Ministry of the Environment by taoyni


									        Ministry of the Environment


                      May 2001, Warsaw
         Modified at the Department of Foreign Funds Management
                                     TABLE OF CONTENTS
1.      INTRODUCTION                                                                             2

2.      CHANGES IN THE STATE OF ENVIRONMENT                                                      4
     2.1. INTRODUCTION                                                                           4
     2.2. WATER SUPPLY MANAGEMENT                                                                4
     2.3. WASTEWATER MANAGEMENT                                                                  5
     2.4. AIR QUALITY                                                                            6
     2.5. SOLID WASTE MANAGEMENT                                                                 6
3.      KEY FEATURES OF ENVIRONMENTAL PROTECTION POLICY                                          7
     3.1. INTRODUCTION                                                                           7
     3.2. ENVIRONMENTAL POLICY                                                                   8
4.      BRIEF OVERVIEW OF ENVIRONMENTAL INFRASTRUCTURE                                          10
     4.1. INTRODUCTION                                                                          10
     4.2. WATER SUPPLY MANAGEMENT                                                               10
     4.3. WASTEWATER MANAGEMENT                                                                 10
     4.4. AIR QUALITY                                                                           12
     4.5. SOLID WASTE MANAGEMENT                                                                12
5.      FINANCING ENVIRONMENTAL PROTECTION INVESTMENTS                                          13
     5.1. INTRODUCTION                                                                           13
     SECTOR                                                                                      16
FROM ISPA FUND                                                           17
     6.1. INTRODUCTION                                                                          17
     6.3. PRIORITY PROJECTS IN THE SECTOR OF AIR QUALITY PROTECTION                             19
     6.4. PRIORITY PROJECTS IN THE SECTOR OF WASTE MANAGEMENT                                   20


The Republic of Poland, like nine other Central and Eastern European countries Malta and
Cyprus, is a candidate to a membership in the European Union (EU). In preparation for its
planned accession date of 1st January 2003, Poland is currently undertaking various measures
to comply with the acquis communautaire. In addition to the existing Phare programme,
support will be provided by the EU through ISPA (Instrument for Structural Policies for Pre-
Accession)1 managed by the EU Commission. ISPA funds will be devoted to implementation
of investments in environment and transport sectors only and will operate most probably
during the years 2000-2006 but not later than the moment that Poland joins the EU.

This document deals with the environmental protection sector only2. It establishes the strategy
in Poland for identification and selection of projects which will be proposed to be supported
from the ISPA funds in the following areas: wastewater treatment and water supply, air
quality, and waste management. The main focus of ISPA in the environment sector is on
measures which enable beneficiary countries, including Poland, to comply with the objectives
of the Accession Partnerships as well as with the priorities indicated in the National
Programmes for the Adoption of the Acquis. In the long term the use of ISPA fund will enable
Poland to implement the goals indicated in the National Environmental Policy and in the
document „Poland 2025 – the long term strategy of sustainable development”. It is assumed
that in the field of environmental protection ISPA resources will be used for implementation
in Poland of the requirements of the following directives:
 Directive 2000/60/EC establishing a framework for Community action in the field of
     water policy;
 Directive 80/778/EEC (with amendments) on drinking water, to be replaced in November
     2003 with Directive 98/83/EC;
 Directive 91/271/EEC on urban wastewater treatment;
 Council Directive 96/62/EC on air quality assessment and management, together with the
    directives related to specific pollutants;
 Directive 88/609/EC on Large Combustion Plants;
 Directive 89/429/EEC on air pollution caused by the existing municipal waste
 Directive 94/67/EC on hazardous waste incineration;
 Directive 75/442/EEC on waste, so-called waste framework directive;
 Directive 91/689/EEC on hazardous waste;
 Directive 94/62/EC on packaging and packaging waste;
 Directive 96/61/EC on Integrated Pollution Prevention and Control;

    Council regulation No 1267/1999 of 21 June 1999
    This document is based on the following background papers:
      The Ministry of Environmental Protection, Natural Resources and Forestry, 1999: “The concept of the
      national wastewater management programme and implementation of the requirements of the European law
      in this field” (authors: Karaczun Z., Peszko, G.), draft, Warsaw
      The Ministry of Environmental Protection, Natural Resources and Forestry, 1999: “The concept of the
      national programme of waste management and implementation of the requirements of European law in this
      field” (authors: Berbeka, K., Grabowski, Z.),draft, Warsaw
      The Ministry of Environmental Protection, Natural Resources and Forestry 1999: “Preparation of pre-
      accession investment programme for effective implementation of environmental protection regulations
      related to air quality” (authors: Beblo, W. and others), draft, Warsaw

   Directive 99/31/EC on the landfill of waste.

Community assistance within the framework of ISPA funds may be granted in various forms
(e.g. direct non-repayable grants, repayable aid, and others). ISPA beneficiaries will be public
sector units, such as state enterprises acting in public interest, local communities (gminas) and
municipal enterprises registered under commercial law but totally owned by local
communities. The rate of Community assistance granted under ISPA funds will in most cases
amount up to 75 % of the total expenditure of public bodies3. ISPA funds cannot be combined
with any other Pre-Accession instruments, except for LIFE programme. All investments
supported by the ISPA funds must be economically efficient. Social cost and benefit analysis
must prove net benefit for the society resulting from the investment. Total cost of each project
will in principle be not less than Euro 5 million, although, in exceptional cases, projects with
a total cost of less than Euro 5 million will also be considered.

The following elements are eligible for funding from ISPA: construction works, purchase of
materials or engines, project management, preliminary studies and technical assistance as
well. Preliminary studies and technical support measures may be financed up to 100% of its
total cost. At the same time only 2% of the total ISPA allocation in the field of environment
can be spent on technical assistance, including:
1. Economic/financial feasibility studies,
2. Environmental Impact Assessments, according to EU rules,
3. Technical reviews, designs and cost analyses,
4. Assistance in the preparation of tender documentation,
5. Assistance in project management.

