Warsaw, 24 December 2023

Commentary – European Commission’s Enlargement Package for Ukraine and Moldova

On November 8, 2023, Thursday, the European Commission, under the leadership of President Ursula von der Leyen, embarked on significant strides towards the enlargement of the European Union, elucidating the present stance of candidate countries[1]. Notably, Ukraine and Moldova play pivotal roles in the ongoing operations of the European Enterprise Alliance within these nations. The endorsement of the 2023 Enlargement Package marked a crucial juncture in the EU’s dedication to the accession processes of diverse countries. President von der Leyen underscored the imperative nature of completing the Union, citing historical significance and substantial economic and geopolitical benefits for both accession countries and the EU at large. The merit-based accession process remains paramount, with the progress of each country serving as a determining factor.

In a groundbreaking move, the Commission advocated for the initiation of accession negotiations with Ukraine and Moldova, acknowledging their considerable advancements in fulfilling the outlined steps for EU membership. Despite the ongoing challenges, Ukraine has showcased a steadfast commitment to reform, implementing transparent pre-selection systems, judicial reforms, anti-corruption measures, and aligning with the EU acquis. Similarly, Moldova has made notable strides in justice reform, anti-corruption endeavours, and various other crucial areas. The Commission’s approval for negotiations aligns with the positive trajectory of their reforms. Detailed progress reports spotlight the transformative efforts made by these countries across various spheres, showcasing their dedication to European values and standards. President von der Leyen reiterated the EU’s support for these accession processes, emphasizing the shared benefits of previous enlargements. The Commission stands prepared to report on the progress of key measures adopted by Ukraine and Moldova by March 2024. This strategic move follows the applications for EU membership submitted by Ukraine, Moldova, and Georgia in February 2022. The conferment of candidate status to Ukraine and Moldova in June of the same year laid the foundation for the current recommendations.

“Ukraine has completed – I was there over the weekend and was convinced of it – well over 90% of the necessary steps that we set out last year in our report.’’ – Ursula Von der Leyen, President of the European Commission[2].

The prospective membership of Ukraine and Moldova in the European Union presents substantial advantages and benefits for both the candidate countries and the EU as a whole.

To start with, accession would act as a catalyst for economic development and growth in both nations. By aligning with the EU’s common market, Ukrainian and Moldovan businesses would gain enhanced access to a vast and prosperous consumer base. Adhering to EU standards would not only improve the quality of goods and services but also foster innovation and competitiveness within these economies. Following, EU membership provides significant political stability and security. For Ukraine, a country dealing with the aftermath of Russia`s war on Ukraine, integration into the EU represents a crucial step towards consolidating democratic institutions and the rule of law. Moldova, too, would benefit from the shared security framework of the EU, contributing to regional stability. Access to EU funds and support mechanisms would empower both countries to address ongoing challenges, including corruption, and strengthen their governance structures. Moreover, cultural, and societal ties between the EU, Ukraine, and Moldova would be reinforced, fostering a sense of unity and cooperation. Additionally, Both Ukraine and Moldova have shown a shared commitment to tackling global challenges, particularly in reaching climate targets, in tandem with their pursuit of EU membership and they have stated that they are committed to helping with the energy transition, in line with the climate goal of the European Union. Through the integration of renewable energy initiatives, environmentally sensitive legislation, and sustainable behaviours, Ukraine and Moldova hope to play key roles in furthering global efforts towards a greener future. The exchange of ideas, people, and cultural influences would enrich the social fabric of the EU, promoting diversity and understanding. In essence, the accession of Ukraine and Moldova into the EU holds the promise of a more integrated, stable, and prosperous European continent, reflecting the core values of democracy, cooperation, and shared prosperity.

As the EU continues its expansion, these developments underscore the union’s commitment to fostering stability, democracy, and prosperity in its neighbouring regions. The upcoming months will undoubtedly witness further discussions and progress updates, shaping the future landscape of a more integrated and united Europe.

***

[1]  “Commission Adopts 2023 Enlargement Package, Recommends to Open Negotiations with Ukraine and Moldova, to Grant Candidate Status to Georgia and to Open Accession Negotiations with BiH, Once the Necessary Degree of Compliance Is Achieved.” European Commission , 8 Nov. 2023, ec.europa.eu/commission/presscorner/detail/en/ip_23_5633.

[2]  “Press Corner.” European Commission, 8 Nov. 2023, ec.europa.eu/commission/presscorner/detail/en/statement_23_5641.

 

See more: 24.12.2023 Commentary: European Commission’s Enlargement Package for Ukraine and Moldova

Warsaw, 16^th November 2023

 

Commentary of the Union of Entrepreneurs and Employers on the amendment to the
EU pharmaceutical law

 

• On 26^th April 2023, the European Commission presented draft regulations with the intention to reform EU pharmaceutical law.
• At the EU level, this is the most significant amendment to pharmaceutical law in 20 years.
• The European Commission sets major goals for the regulations in question, among others:
  • creating a common market and ensuring universal and equal access to cheap and effective medicinal products for patients living in all European Union countries;
  • offering an attractive and innovation-friendly system for research, development, and production of medicines in Europe;
  • reducing administrative burdens and substantially speeding up procedures for granting marketing authorisations for medicinal products so that they can reach patients as quickly as possible;
  • increasing the availability and ensuring a constant supply of medicinal products to patients, regardless of their place of residence within the EU;
  • addressing antimicrobial resistance as part of the EU’s “One Health” approach;
  • reducing the impact of the production and consumption of medicinal products on the natural environment.
• On 19^th October 2023, during the meeting of the European Union Affairs Committee, Maciej Miłkowski, Undersecretary of State at the Ministry of Health, presented the Polish government’s position on the proposed changes, in which:
  • the direction of amendments adopted by the European Commission is approved and the challenges related to the lack of availability of medicines and antibiotic resistance are recognised;
  • it is indicated that individual solutions of the proposed package require clarification – so that the goals assumed by the European Commission can be achieved;
  • there is a clash in the interests of producers of innovative and generic drugs;
  • it is emphasised that the purpose of the provisions under discussion is to increase the availability of medicines for patients, and not to support a given group of entrepreneurs.
• On 17^th November 2023, the Ministry of Health planned a meeting of the Group for the revision of EU drug regulations, which – together with industry representatives and social stakeholders – is to discuss the proposed solutions.

Limited availability of medicinal products has become noticeable not only on the Polish, but on the entire European market. All EU member states face the challenge of a shortage of raw materials, increased production costs, logistic problems, and competition from Asian markets.

Therefore, it is vital that action be undertaken to adapt the current pharmaceutical regulations – which have not undergone significant changes over the last 20 years – to the reality of today, present needs and challenges. It is necessary to increase the attractiveness of the European market for producers and distributors in order to encourage them to transfer production to the European Union.

Nevertheless, in spite of noble slogans justifying the implementation of the planned solutions, they appear insufficient. They focus on several areas (primarily on changes in the registration process and to the period of market exclusivity for newly registered products), shifting onto producers the obligation to ensure availability. The incentives offered are virtual (e.g. formal shortening of the product registration process down to 180 days; extending in theory the market exclusivity period) and do not contain any substantial support package or investment incentives for entrepreneurs operating in a market of key importance to the economy.

Concurrently, the planned regulations ignore issues that the industry has been struggling with for years and which would require harmonisation at the European level (e.g. the problem of prompt access to therapy, implementation of a modern distribution chain, medicine deliveries straight to patients’ homes, price pressure from the public payer).

In view of the above, it is necessary to conduct a detailed analysis of the planned regulations in terms of addressing the needs of not only the regulator but, above all else, of patients and the industry, as well as to discuss these needs first with the local regulator and then its European counterpart in order to address them in the proposed regulations.

On 26^th April 2023, the European Commission presented draft regulations with the intention to reform EU pharmaceutical law.

Following the adoption of the package of changes to the European pharmaceutical law on 26^th April 2023 by the European Commission and the simultaneous commencement of the legislative process in the Council and the European Parliament, we present a position on the project, especially in light of the fact that arguments have arisen in the public opinion that the amendments in question will hinder Europe’s innovation potential compared to other regions around the globe. We kindly inform that we disagree with the claim that the reform of EU pharmaceutical law will weaken the competitiveness of the pharmaceutical industry of the European Union. This is particularly important considering that the deadline for submitting changes to the ENVI Committee of the European Parliament expired in mid-November 2023.

