Audit no. P/24/057/LKA
Yet in the course of this audit the European Commission completed the procedure related to passing the so-called Methane Regulation (Regulation (EU) 2024/1787 of the European Parliament and of the Council of 13 June 2024 on the reduction of methane emissions in the energy sector and the changing Regulation (EU) 2019/942). This Regulation is to protect the environment and improve its condition by reducing methane emissions related to the production and consumption of energy from fossil fuels. One of the tools to reduce the emissions are technologies of economic use of methane by coal companies. This way of cutting emissions is recommended in the Regulation itself.
The Polish law does not define methane emission limits related to coal mining in terms of cutting greenhouse gas emissions. Polish coal mines emit on average from 8 to 14 tons of methane per kiloton of extracted coal but this methane is not used for economic purposes. The original wording of the draft Methane Regulation, presented on 15 December 2021, provided for banning from 1 January 2027 the emission of methane into the atmosphere from coal mine ventilation shafts (except for coking coal mines), if the emission exceeded 0.5 ton of methane per kiloton of extracted coal. Though, as a result of negotiations, attended among others by representatives of Poland, final limits for methane emissions were established at the level of 5 tons of methane per 1 kiloton of extracted coal from 1 January 2027 and 3 tons of methane per 1 kiloton of extracted coal from 1 January 2031.
The existing methods of managing methane, which involve solely its intake using the methane drainage systems in the course of coal extraction, prove insufficient in the light of the Methane Regulation requirements. The absence of investments in technologies which facilitate capturing methane from the mine ventilation air may result in violating the Regulation provisions and pose the risk of imposing fines on coal companies. In line with the Methane Regulation, penalties will be set at a level that will effectively deprive entities responsible for methane emissions of financial benefits arising from the violations. Currently only 25% of the methane emissions is used for economic purposes. This indicates a large potential for its broader use.
Slow reduction in methane emission
In 2019–2023, the total emission of the coal mine methane went down. The percentage share of the emission into the atmosphere remained at a stable level, though. The total emission in that period exceeded 4 billion m³. The economic use of methane went up from 24% in 2019–2020 to 28% in 2023, pointing to progressive improvement in this area. At the same time, the methane content per unit mass of coal increases with the depth at which these coal seams are lying. Currently coal mining is carried out at the depth of 700-1100 metres. Also, coal is planned to be extracted at the levels of 1200–1250 metres. At these depths the methane content is higher than 8–10 m³ per coal ton. It means that in future the Polish coal mines – if the emission reduction does not speed up – will emit more methane. Therefore, the risk of not meeting the Methane Regulation objectives is growing.
Considering the realities of the Polish mining sector, the government negotiated the wording of the draft regulation. Poland pointed out that the rigorous emission limits are technically unfeasible within the deadlines set in the original version of the draft. The negotiations ended in positive changes for Poland related to raising the methane emission limits, postponing the deadlines for implementing the regulations, opportunity to average the emission for companies managing numerous coal mines, the mechanism of exchanging fines for fees.
Inconsistent management of methane emissions
As a result of split responsibilities of ministers and the absence of cooperation between them the effectiveness of using coal mine methane for economic purposes did not increase. The Ministry of Climate and Environment fulfilled the key role in setting up and implementing the energy policy but the Ministry of Industry took over competencies related to managing mineral seams, also including methane.
This division of responsibilities, combined with the involvement of many institutions and ministries in the strategy implementation (Polish Energy Policy 2040, National Energy and Climate Plan), resulted in difficulties in coordinating and ensuring coherence of activities related to the effective management of methane. The Ministry of Climate and Environment did not carry out any activities related to the economic use of methane from coal seams, considering, in the first place, the Ministry of State Assets and only later the Ministry of Industry to be competent in this matter. On the other hand, activities of the ministers responsible for managing mineral seams were mainly limited to monitoring the level of methane sourced from the drainage stations, without taking initiatives regarding the economic use of this gas. These ministries also failed to carry out tasks related to the use of coal mine methane specified in the energy and raw materials policy programmes. The Ministry of Climate and Environment did not take initiatives to develop technologies for the economic use of coal mine methane.
