Given continued reliance on coal, the transition to an economy that produces net zero emissions by 2050 requires stepping up the implementation of policies as outlined in the draft National Energy and Climate Plan, strengthening price incentives, and a range of supporting measures. While decarbonisation of the electricity production is ongoing, it could happen faster if infrastructure capacity development and shortening of permitting times for renewables is accelerated and a more ambitious phase out of coal is adopted to send clear signals for long-term investment. In the transport sector, where emissions have doubled in the past thirty years, comprehensive motor vehicle taxation to strengthen price signal should be accompanied by sustained increases in fuel taxation, and continued investment in public transport. Support to workers and regions negatively impacted by reduced reliance on coal is available and the country is benefitting from investments in battery production. As shown by recent floods, Poland is exposed to extreme weather events that will become more frequent as temperatures increase. There is scope to strengthen the coordination of adaptation policies and insurance arrangements.
OECD Economic Surveys: Poland 2025
Abstract
Poland remains the tenth largest emitter of greenhouse gases (GHG) relative to GDP in the OECD, although progress has been made in reducing overall emissions with the level falling by 15% between 1990 and 2021(Figure 3.1). Despite policy efforts, Poland is likely to fall short of the EU’s target of a 55% emissions decrease by 2030 compared to 1990 levels as emissions were lower by 23% in 2022 and current policies are unlikely to deliver on the EU 2050 target of net zero (World Bank, 2024). A draft update of National Energy and Climate Plan until 2030 was published in November 2024 and is undergoing a revision following public consultation (Ministry of Climate and Environment, 2024). The plan is welcome as it sets out more ambitious policies to achieve climate goals and its implementation will be key. Poland faces significant challenges due to its historical dependency on coal and energy investment needs but is also one of Europe’s largest producers of lithium batteries and electric buses.
Note: Indirect CO2 emissions are excluded. CEE refers to the average of Czechia, Hungary and the Slovak Republic.
Source: OECD Emissions Ddatabase.
Despite reaching a historic high of 30% of energy from renewables last year, the economy remains carbon-intensive due to continued reliance on coal and the role of the cement, metals, fertilisers and refined petroleum industries that are responsible for a significant share of emissions (Instrat Foundation, 2023). The cost of air pollution, approximated by the cost of morbidity and mortality, is among the highest in the OECD (Chapter 2). Nuclear power, planned to enter service in 2035, will replace some of the emissions coming from electricity generation, which is currently the largest contributor. However, emission reductions in other sectors have been limited compared to the EU average and regional peers, and transport emissions have almost doubled since 2005 (Forum Energii, 2024) (Figure 3.1).
Although Poland’s energy import dependence is lower than that of many other OECD countries, around 40% of energy consumed comes from sources abroad and this share has been increasing in recent years (Forum Energii, 2024). Imports of Russian gas were replaced by those from neighbouring countries already in 2023, with an LNG terminal and new connectors installed. Crude oil accounts for the highest share of energy imports, followed by gas and coal. Energy security has been prominent on the political agenda for some time and one of the overarching goals of the updated draft National Energy and Climate strategy. The move to renewables and nuclear energy will reduce dependence on imports. Ensuring energy security has to be balanced with continued reduction on domestically produced coal.
About half of Poland’s emissions are covered by the European Emissions Trading Scheme (ETS), and this share will increase in a few years due to the forthcoming inclusion of maritime transport, fuels for buildings and road transport under EU-ETS2 in 2027. Domestic policies need to further facilitate the green transition, including strengthening domestic price signals, implementing supporting measures and compensating low-income households and coal-producing regions. Given the long-term and far-reaching impact of the transition, building political consensus and ensuring clarity on transition milestones will be essential and can help to channel much needed private sector investment. The current government is revising key strategic documents (National Climate and Energy Plan until 2030, Energy Strategy and Long-term Energy Strategy), but reaching an agreement across political parties and main stakeholders can be difficult. Establishing a Climate Council, as for instance in France, Germany or Sweden, that would gather the main stakeholders, could help in consensus building, gaining stakeholder support and build society-wide understanding of issues at hand. Including decarbonisation targets in legislation, as is the case in Germany, Denmark or the United Kingdom, should be also considered.