The decline in the global competitiveness of the European pharmaceutical sector in terms of R&D is not related to the erosion of intellectual property, because the EU has consistently increased regulatory incentives and monopolies in intellectual property since the 1990s. Each new intellectual property protection or regulatory protection (TRIPS patents, SPCs, the world’s longest regulatory and market exclusivities, orphan product exclusivity, paediatric exclusivity, and SPC extensions) have been introduced with the specific aim of making Europe a global leader in the field of R&D and innovation.

However, this strengthening of monopoly protections directly corresponds to the relative decline in R&D in Europe compared to China and the US. This proves that the claim that “more monopoly leads to more research and development” is false. To make matters worse, these monopolistic measures have directly contributed to the relocation of medicine production outside Europe, although we applaud the EU’s efforts to remedy this situation through reforms.

On the other hand, policy measures that stimulated competition in the sector of generic medicines have fully lived up to their expectations. Legislation on generic medicines has triggered much-needed competition, doubled access to medicines in Europe, and reduced pressure on healthcare budgets. The regulations for equivalent biological medicines have made Europe a global leader in this technology and contributed to significant investments in the production of biological medicines in the EU.

It is therefore imperative that the “Pharmaceutical Strategy for Europe” continues to aid the generic and biosimilar medicines sector to ensure Europe’s safety in terms of medicines.

In the impact assessment of pharmaceutical legislation, it is highlighted (p. 43) that:

“A direct link between EU incentives and EU competitiveness is hard to establish because while the incentives make the EU markets more attractive, they are agnostic to the medicines’ geographical origin. Around 20% of new medicines authorised in the EU are from the EU, the others are mainly from US, UK, Switzerland and Japan that are equally eligible to all EU incentives. Equally EU based innovative companies can benefit from incentives elsewhere, if they sell their products there.

In June 2016, the Council requested the Commission to conduct an evidence-based analysis of the impact of incentive mechanisms, notably SPCs. Two studies have been commissioned. One from Max Planck Institute questions whether the availability of patent or SPC protection affects companies’ decisions to locate research facilities in one jurisdiction or another, emphasising that other factors are likely of greater importance. The Copenhagen Economics study argued that SPCs could play a role in attracting innovation to Europe, pointing out that taxation, education, and other factors are probably more significant in that respect.”

Regulatory exclusivity and exclusivity voucher periods

The pharmaceutical package changes the rules for granting companies the so-called regulatory exclusivity, i.e. temporary protection of entities that introduced a given drug first against market competition. The result of these changes is to extend the maximum protection – which is already longer than, for example, in the United States – from the current 11 years to 13 years.

Regardless, there is no evidence of any correlation between the extension of exclusivity protection and the level of innovation. Data on the directions of import of innovative medicines to the European Union (USA, Switzerland, Great Britain, Japan) prove the opposite.

Moreover, the proposed new rules for granting protection are so unclear that they introduce uncertainty as to when it might be possible to sell a competitive drug in a specific case. One must not forget that the preparation of a generic product requires R&D efforts and clinical trials (bioequivalence studies) and the preparation of registration documentation. The manufacturer of generic products must know several years in advance when they will be able to apply for a marketing authorisation in order to thoughtfully plan the works.

If it suddenly comes to light in the course of these works that data exclusivity has been extended, it may turn out that some of the research carried out or documents prepared (which met the requirements provided for by law on the date on which the six-year data exclusivity period expired) will no longer meet requirement on the date on which the extended data exclusivity period expired. Moreover, during the period of data exclusivity in the EU, generic producers may register medicinal products abroad and sell them there. However, in many countries, the condition for obtaining marketing authorisation is to have a marketing authorisation in the manufacturer’s country. Thus, extending data exclusivity will reduce the competitiveness of producers from the European Union compared to producers from India, China or the USA. In those countries, data exclusivity periods are not as long as they are in the European Union. Therefore, any further additional protection periods should only be granted in the scope of market exclusivity and not data exclusivity.

On top of that, the pharmaceutical package provides for the institution of a Transferrable Exclusivity Voucher (TEV). A company introducing a new antibacterial drug to the market will receive a 12-month-long exclusivity right, which it can use for another drug or sell it to a third party. The proposed structure, although intended to encourage R&D with new antibiotics in mind, may in fact give rise to abuse and anti-competitive behaviour. It is worth considering other methods of supporting the development of antibiotics that have been proposed, for example, in Sweden or the United Kingdom, i.e. an annual revenue guarantee program seems to be an effective tool that can encourage antibiotic developers to invest in research and development by means of ensuring guaranteed revenues. The Swedish and British models show that implementing an income guarantee is a practical and feasible solution that has been tested and has produced positive results.

Even the European Federation of Pharmaceutical Industries and Associations (EFPIA) does not identify intellectual property (IP) issues as necessary for relocation of production.

Each year of competition delay means measurable losses for patients and national payers, and one year means a loss of at least hundreds of millions of euros.

In light of the arguments above, we appeal for:

• establishing a maximum uniform period of data exclusivity of 6 years and a basic period of market exclusivity of 2 years, though market exclusivity might be extended by additional periods constituting incentives currently provided for in the draft directive, however, the total duration of registration protection should not be longer than currently applicable periods, i.e. maximum 11 years;
• a clear indication in the regulations, in the event that the extension of data exclusivity or market exclusivity would be dependent on ensuring the availability of the medicinal product on the market for patients, that such availability means not only launching the medicinal product onto the market and ensuring supplies covering patient demand, but also obtaining reimbursement for this medicinal product or supplying the medicinal product to the EU market, or else the withdrawal of the application for reimbursement in any of the Member States should result in the withdrawal of the granted exclusivity;
• abandoning the TEV and replacing it with the Annual Revenue Guarantee Scheme – developed by the EU-Joint Action on Antimicrobial Resistance and Healthcare-Associated Infections (EU-JAMRAI), thus rewarding innovation while promoting responsible consumption of antibiotics.

Changes in the field of environmental protection

While supporting all actions aimed at improving the state of the natural environment, one should emphasise that the European pharmaceutical industry is already obliged to meet the highest environmental standards. Due to changes in the pharmaceutical package, advanced legislative work is currently underway in the European Parliament and the Council in the field of, for example, municipal sewage, which will significantly affect the European pharmaceutical industry producing equivalent drugs (generic and bioequivalent), which will translate into an increase in the costs of producing these drugs.

With this in mind, one should take into account the balance between objectives and assumptions so that they do not become a competitive barrier and do not lead to the elimination of this branch of the pharmaceutical industry from Europe. This is particularly important due to the shortage of essential medicines in Europe and Asian competition which, on the one hand, is financially subsidised by their governments, and on the other hand is not subject to such stringent regulations.

Impact on competitiveness and SMEs

On small and medium-sized enterprises, the impact assessment states:

• In terms of effect on competitiveness, the proposed incentives do not make a geographic distinction, they equally offer regulatory protection for products developed in the EU, or anywhere in the world which ensures a level playing field between EU-based and third country-based companies. While the EU regulatory framework is attractive for developers, competitiveness also depends on many other factors e.g. tax system and incentives; available grants, loans and other funding (e.g. the European Innovation Council Accelerator); pool of talents; proximity of top academia; clinical trials infrastructures; market size; security of supply chains; favourable reimbursement decisions (p. 60);
• Similarly, incentives for UMN would benefit SMEs, which are generally willing to make early-stage investments in areas of high risk, by giving more value to their assets even if they are acquired by big pharma in late-stage development. SMEs already enjoy fee exemptions and reductions for regulatory procedures and through the new horizontal measures SMEs will benefit from optimised scientific support with a greater likelihood of success for authorisation. Overall, with the increasing investment in biopharmaceutical R&D and the increasing share of SMEs among developers, biopharma SMEs in the EU and elsewhere would have excellent prospects for the future (p. 61).