This document relates only to environmental protection problems, and in particular to water
and sewer management, waste management and assuring appropriate quality of air. It consists
of six parts:
1. Introduction;
2. Information on changes in the state of environment in Poland;
3. Information on provisions and goals of environmental protection policy;
4. Overview of environmental infrastructure;
5. Information on environmental projects financing;
6. Information on selection criteria and priority projects to be financed from ISPA;

The text of this document does not constitute the basis for solving the issues related to the
negotiation process of Polish accession to the EU in the field of environmental protection.
Because of the character of information included in this document and becaause of the
dynamic changes, periodical update of this document is possible. Due to the fact that ISPA is
a specific instrument not every field of environmental protection has been covered by this
document. It does not preclude the possibility of financing the projects which are not covered
with ISPA fund using other financial resources (also EU aid).

The Polish Government undertakes activities aimed at co-ordination of the investment works
between the sectors in order to make them more efficient, according to the regulation
regarding to aid co-ordination within the framework of pre-accession strategy for pre-accesion
countries (Council regulation (EC) No 1266/1999 of 21 June 1999).

  Commission may also consider the resources coming from international financial institutions granted in the
form of loans for these public instutions to be equivalent with domestic public funds.


2.1. Introduction

Poland is one of the larger countries in Europe with a territory measuring 312,685 km 2 . The
country is subdivided into 16 voivodships (regions).

Poland has a population of around 38,654,0004, with 61,8 % living in urban areas. There are
42 cities5 with population of over 100,000. Warszawa, the capital, is by far the largest city
with a population of over 1,626,000, followed by Łódź (815,000), Kraków (740,000),
Wrocław (641,000), Poznań (580,000), Gdańsk (462,000), Szczecin (419,000), Bydgoszcz
(387,000), Lublin (356,000) and Katowice (350,000).

The most urbanised region is the Upper Silesian Industrial District, which contains eleven
cities (including Katowice) with over 100,000 inhabitants. There are also large clusters of
towns and industrial settlements in Warsaw industrial district, Łódź industrial district,
Gdańsk-Gdynia district, and in Lower Silesia.

Most of the country’s surface area (99.7 %) is situated in the Baltic Sea catchment area. The
two largest rivers drain into the Baltic Sea. They are:
1) Vistula, which drains around 50 % of Poland’s surface area, is 1,047 km long and has
   a total catchment area of 194,424km2, 86,8 % of which is within the Polish6 territory;
2) Odra, which is 854 km long and has a total catchment area of 118,681 km2, 89,2 % of
   which is situated within the Polish7 territory.

The largest cities in the catchment area of the Vistula river are: Warszawa, Kraków, Gdańsk
and Bydgoszcz. The largest cities in the catchment area of the Odra river are: Łódź, Wrocław,
Poznań, Szczecin and Katowice.
During the period 1988 – 2000, many environmental protection programmes have been
undertaken and implemented in Poland, which resulted in a significant improvement of the
state of environment in the country. Emissions of pollutants into the air and water have
decreased, the area covered with legal nature protection has increased, and the decisions on
adoption of several international environmental conventions have been taken. The
improvement of the state of environment has been achieved not only due to the decline in
heavy industry’s activity, but also because of the numerous capital-intensive investments
undertaken by private and public institutions as well as other measures implemented in
accordance with the National Environmental Policy.

2.2. Water Supply Management

Currently, groundwater constitutes the main source of water for municipal supply, providing
about 61,8 % of the total volume of water abstracted (1478 hm3), with the rest (1009.3 hm3)
abstracted from surface water intakes (mostly from the rivers, and to a smaller degree – from
artificial water reservoirs and lakes)8. In the nineties water consumption has decreased; in

  31 Dec.. 1999,
  MSO (Main Statistical Office,) 2000, Warszawa
  MSO 2000, Warszawa
  MSO 2000, Warszawa
  MSO: Environmental protection, Warszawa 2000

addition, a significant change of municipal water provision sources took place – share of
water abstracted from surface waters has significantly decreased. Abstraction from
groundwater sources has decreased but not to such a degree. This phenomenon is related to
poor quality of surface waters in Poland – in 1999 none of the rivers monitored were
classified as first class quality water, 0,4 % was assigned the second class, 19,7 % - third
class, and 79,9 % was considered to be beyond any standards9. The quality of groundwater is
generally higher than the quality of surface waters, although a certain percentage of these
waters (about 17 %) is significantly polluted.

The main sources of surface water pollution are untreated or inadequately treated wastewater
discharges from urban areas. Another source of surface water pollution is agricultural run-off
and to smaller degree deposition of pollution suspended in the air, however is less significant.
The main cause of groundwater pollution is the infiltration of pollutants (industrial,
agricultural and municipal) from soil surface. Insufficient amount of water per one inhabitant
is also a problem in Poland. Increase of retention through construction of reservoirs could
help to solve it.

2.3. Wastewater Management

The amount of municipal and industrial wastewater discharged into surface waters has
decreased over the past 10 years, as shown in Table 2.3.1. Decrease of the amount of
wastewater requiring treatment results from more rational use of water in households and
industry. Due to construction of new wastewater treatment plants the amount of untreated
wastewater discharged decreased during the last 10 years.

Since municipalities discharge five times more untreated wastewater than industrial sources, it
is clear that urban wastewater has the potential to exert an enormous impact on water quality.
Therefore, construction of municipal wastewater treatment plants has been recognised as
a priority in the National Environmental Policy.

Table 2.3.1 Wastewater discharges in the period of 1988-99
                                                                                         [MSO 1990, MSO 2000]
    Type of       1988     1990     1991    1992     1993      1994     1995     1996     1997     1998 1999
  Industrial      9581     9055     8418    7973     7757      7798     8129     8324 82691 8188        7902
  Municipal       2478     2314     2166    2075     1981      1999     1852     1752     1692     1655 1590
  Untreated      16642 1343         1134     995      844       809      700      611     5203      424 376
  including 7111.9 hm3 of refrigeration waters (according to the regulations not requiring treatment),
  including 37.3 % of wastewater requiring treatment,
  including 18.3 % of wastewater requiring treatment.

    MSO: Environmental protection, Warszawa 2000

2.4. Air Quality

During the past 10 years a general decrease in emissions of all basic atmospheric pollutants
including sulphur dioxide (SO2), oxides of nitrogen (NOx), carbon dioxide (CO2) and
particulates has been observed in Poland (table 2.4.1.). The change in pollution levels is partly
related to reduction in industrial activity, but it is mainly due to the elimination of industrial
technologies resulting in emission of significant amounts of pollution to the air,
modernisation and restructuring of production technologies, installation of equipment for
treatment of exhaust gases etc.

