Fossil fuel demand is high in Central Eastern Europe. Here's how it can make the energy transition

To anyone following global energy markets at the start of 2025, the economic, political and climate landscape and its potential impact on the industry is a lot to wrap one’s head around.

The current divergence of policies in each of these areas has created an ever more complex environment for energy companies to navigate in. With experts seeing a wide range of possible energy transition scenarios, market players are placing bets with lower confidence in future market outcome.

Anticipating a softening of policy, some of the industry has been quick to lower their energy transition ambitions, while other players are fast-tracking their low-carbon growth promise. How should the rest of the industry react to this divergence? Are we pivoting back to fossil fuels or refocusing our policies? Or is a wider alignment on energy transition goals needed more than ever? One thing is clear: the moment in time is unique and calls for both strategic flexibility and pragmatism in addressing these challenges and uncertainties.

While we are all aware of the global events and ambitious net-zero targets facing the energy sector, our region, defined as Central Eastern Europe (CEE), has its own specific set of factors:

It is the regional factors outlined above, coupled with a global energy imbalance and divergence of regional energy competitiveness, which require us to reconsider our energy value chain and define areas where ORLEN can build a lasting competitive advantage. Our new strategy also aims to address what seem to be contradictory trends: strong demand for fossil fuels in the region, energy security concerns, and energy transition ambitions.

Instead of announcing overly ambitious targets in either the conventional hydrocarbon space or in low-carbon fuels/abatement technologies, or zigzagging between the two depending on policy swings, we are calling for pragmatism. We have made “responsible energy transition” one of the pillars of our strategy and defined a few guiding principles that outline this pragmatism:

This “responsible transition” is not only defined by these development principles, but primarily by a selective investment approach in our conventional business; we will continue to grow this where market fundamentals are healthy. This includes investing in gas and LNG (from upstream through midstream and downstream), which acts as a transition fuel, especially in our region, which has traditionally relied on coal.

Also, contrary to the market situation in the rest of the EU, the CEE region is expected to be a slower adopter of electric vehicles, with current penetration rates in the region estimated at 0.8% compared to an average of 6.5% across Western Europe. This suggests continued fuel marketing operations and crude runs at our refineries in the foreseeable future, which is contrasted by capacity rationalizations across Western and Southern Europe. Other parts of our value chain also appear more resilient. For example, despite a global downturn in the base chemical market, the CEE region continues to be a net importer of polymers, and economic growth will support demand across many chemical product applications.

This further demonstrates the complexity of our approach, in which energy transition goals are intertwined with growth areas in conventional energy space.

Determining a strategic vision and objectives for energy players has never been more complicated. Companies must now navigate the complexities of diverging regional competitiveness, regulatory requirements and low-carbon fuels and technologies that are yet to prove commercially viable. Announcing ambitious decarbonization targets along with a set of initiatives and pathways has become an industry standard; however, this has also raised questions over credibility and economic reality.

Our new strategy does not aim to simply state our low-carbon ambitions, but is intended to find balance between shareholder value, responsibility for energy security and energy transition goals. It is designed for the long-term with a responsible approach to the challenges and opportunities of the energy transition, ensuring both pragmatism and flexibility in our response to a turbulent and uncertain world.