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Executive Summary Poland’s energy transition, while it abounds with challenges due to the scale of the transformation, offers growth opportunities that should be properly evaluated and utilised. As one of the most carbon-intensive economies in Europe, the country needs to expedite necessary reforms for a fully decarbonised energy system that enables economic prosperity. The historical dominance of coal in Poland’s energy sector presents unique challenges toward a sustainable, low-carbon future. As the country moves away from imported Russian fossil fuels and attempts to transition to a coal-free economy, a diverse decarbonisation strategy is crucial for a feasible, reliable, and socially responsible energy transition. Additionally, a stable and enduring regulatory framework and energy policy, immune to political fluctuations, are essential to boost investor confidence and ensure a resilient energy transition, laying the groundwork for sustainable investments and successful decarbonisation. Decarbonising Poland’s economy requires a comprehensive, sector-specific approach. Assessing solutions – considering supply chains, critical raw materials, availability of alternative options, and geopolitical shifts, among others – is vital to reduce dependencies. Uncertainties of the multipolar world underscore the need for a diversified solutions portfolio: over-reliance on a narrow set of technologies is inherently risky in case of major disruptions or lack of availability of certain solutions, which could hinder the energy transition. For a resilient decarbonisation path, it’s crucial to plan for a diverse portfolio of solutions, like electrification along with carbon capture and storage (CCS) and zero-carbon fuels to ensure industrial decarbonisation without compromising competitiveness. With massive demand for electrification and Poland’s power system’s need to shift from coal, which currently makes up 70% of the power mix, the complexity of the transition becomes more pronounced. Clean Air Task Force (CATF) has commissioned a power system optimisation study to provide in-depth insights on probable transition pathways that could aid the newly formed government with independent expert advice. This new power modelling approach was designed to build a decarbonised Polish power system that meets hourly power demand and capacity reserve requirements throughout the year while ensuring profitability for the producers and evaluating decarbonised power systems based on their total system investment and operational costs, using comprehensive scenario-based electricity market modelling. A summary of the modelling study has been published alongside this report under the title Decarbonising Poland’s Power System: A Scenario-Based Evaluation. The modelling highlights1 the need for a rapid2 and thorough phase-in of a diverse set of solutions – renewables, nuclear energy, storage, and biomass – to replace the economically and environmentally burdensome coal power. These findings support the broader vision presented in this report, which dives into the wider policy recommendations and specific technology areas. The coming two decades are crucial for Poland’s energy transition, a process marked by disruption due to its vast scale. It’s vital to view this clean transition not as an externally imposed burden but as a chance to sustain Poland’s economic vitality and competitive edge. This report lays out Poland’s energy transition vision, underpinned by four key principles, and includes policy recommendations for decarbonising the power system, advancing carbon capture and storage, developing low-carbon hydrogen, nuclear energy, reducing methane emissions, and exploring superhot rock energy. Four principles of a new vision 1. Technology optionality within Poland’s energy system Climate neutrality in Poland will require the availability and deployment of a wide range of technologies, ensuring sector-specific decarbonisation with appropriate tools for specific situations and challenges. 2. Long-term planning and energy infrastructure Poland’s energy transition should be based on proactive and effective planning. An integral aspect of long-term planning is developing an energy infrastructure strategy and roadmap, which needs to become a cornerstone of any decision pertaining to climate and energy plans. 3. Public participation The scale of the transition to net zero will require thinking carefully about social fairness, workforce transition and how to involve local communities and municipalities in decision-making. By involving stakeholders at the outset, planning challenges are tackled when drafting the key policy documents head-on, and a sense of shared ownership and accountability among all parties involved is fostered. 4. Cross-regional and international cooperation Cross-regional cooperation has always been an important component of regional development dynamic. Given the complex challenges, reviving and tailoring these partnerships is urgent. This means developing a shared clean transition vision and refocusing on region’s added value both within Europe and through international fora. High-level Recommendations Power System Decarbonisation Promote technology optionality to enable accelerated departure from coal Enable nuclear energy and gas equipped with CCS to complement extensive onshore wind expansion Develop a flexible system by reinforcing the grids and enabling adequate demand-side response Carbon Capture and Storage Advance first CCS projects in Poland to Final Investment Decision Cooperate with other EU Member States on cross border CO2 transport and storage Harness Poland’s CO₂ storage resource potential Clean Hydrogen Implement an optionality approach to clean hydrogen production Prioritise clean hydrogen off-takers in ‘no regrets’ sectors Focus on segments of the