Bank Ochrony Środowiska, S.A

The commitments of the European Union (EU), as defined by the European Commission in “An Energy Policy for Europe”, and also adopted in the Resolution of the European Parliament aim at sustainable, competitive economic development of the Community, including environmental and social aspects. Necessary proposals are set now to fulfil these commitments, known as the 3 x 20 until 2020 package. This is the 20% reduction of CO2 emissions compared to 1990, increase to 20% of the share of renewable energy in the energy balance and 20% reduction in primary energy consumption. These targets, set by the EU and to be reached by its community, indicate how big the future challenges are.

EU society will have to complete ambitious tasks requiring increased financial expenditures to meet these numbers over the next few years.

Identifying real costs

Significant financial effort, in every field, forces cooperation of various environments in which the financial sector plays a crucial role. In the light of expectations of the international community towards a “post Kyoto” period, effective financial mechanisms are becoming significant. A proper financial set up provides the groundwork. This is particularly true in environmental protection in the least developed countries since often environmental costs are not taken into account. In those economies, the poor level of pro-environmental regulations, combined with a lack of financial incentive, is why polluters are not interested in bearing the costs of the reduction of greenhouse gas emissions or other polluting substances.

Importance of sensible principles

This changes with the development of financial assistance programmes in the least developed countries. Legal and financial systems around climate protection in beneficiary states are in place with all financial measures strictly regulated. The most common principles are:

• Financing of qualified expenditures,
• Financing of incurred costs,
• Financing up to the defined level of expenditures e.g. 60-80%

These principles set the structure of pro-ecological investment financing which includes the utilisation of investors’ own funds and loans offered by commercial banks.

Polish example

The Polish Financing Mechanism for Environmental Protection is an example of a mechanism which has been brought about by increasing social awareness and understanding of the environmental degradation, as well as the threats to the health and natural amenities caused by the process. The establishment of the National Fund for Environmental Protection and Water Management in 1989 was a breakthrough in the development of the system. NFOŚiFW is the biggest institution implementing the State Environmental Policy through financing in areas important for the process of adjustment to the EU standards. Regional Funds for Environmental Protection with funds at county and municipality level are the next link of the system. All these funds distribute means generated from penalties and fees related to the use of environmental resources. The EcoFund foundation, established by the State Treasury in 1992 plays an essential role in the system. Its earnings are from the “eco-conversion” of portions of Polish debts pursuant to agreements between Poland and the United States, France, Switzerland, Italy, Norway and Sweden.

Key element in the financing scheme

Bank Ochrony Środowiska S.A. saw the imperative in participating in the implementation of the State Policy of Environment and Climate Protection several years ago and are addressing a significant portion of activity to promoting environmentally sound actions through co-financing of sustainable investments. The Bank’s pro-environmental mission helps the financing system behind environmental protection to succeed.

BOŚ S.A. has granted 415,000 environmental loans, at a total of 2.4 billion Euros, 70% of which was addressed to climate protection. Undertakings financed by BOŚ S.A. cover:

• Large projects in power industry, e.g.: desulphurisation, low emission burners, cogeneration, gas turbines;
• Medium projects implemented by municipalities – e.g.: thermo-modernisation of public utility buildings, boilers modernisation and district heating systems;
• Small individual projects – e.g.: thermo-modernisation of buildings, fuel switch (from coal to oil or gas).

In the 1990s, undertakings were mainly focused on end pipe investments (desulphurisation and dust removal units). Now, the Bank engages in co-financing of investments facilitating reduction of greenhouse gas emissions, achieved by use of high efficient boilers, fuel switch, cogeneration, lowering of energy usage or by switching from fossil fuel energy to renewables.

Value of investments, in the climate protection area, co-financed by BOŚ S.A. exceeds 5.9 billion Euros; this is working towards reduction of:

• Dust emission 138 000 tons/year,
• Sulphur dioxide 444,500 tons/year,
• Nitro oxides 41,300 tons/year,
• Carbon dioxide 1 017 600 tons/year,
• Energy renewable sources 340 GWh/year.

Best effects are achieved when various forms of financing are combined, from both the public and private sector.

This consistently developed and improved system is in co-operation with Polish and foreign commercial institutions and focused on achieving common goals. Firmly rooted in the municipal and industrial infrastructure, it attains measurable results in the climate change arena.

W: www.bosbank.pl