PGNiG’s Green Turn

The ongoing climate change has created a new paradigm, significantly affecting the fuel and energy sectors. PGNiG is facing a new catalogue of risks and opportunities related to business, environment, climate and social aspects.

PGNiG’s mission is to be a trusted supplier of energy for households and businesses. This is indicative of the oranisation’s responsibility for ensuring national energy security. To this end, for years we have been building a diversified and flexible gas portfolio to meet the growing demand from existing and new customers. In view of this commitment, we are taking steps to secure a ‘transition fuel’ for Poland’s energy transition. It is impossible to quickly phase out coal and develop RES capacities without stable sources of natural gas and biomethane. A key aspect for PGNiG is to use natural gas as a fuel facilitating transition from conventional fuels to renewable energy sources and other new technologies.

Besides 2016, 2020 was globally the warmest year on record¹. It seems impossible to consider such record high temperatures as a mere ‘anomaly’. Also, the entire 2011-2020 decade has been the warmest one ever since collecting temperature data began in mid-19th century. Given that in 2020 the average global air temperature was approximately 1.25°C higher than in the pre-industrial era (1850), the world is alarmingly close to the target set out in the 2015 Paris Agreement whose signatory states agreed to work together with the purpose of not exceeding global warming by more than 1.5°C compared with the pre-industrial era.

If we look closer at temperatures in Europe and Poland alone, the data is even more disquieting. While the average global air temperature in 2020 was close to the record high recorded in 2016, a continuous rising trend is seen in Europe. 2020 was by far the hottest year in Europe in the history of temperature measurements, edging out 2019², the previous record, by 0.4°C. Record-high temperatures are also seen in Poland – winter 2019/2020, i.e. the period from December 2019 to the end of February 2020, was the warmest winter season in the history of temperature measurements in Poland³.

The PGNiG Group is well aware of the ongoing climate change, therefore it takes steps to mitigate the human impact on climate and halt a further increase in the average air temperature. These efforts are two-fold.

On the one hand, through constant improvement of technological processes, R&D activities and business decisions, PGNiG seeks to minimise the adverse impact of its operations on climate and environment. In doing so, PGNiG strives to reduce both direct CO₂ emissions from its operations, which occur during extraction of natural gas or production of electricity at PGNiG plants, as well as indirect CO₂ emissions from the production of electricity purchased by PGNiG for its own needs.

On the other hand, PGNiG, through its operations, is directly involved in Poland’s energy transition. For Poland, this transition is both particularly urgent and challenging as, owing to rich coal deposits, for the last century Poland’s energy sector relied almost exclusively on this energy carrier. In 2018, the base year for Poland’s Energy Policy until 2040, the share of coal in electricity generation was as much as 77%. According to this government document, reducing the share of coal by 2030 to less than 56%, while simultaneously lowering CO₂ emissions by 30% relative to 1990, will be largely effected by increasing in the energy transition the use of ‘transition fuel’, that is natural gas⁴. The International Energy Agency (“IEA”) believes that accelerated coal-to-gas switching in the last decade helped, in 2018, to save almost 600 million tonnes of CO₂ relative to 2010 levels⁵. This was primarily attributable to the shale revolution in the United States, which completely transformed the energy sector in North America. However, according to IEA, the vast majority of the potential to further phase out coal in favour of natural gas lies in Europe⁶. In the United Kingdom, coal-to-gas switching has contributed to reducing emissions from the energy sector by as much as 50% over the last decade⁷. Importantly, as long as the electricity storage technology does not reach maturity, enabling the construction of large-scale low-cost storage facilities, natural gas will be playing a key role in balancing the energy system, which relies more and more heavily on zero-emission, but ‘uncontrollable’ renewable energy sources⁸.

Switching from coal to gas is necessary not only to protect climate, but also to improve air quality in Poland. According to the authors of the ‘Clean Air’ government programme, each year around 45,000 people in Poland die of diseases caused by air pollution, more than seven times the number of those who die as a result of passive smoking⁹. Smog is primarily caused by the accumulation of particulate matter, mainly produced from coal combustion and virtually absent in natural gas combustion¹⁰. Thus, to combat smog, the Polish government has launched initiatives to stop burning coal in households in urban and rural areas, respectively, by 2030 and 2040¹¹ Obsolete and inefficient coal-fired furnaces will therefore be replaced with low- and zero-emission ones – with a simultaneous expansion of the distribution infrastructure, natural gas will become an alternative to individual households and municipal heating systems alike.

In view of the above, the role of natural gas as a ‘transition fuel’ in Poland’s energy transition, helping reduce climate and environmental impacts, appears critical today. PGNiG, as the largest player on the Polish gas market, has been engaged in this process for many years, not only by facilitating the transition of the country’s power generation sector towards carbon-neutral, but also by taking steps to steadily reduce its own negative impact on the ecosystem.

¹ NASA, 2020 Tied for Warmest Year on Record , NASA Analysis Shows
https://climate.nasa.gov/news/3061/2020-tied-for-warmest-year-on-record-nasa-analysis-shows/
² Copernicus, 2020 warmest year on record for Europe; globally, 2020 ties with 2016 for warmest year recorded https://climate.copernicus.eu/2020-warmest-year-record-europe-globally-2020-ties-2016-warmest-year-recorded
³ Institute of Meteorology and Water Management – National Research Institute, Polish Climate 2020, p. 3.
⁴ Ministry of Climate and Environment, Poland’s Energy Policy until 2040, Warsaw 2021, p. 35.
⁵ International Energy Agency, The Role of Gas in Today’s Energy Transitions, Paris 2019, p. 7.
⁶ Ibidem, s. 10.
⁷ Ibidem, s. 65.
⁸ Ibidem, s. [X]
⁹ ‘Clean Air’ Programme, About smog https://czystepowietrze.gov.pl/warto-wiedziec-2/
¹⁰ International Energy Agency, The Role of Gas…, p. 33.
¹¹ Ministry of Climate and Environment, Poland’s Energy Policy until 2040, Warsaw 2021, p. 74.