The “big four” Polish state-controlled power companies – PGE, Tauron, Enea, and Energa – gained massively on the Warsaw Stock Exchange on March 2 in the wake of Russia’s war on Ukraine, as investors rushed to buy stocks seen as prospective in a time of crisis.

A slump in EU’s carbon price under the bloc’s Emission Trading System (EU ETS) also helped the rally, as most electricity produced in Poland is from coal-fired power plants. The cost of CO2 was a consistent burden on Polish power companies’ balance sheets, forcing them into a – incremental as it is – shift to greener generation.

The price of CO2 slumped from €95.07 per tonne on the eve of the war to below €70 on March 2, a drop of 30%.

Since Russia attacked Ukraine on February 24, investors’ uncertainty has skyrocketed, leading to the liquidation of exposure to some European assets, including the EU ETS, analysts suggest. 

But the exit does not concern companies seen as crucial in times of crisis such as domestic energy providers operating largely on domestic resources like in Poland. 

As prospects of an embargo on Russian gas imports are reviewed by major EU economies, gas prices are going up, making coal a more economic alternative even at a time of heightened concern about climate change.

Coal prices are now at long-unseen highs. "Benchmark annual futures jumped as much as 32% to $200 a tonne on Tuesday, the highest since 2008. Month-ahead prices rose as much as 38% to hit a record high of $322.50," Bloomberg reported on March 1. 

Poland is the EU’s biggest coal producer and one of the heaviest users.

The revived debate about becoming independent of Russia’s energy commodities is another factor driving demand for Polish energy stocks.

“There is a change in the rhetoric of the EU in the field of energy policy. It is about a return to nuclear energy, but also a general stronger emphasis on the independence of raw materials from Russia,” Kamil Kliszcz, an analyst with mBank, told the newspaper Puls Biznesu.

That could cause the EU to change its stance on Poland’s exiting coal to being more lenient, the analyst also said. Poland's strategy to exit coal only by 2049 has drawn criticism from the EU as much too protracted.

PGE’s stock price jumped 15.67% to PLN9.55 (€2.01) at the close of trade on March 2, WSE data showed. Tauron gained 11.23% to PLN2.77, while Enea rallied 7.14% to PLN9. The stock of Energa – which is owned by PKN Orlen – gained 5.61% to PLN7.53.

Polish coal companies also enjoyed much-increased investor interest, with JSW's stock price ballooning 31.3% to PLN70.9, while Bogdanka gained 30.33 to PLN52.

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