REPUBLIC OF POLAND WORLD BANK PROGRAM-FOR-RESULTS CLEAN AIR THROUGH GREENING RESIDENTIAL HEATING ENVIRONMENTAL AND SOCIAL SYSTEMS ASSESSMENT (ESSA) February 2021 (updated October 2021) FINAL Official Use Table of Contents Executive Summary ................................................................................................................... 5 1. Introduction ........................................................................................................................ 11 1.1 Poland Clean Air Priority Program............................................................................... 12 2. Description of Poland Program for Results........................................................................ 17 3. Objectives of the Environmental and Social System Assessment ..................................... 19 4. Description of Expected Program Environmental and Social Effects. .............................. 20 4.1 Environmental and social screening .............................................................................. 20 4.2 Social inequalities and marginalization of vulnerable groups ...................................... 29 4.3. Gender-related issues in Program ................................................................................ 31 5. Assessment of Program System Consistency with Core Principles of OP 9.00 ................ 31 6. Assessment of Borrower’s Environmental and Social Management Systems (ESMS) relevant to the Program ............................................................................................................ 33 6.1 Methodology ................................................................................................................... 33 6.2 Legal Framework ........................................................................................................... 33 6.2.1 The EU Environmental Legislation context ........................................................ 33 6.2.2 Poland EIA Legal and Regulatory Framework ................................................... 34 6.2.3 Building Law ....................................................................................................... 35 6.2.4 Health and safety regulations concerning construction workers ......................... 35 6.2.5 Waste Management Law ..................................................................................... 36 6.2.6 Regional Anti-Smog Resolutions ........................................................................ 37 6.3 Air Quality Management ................................................................................................ 39 6.3.1 Organizational Structure at the national, regional and local level ...................... 39 6.3.2 Central Register of Emissions from Buildings .................................................... 40 6.4 Verification of completed projects ................................................................................. 41 6.5 Institutional capacity of implementing institutions ........................................................ 42 6.6 Interagency coordination ............................................................................................... 43 6.7 Reputational risk ............................................................................................................ 45 6.8 Grievance redress mechanism and appeals procedures ................................................ 47 7. Key Stakeholders Mapping ................................................................................................ 48 7.1 Ministry of Climate and Environment ............................................................................ 48 7.2 National Fund for Environmental Protection and Water Management ........................ 49 7.3 Regional Funds for Environmental Protection and Water Management ...................... 50 7.4 Municipality (gmina) ...................................................................................................... 51 7.5 Other stakeholders ......................................................................................................... 52 8. Stakeholder Consultations and Citizen Engagement ......................................................... 54 9. Data collection.................................................................................................................... 56 10. Environmental and Social Risk Rating .............................................................................. 59 11. Recommendations for the Program Environmental and Social Systems ........................... 59 12. Inputs to the Program Action Plan ..................................................................................... 61 13. Disclosure of ESSA ............................................................................................................ 62 References ................................................................................................................................ 63 Annex 1. Questionnaire for WFOÅšiGW and key findings ....................................................... 65 Annex 2: Summary of public consultations on the draft ESSA report .................................... 70 2 List of Abbreviations ASR Anti-Smog Resolution AQM Air quality management AQP Air quality plans BGK Bank Gospodarstwa Krajowego CAPP Clear Air Priority Program CEEB Central Register of Emissions from Buildings CO2 Carbon dioxide DH District heating DLI Disbursement linked indicator E&S Environmental and social EC European Commission EE Energy efficiency EIA Environmental Impact Assessment EPL Environmental Protection Law ESMS Environmental and Social Management System ESSA Environmental and Social Systems Assessment EU European Union GDP Gross domestic product GHG Greenhouse gas GIOS Chief Inspectorate of Environmental Protection GMO Genetically modified organism GoP Government of Poland GRM Grievance redress mechanism GUS Main Statistical Office MoCE Ministry of Climate and Environment MoD Ministry of Development MoF Ministry of Finance MIS Management Information System MOPS Municipal Social Assistance Center NFEEAS National Fund for Energy Efficiency and Anti-Smog NFOÅšiGW, NFEPWM National Fund for Environmental Protection and Water Management NIK Supreme Audit Office NGO Non governmental organization OP Operational Policy PBA Polish Banking Association PforR Program for Results PIT Personal income tax PM Particulate Matter PV Photovoltaic (solar) 3 SEA Strategic Environmental Assessment SFB Single-family building SSP Stop Smog Program TRF Thermo-modernization and Retrofit Fund VIEP Voivodship’s Inspectorate for Environmental Protection WFOÅšiGW Regional Fund for Environmental Protection and Water Management WIOS Regional Inspectorate of Environmental Protection ZUM List of eligible equipment and materials 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 gross domestic product (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 European Union (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 European Commission (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 (US$26 billion), 10-year initiative aimed at reducing low stack emissions. The CAPP is implemented by the National Fund for Environment Protection and Water Management (NFOÅšiGW). 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 CAPP deploys a system of subsidies, tax incentives, and targeted loans to help 3,030 million single-family buildings (SFBs) to replace their solid fuel boilers and implement thermal retrofits. The CAPP was simplified on May 15, 2020 to increase its attractiveness to the population. PforR Program Scope The Bank is considering support for a Program-for-Results (PforR) loan, referred to as the Clean Air Through Greening Residential Heating Program (hereinafter the Program) which would support 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 CAPP is well-aligned with EU priorities as noted in the suite of transposed energy efficiency directives, strategy documents (e.g., NECP), AQ standards and in the domain of tackling energy poverty. 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 energy efficiency programs in other Central and Eastern European countries. Therefore, the Bank’s proposed PforR objective, targets, and scope have been developed to closely align with those of CAPP, namely “to save energy and reduce emissions that contribute to air pollution through the promotion and adoption of sustainable heating and energy efficiency investments in single-family buildings in Poland.â€? Thus, it is proposed that the scope of the PforR be defined as a 5-year time slice of the CAPP (including the complementary tax relief scheme under MoF) excluding support for eco-coal boilers, i.e.: (i) while CAPP does include provisions for eligible SFBs to purchase new, eco-design coal boilers until the end of 2021, the 5 PforR would not support them; and (ii) while CAPP is a 10-year program, the PforR would be limited to a 5-year duration. Over the life of the PforR (i.e., March 2022-March 2027), it is estimated that about 813,000 SFBs would be served to support thermal renovations, non-coal boiler replacements, or both, at an estimated CAPP program cost of US$6.1 billion. The proposed PforR would also take into account major planned enhancements to CAPP, such as the inclusion of commercial banks and the launch of a low-income component, as they are introduced and fully incorporated into CAPP. The Program beneficiaries are SFB owners whose homes require thermal renovations and solid fuel 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 an 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 would fit within the existing institutional arrangements under CAPP. However, some institutional adjustments will be needed, such as to include commercial banks, define and formalize the roles and responsibilities of municipalities, and train and mobilize a set of eligible program operators (proposed for the low-income component). 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$6.1 billion budgeted for CAPP in the corresponding five-year period, and about 0.2 percent of the full, 10-year government program (US$25.54 billion). Program Development Objective(s) (PDO) and PDO Level Results Indicators The Program development objectives are to reduce energy use and air pollution emissions from heating sources in single family buildings. 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 and PM2.5). 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 investments. Purpose of the ESSA The purpose of the Environmental and Social Systems Assessment (ESSA) is to (a) analyze the environmental and social effects, including indirect and cumulative effects, of activities associated with the Program; (b) analyze the borrower’s systems for managing the identified environmental and social effects, including reviewing practices and the performance track record; (c) compare 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) formulate 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). 6 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’s 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 PforR operation. 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 PAP 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 Based on the assessment, the environmental and social impacts are expected to be limited, site- specific, reversible, and mitigatable. Physical works financed under the Program are under DLIs 6 and 7 and include thermal insulation of buildings, installation of renewable energy sources and energy-efficient boiler 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) improper 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 Program in parallel with 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. 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) are optional and thus less common in the Program than the replacement of the heating source. Typical recycling under the Program is the desegregation of wood or plastic elements from glass. Wood or plastic is incinerated, glass can be reused or disposed of at a 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 Program. The relevant policies and regulations are in place (following the EU directives, regulations, and decisions). Financial and administrative enforcement is satisfactory. 7 In cases of detection of bird nests and bats resting sites under the roof prior to the works, SFBs or contractors will minimize negative impacts primarily by banning works during the specified nesting period and moving the habitats to another location. This provision is included 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 to limited capabilities of low-income group, in particular in terms of the online application process (DLI 2), (b) concern that a change in fuel, from cheap firewood/coal to more expensive alternatives, may impact the recurring energy bills for lower-income households (DLI 2, PAP), and (c) insufficient citizen engagement and information regarding Program (DLI 5, PAP). With regards to Program procedures, the application process relies heavily upon access to technology (computers and the internet), the ability to access the CAPP website, and the ability to properly fill in the application. With the high reliance on using online applications, elderly persons not familiar with using computers and low-income households without access to the internet are at greater risk of non-participation in the Program. A social risk also relates to a change in household expenditures as a result of changes in fuels (i.e., from low-grade coal to gas or electricity). This regards in particular to SFB owners that choose not to apply for thermal insulation of their building (walls, windows, and front doors), which can reduce the energy demand of buildings and therefore offset higher energy bills. This could be mitigated through an expansion, modification or establishment of certain social programs, such as the housing allowance, the electricity allowance or the special purpose benefit, to cover energy bills in vulnerable SFBs, including those associated with switching to cleaner fuels. Aligned with these potential mitigating measures, a team has been established by the Order of the Minister of Climate and Environment of 23, February 2021 (Legislative Journal of the Minister of Climate and Environment, item 18) for the support of vulnerable consumers and reduction of energy poverty in Poland. Tasks of this team include developing a concept of a support mechanism for vulnerable consumers, specifying a definition of energy poverty and assessing instruments contributing to elimination of the energy poverty phenomenon. 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 the distribution of information through more formalized outreach efforts. 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, efficient gas, electric heat pump, 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 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. 