The largest share of emissions, more than 40%, comes from the energy sector (Figure 3.1). Endowed with important deposits, Poland has long relied on coal as its primary energy source and currently over 80% of primary energy originates from fossil fuels. With the importance of coal decreasing since 1995, 60% of electricity was produced using coal in 2023 (Forum Energii, 2024). In addition to electricity generation, coal is still heavily used for individual and district residential heating, contributing to poor air quality and reducing the quality of life. The share of coal in electricity generation is expected to fall to 22.5% by 2030, 8.5% in 2025 and close to 1.3 % in 2040. The authorities have committed to closing hard coal mines by 2049, but no phase-out of lignite coal - more CO2 intensive - is planned. Some OECD countries have committed to a full phase out of coal, including Canada and Germany.
Transition to net zero emissions will double the demand for electricity according to official estimates. Nuclear energy, a cornerstone of Poland’s net-zero transition plans, is expected to come on stream in the next decade. Large-scale projects, as planned by the authorities, should provide around 6-9 GW. According to a governmental resolution adopted in 2022, the first large scale nuclear power plant will be located in a coastal site in Lubiatowo-Kopalino, with the first reactor due to come on stream in 2036. A second nuclear power plant is also planned. In addition, private sector is looking into feasibility of nuclear power. A recent international review acknowledged the progress made by the authorities in development of the national nuclear power programme, including in developing the necessary infrastructure (International Atomic Energy Agency, 2024). Compared to renewable energy sources that produce electricity in an intermittent way, nuclear electricity production is more stable over time while also being low carbon, although there are environmental concerns related to the storage of waste and low-probability, high-impact negative risks. It is important to underpin the nuclear projects by comprehensive cost-benefit analysis. Given the size of the planned nuclear investment and its key role in decreasing reaching net zero, any potential delays will have an impact on the decarbonisation and cost overruns should be managed carefully. Energy storage is also expected to play an important role from the next decade onwards (Ministry of Climate and Environment, 2024).
Renewable energy in electricity production has nearly doubled over the past decade but from a low base (Figure 3.2). The overall share of renewables in primary energy consumed was 13% in 2022 (Forum Energii, 2024). Despite the recent strong uptake of photovoltaics in both households and industry, solar, wind and heat pumps accounted for only 3% of primary energy consumption in 2022 and two-thirds of the renewable energy was biomass, mainly wood (Forum Energii, 2024). An update of the National Energy and Climate Plan has raised the ambition and foresees 70% of electricity generation from renewables in 2040, about two-thirds in heating and cooling and over 40% in the industry. The EU goal of 29% of renewables in transport seems difficult to achieve in the Polish context, so a target of 18% in 2030 has been set (Ministry of Climate and Environment, 2024) (Table 3.1).
Such plans require strengthening of distribution, transmission and port infrastructures, as well as a reduction in permitting times. Currently, most of the coal-fired power generation is in the south and centre of the country, with corresponding transmission capacity, while for example planned offshore capacities will be located in the north, in the Baltic Sea. Recent updates of development plans by the transmission and distribution operators as well as amendments to the law on investments into transmission networks are welcome. The plan to increase grid investments by a factor of six in 2026-30 compared to 2020-25 appears challenging (ING, 2024).
Source: OECD (2024), Green Growth Indicators (database).
Note: Targets are preliminary as the National Energy and Climate Plan is under review following public consultation.
Source: Eurostat, Ministry of Climate and Environment (2021; 2024).
Wind power, currently mainly from onshore installations, accounts for around 14% of electricity generation. Poland plans to increase offshore wind generation significantly, but this faces planning bottlenecks. Offshore wind generation is expected to partly replace retiring coal-fired power plants (Forum Energii, 2024). To date, 9.3 GW of projects are in the pipeline, which is around half of targeted capacity. These projects are expected to become operational in 2026 with further capacity auctions scheduled for 2025 and 2027. The industry has called for further clarity on offshore development, including an update of strategic documents, such as the Spatial Development Plan for Maritime Areas, as well as the necessary port and grid infrastructure (Forum Energii, 2024b, TPA and Baker Tilly, 2023). Recently published ‘designated areas’ show a potential of 15.3 GW, while the estimated potential of the Polish Baltic coast is over 30 GW (Supreme Audit Office, 2019).