On the one hand, the European Commission is talking about shortening drug exclusivity periods, but on the other, the proposed regulations do in fact open up a whole range of possibilities for extending them. The maximum period of market exclusivity for a drug – of course, apart from the 20-year-long patent protection – according to the new proposed directive and regulation is to be 13 years, while it presently is 11 years.

In addition, the European Commission also proposed the so-called IP package – concurrently processed in the Council and the European Parliament, in which monopoly companies gain the opportunity to introduce one European procedure, SPC, in all EU countries. Today they have to apply member state by member state. And even though the pharmaceutical package introduces regulations shortening registration procedures, enforced in the early 1990s, the SPC intended to compensate for the length of the registration process is not shortened.

To boot, there are numerous projects dedicated to the development of research on new drugs, such as support from EU funds – IPCEI mechanisms or the largest public-private initiatives in the world – Innovative Medicines Initiative, and now the Innovative Health Initiative, in which half of the funds come from all EU citizens and half from monopoly companies represented by COCIR, EFPIA and Vaccines Europe (a specialised vaccines group within EFPIA), EuropaBio, MedTech Europe – and the total budget of IHI for 2021–2027 amounts to EUR 2.4 billion.

All this – critical voices from monopoly companies aside – indicates the EU’s openness and support in this area. It is worth supporting the industry manufacturing drugs that compete on the market with price, because they are the ones that are is short supply in pharmacies. And in this area, EU funds are no longer so generous.

The monopoly period should certainly not be extended, because European patients will have to wait longer for price competition to appear on the drug market, and national payers, including Polish NFZ (National Health Fund), will be forced to bear higher reimbursement costs. Every day that the competition is delayed means a multi-million loss for healthcare budgets.

 

Find out more: 16.11.2023 Commentary of the Union of Entrepreneurs and Employers on the amendment to the EU pharmaceutical law

Warsaw, 4^th September 2023

 

Commentary of the Union of Entrepreneurs and Employers:
Transport infrastructure to be expanded

 

• According to forecasts, the grain harvest in Poland will amount to approximately 34 million tonnes, which will translate into the need to export approx. ten million tonnes of surplus and use almost five million tonnes that remained in the country after last year’s season.
• According to USDA data, the production of wheat alone in Ukraine will amount to approx. twenty-one million tonnes – 3.5 million tonnes more than expected in the previous forecast.
• Due to Russia’s termination of the grain agreement, which guaranteed safe transport of goods from Ukrainian ports on the Black Sea as well as above usual grain stocks in Polish warehouses and harvests exceeding forecast values, an intensification of the transit of Ukrainian products using Polish infrastructure should be expected.
• The increase in the volume of Ukrainian grain crossing the EU border into Poland since the beginning of the war is not a temporary situation, but a change that will reshape the national agricultural system for years to come. Therefore, it is necessary to conclude long-term agreements between Polish and Ukrainian companies that would secure the stability of investments in transit infrastructure.
• Polish authorities face the necessity to draw up a long-term plan to increase the capacity of borders, railway lines, roads, and harbour infrastructure, which is essential to conduct an effective transit policy and start implementing the inevitable investments, which – due to their nature – should be co-financed from EU funds.
• Increasing the volume of transit of Ukrainian products across Poland, while implementing infrastructure investments, is a real development opportunity for domestic enterprises and actual help for Ukraine, which is at risk of war.

Forecasts regarding the grain harvest in Poland indicate quite clearly that over thirty-four million tonnes of grain will reach the domestic market this year. This means the need to export a surplus of ten million tonnes and ca. 4-5 million tonnes (twice as much as on average in recent years) which remained in the country after last year’s season. For years, Polish grain exports have been coping harmoniously with the proper management of foods, delivering them to recipients on foreign markets – member states and non-EU markets alike.

The situation changed with the Russian invasion of Ukraine. Without deciding on the mistakes made in recent months with regard to the policy shaping the import of Ukrainian goods to Poland, we should bear in mind the changes that the current geopolitical situation may bring in the future. Russia has terminated the grain agreement that was in force since August 2022, which basically prevents the export of Ukrainian grain from ports on the coast of the Black Sea. Safety guarantees for ships – regardless of flag – that transport Ukrainian products through a safe corridor have also been abolished. Insurers refuse to send ships to areas of conflict. Missile attacks destroyed grain and oil terminals in Ukrainian ports. This created pressure to intensify the search for new export directions for Ukrainian products. In this context, it was also necessary to establish new transit corridors for goods from Ukraine. Poland turned out to be one of the most important destinations.

We must not forget that, despite the ongoing hostilities, harvests were also taking place beyond our eastern border. As a result of the closure of the Black Sea routes, we should take into account the intensification of shipments of Ukrainian goods also via Polish routes. Due to the possibility of transit of these products across Poland, it is expected that a significant part of them will reach final recipients using Polish border, road, railway, transshipment and finally port infrastructure. Meanwhile, their capacity remains far from sufficient.

Furthermore, it is naïve to think that the issue of Ukrainian grain (but also other product categories) is temporary. Even if the corridors on the Black Sea are unblocked, Poland may prove to be a promising destination in the long term for countless Ukrainian enterprises. The wrong narrative here is to demonise Ukrainian goods, which are vital for Poland both in the context of transit and – in many cases – import. An issue that requires consideration and detailed consultation with business environments is to determine target quotas for the import of Ukrainian products to the Polish market. Regardless of this, the volume of goods transiting across Poland will be much higher than before the war.

For Poland, this is a chance to become a major transit country, but also a trader of Ukrainian grain. Already nowadays, for example, the Port of Gdańsk has significant storage and transshipment capabilities. Last year, at the Port of Gdańsk, grain transshipment amounted to approx. two million tonnes, which was the port’s previous record. It was also 19% more than last year. The first six months of 2023 will see another significant increase in agricultural transshipment. As a country, we can annually purchase and transit more or less 6-8 million tonnes of Ukrainian grain. This will allow us to use the transport and port infrastructure and other resources in Poland, which translates into nearly 20-30 thousand additional jobs for Poles and control over transit.

Trading should be carried out by entities representing domestic capital under strict control of the authorities or by the authorities themselves, which is necessary to maintain a strict separation of transit and imports. We have everything to establish our position on the market, but it still remains latent potential. Meanwhile, in the years to come, our transport infrastructure will be burdened to an extent significantly exceeding that until February 2022. This requires efficient actions on part of the Polish authorities, which must immediately make decisions aimed at increasing the capacity of border crossings with Ukraine, expanding railway and storage infrastructure at the borders or in ports, including by starting actual works on the construction of an agricultural port in Gdańsk and – as planned – in Świnoujście. All these investments should be undertaken considering the potential benefits for the European Union, thus completed with EU funds. However, before that happens, companies operating under Polish law must sign long-term contracts with the Ukrainian side, which will secure the stability of their investments in the long term.

Currently, it is necessary to improve the T-1 transit documentation so that recipients can also accept part (not only the entirety) of the goods, to reduce the bureaucracy of the procedures for issuing decisions by regional Inspectorates of Agricultural and Food Quality Inspection, to increase the staff of both these Inspectorates and Sanitary and Epidemiological Inspectorates at railway crossings, to open additional border points of both institutions, for example at Werchrata/Rawa Ruska crossing, expansion of the Dorohusk/Jagodzin railway crossing by adding railway tracks, enabling temporary storage of goods in Polish customs warehouses for goods in transit, simplifying customs clearance procedures on the Ukrainian side and a number of other solutions proposed by entrepreneurs.

Meanwhile, we still lack strategic decisions that would prevent Poland from having to implement further expensive spontaneous aid programs. Ukrainian grain will cross the Polish border – either in transit or import. The sooner we accept this state of affairs, the sooner Polish enterprises dealing in universally understood transport and trade will benefit from these decisions. It is also a chance for the entire national economy, as well as real help for war-torn Ukraine.

