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Transition to a Low Emission Economy in Poland

This study on Poland is part of the World Bank's series of low-carbon growth studies. It poses the question of how Poland, an EU member state, an industrialized 'Annex I' country for the purposes of international climate discussions,1 and an OECD member, can transition to a low emissions economy as successfully as it underwent transition to a market economy in the early 1990s. With a broad consensus that global coordinated action is needed to prevent dangerous climate change estimated to cost about 1 percent of global GDP) and with EU policies on climate change already in place, Poland faces immediate policy challenges. Could the country commit to more ambitious overall greenhouse gas mitigation targets for the longer term - to 2030 and beyond? What technological options are available, and how expensive are they compared with existing technologies? Would there be high costs in lost growth and employment? Over a shorter horizon, to 2020, what are the implications for Poland of implementing EU policies on climate change? The report addresses these questions while advancing the approach of the Bank's low carbon studies by integrating 'bottom-up' engineering
analysis with 'top-down' economy-wide modeling.

Executive Summary:
English, Polish
Full report: 
English, Polish
Annexes
English, Polish

Introduction
A gainst the backdrop of agreement that global coordinated action is needed to prevent dangerous climate change,9 individual countries are thinking through the implications of climate action for their economies and people. Some countries are already observing the impact of global warming on local weather and water supply. Others wish to position themselves as leaders in the ongoing international negotiations. With the expectation that a global price for carbon10 will eventually be established, some countries may wish to push to the front on emerging...

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Poland's Greenhouse Gas Emissions
Poland is not among the largest emitters of greenhouse gases globally, but its economy is among the least carbon-efficient in the EU. Poland's global share in GHG emissions is just 1 percent; and its per capita emissions are about the average for the EU. Poland cut its emissions considerably as a side effect of the restructuring of transition to a market economy, but the link between growth and emissions has re-emerged in recent years...

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Carbon Abatement Targets and Policy Challenges for Poland
The international agreement on climate change that will eventually supersede the Kyoto Protocol and, more immediately, compliance with EU policies on climate change, pose policy challenges for Poland. Poland's greenhouse gas emission levels and its achievements to date seem to argue that further movement towards a low emissions economy might simply be a matter of accelerating existing momentum. On the other hand, Poland's heavy dependence on coal would seem to make such a transition highly challenging. While Poland has been actively involved in global discussions on climate change policy and has easily met the Kyoto...

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A Suite of Models to Assess Emissions Abatement
To address the issues set out in the last section, engineering and sectoral analyses are integrated into macroeconomic modelingvia a suite of models, to allow improved analysis of the feasibility of emissions mitigation, including its impact on growth,sectoral output and employment. With the objective of assessing the macroeconomic and fiscal implications of greenhouse gas mitigationpolicies for Poland, a suite of innovative analytic tools were developed to analyze abatement prospects not only from the usualbottom-up engineering perspective but...

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Business-As-Usual Scenarios for Poland
A business -as-usual scenario is fundamental to the calculation of costs of carbon abatement, but they can be generated bydiffering methodologies using separate datasets. It is difficult to project the path of an economy over a 15 or 25 year period, andit is not surprising that sectoral details will differ significantly across models. The Marginal Abatement Cost (MicroMAC) curve modelconstructs a relatively simply reference scenario, which matches official projections for growth and energy demand and presumes arising level of efficiency. While more or less matching overall emissions projections, the Macroeconomic Mitigation Options (MEMO)model forecasts in great detail that the Polish economy will shift relatively quickly towards less carbon intensive...

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The Microeconomic Marginal Abatement Cost (Micromac) Curve and Poland's Abatement Options
The Microeconomic Marginal Abatement Cost (MicroMAC) curve is a bottom-up engineering approach to assessing GHG abatement,with an intensive analysis of the power sector. Using detailed sectoral data, the MAC curve model creates a ranking by net costof about 125 emission reduction levers and presents the measures via a well-known visual summary tool - the MicroMAC curve. TheMicroMAC curve summarizes a large amount of policy-relevant information in an easily understandable format. It shows...

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The Macroeconomic Mitigation Options (Memo) Model and The Macroeconomic Impact Of The Abatement Package
The Macroeconomic Mitigation Options (MEMO) model, a large scale DSGE model of Poland, can provide a dynamic assessmentof the macroeconomic impact of GHG options, including a new visual presentation - a macroeconomic version of the MicroMACcurve. The innovative linking of this economy-wide model to the bottom-up engineering approach of MicroMAC curve model allowsanalysis of the varying macroeconomic and fiscal implications of GHG abatement measures, across four public financing options. Forthe comprehensive abatement package, the MEMO model simulations finds that GHG emissions will be reduced by 24 percent by 2020and by 47 percent by 2030, with an economic impact that is generally negative but appears affordable...

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The Regional Options for Carbon Abatement (Roca) Model and Implementing EU Climate Policy
The Regional Options of Carbon Abatement (ROCA) model is a country-level CGE model for energy and GHG mitigation policyassessment adapted to Poland to analyze implementation of the EU 20-20-20 policy package. The model considers some keyvariations on climate policy design that meet the same emission reduction targets and some alternative model assumptions that furtherilluminate the impact on Poland's economy in 2020 through the analysis of 11 simulations. The ‘Main' scenario...

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Energy Sector Options and Their Macroeconomic Impact
Although the energy se ctor has been at the center of all the analysis so far, this section sets out a more detailed examination ofsome key aspects of energy sector options, and, in particular, the careful optimization of the future structure of the electricitysector carried out for the MEMO model. Low-carbon energy supply options present significant opportunities for abatement, but theyare usually quite expensive up front, take a long time to build, and then become long-lived assets with low operating costs. The powersector requires long lead times and, for some technologies, has very long technical lifespans...

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Energy Efficiency Options and Their Macroeconomic Impact: A First Look
Energy efficiency measures hold out the promise of relatively low cost abatement that works directly to delink carbon fromgrowth, the essence of a low-carbon economy. While energy sector abatement options are generally about reducing emissions intensity(CO2e created by energy use), energy efficiency focuses on reducing energy intensity (energy required for each euro of output).Both of these factors will reduce Poland's emissions elasticity...

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Transport: An Alternative Engineering Approach to Mitigation Options
While the e nergy sector, as the dominant source of today's emissions, necessarily receives a much attention and analysis in anystudy of low carbon policies, and while energy efficiency, with well-known potential for ‘no-regrets' actions, is rightfully high onpolicymakers' agendas, Poland also needs to consider how to address the sector with the fastest growing emissions - transport.This section presents the findings of an alternative engineering approach to transport sector mitigation options, applying the TREMOVEPlus model to the road transport sector in Poland. Road transport GHG emissions in...

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Conclusions and Additional Issues
Better understanding of technological options, economic ramifications, and policy impact enhance the likelihood that Polandcan move quickly towards a low emissions growth path. Such a transition will deliver additional benefits, including added energysecurity from increased energy efficiency and use of renewable energy sources, human health benefits from transport and other improvementsthat reduce local air pollutants, and strategic and competitive advantages that are more likely to accrue to countries thatpursue low emissions development early. While this report provides some complex assessments and new analytic tools for policymakers,its analysis, rather than exhausting the central issues related to a transition to low-emissions growth, has identified a number ofadditional economic issues for further work.

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