An amendment of the legislation on wind energy in 2023 reduced the distance requirements for onshore installations from “no less than 10 times the turbine height” to 700 metres from residential or mixed-use buildings. The authorities are working on reducing this distance further to 500 metres, while respecting regulations on noise levels and safety distances from existing electricity grids, which will further increase the potential for new onshore sites. Changes to planning and zoning regulations are in the pipeline, in particular the introduction of a ‘general zoning plan’ in municipalities, which would provide more transparency on development intentions and allow a simplified procedure for the adoption of zoning plans.
Poland is close to the EU target of authorising new solar installations within 2 years, but in 2021 approvals for onshore wind projects took on average 7.5 years (Borowiecki et al, 2023). The legislation for offshore wind farms has been amended in 2021, but no project has been completed yet. The EU target for approvals of offshore wind installation is 3 years. Poland, like other EU countries, plans to establish a single point of contact to coordinate and facilitate permitting. Shortening the permitting times may require more resources for permitting authorities, as has been the case in Germany or Sweden (Borowiecki et al, 2023). The authorities should also explore possibilities to simplify the permitting procedure.
Large-scale producers of renewable energy compete in auctions, where the state provides a variable premium over the market price based on a contract for difference for a period of 15 years or until 2047, and the electricity price is indexed to the inflation rate, regardless of the technology. Public support for smaller-scale renewable production consists of an installation subsidy and net billing, where the energy supplied is valued at the current market price. The authorities are planning to increase the price of the energy supplied by 23% of the current market price and allow customers to use credit generated by feeding into the grid to pay for electricity bills. There is an installation subsidy of up to 50% of the eligible costs or EUR 660 per household. Similar installation support is available for farmers, who can receive grants of up to EUR 5 500 per renewable installation. Businesses are also eligible for installation grants. In addition, the production of renewable energy is exempt from the excise duty and small-scale installations of below 5 MW pay reduced grid connection charges, while micro-installations of 50 kW or less are connected free of charge. Electricity suppliers are obliged to purchase so-called green certificates, the amount of which is set annually by the energy regulator, although the level has remained more or less constant in recent years as the programme is being phased out (TPA Poland and Baker Tilly, 2023). Such policies seem sufficient to attract investments into renewables, conditional on available transmission capacity and streamlining of permitting times.
While a large part of industry is covered by the EU-ETS, domestic policy targets and price signals for heavy industry and decarbonisation incentives for smaller polluters have been weaker (Figure 3.3). Steel, cement, and fertiliser production, highly energy-intensive industries, directly account for around 2.5% of gross value added and for around 2% of employment. Steel production has so far benefited from a surplus of allocated emission allowances, but it has not been the case for the cement and chemical industries (Laskowski and Giers, 2023). In these heavy industries, increasing energy efficiency and replacing fossil fuels with less carbon intensive substitutes will have to be complemented by other technologies, such as carbon capture and storage. In addition, the new National Energy and Climate Plan foresees development of green hydrogen production, as well as development of carbon sequestration technologies (Ministry of Climate and Environment, 2024).
The phasing out of free allowances by 2034 will affect all these industries, with EU-ETS prices included. Companies that will continue to benefit from free allocations will need to meet conditionality requirements, such as energy audits and carbon neutrality plans (Borowiecki et al, 2023). Industry also benefits from excise duty exemptions on certain uses of gas and coal, such as for electricity generation, mining and metallurgical processing. Smaller polluters face a national GHG fee, considerably lower than the implied the EU-ETS price of carbon. In the medium term, this fee should be increased towards the EU-ETS price. The introduction of the EU-ETS2 scheme from 2027 will expand carbon pricing to other sectors including housing, road transport and additional sectors. Raising the national carbon fee in 2026 for ETS2 sectors towards the likely level to prevail once it is implemented would help to smooth the transition. Setting out a clear long-term path of carbon pricing would help incentivise smaller industrial polluters to invest in decarbonising technologies.
The authorities should consider a long-term approach to carbon pricing. The Netherlands and the United Kingdom have set a carbon-price floor, while other OECD countries publish an expected carbon price path to provide clear and credible incentives to companies. Furthermore, implementation of energy-audit measures with a short pay back should be made compulsory. Businesses can be awarded tradable ‘white’ certificates for efficiency improvements. However, in 2023, only over a thousand of such certificates were awarded, trading at an average of EUR 400/tonne. The authorities are currently reviewing the functioning of the certificates and exploring possibilities to improve the system, including its digitalisation, which is welcome.
