Poland eyes cut to biomass, coal co-firing subsidy

The law would likely to reduce consumption and imports of biomass to Poland as increasing demand from dedicated plants will not be high enough to compensate for falling consumption by co-firing plants.

“I expect that next year, generators will reduce their biomass demand by 1mn t,” a biomass buyer with a Polish utility told Argus.

The law proposes gradually reducing co-firing subsidies with the aim of cutting them completely by 2020. “We estimate that already in 2017, consumption of biomass in co-firing will fall to zero,” the biomass buyer said.

Polish demand for biomass has surged in recent years thanks in part to co-firing and dedicated biomass plants coming on line this year. Large generators can currently classify biomass co-firing as renewable and obtain a tradeable renewable certificate for each megawatt hour produced.

But under the new law, generators would initially receive only 0.3 of tradeable certificate for each megawatt hour produced.

The Polish electricity sector's biomass consumption rose to 8.4mn t last year, including 5.1mn t by co-firing plants, according to the economy ministry. This is likely to increase this year because of the number of dedicated plants coming on line.

Last year's growing demand caused an increase in biomass imports to 1.7mn t. The proposed bill aims to reduce imports through the promotion of domestic feedstocks, but biomass buyers doubt that the government's plans will be effective.

Industry reaction
The proposed law received a mixed reaction from Poland's biomass industry. Large generators that currently benefit from subsidies for co-firing strongly object to the bill, saying it will reduce biomass consumption in Poland and make it difficult for the country to increase the share of renewables in its energy mix.

But energy investors praised the bill for promoting the development of dedicated biomass plants. And environmental groups support the bill as they object to biomass co-firing in large generators.

Before becoming law, the proposed bill still needs to go through a lengthy legislative process that includes consultations with other ministries and then a parliamentary debate. This offers electricity generators the opportunity to press the government to keep more attractive incentives for co-firing.

But biomass buyers say the economy ministry is determined to make the bill effective in its present form from January 2013. “Some generators are giving up in their attempts to save co-firing incentives,” the biomass buyer said.

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