

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