The draft National Climate and Energy Plan foresees a reduction of emissions from industry by 20% between 2018-40. Three programs for the industry are in place focusing on i) adoption of renewables, ii) improving energy efficiency iii) adoption of cogeneration. Industry estimates based on past investment show that private funding should be sufficient for decarbonisation efforts in the case of the steel and chemical sectors, while public funding may be needed in the cement industry (Laskowski and Giers, 2023). Public consultation with key stakeholders has been irregular and targets often piecemeal and inadequate, while monitoring and implementation of past policy documents have been limited. The revised Climate Strategy contains high-level targets but should be developed into specific industry plans. The EU-ETS requires that at least half of emissions trading revenues be used for direct decarbonisation measures. The Polish Recovery and Resilience Plan earmarked around 1% of its total expenditure for industry.
Note: In Panel A, OECD is an unweighted average.
Source: OECD Pricing Greenhouse Gas Emissions 2024.
Decarbonising the transport sector, which is responsible for 20% of GHG emissions, is challenging due to growing consumer demand. Emissions have doubled since 1990 and are projected to increase further (Juszczak and Rabiega, 2022). With nearly 30 million registered cars for the population of 36.7 million, Poland is one of the most motorised EU countries and tends to import older and inefficient cars. The truck fleet is significant, accounting for a fifth of EU international freight transport, comparable to Germany (Eurostat, 2024).
Current car and fuel taxation lags behind OECD best practices. There is scope to increase fuel excise taxes, which are low by European standards although similar to some neighbouring countries (Figure 3.4). Duty on diesel should at least be aligned to the duty on petrol, if not higher, to reflect the emissions content. The authorities are working on a revision of the registration fee, to take effect at the end of 2024, and a new annual vehicle tax is planned for 2026 based on the ‘polluter-pays’ principle but will apply only to company cars. This needs to be broadened to include all cars. A targeted car scrappage scheme for older vehicles that would incentivise drivers to upgrade to more fuel-efficient vehicles should be also considered. It could be subsidised by the newly generated vehicle tax revenues and focus on low-income households. Experience from the US, Germany and France shows that such schemes, if well-designed and well-targeted, can effectively lower emissions (OECD/ITF, 2011). As the car fleet renews to low emissions vehicles, revenues from such taxation will eventually fall and the authorities will have to consider other means, such as distance-based charging. Public transport is expanding across several cities, and investment into upgrading its quality is also taking place. Combined with increasing carbon prices, investment and efforts to boost the attractiveness of public transport should continue, in particular in urban areas.
2024
Source: Tax Foundation.
The number of electric vehicles (EVs) remain limited, mainly due to low affordability. There were around 70 000 EVs in June 2024, a 54% increase compared to a year earlier, but accounting for only 4% of new passenger cars sold (European Commission, 2024). Overall, EVs made up only 0.2% of all passenger cars in 2023, compared to an average of 1.7% in the EU. The development of the second-hand EV market is likely to be key to local demand. Public support schemes for EV purchases include company cars and public procurement. EU-wide plans for charging infrastructure along the main roads and motorways every 60 kilometres, hydrogen refuelling stations every 200 kilometres by 2030, and the planned ban on the sale of combustion engines from 2035 should help to increase the uptake of electric and zero emission vehicles. The establishment of low emission zones, such as those in Warsaw and Krakow, in cities with more than 100 000 inhabitants where air pollution exceeds limits, should also help.
Only about 20% of freight was transported by rail in 2020. Over 60% of the rail network is electrified and high-speed rail connections between major cities and the capital have been announced. The expansion of the EU-ETS will include fuels used in maritime transport and free emission allowances in the aviation sector will be phased out by 2026. Maritime and aviation fuels will be subject to higher energy taxes in 2033. Taxing aviation fuels on domestic flights, before the EU-wide regulation applies, should be considered (Teuch and Ribanski, 2021). Ensuring efficient and speedy investment in public transport will be an important incentive for shifting passenger transport as disincentives for personal use of cars increase.
