REPUBLIC OF POLAND PROGRAM FOR RESULTS ENERGY EFFICIENCY IN SINGLE FAMILY BUILDINGS ENVIRONMENTAL AND SOCIAL SYSTEM ASSESSMENT (ESSA) November 9, 2020 DRAFT 1 Table of ContentsExecutive Summary .................................................................................................... 5 1. Introduction .......................................................................................................................................... 11 1.1 Poland Clean Air Priority Program .............................................................................................................. 12 2. Description of Poland Program for Results ............................................................................................ 16 3. Objectives of the Environmental and Social System Assessment .......................................................... 18 4. Key Stakeholders Mapping .................................................................................................................... 20 4.1 Ministry of Climate and Environment ......................................................................................................... 21 4.2 Ministry of Environment ............................................................................................................................. 22 4.3 National Fund for Environmental Protection and Water Management ..................................................... 22 4.4 Regional Funds for Environmental Protection and Water Management .................................................. 23 4.5 Municipality (gmina) ................................................................................................................................. 24 4.6 Other stakeholders .................................................................................................................................... 25 5. Description of Expected Program Environmental and Social Effects. ..................................................... 27 5.1 Environmental and social screening ........................................................................................................... 27 5.2 Social inequalities and marginalization of vulnerable groups ................................................................... 35 5.3. Gender-related issues in CAPP ................................................................................................................... 36 6. Assessment of Borrower’s Environmental and Social Management Systems (ESMS) relevant to the CAPP Program ................................................................................................................................................ 37 6.1 Methodology ............................................................................................................................................. 37 6.2 Legal Framework ....................................................................................................................................... 37 6.2.1 The EU Environmental Legislation context ........................................................................................ 37 6.2.3 Poland EIA Legal and Regulatory Framework ..................................................................................... 38 6.2.4 Building Law ....................................................................................................................................... 39 6.2.5. Health and safety regulations concerning construction workers ...................................................... 39 6.2.6 Waste Management Law ................................................................................................................... 40 6.2.7 Regional Anti-Smog Resolutions ........................................................................................................ 41 6.3 Air Quality Management ........................................................................................................................... 43 6.3.1 Organizational Structure at the national, regional and local level ..................................................... 43 6.3.2 Central Register of Emissions from Buildings ..................................................................................... 44 6.4 Verification of completed projects ............................................................................................................. 45 6.5 Institutional capacity of implementing institutions ................................................................................... 46 6.6 Interagency coordination .......................................................................................................................... 47 6.7 Reputational risk ........................................................................................................................................ 49 6.8 Grievance redress mechanism and appealing procedures ........................................................................ 50 7. Stakeholder Consultations and Engagement ......................................................................................... 52 8. Interviews with the WFOSiGW and other actors ........................................................................................ 53 2 9. Assessment of Program System Consistency with Core Principles of OP 9.00 ........................................ 56 10. Environmental and Social Risk Rating ....................................................................................................... 57 11. Recommendations for the Program Environmental and Social Systems ................................................... 57 References .................................................................................................................................................. 62 Annex 1. Questionnaire for WFOSiGW and key findings ................................................................... 64 Annex 2. Minutes of online meeting with WFOSiGW in Kraków. .............Error! Bookmark not defined. Annex 3. Minutes of online meeting with WFOSiGW in ToruÅ„. ................Error! Bookmark not defined. Annex 4. Minutes of online meeting with WFOSiGW in WrocÅ‚aw ............Error! Bookmark not defined. Annex 5. Minutes of online meeting with WFOSiGW in Lublin. ......................................................... 73 Annex 6. Minutes of online meeting with municipality Skawina. .............Error! Bookmark not defined. Annex 7. Minutes of online meeting with municipality Czerwonak .........Error! Bookmark not defined. Annex 8. Minutes of online meeting with PORT PC (Polish Organization for the Development of Heat Pump Technology) ........................................................................................................................... 74 Annex 9. Interview with Birds’ protection activist ......................................Error! Bookmark not defined. Annex 10. Interview with NGO Polski Alarm Smogowy .............................Error! Bookmark not defined. Annex 11. Facebook search review ...............................................................Error! Bookmark not defined. 3 List of Abbreviations ASR Anti-Smog Resolution AQM Air Quality Management CAPP Clear Air Priority Program EE Energy Efficiency EIA Environmental Impact Assessment EPL Environmental Protection Law ESMS Environmental and Social Management System ESSA Environmental and Social System Assessment EU European Union GDP Gross Domestic Product GIOS Chief Inspectorate of Environmental Protection GMO Genetically Modified Organism GoP Government of Poland GUS Main Statistical Office MoC Ministry of Climate MoD Ministry of Development MoE Ministry of Environment NFEEAS National Fund for Energy Efficiency and Anti-Smog NFOSÌ?iGW National Fund for Environmental Protection and Water Management NIK Supreme Audit Office NGO Non Governmental Organization OP Operational Policy PforR Program for Results PM Particulate Matter SEA Strategic Environmental Assessment SFB Single Family Building SSP Stop Smog Programme WFOSiGW Regional Fund for Environmental Protection and Water Management WIOS Regional Inspectorate of Environmental Protection ZUM Eligible Equipment and Material 4 Executive Summary Background Despite considerable strides in decarbonizing its energy sector, Poland has poor ambient air quality. The country is home to 36 of 50 of the most air-polluted cities in Europe (WHO, 2018). The World Bank estimated that the cost of air pollution amounts to about US$ 31 - 40 billion per year, equivalent to 6.4-8.3 percent of GDP (2016). Poor air quality takes a considerable human toll. Respiratory illness caused by pollution results in approximately 44,500 premature deaths in Poland according to the European Environmental Agency. Poland has come under considerable national and international scrutiny because of air pollution. It has made limited progress in reducing particulate pollution from coarse and fine particulates (PM10 and PM2.5 respectively), leading to non-compliance with EU standards. In early 2018, the European Court of Justice found Poland guilty of failing to meet air quality norms, and in particular for repeatedly failing to meet the EU’s daily and annual limits for PM10. Failing remedial actions, the EC could impose financial penalties on Poland. The government of Poland made the fight against air pollution a top priority. In June 2018, the Clean Air Priority Program (CAPP) was launched – a PLN 103 billion (EUR 24 billion), 10- year initiative aimed at reducing low stack emissions. The CAPP is implemented by the National Fund for Environment Protection and Water Management (NFOSÌ?iGW). It has the specific objective to “improve the energy efficiency of existing single-family housing through thermal modernization and upgrading of heating furnaces.â€? The program deploys a system of subsidies, tax incentives, and targeted loans to help 3,030 million SFBs households to replace their solid fuel boilers and conduct thermal retrofits. The CAPP was simplified on May 15, 2020 to increase its attractiveness to the population. PforR Program Scope The Bank-financed PforR refers to Energy Efficiency in Single Family Building which is part of CAPP. The CAPP has a strong strategic rationale as it tackles critical issues of air quality, energy security, and climate change mitigation due to high energy consumption and pollution from old heating sources in older SFBs. The program is well-aligned with EU priorities as noted in the suite of transposed EE directives, strategy documents (e.g., NECP), and air quality standards. Many EU countries allocate public funding/subsidies to the residential sector, given the substantial market barriers associated with the high upfront investment costs, long payback periods, and high transaction costs. Investment subsidies have been virtually ubiquitous for housing renovation and EE programs in other Central and Eastern European countries, including Lithuania, Bulgaria, Romania, Slovenia, and the Czech Republic. Therefore, the Bank’s proposed PforR objectives, targets, and scope have been developed to closely align with those of CAPP, namely “to improve air quality and to reduce greenhouse gas emissions by exchanging heat sources and improving energy efficiency in single-family housing.â€? Thus, it is proposed that the scope of the PforR loan would include the full breadth of CAPP, but be limited to a five-year implementation period, from 2021-2025, to correspond with the expected disbursement period of the PforR loan. The Bank Program would also include the complementary thermo-modernization tax relief, administered by the Ministry of Finance (MoF). However, CAPP is expected to be implemented for a much longer period, through 2029. The program beneficiaries stay unchanged, namely, SFB owners who need to undergo thermal 5 renovations and boiler replacements, citizens who benefit from better quality air, equipment and service providers who benefit from increased demand for their products and services, banks who benefit from increased number of customers and loan applications, and suppliers of cleaner fuel options (e.g., utilities supplying electricity, gas and district heating, biomass suppliers, etc.). Institutionally, the PforR Program would fit within the existing institutional arrangements under CAPP. However, some institutional adjustments will be needed, such as to included commercial banks, define and formalize the roles and responsibilities of municipalities, and to train and mobilize a set of eligible program operators. Due to the nature of the program, no centralized procurement is planned, so most of the works and equipment contracts would be very small (under US$20,000) and procured by the SFB owners directly. It should be noted that the proposed PforR loan of US$300 million represents about 5 percent of the estimated US$5.6 billion budgeted for CAPP in the corresponding five-year period, and about 0.2 percent of the full, 10-year program period. Program Development Objective(s) (PDO) and PDO Level Results Indicators The Program development objectives are to increase the adoption of sustainable heating and energy efficiency investments in single family buildings and reduce emissions that contribute to air pollution in Poland. Key Program results indicators include: a. PDO 1 (Core): Projected lifetime energy savings (MJ). The indicator measures progress towards reducing energy consumption in single family buildings through stove replacement and thermal renovations over the lifetime of the investments. b. PDO 2 (Custom): Projected lifetime reduction of particulate matter emissions (ton PM10). This indicator measures progress towards reducing particulate matter emissions resulting from stove replacement and thermal renovations in single family buildings over the lifetime of the project. Purpose of the ESSA The ESSA process is a multistep methodology in which the World Bank team: (a) Analyzes the environmental and social effects, including indirect and cumulative effects, of activities associated with the CAPP. (b) Analyzes the borrower’s systems for managing the identified environmental and social effects, including reviewing practices and the performance track record. (c) Compares the borrower’s systems - laws, regulations, standards, procedures, and implementation performance - against the core principles (World Bank Policy PforR) and key planning elements (World Bank Directive PforR) to identify any significant differences between them that could affect PforR Program performance. d) Formulates recommended measures to address capacity for and performance of policy issues and specific operational aspects relevant to managing the PforR Program risks (e.g., carrying out staff training, implementing institutional capacity-building programs, developing and adopting internal operational guidelines). Relevant Environmental and Social management procedures and processes identified through the ESSA process and recommended in the ESSA are designed to (a) promote environmental and social sustainability in the PforR Program design; (b) avoid, minimize, or mitigate against adverse impacts; and (c) promote informed decision-making relating to a PforR Program’s 6 environmental and social effects. The ESSA includes specific recommendations on how to mitigate any key risks and impacts and also how to address any gaps related to institutional/ regulatory framework or organizational capacity. These recommendations should be articulated in the Environmental and Social Sections of the Program Action Plan (PAP) to be prepared for the Program-for- Results (PforR) operation. The recommendations aim to: • Promote environmental sustainability in the Program design; • Avoid, minimize or mitigate adverse impacts; and • Promote informed decision-making in relation to the Program’s environmental effects. Specifically, the ESSA exercise is designed to consider the consistency of the existing country systems with the proposed PforR operation along two dimensions: (1) systems as defined in the legal and regulatory framework of the country; and, (2) capacity of the Program institutions to effectively apply the environmental and social management systems associated with the Program’s environmental and social effects as well as the proposed set of actions in the Program Action Plan that attend to the major gaps in the system as identified in the ESSA with respect to the six core principles of OP/BP 9.00. Environmental and Social Effects of the Proposed Program The environmental and social impacts are expected to be limited, site-specific, reversible, and mitigatable. Physical works financed under the Program are under DLI 6 and 7 and include thermal insulation of buildings and energy efficient installations. None of the anticipated Program activities are expected to have significant irreversible adverse impacts on the environment and/or affected people. Small construction and rehabilitation works will carry a set of common risks typical for such activities: generating noise, dust, construction and demolition waste, and risk to the health and safety of workers. Potential risks and impacts identified through the ESSA relate to: (i) waste management due to the disposal/recycling of old boilers, old insulation materials, windows, and external doors; (ii) impacts on bat and bird habitats located under the roofs/in attics of SFBs to be retrofitted; (iii) adverse effects on houses of historical value or objects, such as tiled stoves of certain values; and (iv) health and safety of workers engaged in construction/installation works and household members during works. Cumulative impacts are related to the (a) removal of asbestos from roofs in SFBs which is not part of the CAPP in parallel with thermal insulation of the roof and (b) disposal/recycling large number of old boilers, external doors and windows. The probability of cumulative impacts associated with the removal of asbestos is small. The common way for recycling scrapped old heating stoves is cleaning, disassembly and melting the metal parts in ironworks to produce simple metal elements. The capacity for doing so exists in Poland. Thermal retrofits of SFBs (building insulation, replacement of windows and doors) is less common in the CAPP than the replacement of the heating source. Typical recycling under the CAPP is desegregation of wood or plastic elements from glass. Wood or plastic is incinerated, glass can be reused or disposed at sanitary landfill. No gaps were identified regarding the capacity of the waste recycling and management system in Poland to cope with construction waste from the CAPP. The relevant policies and regulations are in place (following the EU directives, regulations and decisions). Financial and administrative enforcement is satisfactory. In cases of detection of bird nests and bats resting sites under the roof prior to the works, SFBs or its contractor will minimize negative impacts primarily by banning works during specified 7 nesting period and moving the habitats to another location. This provision is mentioned in the application form. The potential social risks identified in ESSA relate primarily to (a) impacts on vulnerable groups and an increase of social inequalities due limited capabilities of low-income group, in particular in terms of the online application process (DLI3), (b) a concern that a change in fuel, from cheap firewood/coal to more expensive alternatives, may impact the recurring energy bills for lower income households (DLI2), and (c) insufficient citizen engagement and information regarding CAPP (DLI5). With regards to CAPP procedures, the application process relies heavily upon access to technology (computers and the internet), ability to access the CAPP website, and the ability to properly fill in the application. With the high reliance of using on- line applications, elderly persons not familiar with using computers and low-income households without access to internet are at greater risk of non-participation in CAPP. A social risk also relates to a change in household expenditures as a result of fuel source changes. This regards in particular to SFB that chose not to apply for thermal insulation of their building (walls, windows and front doors), which result in keeping the same energy demand of buildings. The CAPP provides increased subsidies for lower income households, and other government programs are being designed to assist the lowest income households. Finally, insufficient, conflicting, or incorrect information, may also deter participation. There is a need to more actively engage beneficiaries in two-way interaction and dialogue on the program design and implementation as well as improve distribution of information. The positive environmental and social impacts of the subprojects mainly relate to the benefits of: • Reduced energy demand due to thermal insulation of buildings (roofs, walls, doors, windows, floor). • Reduction of CO2, PM10 and PM2.5 emissions due to replacement of old heating stoves by modern gas, electric, heat pump, oil, or solid fuel installations. • Reduction of global emissions due to energy-efficient investments and cleaner fuels. • Public health benefits caused by reduced air pollution emissions. • Quality of life improvement due to better heat comfort in houses, and heating systems more comfortable to operate. • The substantial economic boost associated with renovating three million of buildings and replacing thousands of heating systems. • Increased environmental awareness among inhabitants. The environmental and social risks of the Program are rated as Low to Moderate. Assessment of Borrowers Systems and Framework The NFOSÌ?iGW has overall responsibility for the supervision of the CAPP. This Fund plays the coordination role in relation to the 16 regional WFOSÌ?iGW, which are the main implementing agencies for the CAPP at the regional level. The NFOSÌ?iGW reports to the Ministry of Climate. Municipalities can sign a cooperation agreement with the WFOSÌ?iGW, and support the beneficiaries with application forms. Commercial banks are not yet included in the CAPP. They will provide loans to beneficiaries based on the agreement w ith the NFOSÌ?iGW. CAPP implementing agencies (NFOSÌ?iGW and WFOSÌ?iGWs) continue to hold responsibility for applications processing and ex-post verification etc. and hold responsibility for environmental and social standards even in the case of applications submitted in conjunction with loan applications from commercial banks. 8 Polish EIA law and EIA Directive 85/337/EEC with subsequent amendments are not applicable to the CAPP. EIA is not required due to a large number of very small project activities. The contracted companies are obliged to comply with applicable environmental, social, health and safety laws and regulations. They conduct safety training for the workers, and follow standards, depending on the work specificity and regulations for the construction industry. Construction companies are also responsible for the transportation and disposal of inert construction and demolition waste. Any hazardous waste is managed by licensed contractors. The evaluation of the environmental performance of the contractors performing installation works is part of sub- project evaluation conducted by WFOSiGW. It is limited to a post-completion check of certifications for the recycling of old heating installations for a random sample of 5% of SFBs where works were conducted by the contractor, and for all subprojects completed internally by SFB. There is enough capacity within the WFOSiGWs for conducting the ex-post review, and to ensure the fulfillment of the environmental safeguard responsibilities. Suggested areas of improvement and inputs to Program Action Plan This section summarizes the key measures that need to be taken during CAPP implementation for environmental and social aspects. In a broader context, the measures recommended are designed to help proponents improve their system performance and to address important gaps between the regional systems and the PforR core principles and key elements. The Program should incorporate the capacity to adhere to social and environmental requirements as well as to track, analyze, and work to mitigate negative effects and replicate positive ones where applicable. The following actions are proposed: Necessary actions: 1. Broadening the scope of the ex-post review of CAPP. The following should to be reviewed: • Declaration of disposal or reuse of construction demolition waste such as old window frames, doors, glass, and other construction and demolition waste for projects that are subject to thermal insulation and replacement of front door, windows and thermal insulation of walls and roof. • The condition of the site. The site has to be left in acceptable state of cleanliness with no waste left. • Presence of bird and bat survey report (if required) with mitigation measures applied. 