The price situation on the grain market is still unclear. This is particularly important in the context of Russia’s dumping prices, which are even USD 30 per tonne lower than in the case of EU countries. Grain prices fell on the markets this week, which was the result of a forecast indicating higher harvests in Ukraine. According to USDA data, wheat production in Ukraine will amount to approximately 21 million tonnes which is 3.5 million tonnes more than expected in the previous forecast. Theoretically, Polish farmers can refrain from selling grain, again counting on higher prices. If this situation does not happen this year, it cannot be ruled out that it will happen in the following years. Poland’s current infrastructure capabilities may then be insufficient, and domestic producers will be left with their grain in warehouses. Domestic consumption has been fluctuating in the range of 24-26 million tonnes for years, and the surpluses must be utilised. This year’s harvest in Poland and Ukraine may contribute to the return of the demons of recent months.

In September, we must take into account that EU’s preventive measures regarding the import of grain from Ukraine will not be extended. This gives Poland a mandate to negotiate dedicated EU funds for storing Ukrainian grain and to develop other infrastructure (such as terminals) necessary to accept the increased volume of products.

 

See more: 04.09.2023 Commentary of the Union of Entrepreneurs and Employers: Transport infrastructure to be expanded

Warsaw, 30^th May 2023

 

Commentary of the Union of Entrepreneurs and Employers on the Cable Pooling Act

 

While the Cable Pooling Act is a key decision in terms of development with regard to the Polish renewable energy sector, in its current form it remains unattractive:

• energy from a hybrid installation in cable pooling will be cheaper than from a single RES source,
• the role to be played by energy storage in cable pooling is significant, provided that energy storage is not treated as a generation source,
• there is a risk of overregulation of connection sharing rules by generators, which will limit the potential for the emergence of new RES sources.

Presently, connecting new generation capacities to the National Power System is a considerable problem for the Polish energy sector as its reconstruction is both costly and time-consuming. A quick fix to this dilemma (at least to a certain extent) may be the shared use of a connection by renewable sources with different operating times and dynamics. By sharing such a connection, we get a more stable generation profile, which is desirable for the system. Unfortunately, the idea, without proper consultation, may easily turn into a useless regulation.

Proposals for amendments to the Energy Law presented by the Ministry of Climate regarding the so-called cable pooling constitute one of three key solutions for RES-related issues, critical for rapid development of RES in Poland, at an optimal investment cost.

Cable pooling is the possibility of using an already existing connection point, such as a wind farm, by another source, provided that the output power of such a hybrid power plant does not exceed the installed power allocated by the operator in the power connection agreement.

What does it mean in practice? If we have a wind farm with an installed capacity of 50 MW, this is the exact maximum value of energy that we can introduce energy into the system. Most days of the year, the wind farms operate at half of the installed capacity, in this case 25 MW, which means that there is still a possibility of introducing another 25 MW independently from the wind farm.

So, if we add 25 MW from a photovoltaic installation to those 25 MW from the windfarm, we will get a much more efficient source of green energy. Furthermore, the operating times of a wind farm and a solar installation usually do not coincide in time, usually the wind blows stronger at night, and the photovoltaic installation works more efficiently during the day.

If we supplement such a hybrid installation with a gas source with a capacity of about 10 MW and replace it in the future with a hydrogen installation, we will have a local, stable source of energy operating continuously with a fairly steady power for at least 7,500 hours a year.

Such an installation will generate approx. 250,000 MWh of energy per year, of which about 170,000 MWh will be green.

At no time will the energy introduced into the grid exceed 50 MW of power, so there will be no need to modernise the connection to add further sources. And this is a significant saving when planning a new investment, thanks to which the energy from such a hybrid system will be significantly cheaper than with a single energy source.

Proper provisions in the amendment to the Energy Law regarding cable pooling will enable a quick construction of at least 5-7 GW of solar and wind energy sources in Poland without the need for investors to wait for connection decisions, without overloading the power system. On a national scale, this could provide up to 12 TWh of cheap green energy. Some studies indicate that the potential of cable pooling in Poland is much larger, even at the level of 25 GW of new capacity.

Without focusing on individual provisions of the Act, which still require some fine-tuning, the initiative of the Ministry itself should be evaluated positively.

It is also a decision that significantly increases the energy security of the country, because one should expect quick investments in new sources that will supplement the existing ones, and at the local level will ensure an adequate supply of green energy for local industry.

Unfortunately, a fairly clearly identified threat during consultations regarding cable pooling regulations, led by the Ministry of Culture and National Heritage, is the overregulation of the new legal institution.

Technical and regulatory requirements for each single element of the system (aimed at increasing the control of the Energy Regulatory Office (URE) or Polish Power Grids (PSE) over each generation source), in confrontation with the joint and several liability of a group of entities organised under one cable pooling decision, will cause both problems in controlling the generation capacity of individual energy sources and a lack of freedom to shape relationships within the manufacturing group. Moreover, there is a risk of dilution of responsibility within the group, for example, for exceeding the contractual capacity.

At the present stage, the Ministry of Culture and National Heritage has not yet indicated what cable pooling really is and what it is intended to be. Such assumptions would allow for self-discipline in drafting regulations and would limit the risk of their excessive detail, which currently makes the new law extremely difficult to enforce. The complexity of regulations may therefore cause cable pooling to be an option selected only by large energy players or investment groups that are not energy companies, but may block the development of cable pooling and try to monopolise connections.

In order to ensure that the Cable Pooling Act is widely implemented:

• remove from the act any and all provisions that go beyond metering, power control, and control of line overshoots,
• leave the broadly understood principle of freedom to conclude contracts between RES producers who are parties to a cable pooling contract,
• the need to control and the obligation to report generation from each source is rational, but control of each of them should remain the responsibility of business entities, and not state authorities or institutions (in this case, the supervising entity would encroach on the principle of freedom to shape contractual relations),
• public authorities or institutions should only have at their disposal controllability of a power source as a whole solely at the connection point, and not of each generating device. Otherwise, it will disrupt business relations within the group and may become the source of civil lawsuits both against administrative authorities and between entities within said group,
• entities other than those licenced should not be allowed to be parties to cable pooling agreements, so that they do not block or monopolise connections, while not being subject to provisions of the Energy Law (due to the energy security of the state and undesirable actions of third parties),
• parties to the agreements (leaders of a potential joint venture) should only be entities that supply energy at a given connection point or are a licenced applicant for connection to the network,
• the basis of the operation of cable pooling is the stability and predictability of accumulated energy sources introduced at the connection point. Entities that ensure controllability of the energy introduced in accordance with the power demand should be rewarded, promoted, and exempted from fees – this will encourage people to add energy storage to the pooling cable system (so that power control is more flexible and resembles generation from commercial energy sources),
• energy storages operating within the cable pooling system should not be separated or treated as power generators, but together with another renewable source as one generation unit – assigned to a specific generating element.

 

See more: 30.05.2023 Commentary of the Union of Entrepreneurs and Employers on the Cable Pooling Act

Warsaw, June 14, 2023

 

ZPP’s comment: Poland – a good place for Ukrainian entrepreneurship

 

• According to data from Info Credit, Ukrainians established 17,457 business activities in Poland in 2022.
• Only from the beginning of 2023 up to May 29 (inclusive), 13,117 business activities run by Ukrainian citizens were registered in Poland.
• Since the beginning of Russia’s armed aggression against Ukraine, Ukrainians have established the largest number of business activities in Mazovia and Lower Silesia.
• As of early 2022, Ukrainians were most likely to locate their companies in Warsaw, Krakow and Wrocław.
• The number of companies established by Ukrainians in Poland has been significantly influenced by the Special Act on assistance to Ukrainian citizens.

Border Guard estimates show that 12 million Ukrainian refugees have crossed the border with Poland since the beginning of Russia’s armed aggression against Ukraine. In the period of February 24–28, 2022 alone, it was 355,000 people. Migration peaked in March 2022, when approx. 2 million Ukrainians entered Poland. Between April 2022 and the end of May 2023, Polish-Ukrainian border crossings were crossed by 584,000 people in February 2023 to as many as 781,000 people in August 2022. Obviously, not all of these people remained in Poland, but the vast majority nevertheless decided to settle in our country. A significant group are those who have taken up legal permanent gainful employment in Poland or decided to establish a business activity. According to estimates by the Ministry of the Interior and Administration, approx. 97 percent of Ukrainian refugees are women (most men are banned from crossing the state border).