Stopping the increase of NOx emissions and further reduction of emissions of other pollutants
constitute one of the basic goals of the 2nd National Environmental Policy.

Table 2.4.1 Emission levels for selected air pollutants (1988-98)*
                                                                                    [ MSO 1990, MSO 2000]
     Pollutants       1988    1990     1991    1992     1993     1994      1995     1996    1997   1998

     SO2(103 t)       4180    3210     2995    2820     2725     2605      2376     2368     2320     1897
     NOx (103 t)      1550    1280     1205    1130     1120     1105      1120     1154     1180      991
     CO2 (103 t)       509     384      388    359      372      348       330       373      370      338
     Particulates     3400    1950     1680    1580     1495     1395      1308     1250     1200      871
       (103 t)
*        approximate data

2.5. Solid Waste Management

Table 2.5.1 indicates changes in the volume of generated and utilised municipal and industrial
waste over the past 10 years. Still a large volume of industrial and municipal waste is
deposited in landfills; also the growth tendency of the volume of municipal waste generated in
recent years is observed. This is partly due to mass introduction of disposable products and
packages into the Polish market. In the year 199910 there were 12.317 mln. tons of municipal
wastes produced in total of which 0.407 mln tons were selected, 0225 mln tons were
composted and 11.684 mln tons were cumulated on the disposal plants. The amount of
commercially reused waste is considered to be too low, and recycling systems or
environmentally safe waste disposal systems operate at insufficient scale. Therefore,
development of environmentally friendly methods of waste disposal constitutes one of the
most important goals of the National Environmental Policy.

  Acording to the implementation plan related to the Council Directive 99/31/WE of 26 April 1999 concerning
the landfill of waste.

Table 2.5.1.a Production and utilisation of solid waste (1988-97)
                                                                                  [MSO 1990, MSO 1999]
                     1988      1990      1991       1992      1993       1994      1995      1996      1997

 Municipal waste     46478    42686     40915*     47000      40941*     42364*    42248    44697     46859
    deposited in
 landfills, 103 m3
 Industrial waste    185.9     143.9     128.3     121.9      120.5      121.5     122.7    124.5      124.5
 during the year,
         106 t
 Industrial waste    105.7     77.0       65.5      64.3       64.6       65.6     66.9      69.5      80.2
   utilised in the
  economy, 106 t
 Industrial waste    79.7      66.5       62.3      57.1       55.5       54.7     55.5      54.8      44.0
    deposited in
  landfills, 106 t
 * Excluding waste removed by small private firms
There is no information about waste rendered harmless and deposited temporarily so that the amount of
produced wastes is bigger then managed wastes.

        Table 2.5.1.b Production and disposal of solid waste (1998-99)*
                                          [MSO 1999, MSO 2000]
                                                       1998            1999

           Waste generated during a year, 106 t          133.1         126.3
           (excluding municipal waste)
           Commercially reused waste, 106 t               91.7          92.1
           (excluding municipal waste)
           Waste deposited at the territory of the        35.8          27.8
           producer and other places, 106 t
           (excluding municipal waste)
          * data for the years following 1997 are not comparable to the previous
            ones because of the change of waste classification
          There is no information about wastes rendered harmless and deposited temporarily so that the amount
          of produced wastes is bigger then managed wastes.


3.1. Introduction

Environmental protection activities, including transposition and implementation of the acquis
communautaire in this field, lie within the scope of responsibility of the public administration.
The Ministry of Environment is responsible for drawing up national environmental policy
provisions and for preparation of legislation within its field of competence (related to, among
others, protection of air, soil, water, forests and nature, as well as natural resources). The
Inspectorate of the Environmental Protection is responsible for control over the performance
and execution of environmental law and its obligations both country-wide and within the
voivodships. The Inspectorate is independent from the Ministry but it remains under the
control of the Minister. The Ministry oversees also five independent research institutes:
Institute of Meteorology and Water Management, Institute of Environmental Protection,
Institute for Industrial Environmental Problems, Institute for Forestry Research, and
Geological Institute.

The Minister of Health is responsible for chemical control and quality of water for human
needs. The President of the State Nuclear Agency bears responsibility for radiation protection.

Activities such as discharge of wastewater, emission of pollutants into the air and waste
generation require holding a permit in the form of an administrative decision. Such decisions
– in relation to enterprises that are particularly harmful for the environment – are issued by
the voivods, and in case of other economic units – by wójt (head of gmina), mayor, or
president of the city.

3.2. Environmental Policy

The 2nd National Environmental Policy (II PEP) adopted by the Council of Ministers in June
2000 is a document setting directions of environmental policy in Poland. It indicates the main
environmental protection priorities and areas where state intervention is necessary for
preservation of natural resources. This document is based expressis verbis on the rules of
sustainable development and is fully consistent with the EU policy in this field.

Environmental programmes implemented (on the basis of the previous National
Environmental Policy) between 1988-98 have been successful in reducing the levels of
pollution in Poland. Nevertheless, many environmental problems still exist and they are
awaiting solutions. Currently the following problems are considered to be the most important
challenges of the country’s environmental policy:
1. transposition of the EU environmental requirements to the Polish legislation and their
    implementation in practice;
2. decreasing the energy - and material - consumption by the economy, e.g. through
    introducing water- and energy-saving technologies and solutions, reducing packaging
    needs and closing the circulation of materials within groups of enterprises;
3. ensuring effective protection of natural resources and biodiversity;
4. limiting negative impact of transport on the environment.