2. Preparation of Environmental and Social checklist which includes the above items to provide guidance for WFOSiGW personnel conducting ex-post evaluation of CAPP subprojects. As all CAPP participants will be expected to follow Poland’s laws and regulations, the check list will include assessing that activities have followed applicable legislative requirements. 3. Strengthen the existing comprehensive program outreach effort. Currently, information and promotional activities of WFOSÌ?iGWs are based on their own resources for promotion and outreach, while NFOSÌ?iGW makes funds available for the Ministry of Climate which has an overall responsibility for information and education activities. Strengthening existing initiatives could be done through a variety of mechanisms, such as hiring a media firm, using multimedia tools, workshops and/or road shows, municipal-sponsored events, the introduction of program agents or operators, a program help desk, etc., to share program information, eligibility criteria, application procedures, 9 etc. The outreach effort should include developing an awareness baseline, including disaggregation by gender, testing of messages, and impact monitoring with outcome indicators. 4. Enhance conditions under which solid fuel boilers may be installed. Currently, solid fuel boilers are ineligible for subsidies where an existing gas connection is already in place. However, they are eligible in locations where a gas connection may be viable even if not already in place. To enhance these conditions, NFOSÌ?iGW to enter into agreements with gas/DH companies to confirm the viability of establishing connections before SFB owners can receive support for a solid fuel boiler. Consider reducing subsidy levels for coal boilers to encourage CAPP beneficiaries to select other heating technologies. 5. Consider options to support further municipal participation in the program. . Municipalities’ are important as they are the first option for residents seeking information, and are best positioned to reach disadvantaged groups. Municipalities could engage in outreach activities, conduct income verification, potentially provide assistance to disadvantaged groups on the CAPP applications, including visits to SFBs. This may require financial incentives for municipalities to engage in the CAPP. Eco- managers in the MaÅ‚opolska region can serve as an exemplary solution. Useful actions: 6. Establishment of an emissions registry for SFB, which would allow municipalities in particular to better target support to low-income beneficiaries and strengthen enforcement of Anti-Smog Resolutions. 7. In order to improve the review of grievances and feedback, CAPP should develop, amalgamat, utilize systematic approaches to monitor and consult on impacts, grievances, and feedback at regional and national levels. Establishing a systematic review should ensure comments received from stakeholders inform CAPP planning and implementation. If possible, data on feedback providers and grievances should be disagregated by age group, gender, urban/rural and region. This will inform the program on whether specific groups are disproportionatly impacted. 10 1. Introduction Poland has been one of the fastest-growing economies in Europe. With an average 3.6 percent growth per year between 2007 and 2016, the country has grown faster than its regional peers and converged rapidly with other European Union Member States, exceeding 70 percent of the EU’s average per capita GDP at the end of 2018. This transition benefited from a consistent set of policies that promoted productivity increases, strengthening institutions and improvements in human capital endowments. Despite remarkable strides in decarbonizing its energy sector, serious threats remain, particularly in terms of the deterioration of ambient air quality. Poland is today home to 36 of 50 of the most air polluted cities in Europe (WHO, 2018). The World Bank estimated that the cost of air pollution amounts to about US$31 - 40 billion per year, equivalent to 6.4-8.3 percent of GDP (2016), and in line with the estimates by the European Commission and the Polish Government (EUR 26-30 billion). Poor air quality takes a considerable human toll. Respiratory illness caused by pollution result in approximately 44,500 premature deaths in 2014 in Poland according to the European Environmental Agency. Poland disproportionately contributes to the number of premature deaths in the EU-28, accounting for 11 percent of all premature deaths while only accounting for 7.5 percent of the population. There is a clear recognition among high-level authorities that tackling the problem of air pollution is crucial for enhancing the quality of life, strengthening competitiveness and reinforcing the achievement of objectives of Poland’s global climate related commitments. Poland has come under considerable national and international scrutiny because of air pollution. Although Poland has made considerable progress in reducing air quality pollutants such as SO2 and NOX, it has made limited progress in reducing particulate pollution from coarse and fine particulates (PM10 and PM2.5 respectively), leading to non-compliance with EU standards (2008/50/EC Directive on Ambient Air Quality and Cleaner Air for Europe). In early 2018, the European Court of Justice found Poland guilty of failing to meet air quality norms, and in particular for repeatedly failing to meet the EU’s daily and annual limits for PM10. Failing remedial actions, the EC could impose financial penalties on Poland. The government of Poland made the fight against air pollution its top priority. The 2017 Governmental Clean Air Priority Program (CAPP) put forward 15 measures structured around four pillars: (i) improving boiler standards; (ii) improving solid fuel standards; (iii) education and awareness supporting; and (iv) tackling energy poverty. In November 2018, the Government of Poland released a draft Energy Policy, which aims to increase energy security by diversifying supply. The strategy’s 2030 targets include a) reducing the share of coal generation by 60 percent; b) reaching 21 percent renewable energy gross final energy consumption; c) improving energy-efficiency by 23 percent relative to the 2007 forecasts; d) reducing CO2 emissions by 30 percent from 1990 baseline. Poland is implementing several energy efficiency measures in multi-family buildings and public agencies, industries and SMEs, transport and energy generation and supply, and has an energy efficiency obligation scheme (white certificates). Poland is also committed to renovate annually 3 percent of the total area of heated or cooled government-owned buildings and premises to meet at least the minimum requirements for energy performance in buildings as defined by EU Directives. Energy efficient investments are coordinated by the National Fund for Environmental Protection and Water Management (NFOSÌ?iGW) and implemented at regional level by Regional Environmental Protection Funds (WFOSÌ?iGW). Additionally, the 11 Operational Programme Infrastructure and Environment, Regional Operational Programs, as well as BOSÌ? Bank, and the Thermo-modernization and Repairs Fund managed by Poland’s development state bank Bank Gospodarstwa Krajowego support energy efficiency investments. The residential sector continues to be the second-largest energy consumer, driven mainly by SFBs. Approximately 50 percent of households (5.4 million households) live in SFBs, which are considered to be a key contributor to emissions of gaseous and particulate matter pollutants (PM10 and PM2.5) through the combustion of fuels (mostly coal, but also biomass and waste) for the purposes of central heating and domestic hot water in often low quality furnaces. Section 1.1 does not refer to PforR but to CAPP program only. 1.1 Poland Clean Air Priority Program The objectives of CAPP are to improve air quality and reduce GHG emissions by exchanging heat sources and improving energy efficiency in single-family buildings (SFBs).1 The indicators to measure progress towards the objective include: • Number of buildings with improved thermal performance (target: 3,030,000 units) • Number of inefficient heat sources replaced for efficient, low emission heat sources in residential buildings (target 3,000,000 units) • Additional electricity generation capacity from installed photovoltaic (PV) micro installations (target: 50 MWe) • Reduction of final energy consumption (target: 37,500,000 MWh/year)2 • Reduction of dust emissions with a diameter of less than 10 micrometers (PM10; target: 210,000 Mg/year) • Reduction of benzo-α-pyrene emissions (target: 140 Mg/year) • Reduction of CO2 emissions (target: 14,000,000 Mg/year) CAPP was launched in September 2018 and is planned to be implemented until 2029 with (i) commitments signed (signing contracts with CAPP beneficiaries) by December 31, 2027 and (ii) funds disbursed by September 30, 2029. Applications can be submitted by beneficiaries on a continuous, year-round basis. The program was announced as a PLN 103 billion program (CAPP and Stop Smog Program – SSP) with a budget for subsidies, loans to municipalities and thermo-modernization tax relief of PLN 63.3 billion (USD 16 billion) and loans granted by commercial banks of PLN 40 billion (USD 10 billion). At the time of this assessment, commercial banks do not participate in the CAPP in a formalized way but may provide commercial loans to SFB owners. The program is managed by the National Fund for Environmental Protection and Water Management (NFOSÌ?iGW) under the MoC and implemented through the 16 Regional Funds for Environmental Protection and Water Management (WFOSÌ?iGWs, see Figure 1). a) NFOSÌ?iGW is responsible for (i) overall program coordination and implementation; (ii) development of all program rules, guidelines, and procedures including SFB and 1 http://czystepowietrze.gov.pl/wp-content/uploads/2020/04/Program-Priorytetowy-Czyste-Powietrze.pdf 2 If the CAPP target for reduction of final energy consumption was divided by 3 million SFBs, it will be equal to 12,380 kWh annual energy savings per building. For average building size 130 m2 it would require to reduce final energy consumption by 95 kWh/m2, which is a very challenging objective and cannot be achieved in buildings in which only heat source will be replaced without improvement in the energy performance characteristics of the building envelope. 12 equipment eligibility criteria; (iii) developing financing agreements with the regional WFOSÌ?iGWs; (iv) program communications and application platforms; (v) program monitoring, oversight, evaluation and reporting; and (vi) financial mobilization, management and disbursements. b) The 16 WFOSÌ?iGWs are responsible for (i) receipt and processing of applications from beneficiaries; (ii) disbursement of grant payments against eligible expenses; (iii) ex-post inspections and oversight; and (iv) reporting to NFOSÌ?iGW. Operating under a financing agreement with NFOSÌ?iGW, each WFOSÌ?iGW enters into grant agreements with eligible beneficiaries (i.e., SFB owners). WFOSÌ?iGWs also maintain cooperation agreements with participating municipalities and partner banks. The WFOSÌ?iGWs typically establish a separate unit with 15-30 full-time staff responsible for the administration of CAPP and may have 3-4 local offices to deal with applications in their region locations. Municipalities serve as the local points of access for SFB owners and provide them with information about the program. As of June 2020, around 650 municipalities have signed agreements with NFOSÌ?iGW for CAPP implementation. Figure 1. Institutional arrangements for CAPP Ministry of Climate Owners of SFBs NFOÅšiGW WFOÅšiGWs Energy efficiency auditor (optional) Service providers and contractors Designer (optional) Contractual Arrangements Flow of Funds Contractor/installer Services/works delivered The program uses partial subsidies and tax reliefs to support SFBs in Poland to thermally retrofit their homes and replace outdated and inefficient heating systems with more efficient ones relying on cleaner fuels. An eligible beneficiary is a natural person that (i) is the owner or co-owner of an SFB and (ii) has an annual income not exceeding PLN 100,000. The program subsidizes (i) cost of investment preparation; (ii) replacement of heat source, connections, installations, and ventilation; and (iii) thermal retrofits of SFBs. (i) Cost of investment preparation: Energy audit, project documentation/design, and ornithological and chiropterological survey (assessment of impact of thermal renovation on bat and bird habitats located under the roof of retrofitted buildings). 13 (ii) Cost of replacement of heat source, connections, installations, and ventilation: Connection to district heating; replacement of old boiler by a heat pump, gas condensing boiler, oil condensing boiler, coal boiler, wood gasification boiler, wood pellet boiler, or electric heating; gas connection and internal installations; central heating installation and hot utility water installation; mechanical ventilation with heat recovery; and PV micro-installation. (iii) Cost of thermal retrofit of SFBs: Building insulation, windows, and doors. If an investment under the program includes replacement of the heat source, the old boiler must be dismantled. If an SFB is connected to the gas distribution network, a solid fuel boiler is not eligible to be funded under the program. For each eligible cost item, the maximum grant amount is capped through both an absolute maximum grant level and a maximum percentage of the incurred costs. The program foresees two levels of subsidy: (i) Basic subsidy level (Part 1; up to 100% of costs of energy audit; up to 50% of costs of connection to district heating and solar PV installations; up to 45% of costs of heat pumps, wood pellet boilers, and gas connection/boiler room; up to 30% of other costs) for applicants with an annual salary of up to PLN 100,000. (ii) Increased level of subsidy (Part 2; up to 100% of costs of energy audit; up to 75% of costs of connection to district heating and gas connection/boiler room; up to 50% of costs of solar PV installations; up to 60% of other costs) for households with a net monthly income of up to PLN 1,400 per person (for multi-person households) or up to PLN 1,960 per person (for one-person households). The increased level of subsidy was launched on October 21, 2020. The GOP complements the CAPP through a tax relief to owners and co-owners of renovated SFBs, which is managed by the Ministry of Finance (MoF) and uses their treasury resources. The GOP has amended the law on Personal Income Tax (PIT) to introduce a “retrofitting tax allowanceâ€?, which became effective in January 2019. The tax allowance enables an applicant to subtract up to PLN 53,000 spent on retrofitting investments from their PIT base. The applicant benefits from not paying tax on the deducted amount; thus, this benefit is larger for richer households facing higher rates of marginal tax. The tax credit can be used by taxpayers filing their taxes according to the tax scale (17 or 32%), taxpayers paying a flat rate of 19%, and taxpayers that pay tax through a lump-sum from registered revenues. The tax credit can be claimed over the course of 6 years up to a maximum of PLN 53,000; households can claim the entire credit in one year or spread their claim over 6 years. Farmers whose income is covered by the agricultural tax cannot benefit from this tax credit. As of October 16, 2020, CAPP has received approximately 172,700 applications for PLN 2.904 billion (USD 787 million) of grants (with PLN 387 million or USD 105 million of loans) and signed 141,000 co-financing agreements for PLN 2.370 billion (USD 643 million) of grants (with PLN 186 million or USD 50 million of loans). As shown in Figure 2, there has been constant demand for the program since early 2019. 14 Figure 2. Number of CAPP applications received and processed CAPP applications and processing 200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 1.5.20 31.12.18 11.2.19 4.3.19 10.5.19 31.5.19 21.6.19 12.7.19 2.8.19 23.8.19 13.9.19 4.10.19 25.10.19 15.11.19 6.12.19 27.12.19 17.1.20 7.2.20 28.2.20 20.3.20 10.4.20 22.05.20 12.6.20 3.7.20 24.7.20 14.8.20 04.09.20 25.09.20 16.10.20 Applications submitted Applications approved The program has been through various adjustments since its inception in 2018, including: (i) simplification of the subsidy levels, (ii) simplification of the grant application process and acceleration of processing time (e.g., online applications, only an income statement declaration is required for the basic level of subsidy, processing time for applications reduced to 30 days); (iii) integration with the “My Electricityâ€? program to provide subsidies for solar PV under one application; (iv) possibility of receiving subsidies for thermal renovation for beneficiaries that have already replaced their heating systems; (v) retroactive subsidies for investments initiated up to six months prior to application submission; and (iv) launch of Part 2 of the program allowing lower-income beneficiaries to apply for an elevated level of co-financing. Several further adjustments to the program have been agreed and announced by NFOSÌ?iGW on May 15, 20203 and NFOSÌ?iGW is working to complete these adjustments: • Integration of commercial banks: A cooperation agreement was signed between NFOSÌ?iGW and the Polish Banking Association (PBA) on April 30, 2020 to prepare the conditions and processes for commercial banks to participate in CAPP with a loan product, under which the CAPP subsidy would be used for partial repayment of the loan extended to eligible beneficiaries. This loan product would not only provide complementary financing, but also enable distribution of the CAPP subsidy through the commercial banks’ distribution channels. NFOSÌ?iGW has established working groups with the PBA and several commercial banks to develop the procedures and negotiate the draft agreement for the integration of the commercial banks into CAPP. The 3 Most of these changes are aligned with the recommendations made by the Bank under the Catching-up Regions Energy Efficiency - Phase 3 work supported by the EC, that called for a simplification of the CAPP application process and forms, a consolidation of income segments and the inclusion of commercial banks to strengthen distribution channels and leverage program financial resources from commercial bank loans. These recommendations were based on extensive consultations with NFOSÌ?iGW, municipalities, and commercial banks, and included a behavioral diagnostic through which key challenges of SFBs were identified. Four working groups have been established to develop each of these operational enhancements. 15 agreement also includes provisions for a proposed portfolio guarantee issued by Bank Gospodarstwa Krajowego (BGK) and funded by NFOSÌ?iGW, which would cover 80 percent of the commercial bank’s loan portfolio under CAPP. Upon completion of the draft agreement, NFOSÌ?iGW will issue a call for commercial banks to joi n CAPP and start implementation of the changes to the CAPP IT system to allow integration of the banks. It is expected that commercial banks will be ready to launch distribution of the CAPP loan together with the subsidies by June 2021. • Introduction of central CAPP database and online platform: A central CAPP database and online platform are currently under development to improve program monitoring and reporting. This database and platform are also important prerequisites for the participation of commercial banks and other partners in the program as it would enable communication between the IT systems of the partners. It is expected that the system will be operational by end 2021 or early 2022. • List of eligible equipment and material (ZUM): The ZUM was not in place when the program was established but has been under development since early 2019. As soon as ZUM is operational, CAPP will finance only equipment and material listed in the ZUM to simplify and accelerate the verification of applications. The ZUM system is currently online, manufacturers are submitting applications for their equipment and material to be included in the ZUM list, and NFOSÌ?iGW expects that the list will be sufficiently populated with equipment and materials to become operational by end January 2021. In December 2018, the GOP amended the act supporting the Thermo-modernization and Retrofit Fund (TRF) to create the SSP to support low-income SFB owners in municipalities that had adopted the Anti-Smog Resolution. Under this Act, the Ministry of Development (MoD) through the TRF (managed by the Polish Development Bank, Bank Gospodarstwa Krajowego (BGK) provides municipalities with financial resources to implement boiler replacement and thermal retrofit investments for the energy poor. The TRF finances up to 70% of the eligible costs (which are capped at PLN 53,000), the municipality finances 20- 30% of the eligible cost, and the beneficiary contributes between 0 and 10% depending on the financial capacity. The SSP was launched in February 2019 and designed as a pilot to provide support to about 24,000 SFBs until the end of 2024. As of October 2, 2020, seven municipalities4 covering 1,027 SFBs have joined the SSP, and no investments have been completed. The responsibility for SSP is expected to be transferred from the MoD to NFOSÌ?iGW under MoC. This transfer requires legislative changes to the act supporting the TRF, which have been approved and are awaiting the president’s signature. The draft Act includes further changes to operation and implementation of both SSP and CAPP to facilitate their scale-up as well as the launch of a Central Register of Emissions from Buildings (CEEB). 2. Description of Poland Program for Results The World Bank Program-for-Results financing was deemed the most suitable instrument to address the GoP’s request for a strong result focus and incentives to institutional improvements. Program for Results (PforR) will incentivize: (i) a sharper focus on the most important results the GoP wants to achieve, such as increased energy efficiency and air pollutant emission 4 These municipalities are Skawina, Sucha Beskiszka, Pszczyna, NiepoÅ‚omice, Tuchów, Sosnowiec, Rybnik. The total amount of financing for these 7 municipalities amounted to PLN 54.4 million, including PLN 37.4 million from the state budget. 16 reduction; (ii) reliance on GoP’s own systems and procedures, thus reinforcing the institutional capacity needed for the program to achieve desired results in the long term; and (iii) a focus on output and outcome monitoring and evaluation, including through reliable and credible verification systems. The PforR refers to Energy Efficiency in Single Family Buildings. The Program development objective is to increase adoption of sustainable heating and energy efficiency investments in single-family buildings and reduce emissions that contribute to air pollution in Poland. The proposed Program boundaries for the Bank’s PforR loan is expected to contribute to key results areas to support achieving the goals set in the Clean Air Priority Program (the Government program). The Program’s boundaries include: • The Program’s duration is limited to 5 years, versus the envisaged 10 years of the Government program. • Program’s value is estimated to be about USD 2.8 billion, vs. USD 27 billion for the overall program covering the entire country. The CAPP program is managed by the NFOSiGW. Subsidies (capped at PLN 53,000 or about USD14,4) and loans are distributed through 16 Regional Funds for Environmental Protection and Water Management (WFOSiGW). CAPP results have not been as expected. By July 17, 2020 - 151,000 applications were received. 