Insufficient support for companies
Since 2019, Polish extraction companies could apply for additional financing as part of the programme “Mitigating difficulties related to the extraction of minerals”, involving the reduction of methane emissions. Until the end of the audit only one beneficiary applied for a loan for nearly PLN 160 million in total. The low interest shows that the subsidy terms do not represent a sufficient incentive for companies to take benefit of the programme which reduces the effectiveness of efforts to reduce greenhouse gas emissions.
In June 2023, representatives of the Ministry of State Assets and the Ministry of Climate and Environment initiated works to support the mining sector in terms of managing methane and reducing its emissions. That initiative was a follow-up of talks between the Ministry of Climate and Environment and the European Commission on the Methane Regulation. In March 2024, the European Commission Directorate-General for Competition received an initial proposal of public aid, covering a system of incentives to reduce methane emissions. The European Commission initially accepted the Programme but it demanded specific information on technologies, the schedule, costs, financing sources and planned levels of the emission reduction. As part of the initiative a 5-year support programme worth PLN 2 billion was proposed, covering loans and subsidies to build the infrastructure to source and utilise methane in the extraction sector. As of the last day of the NIK audit the requested public aid was not reported for notification to the EU. According to NIK this aid is necessary and potentially beneficial, yet delayed.
The Minister of Climate and Environment announced a zero rate of the fee for coal methane in 2024. According to the Ministry, this decision was to encourage entrepreneurs to invest in technologies using the coal mine methane. NIK stands in a position that this incentive may be not very effective. In February 2022, the Minister of State Assets passed an ordinance specifying in detail the conditions of supporting three Polish coal mining companies. However, the investment outlays for developing technologies, also the ones reducing methane emissions, were excluded from eligible costs. According to NIK the lack of support for technologies reducing methane emissions exposes the companies to financial penalties under the Methane Regulation. The costs of these fines will be probably covered from the state budget as part of subsidies for reducing the production capacity. The Ministry of Industry did not conduct any analyses of legislative measures facilitating investments in technologies to reduce methane emissions. According to mining companies which provided their opinions to NIK in the course of this audit, the European Union Emissions Trading System represents a significant barrier for economic use of coal mine methane in Poland. Installations using biomass only are excluded from this system. This puts coal mine methane in a less favourable position, despite its potentially lower CO₂ emissions per energy unit compared to biomass. The combustion of methane emits approx. 202 g CO₂/kWh, which is a good result in terms of energy. Biomass, for comparison, emits 400–600 g CO₂/kWh, which results from its lower combustion efficiency and a higher content of carbon.
Recommendations
NIK recommends that the Minister of Industry (Minister of Energy) continue works on the notification of state aid under the Programme involving the system of incentives to reduce methane emissions, which constitutes state aid within the meaning of Article 107(3)(c) of the Treaty on the Functioning of the European Union and is subject to notification to the European Commission. The amount of aid measures for the Programme beneficiaries should be linked to the methane emission reduction schedule set out in the Methane Regulation. The programme should focus primarily on investments in mature technologies, i.e. solutions already in use and modernised, such as efficient methane drainage (CMM), cogeneration (CHP), methane drainage stations and gasometric systems. It is also possible to include in the programme immature technologies that are not yet used in the Polish mining industry, but have the potential to significantly reduce methane emissions. An example of such technology is the use of ventilation air methane (VAM). The Supreme Audit Office recognises the need to initiate a change in the law consisting in the exclusion of installations using coal mine methane with a total nominal thermal capacity exceeding 20 MW from the EU ETS system. The justification for this change is the relatively lower CO₂ emissions when burning methane compared to biomass.