These priorities are taken into account in the 2nd National Environmental Policy. They must
be supplemented with the detailed goals, implementation of which will ensure execution of
the requirements of the EU law in Poland. In the long term they will lead to improvement of
the state of environment and will ensure effective mechanisms for protecting the environment
against degradation. Such goals, covered by the scope of this document, are the following:

In the field of water and wastewater management:

a. implementation of programmes aimed at reduction of water consumption, both for water
   used for industrial purposes and for municipal purposes (among others through
   introduction of closed water circulation, educational actions etc.);
b. improvement of quality of surface waters, especially in places where they constitute
   a source of drinking water and assuring that drinking water quality is consistent with the
   EU quality requirements (e.g. through construction of wastewater treatment plants in
   agglomerations and enterprises which affect the quality of water used for drinking water
   supply, through modernisation of water and sewage systems and construction of water
   reservoirs, as well as through the reform of water management system);
c. modernisation, extention and construction of wastewater collection and treatment facilities
   for municipalities with a number of equivalent inhabitants of over 2,000;

d. protection of groundwater resources (among others through limiting use of groundwater
   for industrial purposes);
e. reconstruction of small retention systems, elimination of water deficits in urban
   agglomerations and rural settlements, supply of good quality drinking water and water for
   farming purposes in rural areas, including construction of reservoirs;
f. reduction of discharge of salt waters from hard coal mines to surface waters.

In the field of air quality:

a. implementation of programmes aimed at increasing energy efficiency and at its saving
   (among others through thermoinsulation of apartment buildings and public utility
   buildings, modernisation of power networks etc.);
b. Improvement of air quality in agglomerations where the permissible levels of
   concentration of pollutants are exceeded, first of all through decreasing emissions of
   particulate matter and gases into the atmosphere (both reduction of emissions from large
   enterprises and from small, dispersed, local sources), and through reduction of burden
   created by transport;
c. Implementation of programmes for counteracting global climate changes;
d. Reduction of SO2 emissions up to the level resulting from the Second Sulphur Protocol;
e. Reduction of NOx emissions to the atmosphere;
f. Reduction of volatile organic compound emissions and heavy metals.

In the field of solid waste:

a. implementation of programmes aimed at reduction of the amount of generated industrial
   and municipal waste, implementation of modern technologies of reuse of waste;
b. decreasing the total amount of industrial waste deposited in landfills through successive
   implementation of modern technologies with little or no waste generated;
c. decontamination or safe deposition of all generated hazardous waste;
d. creation of pre-selection systems and recycling of waste as well as environmentally safe

From the point of view of integration with the European Union would also be significant to
achieve the following goals:
 Adjustment of the environmental monitoring system to the European Union directives
 Increase of the areas of protected nature and creation of the coherent system of protected
   areas within the framework of the NATURA 2000 programme;.
 Rehabilitation of contaminated land polluting groundwater sources.

It is assumed that the investments necessary for achievement of these goals will be eligible to
receive support from the European Union funds.


        4.1. Introduction

One of the principal challenges to local authorities in the 1990s was improvement of the
municipal infrastructure management. It was viewed as a precondition for development of the
local economy. As indicated in Section 2, much progress has already been achieved in this
field. However the process of integration with the European Union imposed on Poland new
obligations in this field. Meeting these obligations will be difficult and costly, and therefore it
will need much time. Selected issues related to environmental protection infrastructure and to
the problems covered with the scope of this document will be described below.

        4.2. Water Supply Management

Adjustment of the Polish law to the requirements of EU regulations will need expansion of
the existing water supply system in the selected agglomerations as well as construction and
modernisation of water purification stations. Estimates based on evaluation of the current
demand for water in municipalities indicate the necessity of extension of the network by
around 9,000 km. Activities aimed at water quality protection are also indispensable.

Water reservoirs make it possible to compensate river water discharge during the high water
period and make water use possible during low water period as well. Important for water
supply purposes are drinking water reservoirs, in Poland so-called municipal reservoirs. There
is a need of investments leading to water quality protection in the existing reservoirs
(wastewater treatment plant construction, sewerage systems extension in the sorrounding area
and activities counteracting pollution caused by surface flow and infiltration especially from
the agricultural areas).

        4.3. Wastewater Management

Current Polish legislation impose the obligation to build wastewater collection systems and
treatment plants, according to the Directive 91/271/EEC concerning urban wastewater
treatment. Therefore, the needs in this field are considerable (see Table 4.3.1). There are
1 545 agglomerations11 identified in Poland in which existing water and wastewater
infrastructure inventory has been taken. Not all the Polish cities have been equipped with
sewerage systems or wastewater treatment plants yet. According to the above mentioned
directive the Government of the Republic of Poland has made a decision to regard the whole
territory of the state as the sensitive area of receiving waters. Therfore part of exsiting
treatment plants should have a tertiary degree of sewage effluent treatment. In accordance
with impementation plan related to the Directive 91/271/EWG in a half of treatment plants
serving over 15,000 RLM12 the advanced treatment should be applied in order to reduce total
phosphorus and nitrogen load by at least 75% in the treated wastewater in comparison to
untreated wastewater conveyed to the wastewater treatment plants.

 Data come from implementation plan from Directive 91/271/EWG.
  Population equivalent - is an equivalent of the organic sewage pulp per capita that biodegrades with the
Biological Oxygen Deficiency (BOD5) within 5 days reaching 60 g dailydischarge of 60 g of BOD (Biological
Oxygen Demand) per day (according to the Directive 91/271/EWG)

Table 4.3.1 Wastewater infrastructure (data for the year 2000)
                                                                                         [ME 2001]*
  Agglomeration size by             Number of                Number of                 Number of
the number of equivalent       agglomeration with the    agglomeration with        agglomeration with
 population [tys. RLM]           sewerage collecting   wastewater treatment       wastewater treatment
                                      systems         plants (at least biological  plants with biogenic
                                                                 type)                   removal
          2 - 10                    507                           321
         10 - 15                    100                            64
        15 - 100                    329                            97                       97
          > 100                      80                            21                       21
        TOTAL                      1016                           503                      118
* Data come from the implementation plan related to the Directive 91/271/EWG of 21 May 1991 concerning
urban wastewater treatment.

Among cities with the population equivalent exceeding 100,000 Grudziądz does not have
wastewater treatment plant, therefore this investment has been placed on the list of projects
proposed to be co-financed from ISPA in the year 2001. Warsaw (population equivalent
1,626,000), is currently the single largest point source of untreated wastewater in Poland. In
1999 it discharged into the environment 87 hm3 of untreated municipal wastewater13.
Construction and operation of wastewater treatment plants in six of the largest cities would
reduce the total discharge of untreated municipal wastewater in Poland by about 50 %.

