Landscape of Climate Finance

Renovation in Poland. Report on climate finance landscape in the Polish buildings sector

WiseEuropa experts supported by colleagues from I4CE and NewClimate Institute have prepared the report: Renovation. Landscape of climate finance in the Polish buildings sector. The report emphasizes that buildings renovation does not only play a key role in reducing greenhouse gas emissions, but it can also be a stimulus for the recovery of the European economy after the crisis caused by the COVID-19 pandemic.

– We are in the middle of the process of designing the national programmes of support for the thermal modernisation of buildings, including the update of the major Clean Air programme, and the preparation of the necessary reforms within National Recovery and Resilience Plan. Thus, it is crucial toto design and adopt an action plan – a long-term renovation strategy – in which individual support facilities complement each other, allowing for the effective spending of available funds – explain Karolina Marszał, Aleksander Śniegocki and Zofia Wetmańska in the latest report.

– In the coming years, Poland will gain access to unprecedented funds for thermal modernization of buildings. Limited monitoring of financial flows in the area of buildings renovation creates a risk of only partial and inefficient use of this opportunity – points out Zofia Wetmańska, co-author of the report.

Current landscape of climate finance in the Polish building sector

The authors of the report analysed the available data on financing of low-carbon investments in order to better understand the processes taking place in the Polish buildings sector in recent years and to correctly define future challenges and opportunities for the policy makers, public and private sectors, and financial institutions.

The results show that the years 2014-2019 were characterised by a high variability of the financial expenditures and the involvement of individual groups of investors in the implementation of low-carbon investments in buildings.

The largest amount of funds, i.e. approx. 56% (almost PLN 13 billion), for investments in low-carbon technologies in the buildings sector in the period 2014-2019 was allocated by the public sector, in particular by local governments and communes (43%, almost PLN 10 billion).

Until 2018, the thermal modernisation of building stock and the installation of renewable energy sources were primarily possible thanks to the European funding (which accounted for 75% of all public funds, approx. PLN 11 billion). The characteristics of these funds caused uneven distribution of the investors’ activity over time, resulting in an increase of investments in 2016 by at least 50% in relation to each of the analysed years

The public sector and the sector of enterprises were implementing low-carbon investments in buildings mainly based on European funds, while households mostly relied on funds obtained from commercial banks.

A significant change came in 2019, when national funds (from the national budget, local budgets as well as the National Fund for Environmental Protection and Water Management and the Voivodeship Funds for Environmental Protection and Water Management) accounted for approx. 2/3 of the total involvement of public financing in the implementation of low-carbon investments in buildings. Such a significant increase in the share of national funds shows that properly implemented regulations and incentives may allow the achievement of real changes in the process of decarbonisation of buildings in a very short time – the observed changes are a direct result of the introduction of the thermal modernisation tax relief and the expansion of the Clean Air programme. At the same time, it is worth to note that while public intervention had a significant impact on the increase of the scale of financing measures to support the energy efficiency of buildings, it did not translate into investments in renewable energy sources – the investments in the latter category have been systematically decreasing since 2016.

The analysis includes data on projects aimed at improving the energy efficiency and investments in low-carbon energy sources in the buildings sector that were launched in 2014-2019.