transportation sector where clean hydrogen is needed the most Plan any hydrogen trade and transportation carefully Utilise available mechanisms to support the most promising clean hydrogen projects Nuclear Energy Formulate financial strategies for sustainable nuclear energy development Embrace new pathways for the nuclear industry, focusing on a product-based business model, integrated project delivery, and de-risked finance Explore Small Modular Reactors (SMR) and advanced reactors as a potential pathway for electricity and energy de-carbonisation Reduce Methane Emissions Ensure consistent application of the EU’s Methane Regulation Encourage national oil and gas companies to join OGMP 2.0 Superhot Rock Energy Develop a strategy for geothermal energy that considers superhot rock resources greater than 400 degrees Celsius with the potential to produce gigawatts of clean firm cost-competitive power and heat Support an ambitious and focused research agenda, enabled by robust public funding and collaboration with other member states Carry out a heat reservoir assessment and mapping to understand the national deep high temperature geothermal and superhot rock energy potential – and keep an open-access centralised data repository Create a platform for stakeholder collaboration on superhot rock energy in Poland and across Europe Introduction The energy crisis in Europe, amplified by Russia’s war in Ukraine, has exposed the perils of over-reliance on a single energy supplier. It has also questioned the related decarbonisation narrative in the European Union (EU), which, for years, has been characterised by a narrow set of clean technology options. The new geopolitical reality is starting to shift perceptions of energy security and decarbonisation, with a new awareness of the need to assess strategies through the lenses of economic growth, innovation, and renewed partnerships.3 Poland faces a pivotal moment in reshaping its energy landscape, transitioning away from a coal-dependent energy system to meet ambitious decarbonisation targets. The historical dominance of coal in Poland’s energy sector presents unique challenges as the country strives for a sustainable and low-carbon future. The frequent changes introduced between outgoing and incoming governments further complicate the energy landscape, introducing uncertainties in market conditions and regulatory consistency. To foster investor confidence and ensure a resilient energy transition, Poland requires a stable and enduring regulatory framework and energy policy that transcends political changes, providing a foundation for sustainable investments and successful decarbonisation efforts. Momentum and urgency for a clean transition are here. It needs to be leveraged with long-term, robust climate policies that underpin revitalised energy security and industrial competitiveness in the era of major geopolitical shifts and new partnerships. Poland remains an industrial hub of Central and Eastern Europe (CEE) and is a significant producer of steel, cement, petrochemicals and fertilisers. Heavy industry4 also provides a high employment rate (approx. 20% of the total workforce) and gross value added (20%), while also being responsible for 42.56 million tons of CO₂ emissions – 14% of the country’s total emissions. Therefore, transforming Poland’s industrial base in an economically viable and climate-beneficial way will be one of the most important tasks for the new government. The outcome of Poland’s October parliamentary election marked the arrival of a new coalition government comprised of Civic Platform (Platforma Obywatelska), Third Way (Trzecia Droga) and The Left (Lewica). With many compound challenges ahead, including the update of key climate and energy documents, it is critical that the energy transition is elevated on the agenda. This report is anchored in CATF’s options-based strategy5 and is informed by different analyses: high-level findings of CATF’s Polish power system modelling6, public perception polling7, deep overview of key thematic areas, and actionable policy recommendations. This report outlines a new vision for a clean energy transition in Poland by exploring: The urgent need and opportunity to pivot Poland’s energy transition. A path forward for Poland’s energy transition and key principles of an options-based approach to energy security, climate, and economic growth. A thematic deep-dive and policy recommendations. SECTION 1 Opportunity to pivot Poland’s clean energy transition Background on Poland’s energy transition Poland stands at a critical juncture in its energy landscape, grappling with the challenge of transitioning from an energy system heavily dependent on coal to one that aligns with ambitious decarbonisation goals. The dominance of coal, historically ingrained in Poland’s energy sector, poses unique challenges as the nation endeavours to meet its commitment to a sustainable and low-carbon future. In the EU, Poland is the third biggest emitter after Germany and Italy in terms of total annual emissions. Even today up to 85% of Poland’s energy is sourced from fossil fuels, making its energy sector one of the most carbon-intensive in Europe. While reducing emissions from the transportation and building sectors—which account for 17.8% and 11% of total greenhouse gas emissions respectively—will be pivotal, this report focuses on Poland’s power and industrial sectors, making up around 47.8% and 14% of country’s total emissions. Looking at Poland’s power sector alone in the light of increased demand for electrification of key sectors means that the country will need to make a complete U-turn from 70% of coal generation as of today to almost a similar percentage of zero-carbon sources by mid-century. As of 2021, the country’s power system had the highest carbon intensity8 in the EU. This means an urgent need for significant upgrades and