In order to comply with the requirements of EU legislation extension of the sewerage network
will be necessary. In rural areas with dispersed settlements it is planned to preserve the
existing methods of wastewater management, i.e. its storage in tight reservoirs without drain
and periodical removal to wastewater treatment plants using special cars.

4.3.1. Vistula and Odra river basins

In 1992, a report within the framework of the High Level Task Force of the Helsinki
Convention was prepared, which identified sites and areas which were the most harmful to the
Baltic Sea (hot spots). In Poland 3614 such areas were identified, 6 directly in the Baltic Sea
basin, 17 in the Vistula basin and 13 in the Odra basin. During the period of 1992-2000,
Poland implemented a number of actions which resulted in a significant reduction of the
pollution load discharged to the Baltic Sea. Thanks to these some of the problems in the hot
spots areas have already been solved. There is also a possibility to use the ISPA fund for
solving the remainig hot spots problems.

In 1997, of the 1,536 hm3 of wastewater discharged into surface waters in the Vistula basin,
approximately 292 hm3 (i.e. 19 %) was released untreated (of which 248 hm3 was untreated
municipal wastewater). Wastewater discharged from 18 municipalities in the Vistula basin
constituted over 80 % of the total amount of untreated wastewater discharged to surface water
within this river basin (Warsaw is the source of 40 % of the total load of untreated municipal
wastewater discharged into the Vistula river each year). Construction of wastewater treatment
plants in these municipalities, including Kraków and Warsaw agglomerations, should be
considered to be priority investments.

     MSO: Environmental protection, Warszawa 2000
     According to the Helsinki Convention Office in Gdynia

The Polish part of the Odra basin contains around 1,700 point sources of pollution, including
700 sources having a significant impact on water quality. In 1997, of the 1,076 hm 3 of
wastewater discharged into surface waters in the Odra basin, 19 % was released untreated,
and 45 % received only mechanical treatment. In 1997 there were no wastewater treatment
facilities in 97 of the total number of 375 municipalities situated in the Odra river basin.

   4.4. Air Quality

The quality of atmospheric air in Poland is generally good, although in some agglomerations
exceedances of the permissible concentrations of the pollutants occur. This relates primarily
to suspended particulates, ozone, carbon oxide and nitrogen oxides. The main sources of air
pollution are power and heating plants as well as large enterprises – especially steal mills,
refineries and other chemical plants. In the recent years most of these economic units have
installed equipment for exhaust gases treatment. It is assessed that equipment of industrial
enterprises related to particulates’ emission control is satisfactory; a significant improvement
has been achieved in the field of construction of desulphurisation equipment. Significant
investment outlays in the area of limiting emissions of nitrogen oxides, volatile organic
compounds and selected other industrial pollutants are necessary.

The main sources of pollution in municipalities are local boiler houses, individual boilers, and
car transport. According to the Main Environmental Protection Inspectorate data the
agglomeration in which the highest air pollution concentrations in the country are registered is
Katowice. During the last 10 years air quality in this region has been improving
systematically but concentrations of pollution arising in combustion process locally reach or
exceed permissible levels. Exceedences of air quality standards are recorded also in
Małopolska voivodship. High pollution levels although not exceeding the standards are
registered in lower Silesia voivodship, which is under influence of transboundary impact. It is
worth to emphasise that in some cities (except those in south-west part of Poland, where
pollution concentrations are higher than in other parts of the country) there are relatively high
levels of gas pollutants and particulate pollutants during the heating season. This information
refers to those cities in which domestic coal furnaces or outdated heating systems are the main
heating sources.

Gradual decrease of these types of burden is assumed through covering higher number of
inhabitants with central heating networks, switching energy source in municipal and
individual boilers from coal into gas, and, where mentioned above activities are impossible,
introduction of higher quality coal into the market. Improvement of air quality will also be
achieved through support for technologies increasing energy efficiency and its saving. Also
the activities aimed at decreasing burden related to transport will be undertaken; it is assumed
that emission of pollution from motor vehicles will drop as a result of adjustment of liquid
fuels quality to EU requirements. Also the use of alternative energy sources, where possible,
should be promoted.

   4.5. Solid Waste Management

The primary method of waste disposal in Poland is its deposition at landfills. Selective waste
collection, its recycling and economic use are not well developed. Only a few municipalities
are equipped with facilities for composting of organic waste, other technically advanced
methods of waste utilisation are applied only at a small scale. It is estimated that for
improvement of the situation in the field of waste management a significant number of

modern installations for waste disposal (sorting stations, composting stations, incinerators
etc.) has to be built as well as new landfills. The implementation plan related to the Directive
99/31/WE of 26 April 1999 concerning waste deposition assumes elaboration of the plan for
modernization and use of existing landfills, gradual reduction of its number as well as
construction of new ones in a way that assures existing lower number of them in the whole
country and increasing number of the users at the same time. Also activities aimed at
improvement of sanitary conditions of municipal landfills are necessary because many of the
landfills – both these under exploitation and these which are already closed – are in a bad state
and require taking actions aimed at protection of the environment, to prevent their negative

The most serious problems with reclamation of the existing landfills, lack of suitable locations
for new ones, and lack of facilities for the decontamination and recycling of waste occur in
the largest cities. Therefore, there is the necessity to organise waste management systems in
large municipal agglomerations. In addition it is assumed that operating of waste treatment
plant is profitable starting from the level of 100,000 users, thus investments in the cities of
over 100,000 inhabitants will be considered to be priorities within the ISPA fund. Projects
aimed at solving waste management problems for similar number of inhabitants in some
regions (not necessarily in the large cities) will be taken into consideration as well.