113,000 applications were evaluated positively raising the grant amount to 2 674 000 00 PLN, and the loan amount to 395 000 000 PLN. If Poland wants to address reducing low stack emissions within a 10-year period, then it would need an average pace of 300 000 renovations annually to be able to meet the target (about 3 million SFBs). The challenge to implementing a national program lies in developing a scalable implementation mechanism. The Program would support the following activities and results: • Improving energy efficiency. Boiler replacement compliant with new regulation, and thermal retrofits of SFBs would substantially lower the heat load of the dwelling and enable a low capacity efficient boiler to be installed, thereby significantly lowering energy use, CO2 and PM emissions. It would support investments in thermal insulation of buildings (roof, wall, ground insulation), window replacement, boiler replacement compliant with anti-smog regulations. It would also develop a list of eligible materials and equipment from manufacturers that comply with program requirements. The new installations include selection of the following: • Thermal retrofits of SFBs (building insulation, windows, and doors); • Wood gasification boiler; • Heat pump; • Wood pellet boiler; • Condensing gas boiler; • Oil condensing boiler; • Coal boiler; • Connection to district heating; • Solar collectors; • Electric heating systems; • Required connections and internal installations; 17 • Mechanical ventilation with heat recovery; and • PV micro-installation. • Strengthening of National Fund for Environment Protection and Water Management capacities to monitor and implement CAPP’s revamped key funding instrument through participating commercial banks and transferring of subsidy resources through WFOSiGW. For this, assessment of the interinstitutional coordination, capacity support to key stakeholders, in particular for providing grant financing to the middle-income SFB households will be necessary. Based on discussions with associations of solid fuel boiler manufacturers, and gas boiler and heat pump manufacturers, they are receptive to developing a lease finance scheme, or taking the lead through aggregators role that would recollect applications and could also provide renovation services to the household. • Accessing commercial financing. NFOSiGW, through regional funds WFOSiGWs, would sign agreements with commercial banks to transfer subsidies (in the range of 30 to 40 percent of the investment with a maximum cap of PLN 53,000) which would be disbursed, together with commercial banks loans, to middle-income SFB households. The participating commercial banks would be responsible for identifying, appraising, and financing eligible investments that meet the criteria in under the program. The revamped CAPP will also provide support to motivate the retail managers to market their EE product for SFBs, provide training on financing EE in SFBs to those responsible for deal origination and risk assessment, and undertake aggressive marketing campaigns for the products developed. The key agencies and partners of the Program are described in Section 4. Summary of past engagement with NFOSiGW Under the framework of the European Commission’s (EC’s) Catching up Regions (CuR) initiative, the Bank has been providing technical assistance since 2017 to GoP to reduce air pollution through improved energy efficiency heating systems and thermal renovations in SFBs. The Bank has been working with NFOSÌ?iGW and other entities to assess: (i) the potential benefits and costs of boiler replacement, thermal retrofit, and fuel switching in SFBs; (ii) the investment needs and subsidies required to implement a program to improve energy efficiency and reduce air pollution; and (iii) the potential impacts of a program roll out in the 36 most polluted cities in Poland and the entire country. The analysis was conducted with an inclusion lens, to identify the population sub-groups that require the greatest subsidies and technical support to make the transition. Since last year, the Bank has also initiated work with support of the EC “Coal Regions in Transition Platformâ€? to share experience from Poland to other countries looking at similar issues of coal-based heating in the residential sector (e.g., Western Balkans, Ukraine, Central Asia), which is led by NFOSÌ?iGW on behalf of the Polish government. 3. Objectives of the Environmental and Social System Assessment The ESSA process is a multistep methodology in which the World Bank team: (a) Analyzes the environmental and social effects, including indirect and cumulative effects, of activities associated with the CAPP. 18 (b) Analyzes the borrower’s systems for managing the identified environmental and social effects, including reviewing practices and the performance track record. (c) Compares the borrower’s systems - laws, regulations, standards, procedures, and implementation performance - against the core principles (World Bank Policy PforR) and key planning elements (World Bank Directive PforR) to identify any significant differences between them that could affect PforR Program performance. d) Formulates recommended measures to address capacity for and performance of policy issues and specific operational aspects relevant to managing the PforR Program risks (e.g., carrying out staff training, implementing institutional capacity building programs, developing and adopting internal operational guidelines). Relevant Environmental and Social management procedures and processes to be identified through the ESSA process and recommended in the ESSA are designed to (a) promote environmental and social sustainability in the PforR Program design; (b) avoid, minimize, or mitigate against adverse impacts; and (c) promote informed decision-making relating to a PforR Program’s environmental and social effects. In this report Bank Guidance for Program-for-Results Financing Environmental and Social Systems Assessment are referred. They comprise six core principles presented in the table below. Table 1. Applicability of the core principles Core principle The applicability for Reference in the PforR the report Core Principle #1: Program E&S management The principle applies Sections: 2, systems are designed to (a) promote E&S 5.1, 6.3-4, sustainability in the Program design; (b) avoid, 6.7-11, 7 minimize, or mitigate adverse impacts; and (c) promote informed decision-making relating to a Program’s E&S effects. Core Principle #2: Program E&S management The principle applies Sections: systems are designed to avoid, minimize, or 5.1, 6.3-4, mitigate adverse impacts on natural habitats and physical cultural resources resulting from the Program. Program activities that involve the significant conversion or degradation of critical natural habitats or critical physical cultural heritage are not eligible for PforR financing. Core Principle #3: Program E&S management The principle applies in Sections: 5.1 systems are designed to protect public and worker terms of the risks related safety against the potential risks associated with worker health and safety (a) the construction and/or operation of facilities during construction. or other operational practices under the Program; (b) exposure to toxic chemicals, hazardous wastes, and otherwise dangerous materials under the Program; and (c) reconstruction or rehabilitation of infrastructure located in areas prone to natural hazards. Core Principle #4: Program E&S systems manage The principle is not land acquisition and loss of access to natural applicable. Land 19 resources in a way that avoids or minimizes acquisition and access to displacement and assists affected people in natural resources are not improving, or at the minimum restoring, their expected within the livelihoods and living standards. program. Core Principle #5: Program E&S systems give The principle is Sections: due consideration to the cultural appropriateness applicable primarily 5.1, 5.2 of, and equitable access to, Program benefits, concerning the giving special attention to the rights and interests vulnerable, low-income of Indigenous Peoples/Sub-Saharan African group. Other concerns Historically Underserved Traditional Local do not apply. Communities, and to the needs or concerns of vulnerable groups. Core Principle #6: Program E&S systems avoid The principle is not Sections: exacerbating social conflict, especially in fragile applicable. 5.1, 5.2, 6.8, states, post-conflict areas, or areas subject to 7 territorial disputes. Several methods were applied to complete the assessment. Desk review of legal acts and policy documents provided the background data. Based on these interviews served for consultations and disclosure as well as for additional information elicitation. WFOSiGWs, municipalities, an NGO, a professional organization were interviewed. Moreover, webpages of all 16 NFOSiGW were reviewed, as well as the CAPP-related Facebook groups - to obtain a view of the program recipients' opinion. On-site visits were not possible due to the COVID-19 pandemic. Therefore, online interviews and webpage materials were used. A more detailed description of the methodology and the research conduct is presented in section 8. 4. Key Stakeholders Mapping The main institutions responsible for implementation of the PforR as well as for the national CAPP is the NFOSiGW and WFOSiGW. The NFOSiGW plays a supervision role over the 16 Regional Funds (WFOSiGW), which are the main implementing agencies for the CAPP at the local and regional level. The NFOSiGW are reporting to the Ministry of Climate. Municipalities have cooperation agreement with the WFOSiGW, and support the beneficiaries. Commercial banks are not yet included in the CAPP (planned in October 2020). They will provide loans to beneficiaries based on agreement with the NFOSiGW. The key identified stakeholders of CAPP are presented in Figure 2. Details of each institution are provided below. Figure 2. Key stakeholders of the CAPP. 20 4.1 Ministry of Climate and Environment On November 15, 2019 following the parliamentary elections, the Ministry of Environment was divided into the Ministry of Climate and Ministry of Environment. The Ministry of Climate absorbed the competences of the Ministry of Environment on October 6 2020. The Ministry of Climate and Environment fosters the environment both domestically and globally, and ensures the long-term, sustainable national development with respect to natural heritage and human rights to meet the needs of both the present and the future generations. The Ministry consists of the following departments (www.gov.pl): • Department of Education and Communication. • Department of Budget and Finance. • Department of Energy • Department of Elecromobility and Hydrogen Economy • Department of Nuclear Energy • Department of European Funds • Department of Heating • Department of International Affairs • Department of Renewable Energy Sources • Department of Oil and Natural Gas • Department of Waste Management. • Department of Innovation and Technology Development • Department of Air Protection and Urban Policy. • Department of Law. • Department of Environmental Instruments. • Department of Climate Transition Planning and Strategy • Department of Defense Matters, Crisis Management and Protection of Classified Information. • Bureau of Inspection and Internal Audit • General Director’s Office 21 The Minister of Climate and Environment conducts a policy of sustainable development while preserving native natural resources and the Polish landscape. The Minister is also responsible for rational forest management and effective use of natural resources. On March 21, 2020, the scope of competence of the Ministry of Climate was extended by including energy and heating issues in its structure (transferred from the competence of the Ministry of State Assets). Energy generation is the main source of air emissions in Poland. This additional competence together with air quality management (AQM) responsibilities put the Ministry of Climate and Environment in the central position for air quality policies, programs and measures. The Ministry of Climate and Environment plays a fundamental role in developing the air protection policy and its coordination at the national, but also regional and local levels. The Ministry supervises the National Fund for Environmental Protection and Water Management (NFOSiGW). 4.2 Ministry of Environment The role and responsibilities of the Ministry of Environment were significantly reduced on November 15, 2019 following the parliamentary elections. The ordinance establishing the Ministry of the Environment in the structure of the new government was issued only on March 20th, 2020. The regulation of March 20, 2020 defined the scope of competences of the Ministry of Environment. It specifies that the Ministry is the administrator of the part of the state budget dealing with the environment and that it supervises the Chief Environmental Protection Director who reports to it. The Ministry’s responsibilities include: supervision of forests, hunting, national parks, nature protection, environmental education, and mineral resources. The Ministry of Environment was merged with the Ministry of Climate on October 6, 2020. 4.3 National Fund for Environmental Protection and Water Management The National Fund was established in 1989 as a result of the socio-economic transformation in Poland. The legal basis of the National Fund’s operation as a state legal entity is the Act on Environmental Protection Law of 1989, and the Act on public finance of 2009. In cooperation with Regional funds for environmental protection and water management, it is a pillar of the Polish system of financing environmental management. The primary objective of the Fund is improvement of the environment and sustainable management of resources through stable, efficient and effective support for environmental projects and initiatives. The Fund provides financial support for environmental and water management projects. It also contributes financially to domestic and foreign funds: Operational Program Infrastructure and Environment, the LIFE Financial Instrument, the Norwegian Financial Mechanism and the European Economic Area Financial Mechanism, and bilateral cooperation. The Fund is engaged in pollution abatement, geology and mining, monitoring environment and counteracting risks, nature conservation and forestry, environmental education, health prevention of children, as well as scientific research and expertise. The Fund is a pillar in financing environmental projects in Poland with 30 years of experience. The sources of domestic funds include: • Fees and fines for use of the environment. • Product fees. • Royalty and concession fees. 22 • Fees related to Energy Law. • Fees for recycling of vehicles. • Income from selling of greenhouse gas emissions. The annual domestic budget of the NFOSIGW is about 1.2 – 1.4 billion Euros. The Fund has a good level of competence supporting foreign and domestic projects. Long term planning of revenues and expenses ensures flow of funds for beneficiaries. The main roles of the NFOSIGW in air quality management in Poland are: • Financial support for projects aimed at reducing air emissions. From its own and a basket of external resources, the Fund supports many programs aimed at reducing emissions to air, including those targeted at local governments (e.g. purchase of low-emission public transport vehicles, thermo-modernization, replacement of street lighting), loans to small and medium enterprises and residents. • Management of the CAPP. Under CAPP, NFOSÌ?iGW is responsible for: (i) overall program coordination and implementation; (ii) development of all program rules, guidelines and procedures including SFB and equipment eligibility criteria; (iii) developing financing agreements with regional funds – WFOSÌ?iGWs; (iv) recruitment of participating commercial banks and negotiating their framework agreements; (v) program communications and application platforms; (vi) program monitoring, oversight, evaluation and reporting; and (vii) financial mobilization, management and disbursements. According to the Environmental law of April 27, 2001 Art. 400c, the governance bodies of the NFOSÌ?iGW are the Supervisory Board and the Management Board. The NFOSÌ?IGW manages investments for environmental and water managements projects from its own resources allocated form environmental tax revenues also from European Structural and Investment funds allocated to the Operational Program Infrastructure and Environment, the LIFE Financial Instrument, the Norwegian Financial Mechanism and the European Economic Area Financial Mechanism. 4.4 Regional Funds for Environmental Protection and Water Management Regional Funds for Environmental Protection and Water Management (WFOSiGW) are funding institutions independent from the National Fund for Environmental Protection and Water Management. The legal basis for the operation of the Regional Funds is the same as for the National Fund. They also operate on similar principles. Regional Funds support regional environmental protection programs, including air protection activities. There are 16 WFOSiGW, one in each Region of Poland. Their roles in air quality management (AQM) in Poland are as follows: • Financial support for projects aimed at reducing emissions of air pollutants that are of regional importance. Funds support programs implemented by the regional and local authorities (e.g. thermo-modernization, air pollution abatement, replacement of street lighting), loans to small and medium-sized enterprises, and residents. • Regional Funds are regional institutions responsible for implementing the CAPP. They collect the applications from beneficiaries, verify and approve them. They decide whether to provide grants for the beneficiaries, control the implementation of the work, financial management, and verify the results. They provide progress reporting and necessary information to the NFOSiGW. 23 Performance of WFOSiGW in relation to CAPP is described in section 6.5 4.5 Municipality (gmina) 5 The municipality (or “gminaâ€? in Polish) is the lowest administrative level in Poland and headed by a locally elected wójt, mayor or city president. The wójt or mayor is the head of the executive body of the municipality. Since the early 1990s, gmina has played a fundamental role in local environmental protection. Municipalities are responsible for waste management, sewage and water management, management of communal greenery and organization of public transport. Municipalities implement environmental protection programs, including air protection, climate protection and other environmental programs. Their role in AQM and waste management includes: • Develop local spatial development plans specifying the spatial management of the municipality, develop and implement the Municipal Development Strategy, municipal environmental protection plans, municipal low-emission development programs, energy and heat supply programs. These programs have impact on air quality. • Establish policy for local public transport, limiting air emissions by introducing parking fees, creating bus lanes, entry bans for private cars and pedestrian-only zones, development of non-car transport, cycling passages, etc. • Implement activities resulting from Air Quality Plans (AQPs) and short-term action plans. • Inspect furnaces in the buildings and flats of the residents (such inspections are carried out by Municipal Police) to check the violence of AQPs such as burning waste or fuel banned from the market, excessive emissions from chimney. • Cooperate with Regional Inspectorate of Environmental Protection (WIOS) in the scope of development of the air quality monitoring system in the municipal area . Municipalities can create their own air quality monitoring network, providing monitoring results to commune residents. • Implement programs aimed at improving air quality – e.g. financial support programs for thermo-modernization of buildings, installations of renewable energy sources by residents, replacement of the old coal boilers with the low-emission sources. • Drafting and adoption of Waste Management Plans, which provide types and sources of waste, waste composition, demographic and income forecast, waste management and recycling options. • Collection, recycling and transfer of municipal waste. • Provide environmental education for residents including air pollution and air quality. The municipality has also responsibilities in several areas of social policy and public health: • Develops and implement a municipal strategy for solving social problems, i.e. social assistance programs, prevention and solving alcohol and other problems; integration people and families from special risk groups. • Provides shelter and necessary help for homeless people. 5 Act of 8 March 1990 on municipal local governments. 24 • Organizing and providing social care services. • Runs and provides places in social assistance homes. Municipality has its auxiliary units: soÅ‚ectwo (village council) in rural areas and rada osiedla (district council) in cities. They are elected bodies, with very little executive power. Their tasks are mostly consultative and information. They are consulted in the local planning procedure. They are considered effective in providing information on the local, neighborhood level. By May 15th, 2020, 654 municipalities signed agreements on cooperation with WFOSiGW in implementation of CAPP (source: https://czystepowietrze.gov.pl/lista-gmin-ktore-zawarly- porozumienia-w-sprawie-realizacji-programu-czyste-powietrze) comprising about 30% of all municipalities in Poland. The municipalities that signed the agreement actively support the application phase of the program implementation. Those who did not sign it, had to rely on WFOSiGWs in dealing with the air quality problem. National StopSmog program, dedicated for the lowest income inhabitants is also run by the municipalities. It is going to be included in the CAPP. 4.6 Other stakeholders Contractors/installers deliver heating systems and thermal modernization works under the CAPP. From their perspective, CAPP builds a market for their products and services. Commercial banks involvement in CAPP program were supposed to be announced in September 2020 but it is delayed. According to the Polish Building Law (act of 7 July 1994) workers of a firm contracted to do construction works need to have the building licenses, concerning designing, supervision, and exploitation, issued by the professional self-government (paragraph 2, articles 12, 13, 14). The Chief Inspector of Building Supervision is supervising licensing. The program should have the procedure that only qualified contractors and installers who can be liable and guarantee quality of performed works would be eligible to be contracted by SFBs. The proposed Energy Efficiency Expert Platform is planned to include energy efficiency experts (energy auditors) with proven qualifications, but any energy auditors can be hired used under the CAPP. that can help with a list of eligible contractors/installers and the list can be dynamically monitored and renewed at regular periods (semi-annually or annually). As in the case of energy auditors, communication channels and experience shared events have to be organized for contractors/installers especially on the quality aspects of renovation, and how to avoid main mistakes during renovation process. County (powiat) is the local government unit above the level of municipality. Counties usually cover an area of up to a dozen municipalities and can cooperate in execution of the CAPP program. Their responsibilities are limited as compared to gmina. They are responsible for issuing building permits. The involvement of county offices in the CAPP is much less common. However, in some respects such as asbestos utilization (cumulative impact), it is managed at the county level. In Lubelskie Region, ten counties provide office space for local staff of the WFOSiGW working exclusively on the CAPP. Commercial banks are planned to be involved in the CAPP from mid-2020 (their involvement is delayed) and provide subsidized loans to medium and high income level beneficiaries. Their involvement is under negotiations with the NFOSiGW. An amendment to the Environmental Protection Law of 2008 was approved in November 2020 that will facilitate the engagement of commercial banks through the establishment of a portfolio guarantee, which could help lower the risks of financing, provide lower interest rates and loan tenures, as well as reduce the collateral requirements for creditworthy SFB owners seeking to get a loan under CAPP. 25 SFB households are the direct beneficiaries of the CAPP. There are approximately 5.4 million SFBs in Poland. They constitute nearly 80% of all buildings in urban areas and over 97% in the rural areas. SFBs in rural areas are nearly 20% smaller. Majority of the buildings (over half of them) were built during 1945-1989. The average living space per person in Poland is 28.3m2, while the average for Europe is 39.6m2. Houses built in the last two decades are usually well insulated and have modern heating systems. They usually do not qualify for the CAPP. Therefore, the CAPP will lead to the improvement of the housing conditions and the quality of life of a significant part of Polish households, which are currently disadvantaged in terms of energy efficiency and the quality of housing. Due to the individualized nature of single family buildings, there are few citizens organizations that can act to represent the interests of single family building households as a collective. The general population of Poland is a stakeholder as improved air quality and health conditions will benefit all. Currently, air quality in Poland is considered by the European Environment Agency as the worst in Europe. 