8 Assessment of Borrowers Systems and Framework The NFOÅšiGW has overall responsibility for the supervision of the Program. This Fund plays the coordination role for the 16 regional funds or WFOÅšiGWs, which are the main implementing agencies for the Program at the regional level. The NFOÅšiGW reports to the Ministry of Climate and Environment (MoCE). Municipalities can sign a cooperation agreement with their respective WFOÅšiGW and support the beneficiaries with application forms. Commercial banks are proposed but not yet included in the Program. They will provide loans to beneficiaries based on the agreement with the NFOÅšiGW. The Program implementing agencies (NFOÅšiGW and WFOÅšiGWs) continue to hold responsibility for processing applications, ex-post verification, etc. and hold responsibility for environmental and social standards even in the case of applications submitted in conjunction with future loan applications from commercial banks. Polish EIA law and EIA Directive 85/337/EEC with subsequent amendments are not applicable to the Program. An 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 the subproject evaluation conducted by each WFOÅšiGW. WFOÅšiGWs’ evaluations are limited to a post-completion check of certifications for recycling old heating installations with a random sample of 5% of SFBs where works were conducted by the contractor and for 100% of subprojects completed by SFB owners themselves. Based on the current rate of applications, there is enough capacity within the WFOÅšiGWs to conduct the ex- post review and to ensure the fulfillment of the environmental safeguard responsibilities. Suggested areas of improvement and inputs to Program Action Plan The following measures are recommended to help proponents improve their system performance and to address important gaps between the national 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 to include environmental and social aspects (e.g., waste disposal and recycling, cleanliness of site condition, presence of bird and bat survey, occupational health and safety) through the adoption of an Environmental and Social checklist. The checklist would provide guidance for WFOÅšiGW personnel conducting ex-post evaluation of CAPP subprojects to ensure adherence to Poland’s applicable environmental and social laws and regulations. 2. Strengthen the existing comprehensive program outreach effort. Currently, information and promotional activities of WFOÅšiGWs are based on their own resources for promotion and outreach, while NFOÅšiGW makes funds available for the MoCE which has overall responsibility for information and education activities. Strengthening existing initiatives could be done through a variety of mechanisms, such as hiring a 9 media firm, using multimedia tools, workshops and/or roadshows, 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. 3. Establish formal and systematic communication and training opportunities to strengthen the knowledge and capacity of works providers. Supplement training modules for WFOÅšiGW staff, banks, contractors, and SFB owners, including implementation guides, E&S issues, etc. to reduce mistakes, share lessons, etc. 4. For the overall CAPP, transition from coal to cleaner fuels, including gas-based heaters, and consider phasing out subsidies for coal boilers over time. (On May 21, 2021, the Minister of Climate and Environment announced that support for eco-coal boilers under CAPP would be phased out, and thus from January 1, 2022, coal boilers would no longer be eligible for any government subsidies. NFOÅšiGW also entered into an MOU with the national gas utility on September 27, 2021 to promote gas-based heating where appropriate.) 5. Support further municipal participation in the CAPP. Municipalities 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 SFBs, which would allow municipalities, in particular, to better target support to low-income beneficiaries and strengthen enforcement of regional Anti-Smog Resolutions. 7. In order to improve the review of grievances and feedback, CAPP should develop, amalgamate, and systematize 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 disaggregated by age group, gender, urban/rural, and region. This will inform the program on whether specific groups are disproportionally 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 (EU) 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 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 (€ 26-30 billion). Poor air quality takes a considerable human toll. Respiratory illness caused by pollution resulted 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 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 (Court of Justice of the European Union Press release No 19/18 Luxembourg, 22 February 2018). 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 2018 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. As of May 2021, MoCE has announced its decision to phase out subsidies for coal boilers by the end of 2021. Energy generation has been identified as the main source of air emissions in Poland. In an effort to increase energy security by diversifying supply, the Government of Poland released a draft Energy Policy in November 2018. 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. In June 2020, the newly formed Ministry of Climate (now Ministry of Climate and Environment, MoCE) announced a green investment package amounting to more than PLN 7.8 billion (US$2.09 billion) to support clean energy including renewable energy, cogeneration, EE, electric vehicles, and other measures. MoCE also announced plans to phase out coal in the residential sector, through a proposed ban of coal use for household heating in urban areas by 2030 and rural areas by 2040. On October 2, 2020, the GoP signaled their intent to phase out coal mining by 2049 and shared their revamped 2040 energy and climate goals which include a reduction in coal-based power 11 generation to 22 percent. And, on December 11, 2020, Poland agreed to reduce GHG emissions by 55 percent (of 1990 levels), in line with other EU-27 countries. Poland is implementing several EE measures in multi-family buildings and public agencies, industries and SMEs, transport and energy generation and supply, and has an EE obligation scheme (white certificates). Poland is also committed to renovating 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 (NFOÅšiGW) and implemented at the regional level by Regional Environmental Protection Funds (WFOÅšiGWs). Additionally, the Operational Programme Infrastructure and Environment, Regional Operational Programs, as well as Bank Ochrony Åšrodowiska (BOÅš) Bank, and the Thermo-modernization and Repairs Fund managed by Poland’s development state bank Bank Gospodarstwa Krajowego (BGK) to support EE investments. The residential sector continues to be the second-largest energy consumer, with about 26.5 percent of total final energy consumption (19.90 Mtoe/yr), behind only the transport sector. Approximately 50 percent of households (5.4 million households) live in single-family buildings (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 firewood, biomass, and waste) for the purposes of central heating and domestic hot water in often low-quality furnaces. 1.1 Poland Clean Air Priority Program This section describes the government’s program (CAPP) to which the World Bank’s Program for Results (PforR) operation is intended to contribute. The objective of CAPP is to improve air quality and reduce greenhouse gas (GHG) emissions by exchanging heat sources and improving energy efficiency in 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 as a 10-year program to improve AQ and reduce GHG emissions by exchanging heat sources and improving energy efficiency in SFBs. The CAPP 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 indicators to measure progress towards the objective include, e.g., number of buildings with improved thermal performance; number of inefficient heat sources replaced for efficient, low emission heat sources in SFBs; reduction in final energy consumption; and reduction of PM 10 and PM2.5, benzo-α-pyrene, and CO2 emissions. The CAPP was announced as a PLN 103 billion (US$27.6 billion) program with a budget for subsidies, loans to municipalities and thermo- modernization tax relief of PLN 63 billion (US$16.9 billion) and loans granted by commercial banks of PLN 40 billion (US$10.7 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 (NFOÅšiGW) under the MoCE and implemented through the 16 Regional Funds for Environmental Protection and Water Management (WFOÅšiGWs, see Figure 1). a) NFOÅšiGW 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 the regional WFOÅšiGWs; (iv) program communications and application platforms; (v) program monitoring, oversight, evaluation and reporting; and (vi) financial mobilization, management, and disbursements. b) The 16 WFOÅšiGWs 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 NFOÅšiGW. Operating under a financing agreement with NFOÅšiGW, each WFOÅšiGW enters into grant agreements with eligible beneficiaries (i.e., SFB owners). WFOÅšiGWs also maintain cooperation agreements with participating municipalities and partner banks. The WFOÅšiGWs 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 regional locations. Municipalities serve as the local points of access for SFB owners and provide them with information about the program. As of April 2021, around 1,210 municipalities had signed agreements with NFOÅšiGW for CAPP implementation. 13 Figure 1. Institutional arrangements for CAPP Ministry of Climate and Environment 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 CAPP 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 CAPP subsidizes (i) the 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 the impact of thermal renovation on bat and bird habitats located under the roof of retrofitted buildings). (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 (which will end on December 31, 2021), 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 for middle and higher-income households; 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 14 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 for lower-income households; 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 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. As of February 26, 2021, CAPP has received approximately 212,700 applications for PLN 3.469 billion (USD 875 million) of grants (with PLN 384 million or USD 97 million of loans) and signed 179,700 co-financing agreements for PLN 2.999 billion (USD 756 million) of grants (with PLN 204 million or USD 51 million of loans). As shown in Figure 4, demand for the program has been continuous over time and has seen progressive expansion linked to reforms implemented in May 2020 and October 2020. (As of October 1, 2021, the CAPP increased applications to 325,400 for PLN 5.17 billion in grants and PLN 383 million in loans.) Figure 2. Number of CAPP applications received and processed 250000 200000 150000 100000 50000 0 31.5.19 11.09.20 26.02.21 31.12.18 18.2.19 3.5.19 21.6.19 19.7.19 16.8.19 13.9.19 11.10.19 8.11.19 6.12.19 3.1.20 31.1.20 28.2.20 27.3.20 24.4.20 22.05.20 19.6.20 17.7.20 14.8.20 09.10.20 06.11.20 04.12.20 01.01.21 29.01.21 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; (iv) launch of Part 2 of the program allowing lower-income beneficiaries to apply for an elevated level of co-financing and (v) launch of list of eligible equipment and materials (ZUM) in February 2021. 15 Several further adjustments to the program have been agreed and announced by NFOÅšiGW on May 15, 20203 and NFOÅšiGW is working to complete these adjustments: • Integration of commercial banks: A cooperation agreement was signed between NFOÅšiGW and the Polish Banking Association (PBA) on April 30, 2020 to prepare th e 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 the distribution of the CAPP subsidy through the commercial banks’ distribution channels. NFOÅšiGW 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 agreement also includes provisions for a proposed portfolio guarantee issued by BGK and funded by NFOÅšiGW, which would cover 80 percent of the commercial bank’s loan portfolio under CAPP. In February 2021, NFOÅšiGW issued a call for commercial banks to join CAPP and started implementation of the changes to the CAPP information technology (IT) system to allow integration of the banks. As of April 2021, eight banks had applied to enter into CAPP lending, of which three have now entered into financing agreements with NFOÅšiGW and begun issuing loans. • 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 early 2022. • List of eligible equipment and materials (ZUM): The ZUM was not in place when the program was established but has been under development since early 2019. CAPP will finance equipment and material listed in the ZUM to simplify and accelerate the verification of applications, as well as those that meet the requirements listed in Annex 2 and Annex 2A of the CAPP program documentation. The ZUM system was compiled through manufacturers submitting applications for their equipment and material to be included in the ZUM list. This list was sufficiently populated with equipment and materials and became operational in February 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, 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 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 NFOÅšiGW, 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. 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 investments have been completed. The responsibility for SSP is expected to be transferred from the MoD to NFOÅšiGW under MoCE. 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 the 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 (PforR) financing was deemed the most suitable instrument to address the GoP’s request for a strong result focus and incentives to institutional improvements. PforR will incentivize: (i) a sharper focus on the most important results the GoP wants to achieve, such as increased EE and air pollutant emission reduction; (ii) reliance on GoP’s 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. Both the CAPP and PforR (a) have the objective of improving air quality and energy efficiency through investments in SFBs, (b) cover energy saved, reduced local air pollution, and reduced CO2 emissions as their results areas, and (c) have fully aligned program indicators. For the PforR, the program indicators in the three results areas include: (i) Projected energy or fuel savings (PDO indicator, energy saved); (ii) projected lifetime reduction of particulate matter emissions (PDO indicator, reduced local air pollution); (iii) projected lifetime emissions reductions as a result of the energy savings (climate indicator, reduced CO2 emissions). The investments under the PforR DLI 6 (number of SFBs that have undergone thermal renovations with Eligible Equipment and Materials under the CAPP) and DLI 7 (number of inefficient, solid fuel boilers replaced with efficient, clean, non-coal heating systems with Eligible Equipment and Materials under the CAPP) directly lead to energy savings, reduced local air pollution, and reduced CO2 emissions. The Program development objectives are to reduce energy use and air pollution emissions from heating sources in single-family buildings. The Bank is considering support for a Program-for-Results (PforR) loan, referred to as the Clean Air Through Greening Residential Heating Program which would support CAPP. The CAPP has a strong strategic rationale as it tackles critical issues of AQ, energy security and climate change mitigation due to high energy consumption and pollution from old heating sources in older SFBs and with an inclusion lens. The CAPP is well-aligned with EU priorities as noted in the suite of transposed energy efficiency directives, strategy documents (e.g., NECP), AQ standards, and in the domain of tackling energy poverty. 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 energy efficiency programs in other Central and Eastern European countries. 