5.1. Introduction

Over the years financial means for the maintenance, modernisation and development of
environmental protection infrastructure in Poland have been insufficient. However recently
achievements in this field have been made through creation of an effective system of
environmental protection financing from environmental funds. The system of financial
support for environmental investment created at the beginning of the nineties is functioning
basing on the National Fund for Environmental Protection and Water Management,
voivodship, poviat and gmina funds as well as on banks, foundations and aid programmes,
leasing institutions, investment funds and others. During the past three years the value of
environmental investment accounted for approximately 2 billion euro per year, which in 1997
constituted 8.1 % of all investment outlays in the economy. Table 5.1.1 contains information
on the share of different sources in financing of the investments mentioned above in Poland
during the period 1991 - 1999.
Table 5.1.1 Financial resources devoted to environmental investment
            during the period 1991 - 1998
                                                                     [MSO 1998, MEPNR&F 1999]
     Source of financing          % of total financial resources devoted to environmental investment
                                1991    1992     1993     1994    1995    1996    1997    1998    1999
 Environmental Protection and    40      58       47       41      40       34     30      28      33
  Water Management funds*
  Investors’ own resources &     30      20      25      31      32       38      40      43      36
       commercial loans
         State budget            5       5        7       5       5       5       3       3        2

      Municipal budgets          20      13      16      19      18       19      23      19      23

  Foundations and foreign aid    5        4      5      4      5        4        4       7       6
* National Fund for Environmental Protection and Water Management, regional (voivodship) and the local
(gmina) funds

In the nineties foreign financial resources played a significant role in supporting
environmental investment (see table 5.1.2). These were in particular bilateral aid funds, Phare
funds, funds from debt-for-environment swap, and World Bank resources. The role of foreign
funds was important in spite of the fact that they constituted only 4-7 % (during the period
1991 - 1995 even up to 50 % of this amount was designed not directly for investments but for
training and investment preparation purposes) of total investment outlays for environmental
protection, because they had a function of financial leverage in mobilisation of domestic

Table 5.1.2    Bilateral aid during the period 1990 – 30.06.1998
                                                                              [MEPNR&F 1999]
                   Sector                No. of projects      Amount of          Grants
                                                               donations          (%)
                                                             (US$ million)
 1              Air protection                 51                54.82               41
 2     Water protection and management        136                53.99              40.3
 3              Soil protection                29                 7.55               5.6
 4             Nature protection                6                 0.76               0.6
 5        Environmental monitoring             13                 4.67               3.5
 6              Other problems                 50                12.04                9
                     Total                    285               133.81              100

Experience gained in managing foreign resources in the nineties will be utilised for
appropriate handling with ISPA Fund resources.

Because of differences between the Polish and the EU environmental protection laws, and
because of weak financing of environmental protection infrastructure during the years 1945 –
1989, it is predicted that implementation of the acquis in the field of Environment will be
very costly. The existing estimates indicate that indispensable investment outlays will amount
to 30-40 billion euro. Poland has prepared a strategy for financing implementation of the
acquis. Table 5.3.1 shows a preliminary forecast of financial flows in environmental
protection sector during the period 2000-2006.

Table 5.1.3 Preliminary financial flow forecast for implementation of approximation
programmes in environmental protection sector during the period 2000-2006 (million Euro)15

                                   Capital needs – adopted assumptions
                         2000      2001      2002       2003     2004            2005       2006      Total
Water quality            1100      1200      1300       1400     1500            1550       1600       9650
Air quality              1100      1370      1470       1655     1200            1200       1200       9195
Waste management          255       255       255        255      255             255        266       1796
Other                     n.a.      n.a.      n.a.       n.a.     n.a.            n.a.       n.a.      n.a.
TOTAL                    2 455     2 825     3 025     3 310     2 955           3 005      3 066     20 641

                     Balance of available resources – scenario maximum (ISPA 100%)
                                    2000        2001       2002       2003       2004       2005       2006
EU support                           174        177         177       177         177        177        177
(ISPA funds)
Polish public resources             606.0      608.5      610.9      613.4      615.8      618.3      620.7
Polish private resources           1427.4     1498.7      1570.1     1641.5     1712.8     1784.2     1855.6
including loans
IFIs                                 n.a.        n.a.       n.a.        n.a.       n.a.      n.a.       n.a.
Total                              2 207.4    2 284.2     2 358.0     2 431.9    2 505.6   2 579.5    2 653.3
Needs                              2455.0     2825.0       3025.0     3310.0     2955.0    3005.0     3066.0
Deficit                             247.6      540.8       667.0       878.1      449.4     425.5      412.7
* Since the year 2003 (in accorance with an anticipated   date of Polish accesion to EU) much bigger alocation
from cohesion and structural funds could be available.

Poland can receive 30-37 % of the total ISPA fund devoted to environmental protection and
transport investments. The annual allocation of ISPA fund for environmental protection in the
year 2000 accounts for about 177 million euro (the status on the date of preparation of this

However it is predicted that (with respect to the financial flow procedure) a financial gap may
appear for implementation of approximation pre-accession programmes during the years
2000-2006 (in different periods), and it will be the highest during the period 2001-2003.
During the above mentioned period Poland will still be able to use the resources of
international financial institutions (which was not taken into account in the balance).

The following activities are predicted in order to eliminate the financial gap:
1) implementation of product fees and deposits (the draft project of the act is being
   considered by the Parliament);
2) transferring part of investment outlays to consumers (through gradual increase of charges
   for energy, drinking water, wastewater discharged to sewers);
3) soliciting funds from international financing institutions;
4) mobilisation of additional funds from the environmental funds and commercial sources.
5) working out an offer of short-term credits from the National Found of Environmental
   Management and Water Management (under discussion) or the Bank of Environmental
   Protection to insure availability of capital for investors dealing with the project in which
   ISPA fund is involved.

  In the table 5.1.3 are estimations made for previos (December 1999) version of this document kept, which has
been made according to preliminary guidelines of the Ministry of Finance issued in September 1999. In
accordance with Eurpean Commission suggestions and for this documents needs EU assistance was limited to
sources coming from the ISPA Fund (maximum 177 mln Euro a year in the environment sector in Poland).

5.2. An outline of financing sources for the investment programme in environmental
protection sector

5.2.1. Public financing sources

In such a fields like the municipal water, wastewater and solid waste infrastructure or
municipal heating systems the dominating role in financing of the investments will be played
by the public sources, both domestic and foreign ones (such as European Union pre-accesion
funds or for example funds coming from Polish debt for environment swap - managed by
EKOFUNDUSZ). The main domestic sources are self-government own budgets, loans,
earmarked donations from the state budget, and extra-budgetary funds for environmental
protection and water management (see Table 5.1.1).

