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Poland's energy policy is grounded in its Energy Law of 1997 and in the governing Council of Ministers' "Assumptions for Poland's Energy Policy until the year 2020," adopted in 2000. Both of these documents lay down general principles for the development of the country's energy sector and recognize the important role of energy efficiency in this effort. Another important document adopted by the Polish government is the 2nd Polish National Environmental Policy, in which national goals are set to reduce energy intensity by 25% in 2010 and by 50% in 2025 compared to 2000.

In the late 1990s several small-scale energy efficiency projects were implemented at the municipal level. One of them was initiated by the Krakow center of the Polish Foundation for Energy Efficiency (FEWE). Demonstration projects on low-cost measures for saving heat energy were carried out in six cities in the Krakow Region (Krapkowice, Olsztynek, Nowy Sacz, Luban, Trzcianka and Bialystok) with help from the funding provided by the U.S. Agency for International Development and the Global Environmental Facility. The municipalities themselves contributed about a third of the total US$850,000 cost for the projects. The aim of the initiative was to utilize the American experience in saving heat energy with limited financial resources. The demonstration projects included five public schools, a health care center, a kindergarten and five apartment buildings. On average, heat savings amounted to 15-30% per year (consistent with the fund's allowable payback period, which is not to exceed 5 years).

In 1998, the Polish government established the Thermo-Modernization Fund (TMF). The Fund provides technical and financial support for improvements in residential buildings, heat distribution networks, and small heat-boiler stations (up to 11.6 MW capacity). In 2001, the fund expanded its scope to public buildings such as schools and hospitals. TMF requires that on a given project Polish investors provide no less than 20% of the project capital. The commercial credit is then repaid from the energy savings. The repayment period for the projects is capped at seven years. The fund offers a strong incentive for timely payments on its loans:if the first 75% of scheduled payments are made promptly, the remaining 25% of the loan is forgiven. The goal is to achieve retrofits affecting over 2.4 million apartments--roughly one-quarter of Polish households--and to reduce their heating costs by 40 - 50%. The cost of the program is huge, estimated at US$5 billion for ten years, as is its overarching goal: to reduce the country's annual energy consumption of coal, a major primary energy source in Poland, by 7 to 14 million tons (5-10% of the country's total annual coal consumption).

Another important institution supporting implementation of energy efficiency measures in Poland is the National Fund for Environmental Protection and Water Management (NFOS), which operates in conjunction with Poland's Environmental Protection Bank (BOS). Among the priorities of the fund are mitigating air pollution and conserving raw materials and energy; thus, energy conservation projects are a key focus. From 1989 to 2000, NFOS spent 2,800 million PLN (US$700 million) on air protection in the form of loans, joint funding, credits and project subsidies.

In 2001, the Krakow Energy Efficiency Project was started. This initiative is being financed by the World Bank, GEF, and the Municipal District Heating Company of Krakow, as well as other private and public investors. Total investments of nearly US$100 million are expected over the program's six year duration. Its main objectives are:

  1. Modernization of the city's district heating system.
  2. Improved energy efficiency of city buildings.
  3. Capacity-building for financial support of energy retrofit projects.

Nearly half of the project funds are allocated to modernization of the municipal district heating system in Krakow. It is estimated that implementation of the project will lead to a substantial reduction in heat and water losses, achieving total energy savings of 25%. This is equivalent to annual savings of 250 thousand tons of coal, valued at US$11 million per year.

Although Poland has no official national program on energy efficiency, funds like TMF, NFOS--and in some cases regional and municipal governments themselves--are providing strong support for implementation of energy conservation projects in the public sector. The importance of energy efficiency in Poland is likely to increase after the country's accession into the European Union in 2004.