44,000 citizens annually are estimated to die prematurely due to poor air quality. Although the significant proportion of SFBs will be the direct beneficiaries, the CAPP creates positive externalities for the whole population. The advantages will be mostly in terms of better health conditions. Non-Governmental Organizations and the Smog Alert in particular represent groups of people interested in the air quality issue. The Smog Alert is a social movement and an association focused on the reduction of the emission of the air pollutants. The first group was established by a group of Krakow residents in December 2012. Several similar organizations were formed later, and in 2015, a nationwide Polish Smog Alarm was established comprising 38 local groups. The groups cooperate with loc al environmental organizations and urban movements. Their main demands include the following: introducing quality standards for fuels burned in households, introducing emission standards for coal and wood boilers, launching energy efficiency support programs in buildings, disseminating anti-smog resolutions, coal quality control and tightening alarm thresholds for air pollution. The groups support the CAPP but criticize particular components, such as allowing coal stoves in the program. There are several National Professional Organizations with interests related to the CAPP. The Polish Photovoltaic Association (Polskie Stowarzyszenie Fotowoltaiki, https://stowarzyszeniepv.pl) and Polish Photovoltaic Society (Polskie Towarzystwo Fotovoltaliki, https://pv-polska.pl) are industry organizations whose mission is to support the development of large-scale solar energy in Poland. Both associations aim to increase political and social awareness of photovoltaics, and supports the creation of an appropriate regulatory environment for this dynamically developing sector in Poland. They organize conferences and seminars, support research, and disseminate information. Another organization is the Renewable Energy Association (Stowarzyszenie Energii Odnawialnej, http://seo.org.pl), which promotes the development of renewable energy sources. This association consists of companies active in the area of renewable energy as supporting and cooperating members. Roma people represent a relatively small populations of 20-30 thousand (0.1% of the population of Poland6). The majority of Roma (93%) live in urban areas. Unlike several EU countries, at- risk-of-poverty rates or absolute poverty rates of Roma living in Poland are virtually absent. (https://eprints.lancs.ac.uk/id/eprint/79790/1/Country_Report_Poland.pdf). While there are several organizations representing groups of Polish Roma people, there is little coordination 6 https://ec.europa.eu/info/policies/justice-and-fundamental-rights/combatting-discrimination/roma-eu/roma- inclusion-eu-country/roma-inclusion-poland_en 26 between the groups. The Department of Religious Denominations and National and Ethnic Minorities in the Ministry of Interior and Administration is monitoring the situation of Roma people in Poland. Gender mainstreaming. Poland has no legal provisions to enforce gender mainstreaming and thus there are no actions coordinated at the national level. However, there are several EU regulations in place. The Plenipotentiary for Equal Treatment was established in 2010 under the Act on the Implementation of the Regulations of the European Union in the Field of Equal Treatment. There are also Plenipotentiary for Equal Treatment in all voivodeships in Poland. 5. Description of Expected Program Environmental and Social Effects. 5.1 Environmental and social screening Environmental and social screening of the Program was carried out following the World Bank Guidance of July 1, 2019 on Program-for-Results financing Environmental and Social Systems Assessment to identify any potential impacts, including cumulative impacts, and. The environmental and social impacts and risks refer to Disbursement-linked indicators (DLI), (Table 2) proposed as key results linked to the Program, and disbursements would be triggered by the achievement of these DLIs. Table 2. Program DLIs Indicator/Result Disbursement Description of Indicators Completion Amount (USD) Deadline Policy-level DLIs DLI 1 The approval of legislative amendments to propagate  Approval of $25 million greater uptake for the CAPP and the low-income December amendments to the program, including (i) the establishment of the Central 31, 2021 Act on supporting Registry of Emissions for Buildings (CEEB) to reinforce thermo- municipality engagement around outreach, inspections (possible modernization and and enforcement of solid fuel burning and allow for prior result) renovation, along regional targeting of program resources; (ii) the with other relevant provision of financial resources to BGK to issue Acts guarantees to help make loans more accessible to SFBs and enable more commercial banks to join CAPP; and (iii) the transfer of the Stop Smog Program to MoCE to allow CAPP to serve low-income SFB owners. DLI 2 Design, adoption and operationalization of program or  Design, adoption and $30 million program component targeting low-income households, December operationalization of acceptable to the Bank and other program partners, 31, 2021 a low-income with appropriate subsidy levels, mechanisms for component of CAPP eligibility verification, implementation support and monitoring to ensure high participation rates. This could be achieved through expanding Stop Smog Program or establishing a CAPP Part 3 with appropriate operational mechanisms to support low-income households. Operationalization means the program has been announced, is nationally available and applications are being received and approved. Program-level DLIs 27 DLI 3 Development and launch of a centralized program  Development and $25 million management information system that brings together March 31, launch of a key information from applications and grant payment 2022 centralized program execution from WFOÅšiGWs, including applications monitoring and submitted/ approved, measures and technologies information system installed, results achieved at the regional, district and local levels, remaining SFBs to be served, etc. The MIS would also allow for consolidated program progress and financial reporting to be done. The DLI will be met when the MIS is operational and is used to generate an initial progress report to be submitted to the NAPP Steering Committee. DLI 4 Signing of contract, based on open competition and  Launch of a $25 million market principles acceptable to the Bank, between at June 30, commercial bank least two eligible participating banks, NFOÅšiGW and 2021 component under WFOÅšiGWs, to combine subsidy payments and loans to CAPP, with a one- eligible SFB owners under a single window under CAPP. stop shop for loans and subsidy payments DLI 5 Launch an expanded national-level public campaign on  Development and $25 million CAPP, with range of media tools, guides, websites, December launch of an training and tools to facilitate application preparation 31, 2021 expanded and implementation for all program participants. This comprehensive could be based on the enhancement of the campaign program outreach activities currently being prepared under the shared campaign for CAPP competence of NFOÅšiGW (providing funding for the campaign) and MoCE (design and implementation of the campaign). The outreach effort should include developing an awareness baseline, testing of messages, and impact monitoring with outcome indicators. Impacts of outreach could be assessed in terms of: (i) number of target population reached by media channels (e.g., # of website/ad views); (ii) % change in awareness about CAPP; or (iii) number of applications of program reach annual target (~25,000- 35,000/month). ~$5m could be disbursed each year target impacts are met. Physical progress DLIs DLI 6 Number of eligible SFBs that have completed eligible  Number of SFBs that $85 million thermo-modernization renovation (e.g., installation of Scalable DLI, have undergone insulation, window/door replacement) with materials with final thermal renovations (Up to $6.8m as from the approved ZUM list, a final signed acceptance results due prior result) report (a protocol confirming scope of works by December completed, signed by the contractor and the 31, 2025 beneficiary, which has to be submitted to WFOÅšIGW together with the application for payment) and paid invoice. DLI 7 Number of eligible single-family residential building  Number of $85 million heating systems that have been removed and Scalable DLI, inefficient, solid fuel dismantled, and replaced with more efficient, cleaner with final boilers replaced with (Up to $6.6m as units (covered under the eligible equipment in ZUM) results due efficient, clean prior result) with a final signed acceptance report (a protocol by December heating systems confirming scope of works completed, signed by the 31, 2025 contractor and the beneficiary, which has to be 28 submitted to WFOÅšIGW together with the application for payment), paid invoice and warrantee. Results of environmental and social screening are presented in Table 3 where the identified impacts are linked to the related project activity, mitigation measures, and the remaining risks are presented. Where appropriate, the remaining risk are referred to the DLIs of Table 2. Table 3. Environmental and social impact screening, risk results and mitigation measures. Environmental and Related project Mitigation measures Remaining risks Social Impact activity Environmental impacts and risks 1. Less energy demand Thermal insulation Use of new thermal No risk. Positive impact and hence reduction of of houses. insulation in compliance air pollution due to Installation of more with technical requirements. thermal insulation of efficient heating Use of more energy efficient houses and energy installations. heating installations. efficient installations. 2. Impacts related to Removal and Temporary storage of waste Moderate risk waste management replacement of old in specified locations (temporary storage of boilers, old wall adjacent to the house, waste, transfer and insulation, recover of materials from the disposal) due to removal windows, external waste (metal, wood, glass), of old boilers, old doors. transfer of waste to insulation, windows, designated sanitary landfill external doors and site. construction waste. 3. Capacity of the Replacement and - Scrapping of old heating Moderate risk scrapping and recycling scrapping of old installations in scrapping Based on the assessment, system to cope with heating or recycling centers. Poland has sufficient large volume (300 – 400 installations. - Disassembly, recycling, capacity to perform thousand per year) of and melting of the metal recycling of the expected old heating installations. elements to produce simple quantity of old heating metal products. installations 4. Scrapped boilers Replacement and - Installers remove boilers Low Risk disposed in landfill sites scrapping of old and dispose of at scrapping boilers or recycling centers. There is no incentive to - SFB utilize bulk pick-up put old boiler into periodically offered bylandfills. The iron is municipalities. useful material and may - SFB sell old boiler to scrap therefore be reused, while metal facility. homeowners can get money for their old boiler. 5. Impacts on bat and Thermal insulation - Assess presence of nesting Low risk bird habitats living or of roofs, walls, birds or bats. nesting in the retrofitted replacement of - Determine if Polish Law building. windows and front applies – if yes: SFB doors. responsible for following Polish laws and other legislative acts, decrees, mandates, etc. 29 Environmental and Related project Mitigation measures Remaining risks Social Impact activity - CAPP provides subsidy for ornithological and chiropterological survey. - Ban on works during the nesting season of birds (if present). - Use artificial boxes and relocate habitats to new locations. 6. Asbestos fiber Associated Risk: - Determine if Polish Law Associated Risk as it may causing inflammation of Removal of applies – if yes: SFB be conducted in upper respiratory asbestos roof (not a responsible for following conjunction with CAPP system. part of CAPP) in Polish laws and other activities. parallel with CAPP legislative acts, decrees, thermal insulation mandates, etc. Low risk of roof activity. - Required Asbestos removal conducted by a specialized company. - Workers required to wear masks, safety glasses, gloves and overalls. - Removed materials transferred to an authorized disposal facility in special tracks required. 7. Health and safety of Removal and - Workers required to wear Low risk workers and residents. replacement of old health and safety boilers, old equipment (helmets, insulation, glasses, gloves, steel toe windows, external boots). doors, roofs. - Workers undergo training before each removal/ installation, - Workers follow health and safety rules. - Workers required to follow pandemic protocols. (ie. wearing of face masks, limited contact with residents of SFB) - Residents of the house isolated from the works. 8. Reduction of CO2 and Replacement of - Replacement of old boilers No risk. Positive impact. PM10 and PM2.5 boilers. by new ones of high emissions due to emission class. changes in heating installations to more efficient boilers, heating pump, electric or photovoltaic installations. 30 Environmental and Related project Mitigation measures Remaining risks Social Impact activity 9. Public health benefits Completion of - Use of modern stoves with No risk. Positive impact. caused by improved air works low emissions. quality, enhanced - Lower energy demand by environmental awareness household. Social impacts and risks 10. Impacts on Grant application - Program provide Moderate risk vulnerable groups and process. improved access to increase of social information and The introduction of a inequalities. A assistance for vulnerable low-income component combination of social groups. for CAPP is included as characteristics age, - Low-income Program DLI 2. low education, low assists low income income, and distance families. from regional offices - Consultancy / on site help can hamper access to and advisory assistance the program. - It is at the municpality level by which vulnerable households first seek assistance for program involvement. Improved co-operation with and involvement of municipalities would improve access to CAPP. - WFOSiGW provide information to vulnerable households concerning available programs better suited to their needs, such as StopSmog Program. 11. Energy poverty of Post Refurbishing - A number of government Moderate risk low-income SFB of SFBs, social assistance segments caused by replacement of programs, outside of The introduction of a increased fuel costs. heating system CAPP, are available to subsidy mechanism for Replacement of using clean fuels. address this risk but do cleaner fuels is included heating installation not do so in a in the program action can be done without comprehensive and plan. thermal insulation. consistent manner. - At risk households provided information to contact local social services outreach. - Encourage/inform SFB to participate in thermal renovation measures, which can help lower energy bills. 12. Not clarified The program - PL has reliable records of Low risk ownership status of a application plot ownership and house. Houses system and associated buildings - The scale of the without clarified process. located on plots. problem is small, ownership status are often resulting from 31 Environmental and Related project Mitigation measures Remaining risks Social Impact activity not eligible for - Residents provided with unresolved program support. sufficient information on inheritance eligibility requirements, procedures if owner programs available, and deceased. subsidies that can be utilized. 13. Adverse effects on The program - SFBs will be responsible Low risk physical cultural application for following Polish laws (appears marginal) property (objects of system and and other legislative acts, historical value, ie, process. decrees, mandates, etc. houses or tiled stoves - Application of the of certain value). Monument Protection Act (2003). - Monitoring by Provincial Offices for the Protection of Monuments, which maintains the registry of protected monuments. - Disconnecting tiled stoves of historical value from chimney but remain within SFB at HH request. - Ensure stoves of historical value (tiled stoves) are preserved either within SFB or donated to a historical society or museum. 14. Adverse impact on The program - A coordinated information Moderate risk social equality due to application campaign targeted to insufficient system and specific groups The introduction of a information outreach, grievance - Formalizing the Grievance program outreach and limited submission and Redress system to be campaign is included as responsiveness of review process. followed by WFOSiGW DLI 5. grievance redress and establish reporting system procedures to NFOSiGW of The systematic review GRM status. of grievances and - Formalize feedback feedback is included in mechanism and reporting of the program action plan. feedback from WFOSiGW to NFOSiGW - Improve annual reporting from WFOs to include feedback and grievances. 15. Quality of life Completion of - Use of modern heating No risk. Positive improvement due to works. installations. impacts. better heat comfort in - Promote / encourage houses and heating thermal insulations done in systems easier to conjunction with boiler operate. replacement. 32 The CAPP does not trigger environmental and social assessment according to the Polish EIA law, and EIA Directive 85/337/EEC with subsequent amendments. This is because investment activities are very small in nature and dispersed throughout the country. The small investments do not meet the minimum requirements for EIA scrutiny (in terms of impacts and size). The environmental and social impacts of CAPP are expected to be limited, site-specific, reversible, and mitigatable. None of the anticipated Program activities are expected to have significant irreversible adverse impacts on the environment and/or affected people. Small construction and rehabilitation works will carry a set of common risks typical for such activities: generating noise, dust, construction and demolition waste, and risk to the health and safety of workers, as well as household members living in SFB. Potential risks and impacts identified through the ESSA relate to: (i) waste management due to the disposal/recycling of old boilers, old insulation materials, windows, and external doors; (ii) impacts on bat and bird habitats located under the roofs/in attics of SFBs to be retrofitted; (iii) adverse effects on houses of historical value or objects, such as tiled stoves of certain values; (iv) health and safety of workers engaged in construction/installation works, and (v) health and safety of household members living in SFB. Cumulative impacts are related to the (a) removal of asbestos from roofs in SFBs (which is not part of the CAPP,) in parallel with CAPP’s thermal insulation of the roof and (b) disposal/recycling a large number of old boilers, external doors, and windows. The probability of cumulative impacts associated with the removal of asbestos is small as other programs targeting removal of asbestos have been active for the past 20 years resulting in the reduction of asbestos roofs. In cases of detection of bird nests and bats resting sites under the roof prior to the works, the CAPP program provides 50% subsidy for ornithological and chiropterological survey (if required). This provision is already included in the application form. As far as waste management is concerned, the capacity of the scrapping and recycling system in Poland to cope with a large volume of old disused heating installations (200,000 – 300,000 annually) appears sufficient. In 2019, 12.8 million tons of communal waste were generated in Poland of which 43% of communal waste was landfilled, and the remaining 57% was recycled or recovered including (GUS, 2019): • Recycling - 25%; • Composting or fermentation - 9%; • Thermal processing with energy recovered - 21.5%; • Thermal processing without energy recovery - 1.4%. The typical way of recycling old heating stoves in Poland is disassembly, cleaning, and melting of the metal elements in iron works to produce simple metal elements that can be sold in the market. The remaining non-metallic parts are deposited in landfill sites. Replacement of old windows and doors is less common in the CAPP than replacement of heating sources. Typical recycling is disaggregation of wood or plastic elements from glass. Wood or plastic is incinerated, glass can be reused, recycled, or disposed at a sanitary landfill. The capacity for recycling old stoves in Poland is significant with many large operating ironworks. Scrap operations often pay for scrap metal thus providing an incentive for homeowners to take boiler for scrap as a way to earn an additional sum of money. Similarly, the capacity of incinerators in Poland is sufficient to cope with increased volume of disused wood products. There is a small risk that small number of the scrapped disabled stoves may be illegally disposed of in the landfill sites. However, a SFB has multiple options for proper disposal that it is unlikely that a boiler will end up in a landfill site. 33 Further, prior to May 15, 2020, solid fuel stoves (firewood, coal) were not eligible if a household was connected to or near a gas network or municipal heating network. Starting May 15, 2020 the ineligibility of solid fuels in households where gas or municipal heating is available, was lifted. It was due to the fact that verification of whether a household could be connected to a gas or DH network was taking up considerable time and effort for the WFOSiGWs, and delayed decision on applications. The removal of the ineligibility for solid fuel (firewood, coal) in cases where the household is in the vicinity of a gas network, but not connected to the network, simplifies the procedure and saves time. However, the environmental effects may be compromised. There is no mandatory social impact assessment procedure in Poland. However, for some investments, such as retention reservoirs, social impact is assessed, mostly if relocation, expropriation and other significant disturbances are foreseen. In particular, in the Act on Providing Information on the Environment and Environmental Protection, Public Participation in Environmental Protection and on Environmental Impact Assessment of 2017, article 66, paragraph 15, it is stated that in the Environmental Impact Report analyses of possible social conflicts related to the planned project is required. In the case of CAPP, social impacts related to investments, (as presented in Table 3), are dispersed and small. The program is implemented within individual households, at the request of the household, and most works (such as thermo-modernization and boilers replacement) entail minor changes that have temporal and minor disturbances. Although directly negative social impacts of the program are marginal, some unintended social consequences of CAPP can be anticipated. The Program can be less accessible for elderly, people living in rural areas, low income groups, one-person households, and those living distantly from offices providing information and advice. The potential social risks identified in ESSA relate primarily to the following issues: (a) Impact on vulnerable groups in terms of access to CAPP, and the application process (no. 9 in Table 3). With regards to CAPP procedures, the application process relies heavily upon access to technology (computers and internet), the ability to access the website, and the ability to properly fill in the application. Elderly people not familiar with using computers and low-income households without access to the internet are at greater risk of non-participation in CAPP. To mitigate this risk, the program has put in place agreements with municipalities to provide assistance in the preparation of the application for co- financing. As of 9th of October 2020, 711 municipalities had established agreements on the implementation of the CAPP. Furthermore, a pilot outreach effort using private operators was put forward (in early 2020) to inform and support households in the application process. While this approach was deemed to be highly successful, the continuation and uptake of these measures was inhibited by the onset of the COVID-19 crisis. (b) A concern that a change in fuel, from cheap coal to more expensive alternatives resulting in a change in household fuel expenditures may impact lower income households (no. 9 in Table 3). This poses a higher risk for SFB that chose not to apply for thermal insulation of their building (walls, windows and front doors), and therefore energy demand of buildings remains the same. As implementation of CAPP interventions are based on application requests, it is unlikely that the CAPP will cause an undue burden on those lower income households as they would be less likely to request CAPP inputs. Additionally, while the CAPP provides subsidies based on income levels, other government programs exist that are designed to assist the lowest income households. (c) Insufficient information throughout Poland, or incorrect information sources, may deter 34 or confuse participation and choices. (d) Unclear ownership status of houses (no. 11 in Table 3). (e) Adverse effects on physical cultural property (no. 12 in table 3) , which is expected to be rare. The positive environmental and social impacts mainly relate to the benefits of: • Reduced energy demand due to thermal insulation of buildings (roofs, walls, doors, windows, floor). • Reduction of CO2, PM10 and PM2.5 emissions due to replacement of old heating stoves by modern gas, electric, heat pump, oil, or solid fuel installations. • Reduction of global emissions due to energy-efficient investments and cleaner fuels. • Public health benefits caused by reduced air pollution emissions. • Quality of life improvement due to better heat comfort in houses, and heating systems more comfortable to operate. • Public health benefits caused by reduced air emissions. • The substantial economic boost associated with renovating thousands of buildings and replacing thousands of heating systems. • Increased environmental awareness among inhabitants. Overall, the negative level of impacts of the CAPP on the environment and social issues is minor. Positive impacts are substantial. 