The resources from the state budget constitute only a small percentage in financing of
environmental investments. Extra-budgetary funds (e.g. NFEP&WM) for environmental
protection play an important role in the environmental protection financing system. Part of
their incomes comes from the fees for using the environment and fines imposed for violation
of legal environmental protection standards (the share of returned loans granted before has
been systematically increasing). Share of the environmental funds in financing investments is
decreasing, mainly because of increase in the share of the investors’ own resources and
commercial loans (see Table 5.1.1). This is a positive trend, consistent with the “Polluter Pays

The role of environmental funds in financing pre-accession investment programme will focus
not so much on lowering financial costs of the investments, but rather on concentrating the
resources on supporting investments which constitute priorities from the point of view of the
investment programme. The National Fund for Environmental Protection and Water
Management and the Provincial Funds should place the goals related to European integration
on their priority lists, and they should implement the requirement of consistency with the
European Union standards.

A significant burden of financing investments in water/wastewater infrastructure will rest on
the shoulders of gminas (local communities). Within the limits set by law and credit ability16,
self-governmental financing of these investments should be based either on loans, or on
gmina guarantees for external debt coming from the banking sector or international financing
institutions (first of all in these institutions which do not require state treasury guarantees, e.g.
EBRD, NEFCO). In situations justified by gmina authorities, investments can be financed out
of current incomes of self-government authorities, or, where possible, out of earmarked
donations of the state budget.

5.2.2. Private sources of financing

Gminas and municipal enterprises have been trying to use private sources to a larger extent in
Poland. A system of incentives and preferential conditions for attracting private sector capital
is under development (for example an issuing of municipal bonds, giving concessions to
private firms for construction and operation of gmina infrastructure).
Full balancing of the programme aimed at implementation of the acquis will require
increasing the role of the private sector versus the expected further decrease of incomes of
environmental protection funds and exhausting capabilities of self-government authorities, in

     Currently, the maximum debt of a gmina cannot exceed 60% of its annual income (Law on Public Finances)

order to meet the increasing needs in the area of gmina infrastructure financing. As a result of
administrative reform of the state it is expected that over the next several years competition
(in getting access to public funds) among environmental protection infrastructure and other
sectors’ infrastructure (health protection, education, social assistance, culture) will increase.

Commercial banks are systematically increasing interest in financing gmina infrastructure.
Water/wastewater investments unfortunately have low financial rates of return and long
repayment periods, but they are also characterised with a relatively low risk. This risk should
be further decreased through rational and stable approach of self-government authorities
guaranteeing sound financial base of public infrastructure.
As for municipal bonds, primarily larger cities have decided to finance infrastructure
investments through emission of such bonds to date. Until the end of 1996, 70 % of total
municipal debt in the form of bonds was issued by 44 largest cities, although there are also
good examples of small cities that issue bonds in order to finance water-sewer infrastructure.
Approximately 95 % of bonds was purchased by banks, which confirms inclination of the
commercial banks to financing municipal debt, but at the same time it indicates that
attractiveness of municipal bonds for institutional and individual investors is still low17.

It is predicted that within the framework of the National Strategy for Environmental
Protection, in compliance with EU requirements on free competition, a priority will be given
to the investments co-financed by the private sector.

6.1. Introduction

All the investments supported by ISPA must be economically efficient. It is not equivalent to
financial profitability. Social cost and benefit analysis (CBA) must prove the net benefit for
the society resulting from implementation of the investment.

The projects which are to be supported from ISPA resources do not have to be financially
profitable without subsidies from public sources. However, after receiving the subsidies
(especially from ISPA funds), financial indicators (IRR and NPV) for the investor should
overcome the threshold of profitability, which is a necessary condition for implementation of
the investment. Financial liquidity of the investment during operation should also be
documented; alternatively, it should be proved that the investor will be capable to finance
deficits in financial flows, should they occur. Too high financial profitability of the project for
the investor will cause rejection or decrease of the ISPA subsidy, because it will mean that the
investment can be financed out of commercial sources.

In each case capability of the investment to generate incomes will be analysed. In
environmental infrastructure of gminas user fees (paid by households, economic entities)
constitute a source of income. The level of fees covering costs of operation, maintenance and
amortisation (depreciation) must be scrupulously calculated. Calculations of the full
annualised costs, which corresponds to total demand of the investment for annual income in
order to be self-sufficient, will also be required. It will be possible to gradually increase the
user fees related to public infrastructure, provided that it can be proved that too rapid increase
  World Bank and Municipal Development Agency, Workshop on financing gmina investments, July 1998, post-
conference materials

in fees will impose too high burden on households’ budgets. Incomes generated from fees
which the users will be able to pay, will decrease the share of ISPA funds in financing the
investment, because after capitalisation they will be subtracted from eligible costs constituting
the basis for calculating the share of public resources.

ISPA grants can reach up to 75 % of the share of public resources. Supplementary investment
from public sources will be available in the form of grants and soft loans from national and
regional funds for environmental protection. At least 25 % of investment outlays will have to
be provided from gmina (local community) resources, e.g. from gmina budget, profits or
depreciation funds of gmina companies and from International Financial Istitution resources,
for example EBOR or EBI.

The criteria for selecting priority areas of investments which will be eligible for receiving
support from ISPA resources are as follows:
1. projects which are consistent with the EU environmental policy objectives (Art. 130 R of
the Treaty)
        a) preserving, protecting and improving the quality of the environment,
        b) protecting human health,
        c) prudent and rational utilisation of natural resources.