Carbon pricing in the buildings sector is low (Hoeller et al, 2023). The CO2 emission intensity of buildings in Poland is high due to coal-fired heating, which remains important for both individual and district heating, accounting for around 10% of GHG emissions (IEA, 2022) (Figure 3.5). The energy intensity of the residential sector has decreased only modestly over past two decades (Hoeller et al, 2023). Moreover, residential heating is the main source of particulate air pollution. Around 60% of residential buildings rely on coal or biomass boilers, 35% on district heating systems, and 5% on heat pumps. Most of the housing stock consists of single-family houses, while multi-family houses account for around 8% of housing stock, but the share of the population is split more equally across housing types (Statistics Poland, 2024). About 40% of multi-family houses need retrofitting and the share is even higher single-family houses. A public strategy for renovations targets 3.8% of buildings per year undergoing thermal renovations. In 2022, a number of significant measures were introduced to mitigate inflated energy prices, such as a freeze of natural gas prices for households, subsidies for households using coal and fuel for heating, lower VAT for electricity and heat. While they protected households from the energy price shock and most of them are now being scaled back, it is important that consumer prices reflect market conditions and externalities.
Source: OECD Greenhouse Gas Emissions database; and IEA World Energy Balance database.
Measures are being taken to raise the cost of housing-related emissions and to support the retrofitting of heating systems and increase energy efficiency. Based on EU policy, fossil fuels in the residential sector should be phased out by 2040 and existing buildings should meet zero-emissions standards by 2050 (European Commission, 2024). The expansion of the EU-ETS 2 to heating fuels in 2027 will increase the cost of carbon-based energy. More than EUR 11 billion of EU funding is available over the next 7 years for thermal modernisation and protection of people at risk of energy poverty.
Given the scale of the challenge and difficulties for many households in changing their heating systems and thermal renovations, public intervention is supporting such investments. Around EUR 22 billion of support is available in the main public support programme for single family dwellings, the Clean Air Programme, over a span of 10 years (equivalent to around 0.3% of GDP each year) (Table 3.2). This programme offers pre-financing for low-income households, who represent over 20% of beneficiaries (Sokolowski, 2023). The interest in the programme has increased in recent years, although a generally low level of savings among households has been holding up the pace of renovations. Some commercial banks take part in the programme, and the scale of their involvement could be expanded further. It has supported almost 700 000 projects with an investment of PLN 18 bn (around 0.5% of GDP), and funding applications are for the double of that amount. The main focus has been on replacing polluting sources of energy, including replacing coal-based heaters with gas, popular among many households. In 2023, around 40% of the applications included a comprehensive retrofit that leads to significant energy savings. Evaluations of the programme point to a considerable administrative burden in the application process (World Bank and National Fund for Environmental Protection and Water Management, 2024). Single-family house owners benefit from tax-base deductions of up to PLN 53 000/EUR 11 200 for the costs of thermal renovations. The tax incentive could be made conditional on achieving a certain level of energy standards and extended to other forms of ownership.
Source: Sokolowski (2023), Ministry of Development and Technology.
There seems to be a lack of information on who lives in the least efficient housing, identified at around 900 000 dwellings, which complicates estimates of the cost of the investment needed and the design of adequate incentives for targeting these households (Forum Energii, 2024). Only the Clean Air programme allows pre-financing, which is key for cash-constrained low-income households. Another public programme, destined for urban areas with high pollution levels, is implemented in cooperation with local municipalities. With one of the largest district heating capacities in the region and around three quarters of the facilities still using coal, regulatory obstacles hindering the decarbonisation of this district heating should be reduced (Solarthemalworld, 2023).
The pace of thermal renovation in multi-family dwellings has been modest. Public support programmes has been in place since 1998 and tax incentives were available during 1992-2005. Having undergone renovations in the past, these do not necessarily adhere to high thermal standards applicable today. In 2023, over three thousand applications were awarded public support, and overall more than 50 000 projects have been approved, corresponding to around 2 million dwellings. A burdensome application process is potentially slowing down the take up of the public support and should be revised, although in recent months the authorities have experienced a promising pickup in demand (Forum Energii, 2024).
