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Over half of Poles excluded. What changes do we need in support of thermal modernisation?

10.08.2017 | By Paweł Musiałek and Andrzej Guła

The only modernization program of buildings, functioning in Poland, so far was excluding half of Poles living in single-family houses. Creation of program for this group fits in the plans of the Ministry of Development. It declared the onset of works on a program of modernization of single-family houses. It is a part of governmental plan “Clean Air”. We should expect that aforementioned plan will contribute not only to decrease in CO2 emission, but also will give many economic profits, such as increase of workplaces in small and medium-sized enterprises.

Currently the Ministry of Infrastructure and Building is evaluating governmental plan of supporting thermal modernization and overhaul. This program is functioning in Poland since 1998 when it was created on the basis of special act of law. Operator of Thermal Modernization and Overhaul Fund (later: “the Fund”) is State Household Bank (in polish BGK). In 2008 polish Parliament extended the range of Fund’s activities, creating new law on supporting thermal modernization and overhaul. For many years, Fund was giving support by granting applicants with subsidy for thermal modernization, reaching up to 16% of total cost of the investment. It was directed mainly to multi-family houses, such as blocks of flats, owned by the housing associations. Subsidy is paid via banks, giving it together with credit. Thanks to the Fund, over thirty thousand multi-family houses were modernized, what increased their energetic efficiency and ameliorated esthetics of urban settlements.

While we can talk about success in case of multiple-family households, unfortunately there is no similar program concerning single-family houses in Poland. Although the Fund formally did not exclude the owners of family houses, its construction and high administrative costs, decided that it was not adjusted to the needs of the owners of such buildings. For nearly twenty years of functioning of the Fund, less than a thousand single-family houses made use of it. Meanwhile, there are five millions such houses in Poland.

The reason why the leaders did not decide to support thermal modernization of single-family houses was probably assumption that the owners of such buildings, are wealthier part of polish society, who can afford such investment without the state support. Statistics however shows, that in single-family houses lives over a half of Poles and most of them are situated in rural areas, with low levels of income. This in turn, results in a poor quality of the majority of houses in Poland, including energetic efficiency. As many as 38% of buildings has no thermal insulation. It must be added, that over 70% of single-family houses is heated by the boiler fueled by solid fuel, often of poor quality, what increases the emission of CO2 and smog.

In January, prime minister Morawiecki, declared creation of governmental program of fighting off the smog, called “Clean Air”. Vice-minister of development Jadwiga Emilewicz, declared that in this year, governmental program of thermal modernization of single-family houses, will be created. If polish government is willing to solve the problem of smog over Poland, it will not be possible without a program directed to the owners of little houses. Evaluation led by the Ministry of Infrastructure, is a chance to create first in history, national program of modernization of single-family houses, which aim would be improvement of the air quality and decrease in their energy-consumption. They are said to be the true cause of smog. Such program should be composed of different mechanisms, enabling Poles easier modernization of their homes.

In a first step, broad access to low-interest credits for modernization of houses, should be ensured. Activation of lending by the banks does not require meaningful engagement of budget money. State can decrease the costs of loans by such means as partial takeover of portfolio risks.

Simultaneously, on the areas especially experienced by smog, it is justified to consider support in the form of subsidy for replacement of boiler or for thermal modernization of the house. Development of mechanisms of help for the poorest on the areas where anti-smog laws are being implemented, is absolutely necessary. There, everyone is obligated to adjust their sources of heating to ecological norms, by replacement of old boilers and coal heaters until 2023.

Unfortunately, programs subsiding replacement of boilers and thermal modernization, introduced so far, are practically beyond the reach of the poorest and financing often reaches those, who could afford overhaul themselves. Those instruments are of no use to those, who have not enough creditworthiness, to take attractive loan in National Fund for Environmental Protection and Water Management. Many people are also not able to invest a few dozen thousand zloty in heat insulation, what is necessary to receive a subsidy.

It is worthy to take a closer look at the case of Lesser Poland, region which is a leader in a fight for clean air. Regional legislative body was first in Poland to introduce anti-smog law for entire region. (Unanimity of politicians at voting was very telling.) First programs of subsidies in Lesser Poland, were created, when there were neither anti-smog laws nor regulations banning the sell of most polluting boilers. With lack of such basic regulations, the aim of subsidy programs, was to encourage citizens to replace coal heaters to ecological ones. However, boilers not fulfilling even minimal emission norms, where still available on the market. Due to that fact, number of newly installed, polluting devices was much higher than of those replaced thanks to the program. For example, in 2014, about three thousand boilers were replaced with help of subsidies. At the same time, thirteen thousand environmentally-unfriendly sources of heating occurred. It was actually, a fight with windmills.

Currently, evaluation of functioning of programs led up to now, should be led, taking into consideration new conditions such as anti-smog law and Minister of Development decree, considering emission norms for solid fuel boilers.

In Lesser Poland, over four hundred million zloty, from Lesser Poland Regional Operating Program 2014-2020, was dedicated. Subsidies from this program will allow replacement of only about 25-30 thousand heaters in the course of next few years. It is just 5% of all boilers, needed to be replaced before 2023, on the basis of anti-smog law. We can assume that percentage of house owners, who would replace their source of heating in next few years, without the subsidy, is lower than this 5% of people who will make use of a subsidy. At the same time, numerous support programs created expectations of help, so we can assume that many people is withholding the decision about investment, hoping for a subsidy. Spending a similar amount of money (half a billion zloty) on support for the poorest households, could modernize ten thousand such buildings (assuming an average cost of 50 thousand zloty).

Polish government, can acquire considerable amount of public and private financing for an ambitious national program of building modernization. This would be European founds as well as multi-billion incomes, coming from trade of polish CO2 emission limits. For a long time, polish politicians, did not made use of a chance, created by thermal modernization of single-family buildings, in negotiations with the EU. Thanks to this, not only problem of the smog could be solved. Poles would proof oneself in undertaking actions directed at ameliorating the energetic efficiency, to what they are obliged by the energy and climate policy of the Union. It is a building sector, where lurks the biggest potential for reduction of energy consumption. Discussion over use of money from so called “Modernizing Fund”, is going on in the European Commission. It is an additional few billions euro, a huge part of which will go to Poland. It depends on polish government, whether those funds will be used on realization of a “Clean air” program.

In the end, it is noteworthy, that the program of building modernization, would give the biggest profits to an important sector of polish economy, dominated by small, often family companies. It is them who deal with overhauls, thermal insulation and heating systems modernization. Experiences of The Czech Republic and Germany, shows that profits from program of support of single-family buildings modernization, exceeds required investment.

Translation: Magdalena Stawicka

International_Visegrad_Fund,_emblemo_bluaThis text was created thanks to support of International Visegrad Found.

Photo: public domain (http://www.publicdomainpictures.net)

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