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 be defined as a 5-year time slice of the CAPP (including the complementary tax relief scheme under MoF) excluding support for eco-coal boilers, i.e.: (i) while CAPP does include provisions for eligible SFBs to purchase new, eco-design coal boilers (which ends December 31, 2021), the PforR would not support 17 them; and (ii) while CAPP is a 10-year program, the PforR would be limited to a 5-year duration. Over the life of the PforR (i.e., March 2022-March 2027), it is estimated that about 813,000 SFBs would be served to support thermal renovations, non-coal boiler replacements, or both, at an estimated CAPP program cost of US$5.7 billion. The proposed PforR would also take into account major planned enhancements to CAPP, such as the inclusion of commercial banks and the launch of a low-income component, as they are introduced and fully incorporated into CAPP. Institutionally, the PforR would fit within the existing institutional arrangements under CAPP. However, some institutional adjustments will be needed, such as to include commercial banks, define and formalize the roles and responsibilities of municipalities, and train and mobilize a set of eligible program operators (proposed for the low-income component). 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$5.7 billion budgeted for CAPP in the corresponding five-year period, and about 0.2 percent of the full, 10-year program (US$25.8 billion). 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; • Connection to district heating; • Solar collectors; • Electric heating systems; • Required connections and internal installations; • Mechanical ventilation with heat recovery; and • PV micro-installation. • Strengthening NFOÅšiGW capacities to monitor and implement CAPP’s revamped key funding instrument through participating commercial banks and transferring of subsidy resources through WFOÅšiGW. 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. NFOÅšiGW, through regional funds WFOÅšiGWs, 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 18 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 under the program. The revamped CAPP will also provide support to motivate retail managers to market their EE loan products to 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. Summary of past engagement with NFOÅšiGW Under the framework of the EC’s Catching up Regions (CuR) initiative, the Bank has been providing technical assistance since 2017 to GoP to reduce air pollution through improved EE heating systems and thermal renovations in SFBs. The Bank has been working with NFOÅšiGW 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 EE 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 the 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 NFOÅšiGW 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 (E&S) effects, including indirect and cumulative effects, of activities associated with the Program. (b) Analyzes the borrower’s systems for managing the identified E&S 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). 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. WFOÅšiGWs, municipalities, an NGO, a professional organization were interviewed. Moreover, webpages of all 16 WFOÅšiGW were reviewed, as well as the CAPP-related Facebook groups - to obtain a view of the program recipients’ opinions. On-site visits were not possible due to the COVID-19 pandemic. 19 Therefore, online interviews and webpage materials were used. A more detailed description of the methodology and the research conduct is presented in Section 9. 4. Description of Expected Program Environmental and Social Effects. 4.1 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. The environmental and social impacts and risks refer to Disbursement-linked indicators (DLI), (Table 1) proposed as key results linked to the Program, and disbursements would be triggered by the achievement of these DLIs and results. Table 1. Program DLIs Indicator/Result Amount Description of Indicators Completion (€, millions) Deadline Policy-level DLIs DLI 1 20 Adoption of legislative amendments to propagate greater Adoption of the Act of uptake for the CAPP and the low-income program, January 1, 28 October 2020 including (a) the establishment of the CEEB to formalize air 2021 Amending the Act on quality data collection and monitoring, outreach, Supporting Thermo- inspections, and enforcement of solid fuel burning and (Prior result modernization and allow for better regional targeting of program resources; (b) – completed Renovation and the provision of financial resources to the BGK to issue January 1, Certain Other Acts as guarantees to help make loans more accessible to SFBs and 2021) published in the enable more commercial banks to join the CAPP; and (c) Borrower’s Journal of the transfer of the SSP to the MoCE to allow the CAPP to Laws, item 2127, (“the serve low-income SFB owners. Actâ€?) in respect solely to the amendments in the Act that specifically pertain to: (i) the establishment of the Central Registry of Emissions for Buildings (CEEB); (ii) the provision of financial resources to BGK to issue guarantees; and (iii) the transfer of the Stop Smog Program to MoCE DLI 2 25 Design, adoption, and operationalization of the Program or Adoption and program component targeting low-income households, operationalization at acceptable to the World Bank, with appropriate subsidy the national level of levels, mechanisms for eligibility verification, the low-income implementation support, and monitoring to ensure high program under CAPP participation rates. The DLI has two DLR targets. DLR 2.1: 5 DLR 2.1 will be met when NFOÅšiGW has announced the March 31, first phase of the low-income program on the CAPP 2022 website and included the provisions for the low-income program in the publicly available program website; the 20 World Bank considers that the first phase of the low- income program (subsidy levels, mechanisms for eligibility verification, and monitoring) is acceptable to the World Bank; and at least a total of 100 applications from SFBs for the first phase of the program have been submitted under the CAPP nationally. DLR 2.2: 20 DLR 2.2 will be met when NFOÅšiGW has announced the launch of the second phase of the low-income program on March 31, the CAPP website and included the provisions for the 2023 updated low-income program in the publicly available CAPP documents; the World Bank considers that the updated low-income program (subsidy levels, mechanisms for eligibility verification, extended implementation support, and monitoring) is acceptable to the World Bank; and thereafter at least 100 applications from SFBs have been submitted under the CAPP nationally. Program-level DLIs DLI 3 Development and launch of a centralized program Publication and 20 management information system (MIS) that brings together June 30, 2023 dissemination by key information from applications from WFOÅšiGWs, NFOÅšiGW of a including applications submitted/approved; measures and consolidated CAPP technologies installed at completion stage; and results progress report based achieved at the regional, district, and local levels. The MIS on the centralized would allow for consolidated CAPP progress to be done. CAPP MIS and The DLI will be met when the MIS is operational and is submission of the said used to generate and publish an initial progress report on report to the CAPP to be submitted to a suitable Coordination Coordination Committee and the World Bank and will be available on the Committee CAPP website. DLI 4 Establishment of a financial mechanism with at least three Mobilization of 21 eligible participating financial institutions (that is, June 15, 2022 commercial financing commercial or cooperative banks) to combine subsidy under CAPP, with a payments and loans to eligible SFB owners under a single one-stop shop window under the CAPP. The DLI will be met when at provided by eligible least PLN 50 million in loans have been committed by the financial institutions eligible financial institutions to SFB owners. for loans and subsidy payments DLI 5 Launch an expanded national-level public campaign on the Increased awareness 20 CAPP, with range of media tools, guides, websites, of CAPP based on training, and tools to facilitate application preparation and expanded program implementation for all Program participants. This could be outreach campaign based on the enhancement of the campaign activities currently being prepared under the shared competence of NFOÅšiGW (providing funding for the campaign) and MoCE (design and implementation of the campaign). The outreach efforts should include developing an awareness baseline, testing of messages, and impact monitoring with outcome indicators. The DLI has five DLR targets. DLR 5.1: 4 DLR 5.1 will be met when the rolling 3-month average of December 30, number of applications received per month under the CAPP 2022 in 2022 is greater than 10,000. DLR 5.2: 4 DLR 5.2 will be met when the rolling 3-month average of June 30, 2023 number of applications received per month under the CAPP is greater than 12,000. DLR 5.3: 4 DLR 5.3 will be met when the rolling 3-month average of June 30, 2024 number of applications received per month under the CAPP is greater than 16,000. 21 DLR 5.4: 4 DLR 5.4 will be met when the rolling 3-month average of June 30, 2025 number of applications received per month under the CAPP is greater than 25,000. DLR 5.5: 4 DLR 5.5 will be met when the rolling 3-month average of June 30, 2026 number of applications received per month under the CAPP is greater than 30,000. Physical Progress DLI DLI 6 Number of eligible SFBs that have completed eligible Number of SFBs that 72 thermo-modernization renovation (for example, installation Scalable DLI, have completed of insulation, window/door replacement) with eligible with final thermal renovations (Up to materials from annex 2, 2A, or the approved ZUM, results due by with Eligible €12.12 completed according to CAPP rules and paid invoice. The March 31, Equipment and million as scalable indicator is the number of SFBs with thermal 2027 Materials under the prior result) renovations completed (disbursement formula: €120.00 per CAPP SFB). DLI 7 Number of eligible single-family residential building Number of inefficient 72 heating systems that have been removed and dismantled, Scalable DLI, and solid fuel boilers and replaced with more efficient, cleaner, non-coal units with final replaced with efficient, (Up to (covered under the eligible equipment in annex 2, 2A, or results due by clean, non-coal €14.51 ZUM) completed according to CAPP rules and paid March 31, heating systems with million as invoice. The scalable indicator is the number of SFBs with 2027 Eligible Equipment prior result) non-coal boiler heating systems replaced (disbursement and Materials under formula: €114.29 per SFB). the CAPP Results of E&S screening are presented in Table 2 where the identified impacts are linked to the related program activity, mitigation measures, and the remaining risks are presented. Where appropriate, the remaining risks are referred to the DLIs of Table 1. 22 Table 2. Environmental and social impact screening, risk results and mitigation measures. Environmental and Social Related program Mitigation measures Remaining risks Impact activity Environmental impacts and risks 1. Less energy demand and Thermal insulation Use of new thermal No risk. Positive hence reduction of air of houses. insulation in compliance with impact pollution due to thermal Installation of more technical requirements. insulation of houses and efficient heating Use of more energy-efficient energy-efficient installations. heating installations. installations. 2. Impacts related to Removal and Temporary storage of waste Moderate risk improper waste replacement of old in specified locations management (temporary boilers, old wall adjacent to the house, storage of waste, transfer insulation, windows, recovery of materials from and disposal) due to external doors. the waste (metal, wood, removal of old boilers, old glass), transfer of waste to a insulation, windows, designated sanitary landfill external doors and site. construction waste. 3. Unknown or limited Replacement and - Scrapping of old heating Moderate risk capacity of the scrapping scrapping of old installations in scrapping Based on the and recycling system to heating installations. or recycling centers. assessment, Poland has cope with large volume - Disassembly, recycling, sufficient capacity to when the CAPP reaches and melting of the metal perform the recycling scale (300 – 400 thousand elements to produce simple of 200 – 300 thousand per year) of old heating metal products. old heating installations. installations per year 4. Scrapped boilers Replacement and - Installers remove boilers Low Risk disposed of in landfill sites scrapping of old and dispose of them at boilers scrapping or recycling There is no incentive centers. to put the old boiler - SFB utilizes bulk pick-up into landfills. The iron periodically offered by is useful material and municipalities. may therefore be - SFB sells old boiler to reused, while scrap metal facility. homeowners can get money for their old boiler. 5. Impacts on bat and bird Thermal insulation - Assess the presence of Low risk habitats living or nesting in of roofs, walls, nesting birds or bats. the retrofitted building. replacement of - Determine if Polish Law windows and front applies – if yes: SFB doors. responsible for following Polish laws and other legislative acts, decrees, mandates, etc. - CAPP provides a subsidy for ornithological and chiropterological surveys. - Ban on works during the nesting season of birds (if present). 23 Environmental and Social Related program Mitigation measures Remaining risks Impact activity - Use artificial boxes and relocate habitats to new locations. 6. Asbestos fiber causing Associated Risk: - Determine if Polish Law Associated Risk as it inflammation of upper Removal of asbestos applies – if yes: SFB may be conducted in respiratory system. roof (not a part of responsible for following conjunction with Program) in parallel Polish laws and other Program activities. with Program legislative acts, decrees, thermal insulation of mandates, etc. Low risk 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 are required to Low risk workers and residents. replacement of old wear health and safety boilers, old equipment (helmets, insulation, windows, glasses, gloves, steel toe external doors, roofs. boots). - Workers undergo training before each removal/ installation. - Workers follow health and safety rules. - Workers are 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 PM10 and PM2.5 emissions boilers. with new ones of high impact. due to changes in heating emission class. installations to more efficient boilers, heating pump, electric or photovoltaic installations. 9. Public health benefits Completion of works - Use of modern stoves with No risk. Positive caused by improved air low emissions. impact. quality, enhanced - Lower energy demand by environmental awareness household. Social impacts and risks 10. Impacts on vulnerable Grant application - Program provides Moderate risk groups and increase of process. improved access to social inequalities. A information and The introduction of a combination of social low-income 24 Environmental and Social Related program Mitigation measures Remaining risks Impact activity characteristics age, low assistance for vulnerable component for education, low income, groups. Program is included and distance from - Low-income Program as DLI 2. regional offices can assists low-income hamper access to the families. program. - Consultancy / on-site help and advisory assistance. - It is at the municipality level by which vulnerable households first seek assistance for program involvement. Improved co-operation with and involvement of municipalities would improve access to CAPP. - WFOÅšiGW provides information to vulnerable households concerning available programs better suited to their needs, such as SSP. 11. Energy poverty of Post Refurbishing - CAPP provides Moderate risk low-income SFB of SFBs, information and an EE segments caused by replacement of calculator to help SFBs The use of social increased fuel costs. heating system estimate impact on assistance to support Replacement of heating using clean fuels. energy bills. the transition to installation can be done - A number of government cleaner fuels is without thermal social assistance proposed in the insulation. programs, outside of program action plan CAPP, are available to through inter- address this risk but do ministerial not do so in a coordination that comprehensive and monitors energy consistent manner. poverty implications - At risk households and recommends provided information to appropriate solutions. contact local social services outreach. - Encourage/inform SFB to participate in thermal renovation measures, which can help lower energy bills. 