investment in the power grid estimated at PLN 500 billion9 (approx. EUR 114 billion) to cope with the transmission of electricity generated from clean energy sources. Dubbed as the industrial powerhouse of Central and Eastern Europe, developing economically viable industrial decarbonisation strategy will likely be one of the key tasks of the Polish government. Industrial facilities are responsible for 42.56 million tons of CO₂ emissions, approximately 14% of total Polish emissions annually, that are primarily in the cement, petrochemicals, steel and fertilizer production sectors. Poland, like many other Central and Eastern European countries, has some of the highest industrial employment shares (standing at around 400,000 people10) and industrial gross value-added shares11 in the EU. Hard-to-abate sectors will need actions to be on the path of timely decarbonisation. Without a strategic industrial approach to support businesses in achieving their goals, and turning the transition into a competitive edge, Poland will likely not meet its climate targets. Figure 1. Electricity production by source in Poland12 Despite a rather challenging start, Poland has managed to make some notable progress in various directions: for instance, the country’s solar PV deployment rate has been one of the highest in the EU. Between 2016 and 2021, Poland witnessed a remarkable surge in PV capacity13, from a mere 0.2 gigawatts (GW) to an impressive 7.7 GW. As discussed below, Poland has managed to position as a prominent hub for lithium- ion battery production. The country has been also experiencing a heat pump boom14 – as an example, more than 203,000 heat pumps of all types were sold in Poland in 2022, only 33,000 less than in Germany, which has a population over twice as large. As it will be further discussed in the report, Poland is also at the cusp of some pivotal decisions regarding developing nuclear energy, carbon capture and storage projects and clean hydrogen economy, among others. While Poland’s solar PV breakthrough is noteworthy, it should be mentioned that so far, the country’s renewables deployment rate, much like other countries in the region15, has not been on par with its decarbonisation needs. Updates from Poland’s Energy Policy until 2040 (PEP 2040) and the National Energy and Climate Plan (NECP) are still pending, but the existing versions offer indicative insights: Poland’s 2021- 2030 NECP, updated in 2019, set a target of 21-23% of renewable energy in gross final energy consumption by 2030, a goal already met. A review of PEP 204016 provides similar insights. With updates on the horizon, more ambitious targets, as well as more focus on the required infrastructure are critical. With major changes to Poland’s energy infrastructure looming over the country’s energy transition, a thorough assessment of infrastructure needs should be a cornerstone of Poland’s long-term energy strategy. For example, insufficient grid capacity contributing to a high rejection rate for interconnection of new renewable projects17 would have detrimental effects on Poland’s ability to accelerate renewables. Moreover, the switch from a heavily coal-reliant, centralised grid to a more decentralised grid with significant weather- dependant renewable capacity incurs problems like generation oversupply18 which, without grid upgrades, adequate storage integration, and other grid planning efforts, might become more pronounced with more renewable intake in the system. With Russia’s war in Ukraine, Poland finds itself in a particularly challenging situation: navigating through the energy trilemma of secure, affordable and sustainable energy which should support the transition of the energy system while enabling economic growth and competitiveness. Being cut off from Russian supplies (Poland and Bulgaria were among the first countries in the EU to which Russia cut off gas supplies in April 202219) had direct implications for Poland’s energy security. Gas supply disruption didn’t result in increased coal generation, although research shows20 that the search for alternative and sometimes uncertain fuel import, coupled with increased commodity prices, has translated into a record spending on energy materials (PLN 193 billion) in 2022 compared to 2021 (PLN 100 billion). On the quest to strengthen energy security, Poland has started to look into developing nuclear energy both through conventional nuclear power plant (NPP) and Small Modular Reactors (SMRs). Several countries in the region are already generating a substantial share of electricity from nuclear energy: Bulgaria (44%), Czechia (36%), Hungary (46%), Romania, (18%), Slovakia (54%), and Slovenia (37%). Based on Poland’s clean transition so far, four general observations can be made: Dominance of fossil fuels across all sectors means that further delays of energy transition should be avoided at all costs. This undertaking requires mobilisation of massive funds, however significant delays will likely make transition more costly. With observed success on solar PV deployment, it is crucial that onshore wind also gets sufficient support – CATF’s power system modelling21 indicates an important role that onshore wind can play in clean transition. Poland’s interest and potential to develop nuclear energy and first-mover CCS projects should be supported with enabling policy and regulatory environment. Our analysis also shows that limiting technology options significantly increases system costs. Assessment and planning for enabling energy infrastructure, such as transmission lines, carbon dioxide, and clean fuel pipelines, should be an integral part of Poland’s long-term energy transition. Opportunity for growth Pursuing both energy security and decarbonisation while maintaining competitiveness and growth will shape Europe’s future. In the face of geopolitical uncertainty and compound socioeconomic