Business activity of Ukrainians in Poland in 2022

The definite influx of Ukrainians into Poland has translated into a huge increase in the dynamics of Ukrainians starting businesses. Data from Info Credit shows that in 2022 Ukrainians established 17,457 business activities in Poland, of which 14,258 companies were active at the end of the calendar year. 1,191 business activities were deleted and 1,781 suspended.

Ukrainians were most active in the Mazowieckie Voivodeship, where they established 4,256 companies last year. The second place was taken by the Dolnośląskie Voivodeship, where 2,673 Ukrainian businesses were established. The following voivodeships were ranked next: Małopolskie – 2,285 companies, Pomorskie – 1828, Wielkopolskie – 1,361, Zachodniopomorskie – 1,029, Śląskie – 979, Łódzkie – 687, Lubuskie – 520, Kujawsko-Pomorskie – 417, Podkarpackie – 357, Opolskie – 296, Warmińsko-Mazurskie – 118, Świętokrzyskie – 114 and Podlaskie 91.

Ukrainians registered the largest number of companies in 2022 in Warsaw – 3,289. Many were also established in Krakow – 1,899, Wrocław – 1,873, Poznań – 840, Gdańsk – 835, Szczecin – 655 and Łódź – 484.

Relatively constant over the years has been the group of major PKD codes indicated by Ukrainians within their business activities. Hairdressing and other beauty treatment led the way in 2022, with 2,144 indicated as the main PKD code. The second most frequently indicated type of activity was computer programming activities (1,995 companies), and the third was other building completion and finishing (1,243 companies). Significantly popular in 2022 were also (in parentheses the number of indications as the main PKD code): construction related to erection of residential and non-residential buildings (764), electrical installation (540), freight transport by road (533), mechanical working of metal elements (420), retail sale via mail order houses or via the Internet (383), restaurants and other eating places (376) and other specialized construction activities not elsewhere classified (372).

Business activity of Ukrainian citizens in Poland in 2023

A definite upturn in the establishment of companies by Ukrainian citizens came in 2023. Data from Info Credit shows that 13,117 such businesses were registered between January 1 and May 29, 2023 alone. Active during the indicated period remained 11,694 of them – 421 were suspended and 170 were deleted. There were 51 enterprises operating exclusively in the form of a company, and 3 with the end of the indicated period were waiting to start operations.

The largest number of new business activities established by Ukrainian citizens between January 2023 and May 29, 2023 were registered in the Mazowieckie Voivodeship – 3,211, Dolnośląskie Voivodeship – 1,941 and Małopolskie Voivodeship – 1,793. The following voivodeships ranked next: Pomorskie – 1,285 companies, Wielkopolskie – 993 companies, Zachodniopomorskie and Śląskie – 772 companies, Lubuskie – 507, Łódzkie- 492, Kujawsko-Pomorskie – 333, Podkarpackie – 305, Lubelskie – 260, Opolskie – 182, Świętokrzyskie – 102, Warmińsko-Mazurskie – 98 and Podlaskie – 61.

Also in 2023 (up to and including May 29), Ukrainians were eager to register their businesses within Poland’s largest metropolises. 2,500 companies were established in Warsaw, 1,549 in Krakow, 1,386 in Wrocław, 665 in Gdańsk, 591 in Poznań, 472 in Szczecin and 350 in Łódź.

In the period from the beginning of 2023 to May 29, 2023 inclusive, the main PKD codes most frequently indicated by companies established by Ukrainian citizens were: computer programming activities (2,100 times), hairdressing and other beauty treatment (1,461), other building completion and finishing (817), construction related to erection of residential and non-residential buildings (549), freight transport by road (453), electrical installation (442), mechanical working of metal elements (365), restaurants and other eating places (335), retail sales via mail order houses or via the Internet (315) and other specialized construction activities not elsewhere classified (291).

Poland is a natural migration destination for citizens from Ukraine plunged into war. Domestic legislation also favors the development of Ukrainian entrepreneurship in the Polish market. Of essential importance in this regard is the Special Act on assistance to Ukrainian citizens, which has contributed to a revival in the registration of sole proprietorships by Ukrainian men and women.

 

See more: 14.06.2023 ZPP’s comment: Poland – a good place for Ukrainian entrepreneurship

 

Warsaw, 7^th March 2023

 

Direct lines – key to the development of modern power industry

 

• Direct lines and cPPAs are key to a new energy reality in the EU
• The draft act to implement Directive 2019/944 into the Polish legislation fails to guarantee the expected investment freedom in the area of direct lines
• Hampering the development of RES installations powering industry will have implications for the entire national economy

One of the most significant regulations currently in development, of key importance to the Polish energy transformation, concerns the principles of operation of direct lines, that is the possibility of direct transmission of energy from the producer to the consumer. This aspect is particularly important for the undisturbed functioning of enterprises exporting their products to countries where it is already necessary to document that green energy was used for manufacturing purposes. The supply of energy from RES, or rather the lack thereof, may therefore become a fundamental problem for the further functioning of enterprises.

In accordance with the definition contained in Art. 3 sec. 11 (f) of the Polish Energy Law: “direct line – a power line connecting an isolated generation site directly with a customer or a power line connecting an generation site of an energy company with installations belonging to that company or installations belonging to its subsidiaries”. This translates into an entrepreneur’s own investment or a partnership with a RES producer. This instrument is crucial for the development of the cPPA/vPPA sector, that is long-term B2B contracts for the purchase of green energy.

The currently processed amendment to the Energy Law and the Act on Renewable Energy Sources (UC74), which is planned to be adopted by the Council of Ministers in the first quarter of 2023, aims to implement into the Polish legal system, among others, the Directive 2019/944 on common rules for the internal market for electricity. It also covers the issue of direct lines.

As the legislators themselves have noted, current practices of the market regulator and the courts indicate that the provisions regarding direct lines, in their current wording, are insufficient to achieve the objectives provided for in Directive 2019/944. Thus far, the main problem has come down to the narrow interpretation of the direct line as an installation operating in an island system. For this reason, obtaining a permit for the construction of a direct line has so far only been possible, as a rule, when it was impossible to connect the recipient to the power grid. Meanwhile, direct lines should, on the one hand, be a substitute for the distribution network, and on the other hand, it is only when the coexistence of these two types of connections on a customer’s end (network and via a direct line) is enabled that the act has a chance to positively influence the development of the market in this area.

The Union of Entrepreneurs and Employers is of the opinion that this is an extremely important issue for the economic development of our country, due to the fact that, in the future, direct lines will become a fundamental element of market rules in energy trading. It is regrettable that this issue is one of several included in the UC74 draft act that negatively affect not only the clarity of legal provisions, but also the pace of their processing. A separate act would therefore be a preferred solution. All the more so, since any regulations concerning the development of distributed energy in Poland should in the future take into account the new rules regarding the operation of direct lines. It is, however, certainly good news for entrepreneurs that work on these regulations is still in progress.

One ought to clearly state in this place that direct lines will not be a threat to the national energy system or to the functioning of the traditional power industry, because due to their capacity, they will serve an entirely different segment of the economy. At the same time, they will in the future significantly improve the functioning of medium- and low-voltage lines, which in turn will have a positive impact on the operation of the power system as a whole.

The overarching objective of direct lines should become the key incentive for lawmakers with regard to this type of lines: direct supply of energy to industry as well as local, medium-sized enterprises, mainly manufacturing companies, which require cheap, green energy to develop.

The present model of network operation is incompatible with the provisions on direct lines contained in Directive 2019/944, which obliges member states, among others, to undertake all necessary measures to enable all producers and electricity supply undertakings operating in individual countries to supply their own premises and customers through direct lines, without being subject to disproportionate administrative procedures or costs.

The currently proposed version of the UC74 draft act obliges the recipient to include the trading company even if the producer of electricity and the recipient thereof are the same entity and they only partially use the power line. Such an approach on the part of the legislator will have a significant impact on the prices of electricity supplied through direct lines.

And reducing the cost of energy supply is the main objective of direct lines, especially for large consumers, energy-intensive entities in particular.

Then again, the regulations regarding the need to enter direct lines for production units with a capacity of more than 2 MW to a registry kept by the Energy Regulatory Office (Urząd Regulacji Energetyki) significantly limit the possibility of free investments. This in turn will slow down the investment processes related to generation of distributed energy. It will also significantly limit the use of direct contracts between the producer and the recipient (cPPA/vPPA).

