The carbon footprint of the batteries produced, which would have to be demonstrated, would have to be based not on the energy sources of a particular factory, but on the energy mix of the entire country. Rumor has it that such an idea was tossed to the EC by France, which is said to have a hankering for factories located in Poland. Even if this is true, there is a long way to go before they are taken over.
This text has been auto-translated from Polish.
There are few high-tech industries in which Poland is one of the leading producers. Such undoubtedly includes the production of lithium-ion batteries, which has been widely installed on the Vistula. Of course, this is not done by companies of Polish origin, but by Korean, Nordic or Western European ones, but they give well-paid jobs here, subcontract orders, allow knowledge and experience to spill over, and improve the balance of trade. Better a Swedish battery factory than none at all.
One of the most breaking news of recent weeks has been that this valuable piece of industrial production will be lost in some part. The implementing acts to the EU's Battery Regulation, which are being prepared by the EC, may contain provisions that are extremely inconvenient for countries with coal-based power generation. That is, mainly Poland. The carbon footprint of batteries produced, which would have to be shown, would have to be based not on the energy sources of a given factory, but on the energy mix of the entire country. Rumor has it that such an idea was pitched to the EC by France, which is said to have a hankering for factories located in Poland. Even if this is true, there is a long way to go before they are taken over.
It started last year, when the so-called Battery Ordinance was passed, which regulates not only production, but also operation and disposal. The regulation thus applies not only to lithium-ion batteries, used extensively in electromobility, but also to all others - including ordinary "sticks." The act imposes a number of new obligations on battery marketers, among which carbon footprint reporting is just one of many, and not necessarily the most important.
First and foremost, manufacturers have been required to limit the use of harmful elements such as lead or mercury, and to comply with regulations governing the contribution of rare metals such as lithium or nickel. Batteries must also have a reasonable lifespan.
Finally, manufacturers will have to show the carbon footprint of the resulting batteries. For lithium-ion batteries, this obligation will come into being next February. The carbon footprint will be shown as the amount of CO2 per kWh of energy provided by the battery. How exactly it will be calculated will be determined by implementing legislation to be prepared by the European Commission. Or the best lobbying countries, of which Poland, as we know, is not one.
Initially, the battery's carbon footprint was to be determined on the basis of the energy sources drawn by a given factory, which was quite reasonable. Now, however, a different concept is supposed to be on the table - the carbon footprint would be determined based on the energy mix of the country where the batteries are manufactured. To the naked eye, this is a solution that is thickly sewn and pre-arranged for someone's particular interests. Why should a factory located in the west or north of Poland, deriving most of its energy from RES or imports, be burdened with the carbon footprint of the whole of Poland? Of course, it can be explained by force - after all, production is a whole cycle, it cannot be reduced only to what happens in the factory. There is also transportation, logistics, and, above all, the work of local subcontractors. However, it could just as well be argued that the EU's energy industry is a system of communicating vessels, cross-border power flows take place constantly, so a factory located in northern Poland could draw more energy from extremely low-emission Sweden than from Polish coal-fired power plants.
The issue is serious primarily because we are talking about one of the most important industries for Polish exports. In terms of lithium-ion battery production potential, we probably rank second in the world, behind China, which pushes the whole stakes light years away. The potential of factories located in Poland is the production of 73 Gigawatt-hours per year, while China's is as much as 893 Gwh. The U.S., which is in the lead, has a potential almost identical to that of Poland (70 Gwh), while the other countries are already clearly lagging behind.
Above all, fabrication of batteries really brings a lot of money to Poland. Between 2017 and 2022, the value of lithium-ion battery exports increased from one billion zlotys to 38 billion zlotys. Thus, the industry accounts for 2.5 percent of Polish exports. Of course, the profits go to companies with foreign capital, such as Sweden's Northvolk, which has a plant in Gdansk, or Korea's LG Energy, which has a huge factory in Wroclaw. However, past experience shows that a large part of the profits of foreign corporations stay in Poland as reinvestment. Besides, they provide very well-paid jobs and orders for subcontractors - and, by the way, an outpouring of so-called know-how.
So it's conceivable that one of the EU's leading countries has a hankering to take over at least some of this potential. Everything logically falls into place - France has one of the least carbon-intensive energy mixes in the EU, while Poland has the most. Paris could therefore use this obvious advantage for its own interests. It would have little to do with European solidarity, and would probably hurt pro-integration sentiment in Poland, but it's probably obvious that France and Germany are federalist mainly declaratively. When the opportunity arises to secure profits for their business communities, they are always eager to kick the weaker one.
The hypocrisy of the two largest EU countries is one thing, but the other is the continued indolence of the Polish authorities, who are unable to pull Poland out of the squeeze of the coal power industry. Recall that the EU-ETS (CO2 emission allowances) system was introduced in 2005. Since then, EU climate policy has been more or less ignored by successive Polish governments. Emission allowance prices were initially cheap as borscht - costing barely a few euros - so no one cared. When they jumped to a few dozen euros, there was great surprise in Poland. Now we are faced with extending this system not only to industry and energy, but also to transport and construction. And as we can see from the example of battery production, high carbon intensity can reduce competitiveness in other ways as well.
Of course, it wasn't that nothing was done at the time - it was just done far too slowly. Last year, Poland's energy mix was the greenest ever. However, the term "green" should be taken in quotation marks. The mix was simply less brown. Hard coal and lignite together accounted for more than 60 percent of the Vistula's electricity production. The share of RES turned out to be a record 27 percent, allowing renewables to overtake lignite. Stone still holds strong, however. We generated one-tenth of our electricity from gas, which was also the highest ever. Interestingly, onshore wind farms led the way among RES. As you can see, the foul windmill law did not stifle this segment of the energy industry.
So it's the middle of the third decade of the 21st century, and Poland stands on coal-fired power generation as if it were the communist era. We must consider two-thirds of coal's share in the mix as an incredible success. Meanwhile, EU countries are already in a very different place. According to data from Eurostat, coal accounted for 40 percent of Poland's available energy in 2022. Far behind were Bulgaria and the Czech Republic (about 30 percent each), even further behind was Germany (20 percent), and in the remaining member states, coal's share was marginal.
Even calculating the battery's carbon footprint on the basis of the alleged French proposal does not yet determine anything. What this footprint will be used for will be crucial. If any tax is determined on its basis in the future, the competitiveness of Polish factories will decline, new ones will not be built, and perhaps some of the existing ones will even move out. However, there is also talk of introducing maximum standards. If they were set at a level higher than Poland's capabilities, it would be a real catastrophe, as these factories would have to start wrapping up. However, this is still theory - for the time being, there is talk of determining how to report the carbon footprint.
The darkest scenario is hard to imagine. Brussels does not care about destroying an entire industry in one of its largest member countries. However, more subtle restrictions on Poland's competitiveness are quite possible. It's just a pity that we have provided this opportunity ourselves by ignoring EU climate policy for two decades.