12. Unclear ownership The program - Poland has reliable Low risk status of a house. Houses application system records of plot ownership without clarified and process. and associated buildings The scale of the ownership status are not located on plots. problem is small, eligible for program - Residents provided with often resulting from support. sufficient information on unresolved eligibility requirements, inheritance programs available, and 25 Environmental and Social Related program Mitigation measures Remaining risks Impact activity subsidies that can be procedures if owner utilized. deceased. 13. Adverse effects on The program - SFBs will be responsible Low risk physical cultural property application system for following Polish laws (appears marginal) (objects of historical and process. and other legislative acts, value, ie, houses or tiled decrees, mandates, etc. stoves of certain value). - Application of the Monument Protection Act (2003). - Monitoring by Provincial Offices for the Protection of Monuments, which maintains the registry of protected monuments. - Decommissioning historical tiled stoves allowed to remain within SFB upon 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 Moderate risk social equality due to application system information campaign insufficient information and grievance targeted to specific The introduction of a outreach, and limited submission and groups program outreach responsiveness of review process. - Formalizing the campaign is included grievance redress system Grievance Redress as DLI 5. System to be followed by WFOÅšiGW and establish The systematic reporting procedures to review and reporting NFOÅšiGW of GRM of grievances and status. feedback are included - Formalize feedback in the program action mechanism and reporting plan. of feedback from WFOÅšiGW to NFOÅšiGW - Improve annual reporting from WFOÅšiGWs 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 systems easier to operate. in conjunction with boiler replacement. 26 The Program does not trigger an E&S assessment according to the Polish EIA law, and EIA Directive 85/337/EEC with subsequent amendments. As individual investment activities are very small in nature and dispersed throughout the country, they do not meet the minimum requirements for EIA scrutiny (in terms of impacts and size) at a project level. The E&S impacts of the Program 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 environmental 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 (not part of the Program) in parallel with the Program’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 the 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 provides a 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 Program than replacement of heating sources. Typical recycling is a disaggregation of wood or plastic elements from glass. Wood or plastic is incinerated, glass can be reused, recycled, or disposed of at a sanitary landfill. The capacity for recycling old stoves in Poland is sufficient enough to handle many large ironwork operations. Scrap operations often pay for scrap metal thus providing an incentive for homeowners to recycle their old boilers. Similarly, the capacity of incinerators in Poland is sufficient to cope with the increased volume of disused wood products. There is a small risk that the small number of the scrapped disabled stoves may be illegally disposed of in the landfill sites. However, an SFB has multiple options for proper disposal that it is unlikely that a boiler will end up in a landfill site. 27 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 Program, social impacts related to investments, (as presented in Table 2), 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 can be anticipated. The Program can be less accessible for the 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 the Program, and the application process (no. 10 in Table 2). With regards to Program 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 the Program. 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 the April 2021, 1,210 municipalities had established agreements with NFOÅšiGW 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 were 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. 11, Table 2). 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 Program interventions is based on application requests, it is unlikely that the Program will cause an undue burden on those lower-income households as they would be less likely to request Program inputs. Additionally, while the Program 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 (no. 14, Table 2), may deter or confuse participation and choices. (d) Unclear ownership status of houses (no. 12, Table 2). (e) Adverse effects on a physical cultural property (no. 13, Table 2), 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; 28 • 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 Program on the environment and social issues is minor. Positive impacts are substantial. 4.2 Social inequalities and marginalization of vulnerable groups With a Gini index of 32.1, which is slightly higher than the 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 as subsequently amended), 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. • The 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 (SSP) 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. For low-income households, even a modest contribution of a potential beneficiary may appear as a barrier to participation (Frnakowski and Herrero 2021). A study will be conducted under the SSP to document lessons learned on factors preventing participation and what actions can be included which improve participation of the low-income and vulnerable SFB. The potential target for vulnerable groups is 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 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. 29 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 electric heat pumps are the cheapest fuels (Table 3). Natural gas heating is nearly twice as expensive, while traditional electric heating is the most costly. The heat pump is economical, but the investment costs are high (up to USD 20,000). The price of electric heating can also be reduced by modern infrared heaters or solar PV installation. However, these investment costs are also high. Table 3. 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 require more heating energy, up to two times more than a standard level or well-insulated building. The assessment also identified the need for the government to consider modification, expansion or establishment modification or expansion of certain energy, housing or social assistance programs, as discussed below, to cover energy bills in vulnerable SFBs in need of assistance for their fuel bills, including those associated with switching to cleaner fuels. Two of the most notable programs—the housing allowance5 and electricity allowance6—fail to reach the majority of energy poor households living in single-family buildings due to the nature of the program design. In particular, the special-purpose benefits (Åšwiadczenia celowe (ZasiÅ‚ek celowy), granted under Article 39(2) of the Act of 12 March 2004 on Social Assistance) is granted by social assistance centers and can be used to support an essential living need, including fuel. However, since it is granted on a case-by-case basis the support, with the objective of covering necessary basic minimum needs in a short-term manner. It is not meant as a longer-term program that can support expenditures of groups in need. Furthermore, it is not clear whether these allowances can be used for gas bills in all municipalities (due to the terminology for fuel used in the Social Assistance Act) and the number of households that can be supported varied considerably across municipalities according to budget allocation. 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. They are, however, outside the CAPP. However, improved involvement of municipalities which have a closer connection with low-income households would be able to assist in finding the best alternatives for SFB participation either in CAPP or SSP and associated assistance programs available. 5 The housing allowance was introduced by the act of 21 June 2001 on housing allowances (Ustawa z dnia czerwca 2001 r. o dodatkach mieszkaniowych). Although housing allowances have the greatest conceptual overlap with the needs of low-income households struggling to afford energy bills, the program is currently predominantly limited to multifamily buildings, due to area restrictions for recipients. 6 The energy allowance, as per the Act of 10 April 1997 Energy Law, is stacked on the housing supplement, since those who have been granted a housing supplement may apply for a flat-rate energy allowance. It is conceptually linked to the low-income energy efficiency program, but unfortunately the area requirements mean that it does not cover many single-family buildings. Furthermore, the amount paid is small compared to the energy spending for heating purposes. The allowance supports PLN 10 – 15 per month, compared to a median spending of PLN 135 per month by all households in Poland, and approximately PLN 80 per month among energy poor households. 30 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 EE depends significantly on SFB thermal insulation. 4.3. Gender-related issues in Program 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 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 Program is neutral in gender terms. Concerning the 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 the 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 EE reforms revealed that a gap exists between men and women regarding awareness and knowledge levels of EE 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 EE 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. 5. 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, PforR 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 31 and legal framework, the institutional context, and existing environment and social management procedures against these core principles. Table 4. Applicability of the core principles Core principle The applicability for the PforR Reference in the report Core Principle #1: Program E&S The principle applies Sections: 2, management systems are designed to (a) 4.1, 6.3-4, E&S mitigation measures were promote E&S sustainability in the 6.7-8, 7, 8 proposed to minimize adverse Program design; (b) avoid, minimize, or impacts. They respond to the mitigate adverse impacts; and (c) E&S impacts identified. They promote informed decision-making are presented in Table 2. relating to a Program’s E&S effects. Core Principle #2: Program E&S The principle applies Sections: management systems are designed to 4.1, 6.3-4 Biodiversity and cultural avoid, minimize, or mitigate adverse resources impacts are very small impacts on natural habitats and physical and related to possible cultural resources resulting from the interference with bird or bat Program. Program activities that involve habitats under the roofs of SFBs, the significant conversion or and potential damage to tiled degradation of critical natural habitats or stoves. Mitigation measures critical physical cultural heritage are not were proposed in Section 4.1. eligible for PforR financing. They include moving the bird or bat habitats to another suitable location and disconnecting the tiled stoves. Core Principle #3: Program E&S Workers’ and community health Sections: 4.1 management systems are designed to and safety issues are very small. protect public and worker safety against They were addressed in Section the potential risks associated with (a) the 4.1. The hazardous waste construction and/or operation of impacts were identified facilities or other operational practices indirectly through the under the Program; (b) exposure to toxic replacement of asbestos roofs chemicals, hazardous wastes, and (not part of the Program but may otherwise dangerous materials under the be conducted together with the Program; and (c) reconstruction or Program activities in case rehabilitation of infrastructure located in thermal insulation of the SFB areas prone to natural hazards. roof is envisaged). This is a small risk. It is described in Section 4.1. Core Principle #4: Program E&S The principle is not applicable. systems manage land acquisition and Land acquisition and access to loss of access to natural resources in a natural resources are not way that avoids or minimizes expected within the program. displacement and assists affected people in improving, or at the minimum restoring, their livelihoods and living standards. 32 Core Principle #5: Program E&S The principle is applicable Sections: systems give due consideration to the primarily concerning the 4.1, 4.2 cultural appropriateness of, and vulnerable, low-income group. equitable access to, Program benefits, Other concerns do not apply. 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. Core Principle #6: Program E&S The principle is not applicable. Sections: systems avoid exacerbating social 4.1, 4.2, 6.8, conflict, especially in fragile states, 8 post-conflict areas, or areas subject to territorial disputes. 6. Assessment of Borrower’s Environmental and Social Management Systems (ESMS) relevant to the Program 6.1 Methodology The methodology for this assessment follows the World Bank Guidance of July 1, 2019 on PforR financing ESSA. It focuses on the assessment of capacity and performance of responsible agencies to manage the impacts of the Program effectively. The approach identifies necessary actions to ensure consistency with the core environmental and social principles as well as strengthen the environmental or social management capacity of implementing agencies. Interviews were conducted with the key stakeholders: NFOÅšiGW staff, four Regional Funds (WFOÅšiGWs), and with two municipalities. Due to the 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 a well-established rule of law, with consistent application of established procedures. As a member of the EU, 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 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 33 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 the 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 odors, and without adversely affecting the countryside or places of special interest. 6.2.2 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 references 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 the transboundary impact on the environment; and (vi) environmental impact assessment regulatory bodies. Furthermore, the 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. 34 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 strategic environmental assessment (SEA) processes. 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 Program is not subject to EIA scrutiny due to very small and dispersed scale of investment projects and minor expected impacts. 6.2.3 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 Program, a construction permit or notification is not required for the construction of the following projects: heat pump, photovoltaic panels with a capacity of up to 50kW, thermal insulation of buildings with a height of up to 12 meters. Consequently, the Program subprojects are not directly subject to construction permit or notification. Local authorities responsible for construction works, i.e., the County office, undertakes action in case of violations. The institution with full knowledge of the Program subprojects is WFOÅšiGW. 