Poland’s recovery plan has finally been endorsed by the Commission after over a year of negotiations. Despite multiple declarations from government officials that talks would finish quickly, the plan worth EUR 35 billion was put on hold for an extended period of time because of the Commission’s concerns about the rule of law in the country. Is Poland’s recovery plan a wasted opportunity? Not necessarily, but it is not a fully-used one, either.
Krzysztof Mrozek, Rafał Rykowski, Polish Green Network | 14 June 2022
Although the plan has been greenlit, Poland will have to wait a bit longer for the recovery money to be disbursed. The European Parliament adopted a resolution criticising the Commission for endorsing the plan while Poland’s rule-of-law violations remain unaddressed. Members of Parliament called on the Council to withhold approval of the plan until all conditions are met.
At the same time, the Polish Parliament passed the Supreme Court Act amendments without fulfilling the recovery plan’s milestones on the judiciary. Even if approved by the Council of the EU (expected on 17 June), the plan may remain blocked as these milestones (cancelling the Disciplinary Chamber of the Supreme Court, returning judges suspended by it to the bench and reforming the disciplinary procedure for judges) must be fulfilled prior to any disbursement.
These funds for post-pandemic recovery are one of Poland’s last hopes for catching up with the needs of the green transition. They are much-needed by the Polish economy, which was severely weakened by the fossil fuels prices crisis, economic consequences of the Russian invasion of Ukraine and rapidly growing inflation.
If one expected the recovery plan to mature over the year, the final version may be a disappointment. The plan was indeed improved in some aspects, especially concerning compliance with the ‘do no significant harm’ principle, but it is still clearly not ambitious enough given the current economic and international situation.
Billions of euros that were blocked for so long should help address the dire need of a socially responsible energy transformation, since Poland is lagging behind in this respect compared to the majority of the EU Member States.
According to the Commission’s assessment, even though Poland needs to significantly step up its ambitions in tackling the climate crisis, 42.7 per cent of the measures contributed to climate objectives, which is in line with the EU rules.
Compliance with the ‘do no significant harm’ principle
The Commission’s assessment of the plan states that the plan complies with the ‘do no significant harm’ principle and Poland has carried out an adequate ‘do no significant harm’ assessment. However, the low quality of the recently published assessment of Poland’s main Cohesion Policy programme (European Funds for Infrastructure, Climate, Environment) casts doubt on the thoroughness of the recovery plan’s assessment. As compliance with the ‘do no significant harm’ principle is a key criteria regarding the plan’s evaluation, its assessment should be made public together with the Commission’s analysis of the plan.
Among reforms on energy that are included in the plan, there is an amendment to the Act on investments in onshore wind farms, making the infamous ‘10H’ rule more flexible. The ‘10H’ regulation sets a radius of ten times the height of the windmill that should be maintained between a wind turbine and the closest residential buildings. According to the think tank Instrat, this regulation currently excludes 99.7 per cent of the Polish territory from wind farm investments.
Another positive reform is an amendment of the law on renewables which will implement a collective energy prosumers’ model as well as provisions on new renewable energy communities. This is urgently needed, as the current Polish law does not fully recognise the energy communities and builds up bureaucratic obstacles to their implementation instead. This results in a very slow deployment of energy communities despite big public interest.
On the other hand, one of the reforms included in the recovery plan will aim at creating a legal framework for the use of hydrogen as an alternative fuel for transport. Promoting the use of hydrogen is controversial – in order to be most efficient, until the capacity to produce and utilise renewables-based hydrogen capacities increases, hydrogen should first be used by the branches of industry that are difficult to decarbonise, rather than by the transport sector.
Energy efficiency and heating
Ninety district heating systems are planned to be modernised, whether by investing in fossil gas cogeneration units, renewables (solar, geothermal, bioenergy) or heat pumps. Fossil gas is eligible for funding under one of the ‘do no significant harm’ principle’s exception when it replaces coal, and as long as emissions remain below the threshold of 250 grams of CO2 per per kilowatt hour (kWh). Nevertheless, EU fund supported investments in new fossil gas installations will result in high energy and heat prices for consumers and prolong Poland’s dependence on fossil fuels, and thus should be re-considered.
An important intervention under the recovery plan is heat source replacement in single-family buildings. The final plan states that as many as 791,200 heat sources should be replaced. Although there is a dramatically growing demand for replacing fossil fuels in individual heating, the final plan reduced the number of heat sources that will be replaced by almost 70,000 compared to the version of the plan submitted in May 2021 (originally 860,000).
Gas boilers should make up no more than 40 per cent of the overall number of heat source replacements in individual houses (and 20 per cent in schools and social activity facilities). This could have been considered a progressive approach if the ongoing fossil fuels prices crisis did not make gas boilers even less preferable heat source.
Renewable energy generation and storage
A big focus in the recovery plan is on an expensive programme for offshore wind farm deployment (1.5 GW). According to the original version of the plan, EUR 3.7 billion out of the EUR 5 billion allocated for renewables will be spent on windmills in the Baltic Sea and their infrastructure. Yet, energy produced from offshore wind farms is significantly more expensive than from onshore wind and photovoltaics installations.