challenges, there needs to be steadfast support for a climate and energy strategy that is de-risked, long-term, and inclusive of a diverse set of options.22 Poland’s unique contribution, especially in terms of clean tech manufacturing capacity, should be thoroughly analysed and fully realised. This is especially important in light of the Net-Zero Industry Act23, which aims to boost Europe’s internal clean tech capacity. Being ahead of the curve by creating enabling policy and regulatory environment and, thus, high investor confidence, will be decisive. Despite turbulent geopolitical dynamics, Polish Economic Institute24 shows that for example in September 2023, Poland experienced only a slight decline in industrial production, decreasing by only 0.9%, contrasting with more significant drops in neighbouring countries. This resilience can be partly attributed to the post-COVID-19 expansion of Poland’s industry and subsequent nearshoring trend25. Industrial activity as of November 2023 was 20% higher than in January 2020. On the same note, Poland has significantly ramped up its lithium-ion battery production26 capacity in recent years, with exports in the sector climbing from PLN 1 billion (EUR 0.21 billion) in 2017 to PLN 38.6 billion (EUR 8.24 billion) in 2022. Some other major initiatives in the sector like LG Chem’s battery Gigafactory, as well as investments from Korean SK Nexilis and German Mercedes Benz gave additional boost to the industry. Poland needs to make up for years of underinvestment in its clean energy transition, and with critical climate targets looming on the horizon, it is important that this task is viewed as an enabler of economic growth rather than a destabiliser. Poland’s aspirations to remain an industrial leader of Central and Eastern Europe and, more importantly, to play a meaningful role in strengthening Europe’s clean tech capacity offers a momentum for transformation. There is a renewed sense of urgency and opportunity which should be a driving force for the Polish government in coming years. Where does public opinion stand? Meaningful public engagement is one of the key enablers for a successful energy transition, hence understanding where the public stands should be a standard practice while designing climate policies. To this end, CATF has conducted public polling in Poland and other European countries to understand the population’s opinion on different energy matters. In August 2023, CATF conducted public polling on awareness and perception of clean firm energy technologies27 (including CCS, superhot rock energy, advanced nuclear energy, and low-carbon hydrogen) across six different European countries, including Poland. The polling covered questions on the interest in climate news, awareness of clean energy technologies, and perceptions of clean energy technologies. Overall, the results demonstrate widespread public support for a range of clean firm energy sources and technologies in Poland and beyond. In Poland, superhot rock energy and advanced nuclear energy are well supported, with 66% and 63% of respondents showing support, respectively. Levels of rejection are some of the lowest out of the surveyed countries, with all technologies showing less than 10% rejection. Figure 2. Public support for clean technologies in Poland Question: “Based on what you’ve read, how in favour are you of [TECH] being rolled out across [COUNTRY]?”. Respondents had an 11-point scale to reply, ranging from 0 “ I am completely against it” to 10 “I am completely in favour of it”. The graph shows aggregated percentages for “Reject” (0-3), “Neutral” (4-6), and “Support” (7-10). These are some other technology-specific findings from Poland: Diving deeper into the reasons for supporting or rejecting advanced nuclear rollout, respondents who want less nuclear rollout mention safety and waste concerns (80% and 29%, respectively), followed by worry for costs (23%) and site location (23%). On the other hand, those who want more nuclear rollout mainly highlight that nuclear is a constant source of energy (75%) and a carbon-free technology (59%). 70% of respondents in Poland are in favor of government investments in SHR development. 17% need to know more before making an informed decision, 9% believe the private sector should be responsible for SHR investment and only 4% oppose investment in SHR. 95% of respondents in Poland believe CCS should be used, depending on some factors. A total of 23% believe CCS should always be utilised, 50% only if it’s the cheapest option available, 21% if it’s the only option available and only 5% think it should never be used. When asked about sectors in which low-carbon hydrogen should be used, responses were varied. In Poland, power generation, transportation and energy storage were commonly mentioned, but no specific sector garnered significantly higher support than others, with none surpassing the 50% threshold. This means that more techno-economic analysis and active public engagement are needed to identify and communicate where it makes the most economic and climate-beneficial sense to deploy hydrogen. In July 2022, CATF conducted public polling on knowledge about and attitudes towards methane pollution and the EU methane regulations 28in Poland, France, Germany and Italy. Overall, the results show the following: There is strong support (90% or higher) across respondents in all four countries for regulating methane emissions in the oil and gas industry by reducing leaks, establishing equipment standards, and applying regulatory measures to EU suppliers. (90% or higher) across respondents in all four countries by reducing leaks, establishing equipment standards, and applying regulatory measures to EU suppliers. There is high support for extending EU rules to regulate methane pollution to supplier countries , with 90% of respondents in Poland providing ‘strongly support’ or ‘support’ for an extension of EU rules. , with 90% of respondents in Poland providing ‘strongly support’ or ‘support’ for an extension of EU rules. A total of 66% of Polish respondents claimed that methane poses a major problem for the climate Figure 3. Support or opposition to regulations to reduce methane leaks Question: Would you support or oppose regulations to reduce methane leaks? SECTION 2 Path forward for Poland’s energy transition Looking at Poland’s transition path ahead, this section first explores what the options for its power system decarbonisation are and then delves into four principles that should be applied by the Polish government while developing the country’s climate and energy outlook. There are a number of different pathways that can enable Poland to achieve a decarbonised power system. CATF has commissioned a power system optimisation study to provide an in-depth perspective on probable transition pathways for Poland that can aid the newly formed government with an independent expert advice. The summary of the study, Decarbonising Poland’s Power System: A Scenario-Based Evaluation29, was published alongside this report and provides additional clarity on trade-offs in different techno-economic pathways through a 2050 horizon, as well as actionable policy advice. The results of the study, summarised in Figure 4, can help inform power system design strategies to enable Poland to transition to a competitive and fully decarbonised electricity grid by 2050. In addition to the economic aspects of these pathways, the study explored environmental ramifications, land requirements, and use of critical minerals to allow for further examination of overall sustainability and trade- offs in system design. Furthermore, the study evaluated the performance of the resulting electricity generation portfolios under thirty-five different historical weather years to ensure reliability. The input assumptions were designed to reflect Poland’s existing policies. The study approach was designed to achieve the following: Build a decarbonised Polish power system that meets power demand and capacity reserve requirements every hour of the year whilst ensuring profitability for the producers Evaluate decarbonised power systems based on their total system investment and operational costs and through comprehensive scenario-based electricity market modelling This study delivers a comprehensive perspective that includes estimates for necessary transmission, CCS and hydrogen infrastructure development to deliver on climate targets across a number of scenarios and sensitivities. These necessary infrastructure investments are crucial to understanding the full picture of the decarbonisation challenge and are often excluded in other studies available for the Polish context. Figure 4. Summary of key characteristics of main scenarios considered in the study The study suggests Poland to adopt a diverse, optionality-based decarbonisation strategy, including renewables, nuclear, storage, demand response, and biomass. It warns that restricting technology options, like excluding new nuclear or carbon capture enabled gas power plants, could significantly increase costs and triple the necessary energy infrastructure, such as transmission. Recommendations distilled from this study can be found in Section 3. Thematic deep-dive and policy recommendations of this report. Considering the importance of a wider solutions portfolio for Poland’s energy transition, the rest of the report provides a closer look at key principles for navigating such a transition and offers deeper analysis and recommendations of each proposed solution. Key principles of an options-based approach Technology optionality within Poland’s energy system Energy transition in Poland necessitates taking a systems-based approach to the challenge at hand and assessing all options that can bring Poland closer to its climate targets. Renewables will likely represent a large part of the emissions reduction towards net zero but cannot cover all the abatement needed. While these measures are necessary, they have limits in terms of deployment pace, land use, and application to decarbonise specific industries. Climate neutrality in Poland will require the availability and deployment of a wide range of technologies, ensuring sector-specific decarbonisation with appropriate tools for specific situations and challenges. Increased interest in diversifying Poland’s clean technology portfolio, including nuclear, carbon capture and storage, low-carbon hydrogen among others indicates that technology optionality can and should be an important pillar of the country’s energy transition. And there are already several positive developments that need to be further accelerated: renewables generated 26% of Poland’s electricity in 202330, up from 19.3% the previous year. There is a substantial offshore wind potential at the Baltic Sea, where work on Poland’s first offshore wind farm is set to begin and, once operational, is estimated to provide 3% of total electricity generation. On nuclear energy, Poland considers building both large-scale nuclear power plants, most notably in Lubiatowo-Kopalino31 in northern Poland, as well as several small modular reactors. While Poland doesn’t yet have a Carbon Management strategy, there has been an increased interest in CCS in recent months, like the Innovation Fund-supported project Go4ECOPlanet32 at the Lafarge cement plant in Kujawy, and the recent CO₂ storage project in Norway’s Arctic by the country’s utility giant Orlen, as well as the potential amendments to the Polish Geological and Mining Law, allowing for onshore CO₂ storage. Poland also has substantial CO₂ storage potential33, most of which is located onshore. However, lack of policy support and insufficient political recognition can considerably hinder further innovation in this critically