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. To the extent feasible, the Program should require qualified contractors to provide equipment warranties, works guarantees, etc., to ensure the quality. 6.2.4 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 6.2.3), 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 is 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 35 obligatory “Safety and Health Planâ€? are provided in the 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 a criminal liability in Poland regarding the 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 Program, 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. 6.2.5 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 a 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 levels. It follows the EU Waste Framework Directive 2008/98/EC. It is indirectly relevant to the Program. 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 2,190 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 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. 36 The legislation more directly relevant to the Program is the Act on maintaining cleanliness and order in municipalities (Dz. U. 1996 No 132 poz. 622) with 8 subsequent amendments. The Act specifies construction waste relevant to the Program as ‘construction and demolition waste, excluding wood and plastic waste, glass. The Act specifies the following responsibilities for waste management at the municipal level (Dz. U. 2020 poz. 1439): Art. 3.1) 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 5.1) 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. 5.1.4) 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 responsibilities for the implementation of these provisions remain within the competence of the MCE. The provisions of the Act on maintaining cleanliness and order in municipalities are generally satisfactorily implemented. The construction waste generated by the Program 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 cleaned up by municipalities, but new ones arise. 6.2.6 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 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 37 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 building sectors. 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. Adoption of ASRs and their enforcement are needed across Poland to stimulate the 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 are 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 ongoing 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 fulfill, 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 AQM 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 EE 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 Voivodship’s Inspectorates for Environmental Protection (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 NIK 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. 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). 38 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). 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 50-70% 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 4.2). 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 MoCE 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 MoCE is responsible for decision-making on the allocation of funds dedicated to environmental protection under the national budget, and coordination with other ministries 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 NFOÅšiGW 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 the 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. The Regional parliaments have air quality within their area of competencies. The severity of the air quality problem varies among regions, with the Lubuskie Voivodeship being not very 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. 39 polluted, while in the MaÅ‚opolskie and ÅšlÄ…skie, air pollution is a serious issue. Of 16 regional parliaments, 14 ASRs are now adopted. The ASRs vary in terms of fuel and boilers standards. The typical rationale for the decentralization of AQM 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 AQM 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 the 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 or 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 MoCE. The air quality monitoring and progress evaluation function are 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 Modeling System) 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 A lack of an 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 ASRs 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 thermo-modernization 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. 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 modernizations and investments in EE (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 40 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.e., NFOÅšiGW, WFOÅšiGWs, BGK), representatives of municipalities (air protection specialists at the city hall and social protection specialists at Municipal Social Assistance Center (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 NFOÅšiGW and other funding authorities (WFOÅšiGWs, 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 district heating or gas networks. 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 the contractor, and all SFBs where works were conducted by the SFB owner. The verification includes all investment-related permissions, scrapping documents for the old stove, and checking the conditions of the site. In case of severe problems detected, a part of funding can be withdrawn by WFOÅšiGWs. 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 an old stove in a designated facility). It is also possible that investment is visited by controllers. 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 the 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 41 assumed but it is not checked. Overall, sufficient capacity exists in the WFOÅšiGWs to conduct inspections of scrapped old stoves during ex-post inspections. Each WFOÅšiGW usually employs 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 WFOÅšiGW staff to try and coordinate any site inspections during implementation. 6.5 Institutional capacity of implementing institutions CAPP aims at a substantial reduction of gaseous and particulate matter pollutants emissions in Poland and increased EE of SFBs. Institutionally, CAPP relies on the sixteen branches of WFOÅšiGWs, which are operationally responsible for reviewing applications and granting subsidies to beneficiaries. To implement the CAPP, WFOÅšiGWs recruited additional personnel that was subsequently trained. The number of WFOÅšiGW personnel involved on a full-time basis in the CAPP varies from 20 to 30. Additionally, there are staff members working on CAPP on a part-time basis, e.g., in controlling and in accountancy departments. The organizational structure and modus operandi differ among WFOÅšiGWs. 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 differ. Some WFOÅšiGW established special departments, whereas others extended the existing organizational structures. The training was organized for both newly employed and experienced personnel. WFOÅšiGWs provides training for municipalities that signed a 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 WFOÅšiGWs’ staff. WFOÅšiGWs have established local offices to support beneficiaries with filling the application form. The number of local officers serving the CAPP varies from 3 to 10. The WFOÅšiGWs’ staff can provide limited assistance and support to beneficiaries, especially the elderly and socially disadvantaged. Cooperation with municipalities is an important factor in program implementation. The active role of the municipalities facilitates access to the program for residents. Yet, only about 30% of municipalities signed a cooperation agreement with the WFOÅšiGWs, 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 the proportion of municipalities with agreements, number of information offices, energy poverty (SokoÅ‚owski et al. 2020, Ziółkowska et al., 2018), do not influence the number of applications substantially. The only significant factor is urbanization rate, which is negatively correlated: the lower 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 WFOÅšiGWs seem to be relatively well prepared, as far as reviewing the application. However, the WFOÅšiGWs have very limited capacity to offer active assistance to individual applicants. Considering the significant number 42 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 WFOÅšiGW or not. Municipalities that signed such an agreement, have the CAPP specialist trained by the WFOÅšiGW. Other municipalities do not have this option. A 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, EE, emission reduction, type and efficiency of heating installation, thermal insulation of buildings. Overall, the staffing capacity of the WFOÅšiGWs 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 WFOÅšiGWs are understaffed in terms of active assistance to individual SFB in preparing CAPP applications (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 include: • 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. From an operational point of view, 16 WFOÅšiGWs have the main implementation role for CAPP. The most important cooperation in the execution of CAPP takes place between the NFOÅšiGW, WFOÅšiGWs, and municipality (gmina). There are also other agencies with activities relevant to 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. 2020 poz. 1219). Information on air pollution is publicly available. Data from automatic monitoring stations (190 out of 280 stations) is available online or via mobile applications. Cooperation is needed between the NFOÅšiGW and the Chief Environmental Inspectorate in terms of monitoring air quality as the outcome CAPP. Poland has been running a program for eliminating asbestos coordinated by NFOÅšiGW and executed via WFOÅšiGW and counties since 2006. The overall aim of the program is to eliminate all asbestos by 2032, and the program funds 100% of all costs. However, the asbestos 43 program is managed independently, although SFBs could apply for funding from both programs. Concerning the execution of CAPP, NFOÅšiGW is the coordinating body for the whole program, while 16 regional WFOÅšIGWs are responsible for implementation. The cooperation between WFOÅšIGWs and NFOÅšiGW 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, WFOÅšIGWs ask NFOÅšiGW for clarification. The WFOÅšIGWs report to NFOÅšiGW 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 an operational level of information flow among the WFOÅšIGWs. The cooperation between NFOÅšiGW and the WFOÅšIGWs is smooth. The WFOÅšIGWs 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 varies among voivodeships, from 10% to more than 50% (Figure 3). Figure 3. Proportion of municipalities that signed an agreement on CAPP cooperation with WFO ÅšiGW (data of June 8th, 2020). 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 newly revised regulation of CAPP, endorsed on May 15, 2020 municipality's 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 WFOÅšiGWs. WFOÅšiGWs offer training for municipalities’ staff involved in the CAPP. From October 22, 2020 (the call for applications under the second part of the program) all municipalities are invited to cooperate in the implementation of the program and arranging 44 agreements with WFOÅšiGW for this purpose. If the agreement is signed, the WFOÅšiGW will cover the costs of servicing the tasks carried out by the municipality from the funds provided by the NFOÅšiGW in such a way that: (i) the municipality will receive an amount of PLN 100 for an application for an increased level of co-financing submitted under the program, containing a certificate issued by the commune, which was submitted to the WFOÅšiGW via the commune; (ii) the commune will receive an amount of PLN 50 for an application for an increased level of co-financing submitted under the program, which was transferred to the WFOÅšiGW via the commune, but the certificate was issued by another municipality due to the fact that the applicant's residence address is different from the location of the building; (iii) the commune will receive an amount of PLN 50 for an application for an increased level of co- financing containing a certificate issued by the commune, submitted under the program without the commune's agency. The commune will receive funds for the issued certificate only when it is issued using a dedicated IT system. The role of municipalities is crucial and should be extensive, as for applicants it is a customary contact point, easier to reach than WFOÅšiGWs 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. Cooperation between the WFOÅšiGWs and counties is less common. A good practice takes place in the case of Lubelskie WFOÅšiGW, where the WFOÅšiGW opened ten local offices. Office space is provided by the counties, while the staff is employed and trained by the WFOÅšiGW. These offices are located in the most distant counties from the WFOÅšiGW main office in the city Lublin to provide information and advisory to those living 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 NFOÅšiGW. An amendment to the Environmental Protection Law of 2008 was approved in November 2020. The new amendment 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 analyze the systems for a commercial bank’s environment and social system since it is not yet operational. However, the commercial loans secured from participating banks will be distributed to recipients as part of the entire CAPP package. In this way, the CAPP implementing agencies (NFOÅšiGW and WFOÅšiGWs) hold responsibility for environmental and social standards of all funding which, by default, would include all funds distributed for CAPP loans. 6.7 Reputational risk The CAPP aims at solving serious environmental and social problems related to public health. It is an answer to the demand for action articulated by the public. However, there are three main reputational and political risks. Firstly, WFOÅšiGWs cannot provide sufficient advice and assistance to individual SFBs. It would require significant and unrealistic increase in the number of staff. Therefore, the engagement of municipalities is necessary. However, a significant number of municipalities are reluctant to engage in CAPP or lack the capacity to do so. 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 the WFOÅšiGWs in some cases. Although the scale of these abuses is rather small and difficult to estimate, one 45 WFOÅšiGW declared on its webpage, 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 bills (see Section 4.2). However, other NGOs point to the negative environmental impacts of continued coal use and would prefer to see no subsidies under CAPP being used to support coal boilers. On May 21, 2021, the Minister of Climate and Environment announced that support for eco-coal boilers under CAPP would be phased out, and thus from January 1, 2022, coal boilers would no longer be eligible for any government subsidies. As such, this reputational risk will be lessened. Further, NFOÅšiGW entered into an MOU with the national gas utility on September 27, 2021 to promote gas-based heating where appropriate. Since lower income households are less likely to be connected to gas networks and have been more likely to apply for eco-coal boilers under CAPP, ensuring that appropriate support is available to low-income households for their transition to cleaner fuels will need to be addressed through the low-income program. 