In one of Poland’s first projects aimed at meeting these stringent EU requirements, oil-refining company and petrol retailer PKN ORLEN is embarking on a substantial environmental and energy efficiency improvement programme at its heat and power plant at the Plock refinery in central Poland.

Thanks to a €250-million ERBD loan and a linked environmental programme, an estimated 142,000 tonnes of carbon emissions will be avoided each year, largely through direct improvements to the refining process, including the replacement and modernisation of the power plant’s boilers. That is the equivalent of annual greenhouse gas emissions from some 90,000 passenger vehicles.

A valuable partnership

The loan comes in addition to €2.75 billion in multi-currency commercial bank financing which will primarily be used to refinance existing debt.

A major incentive for PKN ORLEN to work with the EBRD was the fact that the Bank could offer a loan with a seven-year maturity, which is longer than any tenor offered on a commercial basis.

Unlike the commercial loans, the EBRD financing comes with conditions that ensure various environmental targets are met, says Kevin Bortz, EBRD Director of Natural Resources.

“It is encouraging to know that a large and sophisticated company such as PKN ORLEN, a major market player from an advanced economy, recognises that the EBRD can add value to their operations by providing secure and long-term funding as well as technical expertise on a range of complex issues including energy efficiency and environmental solutions,” says Mr Bortz.

The project ensures that PKN ORLEN will achieve compliance with EU emissions targets and help accelerate Poland’s compliance with both the Accession Treaty and the new Industrial Emissions Directive by approximately one year.

The project will also enable the company to move towards the top 15 per cent of the most carbon-efficient installations in the EU’s Emissions Trading Scheme.

Efficiency equals competitiveness

The company appreciates the EBRD’s involvement and recognises that meeting environmental standards provides direct benefits. “These investments will result in a reduction in emissions while increasing power capacity and allowing PKN ORLEN to better balance its energy needs,” says Jacek Krawiec, President of PKN ORLEN’s management board.

PKN ORLEN’s main competitors in the region are MOL of Hungary and Romania’s Petrom, whose controlling shareholder is Austrian energy company OMV. In contrast to PKN ORLEN, both MOL and Petrom have access to their own oil production sites.

“To remain a competitive regional player, PKN ORLEN will have to focus on improving efficiencies,” says EBRD project operation leader Loredana Guglielmi. “Through these investments, the company will significantly improve its energy generation and heating capacity, which should result in a surplus of electricity with which it can supply the local market.”

Innovative energy management

As the first company of its scale in Poland, the company also agreed to implement an integrated and externally-certified carbon and energy-management system across all operations. This will allow for the continuous monitoring of energy and emission intensities, specific goals and targets, as well as regular public disclosure of its performance.

In recognition of its innovative nature and high impact, the PKN ORLEN project has been selected as a demonstration project in a forthcoming EBRD study on refineries. The Bank hopes it will encourage other refiners in the region to undertake similar projects.

Dariusz Prasek, Director for Project Appraisal with the EBRD’s Environment and Sustainability Department, has known PKN ORLEN for some time. “In the early 90s the company was on the list of the 80 worst polluters in Poland,” he remembers. “They have embarked on a very difficult process of addressing past environmental damage and catching up with good international practice. With our project, we have a chance to move the company's performance from good to excellent. This is environmental transition at its best!”