Stocks of key Polish energy companies listed on the Warsaw Stock Exchange tanked on December 3 after media reports that the government was no longer considering the option of taking over the companies’ coal assets.

The previous Law and Justice (PiS) government planned to spin off coal assets to a new entity, the National Energy Security Agency (NABE), which would secure their operation and maintenance before gradually retiring them in line with Poland’s overarching strategy to reduce coal’s share in electricity generation. 

Relieved from the burden of coal assets, the companies – PGE, Tauron, and Enea – would be better positioned to attract green financing and drive Poland’s energy transformation. Today, Poland’s energy generation sector remains dominated by coal and lignite, which make up over 60% of the country’s energy mix.

The current administration appears, however, to have abandoned the NABE plan in favour of leaving coal assets with the companies, devising separate transformation plans for each company, the newspaper Dziennik Gazeta Prawna reported.

The ruling coalition believes that state-controlled energy companies can secure financing for investments without offloading their coal assets to a separate entity, the newspaper  wrote, citing anonymous sources from the Civic Coalition, the main party of Poland’s coalition government.

The report led to a sell-off of energy stocks on the Warsaw Stock Exchange. PGE’s share price was down 6.8%, Tauron’s stock price declined 5.7% while Enea dropped 2.3%.

While the media reports remain unconfirmed, it appears that a full spin-off of coal assets is now unlikely. The government could go for gradual closure of less critical power plants, while providing support to coal operations deemed necessary to keep the country’s power system going.

With the burden of their coal assets, the energy companies could struggle to attract financing for their green transition.This scenario would be particularly challenging for PGE, as it could constrain the company’s ambitions in renewable energy and other investments, according to Puls Biznesu. Enea would also face an impact, while Tauron would be least affected.

Major investments in nuclear power and offshore wind are expected to reduce coal's share in Poland’s energy mix to below 20% in 2040 and thus bring down climate-harming emissions. Onshore wind and solar power installations are also expected to support energy transition.

Poland's government is wary of the costs of the bloc's climate policy – transitioning away from coal to low-carbon energy sources in particular – that the still coal-reliant country is going to incur. 

Those costs could exceed PLN500bn (€115.39bn) in "the coming years", Climate and Environment Minister Paulina Hennig-Kloska said in early 2024. 

Under the NABE scenario, Poland would only abandon coal in 2049. Experts say, however, that climate policy and market trends could actually move the date forward to the mid-2030s or sooner.