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Coal Allowance – a New Form of Support

Coal Allowance – a New Form of Support

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Uncertainty and fluctuations in the energy market are raising concerns about whether it will be possible to keep warm in the autumn and coming winter.

What are the causes of the problems?

Problems with energy availability are commonly attributed to current events such as the Russian aggression in Ukraine. However, the conflict has only magnified and accelerated phenomena that were already on the horizon – e.g. problems arising from existing market models or the energy transition process, namely the volatility and increase of energy prices and the challenges of generating sufficient amounts of energy, due, for example, to the scarcity of fossil fuels, for which a reduction in extraction is being sought.

Coping with these challenges

State aid is subject to various restrictions, making it impossible to propose a financial support mechanism for businesses, and moreover would be extremely time-consuming and more difficult than providing assistance to individual consumers. Undoubtedly, these circumstances may underlie the recently introduced coal allowance.

What is the coal allowance?

This is a benefit of PLN 3,000 for applicable households, introduced by the Coal Allowance Act of 5 August 2022.

This benefit is available to households whose main source of heating is:

  • a solid fuel boiler,
  • fireplace,
  • freestanding stove,
  • air heater,
  • kitchen range,
  • cook stove,
  • coal cooker, or
  • solid fuel fired tiled stove,

– powered by solid fuels and registered or reported in the Central Emission Register of Buildings (CEEB).

Coal allowance – deadline for applications

Applications for the coal allowance can be made until 30 November 2022. The allowance should be paid up to one month from the date of application.

Importantly, the new law does not provide any way of verifying what the money from the coal allowance is actually used for, and so the funds do not have to be actually used to purchase coal and may be spent on basically anything.

The model application is set out in the Ordinance of the Minister of Climate and Environment of 16 August 2022 on the model application for the payment of the coal allowance (Journal of Laws, item 1712).

What about other sources of heat?

One of the most frequently raised objections to this solution is that other sources of heat in households, which are also affected by the inevitable price increases, have been overlooked. What’s more, thanks to programmes such as ‘Czyste Powietrze’ (Clean Air), many people have upgraded their heating systems, replacing coal-fired stoves with other, less emitting devices. And this, in the current legal environment, makes them ineligible for the coal allowance.

According to media reports, the government is currently working on supplementary arrangements, whereby support would also be provided for heat sources including:

  • pellets – in the amount of PLN 3,000.
  • chunk wood – PLN 1,000.
  • fuel oil – PLN 2,000.
  • LPG – PLN 500.

Is the coal allowance a good idea?

The proposed support has a number of drawbacks that make it questionable as to whether the coal allowance will have the intended effect. 

By Wojciech Wrochna, Partner, Kochanski & Partners