Interview | Laszlo Varro, Chief Economist, International Energy Agency (IEA)

23 January 2020

The International Energy Agency (IEA) is a Paris based, independent intergovernmental organization established in 1974 by 23 member of the Organization for Economic Cooperation and Development (OECD) in the wake of the oil crisis. It has in the meantime become a beacon of knowledge, data and analysis on energy markets worldwide and its annual World Energy Outlook is a widely anticipated across the field. Poland joined the IEA in 2008 and is an actively involved member.

 

Given the IEA’s overarching vision over the energy industry in Europe, what do you identify as the key trends dominating Central and Eastern Europe in recent years?

The past couple years were characterized by significant technological progress and cost declines of key renewable energy sources, in particular offshore wind for instance. It is a “learning by doing” strategy in which the industry has by now accrued significant experience in designing and building offshore wind turbines and lately the Baltics are showing lucrative offshore potential. This is also due to public perception – for some reason people have developed negative sentiments towards wind turbines, so onshore has seen harsher restrictions for which Poland’s 10H rule is a good example. Solar photovoltaics have also taken off all over Europe, and seen notable technological advances.

Another global trend with implications for CEE stems from natural gas, in particular due to the US shale gas revolution, which has been exceeding expectations. The US is now the largest gas producer in the world with a whopping two thirds of global production growth in the past decade, and 2019 broke the records in terms of investments poured into liquefied natural gas projects (LNG). 

 

While 10 years ago a diversified gas market in CEE seemed like a distant dream, it is now an undisputed reality that CEE will soon attain its most diversified, secular and non geopolitical gas market in history.

 

CEE countries, Poland included, have a strong relationship with North America and the latter’s evolution into a significant gas exporter has strong implications for CEE. But naturally the infrastructure has to rise to the situation and in this respect Poland plays a pivotal role with the Baltic LNG terminal, a project that proved to be a remarkable foresight. There is still work to be done, make no mistake, for instance for better interconnectivity. 

Going back to challenges currently faced by the wind industry here in Europe, how would you say other jurisdiction compare with Poland in terms of support for both onshore and offshore?

Onshore has been suffering across the board, even in the UK the focus has been primarily on offshore in the past couple years because it became increasingly difficult to develop turbines onshore. Poland is not an outlier in encountering social acceptance challenges for onshore wind development. Offshore has a higher utilization rate and improved cost efficiency over longer periods of time. Poland has fantastic potential for offshore wind and we are optimistic about its evolution.

A few years ago you launched your Technology Collaboration Programs at the IEA, could you introduce their mission and way of operating?

Indeed we created these programs many years ago and under Dr. Birol’s leadership. In recent times we have been growing them to become a hub for green energy technology, bringing a new life to the programs.

 

The IEA Technology Collaboration Program supports the work of 38 independent, international groups of experts and brings together like minded individuals in the fight towards energy sustainability. We look at several technologies from electric car batteries to efficient air conditioners, all necessary for the energy transition.

The majority are unfortunately not on track. This is why we have been very outspoken about urgency in improving the clean energy progress through technology. 

 

This is a global phenomenon that we should collectively be prioritizing – what would you say are the key impediments to a swifter clean energy transition?

Overall there is under investment in R&D and for many important technologies there is a lack in supportive national policies to drive change. There is not much point in having prototypes developed in the laboratory if they are afterwards not deployed at a national or commercial scale somehow. Solar panels for example, were invented in 1957 and for many years they were solely used in government funded space  research. Then, countries like Germany, Japan and the US invested in their deployment at a wider scale, propelling solar to the levels it reached today. 

Poland has made great strides in reducing its coal dependency from 99% in the early 1990s to roughly 80% currently – what is your perspective on what constitutes a just energy transition going forward?

The Polish government has a legitimate interest in handling a just transition and in my experience no one questions the need for measures to safeguard energy security during the transition. While many green technologies have been deployed in recent years, the question that remains is how to manage the transition while not neglecting social issues.

 

One indisputable fact is that is Poland currently still needs coal in order to keep the lights on.

 

The majority of coal fired power plants in Poland are old and soon will reach the end of their life. Poland has a plan to further diversify into gas, renewables and nuclear. One additional solution lies in carbon capture and storage technologies, which can be most effective in reducing future emissions and I believe it can play an important role in countries with large coal reserves.  

What has been IEA's experience in collaborating with Poland and what are your joint targets moving forward?

Poland has been a very proactive and helpful member of the IEA since joining over a decade ago. In December 2019 Poland chaired the IEA’s Ministerial meeting and all participants were impressed by the leadership, commitment and effective diplomacy that Poland displayed. We have an ambitious program to modernize energy systems in Ukraine, the Caucasus and Poland is one of the key countries supporting this work. Personally I have had an exceptionally positive experience in working side by side with Polish representatives. 

 

 

 

 

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