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 NFOÅšiGW in cooperation with the MoCE, including TV and radio ads. WFOÅšiGWs 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, NFOÅšiGW needs to sustain the information and promotional activities throughout the project to build the CAPP’s recognizability. The activities need to be targeted, taking into account the project progress in terms of regions and groups of beneficiaries. 46 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 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 roof cover reconstruction, involves more distinct works, which are limited and contained to SFBs. 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 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 scale of investments 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 complaints concerning birds’ protection. CAPP maintains a central phone line at NFOÅšiGW. In addition to the national line, each regional WFOÅšiGW 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, each WFOÅšiGW produces yearly reports for the NFOÅšiGW, however, there is no formalized requirement to describe grievances addressed and feedback received, which would allow NFOÅšiGW to analyze feedback and ensure grievances are properly resolved. For grievances related to applications, a structured approach is followed. CAPP application documents include a description of the appeals procedure in the Regulations for the Call for Applications for CAPP Co-financing and is available online (https://www.gov.pl/web/gov/skorzystaj-z-programu-czyste-powietrze). It is expected that most grievances would come from applicants 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 writing about the decision and the justification for the rejection. An applicant then has ten days to initiate the appeals process. (In the previous edition of the program, an applicant had five days to initiate an appeal.) Within the subsequent ten-day period, WFOÅšiGW staff reassess the application. The second decision is final. In Lublin, during the first phase of the CAPP, reported that 50% of rejected applications resulted in an appeal, of which roughly 20% were successful in reversing the rejection. 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 friendlyâ€?, thus application rejections are expected to decrease dramatically. 47 For grievances more broadly, WFOÅšiGWs 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 the 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. For grievances more broadly, WFOÅšiGWs 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 the 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 mechanisms are available at the regional and national level, there is no systematic review of complaints concerning the application procedure or other grievances. Therefore, it is recommended that NFOÅšiGW formalize the grievance mechanism used at both national and regional levels, but also to formalize the process by which each WFOÅšiGW reports on grievances and feedback received as well as the status of grievance resolution. Reporting by regions of grievances can inform NFOÅšiGW of recurring problems encountered and identify information gaps that may need to be addressed at the national level. 7. Key Stakeholders Mapping The main institutions responsible for the implementation of the PforR as well as for the national CAPP is the NFOÅšiGW and WFOÅšiGW. The NFOÅšiGW plays a supervisory role over the 16 Regional Funds (WFOÅšiGW), which are the main implementing agencies for the CAPP at the local and regional levels. The NFOÅšiGW is reporting to the MoCE. Municipalities have a cooperation agreement with the WFOÅšiGW and support the beneficiaries. Commercial banks are not yet included in the CAPP. But their participants are currently planned in June 2021 and will provide loans to beneficiaries based on agreement with the NFOÅšiGW. The key identified stakeholders of CAPP (and PforR) are presented in Figure 4. Details of each institution are provided below. Figure 4. Key stakeholders of the CAPP (and PforR). 7.1 Ministry of Climate and Environment On November 15, 2019 following the parliamentary elections, the Ministry of Environment was changed into the Ministry of Climate 48 and Ministry of Environment. From March 20, 2020 until October 6, 2020 two ministries operated - the Ministry of the Environment and the Ministry of Climate. The Ministry of Environment joined the Ministry of Climate on October 6, 2020 to form the Ministry of Climate and Environment on October 6, 2020. The MoCE fosters the environment both domestically and globally and ensures long-term, sustainable national development with respect to natural heritage and human rights to meet the needs of both the present and 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 Electromobility 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 The MoCE, among others, 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 the effective use of natural resources. Since March 21, 2020, the responsibility of the MoCE has extended to include addressing energy and heating issues in its structure (transferred from the Ministry of State Assets) as energy generation has been identified as the main source of air emissions in Poland. Overall, the MoCE in the central position for air quality policies, programs and measures including air quality management. The Ministry 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 NFOÅšiGW. 7.2 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. 49 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. • Fees related to Energy Law. • Fees for recycling vehicles. • Income from the selling of greenhouse gas emissions. The annual domestic budget of the NFOÅšIGW is about EUR 1.2 – 1.4 billion. The Fund has an adequate competence to support foreign and domestic projects. Long-term planning of revenues and expenses ensures the flow of funds for beneficiaries. The main roles of the NFOÅšIGW in air quality management in Poland are: • Financial support for projects aimed at reducing polluting 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, NFOÅšiGW 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 – WFOÅšiGWs; (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 NFOÅšiGW are the Supervisory Board and the Management Board. The NFOÅšIGW manages investments for environmental and water management projects from its own resources from environmental tax revenues and 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. 7.3 Regional Funds for Environmental Protection and Water Management The Regional Funds for Environmental Protection and Water Management (WFOÅšiGW) are funding institutions independent from the NFOÅšIGW. 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 WFOÅšiGW, one in each region of Poland. Their roles in AQM in Poland are as follows: 50 • 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 NFOÅšiGW. The performance of WFOÅšiGW in relation to CAPP is described in Section 6.5. 7.4 Municipality (gmina) 9 The municipality (or “gminaâ€? in Polish) is the lowest administrative level in Poland and is 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 an 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 a chimney. • Cooperate with the 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 low-emission sources. • Draft and adopt Waste Management Plans, which provide types and sources of waste, waste composition, demographic and income forecast, waste management and recycling options. 9 Act of 8 March 1990 on municipal local governments. 51 • Collect, recycle and transfer 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: • Develop and implement a municipal strategy for solving social problems, i.e. social assistance programs, prevention and solving alcohol and other problems, integrating people and families from special risk groups. • Provide shelter and necessary help for homeless people. • Organize and provide social assistance services. • Run and provide places in social assistance homes. Each 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. As of April 2021, 1,210 municipalities had established agreements with WFOÅšiGW on the implementation of the CAPP. 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 WFOÅšiGWs in dealing with the air quality problem. The National Stop Smog Program (SSP), dedicated to the lowest income inhabitants is also run by the municipalities. It is planned to be integrated into the CAPP. 7.5 Other stakeholders Contractors/installers deliver heating systems and thermal modernization works under the Program. From their perspective, CAPP builds a market for their products and services. 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. However, the experience, quality, and capacity of participating companies can vary significantly. The Program should establish formal and systematic communication and training opportunities to strengthen the knowledge and capacity of participating companies. The Program should have the procedure that only qualified contractors and installers who can be liable and guarantee the quality of performed works and provide equipment warranties would be eligible to be contracted by SFBs. The proposed Energy Efficiency Expert Platform is planned to include EE experts (energy auditors) with proven qualifications, but any energy auditors can be hired used under the CAPP. Providing a list of eligible contractors/installers can help. 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 the 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 the execution of the CAPP. 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 52 the county level. In Lubelskie Region, ten counties provide office space for local staff of the WFOÅšiGW working exclusively on the CAPP. Commercial banks are planned to be involved in the CAPP from mid-2021 and provide commercial loans to medium and high-income level beneficiaries. Their involvement is under negotiations with the NFOÅšiGW. 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. 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 rural areas. SFBs in rural areas are nearly 20% smaller. A 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 39.6 m2. 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 EE and the quality of housing. Due to the individualized nature of SFBs, there are few citizen organizations that can act to represent the interests of SFBs 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 a 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 represent groups of people interested in the air quality issue, the most notable being Smog Alert in Poland. Smog Alert is a social movement and an association focused on the reduction of the emission of 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 local 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 EE 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 boilers in the CAPP. In response, MoCE has agreed to phase out subsidies for coal boilers by the end of 2021. 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 support 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. 53 Roma people represent a relatively small population of 20-30 thousand (0.1% of the population of Poland10). 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 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. Women and 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 EU in the Field of Equal Treatment. There are also Plenipotentiaries for Equal Treatment in all voivodeships in Poland. 8. Stakeholder Consultations and Citizen Engagement In the preparation and establishment of the CAPP, there were several consultations and engagement activities. Within the 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, NFOÅšiGW initiated public consultations with a focus on the 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 NFOÅšiGW 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 the existing 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 several ways in which NFOÅšiGW can further engage civil society using two-way consultation channels concerning the CAPP. Monitoring beneficiary and stakeholder views of subproject implementation, levels of satisfaction, as well as compiling suggestions on program 10 https://ec.europa.eu/info/policies/justice-and-fundamental-rights/combatting-discrimination/roma-eu/roma-inclusion-eu- country/roma-inclusion-poland_en 54 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 the local municipalities and representatives by which to contact CAPP. Table 5 shows various avenues by which CAPP can seek feedback and engage with stakeholders. Table 5. Methods to seek feedback and engage with stakeholders. Surveys 1. To assess the 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 also include disadvantaged groups and socio- economic characteristics such as income, gender of household head, age, place of living (rural/urban), etc. The survey should take into account the results of the report by IMAPP Consulting (2019) and the paper by Frankowski & Herrero (2021). The needs and the eligibility of SFBs for support such as the energy allowance, should be analyzed. 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. The SSP lessons learned on factors preventing participation and what actions can be included which improve participation of the low-income and vulnerable SFB. 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 allow persons to participate from home either using computers or phone lines. Inclusion of the phone line option will provide an avenue of participation for persons who have less access to, or knowledge of, computers. Citizen Few citizen organizations exist which represent groupings of individual SFB engagement 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 NFOÅšiGW level. Dedicated email address contact points and phone lines for CAPP at the WFOÅšiGW level. Listing of contact points on the website and included in information campaigns. 55 9. Data collection 9.1 Interviews with WFOÅšiGW and other actors Online interviews were conducted in May-September 2020 to provide an opportunity for stakeholders to express their opinion and suggestions concerning the Program. Standard interviews were not possible due to the COVID-19 pandemic. Online interviews of all 16 WFOÅšiGW would be time-consuming and inefficient. Therefore, four WFOÅšiGWs (Kraków, ToruÅ„, WrocÅ‚aw and Lublin) were selected for interviews. They represented different regions, different levels of the air pollution problem severity, the various experiences 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 NFOÅšiGWs. 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 6). The consultations were completed by interviewing the leader of the Polish Smog Alarm, the biggest Polish umbrella NGO focused on clean air, as well as the Chairman of the Polish Organization for the Development of Heat Pump Technology, and an activist engaged in the protection of birds in cities. Table 6. 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 (NFOÅšiGW, self - governmental institutions as municipalities and counties). WFOÅšiGW 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 WFOÅšiGW 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 56 Permissions (building permissions, waste management (asbestos) Counties Eventual co-operations with WFOSiGW (no stakeholder consultation with county offices is foreseen) Capacity Contractors Experience from the previous edition of CAPP Banks will be involved from mid-2021. Once the role of banks is Commercial banks finalized and operational, bank participation can be further assessed. Interviews were arranged by the World Bank office in Warsaw and by 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. 