2. projects which are consistent with the EU environmental principles (Art. 130 R of the
Treaty), and in particular with:
a)      precautionary principle,
b)      preventive action principle,
c)      elimination of pollution at its source,
d)      Polluter Pays Principle.
3. Activities which are listed as priorities in the National Programme for the Adoption of the
Acquis (NPAA);
4. projects which can demonstrate quantitative reductions in pollution for a maximum number
of people (thus generating an effect of scale);
5. projects which will support implementation of the 2nd National Environmental Policy in
those areas where it is fully compatible with NPAA and the provisions of the Council
regulation on ISPA funds;
6. pilot projects which have the potential to stimulate strong partnership between regional and
local authorities, aimed at fast development of regions through utilisation of regional
characteristics of human and environmental resources.
7. projects contributing to protection of ecosystems of extraordinary value from the point of
view of nature protection and biodiversity;
8. projects which have the best potential to contribute to gradual achievement of economic
and social cohesion of Poland with the EU (showing the highest economic and social

The projects co-financed from ISPA and implemented at regional level will be placed in
broader legal and institutional frameworks enabling implementation of sustainable
development, and shall be consistent with the environmental protection programmes in the
regions18. The Ministry of Environment activities should provide adequate information on an

   It results from the Article 90 items 3 and 4 of the Act on Protection and Management of the Environment:
3. The Minister relevant for environmental protection aspects, voivodship parliaments and poviat councils as
well as gmina councils will develop the programmes for sustainable development in the area of environmental
protection resulting from the national environmental policy.
4. The national, voivodship, and self-governmental lists of priority undertakings constitute a part of the

opportunity to use ISPA fund to the relevant entities. It should also stimulate potential final

ISPA fund is designed for investments which implemented will increase the adjustment of the
Polish standards to the European Union standards. In environmental protection sector
financial resources are devoted to: water and waste water management, waste management
and investments realized for the purpose of air quality protection.

6.2. Priority projects in the sector of water and waste water management

In case of wastewater management of particular interest will be the projects proposed by cities
with the population equivalent of over 100,000, followed by the cities with population
equivalent 50,000 to 100,000 or smaller, and also gmina's associations (this should allow to
create larger, more comprehensive projects with higher budget – easier for handling and
supervising; also supporting cooperation of self-governmental units). The priorities are:
 investments leading to regulating water provision and wastewater management (in
    accordance with the requirements of the Directive 91/271 EEC);
 investments leading to the achivement of compliance of water quality with the
    requirements of the EU;
 investments for protection of surface water and groundwaters serving as sources of
    drinking water; in this respect, projects aiming at rehabilitation of contaminated land
    which pollutes undergroundwater should be considered;
 investments for protection of waters especially sensitive to eutrophication, investments
    limiting discharge of wastewater directly to lakes and for protection of transboundary

In order to improve the quality of drinking water, projects which aim at protection of water
reservoirs19 will be taken into consideration. The priority investments are those which serve as
direct protection of water reservoirs, but a higher priority will be given to investments which
supply a greater number of consumers.

6.3. Priority projects in the sector of air quality protection

Activities aimed at reduction of air pollution in Poland should focus primarily on increasing
efficiency of energy use and on its saving, as well as on investments aimed at: modernisation
of municipal boiler houses, switching from coal fuel into gas fuel in local and individual
boilers, connecting municipal units to local, industrial heat sources, construction of small
heating centers, or implementation of electric heating. In cases where such solutions cannot be
used, alternative solution could be provision of smoke-free fuels or replacing old burners with
the new ones, of high energy efficiency. Important activities aimed at limiting air pollution at
urbanised areas will be those focusing on decreasing transport-related emissions.

The priority for air pollution control investment financed partly from ISPA funding should be
elimination of coal burners in the largest cities in Poland, with top priority given to Katowice

programmes mentioned in item 3.”
   For example such reservoires as: Goczałkowice reservoir – source of drinking water for Katowice
agglomeration, Dobczyce reservoir in Górna Raba catchment - source of drinking water for Krakow, Czorsztyn
reservoir in Dunajec catchment – source of drinking water for Podhale region, Żywiec reservoire - source of
drinking water for Beskidy and Podbeskidzie regions, Sulejowski reservoire - source of drinking water for Łódź,
Miedwie reservoir - source of drinking water for Szczecin.

agglomeration but also to the cities in lower Silesia and Małopolska voivodships. According
to the Main Inspectorate for Environmental Protection pollution levels resulting from
combustion proceces in these areas locally reach or exceed permissible levels. Funds could be
designed also for investments in other places, especially for projects aimed at solving
problems of central parts of big cities with old, dense built-up areas, where the main heating
source are individual coal fired boilers or with outdated heating systems (for example in
cities: Katowice, Kraków, Łódź, Poznań, Toruń, Wrocław).
Priority for ISPA funding should be modernisation or conversion to natural gas of
approximately 1,000 local heat power plants which are 30 or more years old. Investements
aiming at using the alternative energy sources such as geothermal energy will also be
Among priority investments the following could be mentioned:
 implementation of the investments envisaged in air quality improvement plans in the areas
     where permissible levels of pollutants concentration are exceeded;
 launch of investments aimed at improvement of air quality in agglomerations.

6.4. Priority projects in the sector of waste management

Priority agglomerations and regions for investment supported from the ISPA fund are first of
all those over 100,000 inhabitants (information about cities with population of over 100,000
inhabitants is shown in Appendix II). It is assumed that waste processing plant operation is
profitable starting from the level of 100,000 users. In accordance with the implementation
plan related to Directive 75/442/WE of 15 July 1975 on waste (framework directive),
essential is to work out the waste management plans including dangerous wastes on the
diffrent levels of administration. Plans for municipalities should be worked out at least until
2004. In the future support will be given to the projects that implement existing waste
management plans. As priority investments will be considered those which ensure
comprehensive aproach to the waste management. Their implementation will lead to the
disposal of the lowest possible waste amount and will provide waste sorting, reuse and
recycyling. Some of the project examples would include construction of waste processing
facilities consisting of elements such as: landfill, incineration plant, composting plant or
sorting plant. Project could also be connected with hazardous waste management in
accordance with plans and programs of their removal20. ISPA funds will be used especially
 implementation of waste management investments in major agglomerations, in
     accordance with the existing programmes. Programmes in smaller settlements will be
     implemented depending on funds availability;
 implementation of investments in areas where existing landfills have negative influence
     on ground water;
 implementation of investments in areas where capacity of existing landfills is being

The distance between the city and the landfill will also be considered (in accordance with the
reduction of the distance required for the transport of the waste). The investments aiming at
neutralisation of hazardous waste should also be the priority ones.

  In accordance with the implementation plan related to the Directive 99/31/WE of 26 April 1999 concerning
the landfill of waste "The Program for removal of azbestos and the products used in Poland that contain
asbestos" is under preparation.


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