Coal Demand and Environmental Regulations: A Case Study of the Polish Power Sector

Abstract

The impact of environmental regulations implemented in the power industry that affect the consumption of solid fuels is of key importance to coal-based power generation systems, such as that in Poland. In this context, the main purpose of the paper was to determine the future demand for hard coal and brown coal in the Polish power sector by 2050 with reference to the environmental regulations implemented in the power sector. To achieve these goals, a mathematical model was developed using the linear programming approach, which reflected the key relationships between the hard and brown coal mining sector and the power sector in the context of the environmental regulations discussed. The environmental regulations selected had a great influence on the future demand for hard and brown coal in the power generation sector. The scope of this influence depended on particular regulations. The prices of CO2 emission allowances and stricter emissions standards stemming from the Industrial Emissions Directive and the BAT (Best Available Techniques) conclusions had the largest influence on the reduction of hard coal demand. In the case of brown coal, no new power generating units would be deployed; hence, brown coal consumption would drop practically to zero in 2050 under all the scenarios considered.