The private rental market, where a problem of split incentives between landlords and renters often results in underinvestment in energy efficiency, is relatively small in Poland, with around a million of housing units and majority of them in housing cooperatives. Several international studies point to lack of information among both renters and homeowners, as a reason for overestimating energy performance (de Mello, 2023). As of last year, the EU’s requirement for energy performance certificates applies to new construction and buildings that are subject to a sale or lease. Poland could go further in its efforts to retrofit the building and housing stock by tightening the conditions for renting based on energy efficiency, extending energy certification to all buildings and introducing compulsory life-cycle carbon reporting in the real estate sector. The Netherlands applies energy performance certification to all properties, thereby increasing awareness of the potential for economic benefits of retrofitting across all tenure types. France is gradually tightening the energy efficiency standards for rental dwellings, requiring a minimum category of D (consumption of up to 250 kWh per m2) by 2034.
Climate change is increasing the frequency of extreme weather events in Poland, such as floods, prolonged droughts, and major storms (Figure 3.6). In September 2024 floods affected the south of Poland and resulted in several deaths and considerable damage to property. Heavy rain and flooding in 2020 affected one of the country’s coal storage facilities, leading to an interruption of power generation, while a heatwave in 2015 forced the country’s transmission system operator to restrict industrial electricity use (IEA, 2024). The average temperature increase in Poland has outpaced the OECD average and many European countries, and over 15% of workers reported heat-related discomfort. The temperatures are projected to continue to rise throughout this century, with the number of days above 25 degrees increasing from 29 in the last decade to 52 days in 2070-29 (IEA, 2022). Extreme rainfall (over 50 mm per day) has become more frequent. Major storms with very strong winds pose a threat to overhead power lines, which still dominate electricity distribution (IEA, 2022). Temperature increases have been more pronounced in the eastern and western parts of the country than in the centre, while flooding has mainly affected the south. In the north, rising sea levels will increase flooding risks on the coast.
Population exposed to river flooding (2020)
Source: OECD International Programme for Action on Climate (IPAC) Dashboard (https://www.oecd.org/climate-action/ipac/); and Maes, M. J. A., et al. (2022), "Monitoring exposure to climate-related hazards: Indicator methodology and key results".
Adaptation efforts are shared across different levels of government according to their respective sectoral responsibilities and geographical boundaries. While awareness and planning has increased in the largest cities, it is still lagging in rural areas. More than 130 cities (covering 36% of the population and more than a half of the urban population) have reviewed key climate-related challenges and have adaptation plans in place. A further 50 cities are currently working on adaptation plans covering an additional 6% of population. Other policy tools include increasing awareness of ‘blue and green’ infrastructure, such as the use of natural features in urban environments, awareness raising campaigns and data collection on the achievement of adaptation goals by cities. So far, most of the funding for the development of adaptation policies and programmes has come from EU funds which, with its 7-year funding horizon, allows for medium-term planning. Stronger coordination and monitoring could strengthen climate adaptation policies. An update of the National Adaptation Strategy, including key performance indicators and timelines to allow quantifiable measurements of overall performance, can help to improve consistency across sectoral adaptation policies. Enforcing restrictions on the construction of dwellings in flood prone areas, and updating these regularly, should be also high on the policy agenda.
Expanding insurance protection against extreme weather events climate can help manage the economic cost of climate change. In Poland, only 7% of climate-related disaster losses were insured during 1980-2022 (EEA, 2023). Mandating more comprehensive private insurance for natural disasters should be envisaged, possibly with some state backing for catastrophic events. Climate-related risks could be added to mandatory certification of buildings, as is the case in Germany. Switzerland mandates building insurance against natural catastrophes in majority of its cantons, which either private or public insurers provide. In France, the CATNAT insurance scheme mandates a premium at a flat rate for all property and motor vehicle insurance policies to insure against natural disasters (OECD/The World Bank, 2019). Subsidising insurance for vulnerable households could address potential concerns about housing affordability (OECD, 2021).