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 agreement with WFOÅšiGW, and the second one was a rural municipality that had not signed such an agreement. All interviews started with a short introduction and description of the role of the World Bank in the Program. Key findings are integrated into the 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 abstain from criticizing the measures and the policies. Besides the interviews, web pages of all 16 WFOÅšiGWs 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 NFOÅšiGW 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 the COVID-19 pandemic. Instead, to obtain a picture of the program recipients’ opinions, it was decided that the Facebook discussions review can represent the opinions of applicants. The CAPP-related Facebook groups were reviewed. 9.2. 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 9.1, this did not negatively impact consultations with relevant stakeholders as they had already adapted to a virtual meeting format. Consultations to be conducted during this or future pandemics will continue to be 57 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. NFOÅšiGW has also improved, or added, materials available online including training modules and planning tools to assess available options. During the implementation of Program activities at the SFB level, all workers will be expected to follow protocols established at the national, regional, and local levels. This includes the wearing of proper face masks and maintaining limited direct contact with household members. Works conducted at the 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 the SFB. 58 10. Environmental and Social Risk Rating The Program does not trigger E&S impact assessment in Poland due to small-scale investments disbursed across the country that have minor E&S impacts. The E&S 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 2. The moderate environmental risks are related to (i) improper 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) unknown or limited 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 are related 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. Hazardous waste must be 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 Program. 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 conducting installation works includes an ex-post check of the 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 100% of subprojects where work was conducted by an SFB owner. 11. Recommendations for the Program Environmental and Social Systems The measures presented below need to be taken during Program implementation for E&S aspects. In a broader context, the measures recommended are designed to help proponents improve their system performance and to address important gaps between the national systems and the PforR core principles and key elements. The Program should incorporate the capacity to adhere to E&S 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: Necessary actions: 1. Broadening the scope of the ex-post review of CAPP to include environmental and social aspects (e.g., waste disposal and recycling, cleanliness of site condition, presence of bird and bat survey, occupational health and safety) through the adoption of an Environmental and Social checklist. The checklist would provide guidance for 59 WFOÅšiGW personnel conducting ex-post evaluation of CAPP subprojects to ensure adherence to Poland’s applicable environmental and social laws and regulations. 2. Strengthen the existing comprehensive program outreach effort. Currently, information and promotional activities of WFOÅšiGWs are based on their own resources for promotion and outreach, while NFOÅšiGW makes funds available for the MoCE which has 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 roadshows, 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. 3. Establish formal and systematic communication and training opportunities to strengthen the knowledge and capacity of works providers. Supplement training modules for WFOÅšiGW staff, banks, contractors, and SFB owners, including implementation guides, E&S issues, etc. to reduce mistakes, share lessons, etc. 4. For the overall CAPP, promote transition from coal to cleaner fuels, including gas-based heaters, and consider phasing out subsidies for coal boilers over time. (On May 21, 2021, the Minister of Climate and Environment announced that support for eco-coal boilers under CAPP would be phased out, and thus from January 1 2022 coal boilers would no longer be eligible for any government subsidies. NFOÅšiGW also entered into an MOU with the national gas utility on September 27, 2021 to promote gas-based heating where appropriate.) 5. Support further municipal participation in the CAPP. Municipalities 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 SFBs, which would allow municipalities, in particular, to better target support for the low-income beneficiaries and strengthen enforcement of regional Anti-Smog Resolutions. 7. In order to improve the review of grievances and feedback, CAPP should develop, amalgamate, and systematize 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 disaggregated by age group, gender, urban/rural, and region. This will inform the program on whether specific groups are disproportionally impacted. 60 12. Inputs to the Program Action Plan The inputs to the Program Action Plan (PAP) are presented in Table 7. Table 7. Action inputs to the PAP. Action Due date Responsibl Completion Measurement e Agency Broadening the scope of the ex- From 30 NFOSiGW Oversight elements of post review of CAPP to include Dec 2022 program are updated in environmental and social financing agreements aspects (e.g., waste disposal and between NFOSiGW and recycling, cleanliness of site WFOSiGWs and included in condition, presence of bird and program procedures. bat survey, occupational health and safety) through the adoption of an Environmental and Social checklist. The checklist would provide guidance for WFOÅšiGW personnel conducting an ex- post evaluation of CAPP subprojects to ensure adherence to Poland’s applicable environmental and social laws and regulations. Supplement training modules 29-Sept- NFOSiGW NFOÅšiGW has produced for WFOÅšiGW staff, banks, 2023 training materials for banks contractors, and SFB owners, and has produced improved including implementation training materials to include guides, E&S issues, etc. to E&S issues and lessons reduce mistakes, share lessons, learned. etc. Develop formalized approaches Recurrent NFOSiGW Yearly reporting on a for reviewing feedback from - Yearly satisfaction survey with grievance mechanisms, gather gender, income and social regular information on impacts sub-group disaggregation. on beneficiaries by social Annual townhalls that groups and gender, strengthen engage stakeholders on and formalize citizen progress, beneficiary engagement mechanisms. feedback and actions taken to respond to feedback. By June 15, 2022, and updated annually. Support municipal participation Recurrent NFOSiGW Adoption of program in the CAPP, including through December revisions to include financial support, guidance, and 2022 municipal roles and training (e.g., program mechanisms for technical outreach, application assistance, and financial support by Dec income verification, AQ control 31, 2022, and then annually. strategies, monitoring 61 application submissions and enforcement). 13. Disclosure of ESSA The draft ESSA report (in English) was publicly disclosed by the World Bank’s external website on December 3, 2020 and public consultations were announced (along with links to the Polish version of the document) on the Bank’s Warsaw Office website on December 9 and on the NFOÅšiGW website on December 15. In order to obtain feedback and comments on the draft ESSA, a public consultation meeting with key stakeholders was conducted on December 17, 2020. The participants included officials from both NFOÅšiGW and WFOÅšiGWs, relevant government agencies, and other stakeholders. In addition, written comments were received from three organizations. The summary of public consultations on the draft ESSA is presented in Annex 2. 62 References Act 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. Frankowski, J., & Herrero, S. T. 2021. “What is in it for me?â€? A people-centered account of household energy transition co-benefits in Poland. Energy Research & Social Science, 71, 101787 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. ISSN 0867-3217. http://documents.worldbank.org/curated/en/574171554178748054/Air-Quality-Management- in-Poland. https://czystepowietrze.gov.pl/lista-gmin-ktore-zawarly-porozumienia-w-sprawie-realizacji- programu-czyste-powietrze) Directive CAFE (Clean Air For Europe) 2008/50/EC https://www.lexlege.pl/prawo-budowlane https://nfosigw.gov.pl/czyste-powietrze/o-programie-czyste-powietrze https://www.krakowskialarmsmogowy.pl/zdrowie https://www.nfosigw.gov.pl/ https://powietrze.gios.gov.pl/pjp/content/measuring_air_assessment_measurings https://www.spsieradz.finn.pl/res/serwisy/bip- spsieradz/komunikaty/_006_002_121951.pdf?version=1.0 IMAPP Consulting, 2019. Ocena ex-ante zastosowania instrumentów finansowych w ramach priorytetu inwestycyjnego 6e RPO WSL 2014-2020, Warszawa/Katowice, https://rpo.slaskie.pl/media/files/cms/Ewaluacja/Raporty/Ocena%20ex%20ante%20zastosowa nia%20instrumentow%20finansowych%20w%20ramach%20priorytetu%20inwestycyjnego% 206e%20RPO%20WSL%202014_2020.pdf Krakowski Alarm Smogowy, 2018: Poza kontrolÄ…. Analiza systemu kontroli palenisk domowych. Stowarzyszenie KAS. Kraków. 63 Książopolski K., 2019, Wykorzystanie potencjaÅ‚u OZE w walce ze smogiem na obszrach wiejskich, Europejski Fundusz Rozwoju Wsi Polskiej. Kubecka, A., Koziorzemska, W.M., Nowotniak, J. 2019. The faces of women’s poverty in Poland. 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. 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). SokoÅ‚owski J., Lewandowski P., KieÅ‚czewska A., Bouzarovski S., 2020, A multidimensional index to measure energy poverty: the Polish case, Energy Sources, Part B: Economics, Planning, and Policy, Volume 15, 2020 - Issue 2: Energy Poverty, Pages 92-112, https://doi.org/10.1080/15567249.2020.1742817 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 Ziółkowska (ÅšwiÄ™cicka) K., KieÅ‚czewska A., Lewandowski P., 2018. Zjawisko ubóstwa energetycznego w Polsce, w tym ze szczególnym uwzglÄ™dnieniem zamieszkujÄ…cych w domach jednorodzinnych, IBS, raport. 64 Annex 1. Questionnaire for WFOÅšiGW and key findings 1. Are the roles and responsibilities clearly defined in relation to the CAPP’s implementing agency Regional Fund for Environmental Protection and Water Management (WFOÅšGW), including accountability for delivering the Program, and relations with other state agencies (such as the NFOSGW, and others)? 2. Does the implementing agency WFOÅšiGW have adequate resources to implement the CAPP? 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 the implementation of the CAPP? 6. What are the environmental and social responsibilities of the WFOÅšiGW in relation to the CAPP? 7. Have environmental and social impacts of the CAPP been assessed? 8. Is the CAPP implementing agency WFOÅšiGW 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 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 the annual reduction in PM10, PM2,5 and CO2 emission during the project implementation, and after the completion? 13. What arrangements are put in the CAPP for temporary storage and disposal of hazardous waste (asbestos and PCBs)? 14. What arrangements are put in the CAPP 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? 16. Does the CAPP consider activities and interests of other stakeholders that may affect environmental or social management (cumulative impacts)? 17. How do you assess modifications made in March 2020 to the CAPP? What other measure would you recommend to improve the environmental and social effectiveness of the Program? 65 Key findings of the interview based on the questionnaire 1. Are the roles and responsibilities clearly defined in relation to the CAPP’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 NFOSÌ?GiW, and municipalities)? Yes, all roles and responsibilities are clarified, on the basis of the agreement and the contract with the National Environmental Found (NFOÅšiGW). There were no changes to the agreement between the NFOÅšiGW and the WFOÅšiGWs following the CAPP modifications on May 15, 2020. Usually between 20% and 50% of municipalities signed an agreement with the WFOÅšiGWs regarding the CAPP. For instance, in Kujawsko-Pomorskie Region, 26% of municipalities signed such an agreement. The WFOÅšiGWs train 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 an agreement with the WFOÅšiGWs. The WFOÅšiGWs are 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 understands them clearly? Yes, the WFOÅšiGW 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, preparing agreements with applicants, checking eligibility and signing contracts. Five percent of the agreements have to be controlled after completion. The WFOÅšiGWs 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. The exception is the Lublin WFOÅšiGW, which opened 10 such local offices. The staff roles and responsibilities are less clear at the municipal level. It depends on the level of dedication to the CAPP, training of staff by the WFOÅšiGWs, and agreement signed with the WFOÅšiGWs. 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 the 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? None. Companies doing the works are obliged to comply with the health and safety regulations. They have to keep the regular work safety training for the workers and keep standards, depending on the work specificity. These are regular regulations for all the industry. 66 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 implementing agency WFOSÌ?iGW adequately staffed, in terms of skills, qualifications, and a number of personnel for program administration, planning, and design, implementation, monitoring, and environmental and social functions? The WFOÅšiGWs 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 WFOÅšiGW are engaged on a part-time basis. The interviewed WFOÅšiGWs set up 3 to 4 local offices with one specialist dealing with CAPP. The 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 WFOSÌ?GW for the CAPP to randomly monitor applications and implementation? There are no independent environmental and social consultants hired for the CAPP monitoring. Internal monitoring of at least 5% of applications is done by the WFOÅšiGWs after works are completed. 9. Will the framework contractor be responsible for the 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’ training, workwear, medical examination, etc. 11. Who will estimate and monitor the 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 WFOÅšiGWs and the WIOS regarding monitoring the CAPP air quality results. The WFOÅšGiWs report to the National Fund on the number of signed and implemented projects, and the related environmental impacts. 12. What arrangements are put in the CAPP for temporary storage and final disposal of hazardous waste (asbestos and PCBs)? There are no such arrangements in the CAPP. It is the contractor’s responsibility. Costs related to the utilization of asbestos are not eligible in the CAPP. 13. What arrangements are put in the CAPP 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 a mandatory protocol of scrapping of the disused heating installation. Such protocol is an obligation of the beneficiary. It can be checked by the WFOÅšiGWs when the works are completed. In the case of stoves of architectural value, 67 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? There are no such provisions in the CAPP. Regulations on Environmental Impact Assessment are not applicable in the CAPP. 15. How do you assess modification made in March 2020 (put in force on May 15, 2020) to the CAPP? What other measure would you recommend to improve the environmental and social effectiveness of the CAPP? 