Poland prioritizes renewables in pandemic-recovery plans

Analysis by European economic think tank Bruegel shows Poland has allocated the largest slice of its EU pandemic-recovery funding to renewables and clean technology.

While the €13.49 billion ($14.2 billion) the Polish government says it will devote to such facilities, to the end of 2026, is less than the €15.1 billion allocated by Italy, the latter represents only 7.9% of the total spending package tabled by Rome and approved by the bloc. Clean power and technology spending instead accounts for 37.5% of the budget submitted in Warsaw's Recovery and Resilience Plan (RRP).

The European Union has committed to dole out €723.8 billion across member states to finance their recovery from the pandemic. With the package to consist of €338 billion of non-repayable grants and €385.8 billion of EU loans, according to Brussels-based Bruegel, the final RRP was submitted by the Netherlands at the end of last month.

With details difficult to nail down, Bruegel used various measures to assess how the member state spending plans should be broken down. It provided reference to seven definitions outlined by the European Commission, which include spending on renewables and clean tech, and budgeting for sustainable transport and charging facilities.

With the commission having required the national budgets to allocate at least 37% of the funds to a wider “green transition” definition, Poland surpassed that threshold for renewables and clean tech alone. The €360 million allocated to clean power and technology by Cyprus accounted for 28.9% of its RRP, according to Bruegel, with Czechia allotting 25.6% of its finance (€1.81 billion), Malta 22.6% (€80 million), and Bulgaria 22.1% (€1.46 billion).

Coming up short

Sweden and Luxembourg met the 37% green transition mark without allocating any of their RRP funds to renewables and clean tech. Alongside Italy in the relative EU laggards in that respect are Latvia, which allocated €80 million (4.4% of its RRP) to such priorities, Ireland (€50 million and 5.5%), Spain (€4.72 billion making up only 6.8%), and Portugal (€1.23 billion and 7.4%). Germany‘s €3.32 billion for renewables and clean tech amounts to 11.9% of its total RRP budget and France‘s €3.68 billion makes up 9%.

Sustainable transport and charging points supplied a large chunk of spending in the bloc's smallest member states, with those priorities accounting for 32.7% (€30 million) of Luxembourg's plans and 32% of (€110 million) of Malta's. The €8.84 billion allocated by Romania for sustainable transport accounted for 30% of its RRP and Hungary‘s €1.81 billion made up a quarter of its pandemic-recovery spending.

At the other end of the scale, low-emission transport accounts for just 2% of Czechia's plans, with a budget of €150 million, and the same sum adds up to 4.5% of Sweden's planned spending on the issue, and 7.1% of Finland‘s. The €970 million allocated by Portugal accounts for 5.8% of its total RRP and Greece will spend €1.05 billion on the same percentage of its pandemic-recovery fund.

The €5.93 billion Germany will devote to sustainable transport is 21.2% of its overall spend. Spain will allocate 19% of its funds to the issue (€13.2 billion), Italy will apportion 18.5% of its cash to transport (35.4 billion), and France 16.6% (€6.78 billion).

Spendthrift states

The breakdown produced by the think tank, which is largely financed by EU member states and European corporate members, also offered an insight into the budgeting approach of the nations concerned. Eighteen countries applied for the maximum amount of grant funding the commission estimates it will be able to raise for them, while the same could be said of only two countries when it comes to the available loans.

Germany has asked for €2.3 billion more grant assistance than the EU anticipates will be available, France €1.5 billion more, and Austria a €1 billion bonus. Slovakia and Bulgaria face having to make up a €300 million overshoot in their grant request from their own coffers, and Croatia and Romania are set for €100 million shortfalls. Surprisingly, Latvia has requested only €1.8 billion of the €2 billion the EU estimates will be available to it in non-repayable grants. Bruegel indicates a final decision has not been made by the Netherlands.

On the proportion of recovery funding that would have to be returned to the commission, Romania has signed up to its maximum €15 billion credit line and Italy is not far short, having to date requested loans worth €122.6 billion of the €122.8 billion the commission expects to offer. Four nations have taken a more cautious approach, with Poland seeking €12.1 billion of a projected €34.8 billion borrowing package, Slovenia asking for €700 million of €3.2 billion, and Portugal preparing to draw down just €2.7 billion of an anticipated €14.2 billion overdraft.

Greece, by contrast, has asked the EU for loans worth €12.7 billion, despite having been offered only an estimated €12.4 billion of credit.