The proposed shape of the regulation is unacceptable, as it limits the possibility of increasing supply of green energy to the industry, which may in the end hamper the development of the entire economy.

The form of the so-called solidarity fee (a surcharge to be paid by recipients connected to the power grid in spite of the fact that most of their energy supplies will be sent through direct lines) also changed in the latest proposal of the regulations. The introduction of the solidarity fee is in its essence understandable, because the operator is legally obliged to bear the maintenance costs of the energy network to which the recipients are connected, despite the decreasing supply of energy through these lines. However, according to the draft, the fee is to be related to the amount of energy transmitted through a direct line and will be paid to the trading company. In the opinion of the Union of Entrepreneurs and Employers, the fee payment mechanism should be covered by a transitional period and fully regulated later in the future, when both producers and consumers already have more experience in this new energy trading model at the local level, based on direct lines.

The number of rejected motions to connect new RES installations to the distribution and supply network is constantly growing, which impedes the development of investments and threatens the Polish economy. Investment opportunities in direct lines are supposed to remedy such barriers and the emphasis here should be on expanding the rights of producers and recipients followed by reducing administrative costs and obligations.

One ought to keep in mind the determination of the European Commission in establishing a common energy market, where direct lines and cPPAs are key elements in creating a new energy reality. A reality based on a different business model in the power industry than before, where relations between producers and recipients are not burdened with unjustified additional costs.

It might be worth considering how such a new business model is going to affect the competitiveness of the economies of countries that will actively participate in it.

The Union of Entrepreneurs and Employers calls for the abolition of all legislative restrictions on investment processes related to the construction of direct lines.

 

See more: 07.03.2023 Direct lines – key to the development of the modern power industry

Warsaw, 20 January 2023

 

Summary of 2022 in the energy industry as a year of changes and challenges

 

• Although the energy crisis did not bring the predicted catastrophe to Europe, it did lead to a significant turnaround in resource and raw material policies.
• Accelerating distributed energy development in the EU today is a race against time and other markets – a race for stable and lower energy prices on the Old Continent.
• In the face of new challenges, the energy transition all the more needs to be implemented in a smooth, rational and economically efficient manner.

With Russia’s attack on Ukraine on 24 February 2022, the old order to which the European continent had been accustomed to for more than 20 years, was gone. Until that day, fluctuations in energy commodity prices were stabilized by the steady supply from Russia. As it turned out, however – and this had already been noted by Polish policymakers, among others – Russia’s raw materials policy not only pursued economic goals, but also served as an effective weapon in the struggle against the more broadly defined Western world. Last year was thus a sad lesson on the consequences of years of naiveté in assessing the Kremlin’s intentions. Despite everything, however, we entered 2023 as a winning continent. Thanks to widespread mobilization in the face of the energy crisis, for the time being we have avoided a wave of blackouts in Europe. And while it is possible that without the support of mother nature (high temperatures + wind), the image would be less optimistic – it should also be acknowledged that so far, the darkest scenarios have not come true.

At the same time, there is no doubt that, under the influence of events beyond our eastern border, the 2022 energy policy of countries based solely on economic analysis, has been undermined. Nowadays, the strategic perception of energy, its independence, diversification of sources, stability of supply, stockpiles of raw materials, dispersion or, finally, resilience to threats, are equally important. This is not to say that such thinking has not existed in Europe before, but it has definitely been in the vanguard. Today’s overhaul of European countries’ energy systems is beyond economic.

With the above in mind, it is necessary to consider whether Poland’s energy industry is stable, secure, efficient, and whether the existing concepts of its development are defensible when confronted with new challenges. For example – further dispersal of energy generation sources has almost become the raison d’etre of most countries in Europe, but it is the state generation and transmission system that is supposed to guarantee the necessary energy supply to maintain production in times of emergency (e.g. war).

It is therefore worth analyzing in more depth whether accelerating the implementation of the FitFor55 package, under the provisions of RePowerEU in response to Russian aggression, is an effective response to the challenges that have arisen. In our view – no. The move away from Russian hydrocarbons should, of course, be accompanied by the development of renewable-based generating units (and the accompanying infrastructure), but also by a rational approach to the energy resources at the disposal of European countries – coal units powered by domestic raw materials, or nuclear units. Strong acceleration and radical increase in climate targets will be a counter-effective strategy, leading to the impoverishment of European consumers.  We should base plans and decisions on precise calculations and analysis. The loop made of exorbitant climate targets must not take oxygen away from the European economy and elevate energy prices, or we will irretrievably lose the industries we absolutely need to fuel the future. So, while reducing CO2 emissions and building energy efficiency are crucial, the path to zero-carbon should be smooth, economically sound and take into account the use of available sources, including assuming the rational use of coal resources.

The details will be insanely important here, because as the example of Poland has shown, mere access to a raw material such as coal, without proper safety mechanisms and regulations, will not stabilize energy prices. Besides, no EU country has passed the test of community solidarity, as egoistic interests in securing energy resources for their own local market have come to the fore in times of uncertainty.

In our view, the experience of this war should reset some opinions about the future of Poland’s energy architecture, centered around large-scale energy projects currently located mainly in northern Poland. More attention should be paid to dispersing energy sources and relying mainly on renewable sources, stabilized in the future by nuclear, hydrogen, biogas and energy storage facilities. In doing so, it is important to consider what role natural gas facilities will play and what will flow through them in the future. In contrast, coal power generation should remain within the system, as a complementary and stabilizing source, supporting us in a smooth transition, but also guaranteeing energy security for as long as it is necessary.

In 2022, there was a reversal in polarization in the energy industry in 3 areas:

1. Gas and nuclear power were included in the EU taxonomy,
2. Poland concentrated on energy from nuclear and offshore wind farms,
3. In the perspective of two decades, there will be a shift of electricity production from the south to the north of Poland.

In Poland in 2022, it was not possible to notice a particular legislative acceleration enabling increased diversification of energy sources, guaranteeing energy security. Quite the contrary – there was the will to further concentrate the sector. The protracted discussions on the windmill law and direct lines have delayed the passage of these laws, which are extremely important for the development of distributed sources. Meanwhile, wind power should be expanded on a par with photovoltaics to complement each other in the future. The availability of clean and cheap energy should not be held hostage to political struggle. These issues require consensus spanning the divisions.

The scapegoat of the 2022 energy crisis was also the long-developed Commodity Power Exchange. The abolition of the exchange obligation and legal interference in market mechanisms, which was supposed to guarantee a reduction in price fluctuations, in retrospect will not change the market to provide greater flexibility and lower prices, but will strain its transparency.

In 2023 – as in the previous year – the bottleneck for the energy industry will be the distribution network, which cannot accept and distribute the amount of energy we are able to produce at peak times. The associated connection problems basically prevent work on new projects, which in the coming years will exacerbate the deficit of green energy which is badly needed by Polish industry. The PSE company, which manages the grid, sees solutions in expanding existing connections and increasing their capacity, without leaning toward promoting to potential producers the construction of new sources, energy storage, or direct lines that would relieve pressure on the grid. There is also a lack of simplified procedures for entrepreneurs to build their own energy sources. These issues will hopefully be addressed in the updated Energy Policy of Poland 2040 strategy.

The 2022 summary should not overlook positive signs, showing that policymakers are slowly realizing the threat to the overall economy from the green energy deficit in the Polish market. The power of prosumer energy, which is becoming a significant shareholder in the energy market, supporting the green transition, indicates that taking part of the market out of institutional oversight serves a common cause. It is also noticeable that the legal foundation is being laid for the construction of local energy communities planning to invest in renewable energy sources. Local initiatives are an extremely important source of modern energy development, and any state assistance in this regard is most welcome. In doing so, it is important to emphasize the need to relieve the pressure on the high- and medium-voltage power grid, for production and direct distribution of energy locally.

