EUR 159 billion – this is the amount Poland can count on as a result of the EU summit in Brussels. The summit ended on Tuesday morning, the fifth day of negotiations. Member State leaders agreed on a pandemic recovery fund and the EU budget for the next seven years. The former amounts to EUR 750 billion, and the latter amounts to EUR 1 trillion and EUR 74 billion. The summit conclusions read that “in principle all EU spending should be in line with the goals of the Paris Agreement” and that “climate action will be mainstreamed into funded policies and programs”. What does this mean for Poland? We translate.
1. Success or failure
On Tuesday, after the summit, representatives of the Polish government spoke about the success achieved by Poland, while environmentalists emphasized the mistakes made.
– We are talking about potentially very large money. This is good news for Poland, because – let us remind you – until recently we had the perspective of drying up the source of EU money. At the same time, the coronavirus crisis is treating us gently for the time being – believes Aleksandra Gawlikowska-Fyk, project manager of the power industry at the Forum Energii think tank.
However, Poland will not have full freedom in spending money.
– The conclusions also include an “emergency brake”, ie the option to stop the transfer of money if, in the opinion of most EU members, it will be spent incorrectly. Therefore, the Polish government has no grounds to claim that we have succeeded again – we will get the money and be able to spend it without any conditions. This is not true – emphasizes Urszula Stefanowicz, expert of the Climate Coalition.
2. The money is but half frozen
On the basis of information from Brussels, Aleksandra Gawlikowska-Fyk guesses that Poland could get EUR 3-4 billion for the transformation itself. This amount consists of EUR 1.5-2 billion written in earlier documents, plus EUR 1.5-2 billion from the pool agreed on Tuesday morning.
– This amount will be available to Poland, provided that we make a commitment to strive to achieve climate neutrality in 2050. If not, we can only count on half. From the very beginning, the Just Transition Fund aimed to support climate neutrality, but only now it is mentioned that it is to be a condition for paying out money – adds the Forum Energii expert.
In addition to the Just Transition Fund, Europe will also have 30 percent at its disposal for similar purposes. as part of the cohesion policy, and as part of agricultural policy up to 40 percent. Here, the amounts reach up to EUR 100 billion.
– The decisions of the European Council are not yet a law. We have to wait for the ordinance – emphasizes Aleksandra Gawlikowska-Fyk.
3. Poland is heading towards neutrality anyway
Poland is the only EU country that has still not declared its commitment to climate neutrality in 2050. There is also no consensus in the government on this matter.
– However, it is worth remembering that Poland has to move in this direction anyway. After all, we have old generation assets and underfunded transmission networks. If we want to massively install photovoltaic panels on roofs, we have to modernize the networks. We also have to do it if we want clean air – says Aleksandra Gawlikowska-Fyk.
4. Polish miners have reasons to worry
According to Greenpeace, the cut of the Just Transition Fund will mean a reduction in the allocation for Polish mining regions, the more so as Poland has not declared its intention to achieve the climate neutrality goal. Greenpeace considers failure to do so as a mistake.
– The local mining communities will pay for this mistake, as they will receive much less money for the economic transformation and retraining of employees currently associated with mining – that is, for changes that are inevitable and necessary – says Joanna Flisowska, head of the climate and energy team at Greenpeace Polska. He reminds that in 2015-19 the extraction of hard coal in Poland decreased by 25%, and imports increased by more than a half.
Comments:
Jacek Zalewski – Let the community be a community
The extraordinary summit of the European Council (CoE) was an undisputed success, because the idea written in the title did not die.
The record for the length of the collection of presidents / prime ministers, from Friday morning to Tuesday dawn, and the amounts decided on – a total of over EUR 1.8 trillion, have been high. The multiannual financial framework (MFF) 2021-27 was first examined at a stationary summit on February 21, then was the subject of a videoconference, last time on June 19, and finally the Council of Europe, meeting in stationary, approved it again. However, the coronafund with a smaller amount, but more important in the short term, definitely came to the fore.
As after every European Council summit, all heads of state and government predicted success in their respective countries. They pride themselves on what is most beneficial for them, they hide uncomfortable threads under the rug. For Poland, for example, the conclusion of the summit is such that only countries committing to climate neutrality by 2050 can count on more money in this area. The objective and fair assessment of the summit is that the agreement is of course historic, but it was achieved at the cost of many cuts in the ordinary multi-year budget. Moreover, the duality of linking funds with the broadly understood issue of the rule of law is widely commented on. Even … the readings of the same text of the CoE conclusions are different, chairman Charles Michel emphasizes that the threads have been linked, while Prime Ministers Mateusz Morawiecki and Viktor Orbán have denied it. The truth is that they verbally did, but this link is untranslatable into any legal ramifications. A typical EU trick – it is, that is, it is not.
