Poland: Focus on the energy crisis
Andrzej Tokaj
by Andrzej TokajAndrzej Tokaj is a Senior Partner and the Head of Real Estate at Penteris. His expertise and industry-related experience together with his dedication and engagement have built a powerful practice, and these founding principles continue to drive his team to fulfil client goals. Contact Andrzej.
Driving the crisis
The rising cost of commodities is the main driver behind the crisis which seems to be hitting energy-intensive companies the hardest but also greatly impacting other businesses. This is having a knock-effect on both food and energy prices which, in turn, is ramping up the operating costs of companies.
Of course, those enterprises, companies, and corporations that use the most energy as part of their operations have been the most affected. This includes businesses in the paper, fertilizer, and nitrogen compounds industries, as well as companies producing cast iron and iron alloys.
In the past, Poland benefitted from relatively low-priced energy supplies and was reluctant to take a greater effort or make investment commitments which could lead to the improvement of efficiency in energy production and consumption.
Cutting costs
Due to the now steep prices of energy, many production facilities have been forced to temporarily shut down. This includes Grupa Azoty, Poland’s chemical giant, which had to briefly suspend production in August 2022. Their production of melamine – a compound used in varnishes, paints, and adhesives within the automotive and textile industries – has yet to resume.
It is not only the large industrial powerhouses that are dealing with these problems. The energy crisis has also affected sectors not normally considered energy-intensive. This includes hotels and restaurants, and the entertainment and services sector. They have all been hit by rising energy costs which have only added to the struggles these smaller entities have experienced during and after the pandemic.
Protecting the future
In order to deal with this situation, Poland’s government has pushed through a handful of regulations to support citizens, vulnerable parties, and energy companies through the so-called Energy Shield, which is a system of compensation and supplements which, in the final analysis, equates to lower energy prices.
Together with Poland’s push for nuclear energy (highlighted by the news that US-based company Westinghouse will be supporting Poland’s nuclear programme), and the greater sense of urgency across the European continent for energy security, these initiatives in response to this crisis have set the scene for a more measured and practical approach to energy security in Poland and the EU.
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