5.2 Social inequalities and marginalization of vulnerable groups With a Gini index of 32.1, which is slightly higher than EU’s average of 30.4 in 2018, Poland’s social inequalities can be classified as moderate. It relates primarily to income and welfare disparities between the urban and rural populations of Poland. Low Income groups are the most vulnerable due to limited access to resources and additional assistance needed but not covered within CAPP. There are three main measures of poverty in Poland. • Relative poverty threshold is 50% of the mean monthly expenditure determined at the level of all households estimated with the use of the so-called original OECD equivalence scale. In the fourth quarter of 2018 it was PLN 810 for a single-member household and PLN 2187 for 2 adults +2 children household. • The legal poverty threshold is the amount which, according to the Law on Social Assistance (2018 item 1508), provides eligibility for a monetary benefit from the social assistance system. In 2017 and from the first to the third quarter of 2018, the poverty threshold amounted to PLN 701 and PLN 528, for single household/multi-person households respectively. • Extreme poverty threshold is set on the basis of the subsistence minimum estimated by the Institute of Labor and Social Studies for a 1-person employees’ household. For 2018 the extreme poverty threshold amounted to PLN 595 for a single household and PLN 1606, for 2+2 households. There is a separate, but similar, program (Stop Smog) that focuses on assisting low income SFB households. It is expected that, while the Program is addressing all SFBs in Poland, financing for low income groups will increase. The potential target for vulnerable groups are elderly residents living in rural areas with low income level, lower access to electronic forms and information, and lower computer literacy needed for the application process. This group will 35 need special support and assistance in filling the application form and in technical part of an investment. This can be done by consultants appointed by municipalities or by private sector consultants. One aspect of the inequality risks is the relative cost of heating fuels. The comparison of prices of different heating sources shows that coal and heat pump systems are the cheapest fuels (Table 4). Natural gas heating is nearly twice as expensive, while electric heating is the most costly. The heat pump is economical, but the investment costs are high (up to 15,000 USD). The price of electric heating can also be reduced by modern infrared heaters or PV installation. However, the investment cost is high. Table 4. Comparison of heating costs with different energy sources. Cost of 10 kWh Energy source PLN (USD) Natural gas 2.3 (0.58) Electricity 5.5 (1.39) Coal 1.3 (0.33) Pellet 2.5 (0.63) Heat pump 1.4 (0.35) House insulation influences the cost of heating. SFBs without proper thermal insulation requires more heating energy, up to two times more than a standard level or well-insulated building. The team has also recommended the government consider expansion of the current social assistance program to cover energy bills in vulnerable SFBs in need of assistance for their fuel bills, including those associated with switching to cleaner fuels. While such impacts could be mitigated by the parallel thermal renovation of the SFB, the support would be needed by some poor SFB owners who may experience or be concerned about experiencing higher energy bills, and thus risk their continued use of inefficient coal boilers. Considering the relative cost of heating, the replacement of coal heating stoves by natural gas- based systems leads to more operational expenses. This increase is compensated by the better efficiency of a new heating stove. Moreover, the new heating systems require less effort, and therefore it increases the quality of life. For low-income households, heating poorly insulated houses with coal, the replacement by gas boiler can lead to energy poverty, i.e., the necessity to save on thermal comfort. Generally, for low-income households, the coal stoves replacement leads to meeting the air quality objectives, but energy efficiency depends significantly on SFB thermal insulation. 5.3. Gender-related issues in CAPP In Poland, there is a gender pay gap. Women performing the same job earn 7–18.5% (an average of 700 PLN) less than men (GUS, 2018). However, this gap does not deviate from other EU countries (EU average is over 16% according to Eurostat 2014). At the same time, there is an issue called “feminization of povertyâ€? in Poland in which poverty affects women 14% more often than men. Additionally, it is more common among women living in poverty, to care for children or older people (Kubecka et al. 2019). Women are, in most cases, co-owners of the SFBs (Art. 32 § 1 Kodeks Rodzinny i Opiekunczy). Since women have lower labor force participation rates than men, and are also subject to a 36 gender gap in pay, they are less likely to be able to benefit from the tax relief – despite being homeowners. In terms of accessibility, the CAPP is neutral in gender terms. Concerning the CAPP’s outcomes, the program can indirectly improve women’s situation as the work burden related to heating at home will decrease. Often, women are responsible for heating, which in case of coal stoves requires everyday efforts of carrying coal, keeping the fire, and cleaning. These burdens disappear with gas boilers. Gender gaps in knowledge and in the ability to act on this knowledge in making household decisions may result in gender gaps in the ability to participate in the Program. A 2015 qualitative study conducted in eight ECA countries on energy efficiency reforms revealed that a gap exists between men and women regarding awareness and knowledge levels of energy efficiency as well as in their ability to take actions to improve energy use in their households (Rebosio and Georgieva 2015). Men are generally better informed about topics related to energy efficiency investments and more involved in making decisions about which energy sources to use. This gap puts women, particularly those in female-headed households, at a disadvantage as they are less likely to apply to and benefit from the Program. 6. Assessment of Borrower’s Environmental and Social Management Systems (ESMS) relevant to the CAPP Program 6.1 Methodology The methodology for this assessment follows the World Bank Guidance of July 1, 2019 on PforR financing Environmental and Social Systems Assessment. It focuses on the assessment of capacity and performance of responsible agencies to manage the impacts of CAPP effectively. The approach identifies necessary actions to ensure consistency with the core environmental and social principles as well as strengthen environmental or social management capacity of implementing agencies. Interviews were conducted with the key stakeholders: NFOSÌ?iGW staff, four Regional Funds for Environmental Protection and Water Management, and with two municipalities. Due to COVID-19 pandemic, the interviews were conducted online, on the phone, and via online conference calls. Online consultations were based on questionnaires (Annex 1) sent to the interviewees prior to the interview. 6.2 Legal Framework 6.2.1 The EU Environmental Legislation context Poland has well established rule of law, with consistent application of established procedures. As a member of the European Union, Poland is obligated by the European “Environmental Acquisâ€? which is an integral part of the “Acquis communautaireâ€? and which comprises more than two hundred legal instruments (directives, regulations and decisions) dealing with environmental matters such as water, waste management, chemicals, natural habitats, air pollution, nuclear safety, Genetically Modified Organisms (GMOs), and other processes and tools of environmental management and protection such as environmental assessment and 37 environmental information disclosure. The European Community legal order is autonomous and independent from the legal order of its Member states. In consequence and as mentioned above, Community Law has priority over domestic laws whether parliament-voted laws or government adopted regulations. In case of conflict, Community law prevails. This supremacy applies to EC treaty provisions but also to directives, regulations and decisions. This means that national administrative authorities and national courts have the obligation and duty to give legal force to EU rules. The only restriction is that EU rules must be unconditional and precise. In the absence of Community provisions, the Member states are free to adopt environmental rules, procedures and standards which they consider appropriate considering the general restrictions under the EU Treaty with emphasis on the obligation not to take any action or measures that would set “quantitative restrictions on imports...â€? (Article 28) or be inconsistent with the protection of “health and life of human, animals and plantsâ€? (Article 30). In conclusion, it is clear that Member states and the Community share responsibility and competence for environmental management and protection. As long as the Community has not enacted rules, procedures and standards, Member states are free to adopt their own. EU Birds Directive 2009/147/EC EU Birds Directive applies to program activities relevant to thermal retrofit of buildings where the bird’s habitats may be located. The Directive covers the protection, management and control of all species of naturally occurring birds in the wild state and lays down rules for their exploitation. It applies to birds, their eggs, nests and habitats. EU Waste Framework Directive 2008/98/EC EU Waste Framework Directive applies to program activities generating construction waste. According to this Directive, the waste should be managed without endangering human health and harming the environment, and in particular without risk to water, air, soil, plants or animals, without causing a nuisance through noise or odours, and without adversely affecting the countryside or places of special interest. 6.2.3 Poland EIA Legal and Regulatory Framework The 2001 Environmental Protection Law (EPL) provided an overall legal framework for Polish environmental law and Poland’s transposition of the EU “Environmental Acquisâ€?, as well as providing the first comprehensive legal foundation for EIA in Poland. The EPL was amended in 2008 when the Government adopted an amended version from which it has removed all reference to EIA. Since then, EIA is governed by the 2008 Act on Disclosure of Information on Environment and its Protection, Participation of Society in Environmental protection and Environmental Impact Assessment (EIA Act). The EIA Act reinstates at the domestic level key principles of environmental management and protection, including, among other things, anything connected to (i) pollution control, (ii) waste management, (iii) general principles of natural resources conservation and use, (iv) public access to environmental information, (v) environmental impact analyses and assessments, and (vi) environmental protection liability. The EIA Act is structured in such a way that it integrates into the Polish domestic legal framework all provisions of EU legislation related to (i) access to (environmental) information; (ii) public participation in procedures related to environmental protection; (iii) the environmental impact assessment procedure relating to the implementation of plans and programs; (iv) environmental impact assessment procedure for proposed projects; (v) environmental impact assessment procedure relating to transboundary impact on the environment; and (vi) environmental impact assessment regulatory bodies. Furthermore, the 38 EIA legislation as it stands, must be considered and analyzed in conjunction with relevant provisions of several other sectoral laws and regulations including those related to land-use planning, construction and building, nature conservation, geological and mining activities, motorways and roads construction, and others. Under the EIA Act, an EIA must assess the direct and indirect impacts on the environment, human health and the quality of human life; property, cultural heritage, the interaction between these elements, and the access to the mineral deposits. In addition, an EIA report must include a description of any possible transboundary impacts as well as impacts on the land surface (including land mass movements, climate and landscape), options analyzed, including a “no actionâ€? alternative, and measures to prevent, minimize and mitigate adverse environmental impacts. Relevant stakeholders are consulted during the EIA and SEA process. Specifically, there is a 21-day comment submission window, and the final Decision on Environmental Conditions must include information on public participation and the manner in which comments and suggestions were taken into consideration in its justification. In addition, the 2008 EIA Act provides that every person has a right to information in Polish on the environment and its protection, and requires timely disclosure of various types of information including information concerning the EIA process. The above Polish legal and regulatory framework applicable to EIA is fully consistent with the EIA legal and regulatory framework developed and adopted by the EU. The CAPP Program is not subject to EIA scrutiny due to very small and dispersed scale of investment projects and minor expected impacts. 6.2.4 Building Law The Construction Law of 1994 (Dz. U. 1994 No 89 poz. 414) with subsequent amendments, regulates the activities related to the design, construction, maintenance and demolition of buildings and defines the rules of operation of public administration bodies in these areas. Participants of the construction process are investor, supervision inspector, designer and works manager. Concerning the CAPP program, construction permit or notification is not required for construction of the following projects: heat pump, photovoltaic panels with the capacity up to 50kW, thermal insulation of buildings with a height up to 12 meters. Consequently, the CAPP sub-projects are not dirstly subject to construction permit or notification. Local authorities responsible for construction works, i.e., the County office, undertakes action in case of the rules violation. The institutions with full knowledge of the CAPP projects is WFOSiGW. Buildings entered in the register of monuments require, prior to the issuance of a building permit decision, obtaining a permit to carry out these works, issued by the competent voivodeship conservator of monuments. 6.2.5. Health and safety regulations concerning construction workers The general health and safety rules (in Polish: BHP - BezpieczeÅ„stwo i Higiena Pracy) concerning construction works are defined in Building Law (see section 6.2.4), where the rules concerning planning and executing construction investments and building maintenance are defined. The specific legislative base of Health and Safety in building works are given in the Ministerial Decree (Ministry of Infrastructure) of March 6, 2003 on health and safety during construction works (Dz. U. No 47, poz. 401). Further details, for example, regulations on the 39 obligatory “Safety and Health Planâ€? are provided in Ministerial decree (Ministry of Infrastructure) of July 23, 2003 (Dz. U. No 120, poz. 1126). All obligations and responsibilities of investors, contractors and workers are defined, and safety regulations concerning construction sites are described. The contractors should implement all regulations concerning health and safety. The law regulates the provision of protective clothing and equipment, training, supervision and the maintenance of a safe working environment, the control of major accident hazards and fire precautions. There is criminal liability in Poland regarding violation of these procedures. “Safety and Health Planâ€? is obligatory in case there are high risk works involved (e.g. working on high buildings, or with dangerous material) during the construction or the construction is large (at least 20 persons employed for 30 days or overall work exceeds 500 working days) a special should be worked out. In the CAPP, the works do not require building permits. In small-scale investments, the contractors are responsible for Work and Safety regulations, and in case of any accidents, they bear responsibility. This includes the necessary qualifications for the given works and work and safety courses for the workers. All health and safety issues are inspected by the State Inspectorate of Work. The Inspectorate has branches in all Voivodships and monitors whether the employer fulfills his/her obligations concerning remuneration, working time, holidays, protection of the rights of women, employed disabled and young people, working hours, safety training and accidents at work. 6.2.6 Waste Management Law The Law on Waste (Dz. U. 2013 poz. 21) from December 14, 2012 with subsequent changes is the main act regulating waste management in Poland. It describes in good level of details waste management in Poland, responsibility for waste management, provided definition of waste and hazardous waste, principles of waste management, waste recycling, temporary storage of waste and provides guidelines for Waste Management Plans at the national, regional and local level. It follows the EU Waste Framework Directive 2008/98/EC. It is indirectly relevant to the CAPP. As far as waste management facilities in Poland, at the end of 2019, there were 278 landfill sites in Poland, of which 92% were equipped in gas recovery system (37% with venting gas, 36% with gas burning without energy recovery, and 27% with gas burning and energy recovery). Illegal dumping is a problem with 26,000 tons of waste was recovered from small illegal dumpsites. In 2019 (GUS, 2019) there were 2190 selective collection centers for communal waste, served by 1352 companies. There are 25 landfills for hazardous waste in Poland, which accept asbestos waste (https://www.spsieradz.finn.pl/res/serwisy/bip- spsieradz/komunikaty/_006_002_121951.pdf?version=1.0). There are also 10 incinerators for hazardous waste. The technical capacity for handling inert construction and demolition waste and hazardous waste from the CAPP program is sufficient in Poland. There is a problem with very small illegal dumpsites in Poland. The annual number of such illegal sites reached 15,289 in 2016 in the country (NIK, 2018). These sites are recultivated by municipalities (gminas) but new ones appear. There is a system of inspections and fines for breaking the law regarding waste management. The inspections are actively carried out by GIOS, municipalities, and the Supreme Audit Office (NIK). There is an extended system of fines for breaking the waste management rules. Inspections and fines are important and applied instruments for enforcing proper waste management. The legislation more directly relevant to the CAPP program is the Act of July 19, 2019 amending the Act on maintaining cleanliness and order in municipalities (Dz. U. 1996 No 132 poz. 622). The Act specifies construction waste relevant to the CAPP as ‘construction and demolition waste, excluding wood and plastic waste, glass. The Act specifies the following responsibilities for waste management at the municipal level: 40 Art. 1, "5) Municipality ensures selective collection of municipal waste, including at least: paper, metals, plastics, glass, multi-material packaging waste and bio-waste. Art. 3b, 2. Municipalities are obliged to achieve the level of recycling, preparation for reuse and recovery by other methods other than hazardous construction and demolition waste constituting municipal waste in the amount of at least 70% by weight per year. Article 5, "3) Selective collection of municipal waste generated on the premises of the property in accordance with the requirements set out in the regulations and the manner specified in the regulations issued on the basis of Article 4a paragraph 1. Article 5, "1a. Unsegregated (mixed) municipal waste is transferred by property owners to a municipal organizational unit or an entrepreneur collecting municipal waste entered in the register of regulated activities, referred to in Article 9b paragraph 2. Art. 5, "1) Collecting and disposing of waste collected in containers or bags intended for this purpose and keeping these containers in a proper sanitary, order and technical condition, as well as maintaining the waste collection places in a proper sanitary condition. The act indicates the obligations of property owners in terms of waste management and disposal. It also clarifies the duties of property owners, the municipality and a construction company. The provisions of the Act on maintaining cleanliness and order in municipalities are generally satisfactorily implemented. The construction waste generated by the CAPP subprojects can be collected by municipal services if the amount is small and the waste is inert. In case the quantities are larger, special service can be ordered or the contractor can handle the waste to the landfill site or recycling center using his own vehicle and bags. Hazardous waste is handled by specialist company. The capacity at the municipal level is considered insufficient. There are issues with high number of small illegal dumpsites across Poland with various types of waste including construction waste. The small illegal dumpsites are clean up by municipalities but the ones arise. 6.2.7 Regional Anti-Smog Resolutions The adoption of anti-smog resolutions (ASRs) by regional parliaments allows regions to restrict the use of certain fuels and heating systems. The adoption of ASRs was enabled by the Act of September 10, 2015 amending the Act on the environmental protection. Under Article 96, the self-government of a given province may, in order to prevent negative impact on human health or the environment, introduce restrictions or bans on operating installations in which the fuels are burned (Makuch, 2019). The regulation of Article 96 indicates the elements of the resolution that are compulsory and those that can be optional. The mandatory elements of each resolution constitute: (i) the borders of the area in which restrictions or prohibitions are introduced; (ii) types of entities or installations for which restrictions or prohibitions are introduced; (iii) the types or quality of fuels allowed for use or the use of which is prohibited in the area covered by the resolution or technical parameters or solutions of installations in which the fuels are burnt (Makuch, 2019). The resolutions transfer both responsibility and action to owners of residential and other types of buildings, who must follow the imposed resolutions by the region. Unlike AQPs, which may address various sectors, ASRs are aimed solely at reducing negative impacts of air pollution from the residential and other buildings sector. For effective implementation of ASRs, it is crucial to raise public awareness on adopted regulations and of the CAPP, which provides financial support to households for reaching their objective. 