Will the Energy Transformation Fund start operating in 2022?

FTE

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The published draft amendment to the act on the greenhouse gas emission trading scheme indicates that the Energy Transformation Fund (FTE) is to start operating in 2022. Its task will be to dispose of funds from the sale of CO2 emission allowances, and the money raised will help finance nuclear and renewable energy. Along with the draft, a bill on environmental protection law was published on 14 October.

The draft, which was prepared by the Ministry of Climate and Environment, shows that energy-related investment expenditures in the national economy have been estimated in the KPEIK (National Energy and Climate Plan) at more than EUR 356bn in 2021-2040. The draft’s RIA explains that Poland will not choose to use the derogation for energy and increase the Modernisation Fund. Instead, the entire available pool will be auctioned, and the revenues generated from 40% of the allowances will contribute to the modernisation of the energy sector. Financing will be the responsibility of a newly created national fund, which will be able to deploy resources more freely, unlike the Modernisation Fund. Programmes implemented under the new fund will not have to be approved by external bodies, as would be the case with the FM, which is obliged to consult programmes with the European Investment Bank and the Investment Committee. In addition, the Modernisation Fund does not only deal with the energy sector, and funds are provided for many other investments.

The Ministry of Climate and Environment estimates emission allowances at around 268m and indicates that the 2021 auctions may also include emission allowances unused under the derogation mechanism for the energy sector in the third settlement period of the EU ETS. The sale of these allowances will support the transformation of the power sector, and the funds raised will amount to 50% of the revenue associated with this pool, which is about 17m emission allowances.

FTE will support modernisation in the energy sector

The newly established state special purpose fund will be the Energy Transformation Fund, which will be fed with funds from the sale of 40% of the pool of CO2 emission allowances. The fund is to start operating in 2022 and the funds are to support modernisation, diversification and sustainable transformation of the energy sector. The National Fund for Environmental Protection and Water Management will be responsible for managing the fund. Its tasks will include the development of FTE projects and public consultations. It will also be responsible for recruiting and assessing applications, concluding co-financing agreements on behalf of the administrator of the FTE, as well as supervising investments that received co-financing and assessing them in terms of the material and environmental effects achieved.

According to the amendment to the law, there are plans to establish the FTE Consultative Council, and its membership will be selected by the ministers responsible for State Assets, Energy, Public Finance, and Climate as well as by the Government Plenipotentiary for Strategic Energy Infrastructure and the Prime Minister. Each of them will be able to appoint one member of the Consultative Council. Bank Gospodarstwa Krajowego will be responsible for the financial side.

The investments which will be able to apply for co-financing from FTE include projects related to nuclear energy, RES, industrial and distribution networks, energy storage or CO2 capture and storage. Investments based on fossil fuels will not be eligible for the programme. Funding will be provided in the form of loans and grants, and the FTE plans two modes of financing: competitive and continuous.

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