What is also positive is the idea of sharing the profits with surrounding communities for locally produced energy from RES. This leads us to think more deeply about the advantages of renewable energy, especially windmills, which have long since ceased to be associated in the minds of the society with negative environmental effects, and have even become a positive part of the non-urban landscape. The government’s amendment to the windmill law in the form of a mandatory contribution of 10% of the energy generated for local consumers is, in this case, perhaps not the best way to build an investor-community coalition. However, the initiative itself seems to have had a positive reception and, most importantly, has subjected long-held views in this area to critical thinking.

The Union of Entrepreneurs and Employers also welcomes the amendment to the Renewable Energy Sources Law and the extension of the time for the first sale of PV energy in support schemes from 24 to 33 months, putting the technology on a par with wind farms. The basis for these changes was to mitigate the effects of broken supply chains during the pandemic, intended to give PV power generators additional time to adjust to the new market situation and ease price pressures.

We are very happy about the doubling of the auction volume for investments in offshore wind farms (RES Act UC 99). This is an important initiative for investment in this type of RES and, in the future, the basis of the hydrogen industry.

We are closely and optimistically following the preparatory process for a law on so-called cable pooling, i.e. making already owned connection power available to other types of renewable sources, within the framework of the existing connection agreement. The law will allow more flexible use of existing transmission lines, which could translate into additional investment in RES and a rapid increase in the supply of green energy for the Polish economy.

On the other hand, the Law on Emergency Measures to Curb Electricity Prices and Support Certain Consumers in 2023 and its secondary legislation are, in our opinion, inaccurate, and in the opinion of market participants, changes have been introduced that are unfavorable to the entire energy system, which in turn may result in a reduction in energy production in Poland. The rules for calculating the price cap introduced by this regulation pose a threat to the profitability of RES investments. Seeing what role RES played during the summer and autumn months, where the use of renewable energy gave the conventional power industry the time it needed to replenish gas and coal storage, these decisions that are hard to understand.

From the point of view of the entire Polish economy, today the passing of the windmill and direct line laws is an absolute legislative priority, as is the cable pooling law. Investments related to these laws could result in an increased supply of green energy by at least 10 terawatt hours per year, starting in 2026. And this is without any visible contribution from the State, including without a particularly intensive support system.

In this context, there is also a need to rearrange dependencies in the energy industry. The current completely vertical system promotes concentration practices that deviate from the principles of a market economy.

Moving distribution into the realm of market energy would be a revolutionary move, but if it is done with the participation of a Distribution Network Operator, the existing distribution system operators will largely control the process. Such an impulse is already being felt, but the role of the state in this area is to shape it in such a way that the restriction of market principles is minimal and dictated only by Poland’s energy security.

Invariably, the launch of the program of revitalization of multi-dwelling units 200+ (which awaits the concentration of coal assets under the National Energy Security Agency (NABE)) along with passing the wind law, remain important. This would clearly show the direction of Poland’s transition and gradual move away from coal, as well as provide more room for negotiations with the European Commission on Poland’s energy transition path, taking into account the temporarily important role of conventional power generation.

Poland should push the concept of maintaining coal mines and coal power in Europe at a level that allows the economies of European countries to function under the threat of war. In view of the military situation, maintaining only the profit criterion in the European energy industry would be a big mistake, and our country is particularly vulnerable to the consequences of a military conflict with Russia. The wealth of European countries allows the creation and maintenance of an energy reserve base based on fossil fuels.

Poland, as well as Europe, has large coal and lignite deposits that allow to maintain energy independence in special cases, and this should not be abandoned prematurely. Likewise for nuclear sources, for which the plans to extinguish in some EU countries, were a bit too hasty. It is worthwhile to make parallel efforts to develop emission-free technologies for the use of fossil resources. Such an energy policy is in no way at odds with the energy Green Deal and the need to decarbonize the power and heating industry based on carbon-free sources. On the contrary, it can inspire the development of such sources as long as it is coordinated with a program to make the operation of coal blocks more flexible.

The program of revitalization of multi-dwelling units 200+ fits perfectly into such a coordinated policy. We should present the results of this program to the decision-makers in the European Commission and try to get it approved both formally and financially.

The concept outlined above could be integrated into Poland’s overall energy transition and form the basis for optimal development of both renewables and nuclear power.

The most important tasks in 2023 for policy-makers in the Polish energy sector:

• Passing a law eliminating investment barriers in onshore wind power.
• Passing a law on direct lines and cable pooling.
• Refining and passing the law on effective support for energy communities.
• Promptly developing and passing a law on investment facilitation for renewables on brownfield and post-mining sites.
• Maximum removal of barriers to development of solar power.
• Launching a program of revitalization of multi-dwelling units 200+.
• Strong presence at the European Union level – consistent opposition to ideologically motivated programs to accelerate the energy transition and tighten climate policy;
• Building a strategy for the use and development of transmission and distribution networks
• Consistent, planned construction of nuclear power plant(s)
• Changing the state’s raw materials policy and the creation of permanent stocks to make Poland independent of price fluctuations

Those of the above tasks that are regulatory in nature should be implemented in the first half of 2023, so that their effects on the economy will begin to be felt as early as 2025. This means, as mentioned earlier, an increase in the supply of green energy by at least 10 terawatt hours per year.

Despite the impediments associated with the election year in our country, we are counting on constructive legislative momentum in the energy-related area and the passing of basic and necessary laws to enable the development of modern energy based on distributed sources.

According to ZPP, we could have expected a bit more legislative activity in the energy area in 2022, but the year should definitely not be counted as a lost year in terms of progress in Poland’s energy transition. At the same time, it is worth remembering the consultation-based formula of cooperation between lawmakers and the society, which guarantees far better final results.

From the perspective of the EU energy market, Poland could be one of the few countries secure in terms of energy. However, the lack of crisis solutions and late legislative initiatives have only allowed ad hoc relief, without redefining the energy system. 2023 is the year of another opportunity for those in power to ensure our country’s competitiveness and energy stability.

 

See: 20.01.2023 Summary of 2022 in the energy industry as a year of changes and challenges

Warsaw, 21 December 2022 

 

Commentary of the ZPP:
Activation of seniors as an opportunity to fill supply gaps in the labour market

 

• The analysis of demographic trends, conducted based on the Statistics Poland data, indicates that persons at the age of 50 and over will constitute approximately 50% of Polish society in 2050.  This means the necessity of professional activation of that group, with special emphasis on persons of retirement age.
• In Poland, approximately 90 % of people reaching retirement age decide to leave their jobs.  Experts point out that retirement is too often treated as a compulsion rather than an option.
• In the coming years, the average age of an employee will increase and so will the average age of a customer.  Activation of seniors in the labour market may be a response to the inevitable change in consumer trends.
• Shaping the senior policy in relation to the labour market should be preceded by a thorough diagnosis of the needs of the diverse group of people aged 50+.

In Poland, the number of persons receiving a pension is growing. Based on the Statistics Poland data, approximately 5.98 million persons were receiving pension in the period from January to April 2021. After a slight decline in the period from May to August, the number of beneficiaries increased to 5.999 million in September and was growing.  In October 2021, 6.02 million persons were receiving pension, 6.03 million in November and 6.04 million in December of the same year.

Conclusions drawn based on the Statistics Poland data make it necessary to analyse the forecasts related to the number of senior citizens in Poland. Statistical data analysts have calculated that the number of persons aged 60+ is expected to increase to approximately 10.8 million in 2030, reaching 13.7 million in 2050. This means, taking into account other demographic data, that persons aged 50 and over will constitute approximately 50% of the Polish population.  Polish residents at the age of 60 and over will constitute just over 40% of the population in 28 years’ time. This data involves an unprecedented increase in the burden on the pension system and a sharp reduction in the working-age population but not only.  On average, the group of professionally active persons will be much older than today.

The issue needs to be addressed now. In Poland, approximately 90% of persons who reach retirement age resign from work.  This is related to the perception that reaching the retirement age is a sort of compulsion to retire and not one of the possibilities.  Based on the Statistics Poland data, only 39% of persons aged 60-64 and only 6% of persons over 65 will be professionally active in 2020.  Although companies recognise the problem, the percentage of employed senior citizens is still significantly low in Poland, compared to most Western European countries.

