Threats to the Financing of Eco- Investments in Polish Cities and Towns
4. Analysis of the Problems of Financing Pro- Ecological Investments in Cities: Case Studies
This section will discuss a selection of examples of cities which have won awards for eco- investments and which are currently experiencing severe problems in maintaining balanced budgets.
In Krakow, a local government unit, under the name Climate- Energy- Water Management (KEGW), was set up with the aim of being one of the first in Poland to adapt the city to climate change (11). KEGW has been operating since January 1, 2020, and is engaged primarily in the construction and maintenance of the city’s drainage system, flood protection, as well as investments in renewable energy sources. The most important of investments of KEGW are: the improvement of the rainwater management system through an inventory of the network of ditches and canals carrying rainwater, their modernization and construction, the design and creation of retention reservoirs of various sizes, rain gardens and other elements of green- blue infrastructure aimed at more efficient rainwater management in the city of Krakow. Another action is to reduce atmospheric greenhouse gas emissions through a program to improve the energy efficiency of public buildings. To achieve this, an energy and utility management system for municipal buildings has been developed, and investments are being prepared for the thermo- modernization of buildings and their adaptation to modern technical and environmental requirements. Further plans include electricity generation from renewable sources (including the construction of high- power photovoltaic farms on brownfield and degraded land) and intensifying the development of distributed electricity generation based on individual rooftop photovoltaic installations or energy production systems within energy clusters and cooperatives. All these developments require substantial financial support and, in the face of the energy crisis, rising inflation, or the continuing uncertainty related to the armed conflict in Ukraine. Such support may be scaled back or even temporarily suspended and postponed. In addition, an important threat is
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the rising cost of debt servicing and the search for new sources of funding. City budget deficits confirm this— for Krakow, the 2023 deficit has been planned at more than PLN 1.082 billion (12). As a result, the eco- investments that are carried out are mostly those initiated in previous years, and among them mainly those for new road investments and repairs to the most dilapidated infrastructure.
In addition to this, the city has had to significantly increase its funding for educational facilities as the current government has shifted this responsibility to local authorities.
In Szczecin, pro- ecological investments focus on the expansion and modernization of the water supply and sewage infrastructure (through the use of the latest water production and sewage treatment technology) at an estimated cost of a quarter of a billion zlotys (13). Thanks to this, city residents will not only receive a continuous supply of clean and safe water, but the problem of the efficient collection and treatment of wastewater will also disappear. The main water pipeline and the water production plant will be modernized, and asbestos cement will also be removed from the water network. In addition, renovation work will be carried out at the wastewater treatment plant so that it will meet the highest possible environmental standards. Further green investments in renewable energy sources are planned, namely the construction of new photovoltaic farms to provide cheaper energy for water supply facilities. Given the fact that city’s own sources already provide more than 25 % of the energy required by Szczecin’s waterworks, these are tangible and quantifiable savings.
The structure of financing eco- investments in these urban areas in Szczecin is based on the use of own funds as well as available subsidies and preferential loans. This is intended to keep the cost of debt servicing relatively low, yet has unfortunately proved extremely difficult from 2022 onward due to galloping inflation (16). However, Szczecin’s administrators are consistently focusing on pro- environmental measures, guided by the idea of Floating Garden 2050, which means promoting a responsible approach to the management of natural resources, the city’s return to the waterfront, care for the environment and investments that enhance the quality of life. An example of a specific action of this kind was the construction and commissioning of the Eco Generator waste incineration plant. The difficult year of 2022 (already mentioned) also caused financial problems in Szczecin, with the consequence that a significant budget deficit (PLN 165 million) has been planned for 2023 and many previously planned investments were downsized or postponed.
In the city of Wrocław, which experienced a major flood in 1997 (which the recent hit Netflix “High Water” is based on), four retention reservoirs with a total capacity of more than 60,000 m3 (the capacity of 19 Olympic- sized swimming
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pools) were built as part of environmentally friendly investments (18). Each reservoir has a capacity of over 15,000 cubic meters and is 15 meters high. In addition, pumping stations, an air deodorization station, a transformer station, a network of pipelines and technical chambers have also been built. All this is designed to minimize the effects of climate change and unforeseen weather phenomena. The difficult budget period in 2023 (planned deficit of PLN 667 million) resulted in the reduction of planned investment projects to only key infrastructural ones (construction of roads, bridges, a tram line). At the same time, the typically eco- investments were reduced to those related to the replacement of heating equipment with environmentally friendly solutions (resulting in the reduction of air emissions of substances such as PM2.5, PM10, carbon dioxide, and benzo- a- pyrene). The main threat to the financing of investments by the city, including pro- ecological investments, is the freeze of Personal Income Tax (PIT), inflation and the high cost of services (primarily fuel costs). The structure of the city’s revenues is as follows: own income accounts for 72 %, grants and funds from the state budget— 6 %, general subsidy (including education)— 19 %, and subsidies for the implementation of tasks with the participation of EU funds—
3 %. Thus, efforts to increase the share of own income must come first.
One Polish city that stands out for its efficient waste management is Gdynia. It is here that soft funding, that is, increasing the level of education of residents on waste management, should be particularly emphasized (14). In addition to this, a second distinctive feature of the city is the establishment of the first electric vehicle charging station in Poland, using electricity recovered from trolleybuses (in the process of decelerating these vehicles). It was implemented as part of two EU projects (EfficienCE and CAR). A mobile charging station of this type offers significant advantages over traditional solutions, as the connection of such a station does not require additional installation costs and cuts investment time.
In addition, it offers the possibility to increase the time of use of the available overhead power line infrastructure to a full twenty- four- hour period at no additional cost. The station could potentially be upgraded in the future with an intelligent energy monitoring system to control the level of energy consumption in the overhead line and detect which one is not being used. Thanks to the energy storage reservoir in the charger’s battery (lithium- ion battery), the requirements for connecting it to the public electricity grid are minimal and do not require the involvement of significant financial and technical resources. Gdynia’s planned budget deficit for 2023 is PLN 194 million, so the number of investment projects will mostly include road infrastructure, communication and education (17). Projects in the field of eco- investments— energy modernization of public buildings in Gdynia— will be negligible, which again confirms that there is a
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financing barrier to these types of projects if no sufficient revenues flow to the municipal budget. These units have suffered the greatest losses from the changes in personal taxes, and Gdynia alone will receive more than PLN 57 million less from this source.
5. Conclusion
The examples of cities and towns analyzed in this paper illustrate different types of pro- ecological (eco, green) investments initiated and implemented by these entities. Their scale, scope or duration vary and are determined by the specific characteristics and needs of individual cities and towns. However, all these cases reveal a clearly noticeable obstacle impeding the progress of such projects— namely, the lack of assured funding sources. City authorities have given priority to investments in infrastructure associated with the construction of roads, the development of urban transport systems or the construction of public buildings and facilities. pro- ecological investments, although present in urban plans, did not constitute major items in their budgets. Still, the efforts toward the continuation of these projects, aimed above all at reducing the most polluting heating sources, must be appreciated. There is a need for long- term governmental support for cities and towns in their environmental aspirations, as these are directly linked to the residents’ health. Hence, ensuring stable funding for these types of projects cannot be left solely to the discretion of municipal authorities, as it has been shown to be case studies in the research to date, but it should be included in strategic programs of a nationwide reach and, above all, in the state government environmental policies, which— with regard to the natural environment— must be guided by the principle: Primum non nocere, secundum cavere, tertium sanare [First do no harm, then prevent and finally heal].
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