Compared to the large-scale offshore investments, support for energy communities (EUR 97 million) is modest. And although 139 communities will receive pre-investment support, only 10 cases will see recovery money go directly to establishing the community. Also, as part of the development of energy storage systems, up to 28,000 small (4 to 5 kWh) installations will be supported for energy prosumers, but not energy communities – even though larger storages used by collective prosumers have better potential to stabilise the energy system.
Recovery plan investments in public zero- and low-emission public transport (in synergy with cohesion policy spending) will certainly improve the accessibility and quality of service. As many as 1,738 ‘clean’ buses will be purchased, along with 183 trains and 110 trams. Poland will also modernise 500 kilometres of railway lines.
While public transport investments raise no concerns, the plan to reach production capacity of 100,000 new zero-emission vehicles by mid-2026 does not seem realistic. Grants supporting production of electric cars will amount to EUR 900 million. This allocation could be limited and re-allocated to sectors where there are growing needs, such as energy efficiency measures and changing heat sources connected with deep modernisation (where the target was lowered compared to an earlier version of the plan).
As far as biodiversity is concerned, there is some substantial improvement in Poland’s recovery plan. This was not difficult to achieve since in the previous version of the plan biodiversity was almost not mentioned. According to the European Commission’s analysis, EUR 170 million has been allocated for the component Nature and biodiversity protection, natural heritage and resources, green and blue infrastructure.
Also, there are more strings attached to the reform Support for the sustainable management of water resources in agriculture and rural areas. The last publicly known version of that reform was aimed at simplifying permitting procedures for water retention investments. This would relax or remove environmental safeguards, which are already insufficient for some water management projects in Poland. But now, amendments must not lead to any deterioration of the level of compliance with EU environmental legislation. This milestone involves projects likely to have a significant impact on the environment as well as investments in, or affecting, Natura 2000 areas.
In addition, the controversial investment plan on water management facilities seems to be improved in the final plan. This investment was added without civil society’s knowledge, just after public hearings, and ever since then, it has been considered a significant threat to Polish rivers. Building reservoirs, dams, and gates on rivers would mean a great loss for the ecological connectivity. Now, the most disturbing multifunctional hydro-technical investments were removed from the name of the measure, yet it is unclear whether this means the actual investment will be completely excluded. For example, although the latest revision now includes references to prioritising nature-based solutions as part of the milestones, there are no explicit exclusions preventing the construction of concrete hydropower.
Biodiversity seems to be better protected by the milestones and targets in the final version of the recovery plan. Restoration and protection are mentioned in almost every milestone attached to the reform along with any investment which could be potentially harmful to nature.
The preparation of the plan was kept secret, and civil society was excluded at its early stages. Violations of the partnership principle in the preparation phase limited civil society’s ability to improve the plan and influence its shape. Also, changes to the plan – mainly positive – are a result of negotiations done behind closed doors between the Polish government and the Commission. When the negotiations were taking place, we were denied access multiple times to any newer version of the plan by both the Polish and EU sides. Problems with transparency with respect to the planning raise concerns regarding insufficient public oversight in the spending of billions of euros during the implementation phase.
Although the creation of a monitoring committee is not explicitly required by the Recovery and Resilience Facility regulation, it was indicated as a milestone for Poland. Unfortunately, it is weakened by the lack of a requirement that the civil society representatives in the committee be ‘independent from the government’. The selection of members has already started, again behind closed doors, in a highly politicised procedure. A new law setting rules for the implementation of recovery and cohesion funds also limits access to public and environmental information.
Altogether, these provisions limit public oversight and the ability for civil society to play a role in the monitoring and implementation of the recovery plan to the extent that EUR 35 billion may be spent in a way that undermines the green transition. The disbursement procedure used for the Recovery and Resilience Facility means that if certain investments violate the EU legislation or principles, such as ‘do no significant harm’, in the worst case, the EU would not reimburse the expenses, but would not prevent the investment from happening. The lack of transparency might prevent civil society from stopping such investments before the damage is done.
For the green transition in Poland, the endorsement of the Polish recovery plan brings positive news. A significant stream of funds will boost the green transition and mitigate the economic and social consequences brought on by the pandemic, war and inflation.
Although the plan properly sets out the priorities, its transformative ambitions are modest, and its targets are outdated. It also needs to be amended in order to contribute to achieving the new REPowerEU goals. Currently, fossil gas investments are still possible, and a significant amount of money will go to questionable projects, such as offshore wind farming (expensive) and electric vehicles manufacturing (difficult to deliver in the timeframe of the Recovery and Resilience Facility). At the same time, expected results in energy efficiency, heating replacement and energy communities’ development remain moderate. Last but not least, weak public oversight and low transparency risk the misuse of the plan’s 42.7 per cent of climate spending.
Note: Although approved by the Commission on 1 June, the final version of the plan has not been disclosed as of 13 June. This leaves us with documents prepared by the Commission, one of which gives us a good picture of the content of the plan and Commission’s priorities in its implementation. It is the Annex to the Proposal for a Council Implementing Decision (COM(2022) 268 final), containing milestones and targets of the plan and a clear description of reforms and investments. It does not, however, contain specific allocations, broken down by investments. They will be included in the plan itself.
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Institution: EU Funds
Theme: Recovery plans | RRF | EU Recovery Fund | Energy | Green transition