By Virali Gokaldas

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In Europe, attention on lignite coal, the dirtiest form of coal, is usually focused on Germany, the European Union’s largest economy where, in spite of one of the world’s most ambitious renewable energy transition programs, lignite still makes up 25% of the national power mix. However, German lignite’s days appear to be numbered, with major utilities now making consistent losses on it and the federal government due this summer to introduce an action plan aimed at reducing the country’s greenhouse gas (GHG) emissions 95% below 1990 levels by 2050. Moreover, a March 2016 analysis from Barclays, which takes into account EU GHG reduction targets and the low-carbon headwinds strengthened by the Paris agreement, finds for the German power sector “that very little coal and lignite could run by 2030.”

However, just across the border from Germany, Polish state-owned and private companies are pushing on with plans to develop a string of new open-pit lignite mines – with major financial support from some well-known banks. Since its entry into the EU in 2004, Poland has garnered – and even seemed keen to cultivate – a reputation for being the continent’s number one climate wrecker. Yet even so, the latest plans of two companies, Polska Grupa Energetyczne (PGE) and Zespół Elektrowni Pątnów-Adamów-Konin (ZE PAK), take the breath away. Adding to the nine mines currently in operation, PGE and ZE PAK are now embarking on securing concessions for eight or nine further mine installations with potential reserves of nearly 8.5 billion tons of lignite, an amount greater than has ever been extracted and burned in Poland’s history.

Nonetheless, this final, spectacular lunge for lignite is taking place in a tough financial time for these companies – the state-owned PGE registered a net loss of EUR 680 million in 2015. However, neither climate considerations nor the shaky financial positions of the companies seem to be deterring big bank investors. Banks including BNP Paribas, Société Générale, ING, Citigroup, Commerzbank, UniCredit, and Santander have been involved in recent bond and project finance transactions with the company. These have kept PGE afloat, even as a top banker at ING recently commented that project finance for new coal projects in Poland makes no sense. Local protests are sprouting up all over Poland, and wider trans-European and global anti-coal movements such as Ende Gelände and Break Free are only going to increase the risks and losses for both lignite-dependent companies and their financial supporters.