Q: What are the main conclusions of the report?
A: For one, the report identifies a definite GHG reduction volume achievable in Poland at a defined cost. A considerable amount of 43% of that volume constitutes negative cost. That means that reduction of emissions would bring profits rather than losses to the economy. If that is so, why don’t we start doing good business in this field? That is a question that needs to be answered.
However, the great value of McKinsey’s report is that is identifies this phenomenon. Some say that this is fantastic. If reductions can be done with profit, then let’s do them. McKinsey shows, however, that while Poland has the potential, it has not tapped it yet. If it could, it would have done so already. There must obviously be some barriers and these we have to identify ourselves. Some practical experiences have corroborated these assertions. Poland’s abatement potential has been tapped to some extent, for example, by thermo-insulating buildings. That, however, happened, only after introducing budget subsidies covering 20% of the investment costs involved. Hence the first signal ensuing from McKinsey’s report to the government and society is: you have an immense reserve potential, but you didn’t tap it yet!

Q: Then finding a proper answer to why is it so, is a key issue…..
A: Of course, a key has to be sought for each and any concrete undertaking, technology and area of the economy, but surely some of the answers will ensue from the situation that not the investor but someone else might reap benefits. The simplest example. Suppose I am owner of the house in which you rent your flat and in which you pay for heating. It is obviously me who should invest toward insulating the building. However, only you will benefit since you will be paying smaller bills for heating. Only I will bear the costs. That example indicates that no mechanism is in place yet to ensure that what is good for the economy as a whole, is also advantageous for both the investor and the consumer. It is up to the government to unblock, launch or outright build such a mechanism.
The second information from McKinsey’s curve is that we already have quite a big potential but tapping is burdened by costs. That prompts the question: who will bear that cost? The general public- that is the answer. But we would like to know who concretely. I hope that what I am saying is not taken a criticism of the report.

Q: Absolutely not. This is a signal that by undertaking measures to identify these mechanisms you are talking about, the Commission will by the same token open new markets and new business opportunities….
A: Precisely that can be deduced from reading McKinsey’s report with full understanding. It follows that there are areas in which new businesses should be opened, and on the other side the state should cooperate in opening such areas. In part that will benefit the economy as a whole, and in part that will have to be paid for. However, McKinsey’s curve also points out the profitability of such measures, indicating what to do first, and what to do later. Generally, it is right to start doing things that will profit the economy and to proceed only afterwards with things at some cost to the economy. And that is the second value of the McKinsey’s report.

Q: Could you give me a concrete example of a market that could be opened thanks to such an analysis?
A: Thermo-insulation of existing commercial buildings, that’s one... A very high ”negative cost” amounting to EUR 60 per one ton of CO2. That means that we’ll reduce CO2 emissions and in addition earn EUR 60 on each reduced ton after deducting investment costs. Another example – the energy efficiency of new residential buildings. We might erect well-insulated buildings from the very start, and that with a profit of EUR 20 per one ton of CO2.

Q: Could we force the developers to do that?
A: This is up to the state. If contractors make too thin walls or don’t insulate the buildings properly, than it is up to the state to say on our behalf – that is in your interest, in the interest of customers and climate – that buildings shall no longer built in such a way. Why don’t we do the same as in Denmark, Sweden, Norway, Germany – and these are all countries in our climate zone? Why is it that heating one square metre of apartment space in Poland requires the consumption of 150 KWh per year, that is 15 litres of heating oil? In contrast, only five liters, or even 1.5 liters in passive homes, are needed for that same purpose in countries I mentioned. My students have calculated that if VAT was cut from 22% to 7%, than all additional expenses for such a building would be returned within 14 years. That could be an interesting prospect for the developer. Hence the state should calculate likewise.
This all I am saying does not come from McKinsey’s report. These are but conclusions than can be drawn from reading the analysis. It is also worthwhile to take note of a difficult and even painful issue. For the report also shows the possible pace of changes. It follows that in 2010 Poland’s reduction of CO2 emissions in relation to 2005, a drop from 386 million tons to 373 million tons, will be symbolic. Admittedly, that will amount to a 20% reduction in relation to BAU (business-as-usual), that is to as much as if we did nothing to reduce emissions, but it will amount to barely 3.4% compared to 2005. More serious possibilities will emerge between 2020-2030. Only in that decade shall we be able to achieve a 47% reduction in relation BAU, and that will mean as much as 31% compared to 2005. Does it mean that we may sit idly by and wait until 2020? Absolutely not. It only signifies that investments which we’ll start in the very near future will bring effects only after 2020. So to score results, we need to start investing now. That applies in particular to investments in fields such as nuclear energy. But to speak of serious results, building one power block will not be enough. Needed are nuclear power plants generating several thousand MWs and 5-6 power blocs.
McKinsey’s report is not a recipe. It is merely a diagnosis. Let’s heed it well.