Some 12% of workers in Poland are employed in emissions-intensive jobs, the highest share among OECD countries, although this estimate excludes agriculture with around 10% of employment in Poland (OECD, 2024) (Figure 3.7). Projections based on the OECD ENV-Linkages Model show that most high-emission industries are expected to see noticeable declines in employment before 2030 because of the implementation of climate-mitigation measures in line with the EU emission reduction targets (Fit-for-55) (Borgonovi et al, 2023). Many of these job losses are concentrated around mining areas and where fossil-fuel related jobs play a major role in the local economy. Moreover, past evidence shows that workers from the emissions-intensive industries often change jobs into similarly emissions-intensive occupations. Currently, much of the green transition planning is driven at the regional level, and inclusion of social partners has been ensured. Nevertheless, certain tripartite agreements have not been adhered to and concerns about sustainability of others have been raised (Forum Energii, 2024; ESEC, 2023). A long-term strategy based on the local economic potential, its comparative advantages and encompassing societal and cultural challenges, has been absent. Furthermore, local stakeholders point out the need for campaigns raising awareness of the impacts of energy transition, increasing people’s willingness to change and availability of relevant reskilling activities backed up by an analysis of supply and demand that goes beyond the current favourable labour market trends (ESEC, 2023).
Share of employment and GHG emissions in high-emission industries (2019)
Note: *Data refer to 2016 and to CO2 emissions for Mexico and the United States. Average across 26 OECD countries shown. Agriculture is excluded.
Source: OECD National Accounts and Eurostat Air Emissions Accounts.
The coal mining industry has undergone a major restructuring in the past and a large share of its workers is close to retirement (OECD, 2023). Nevertheless, other industries will be also affected. The current tight labour market, combined with a declining size of the workforce due to population ageing, should help to facilitate the transition. Jobs in less emissions-intensive sectors tend to be located elsewhere and labour mobility has been low, but such data may be distorted in the past by a relatively high tendency of workers to emigrate. Policies supporting job reallocations, including affordability of housing and upskilling will be important. Adult participation in lifelong learning remains moderate, while occupational barriers in services remain high (Chapter 3).
Mitigating measures for low-income and rural households that spend most of their income on goods and services with a large carbon footprint are needed (OECD, 2024). In Poland, poor households spent more than one fifth of their income on energy and around 14% are affected by energy poverty (Figure 3.8, A). The burden of increased carbon pricing during the past decade has been between 1.8% for the highest income decile to almost 5% in the lowest income decile (Figure 3.8, B). While energy consumption is a key driver of household emissions, households’ carbon footprint also contains spending on other goods, such as food and transport. In low-income households, these are often necessity goods whose consumption is difficult to reduce. Given that households in higher income deciles spend a larger share of their income on motor fuels, increasing motor fuel excise taxes could partly alleviate distributional concerns.
Strengthening price signals, as suggested earlier, should be accompanied by revenue recycling. Several OECD countries such as Austria, Lithuania, Ireland, Switzerland, or New Zealand address distributional concerns of carbon pricing by a partial or full recycling of carbon-related tax revenue (OECD, 2024). Although rising carbon prices are designed to narrow the tax base of polluting activities eventually, this is a gradual process and their decline is a matter of decades. Cushioning adjustment costs for affected households can help to improve the political economy of the green transition. Another policy option that could be explored is lowering labour taxation as higher carbon taxation brings in new revenues. The current fiscal situation does not offer much scope for revenue recycling, but such measures should be considered as the fiscal situation improves.
Note: Groups 1‑10 refer to income deciles (equivalised disposable household income). In Panel A, heating fuel includes expenditure on gas (natural gas and town gas), liquified hydrocarbons, kerosene and other liquid fuels, coal and other solid fuels. Motor fuel includes expenditure on diesel and petrol for transportation. In Panel B, change in the cost of household-specific consumption baskets, as a share of disposable household incomes, taking consumption baskets (2015 in EU countries) and the fuel mix and carbon intensity of consumption (using the 2016 vintage of the environmentally extended World Input-Output Database – WIOD) as fixed.
Source: OECD calculations using household budget surveys (2015 for EU countries), OECD Effective Carbon Rates data, IEA emissions factors for different fuels and WIOD input-output data (for electricity).
References
Borgonovi et al (2023), The effects of the EU Fit for 55 package on labour markets and the demand for skills, OECD Social, Employment and Migration Working Papers No. 297, OECD Publishing, Paris
Borowiecki et al (2023), Accelerating the EU’s green transition, OECD Economics Department Working Papers No. 1777, OECD Publishing, Paris.
de Mello, L. (2023), Real Estate in a Post-Pandemic World: How Can Policies Make Housing More Environmentally Sustainable and Affordable?, Review of Public Economics, Vol. 1/2023/244.
