Greening the economy:identifying a proper policy mix

Jan RączkaPresident of the Board

National Fund for Environmental Protection and Water Management

National Fund for Environmental Protection and Water Management

Plan of the presentation

• Poland – key challenges

• A recommended policy mix – housing sector

• Housing – new buildings

• Housing – exsisting buildings

• Conclusions

National Fund for Environmental Protection and Water Management

Poland – key challenges

• Broad support for environmental priorities by politicians

• Pressure of various interest groups

• Co-ordination of sectoral policies

• Too complex incentives

• Unclear vision of a long term competitive advantage

National Fund for Environmental Protection and Water Management

A recommended policy mix – housing

• New buildings

• Existing buildings

Any policy mix needs to be complemented with ecological education.

National Fund for Environmental Protection and Water Management

Housing – new buildings

• Strict energy standards (introduced earlier than required

by the EU directives)

• Financial incentives for households

• Public institutions eligible for EU grants for buildings

under a condition of achieving strict energy standards

National Fund for Environmental Protection and Water Management

Housing – new buildings. Subsidised morgage loans, efficient instrumentto support near zero - emission buildings

• Triple benefit:

o Improved energy efficiency is a viable investment

o Lower margins on mortgage as energy aware borrowers

are more creditworthy

o A small grant component from public funds to attract attention

of households

National Fund for Environmental Protection and Water Management

Housing – new buildings

• Conclusions:

o No need to cover all incremental costs by the state to achieve

required energy standard

o Market mechanisms work for the environment

National Fund for Environmental Protection and Water Management

• More ambitious standards for rehabilitated buildings

• Financial incentives scaled to actual energy standards

achieved after rehabilitation

• Some buidings are not worth rehabilitating - a criterion to be

defined

• Co-ordination between ecological and social policies is needed

Housing – exsisting buildings

National Fund for Environmental Protection and Water Management

Housing – exsisting buildings,lack of co-ordination between ecological & social policy (1)

• Households enjoy regulated electricity tariffs:

o Tariffs are two times lower than in Germany

o Subsidised electricity for the poor and the well-off results

in the inflated consumption

o Moderate social goal is at high economic & environment cost

to the society

National Fund for Environmental Protection and Water Management

Housing – exsisting buildings,lack of co-ordinations between ecological & social policy (2)

• The poor are eligible for housing allowances:

o Households do not face any financial barrier as extra

consumption of electricity is covered by the state

National Fund for Environmental Protection and Water Management

Housing – exsisting buildings

• Conclusions:

o Getting prices right

o Social instruments need to be accurately targeted

o Provide the poor with energy-efficient equipment instead

of subsidizing energy consumption

National Fund for Environmental Protection and Water Management

• Ecological policy is vulnerable to general politics

• Broad support for environmental priorities is a must for proper

co-ordination of sectoral policies

Conclusions (1)

National Fund for Environmental Protection and Water Management

• Environmental goals can be achieved through interlinking other

policies with environmental standards

• We can get more out of public money we have if we rebalance

incentives

Conclusions (2)

National Fund for Environmental Protection and Water Management

• Market mechanisms can be employed to contribute to the

achievement of environment goals

Conclusions (3)