Warsaw, 3 October (Argus) — A new Polish law on biomass subsidies is likely to be delayed by at least six months as rival lobbies continue to push the government over subsidies for joint biomass and coal combustion.

A proposed bill from the energy ministry would result in co-firing subsidies falling by 70pc from 2013 and being fully removed after 2020. But the treasury ministry is against this, and lobbying between both departments will cause a delay in implementation.

Utilities burning biomass expected a new policy to be in place by January 2013, but that looks likely to be delayed by six months.

“Internally, in our plans we assume that subsidies for joint combustion will remain unchanged at least until July next year,” a source with a leading Polish utility told Argus.

Some of Poland's largest generators and utilities have criticised plans to cut the co-firing subsidy, with some indicating that they may sue the government for compensation if the new biomass law limits subsidies on joint combustion. “Some utilities have recently made investments in joint combustion and there will be legal ground for lawsuits,” says Krzysztof Kwiecien, a lawyer with Chalas i Wspolnicy who advises investors on energy issues.

To become binding law, the current draft bill needs to be approved by the government and then parliament, with both steps expected to be time consuming and exposed to lobbying efforts from generators as well as environmentalist groups, who oppose joint combustion.

“The game for joint combustion subsidies is not yet decided,” Kwiecien says.

The stalemate surrounding the new law does not discourage utilities from investing in dedicated biomass generators. Local firm PGNiG subsidiary PGNiG Termika this week announced plans to replace a coal-fired boiler with a biomass-fired boiler at its 622MW Siekierki heat and power plant in Warsaw. The new boiler — which is to be brought on line by the end of 2014 — will burn 350,000 t/yr of biomass. The firm currently burns about 160,000t of biomass in joint combustion with coal.

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