What is the Baltic Pipeline and how will it affect the Polish energy sector?
by PAC Policy Intern Kay Minkiewicz
The Baltic Pipeline is a proposed pipeline between Denmark and Poland. It aims to connect the natural gas transmission system in the Norwegian North Sea to Poland via Denmark, creating a new gas supply corridor to Central and Eastern Europe. The project has five key components. First, the development of an offshore pipeline that connects the Norwegian gas system in the North Sea and the Danish gas transmission system. Second, the expansion of the existing onshore Danish transmission system. Third, the creation of a compressor station in the eastern part of Zealand, Denmark. Fourth, the creation of an offshore pipeline between Denmark and Poland in the Baltic Sea. Finally, the expansion of the onshore existing Polish gas transmission system. The companies responsible for carrying out this project are Gaz-System on the Polish side and Energinet on the Danish side.
Developments in the permits necessary for construction received by Gaz-System and Energinet mean that the new gas corridor is ready to start construction. In November 2019, the Danish Minister for Climate and Energy granted a permit to build in the Danish Marine seas. Adding to this, in December 2019, an agreement was signed with Nord Stream 2 (the underwater gas pipeline linking Germany and Russia), licensing the crossing of the Baltic Pipeline and Nord Stream 2 in the Baltic Sea.
More recently, in March 2020 Gaz-System received three crucial permits to start on shore construction in Poland from the governor of the West Pomeranian Voivodeship. The first permit covers 26 miles (42 km) from the Płoty node to the Goleniów compressor station, and the second permit covers 22.7 miles (36.5 km) from the Konarzewo receiving terminal to the Płoty gas transmission node. The third permit covers building from Niechorze to the Konarzewo receiving terminal, spanning a 2.8 mile (4.5 km) stretch. There is only one more technicality that Gaz-System requires, a permit to build on a 295 foot (90 m) stretch from ‘the first dry welded joint’ to Niechorze. Tomasz Stępień, the Chair of the Management Board of Gaz-System strongly believes that realizing the next stages of construction will be straightforward, saying that “Efficient implementation of the subsequent stages is possible thanks to the involvement of the governor of the West Pomeranian Voivodeship.” The current construction timeline projects that the pipeline will be operational in 2022.
The two main outcomes of the Baltic Pipeline on the Polish energy sector are energy diversification and independence. Regarding energy diversification, currently the Polish energy sector is highly reliant on coal. Although the use of coal has been decreasing, 73.6 percent of electricity production was coal based in 2019. This reliance on coal is not sustainable due to the Carbon Dioxide (CO2) targets set by the European Union. Adding a greater share of natural gas in the energy sector offers a solution as natural gas emits 50 to 60 percent less CO2 when compared with emissions from coal plant.
Concerning energy independence, the Baltic Pipeline offers a way out of the Gazprom deal signed with Russia in 1996. This deal accounts for around two thirds of the natural gas supply in Poland. An overreliance on Russian natural gas is detrimental to Polish interests. It gives Russia monopolistic bargaining power in setting the natural gas rate to Poland. Consequently, Poland has been charged a higher margin on natural gas than Germany. Undoubtably, this monopoly may weaken Poland’s and its allies’ position in other negotiations with Russia. Thus, the Baltic Pipeline will make Poland and its allies stronger. A strong Poland with a diversified energy sector and independent of Russian natural resources will better promote US interests and American values of enterprise and independence in Central Eastern Europe. In part due to the Baltic Pipeline project, the Polish government does not plan to buy gas from Gazprom after 2022.
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Kay Minkiewicz is a policy intern at the Polish American Congress and a first-year student at The London School of Economics and Political Science, where he is majoring in Philosophy and Economics.