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Poland's PKN announces 2030 green strategy to cut emissions, boost RES capacity

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Poland's PKN announces 2030 green strategy to cut emissions, boost RES capacity

Highlights

Five-fold increase in RES capacity, offshore, PV

Cut emissions from assets by 20%-33%

Increase gas-fired capacity, biofuels output

Warsaw — Poland's largest refiner, PKN Orlen, said Nov 30 that it plans a five-fold increase in its renewable energy capacity, major investments in gas and biofuels production and significant reductions in CO2 emissions by 2030.

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The company has earmarked total capex of Zloty 140 billion ($37.5 billion) in its 2030 strategy, according to a company presentation. Some Zloty 30 billion will be spent on sustainable development projects, including Zloty 25 billion on reducing CO2 emissions by 20% from the company's refining and petrochemical assets.

The largest amount, Zloty 4.7 billion, will be spent on a five-fold increase in the company's renewable energy capacity to 2.5 GW through the construction of 1.7 GW of offshore wind farms in the Baltic Sea and 800 MW of both onshore wind and PV solar projects, CEO Daniel Obajtek said during the multimedia presentation.

"We are opening a new chapter in the history of PKN Orlen," Obajtek said. "We are building a new multi-energy group capable of competing in the face of significant changes."

Among the changes the company mentioned was the slowing growth in oil demand, with peak oil now expected between 2030 and 2035 or earlier. PKN also cited shifts in oil and gas supply due to the US shale revolution and a collapse in demand caused by the COVID-19 pandemic at the same time that renewable energy, especially wind, becomes more price competitive. More ambitious climate goals in the Paris Agreement and EU Green Deal, as well as rising consumer awareness about these issues also influenced the company's strategy change.

PKN said it plans to reduce CO2 emissions from its refining and petrochemical assets by 20% and in its power assets by 33%, and is targeting becoming carbon neutral by 2050. The company is planning more than 60 projects to increase the energy efficiency of its existing refining and petrochemical assets in Poland, Lithuania and the Czech Republic. Thanks to energy efficiency investments already made in PKN's Plock, Litvinov and Mazeikiai refineries, more than 80% of the company's CO2 emissions in this segment are now covered by free allowances.

Hydrogen technologies

In the power segment, PKN will also almost double gas capacity to 2 GW through the construction of combined gas cycle turbine units in Ostroleka and possibly Gdansk. Following its acquisition of state-owned utility Energa in April, PKN now owns 1 GW of gas-fired generation capacity and more than 50 renewable energy sources with combined capacity of 450 MW. Apart from Energa, PKN is also planning to acquire smaller Gdansk-based rival, Lotos and the state gas company, PGNiG.

In the refining segment, the company has pledged Zloty 2.4 billion to achieve a six-fold increase in biofuels production to 2 million mt. In petrochemicals, PKN has earmarked Zloty 4.4 billion to build a plastics recycling facility with capacity of between 0.3-0.4 million mt/year and increase the company's share of speciality products in its portfolio from 16% to 25%.

The company is also planning to develop hydrogen technologies and expand its distribution network for alternative fuels. Preparations have begun for the construction of a 600 kg/hour hydrogen hub in its petrochemicals complex in Wloclawek.

In the retail segment, PKN has allocated Zloty 1.1 billion to increase its gross non-fuel margin by at least 50% and boost the share of foreign service stations in its portfolio from 37% to 45%. In upstream investments, the company said it plans to spend Zloty 0.9 billion to ramp up production from 18,000 b/d of oil equivalent to 50,000 boe/d in order to be able to cover 20% of its own gas feedstock needs.

Funding for the investments will be partially sourced through the issuance of green and sustainable bonds on the European capital market, PKN said.