Poland: National reconstruction plan – Circular no. 3 “June Newsletter”

by Alfio Mancani
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On May 3, 2021, Poland sent the National Reconstruction Plan (Krajowy Plan Odbudowy hereinafter: KPO) to the European Commission. It is a document which is the basis for using the Reconstruction Fund prepared within the European Union framework.

The establishment of the Reconstruction Fund aims to rebuild and create socio-economic resilience in Poland after the crisis caused by the COVID-19 pandemic, as well as to support investments and implementation of structural reforms.

Poland will have EUR 58 billion at its disposal (until 2026), of which EUR 23.9 billion in the form of non-repayable grants and EUR 34.2 billion in the form of loans for the period 2021-2026. KPO assumes that it will use EUR 12.1 billion in loans.

The specific objectives of the KPO are:

  1. Qualitative, innovative development of the economy leading to an increase in its productivity, taking into account the digital transformation of the country and the society;
  2. Green transformation of the economy and development of green, intelligent mobility;
  3. Increase of social capital and quality of life, in particular by ensuring the improvement of citizens’ health condition and higher quality of education and skills adapted to the needs of the modern economy.

The KPO has almost 500 pages. In addition to social, educational and health programs, the most funds are allocated to “Green energy and reducing energy consumption” – EUR 5.7 billion from the grant part and EUR 8.6 billion from the loan part (a total of EUR 14.3 billion) and “Green, intelligent mobility”- EUR 6.8 billion from the grant part and EUR 0.7 billion from the loan part (a total of EUR 7.5 billion). The plans for both of these areas will be analysed below.

 

Industrial Policy of Poland

According to the KPO, the Industrial Policy of Poland will be based on traditionally strong industries or those with new development perspectives.

In terms of legal and financial instruments, in addition to the existing tax relief for research and development (R&D relief), or to the preferential rate for income made from qualified intellectual property rights (IP BOX relief), it is planned, inter alia, the introduction of a tax relief mechanism for enterprises introducing robotization, the so-called robotization relief. This relief will introduce the possibility of deducting the costs of investment in robotization. The relief is to be available to all companies, regardless of their size or industry. It will allow, among others, an increase in the number of installed industrial robots increasing the productivity and, at the same time, the quality of products and the level of technological quality of production and services.

As part of the KPO, it is planned to create systemic conditions for the development and implementation of breakthrough technologies that have found particular application during the COVID-19 pandemic and have the potential to play a significant role in the recovery of the economy after the pandemic, i.e. unmanned technologies (unmanned mobility) as well as Earth observation and dual use space technologies.

In terms of unmanned mobility, as a continuation of the national programs stimulating the development of the UAV (Unmanned Aerial Vehicles) area, a pro-development regulation will be introduced, specifying principles of testing and implementation of solutions based on UAVs and a multi-annual program for the development of the area of unmanned aerial vehicles will be adopted. A regulation will also be introduced to adapt aviation institutions such as the Polish Air Navigation Services Agency to new challenges related to the development of the UAV sector.

 

Energy Transformation

Considering that currently as much as 72% of energy produced in Poland comes from the combustion of coal (hard and brown coal), in order to reduce CO2 emissions, the following plans has been arranged:

The KPO provides for the creation of a system of incentives for energy savings, both in the case of individual users and other entities (element of the Clean Air reform and energy efficiency). The instrument for this will be, among others an amendment to the Energy Efficiency Act providing, inter alia, non-repayable subsidy programs to achieve final energy savings at the end user. As part of it, the following are planned in particular:

It will be particularly important to strengthen the “Clean Air” program by simplifying the procedures and increasing the Program availability for potential beneficiaries, which will have an impact on reducing the emission intensity of the communal-living sector. There are also plans to modernize the heating system. It is planned to develop a mechanism to support investments in renewable energy sources, focused primarily on the transformation of ineffective heating systems located in small and medium-sized cities, for which investments in low-emission sources constitute an opportunity for development and financing to improve the efficiency of these systems.

As part of the improvement of the condition of infrastructure, structure and safety of transport for a competitive, green economy and intelligent mobility, it is planned to increase the quality and environmental efficiency of public transportation. In terms of reducing emissions in transport, it is crucial to introduce a regulatory system and support investments aimed at increasing the share of low- and zero-emission transport in road transport and in public transport. The instruments to be used in this reform will be the increase of the minimum share of low- and zero-emission vehicles in the procurements of public entities within the total number of vehicles, both for cars, trucks and buses. The minimum levels will be increased in stages to reach 22% after 2025 – for zero-emission passenger cars, 9% – for alternative fuel trucks and 46% – for alternative fuel-powered buses (of which at least half must be zero-emission buses).

In cities with more than 100,000 inhabitants, where the levels of harmful substances are exceeded, new statutory solutions will be introduced regarding mandatory clean transport zones.

There will be a statutory obligation for larger cities to order only electric and hydrogen buses. In accordance with the Polish Energy Policy until 2040, in cities with more than 100,000 inhabitans, each tender for the purchase of buses for public transport from 2025 should apply only to zero- and low-emission buses (electric and hydrogen). The planned solution provides for the introduction from 2025 of an obligation to award contracts for the organisation of transport only to entities offering this type of vehicles.

The solutions presented above will result in the allocation of significant funds (until 2026) in order to implement the assumed plans, which will undoubtedly translate into a significant development of the industries that will be responsible for the implementation of the KPO.

 

Partner of Horizon Consulting in Poland – www.guidiconsulting.pl & www.md-partners.pl

 

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