The MFF 2021-27 treaty has been set in amounts below recent plans. The European Parliament, which only deals with the expenditure side, expected a much larger budget. The 2018 initial project of the European Commission (EC) led by Jean-Claude Juncker was also higher. The new EC, President Ursula von der Leyen, revised the draft downwards and has been sticking to this version for many months. By the way, at the five-day summit, the supranational government was in the background. It was even logical, after all, the CoE is the highest collegial body of the community, co-created by heads of state / government of the Member States.
The final compromise reflects the postulates of the group of net contributors. The entire coronafund was kept at the level of EUR 0.75 trillion, but the proportions between grants and loans were significantly changed, which will have serious consequences for the most important EU programs. The reduction in the distribution of money from EUR 0.5 to EUR 0.39 trillion and the increase in the amount of loans to EUR 0.36 trillion was accepted by payers who at first did not want to hear about grants at all. The summit conclusions are a very extensive document, 67 pages long. Coronafund was regulated first, followed by the MFF. The conclusions are a huge set of guidelines, tables with more than a trillion euro are only on the last two pages. Individual countries are almost non-existent, with a few exceptions being, for example, rebates for five net payers or money for three countries in our region that are decommissioning post-Soviet nuclear power plants. The so-called. National envelopes so far only exist in the documents of the summit participants, they will be detailed and made public only in the autumn regulation.
Ignacy Morawski – The European Union gives Poland a golden horn
For many years, economic commentators have been repeating that the third decade of the 21st century will be difficult for the Polish economy, because European funds will be clearly cut.
Although their impact is sometimes overestimated, there is no doubt that they are the main factor determining the country’s infrastructure modernization. So cutting them could be painful.
Recent decisions taken within the EU change this perspective by 180 degrees. We will get money not less, but much more. For four years, the funds will be more than twice as much as expected. Counting the current net transfers, we were supposed to get approx. 1.5 percent. GDP per year from the traditional so-called multiannual financial framework, and we will get about 4-5 percent. GDP from the traditional budget and the special reconstruction fund. These are huge amounts that may not only enable Poland to significantly expand its infrastructure, but also facilitate coping with the greatest challenge of the 21st century – the energy transformation from coal to renewable energy.
For four years, we will receive from the EU more or less as much as we spend on public investments in total. There is a chance that thanks to these funds it will be possible to quickly make up for the economic losses after the epidemic crisis. Let me remind you that according to the projections of the National Bank of Poland, the annual GDP loss due to the epidemic is approx. 6%. for several years – our domestic income will be as much lower than in the scenario without the virus until at least 2022. European funds will allow us to make up for a large part of this loss – not so much thanks to an increase in public investment, but thanks to a demand impulse, which will raise the overall expected revenue path in economy, which will also encourage private companies to invest. This powerful stimulation comes just as the so-called fiscal multipliers, the impact of budgetary expenditure on GDP, are exceptionally high.
We will not receive all EU funds in the form of grants. Some of them will be loans that we will pay back in 2028-58. I did not include returns in net transfers, because they will not take place until the next decades, so they will not have any impact on the macroeconomic situation in Poland in the coming years.
From the perspective of a decade, it does not matter whether we receive grants or loans. It is a foreign transfer increasing the income that can be allocated to investment without lowering the consumption rate. Figuratively speaking, in order to replace the heating boiler at home, we do not have to give up buying a car.
From the long-term perspective, the share of loans in EU funds is, however, of some importance. Since we will have to give some money back, we have to spend it on projects that bring the maximum possible profits. In the next decade, we may become a country that in total receives little more from the EU than it pays in, so we must use this decade for 100 percent. The European Union gives us the golden horn and we cannot give it up.
I am very far from convinced that EU funds are a key factor in the country’s development. They only support a country that is lucky and properly managed. As an economy that does not produce the world’s most important technologies, we are not masters of our own fate. However, we can take care of three elements: openness to the world, institutional stability and macroeconomic stability. If we meet these conditions – which we are currently doing for school four with a minus (four for openness, club from institutions, five for macro stability) – there is a good chance that European funds will significantly raise the standard of living in Poland.
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