Natural gas is rapidly gaining in geopolitical importance. Gas has grown from a marginal fuel consumed in regionally disconnected markets to a fuel that is transported across great distances for consumption in many different economic sectors. Increasingly, natural gas is the fuel of choice for consumers seeking its relatively low environmental impact, especially for electric power generation. As a result, world gas consumption is projected to more than double over the next three decades, rising from 23% to 28% of world total primary energy demand by 2030 and surpassing coal as the world's number two energy source and potentially overtaking oil's share in many large industrialized economies.

The growing importance of natural gas imports to modern economies will force new thinking about energy security. The Energy Forum of the James A. Baker III Institute for Public Policy and the Program on Energy and Sustainable Development at the Stanford University Institute for International Studies are completing a major effort to investigate the geopolitical consequences of a major shift to natural gas in world energy markets. The study utilizes historical case studies as well as advanced economic modeling to examine the interplay between economic and political factors in the development of natural gas resources; our aim is to shed light on the political challenges that may accompany a shift to a gas-fed world.

This paper is part of the wider Program on Energy and Sustainable Development study on the historical experience of Independent Power Producers (IPPs) in countries that are in the midst of transforming the industrial organization of their electric power sectors. The study seeks to explain the patterns of investment in IPPs and the variation in IPP experiences. The aim is not only to assess the historical record accurately but also to chart possible future paths for the IPP mode of power sector investment. This paper follows the research methods and guidelines laid out in the project's research protocol.

In terms of IPP history, fuel context, and economic and political environment, Poland is not unique among the countries of Eastern Europe. All three EU accession countries in Eastern Europe-Poland, the Czech Republic and Hungary-are formerly centrally planned economies that are in the midst of liberalizing their power sectors. As seen in Figure 1, both Poland and the Czech Republic rely primarily on coal for electric power generation. Poland was selected for study because it is the largest market and because coal is an entrenched incumbent.