WAIFC salutes its members’ work in encouraging the allocation of capital needed for the transition away from carbon dependency. While the Alliance works on global syntheses of these efforts along with other topics of common interest, the management team wishes to highlight the green work done in individual member jurisdictions. The first spotlight shown was on South Korea, the second Rwanda, and this month the focus is on Poland. The world tour will continue each month.
The European Union Context
The reader must first enter the environment of a member country of the European Union. Each member state has assigned certain of its sovereign rights to the supranational organization, as agreed by all. Once membership is attained, all 27 member states are in the position of having public policy decisions and supranational law as determinants of the broad direction of much of their nations’ lives – and then they must also have national law and public policy reflect the EU goals in a subordinate, more detailed version in order to realize the direction set by Brussels.
The European Union has been a global leader in green transition public policy. But this opinion looks, in particular, at what the Polish government has determined. This is where Future Finance Poland and its members get involved.
Polish National Policy
Polish industrialization was based on coal, and historically there was both a great deal of coal and industry, along with wide, fertile plains covering most of the territory and supporting the large and productive agricultural base. Poland has a long coastline on the Baltic Sea.
The government in Warsaw has set substantial green investment plans focused on the transition to renewable energy.
Poland aims for a 56% share of its energy to be from renewable sources by 2030, according to ESG News, which represents a significant increase from previous commitments. To get there, the long Baltic shoreline will be put to good use. Like its neighbors Denmark and Germany, Poland is investing heavily in wind farms, and capacity is rapidly being built. Because the landscape of the entire territory is mostly flat and open, which has been a historic problem for military defense, wind onshore is also plentiful enough to be worth capturing at competitive costs. The price of solar panels has collapsed so far this decade that even in those northern latitudes there is enough light to make this source commercially viable.
One of the newer tools of the energy transition kit is green hydrogen. Poland is developing a €640 million plan to invest in hydrogen production, transportation, and infrastructure, aiming to put this relatively new energy source to work.
The changing sources of energy and their constantly varying inputs require adaptations for Poland’s energy infrastructure. This begins with grid modernization.[1] The Polish power grid operator (PSE) is investing $15.4 billion to expand and modernize the grid to accommodate the increased renewable energy capacity, including nuclear energy, and allow for and manage the constant changing flow of inputs while keeping the output at the user level absolutely constant. This represents quite the challenge in terms of physics and engineering.
Attitudes on nuclear energy in Europe have been changing over the past decade, not least with the shock of dependency on Russian energy sources with the outbreak of the full-scale war on Ukraine. The radioactive waste problem and operational risk seem to be outweighed by the potential for clean, constant feed into the grid. Poland is also planning to integrate nuclear power plants and small modular reactors into the grid.
Poland’s Financial Tools for the Transition
Green bonds: Poland's State Development Fund (PFR) is positioning itself as an anchor investor in green bonds to boost local demand and accelerate the transition of funding away from coal.
Poland’s Green Investment Scheme (GIS) supports energy efficiency improvements in public buildings, including insulation, window replacements, and heating system upgrades. Energy efficiency gains are encouraged also in private buildings, and the GIS supports local efforts are decarbonization.
The European Union provides funding and support as structured in Poland’s national Recovery and Resilience Facility. This part of the nation’s energy program includes significant investments in green transition projects, such as renewable energy, energy efficiency, and the simultaneous digital transition that is accompanying decarbonization. The European Investment Bank (EIB) and other international financial institutions are providing significant funding for Poland's energy transition projects.
When that funding gets to Poland, several key players step into action. We have noted the PFR above, and here underscore its particular importance in offshore wind and energy storage. Another is ARP, the Industrial Development Agency, which works to mobilize capital for the energy transition through the Polish Green Fund. Finally, the BGK, the Bank Gospodarstwa Krajowego, is especially focused on the work related to hydrogen as a source of clean energy.
For WAIFC
The goal of sharing ideas and information amongst members is the very purpose of this Alliance. Although the questions and schemes resonate broadly and are surely familiar across WAIFC and beyond, it may well bear closer examination to see what tips from the Polish programs might be adapted in other parts of the world. This opinion gives some addresses that could be useful contacts for outreach.
[1] Readers outside the European Union are reminded that the EU power grids are interconnected, and electricity does get sent from country to country depending on need and availability. The transmission lines must tolerate constant and instantaneous changes in sources of electricity as well as to allow for geographical modification.