41 Adoption of ASRs and their enforcement are needed across Poland to to stimulate replacement of boilers that contribute the most to emissions of air pollutants. While regions are not required to put in place ASRs, their establishment and eventual enforcement is seen as a key regulatory component of the CAPP, since low market uptake of thermal retrofit and heat source replacement is a risk for CAPP in reaching its objectives. As such, these regulations are important to support market uptake for the national program. Thirteen out of the 16 voivodships have adopted ASRs requiring SFB owners to replace non-compliant solid fuel boilers (manually fed-coal boilers with low-quality coal, wood and trash used as fuel), while consultations are on- going in a 14th voivodeship. Even in the regions which have adopted ASRs, knowledge on the resolution has been uneven and enforcement can be strengthened. The ASRs vary substantially across regions in the timelines that are set, the fuels that are covered and the requirements to replace boilers. A national minimum standard for ASRs to fulfil, even if not legally binding, would be useful for advancing towards a more unified approach to fuel standards and boiler requirements. An effective monitoring and enforcement system is also needed to ensure public compliance with air quality rules and regulations, most importantly AQPs and ASRs. Still, key information and practical role definitions are missing. Potentially the most consequential gap in the existing system of monitoring Air Quality Management implementation and enforcing compliance is the lack of effective control over SFB heating installations at the local level. Inspections would be needed, and are the norm in other countries, to ensure that equipment complies with emission and energy efficiency regulations and only use permitted fuels. However, while the situation varies by locality, only a small number of inspections is carried out in most municipalities due to the limited availability of staff, skills, equipment and the high cost of testing ash samples for fuel quality and compliance. In regions that have adopted anti-smog resolutions, the ASRs are enforced by government officials of the municipal police, municipal guards and VIEPs. Inspections of compliance with requirements of ASRs are carried out based on technical documents and certificates provided by users which confirm compliance with the required standards. Authorities can also control compliance with fuel standards by taking samples of ash from home boilers, which are analyzed in laboratories. The number of inspections related to AQPs, ASRs and fuel standards7 carried out in a given municipality depends primarily on how seriously the authorities treat the problem of poor air quality. Overall, the number of household inspections is low and compliance is therefore limited. A 2018 report by Poland’s Supreme Audit Office (NIK 2018) criticizes the number and effectiveness of current inspections. In most municipalities, only a low number of household inspections are implemented, given the limited number of inspectors assigned to control tasks and the high costs of laboratory evaluations of the quality of solid fuels burned in households – up to EUR 150 per sample. In general, offices in large cities carry out significantly more checks than smaller municipalities. The least number of inspections is carried out in rural municipalities where an average number of 0.5 inspections was carried out per municipality in 2018 (Portal Komunalny.pl. 2018). 7 In September 2018, the Regulation of the Minister of Energy on quality requirements for solid fuels was adopted (JoL of 2017, item 1690) and enters into force in June 2020. The regulation specifies the minimum requirements that must be met by selected solid fuels (i.e. coal, briquettes, the solid fuel form processing of lignite or hard coal). However, the permittable sulphur content for coal use of households continues to be higher in Poland compared to other EU countries (Awe et al. 2019). 42 Significant differences in the number and effectiveness of controls can be observed between municipalities, depending on their level of staffing. Municipalities with municipal guards8 record on average 50 to 70% more violations of ASRs that lead to the assignment of fines or referral to the court (Krakowski Alarm Smogowy 2018). In 2016, 4,700 furnace inspections were carried out in MaÅ‚opolska region in municipalities with municipal guards, and only 150 inspections in municipalities without guards. In 2017, the overall number of inspections significantly increased, with 12,000 inspections in communes with guards, compared to 450 inspections in communes without guards. The CAPP's implementation requires careful consideration of the disadvantaged group, in particular, low-income groups (see section 5.2.). People in difficult life situations are assisted via the social assistance system. It relies on the Act on Social Assistance (Ustawa o Pomocy SpoÅ‚ecznej) of 12 March 2004. The act defines tasks, responsibility, types of social assistance benefits, the rules, and procedures for their provision. The main role has social welfare centers operating in each municipality. They provide assistance in the form of social work, cash benefits, material support. The main issues dealt with the social assistance system are poverty, social exclusion (marginalization), homelessness, unemployment, and disability. Each municipality determines its social policy. There are also social welfare centers in each county. 6.3 Air Quality Management Poland’s legal framework for managing air pollution is complex and decentralized, guided by the overall four-tier government administration (national, voivodeship, powiat, gmina levels). This organizational structure requires the interaction of many stakeholders including administrative bodies from the environment and other sectors, Funds for environmental protection and water management, and research institutes. 6.3.1 Organizational Structure at the national, regional and local level The Ministry of Climate is designated by the Environmental Protection Law to have responsibility for air quality management activities in Poland, including the setting of regulations. In addition, the Ministry of Climate is responsible for decision-making on the allocation of funds dedicated to environmental protection under the national budget, and coordination with Ministries of Energy, Health and Economy on aspects of air quality management and air pollution control that interface with the agenda of the respective Ministries. The Ministry also supervises the Chief Inspectorate of Environmental Protection, General Directorate for Environmental Protection, the National Fund for Environmental Protection and Water Management and research institutes, including the Institute of Environmental Protection- National Research Institute, National Centre for Emissions Management (KOBIZE) and the Institute for Ecology of Industrial Areas. At the sub-national level, several entities have air quality management responsibilities. At Regional (Voivodeship) level they include: The Regional Parliament (Sejmik), Marshal, Management Board, and Inspectorate of Environmental Protection. At the county (Powiat) and municipality (Gmina) levels, relevant actors include the Powiat Council, Starosta (County Head), Powiat Board and Gmina Council. 8 Municipal guards are municipal police forces that are funded and administered by some municipalities in Poland, depending on their size and financial resources. Not all municipalities maintain municipal guards. 43 The Regional parliaments have air quality within their area of competences. The severity of the air quality problem varies among regions, with the Lubuskie Voivodeship being not very polluted, while in the MaÅ‚opolskie and SÌ?lÄ…skie is a serious issue. Of 16 regional parliaments 13 adopted the Anti-Smog Resolutions. The Resolutions vary in terms of fuel and boilers standards. The typical rationale for the decentralization of air quality management is that regional and local authorities are more familiar with the specifics of local problems and their causes, and are best positioned to direct local air quality management activities. They might achieve better outcomes if given the ability to choose the most appropriate policies and instruments. However, in Poland there is a lack of mandatory uniform state guidance such as for development of emission inventories and conducting air dispersion/air quality modeling. The government is working on strengthening emission inventories and streamlining methodologies for their preparation by the regions. Air quality monitoring across Poland is carried out by the GIOS and WIOS in 46 air quality zones, at monitoring stations using either the gravimetric and the automatic method. Routine measurements include particulate matter (PM10 and PM2.5), B(a)P, C6H6, NOx, SO2, O3 and selected heavy metals contained in the emissions. Only measurement results provided by GIOS/WIOS are treated as accredited; data from other monitoring stations are not considered. The measurement results indicate where actions must be taken to improve air quality. GIOS and WIOS are subordinated to the Minister of Climate. The air quality monitoring and progress evaluation function is constrained by the limited number of the monitoring station network. 190 automatic stations and additional 70 manual stations were installed and operating in Poland in January 2020. Therefore, air quality modeling (primarily CALPUFF) is used to determine the air quality in areas not covered by monitoring stations. In recent years, the national air monitoring system has received financial support from NFEPWM for the construction of the new stations and retrofitting of existing measuring stations with missing equipment. The air quality modeling system is imperfect, especially in regions with a diverse terrain structure. Modeling is said not to provide reliable results in areas with high concentrations of air pollutants, which is where air quality monitoring is particularly important. 6.3.2 Central Register of Emissions from Buildings Central Register of Emissions from Buildings A lack of emissions registry in Poland poses challenges for the proper planning of heat source replacement. This is a critical gap for the heat source transition, both from the perspective of the eventual enforcement of Anti-Smog Resolutions and from the perspective of adequately targeting resources to voivodeships and municipalities with the higher shares of non-compliant boilers. The draft Act amending the Act on supporting thermomodernization and renovation and certain other Acts introduce a legal basis for the functioning of the Central Register of Emissions from Buildings (Centralna Ewidencja EmisyjnoÅ›ci Budynków, CEEB). This proposed amendment will enable the collection of countrywide uniform and consistent data on buildings and their emissions sources. 44 The database is a first attempt of the Polish administration to organize and unify data on emission sources (heat boilers) in the individual heating and other relevant related information: (i) technical specification (age, boiler class), (ii) track record of boiler control and measurement of pollution levels and (iii) history of modernisations and investments in energy efficiency (boiler upgrade, etc.) and subsidy records (source of funding, value). At the moment, there is no single national or regional register that would allow any authority to assess a potential beneficiary of CAPP or other emission abatement program in terms of their eligibility with respect to the criteria mentioned above. Hence, the CEEB has the potential to play an important role in the implementation of CAPP and the low-income program, as it brings information from numerous regional (municipality led) and national registers to a common denominator and increases the quality of data used and decisions made. The legal apparatus accompanying CEEB equips the relevant funding authorities (i.a. NFOSiGW, WFOSiGW, BGK), representatives of municipalities (air protection specialists at the city hall and social protection specialists at MOPS), and inspection specialists (e.g. chimney sweepers) with tools needed to fill CEEB with new records and maintain its activity. The Act defines a role (duties and rights) for different parties with access to CEEB and households themselves with regard to maintenance of records in the database on a regular basis (annually) or as one-off events. The introduction and successful implementation of CEEB should allow NFOSiGW and other funding authorities (WFOSiGW, marshal offices, municipalities) which have access to CEEB to better track information on heat sources by a municipality. CEEB when properly introduced can also allow the public administration to measure energy poverty in a very detailed scale and track progress in its reduction in areas particularly exposed to this phenomenon, e.g. in areas with high population density and no access to CHP and gas network. 6.4 Verification of completed projects In the new edition of CAPP (May 15, 2020) there is an obligatory ex-post verification of 5% funded and completed investments implemented by contractor, and all SFBs where works were conducted by SFB owner. The verification includes all investment-related permissions, scrapping document for the old stove, and checking conditions of the site. In case of severe problems detected, a part of funding can be withdrawn by WFOSiGW. The lowered rate of verification since May 15, 2020 can be beneficial as it leaves the capacity for targeted ad hoc controls in cases where a breach of regulation is suspected. The verification procedure of the subproject consists of the following elements: 1. Verification of payment requirements: Whether the invoice fulfills formal requirements, accountancy norms of the application, costs are eligible. 2. Verification on the site of the investments: can be carried out during or after finishing the investments. This control includes all documentation and ways of implementation. 3. Agreement verification. All agreements are verified (in case there were tenders or all other agreements with contractors). 4. Control at the end of the funding process: all investment-related documentation is controlled (including confirmation of scrapping old stove in a designated facility). It is also possible that an investment is visited by controllers. 45 5. Effectiveness control is done by checking if there are no modifications of the original investments and if efficiency indicators are met (e.g., the achievement of heat insulating indicators). In the new CAPP edition, more issues rely on an investor's statement, i.e., that the investment follows the building law, that all environmental and waste management issues are according to the regulations. This simplification creates a possibility for potential violations. The new procedure is more accessible than the previous one, but declarations required from the beneficiaries imply certain knowledge, which cannot be assumed. The experience from the previous edition of CAPP shows that beneficiaries often do not read the necessary documents carefully. For instance, in case of replacing windows and doors the specific standards were required in the application, concerning thermal insulation of walls. In the new edition it is assumed but it is not checked. Overall, sufficient capacity exists in the WFOSiGW to conduct inspections of scrapped old stoves during ex-post inspections. WFOSiGW usually employ 3 to 7 specialists to deal with ex-post review. It should be noted that the very high volume of subprojects (more than 3 million in 10 years), the broad geographic coverage of eligible SFBs, the nature of the small and simple works (many can be implemented within 1 week) and the low environmental impacts make it near impossible for WFOS staff to try and coordinate any site inspections during implementation. 6.5 Institutional capacity of implementing institutions CAPP aims at substantial reduction of gaseous and particulate matter pollutants emissions in Poland, and increased energy efficiency of houses. Institutionally, CAPP relies on the sixteen branches of WFOSiGWs, that are operationally responsible for reviewing applications and granting subsidies to beneficiaries. In order to implement the CAPP, WFOSiGWs recruited additional personnel, that was subsequently trained. The number of WFOSiGW personnel involved on full time basis in the CAPP varies from 20 to 30. Additionally, there are staff members working on CAPP on part-time basis, e.g. in controlling and in accountancy departments. The organizational structure and modus operandi differ among WFOSiGWs. Mostly, there are dedicated staff for the CAPP, but sharing work with other programs is also present. Both the number of dedicated personnel and the structure of the program implementation differs. Some WFOSiGW established special departments, while in others the existing organizational structures were extended. The training was organized for both newly employed and experienced personnel. WFOSiGWs provides training for municipalities that signed cooperation agreement. Consequently, the municipalities’ trained personnel assist residents with the CAPP applications. The main challenge is the scope of work. Roughly, there are about 3 million households, that can apply for a CAPP subsidy. It involves a massive effort to assist them. In the first stage of CAPP, the formal procedure required strict documentation and was time-consuming. Despite the simplification in the modified CAPP (May 15, 2020), it is still the main burden of the WFOSiGWs staff. WFOSiGWs have established local offices to support beneficiaries with the filling the application form. The number of local officers serving the CAPP varies from 3 to 10. The WFOSiGWs’ staff can provide limited assistance and support to beneficiaries, especially elderly and socially disadvantaged. Cooperation with municipalities is an important factor in the program implementation. Active role of the municipalities facilitates access to the program 46 for residents. Yet, only about 30% of municipalities signed a cooperation agreement with the WFOSiGWs, ranging from 10% in Warminsko-Mazurskie Region to 50% in Podlaskie Region. Despite all the differences between Regions (voivodships), statistical analysis shows that the factors, such as proportion of municipalities with agreements, number of information offices, energy poverty, do not influence substantially the number of applications. The only significant factor is urbanization rate, which is negatively correlated: the smaller urbanization rates, the more application was submitted. This result can easily be explained by the fact that SFBs in rural areas outnumber the ones in urban areas. In terms of overall capacity to implement the CAPP, the WFOSiGWs seem to be relatively well prepared, as far as reviewing the application. However, the WFOSiGW has very limited capacity for active assistance to individual applicants. Considering the significant number of eligible SFBs, a certain involvement of municipalities is recommended. The municipalities' engagement varies depending on whether the municipality signed a cooperation agreement with the WFOSiGW or not. Municipalities that signed such agreement, have the CAPP specialist trained by the WFOSiGW. Other municipalities do not have this option. Special case is the MaÅ‚opolska Region, where eco-managers (hired by about 40% of municipalities and co-financed by the LIFE project) contribute very positively in supporting residents with applications for the CAPP, energy efficiency, emission reduction, type and efficiently of heating installation, thermal insulation of buildings. Overall, the staffing capacity of the WFOSiGWs is sufficient for reviewing CAPP application forms of beneficiaries at the program’s current pace, and for random ex-post inspections of 5% of subprojects implemented by contractors, and 100% of sites implemented by SFB owners on their own (provided they have qualifications to do that). However, the WFOSiGWs are understaffed in terms of active assistance to individual SFB in preparing CAPP application (especially for elderly and low-income residents). The municipalities need to take part in this respect. Without active cooperation of municipalities, the CAPP will likely miss part of the disadvantaged beneficiaries: those living far from the offices, less computer literate, and disabled. The proposed broadening the ex-post inspection to cover environmental and social issues includes: • Checking SFB owner’s statement on recycling/disposal or reuse of construction and demolition waste such as old window frames, doors, glass, and other construction and demolition waste for projects that include thermal insulation and replacement of front door, windows and thermal insulation of walls. • The condition of the site. The site has to be left in the original state of cleanliness with no waste left. • Presence of bird and bat survey report (if required) and mitigation measures applied to protect the birds and bats habitats. 6.6 Interagency coordination CAPP implementation involves complex organizational, administrative and regulatory structures and practices. Concerning implementation, there are several bodies that need to cooperate: from the public and private sectors. In operational sense, 16 WFOSiGW have the main implementation role for CAPP. The most important cooperation in execution of CAPP takes place between the NFOSÌ?iGW, WFOSÌ?iGWs and municipality (gmina). 47 There are also other agencies with activities relevant for CAPP. The Chief Environmental Inspectorate is responsible for air quality monitoring. 260 monitoring stations collect data on air pollution. The location of sampling sites and standards of the monitoring is regulated via Ministerial Decree (attachment 2 and 3 (Dz.U. 2018 / 1119), and the Environmental Protection Law (Dz. U. z 2018 /799). Information on air pollution is publicly available. Data from automatic monitoring stations (190 out of 280 stations) is available online or via mobile applications. A cooperation is needed between the NFOSiGW and the Chief Environmental Inspectorate in terms of monitoring air quality as the outcome CAPP. Poland, runs program for eliminating asbestos coordinated by NFOSiGW and executed via WFOSiGW and counties. Starting from 2006, the overall aim of the program is to eliminate all asbestos by 2032. 100% of all costs is funded within this program. However, the programs are managed independently, although SFBs could apply for funding from both programs. Concerning execution of CAPP, NFOSÌ?iGW is the coordinating body for the whole program, while 16 regional WFOSIGW are responsible for implementation. The cooperation between WFOSIGW and NFOSiGW is based on the hierarchical structure of the agency. For the program specific agreements, contracts were signed where tasks and responsibilities are defined. In case of necessity, WFOSIGWs ask NFOSiGW for clarification. WFOSIGWs report to NFOSiGW about their conduct and progress in the program implementation. They also provide suggestions and comments concerning the program, signaling possible improvements in the application form, etc. There is operational level of information flow among WFOSIGW. The cooperation between NFOSiGW and WFOSIGWs is smooth. WFOSIGWs cooperate with municipalities (gmina) in the program implementation. The cooperation with municipalities is based on signed agreements. The proportion of municipalities, that signed the agreements vary among voivodeships, from 10% to more than 50% (Figure 3). Figure 3. Proportion of municipalities that signed agreement on CAPP cooperation with WFOSiGW (data of June 8th, 2020). 48 Municipalities play an important role in the CAPP. They advertise the program, provide advice, collect applications, and secure verification of information on income, necessary for the completion of the application form. In the new revised regulation of CAPP, endorsed on May 15th, 2020 municipality role is limited to supporting residents in terms of selection of heating units and thermal insulation, filling in the CAPP application, and an option to transfer the application to WFOSiGW. WFOSiGWs offer training for municipalities’ staff involved in the CAPP. Currently, there is no financial support by WFOSiGW for municipalities (a payment of 100 PLN per each application submitted to WFOSiGW is planned from autumn 2020). The role of municipalities is crucial and should be extensive, as for applicants it is a customary contact point, easier to reach than WFOSiGWs offices which in many cases are distant for the applicants. Also, some of the tasks that are linked to the project indirectly, such as waste management, asbestos utilization, and similar issues, are dealt at the municipal or the county level. It makes the municipalities a natural contact point for residents. In order to involve more municipalities to cooperation more firmly, it is planned to reward municipalities with 100 PLN per each application delivered by them to WFOSiGW that required their assistance, and verification of applicant income. Cooperation between WFOSiGW and counties is less common. A good practice takes place in the case of Lubelskie WFOSiGW, where WFOSiGW opened ten local offices. Office space is provided by the counties, while staff is employed and trained by WFOSiGW. These offices are located in the most distant counties from the WFOSiGW main office in the city Lublin to provide the information and advisory to those, who live in peripheral areas. Commercial banks are planned to be involved in the CAPP from mid-2020 (their involvement is delayed) and provide subsidized loans to medium and high income level beneficiaries. Their involvement is under negotiations with the NFOSiGW. An amendment to the Environmental Protection Law of 2008 was approved in November 2020 that will facilitate the engagement of commercial banks through the establishment of a portfolio guarantee, which could help lower the risks of financing, provide lower interest rates and loan tenures, as well as reduce the collateral requirements for creditworthy SFB owners seeking to get a loan under CAPP. As their involvement was delayed, the ESSA could not analysis the systems for a bank’s environment and social system. However, subsidized loans secured from a bank will be distributed to recipient as part of entire CAPP package. In this way, the CAPP implementing agencies (NFOSiGW and WFOSiGWs) hold responsibility for environmental and social standards of all funding which, by default, would include all funds distributed for CAPP subsidized loans. 