-Poland is one of the most proactive countries in the region in proposing projects, also in renewables. Even when we speak about transition to a low-carbon economy, climate and energy efficiency, we see that Poland is one of the most proactive from the region, among the countries in transition. We have an excellent cooperation with Poland– as said by Lilyana Pavlova, Vice-President of the European Investment Bank in an interview with BiznesAlert.pl.
BiznesAlert.pl: What can you say about the recent contract with PGE?
Lilyana Pavlova: At the end of 2019, we signed the contract with PGE on supporting three onshore wind farms on the Baltic Sea shore (97 MW altogether). It is a loan for 17 years, for PLN 272,5m, equivalent to approx. EUR 64 mln. It is PGE’s priority to become greener and diversify its energy mix. The EIB fully supports PGE’s long-term plans and we hope it can drive further investments. We have discussions with other bigger and smaller players in the Polish market. In 2020 we hope to have new projects – we have advanced talks with a couple of companies on financing onshore wind farms and photovoltaic plants.
To get financing you need a plan. Do you see the commitment on the side of the Polish government?
We see a strong commitment of the Polish government for this transformation in the direction of a low-carbon economy. Designating a climate minister is a positive signal, which demonstrates the commitment to deliver in this area. We know that this is a challenging topic for Poland, as it is for other countries in the region, but we see that Poland is developing a national plan for climate and energy. This will enable us as a bank to provide additional support to Poland, because we can provide both technical assistance for the feasibility study and targeted support for the projects within the “Just Transition Mechanism”.
In November, the European Investment Bank decided to phase out financing fossil fuels, including gas. What does this mean for the region of Central and Eastern Europe?
Late last year the Board of Directors adopted the revised Energy Lending Policy (ELP) where an agreement was reached that we are phasing out fossil fuels funding starting from the end of 2021. This decision is part of our more ambitious commitment to climate action, which is aligned with the EU Commission’s Green Deal. We will gradually increase the share of our financing dedicated to climate action and environmental sustainability to reach 50% of the Bank’s operations in 2025 and from then onwards.
It means, we will aim to support EUR 1 trillion of investments in climate action and environmental sustainability in the critical decade from 2021 to 2030. As a rule, the EIB does not finance the full costs of a project, it usually can finance up to 50%, which is already significant. By doing so, it also acts as a catalyser for additional public and private financing, meaning that we are able to mobilise other investors thanks to our involvement. Since 2012, for example, the EIB provided EUR 150 billion of finance worldwide, supporting EUR 550 billion of investment in projects that reduce emissions and help countries adapt to the impacts of climate change. This made the EIB one of the world’s largest multilateral providers of finance for projects supporting these objectives. The EU bank has been Europe’s climate bank for a long time. Now we are upscaling our ambition.
Polish goverment was sceptical about this decision…
This decision was taken by the majority of members of the EIB board (92 per cent) when we decided to transform into the climate bank. We are quite aware of the Polish position concerning the bank’s decision. As you know, we adopted a transition period in phasing out fossil fuels funding. It will enter into force as of January 2022 – one year later than originally planned in our first draft which means that by the end of 2021 we will have our last projects in fossil fuels accepted, after that we will be focusing on lending mainly on energy efficiency and renewable energy projects. Low-carbon gas like biomethane and renewable hydrogen will be eligible.
Do you predict exceptions?
From our point of view it was agreed that no exceptions will be possible for single countries nor regions. This does not mean that Poland cannot continue having other funding opportunities for fossil fuels investment, from other international financial institutions or other sources. We know that gas is still important for Poland. However, our Energy Lending Policy stipulates that we will phase out from unabated gas. We are ready to support others projects in renewables andenergy efficiency.
EIB will try to compensate?
Let me stress one very important point. The EIB is fully aware that not all countries have the same starting point when it comes to their energy mix. That is why the EIB will establish an Energy Transition Package to provide extra support to those Member States or regions with a more challenging transition path. That includes Poland. We understand that gas is still important for Poland. We will try to help compensate the impact of the new Energy Lending Policy through supporting other projects: in energy efficiency, renewable energy, just transition. There is a lot to do.
How to support Poland in Energy transition?
We will strongly support Poland in developing and implementing its energy and climate plan, which is really ambitious. We are ready to support all projects which are climate-oriented, which are based on renewables and which are part of the just energy transition. Poland wants and needs a transition process towards low-carbon energy and renewables with all possible means and we are ready to continue to support projects that are well prepared, including onshore wind-farms and photovoltaic farms.
We have to remember that Poland is one of the most proactive countries in the region in proposing projects, also in renewables. Even when we speak about transition, climate and energy efficiency, we see Poland is one of the proactive country from the region, among the countries in transition. This is true for its energy sector and for its economy in general. Let us remember that in 2019 Poland was one of the top five recipients of EIB loans, all sectors included, among the EU 28 Member States. Cooperation between Poland and the EIB is strong and deep and it will remain so.
Do you discuss supporting projects dedicted to air pollution with Warsaw?
I believe this should be a part of the strategy in our cooperation. The Polish government worksvery hard in this part of the energy sector and we are ready to support its initiatives at national and local levels.
Interview by Bartłomiej Sawicki