Climate risk pricing

Poland: a just transition case study

Written by Prahalad Prasad & Jonas David

Download full paper (0.2mb)

Poland is one of the EU's most fossil fuel-exposed economies, with coal still accounting for the majority of electricity production. This paper examines how the social aspects of Poland's energy transition, if ignored, could complicate the process and carry financial consequences for bond investors.

The transition is financially material for Poland. As an EU member subject to the Emissions Trading System, Poland faces high energy costs due to its coal reliance, but a successful shift to renewables could reduce these. Poland's reliance on EU funding also means non-compliance with climate regulation risks losing access to transition finance.

Energy security adds urgency. Poland's import dependency has risen sharply, and AFII analysis shows its local currency bond yields rose more than regional peers in March 2026, when oil prices spiked during the Iran crisis — a consequence of fossil fuel exposure.

Failure to consider social risks can delay the transition. Poland's 2025 presidential election brought to power a candidate who campaigned against the EU Green Deal and has since vetoed onshore wind legislation, illustrating how failure to manage the human impact of transition can produce political outcomes that slow it down.

With the significant investment required to fund Poland’s shift from fossil fuels, bond markets will play a sizable role. Just transition-aligned projects are not included in the eligible categories of Poland’s latest Green Bond Framework update, meaning bond investors have an engagement opportunity to ensure these social risks are being addressed. 

About the authors

Prahalad Prasad

Prahalad Prasad

Associate Director, Research

Based in London, Praha covers topics including but not limited to the just transition, sustainability-linked bonds and deforestation. He previously spent seven years in Lloyds Bank’s Debt Capital Markets team.

Jonas David

Jonas David

Research Director

Based in London, Jonas researches the role of fixed income markets in the climate transition, focusing on key sectors, sovereigns and development finance. He previously worked in emerging markets fixed income at Morgan Stanley Investment Management and UBS.

Before you sign up

By completing this form, you agree to AFII sharing information that we think you may be interested in, including our insights on climate transition. See our Data Protection Policy for more information about how we collect and use your personal data, and any rights you may have in relation to your personal data. You may opt out from our distribution list at any time.