6.7 Reputational risk The CAPP aims at solving serious environmental and social problems, related to public health. It is an answer for the demand for action articulated by the public. However, there are three main reputational and political risks. Firstly, WFOSiGWs cannot provide sufficient advice and assistance to individual SFBs. It would require a significant and unrealistic increase of staff. Therefore, engagement of municipalities is necessary. However, a significant number of municipalities are reluctant to engage in CAPP. As a result, consultancy firms provide assistance in preparing the applications and technical advice to SFB owners. They are criticized for excessive charges and for unjustifiable acting as a representative of WFOSiGW in some cases. Although, the scale of these abuses is rather small and difficult to estimate, one WFOSiGW declared on its webpage, 49 that they did not support any particular firm nor technology. Independent consultants’ abuses can potentially cause reputational problems. The simplification of the application form and procedure, will decrease the need for consultancy firms. Secondly, improved air quality is a public issue that is supported by citizens groups, NGOs and politicians. However, some measures have faced criticism. Many NGOs criticize the CAPP for its slow pace of implementation and raise the issue of program accessibility for low-income households. There are also concerns raised from coal and firewood sellers. It is a significant industry in Poland, and it often uses an argument, that air quality measures bring additional burden for the poor, for whom firewood and coal are the cheapest fuels. This argument is partly justified, as cleaner fuels can entail the potential rise of energy cost (see section 5.2). Thirdly, many municipalities feel overburdened with CAPP activities without formal recognition of the role they play and associated financial support to address CAPP tasks. In their perspective, CAPP is an example of the government practice to transfer the responsibility for national programs to the municipalities without securing resources for the administrative conduct. Initially, when the air quality problem appeared publicly, the governments tried to transfer the responsibility to solve it to the municipalities. The resources were limited, but several municipalities launched local programs, mainly aimed at replacing inefficient coal stoves and installing air quality monitoring. These programs had limited scope and there is no registry to indicate how many municipalities undertook the programs and their effects. When the CAPP was announced, the municipalities were the first point of contact where residents asked for information and assistance. Most of the municipalities, especially small ones, were not prepared and could not secure resources to provide such support. The information and promotional activities constitute an important context of the reputational risk and the overall conduct of the project. There are several activities undertaken by the NFOSiGW in cooperation with Ministry of Climate, including TV and radio ads. WFOSiGWs also carry promotional activities from their own budgets. The webpage www.czystepowietrze.gov.pl provides detailed information about the program and its particular aspects. Also, presentations from the webinar “Akademia czystego powietrzaâ€? (Clean Air Academy) are available. Information about the CAPP is on Facebook (www.facebook.com/NarodowyFunduszOchronySrodowiskaiGospodarkiWodnej/) and Twitter. However, the multiplicity of previously introduced programs, e.g., Kawka, can confuse potential beneficiaries. Also, there are two webpages (czystepowietrze.pl; czystepowietrze.eu) with very similar addresses to the official web page of the program. They are created by private companies providing services for beneficiaries. Therefore, NFOSiGW needs to sustain the information and promotional activities throughout the project to build the PAPP’s recognizability. The activities need to be targeted, taking into account the project progress in terms of regions and groups of beneficiaries. 6.8 Grievance redress mechanism and appeals procedures The CAPP is a specific program as it comprises a large number of micro-investments. In most cases, CAPP activities do not negatively impact on neighbors, local communities, or other stakeholders. Indirectly, the program produces benefits for stakeholders as it contributes to better air quality, i.e., a better quality of life. A minority of subprojects, such as insulation of buildings, installing heat pumps or roofs cover reconstruction, involves more distinct works, which are limited and contained to SFB. Specific provisions of the Construction Law, the Act on the Prevention and Repair of Environmental Damage of 2007 (Dz.U. 2007 No 75 poz. 493), the Environment Protection Act of 2001, (Dz.U. 2001 No 62 poz, 627), the Act on Maintaining 50 Cleanliness and order in municipalities of 1996 (Dz. U. 1996 No. 132 item 622) would address most interests, concerns, or objections of neighbors, local community members and the environment as a public good. It is improbable that neighborhood objections would appear, due to the very limited investments scale and confined space in which an activity is implemented (see Section 6.5). The Act on the Prevention and Repair of Environmental Damage, the Environment Protection defines environmental damages and the ways to protect the environment. In the case of the CAPP, an issue of certain importance is the protection of nesting birds and bats. If an endangered nest is identified, a protection period from March 1 to October 15 bans works implementation. All SFBs will be expected to follow Polish laws, regulations, decrees or other relevant mandates. Individual persons and organizations can submit complaints to the Environmental Protection Department of the municipality office, the Regional Directorate for Environmental Protection, or the Municipal Police if the regulations are violated. In practice, in most Polish cities, activists and organizations frequently use the complaints concerning birds’ protection. CAPP maintains a central phone line at NFOSiGW. In addition to the national line, each regional WFOSiGW maintains a phone line as well as provides email contact information. It is through these avenues of contact in which a CAPP grievance or feedback can be addressed. In order to ensure that grievances are answered and the feedback is taken into consideration, WFOSiGW produces yearly reports prepared for the NFOSiGW, however there is no formalized requirement to describe grievances addressed and feedback receivedwhich would allow NFOSiGW to analyze feedback and ensure grievances are properly resolved. For grievances related to applications, a structured approach is followed. CAPP application documents includes a description of the appeals procedure in the Regulations for the Call for Applications for CAPP Co-financing and is available on-line (https://www.gov.pl/web/gov/skorzystaj-z-programu-czyste-powietrze). It is expected that most grievances would come from applicant’s who seek to appeal a rejected application. The application is assessed in accordance with formal criteria. If the application is rejected, the applicant is informed in the written form about the decision and the justification for the rejection. An applicant is informed about the option to appeal and has ten days to initiate the appeal process. In the previous edition of the program, an applicant had five days to initiate an appeal. Within the next ten days, WFOSiGW staff reassesses the application. The second decision is final.In Lublin, WFOSiGW, in the first phase of the CAPP program, 50% of rejected applications resulted in an appeal, of which roughly 20% succeeded in appeal. During the COVID-19 pandemic, many required documents were difficult to obtain. Thus, many rejections occurred, but they were successfully appealed. With CAPP updates the application is more "user friendly," thus application rejections are expected to decrease dramatically. For grievances more broadly, WFOSiGWs play the central role in terms of information about the CAPP and complaints about the program operations. Grievances may cover a range of issues, and are not limited to applications related issues. Dedicated phone lines and office staff at regional level serve as channels for the beneficiaries and impacted persons. There are complaints about the accessibility of the phone information, in terms of getting through. While grievance mechanism is available at regional and national level, there is no systematic review of complaints concerning the application procedure or other grievances. Therefore, it is recommended that NFOSiGW formalize the grievance mechanism used at both national and regional level, but also to formalize the process by which WFOSiGWs report on grievances and feedback received as well as the status of grievance resolution. Reporting by regions of 51 grievances can inform NFOSiGW of recurring problems encountered and identify information gaps that may need to be addressed at national level. 7. Stakeholder Consultations and Citizen Engagement In the preparation and establishing of the CAPP, there were several consultations and engagement activities. Within preparation of the program and the draft amendment to the act on Supporting thermo-modernization and renovations the Plenipotentiary of the Prime Minister for the Clean Air program, initiated public consultations. Several institutions took part in the consultations, such as Marshal offices, non-governmental organizations dealing with the problem of smog, business, and representatives of 33 cities that WHO included in its list of 500 cities in Europe with the most polluted air. During the first phase of CAPP implementation, 60% of beneficiaries resigned from the application process after familiarizing themselves with program loan regulations. In October 2019, NFOSiGW initiated public consultations with a focus on operation of the loan instruments. Municipalities, counties, organizations and individuals were provided an opportunity to comment. The Polish NGO, Smog Alert, submitted an appeal, signed by 3,000 people from the MaÅ‚opolska region, demanding effective control of air quality, the creation of local service points for the "Clean Air", supporting the withdrawal of public subsidies to coal- fired boilers, and calling for the conduct of social campaigns encouraging the replacement of coal stoves. A special background document “Analysis of the operation of the loan facility under the Clean Air programâ€? was prepared. Consultations contributed to modifications of the program as launched in May 2020. The NFOSiGW has conducted two-way consultations with multiple municipalities, regions and NGOs in preparation for improving the CAPP application process and more broadly as part of the May 2020 reforms. However, these feedback and consultation mechanisms can be further enhanced to the benefit of the CAPP by including a formalized feedback mechanism, which includes a grievance redress mechanism, throughout implementation. Consultations and feedback mechanisms are designed to inform CAPP on which actions are being successfully implemented with desired results, and which areas may need improvement. There are number of ways in which NFOSiGW can engage civil society with regard to the CAPP program. Monitoring beneficiary and stakeholder views of subproject implementation, levels of satisfaction, as well as compiling suggestions on program components can enhance efficiency. Vulnerable groups, which may be less likely to participate via a web-based platform, can contact CAPP through telephone lines available at national and regional levels. Additionally, vulnerable citizens may contact local, municipality, representatives by which to contact CAPP. The following table shows various avenues by which CAPP can seek feedback and engage with stakeholders. Surveys 1. To assess level of knowledge and attitudes by sub-group of the population, to inform outreach campaigns and appropriate approaches. This should be conducted to feed into an effective outreach strategy. Target groups surveyed which also includes disadvantaged groups and socio-economic characteristics such as income, gender of household head, age, place of living (rural/urban) etc. 52 Examine the following questions, with disaggregation by group: Level of participation in the program and whether the group is disproportionately participating. Level of knowledge of CAPP, anti- smog resolutions and attitudes towards heat-source replacement, disaggregated to assess differences across main groups. 2. To determine satisfaction with the program and investments, eliciting feedback in a timely manner (survey can be sent at low cost through follow-up email to applicants). Prepare and carry out surveys of CAPP participants which include both successful and rejected applicants. Consultations Consultations with stakeholders, including NGOs, to comment on project implementation and participation in CAPP. Arrange virtual town hall consultations which allows persons to participate from home either using computers or phone lines. Inclusion of phone line option will provide avenue of participation for persons who have less access to, or knowledge of, computers. Citizen Few citizens organizations exist which represent groupings of engagement individual house owners. A potential channel of citizen engagement could involve partnering with selected municipalities to generate feedback in a participatory manner, through district councils or village councils which are elected representatives for an area. District and village councils are auxiliary bodies of the municipalities with small budgets but often play a significant role in consultations and decision making on the local (neighborhood) level. Feedback Dedicated email address contact points and phone lines for CAPP at Mechanism NFOSiGW level. Dedicated email address contact points and phone lines for CAPP at WFOSiGW level. Listing of contact points on website and included in information campaigns. 8. Data collection 8.1 Interviews with WFOsIGW and other actorsOnline interviews were conducted in May- September 2020 to provide an opportunity for stakeholders to express their opinion and suggestions concerning the CAPP. Standard interviews were not possible due to COVID-19 pandemic. Online interview of all 16 WFOSiGW would be time consuming and inefficient. Therefore, four WFOSiGWs (Kraków, ToruÅ„, WrocÅ‚aw and Lublin) were selected for interviews. They represented different regions, different level of the air pollution problem severity, various experience of the air quality programs implementation. After carrying the four interviews, analysis of the transcripts, finding of missing information, and repetitions from interviewees, it was decided not to continue interviews with NFOSiGWs. Next, two municipalities were identified for interviews. They were representing different regions, experience with clean air programs, and types: the municipality of Skawina was an urban municipality, and the municipality of Czerwonak - a rural one (Table 5). The consultations were completed with interviewing the leader of the Polish Smog Alarm, the biggest Polish umbrella 53 NGO focused on clean air, as well as the Chairman of Polish Organization for the Development of Heat Pump Technology, and an activist engaged in the protection of birds in cities. Table 5. Key issues for each stakeholder group relevant for ESSA (text in italics indicate institutions that were not interviewed). Organization Issues Institutional capacity Organizational arrangements within the institution Co-operation with other institutions (NFOSiGW, self - governmental institutions as municipalities and counties). WFOSiGW Information campaign an advisory on CAPP Potential social exclusion and energy poverty Controlling Appeal procedure Institutional capacity Organizational arrangements within the institution Co-operation with other institutions WFOSiGW and counties). Municipalities Information campaign an advisory on CAPP If necessary, on-site consultation StopSmog program management Social concerns, NGO Consultations The role of technology in CAPP Polish Organization for Consultations the Development of The role of information Heat Pump Technology Institutional capacity Activist in birds’ Grievance procedure protection Permissions (building permissions, waste management (asbestos) Counties Eventual co-operations with WFOSiGW (no stakeholder consultation with county offices is foreseen) Capacity Contractors Experience from previous edition of CAPP Banks will be involved from September. We do not plan Commercial banks consultation with representatives of Banks as currently their role in the CAPP is not clear. Interviews were arranged by the World Bank office in Warsaw and by the World Bank consultants. All interviews were arranged in advance. It required some communication exchange but was relatively easy. Interviewees were already used to online meetings. Minutes of meetings were prepared after each meeting. The list of questions referring to the environmental and social impacts was prepared. The questions were sent to interviewees in advance. The list was slightly modified, taking into account a particular stakeholder. Mostly, one to three interviewees at the senior level were interviewed in one interview. They represented positions of mayors, deputy mayors, directors of departments, senior specialists. Among the municipalities selected for interviews, one was a city, with a signed cooperation 54 agreement with WFOSiGW, and the second one was a rural municipality that has not signed such agreement. All interviews started with short introduction and description of the role of the World Bank in the CAPP. Key findings are integrated into ESSA report. It can be assessed that the online interviews brought solid data, and did not cause any substantial omission. The interviewees were encouraged to ask clarification questions and raise issues not covered by the list. No political or social sensitivities were noticed. Interviewees talked openly, and did not obtained from criticizing the measures and the policies. Besides the interviews, webpages of all 16 NFOSiGW were closely scrutinized in reference to the issues of the interviews. Also, several indices were calculated for voivodships (number and density of information points; proportions of municipalities with signed agreements; energy poverty index; number of applications in CAPP – generally, per area, per inhabitants) to control the differences and to assess the positions of the selected ones against the others. Moreover, several online workshops on the CAPP organized online by NFOSiGW were analyzed. These sources served as additional verification of the information gathered via interviews. Key findings of the interviews are summarized in Annex 1. Concerning individual SFBs, the final beneficiaries of the program, it was not feasible to conduct a survey representing the CAPP applicants due to COVID-19 pandemic. Instead, to obtain a picture of the program recipients’ opinion, it was decided that the Facebook discussions review can represent the opinions of applicants. The CAPP-related Facebook groups were reviewed. 8.2. Pandemic safety measures: Due to the current pandemic, Covid-19, interviews were conducted via telephone conference calls, or utilizing web-based meeting platforms. As stated in section 8.1, this did not negatively impact consultations with relevant stakeholders as they had already adapted to a e-meeting format. Consultations to be conducted during this, or future, pandemics will continue to be conducted either via telephone conversations or web-based meetings.Concerning the impact of the pandemic on CAPP, as the application process heavily relied on a web-based application process, CAPP did not see a decrease in the number of applications during the COVID-19 application process. In response to COVID-19, CAPP modified its requirements allowing for an additional six months by which to have completed activities. NFOSiGW has also improved, or added, materials available on-line including training modules and planning tools to assess available options. During implementation of CAPP activities at SFB level, all workers will be expected to follow protocols established at the national, regional, and local level. This includes the wearing of proper face masks and maintaining limited direct contact with household members. Works conducted at household level are considered minor, easily implemented, and would require only 1 or 2 days to complete which further limits a household’s interaction with people outside of SFB. 55 9. Assessment of Program System Consistency with Core Principles of OP 9.00 This section assesses the arrangements for managing environmental and social risks and benefits associated with the program in a manner consistent with the Operational Policy/Bank Procedure (OP/BP) 9.00, Program for Results Financing. These principles are intended to guide comprehensive assessment of existing borrower Program systems as well as their capacity to plan and implement effective measures for environmental and social risk management. The section assesses the Strengths, Gaps, Opportunities and Risks with respect to the relevant policy and legal framework, the institutional context, and existing environment and social management procedures against these core principles. Core Principle # 1: Environmental and social management procedures and processes are designed to (a) promote environmental and social sustainability in the program design; (b) avoid, minimize, or mitigate against adverse impacts; and (c) promote informed decision making relating to a program’s environmental and social effects. Environmental and social mitigation measures were proposed to minimize adverse impacts. They respond to environmental and social impacts identified. They are presented in Table 3. Core Principle #2: Program E&S management systems are designed to avoid, minimize, or mitigate adverse impacts on natural habitats and physical cultural resources resulting from the Program. Program activities that involve the significant conversion or degradation of critical natural habitats or critical physical cultural heritage are not eligible for PforR financing. Biodiversity and cultural resources impacts are very small and related to possible interference with bird or bat habitats under the roof of SFB, and potential damage to tiled stoves. Mitigation measures were proposed in section 5.1. They include moving the bird or bat habitats to another suitable location, and disconnecting the tiled stoves. Core Principle #3: Program E&S management systems are designed to protect public and worker safety against the potential risks associated with (a) the construction and/or operation of facilities or other operational practices under the Program; (b) exposure to toxic chemicals, hazardous wastes, and other dangerous materials under the Program: and (c) reconstruction or rehabilitation of infrastructure located in areas prone to natural hazards. Workers’ and community health and safety issues are very small. They were addressed in Section 5.1. The hazardous waste impacts were identified indirectly through replacement of asbestos roofs (not part of the project but may be conducted together with the Program in case thermal insulation of the SFB roof is envisaged). This is a small risk. It is described in section 5.1. Core Principle #4: Program E&S systems manage land acquisition and loss of access to natural resources in a way that avoids or minimizes displacement and assists affected people in improving, or at the minimum restoring, their livelihoods and living standards Not applicable. Land acquisition or loss of access to natural resources are not part of the CAPP. Core Principle #5: Program E&S systems give due consideration to the cultural appropriateness of, and equitable access to, Program benefits, giving special attention to the rights and interests of Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities, and to the needs or concerns of vulnerable groups. The principle is applicable primarily concerning the vulnerable, low-income group. Other concerns do not apply.Core Principle #6: Program E&S systems avoid exacerbating social conflict, especially in fragile states, post-conflict areas, or areas subject to territorial disputes. 