important technology to decarbonise hard-to-abate sectors. Hydrogen is another critical lever in Poland’s energy transition. The country is currently the third biggest producer 34of hydrogen in the EU, with around 1.3 million tonnes produced every year – while it sounds compelling, this is primarily grey hydrogen, produced almost exclusively from carbon-intensive steam methane reforming. Much like its power sector, hydrogen production will need to undergo a thorough transformation both by installing CCS technology on the existing Steam Methane Reforming plants (blue hydrogen) and accelerating renewables deployment for green hydrogen production. In 2023 alone, the EU has earmarked EUR 158 million35 to partially replace grey hydrogen at the Gdansk petrochemicals facility with green hydrogen. There is more good news in the pipeline, however, much more deliberation and techno-economic analysis is needed to both create realistic assessments of developing the Polish hydrogen economy and to identify key sectors where limited hydrogen resources should be deployed without jeopardising energy security. Poland is at the pivotal moment of developing a broad portfolio of clean technologies, which comes at an important time with major geopolitical shifts and a new wave of industrial policies36, most notably the Inflation Reduction Act (IRA)37 in the Unites States and the Net-Zero Industry Act38 (NZIA) in the European Union. Increased focus on localising clean tech manufacturing across the full value chain along with diversifying strategic partnerships for critical raw materials is clearly visible. Industrial competitiveness and economic growth were also clear frontrunners in President von der Leyen’s 2023 State of the Union Address39. It is crucial for the Polish government to incentivise development and deployment of these clean technologies outlined above and beyond with tailored support mechanisms. To this end, CATF has undertaken a thorough assessment of what should be key pillars of Designing a business case for clean technology in Europe40. Based on lessons learned from the Inflation Reduction Act, but also its preceding legislations, like Energy Act of 2020 and Infrastructure Investment and Jobs Act of 2021, the report offers a refreshing view of how policy incentives should be designed to accelerate the development of clean tech from Research and Development (R&D) to early commercialisation and expansion. Figure 5. Taxonomy of instruments that can be used at the stages of technology to support scale-up and market take-up At this stage, there are several actions that Polish government can undertake: Support technology innovation and embrace an approach that maximises the number of pathways and solutions available. In addition to supporting the rapid scale-up of renewable energy, policymakers should support an expanded set of options that includes conventional and next- generation nuclear energy, carbon capture and storage, climate-beneficial zero-carbon fuels, and their enabling infrastructure. In addition to supporting the rapid scale-up of renewable energy, policymakers should support an expanded set of options that includes conventional and next- generation nuclear energy, carbon capture and storage, climate-beneficial zero-carbon fuels, and their enabling infrastructure. Clarify the current technology deployment policy funding landscape, assessing whether it is suitable to deliver deployment, and how it could potentially be improved and simplified. One of the key learnings from the Inflation Reduction Act is that a broad spectrum of available incentives should be applied to different stages of technology development. It is critical that research and development-focused grants are subsequently complemented with other tailored incentives to bridge the gap between R&D and technology expansion. assessing whether it is suitable to deliver deployment, and how it could potentially be improved and simplified. One of the key learnings from the Inflation Reduction Act is that a broad spectrum of available incentives should be applied to different stages of technology development. It is critical that research and development-focused grants are subsequently complemented with other tailored incentives to bridge the gap between R&D and technology expansion. Enable faster deployment through regulatory streamlining and faster permitting based on simple and clear criteria. Make information transparent and easily accessible on dedicated web platforms. based on simple and clear criteria. Make information transparent and easily accessible on dedicated web platforms. Address infrastructure needs with proactive planning and coordination. This helps surmount barriers standing in the way of building out shared energy infrastructure such as carbon dioxide and hydrogen transport and storage, transmission, interconnection, and others. 2. Energy Infrastructure and Long-Term planning Poland’s energy transition should be based on proactive and effective planning. The country’s past record shows that planning has been a somewhat overlooked area in energy policy. With pending revisions of the National Energy and Climate Plan (NECP) and Energy Policy of Poland until 2040 (PEP 2040), the Polish government should contemplate how to facilitate planning processes, including cross-ministerial coordination on key energy and climate topics. CATF’s report Bridging the Planning Gap: Transforming European NECPs to Deliver on Climate Targets41 looks at how the NECP can and should be used as an interim planning tool since “interim plans can break these longer-term goals into manageable pieces, delegate responsibility for discrete tasks over shorter timeframes, facilitate buy-in and engagement on near-term objectives, and allow for recalibration if and when wider contexts shift, or plans change”. This itself means strengthening institutional capacity