Derkacz, A.J. and V. Cohen (2024), The size of the rental housing segment in Poland and its main determinants, Real Estate Management and Valuation, Vol. 32 (2024), Issue 1 (March 2024).
Energy Transition (2023), How to modernize Poland’s outdates electric grid,
European Commission (2023), EU Transport in figures - Statistical Pocketbook 2023.
European Commission (2024), June 2024 Polish Electric Vehicle Market Overview, European Alternative Fuels Observatory, European Commission.
European Economic and Social Committee (2023), Energy policy and the labour market: consequences for employment in regions undergoing energy transitions, Final report, European Commission, Brussels.
Eurostat (2024), Road freight transport statistics, accessed August 20, 2024, Eurostat, Luxembourg.
Forum Energii (2024), Energy Transition on Poland, 2024 Edition, Forum Energii, Warsaw.
Forum Energii (2024), Umowa rzadu z gornikami-bomba z opoznionym zaplonem, Forum Energii, Warsaw.
Forum Energii (2024), Czysta I tania energia w polskich domach. Jakych zmina potrebujemy? (Clean and Affordable Energy in Polish Homes), Forum Energii, Warsaw.
Hoeller et al (2023), Home, green home: Policies to decarbonise housing, OECD Economics Department Working paper no. 1751, OECD Publishing, Paris.
IEA (2022), Poland – climate resilience indicator, International Energy Agency,
ING (2024), The uncertain road to carrying out Poland’s ambitious energy strategy, ING Think, ING Economics.
Instrat Foundation (2023), The largest industry CO2 emitters in Poland, accessed August 20, 2024.
International Atomic Energy Agency (2024), IAEA Reviews Poland’s Nuclear Power infrastructure development, International Atomic Energy Agency.
Juszczak, A. and W. Rabiega (2022), The green economy and its impact on the climate and economic growth, Polish Economic Institute, Warsaw.
Laskowski K. and M. Giers (2023), Poland’s heavy industry decarbonisation, Wise Europa.
Ministerstwo Energii (2018), Wnioski z Analiz prosgnostycznych dla sektora energetyczneho – zalacznik nr 1 do Politiyki energetycznej Polski do roku 2040 (PEP 2040), Ministerstwo Energii, Warsaw.
Ministry of Climate and Environment (2021), Energy Policy of Poland until 2040 – Extract, Ministry of Climate and Environment, Warsaw.
Ministry of Climate and Environment (2024), National Energy and Climate Plan 2030-2040, Ministry of Climate and Environment, Warsaw.
OECD/ITF (2011), Car Fleet Renewal Schemes: Environmental and Safety Impacts, International Transport Forum, OECD Publishing, Paris
OECD (2021), OECD Environmental Performance Reviews: Belgium 2021, OECD Environmental Performance Reviews, OECD Publishing, Paris.
OECD (2023), Economic Surveys: Poland 2023, OECD Publishing, Paris.
OECD (2024), Employment Outlook: The Net-Zero Transition and the Labour Market, OECD Publishing, Paris.
Sokolowski J. (2023), Energy poverty and unfit housing in Poland – An investment strategy to renovate the worst-performing segment of the housing stock, European Federation of National Organisations Working with the Homeless (FEANTSA).
Solarthemalworld (2023), The EUR 100 billion challenge – transforming the Polish district heating sector, accessed August 21, 2024.
Statistics Poland (2024), Housing conditions in Poland according to the results of the National population and Housing census 2021, Statistics Poland, Warsaw.
Teusch, J. and S. Ribansky (2021), Greening international aviation post COVID-19: What role for kerosene taxes?, OECD Taxation Working Papers, No. 55, OECD Publishing, Paris.
TPA Poland and Baker Tilly (2023), Wind energy in Poland – 2023 Report.
World Bank and National Fund for Environmental Protection and Water Management (2024), Clean Air Programme – Survey of beneficiaries 2023, World Bank and National Fund for Environmental Protection and Water Management.
World Bank (2024), Country Climate and development Report: Poland, World Bank Group, Washington.