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 SFBs, and ban on installing modern coal heating installations in locations where the 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 funding 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 the WFOÅšiGWs. These issues were raised by the Kujawsko- Pomorskie WFOÅšiGW in ToruÅ„, and by the WFOÅšiGW in Lublin. 16.What other measure would you recommend to improve the environmental and social effectiveness of the CAPP? This program is well planned. In the near future an agreement will be signed with commercial banks that will assess the creditworthiness of beneficiaries and provided loans partly paid back by the WFOÅšiGW. However, CAPP promotion needs to be strengthened and financed at the WFOÅšiGW 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 the house. In fact, both activities should be financed as a condition. 17. Are organizations responsible for identifying, and monitoring environmental and social impacts independent from the financing bodies? Monitoring of at least 5% of the projects is conducted internally by WFOÅšiGW 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 the 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? 68 The CAPP does not lead to energy poverty. There is the supplementary Stop Smog Program that is now included in the CAPP and dedicated to the poorest families. The low-income SFBs get a higher level of funding. The lowest income applicants can submit invoices directly to the WFOÅšiGW and thus avoid paying the cost to the 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 WFOÅšiGW to ensure impartiality. In the Lublin voivodeship, about half of unsuccessful applications are appealed. About 20% of them are successful. 21. Is there a sufficient amount of public information concerning the CAPP? The CAPP could be better promoted. There is no funding allocated to the WFOÅšiGWs for promotion activities. The Lublin WFOÅšiGW 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 the 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? In many cases, the quality of life increases with changing coal stoves to gas boilers or other heating sources. Especially in the case of elderly people, this is a very important benefit. 69 Annex 2: Summary of public consultations on the draft ESSA report Introduction The World Bank organized public consultations on the draft ESSA report prepared for Poland’s Clean Air Through Greening Residential Heating Program-for Results (previously called the Energy Efficiency in Single Family Buildings Program-for-Results). The draft ESSA report was disclosed in English and Polish languages in the World Bank’s external website (December 3, 2020), on the Bank’s Warsaw Office website (December 9, 2020), and on the NFOÅšiGW website (December 15, 2020) along with the announcement of formal consultation date. Also, direct invitations to consultation meeting were sent to key stakeholders (Table 2.1). The WB External Affairs Officer in the Warsaw office was the designated point of contact to solicit stakeholder feedback and comments. A virtual public consultation meeting with key stakeholders was conducted on December 17, 2020 (14:00-16:00, CET) via WebEx due to the COVID pandemic. A slide presentation in Polish language was prepared and shared on the purpose of ESSA, the overview of the PforR, the key findings of the environmental and social systems assessment, and recommended actions to strengthen various aspects from the assessment. In addition to the virtual consultation meeting, written comments were received from three organizations following the event. Public consultation virtual meeting The meeting was opened by Filip Kochan, External Affairs Officer based in Warsaw. The WB team presented an overview of the ESSA, the Program within CAPP, Program objectives, proposed Disbursement Linked Indicators, and the Program Action Plan. The Social and Environment team presented expected benefits of the program as well as possible negative impacts, the country systems to be used, and the recommended actions and useful actions to be implemented within the PforR. The consultation was then opened up for comments or questions from participants. The Association for Rural Municipalities provided a number of comments including: - Any EE activity will only be effective when different schemes and programs are enacted in a way in which to build synergies through an umbrella organization which can manage all programs related to Energy Efficiency. - Asbestos roof removal in the country needs to be increased. - Rural areas are very disbursed, fragmented and are not well covered by gasification. In this very year, the gas company revised the priority setting procedures. For an investment to be approved by the gas company, they require a 20-year payback period to consider an investment in the gas network. - An estimated 3 million SFB have coal or wood-burning systems, however, full scope is unknown and therefore there is a need for a baseline database such as the newly initiated Central Register of Building Emissions which can provide relevant data to the Ministry and inform CAPP. However, there is no dedicated entity, or staff within each region and municipality, by which to have relevant data input into the registry. Instead, this is an additional burden on municipalities to provide staff who can input data. Team response to comments included: A Central Register of Buildings is part of recommendations which would be a benefit to inform CAPP in geographic pockets which should be targetted. The ESSA did recommend a Central Register of Buildings. 70 The assessment did mention the need for municipality support for assisting the CAPP. Environmental Protection Institute. The representative requested more information on the timeline of database preparation and commented on the viability of such an ambitious goal. Team response to comments included: NFOSiGW informed the meeting that this is a top priority of the ministry, and is currently in the process of being operationalized. WB commented that with large, complex programs it is expected that the start-up would be slow at first, but subsequent years are expected to have significantly more activity and involvement. The PforR is establishing the building blocks by which CAPP can achieve its goals. A stronger, more robust, information campaign is expected to increase demand. In May 2020, CAPP implemented a number of modifications which has contributed to removing some barriers to participation such as simplifying the application process and streamlining bank involvement. The CAPP went from 8000 applications a month to 10,000 applications per month indicating progress in CAPP goals. This is even more significant given the fact that this increase occurred during a global pandemic. Once the pandemic finally comes to an end it is expected that participation will increase exponentially. The meeting was closed by informing participants that the WB will continue to accept written comments, encouraging participants to share this information with colleagues who may be interested in contributing to the PforR. Participants of virtual public consultation meeting Association of Rural Municipalities (ZGW) Ministry of Development Funds and Regional Policy Krajowy OÅ›rodek Bilansowania i ZarzÄ…dzania Emisjami (KOBIZE)/The National Centre for Emissions Management NFOSiGW team WB team Jas Singh – Lead Energy Specialist (Task Team Leader) Agnieszka Boratynska – Program Assistant Dariusz Kobus – STC Environment Filip Piotr Kochan – External Affairs Officer, Warsaw office Hmayak Avagyan – Environmental Specialist Kristine Schwebach – Sr. Social Development Specialist Piotr Matczak – STC Social Reena Chandu Badiani-Magnusson – Sr. Economist (co-Task Team Leader) 71 Table 2.1: List of Stakeholders contacted via emails and websites Institution Anti-Smog Resolution WFOÅšiGW BiaÅ‚ystok WFOÅšiGW GdaÅ„sk WFOÅšiGW Katowice WFOÅšiGW Kielce WFOÅšiGW Kraków WFOÅšiGW Lublin WFOÅšiGW Å?ódź WFOÅšiGW Olsztyn WFOÅšiGW Opole WFOÅšiGW PoznaÅ„ WFOÅšiGW Rzeszów WFOÅšiGW Szczecin WFOÅšiGW ToruÅ„ WFOÅšiGW Warszawa WFOÅšiGW WrocÅ‚aw WFOÅšiGW Zielona Góra Association of Polish Rural Communities The Association of Polish Cities Main Statistical Office Ministry of Climate and Environment The Polish Smog Alert NFOÅšiGW Ministry of Internal Affairs and Administration, Department of Religious Denominations and National and Ethnic Minorities Chief Inspectorate of Environmental Protection Main Office for Construction Supervision Institute of Environmental Protection-National Research Institute KOBIZE (Krajowy OÅ›rodek Bilansowania i ZarzÄ…dzania Emisjami/ National Centre for Emissions Management) Instytut Ekologii Terenów UprzemysÅ‚owionych BGK Poland Habitat Polish Regions Assosiation Wiosna Assosiation Ministry of Funds, Department of Regional Operational Programmes Institute for Structural Research Ministry of Funds, Department of the European Social Fund Caritas ECCE - Europejskie Centrum Klimatu i Åšrodowiska Wise Europa Polski Alarm Smogowy CASE CENEA Polish Economic Institute 72 Stowarzyszenie Mali Bracia Ubogich Projekt Starsi Mazowieckie Centrum Pomocy Spolecznej Fundacja Czyste Powietrze Polish Organization towards Work for Energy and Efficiency and Research Fundacja Global Compact Poland Greenpeace Polska The Institute for Sustainable Development Written comments received Comments of the Ministry of Finance of Poland The comments received from the Ministry of Finance were related to minor clarifications and edits in the institutional and legal framework of the country, described in the ESSA report. Comments are addressed in the revised ESSA report. Comments of the National Centre for Emissions Management (KOBIZE) In our opinion, it would be worthwhile to add methodology for estimating emission reduction projections (the emission factors taken into account in the 2029 emission reduction projections for CO2 and air pollution, the assumptions for translating 37 500 000 MWh/year of final energy savings into reduction of 14 000 000 Mg CO2 /year, as well as data on air pollution reduction) to the analysis. Comments are not addressed in the ESSA report. However, the Bank’s Project Appraisal Document, which will be disclosed after Board approval, includes details on the energy savings and corresponding CO2 and air pollution emission reduction calculations. Comments of the Structural Research Institute 1. Some information that can be helpful with the CAPP/PforR ESSA is available from the 2019 ex-ante assessment for the implementation of financial instruments in connection with heating source replacement in Silesia: https://rpo.slaskie.pl/media/files/cms/Ewaluacja/Raporty/Ocena%20ex%20ante%20zastosowa nia%20instrumentow%20finansowych%20w%20ramach%20priorytetu%20inwestycyjnego% 206e%20RPO%20WSL%202 014_2020.pdf, including a case study on the development of a portfolio of forgivable loans for thermo-modernization and heat source replacement from the resources of Opole Regional Fund for Environment Protection and Water Management (WFOÅšiGW). 2. CAPP/PforR outreach campaigns should first of all be preceded with some research into what drives and motivates those who keep their solid fuel boilers as well as those who have decided to get their solid fuel boiler replaced. There is some evidence to that end in an article looking into a sample of 140 households: https://www.sciencedirect.com/science/article/pii/S2214629620303625, but it is not representative and it covers prior heat source replacement programs, not the Clean Air as such. 73 3. It is mentioned in the ESSA that some unintended consequences can be anticipated, but the issue is not addressed at length. It would seem reasonable to use a sample of completed projects for analysis and review of those unintended consequences associated with thermo- modernization and heat source replacement. 4. Before launching the program, a study should be carried out to evaluate the impact of heat source replacement on the budgets and to check whether there is some return on investment (and if so, how long it takes to see the ROI and what additional thermal modernization measures need to be undertaken for the ROI to be generated). The CAPP has been in place of two years now and an evaluation of CAPP outcomes and citizen satisfaction should be initiated, at least on a pilot basis, by way of an input helpful in solving this dilemma; particular attention should be paid to those who used both the grant and the loan from the CAPP/BOÅš bank. 5. The report is not very specific when discussing the mitigation measures for those who decide to get their heat source replaced. The low-income population segment, on top of the standard instruments, should be offered a clean energy allowance, at least during the initial period following the switch (e.g., during their first heating season with the new source of heat – to give the household some time to prepare for electricity/gas bill increase). This allowance could follow the mechanics of the special purpose benefit (Polish: zasiÅ‚ek celowy) managed by social assistance centers, and it could be distributed in the same way (e.g., as the refund of the amount in excess of the existing notional price of heating fuel required to heat the dwelling unit). 6. SFB owners have been practically ineligible for the existing support measures, including the most common ones, i.e. the housing allowance or the energy allowance. The living space size criterion makes SFB households ineligible. In other words, in a heat source replacement scenario, SFBs can be faced with higher expenses and a lack of support. The old instruments need to be revised or a dedicated instrument must be introduced to serve as a ‘shield’. 7. Integration of commercial banks is relevant only for middle/high-income households. Low-income households in their entirety should receive public support on preferential terms, without getting commercial banks involved. Page 21 reads: “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 householdsâ€?. 8. As far as support for low-income households is concerned, we would like to suggest that under the new CAPP component, full funding should be offered for heat source replacement and thermal modernization. According to Structural Research Institute findings, even a very modest requirement of beneficiary contribution may turn out to be a barrier to the inclusion of low-income households in the CAPP. 9. Energy poverty information and the discussion of this issue in the context of air pollution seem rather non-specific. A good grasp of the detailed characteristics of this phenomenon may be instrumental in designing the measures for the low-income population. The data on the volume and characteristics of low-income households in Poland, including those living in SFBs and affected by energy poverty, is available from Structural Research Institute publications (e.g., https://www.tandfonline.com/doi/full/10.1080/15567249.2020.1742817; https://ibs.org.pl/publications/zjawisko-ubostwa-energetycznego-w-polsce-w-tym-ze- szczegolnym- uwzglednieniem-zamieszkujacych-w-domach-jednorodzinnych/). 10. The topic of CAPP uptake among low-income senior citizens has been presented without much detail, especially when it comes to specific solutions for effective mobilization of sensitive energy consumers. It would seem right to make some of the measures in the program 74 conditional upon effective mobilization of poor citizens. It has been suggested that municipalities be compensated for their role in the submission of CAPP applications. One should set up different rates for mobilizing the members of vulnerable social groups (e.g., population of low-income beneficiaries of social assistance). In other words, a municipality would get higher compensation for mobilizing the individuals who meet certain pre-defined criteria. Some of the comments are addressed in the revised ESSA but several focus on the CAPP design and implementation modalities and fall outside the scope of the ESSA. 75