to develop, implement and monitor climate and energy strategies backed up by evidence and techno-economic analysis. To this end, one of the viable proposals has been put forward by the Warsaw-based think-tank Instrat Foundation,42 to create an agency “ that would strengthen the analytical capabilities of the administration and drive the work on the energy strategy and monitor its implementation.”43 An integral aspect of long-term planning is developing an energy infrastructure strategy and roadmap, which needs to become a cornerstone of any decision pertaining to climate and energy plans. The sooner we can understand the size and infrastructure needs of a net-zero and energy secure future, the more efficient and less costly the transition can be. Policymakers should develop a comprehensive approach on infrastructure deployment, based on long-term planning and robust energy system models, with intermediate goals and contingency strategies. The success of Poland’s energy transformation will largely depend on the government’s ability to modernise Poland’s ageing electricity grid so it can accommodate electricity generated from weather-dependant renewables and baseload power sources. Additionally, as traditional coal regions located mostly in southern part of the county have been providing energy to the rest of the country, major offshore wind, hydrogen and nuclear projects located in northern Poland will change clean energy transmission routes dramatically, and infrastructure will need to adapt. Considering the importance of proactive planning for required energy infrastructure, CATF’s report Pledges to Plans: Principles & Components of Durable Energy Transitions44 provides helpful guidance to governments to successfully navigate to the desired end-state, i.e. achievement of climate targets through effective and proactive planning. Often overlooked, planning is a highly nuanced and integral part of energy policy. Our report concludes that within a triad of target-plan- incentivise45, governments in general have been more proactive on setting climate targets and implementing programs to fund or support decarbonisation efforts and slower to reform energy planning or develop comprehensive and forward-looking plans. Such a lacklustre approach towards planning can become a “valley of death” in the energy policy. To overcome this pitfall, it is critical that the government recognizes planning as a critical element of energy policy and invests in improving planning processes to ensure that deployment policies are both effective and durable. Effective planning should be proactive and risk-aware, cross-sectoral, co-created with all relevant stakeholders, comprehensive, transparent, scenario-based and should include systems-perspective, actionable roadmaps and real-life progress tracking. Policymakers should also incorporate opportunities to revise and amend plans to adapt to any economic, geopolitical, and social shifts on the pathway to net zero. Figure 6. Planning as critical step between targets and incentives Public Participation Considering the direct impact of climate and energy policies on society, proactive and meaningful public engagement is critical for effective policy planning and safeguarding democracy. To achieve both goals, early engagement of key stakeholders, widely promoted public surveys, and transparent updates on the key policy documents are essential. Given that short-to-long-term climate and energy policies touch on every aspect of people’s lives – from daily commutes to work to consumption habits – efficiently involving the public is imperative to democratically validate the country’s chosen trajectory, increase ownership and accountability, and thus improve the chances of success. In the Polish context three key topics are worth mentioning: Clean energy transformation will require profound changes in the way climate policy is designed, implemented and monitored. Just transition will continue to be a key pillar of the energy transition in Poland and wider CEE region. Poland should tap into its clean technology potential as an enabler of energy security, economic growth and industrial competitiveness. These points, coupled with soaring energy prices and increased cost of capital, mean that households and industrial players will be affected by the energy transition, which requires an early and proactive engagement with all relevant stakeholders. For instance, if Poland is to retain its role as the industrial leader of the region and reinvigorate its potential as a clean tech manufacturing hub, there needs to be a broad and inclusive dialogue with industry to better understand how their growth can be coupled with decarbonisation efforts especially considering the projected CO₂ prices within the EU Emissions Trading system. In the same way, the just transition – affecting more than 80,000 workers directly employed in coal and lignite sectors and the broader economies of those regions – requires participatory decision-making devoid of vested interests and based on an analysis of what brings most economic, climate and community benefits. To facilitate a wide-scale transformation, it is imperative to create space for meaningful public participation in a way where expertise and perspectives from a broad set of stakeholders help to inform key decisions. By involving stakeholders at the outset, planning challenges are tackled when drafting the key policy documents head-on, and a sense of shared ownership and accountability among all parties involved is fostered. Engaging stakeholders early in the process helps identify the viable and non-viable compromises, allowing for proactive management of political- economic challenges. This approach minimises the risk of implementation delays by vetoes later in the process. Ideally, such a process should also harness the expertise of stakeholders to supplement