56 Not applicable. 10. Environmental and Social Risk Rating The CAPP does not trigger environmental and social impact assessment in Poland due to small scale investments disbursed across the country that have minor environmental and social impacts. The environmental and social impacts are expected to be limited, site-specific, reversible, and mitigatable. The environmental and social risks of the Program are rated as Moderate. More information about risk is provided in Table 3. The moderate environmental risks relate to (i) waste management (temporary storage of waste, transfer and disposal) due to removal of old boilers, old insulation, windows, external doors and construction waste, and (ii) capacity of the scrapping and recycling system to cope with large volume when the program reaches scale (300-400 thousand per year; currently approximately 60 thousand per year) of old heating installations. Other environmental risks are considered low. The moderate social risks relate to (i) impacts on vulnerable groups and increase of social inequalities (a combination of social characteristics age, low education, low income, and distance from regional offices can hamper access to the program), (ii) energy poverty of low- income SFB segments caused by potentially increased fuel costs (replacement of heating installation can be done without thermal insulation), and (iii) adverse impact on social equality due to insufficient information outreach, and limited responsiveness of grievance redress system. Other social risks are low. The contracted companies are obliged to comply with applicable environmental, social, health and safety laws and regulations. Construction companies are also responsible for the transportation and disposal of inert construction and demolition waste. Any hazardous waste is managed by licensed contractors. No gaps were identified regarding the capacity of the waste recycling and management system in Poland to cope with construction waste from the CAPP. The relevant policies and regulations are in place (following the EU directives, regulations and decisions). Financial and administrative enforcement is satisfactory. There is sufficient capacity for recycling of scrapped old heating stoves in the country. The evaluation of the performance of the contractors performing installation works is limited to an ex-post check of subproject including checking certifications for the recycling of old heating installations for a random sample of 5% of SFBs when the work was conducted by the contractor, and all subprojects where work was conducted by SFB owner. 11. Recommendations for the Program Environmental and Social Systems The measures presented below need to be taken during Program implementation for environmental and social aspects. In a broader context, the measures recommended are designed to help proponents improve their system performance and to address important gaps between the regional systems and the PforR core principles and key elements. The Program should incorporate the capacity to adhere to environmental and social requirements as well as to track, analyze, and eventually work to mitigate negative effects, and replicate positive ones where applicable. The following actions are proposed: 57 Recommended actions: 1. Broadening the scope of the ex-post review of CAPP. The following needs to be reviewed: • Declaration of disposal or reuse of construction demolition waste such as old window frames, doors, glass, and other construction and demolition waste for projects that are subject to thermal insulation and replacement of front door, windows and thermal insulation of walls and roof. • The condition of the site. The site has to be left in acceptable state of cleanliness with no waste left. • Presence of bird and bat survey report (if required) with mitigation measures applied. 2. Preparation of Environmental and Social checklist to provide guidance for WFOSiGW personnel conducting ex-post evaluation of CAPP subprojects. This includes the above items as well as ensuring that the CAPP standards have been met and that all applicable laws, legislations, and regulations have been followed. 3. Strengthen the existing comprehensive program outreach effort. Currently, information and promotional activities of WFOSÌ?iGWs are based on their own resources for promotion and outreach, while NFOSÌ?iGW makes funds available for the Ministry of Climate which has an overall responsibility for information and education activities. Strengthening existing initiatives could be done through a variety of mechanisms, such as hiring a media firm, using multimedia tools, workshops and/or road shows, municipal-sponsored events, the introduction of program agents or operators, a program help desk, etc., to share program information, eligibility criteria, application procedures etc. The outreach effort should include developing an awareness baseline, including disaggregation by gender, testing of messages, and impact monitoring with outcome indicators. 4. Enhance conditions under which solid fuel boilers may be installed. Currently, solid fuel boilers are ineligible for subsidies where an existing gas connection is already in place. However, they are eligible in locations where a gas connection may be viable even if not already in place. To enhance these conditions, NFOSÌ?iGW to enter into agreements with gas/DH companies to confirm the viability of establishing connections before SFB owners can receive support for a solid fuel boiler. Consider reducing subsidy levels for coal boilers to encourage CAPP beneficiaries to select other heating technologies. 5. Formalizing and financing municipality involvement. Municipalities’ are important as they are the first option for residents seeking information, and are best positioned to reach disadvantaged groups. Municipalities could potentially provide assistance to disadvantaged groups on the CAPP applications, including visits to SFBs. This requires financial incentives for municipalities to engage in the CAPP. Eco-managers in the MaÅ‚opolska region can serve as an exemplary solution. Useful actions: 6. Establishment of an emissions registry for SFB, which would allow municipalities in particular to better target support for the low-income beneficiaries and strengthen enforcement of Anti-Smog Resolutions. 7. A formalized system by which NFOSiGW review grievances and feedback received from stakeholders inform CAPP planning and implementation. This system needs to 58 include reporting of grievances received and addressed at regional level. This information would then be used to inform the CAPP implementation. 59 10. Inputs to the Program Action Plan The inputs to the Program Action Plan (PAP) actions include three environmental actions and one social action. They are presented in Table 6. Table 6. Action inputs to the PAP. Environmental Actions Action Due date Responsible Completion Measurement Agency Broadening the scope of the From WFOSiGW Checking template and ex-post ex-post review of CAPP: July 2021 reviews of CAPP. - Declaration of disposal or reuse of waste such as old window frames, doors, glass, and other construction and demolition waste for thermal insulation projects. - The site has to be left in acceptable state of cleanliness with no waste left. - Presence of bird and bat survey report (if required) with mitigation measures applied. Environmental and Social From WFOSiGW Presence of checklist in ex-post checklist to provide July 2021 reviews of CAPP. guidance for WFOSiGW Training of personnel personnel conducting ex- conducting ex-post reviews of post evaluation of CAPP CAPP. subprojects. Providing financial From WFOSiGW 100 PLN payment is introduced incentives for January for each beneficiary of CAPP municipalities to engage in 2021 that was served by municipality the CAPP. (and application was sent by municipality) that signed agreement with WFOSiGW. Checking COPP regulations. Social Actions Action Due date Responsible Completion Measurement Agency Systematic review of From mid WFOSiGW Grievances records. grievances and feedback to June 2021 Actions taken. ensure that comments received from stakeholders inform CAPP planning and implementation. 60 11. Disclosure of ESSA In order to obtain feedback and comments on the draft ESSA, a public consultation meeting with key stakeholders will be conducted on December xx, 2020. The participants included officials from both NFOSiGW and WFOSiGWs, relevant government agencies, and other stakeholders. The draft ESSA was disclosed at the Bank InfoShop on November xx, 2020, and on the NFOSiGW website in the local language on November XX, 2020. 61 ReferencesAct on Environmental Protection Law, 2004 Act on maintaining cleanliness and order in municipalities Dz. U. 1996 No 132 poz. 622 Awe, Yewande Aramide, Maja Murisic, Anna Koziel, Grzegorz Wolszczak, Filip Piotr; Kochan, Joanne Marie Green, Elena Strukova Golub, et al. 2019. Air Quality Management in Poland. Washington, D.C.: World Bank Group. Boguszewski R., HerudziÅ„ski T., Ubóstwo energetyczne w Polsce, Pracownia BadaÅ„ SpoÅ‚ecznych SGGW. FundEko, 2019. Wsparcie dziaÅ‚aÅ„ dotyczÄ…cych ochrony powietrza i ograniczania ubóstwa energetycznego w ramach regionalnego programy operacyjnego województwa Å›lÄ…skiego, raport, Warszawa. GUS, 2011. Zamieszkane budynki, Narodowy Spis Powszechny LudnoÅ›ci i MieszkaÅ„. GUS, 2016. Jakość życia osób starszych w Polsce, na podstawie wyników badania spójnoÅ›ci spoÅ‚ecznej 2015. GUS, 2019. Budżety gospodarstw domowych w 2018 r. GUS, 2019. Statistical analysis. Environmental protection 2019. 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Kobieta i Biznes/Women and Businessâ€?, no.1–4: 39–49.National Emissions Ceilings (NEC) Directive 2016/2284/EU Law on Waste (Dz. U. 2013 poz. 21) Niezależni Doradcy Energetyczni, 2020. Raport podsumowujÄ…cy pilotazowe dziaÅ‚ania informacyjno-doradcze w ramach programu Czyste Powietrze, Kraków. NIK, 2018. Ochrona powietrza przed zanieczyszczeniami, Warszawa. 62 NIK, 2018. Realizacja zadaÅ„ gminy w zakresie zagospodarowania odpadów komunalnych. Lata 2016 – 2017. RozporzÄ…dzenie Rady Ministrów z dnia 20 marca 2020 r. w sprawie przeksztaÅ‚cenia Ministerstwa Klimatu (Journal of Laws of March 2020 item 499). The Clean Air Programme for Europe (CAPE), 2013. European Commission. https://www.who.int/gho/publications/world_health_statistics/2018/en/ The World Bank. 2017. CPIA Criteria 2017. Washington, D.C.: The World Bank. http://pubdocs.worldbank.org/en/203511467141304327/CPIA-Criteria-2017v2.pdf. Wijetilleke, Lakdasa, and Suhashini A. R. Karunaratne. 1995. Air Quality Management: Considerations for Developing Countries. World Bank. Washington, D.C.: The World Bank. https://doi.org/10.1596/0-8213-3191-4. World Bank (2019). Air Quality Management – Poland. Final Report. World Bank Group. 2020. Introduction to Air Quality Management: ELearning Course. Washington, D.C.: World Bank Group: Open Learning Campus. World Bank (2020). Poland: Analyzing the Institutional Framework for AQM. https://olc.worldbank.org/content/introduction-air-quality-management-self-paced. www.gios.gov.pl www.gov.pl 2008/50/EC Directive on Ambient Air Quality and Cleaner Air for Europe 63 Annex 1. Questionnaire for WFOSiGW and key findings 1. Are the roles and responsibilities clearly defined in relation to the CAPP Program’s implementing agency Regional Fund for Environmental Protection and Water Management (WFOSÌ?GW), including accountability for delivering the Program, and relations with other state agencies (such as the NFOSGW, and others)? 2. Does the implementing agency WFOSÌ?iGW have adequate resources to implement the CAPP Program? 3. Do staff roles and responsibilities are adequate and clear, and staff understand them clearly? 4. Is there a coordinating body empowered to resolve coordination issues or delays in required actions? 5. What kind of permits are required for households to obtain to proceed with implementation of the CAPP? 6. What are environmental and social responsibilities of the WFOSÌ?iGW in relation to the CAPP? 7. Have environmental and social impacts of the CAPP been assessed? 8. Is the CAPP Program implementing agency WFOSÌ?iGW adequately staffed, in terms of skills, qualifications, and number of personnel for program administration, planning, and design, implementation, monitoring and environmental and social functions? 9. Are environmental and social management agents or consultants hired by WFOSGW for the CAPP Program to randomly monitor applications and implementation? 10. Will framework contractor be responsible for implementation of certain types of works at the household level or will it be up to the individual household to choose a certified contractor? 11. What health and safety issues will have to be followed by the contractor? 12. Who will estimate and monitor annual reduction in PM10, PM2,5 and CO2 emission during the project implementation, and after the completion? 13. What arrangement are put in the CAPP Program for temporary storage and disposal of hazardous waste (asbestos and PCBs)? 14. What arrangements are put in the CAPP Program for temporary storage and disposal of old boilers, old wall insulation, disused windows, asbestos roofs, disused external doors? 15. Where will the environmental and social safeguards for the contractors be codified? What are monitoring and supervision arrangements to verify compliance with environmental and social safeguards of the CAPP Program? 16. Does the CAPP Program consider activities and interests of other stakeholders that may affect environmental or social management (cumulative impacts)? 17. How do you assess modification made in March 2020 to the CAPP Program? What other measure would you recommend to improve environmental and social effectiveness of the Program? 64 Key findings of the interview based on the questionnaire 1. Are the roles and responsibilities clearly defined in relation to the CAPP Program’s implementing agency Regional Fund for Environmental Protection and Water Management (WFOSÌ?GiW), including accountability for delivering the Program, and relations with other state agencies (such as the NFOSGiW, and municipalities)? Yes, all roles and responsibilities are clarified, on the basis of the agreement and the contract with the National Environmental Found (NFOSiGW). There were no changes to the agreement between the NFOSiGW and the WFOSiGW following the CAPP modifications on May 15, 2020. Usually between 20% and 50% of municipalities signed agreement with the WFOSiGW regarding the CAPP. For instance, in Kujawsko-Pomorskie Region, 26% of municipalities signed such agreement. The WFOSiGW trains municipal staff dealing with CAPP. There is no financial support to municipalities for their involvement in the CAPP. This is discouraging many municipalities from signing agreement with the WFOSiGW. WFOSiGW is expected to provide support to municipalities at the level of 100 PLN for each submitted application through municipal services. 2. Do staff roles and responsibilities are adequate and clear, and staff understand them clearly? Yes, the WFOSiGW staff understands the responsibilities and tasks. There were several trainings for the staff where all necessary information was provided. There are project teams on screening applications, on preparing agreements with applicants, on checking eligibility, and signing contracts. Five per cent of the agreements has to be controlled after completion. The WFOSiGWs typically set up the following divisions dealing with CAPP: application evaluation, agreement preparation, implementation, accounting and supervision. They opened 3-4 local offices to deal with applications in their region. Exception is the Lublin WFOSiGW, which opened 10 such local offices. The staff roles and responsibilities are less clear at the municipal level. It depends on level of dedication to the CAPP, training of staff by WFOSiGW, and agreement signed with the WFOSiGW. 3. Is there a coordinating body empowered to resolve coordination issues or delays in required actions? There is no such CAPP coordinating body. 4. What kind of permits are required for households to obtain to proceed with implementation of the CAPP? The owner of the SFB has to arrange all necessary permits that are required for the planned works according to the Polish Construction Act. In case of gas connection, special permit is required from the gas operator. 5. What are environmental, social and work and safety related regulations responsibilities and of the WFOSÌ?iGW and municipality in relation to the CAPP? 65 None. Companies doing the works are obliged to comply with the health and safety regulations. They have to keep the regular work safety trainings for the workers, and keep standards, depending on the work specificity. These are regular regulations for all the industry. 6. Have environmental and social impacts of the CAPP been assessed using Polish regulations? No. The CAPP does not require environmental and social assessment as the impacts are small and highly dispersed. 7. Is the CAPP Program implementing agency WFOSÌ?iGW adequately staffed, in terms of skills, qualifications, and number of personnel for program administration, planning, and design, implementation, monitoring and environmental and social functions? The WFOSiGWs are generally well prepared for the CAPP. Usually, 15-30 staff are dealing directly with the CAPP on a full time basis. In addition, accountancy and controlling staff of the WFOSÌ?iGW are engaged on a part time basis. The interviewed WFOSiGWs set up 3 to 4 local offices with one specialist dealing with CAPP. Exceptional case is the Lublin Region, where 10 such local offices were set up and based in the county offices. The level of preparedness does not apply to environmental and social issues as these are not considered in the CAPP due to low level and dispersed impacts. 8. Are environmental and social management agents or consultants hired by WFOSGW for the CAPP Program to randomly monitor applications and implementation? There are no independent environmental and social consultant hired for the CAPP monitoring. Internal monitoring of at least 5% of applications is done by WFOSiGW after works are completed. 9. Will framework contractor be responsible for implementation of certain types of works at the household level or will it be up to the individual household to choose a certified contractor? There are no such contractors within the CAPP. The choice of a firm depends on a beneficiary. 10. What health and safety issues will have to be followed by the contractor? There are no specific arrangements regarding health and safety in the CAPP. It is the responsibility of the contractor including specific requirements regarding workers’ trainings, work wear, medical examination etc. 11. Who will estimate and monitor annual reduction in PM10, PM2,5 and CO2 emission during the project implementation, and after the completion? There are no such arrangements in the CAPP. This is the task for the WIOS. There is no agreement between the WFOSiGW and the WIOS regarding monitoring the CAPP air 66 quality results. WFOSÌ?GiW reports to the National Fund on the number of signed and implemented projects, and the related environmental impacts. 12. What arrangement are put in the CAPP Program for temporary storage and final disposal of hazardous waste (asbestos and PCBs)? There are no such arrangements in the CAPP. It is contractor’s responsibility. Costs related to the utilization of asbestos are not eligible in the CAPP program. 13. What arrangements are put in the CAPP Program for temporary storage and final disposal of old boilers, old wall insulation, disused windows, asbestos roofs, disused external doors? The only such requirement in the CAPP is mandatory protocol of scrapping of the disused heating installation. Such protocol is an obligation of the beneficiary. It can be checked by WFOSiGW when the works are completed. In case of stoves of architectural value, a document is needed stating the stove was permanently disconnected from the chimney, and it is not operational. 14. Where will the environmental and social safeguards for the contractors be codified? What are monitoring and supervision arrangements to verify compliance with environmental and social safeguards of the CAPP Program? There are no such provisions in the CAPP. Regulations on Environmental Impact Assessment are not applicable in the CAPP program. 15. How do you assess modification made in March 2020 (put in force on May 15, 2020) to the CAPP Program? What other measure would you recommend to improve environmental and social effectiveness of the Program? The changes to the CAPP made on May 15, 2020 are positive. They are friendly to the beneficiary. The forms are simple. Instead of copies of documents, statements by beneficiaries are sufficient. The processing time was reduced from 90 days to 30 days. However, the modifications did not include promotional financing of the CAPP. Further, standards for insulation material (including also windows and doors) for SFB, and ban on installing modern coal heating installations in locations were gas network is available or connection to municipal heating is possible were lifted on May 15, 2020. Another issue is that applications should automatically indicate mistakes, which is not the case from May 15, 2020. This can prolong the application process. Also, the amount of refunding is no longer visible in the online application form. It can create some confusion amongst beneficiaries. Finally, the role of municipalities was reduced to advising the residents and an option to send the application to WFOSiGW. These issues were raised by Kujawsko- Pomorskie WFOSiGW in ToruÅ„, and by WFOSiGW in Lublin. 16. What other measure would you recommend to improve environmental and social effectiveness of the Program? 67 This program is well planned. In the near future an agreement will be signed with commercial banks that will assess creditworthiness of beneficiaries and provided loans partly paid back by the WFOSiGW. However, CAPP promotion needs to be strengthened and financed at the WFOSiGW level. There should be also some CAPP financing at the municipal level. Also, the role of municipalities should be strengthened and financing should be secured. The CAPP needs to be better promoted to build more trust amongst the population. Finally, there should be better link between the replacement of heating installation and thermal insulation of house. In fact, both activities should be financed as a condition. 17. Are organizations responsible for identifying, and monitoring of environmental and social impacts independent from the financing bodies? Monitoring of at least 5% of the projects is conducted internally by WFOSiGW after completion of works. There are no independent companies. 18. Do you think that CAPP can cause environmental or social conflicts? This is highly unlikely. The CAPP would not entail social conflicts or social tensions. Impartiality is the principle in conducting CAPP procedure. Families with low computer literacy are provided advice. 19. Is there a danger that CAPP increases the chances of Energy poverty and disclosure? The CAPP does not lead to energy poverty. There is the supplementary StopSmog program that is now included in the CAPP and dedicated to the poorest families. The low income SFBs get higher level of funding. The lowest income applicants can submit invoices directly to the WFOSiGW and thus avoid paying the cost to contractor upfront. 20. Is there a possibility of appeal in the case of rejected applications? Yes. The appeal has to be launched within ten days of the application rejection. The application is assessed by another employee of the WFOSiGW to ensure impartiality. In Lubelskie Region, about a half of unsuccessful application are appealed. About 20% of them are successful. 21. Is there sufficient amount of public information concerning the CAPP? The CAPP could be better promoted. There is no funding allocated to the WFOSiGW for promotion activities. The Lublin WFOSiGW provided 1 million PLN through NGOs to raise public capacity regarding the CAPP and stimulate residents to apply. 21. Are there procedures to identify buildings with an importance of cultural heritage (as an old cottage)? In case such buildings are subject to the CAPP, permission is needed from the Regional Conservator of Historical Treasure. Such cases are exceptionally rare. 23. Apart from the better air quality, are there some added social values related to CAPP? 68 In many cases the quality of life increases with changing coal stoves to gas boilers or other heating source. Especially in the case of elderly people this is a very important benefit. 69 70 71 72 73 74