The Czech republic’s Contentious Road to Energy

A long-term energy plan has been elusive for some time in the Czech Republic. After stalling at the end of 2014, lawmakers are finally seeking to strike a compromise by July. As in every other country, the struggle to find a suitable energy plan comes down to politics. More specifically in the Czech Republic, it comes down to coal mining limits.

The mining limits on coal, put in place in the 1990s, are vehemently opposed by trade unions, strongly supported by environmentalists and heavily debated amongst lawmakers. The proposed long-term energy deal encapsulates several concurrent issues: economic implications and job impact, the issue of alternative energy sources, and the European Union’s increased commitment to clean energy–a phenomenon that has yet to sweep the Czech Republic.

To analyze the situation, two of the five major mines in the Czech Republic – Bilina and CSA, were subject to a study commissioned by Andrej Babis, ANO leader and Czech finance minister. The study was conducted by Carbounion Bohemia, one of the largest traders of coal, oil and natural gas in the Czech Republic. The study concluded that mining limits could be relaxed at Bilinia, but not necessarily at CSA. Meanwhile, Czech trade unions are arguing for the complete elimination of all minig limits.

There are several potential options on the table for changes in mining limits: their complete elimination, leaving them in their present state, or partially lifting them with regard to preservation of the two most threatened towns on the German border, Horni Jiretin and Cernice. The expansion of mining in and near these two towns would result in loss of many homes.

As far back as 1991, the Czech government assured citizens of the above towns that their homes would not be destroyed in order to make room for more mining. Meanwhile, the unions have taken up the sarcastic argument, that along with the destruction that the elimination of mining limits would bring, at least the citizens of the two towns would finally know what awaits them.

I’m not surprised those people are dissatisfied, because the worst thing is uncertainty,” Josef Stredula, head of the Confederation of Trade Unions, said at a news conference in January. “Who’d want to live somewhere where you don’t know what’s going to happen? Yes, it could be tough at first. But the effects would be huge – from employment to the strategic sustainability of Czech industry in general.”

While 68 percent of the Czech population opposes the total elimination of mining limits according a Greenpeace poll, comments made by Minister of Trade Mládek seem to indicate that his preferences lie closer to those of the trade unions. Mládek cites economic factors as a key reason to relax the limits: “In particular, there would be a significant increase in unemployment in a socially vulnerable region. Such a decision would also mean a decline in revenues to the state budget and local budgets, a lack of coal for thermal power stations as of 2024, and also a possible lack of money for remediation and reclamation work related to the termination of mining.”

Opposite the issue to relax mining limits stands Ondrej Babiš and his company Agrofert. Babiš, who commissioned the study on the coal mines, has huge economic interests that concern him personally. As the owner of Agrofert, a company that produces, in addition to other things, biofuels, an alternative energy source, Babiš stands to lose or gain millions based on the outcome of the coal mining agenda.

The potential conflicts of interest for Babis have been heavily scrutinized, particularly in regard to economic benefits Babis could potentially reap as the Czech Republic works to meet the EU’s requirements regarding the amount of biofuels to be used as an energy source. A May 3 poll commissioned by Czech Television showed that over half of Czechs think that Babis is facing a conflict of interest when it comes to his ownership of Agrofert, a company with vast economic ties across the region, and his role as Finance minister. Of note, 26 percent of those who voted for Babis also think that Babiš is facing a conflict of interest. Babiš acknowledged the conflict in a statement to the Czech News Agency, but said that his companies do not “abuse” it.

Based on the above, it can be seen, that as energy policies are hammered out across Europe, the environmental aspects that seem to drive debate in other countries clearly have much less of an impact in the Czech Republic.

For example, Germany implemented an energy plan called Energiewende, or “energy change,” with the aim of 80 percent of its energy sources being carbon emission free by 2050, as well as completely abandoning nuclear power by 2020. According to The Economist, renewable energy now accounts for 27 percent of Germany’s energy production.

The Czech Republic remains far more reliant on non-renewable energy sources, as evidenced by the debates over expanding coal mining. Brown coal, which is mined in 4 of the 5 major mines in the Czech Republic, remains a controversial energy source. Though coal in general is environmentally contentious, brown coal can be made up of up to 66 percent moisture, which greatly increases the amount of carbon dioxide emissions produced. The Czech Republic, which is the 3rd highest emitter of carbon dioxide in the EU after Estonia and Luxembourg, relies heavily on brown coal, which accounts for 73 percent of the country’s coal supply.

Breakdown of Czech Republic Energy Sources

Coal

40.6%

Oil

20.4%

Natural Gas

15.8%

Nuclear Energy

18.6%

Alternative, renewable energy

6.5%

information from European Association for Coal and Lignite

Graph source: http://www.eea.europa.eu/data-and-maps/figures/co2-emissions-per-capita-by-country-split-by-energy-and-non-energy-related-emissions-2005

No wonder then, that environmentalists are lobbying against the proposed relaxation of limits. The Green Party, which has little presence, has launched a campaign to preserve the mining limits. Mladek won the Oil Guzzler award this year, a facetious prize given by environmental activists to the person who spearheaded the worst environmental project or took the worst stance for that year, for his work on the energy policy, in particular for its reliance on nuclear energy and coal.

When it comes to alternate energy sources to coal, politics are again a factor, and so is foreign policy. When the Czech Republic isn’t using coal as an energy source, it turns to foreign imports of oil and natural gas, which together make up roughly 36 percent of its energy sources. Oil and gas are predominantly imported from Russia, a country that continually uses energy as a foreign policy weapon. The volatile political climate’s impact on energy is evidenced by Russia’s repeated threats to cut off natural gas to the Ukraine. The Czech Republic, like most of the EU, is forced to determine how much trust it can afford to put in the volatile country’s natural gas and oil supplies.

published: 3. 6. 2015