institutional capacity for execution. Stakeholders bring diverse skills and knowledge to the table, which should be leveraged not only to foster a breadth of perspectives but also to alleviate the personnel and capacity burdens faced by planning entities in the region. The scale of the transition to net zero will require thinking carefully about social fairness, workforce transition, and how to involve local communities and municipalities in decision-making. All of this is crucial for developing well-informed, comprehensive and bespoke sectoral and technology roadmaps reflecting industry and societal needs, and aligned with on the ground realities. Involving the public efficiently will also allow a broad range of stakeholders to ask hard questions to determine if current national energy and climate policies are fit for purpose. To this end, CATF has produced a comprehensive assessment46 how an effective multilevel governance platform can be set up within the context of National Energy and Climate Plans. With key policy documents to be revised, CATF recommends the Polish government to facilitate inclusion of stakeholders’ engagement in the NECP process based on the model outlined below. Figure 7. Climate and Energy Dialogue Platform Cross-regional and international cooperation Major geopolitical shifts triggered first by value chain disruptions caused by the COVID-19 pandemic, further exacerbated by Russia’s war in Ukraine, and subsequent realignment of international partnerships means that Poland and Central and Eastern Europe47 are recalibrating their positions. While countries in the region should not be subject to one size fits all approach due to their unique characteristics, there are several factors that converge their transition trajectories: Structural dependencies on Russian fossil fuels: in 2020, most of the countries in the region were more than 50% dependent on Russian gas, with Latvia at the highest (92%), followed by Bulgaria (79%), Slovakia (68%), Hungary (61%), Slovenia (60%), Czechia (55%) and Poland (50%) as well as ageing infrastructure that needs to be urgently repowered and repurposed. Dominance of coal in the energy mix of countries across the region, with a high number of just transition regions. Historically slower rate of renewables deployment 48 compared to the EU average. compared to the EU average. Renewed interest in clean technologies spanning from advanced nuclear to low carbon hydrogen to CCS, as well high uptake of heat pumps 49 especially in Poland. especially in Poland. Diversified portfolio of both domestic natural gas production (e.g. Romania’s Neptune Deep project), new pipe connections (e.g. Baltic pipe50) and LNG terminals, including Floating Storage Regasification Units (FSRU) like Klaipeda’s LNG terminal51 in Lithuania, Świnoujście LNG terminal in Poland among others. While natural gas is going to play an important role in CEE’s energy security in the near and medium-term future, it is critical to raise awareness and deploy strict regulations to reduce methane emissions52 in the gas sector (detailed recommendations on reduction methane emissions can be found in Section 3. Thematic Deep-dive and Policy Recommendations). Moreover, there needs to be a focus on supporting production of low-carbon hydrogen from natural gas with carbon capture and storage technology to meet high hydrogen demand in the region. This set of common challenges and opportunities means that there is room and urgency for closer coordination, especially on developing a regional value chain and enabling cross-border infrastructure. As an example, for carbon capture and storage, under the ‘Projects of Common Interest’ (PCI), a clear and increased focus on cross-border CO₂ transport and storage networks has emerged. The 6th PCI list53 published in late 2023, includes 14 CO₂ infrastructure projects – more than doubling the number in the previous list – and includes the ECO₂CEE project which plans to connect Polish industrial emitters with CO₂ storage sites in the North Sea. With PCI status, projects like ECO₂CEE will now be able to benefit from a number of advantages including streamlined permitting and eligibility for financial assistance under the Connecting Europe Facility (CEF) in the form of grants. The most recent round of funding from the CEF54 in late 2023 included just under €480 million in grants being awarded to four CO₂ transport and storage projects, out of a total of €594 million available, clearly showing the high level of ambition to deploy carbon capture and storage across the Union. Apart from infrastructure-related cooperation, there is an ample opportunity for cross-learning, especially on new and emerging technologies: The EU Commission’s recent announcement55 on the launch of the SMR Industry Alliance has been a result of months-long engagement from the countries in the region56, however, there is more to be done on leveraging demand aggregation and creating space for learning and expertise sharing. Another notable example is CCS4CEE57 – a cross-regional consortia for building momentum for the long-term CCS deployment in the region. The 3 Seas Hydrogen Council58 is another first- of-a-kind initiative which brings together countries in Central Europe and Baltic states. Cross-regional cooperation has always been an important component of regional development dynamics. In the light of existing compound challenges there is an urgent need to revive these partnerships and make them fit for purpose. This means developing a shared clean transition vision and refocusing on region’s added value both within Europe and through international fora, including transatlantic partnership. In the multipolar world, Poland needs to diversify and bolster strategic partnerships to avoid over-reliance on any single partner or supplier. Figure 8. Diagram of alliances and allied organisations59 SECTION 3