The situation is partly made better thanks to the inflow of economic immigrants and refugees – especially from the territory of Ukraine. However, in any case, the scale of that phenomenon must not obscure the consequences of the ageing of the society, which will be of key importance for shaping the labour market in Poland. At the same time, one should not forget that, in addition to a larger number of older employees, there will also be a greater number of older customers in Poland. This correlation may have a positive impact on the already existing trend of employing senior citizens. In Poland, in the first quarter of 2021, the number of working women at the age of 60 and over and men over 65 years old was  687,000. In the second quarter, it was already 721 thousand persons, and  754 thousand persons in the third quarter.  This is a positive trend; however, it does not compensate for the persistently low fertility rate, which will amount to 1.4 children per woman in 2022. The economic indicators, which are worrying the society, will not bring a demographic miracle.

Adapting the labour market to the needs of older workers is becoming a great challenge. Shrinking down of the group of people in the traditionally-understood working age will translate into changes in the employment model in companies in the near future, and increase the number of senior citizens in professions where their representation is currently low. In addition to the increase in the average age of employees, the aforementioned increase in the average age of customers will also be a challenge for the market, which will translate into an evolutionary change in consumer trends.

There is no doubt that employers will have to implement certain methods to activate senior citizens in their enterprises, organizations or institutions.  Actions making the workplace more accessible to persons at the age of 50 or over should be subject to special supervision. The methods of implementing those measures should include special activation programmes, retraining courses (including language courses) and better use of flexible forms of employment.

The analysis of demographic and macroeconomic trends leaves employers no choice.  Already today, companies are forced to implement measures to build an inclusive organisational culture that takes diversity into account, i.e., a diversity and inclusion strategy. 
State structures – both at the central and local government levels – must also become more involved in the process of activating senior citizens in the labour market than they are today. Although initiatives such as “A skilful worker has no age” and other related initiatives are being implemented in the country, their scale and the response of the labour market still remain too small. In the meantime, although many companies still do not want to accept it, Generation X will be retiring in 15 years’ time.

Senior policy strategies must not take on the form of coercion. As practice shows, activation “with the use of force” does not bring the expected results.  The real needs of senior citizens must be taken into account and correlated with the needs of the labour market. It should not be forgotten, and many initiators of programmes addressed to the oldest citizens have fallen into this generalising trap, that the group of senior citizens is diverse in terms of age and territory – the perspective of the residents of large cities is different from that of medium-sized agglomerations and inhabitants of rural areas. It also seems economically justified – within a rational framework – to institutionally support forms of care for the elderly and children to increase the participation in the labour market of people who also have caregiving responsibilities.

Measures to increase the participation of professionally inactive senior citizens in the labour market can reduce the non-wage burden on salaries and increase the profitability of taking up work. The estimated number of persons at the age of 50 and over who could supply the labour market is 2 million. A bold move, albeit politically difficult, would be to raise the retirement age.  Such a decision would certainly increase the efficiency of the pension system, which will face an increased disproportion between the number of professionally inactive seniors and those of working age soon. Based on the Personnel Service report, professional activation of persons aged 50+ and bringing the level of participation of senior citizens in the labour market closer to the level in Western European countries “could, in the long run, bring an increase in GDP of up to USD 66 billion”.

Activating senior citizens in the labour market is not only an opportunity but also an obligation of employers. More effective integration of employees aged 50+ in the labour market is an opportunity to increase the economic and social well-being of Poles – all the more so that their health condition and life expectancy increase year by year.

See: 21.12.2022 Commentary of the Union of Entrepreneurs and Employers: Activation of seniors as an opportunity to fill supply gaps in the labour market

                                                                                                              Warsaw, 20 December 2022

 

Commentary of the ZPP on draft Regulation of the Council of  the European Commission on the development of renewable energy as a key form of achieving energy independence of Europe

 

The Council of the European Commission is proposing another instrument to speed up investment in RES (Renewable Energy Sources) – the Regulation of the Council of  the European Commission on the development of renewable energy as a key form of achieving energy independence of Europe;

Shortening the investment process in carbon-free energy sources is, in the opinion of Brussels, the basis for achieving independence from fuel from Russia;

The proposals of the Council could trigger a thaw for government-frozen solutions in the field of modern renewable energy;

Brussels does not look at the legal blockages in the area of renewable energy and speeds up the introduction of solutions for wind farms, district heating and even biomass and biomethane, one by one.

When reading the draft Regulation of the Council of the European Commission establishing a framework to accelerate the introduction of renewable energy solutions, it should be noted that most of the regulatory dispositions of the Regulation are in line with the expectations of the green energy sector in our country.

On many occasions, as the ZPP (the Union of Entrepreneurs and Employers), supported by the RES industry in Poland, we have drawn attention to the need to facilitate investment in that sector, which could primarily include post-mining and industrial areas. It seems reasonable to introduce regulations obliging administrative bodies, entities that deal with energy transmission and distribution, to determine appropriate areas for RES installations, where significantly simplified administrative procedures would be introduced to allow investors to quickly implement projects (e.g. road lanes along motorways, former landfill sites, large surface car parks) both for environmental (negligible, minimal impact on the environment), social (lack of conflicts and acceptance of residents) and technical (grid connection conditions) reasons. In this way, the installation of renewable energy generation infrastructure would be facilitated as administrative bodies, local authorities and grid companies would have to verify the compliance of such installations with local environmental and technical requirements. The issue of selecting areas for faster RES investments is proposed in the from of yesterday’s amendment to REpowerEU approved by the European Parliament – discussed at the end of the text.

With regard to photovoltaic investments, the Commission suggests reducing the time limit for issuing a building permit to one month, which seems a bit too short in our national circumstances.

The Regulation demonstrates the determination of the European Union countries to develop renewable energy sources and there is no doubt that the war in Ukraine will speed up decarbonisation processes in Europe.

The future economic image of Europe will be shaped based on green energy. This should be a supra-political guideline for the decision-makers in our country, which does not mean us giving up defending our energy interests, even those based on fossil fuels for a long time to come.

An example of reconciling energy interests is the assumptions of the programme “Bloki 200+”, as part of which the development of renewable energy is based on stabilising our own coal sources. Such a policy is certainly in line with the Regulation of the Council and it just needs to be properly presented and justified.

The fact of diversity of energy and heating situation in Poland must be understood in Europe, especially considering the new geopolitical conditions we find ourselves in after Russia’s aggression against Ukraine.

It should be noted that the draft Regulation does not refer to combined heat and power plants but only to the expansion of renewable energy power plants. Given the challenges of the heating sector, in terms of the need for its transformation, which is linked to, among other things, the proposals of the ”Fit for 55 package”, we believe that it would make sense to introduce a principle based on which the construction of RES installations in existing district heating systems could also benefit from accelerated procedures. This could be expressed as follows: The authorisation process for the expansion of district heating systems to include renewable energy projects and authorisations related to upgrading the assets necessary for their connection to the grid, should not exceed six months, including environmental impact assessment, if required by the relevant legislation. To be consistent, in the draft Art. 2 sec. 2, after the word “power plant” the expression “or combined heat and power plant” should be added, and in Art. 4, after each word “power plant” the expression “or combined heat and power plant” should be added.

We need to be aware that, in the future, it will be renewable energy sources that will be the basis of the European energy market and that Poland, with its huge burden of the energy sector with coal sources, must remodel its energy market to a much greater extent than other EU countries.

Observing the costs of generating energy from renewable sources today, it is already possible to predict the costs of energy and heat on European markets once energy independence is achieved. Poland cannot remain outside that market as high-cost sources and a loss of competitiveness would threaten our entire economy.

The Council formulates the need for immediate action and this requires more details  as some of them will require statutory changes. Although the Council indicates that this is an internal regulation with the possibility of extension, it can be considered that it will be in place for a very long time and is likely to take a permanent form.

The Regulation draws attention to further works on the rules for direct contracting, the so-called CPPAs (Corporate Power Purchase Agreement), which is an extremely important form of the bottom-up shaping of energy market. This is closely linked to the development of distributed energy. Further on, the Regulation draws attention to the need to disperse energy and heat generation sources. So far, the Polish energy sector has been moving towards centralisation, i.e., in the opposite direction.

The document emphasises the need to reduce procedures for those sources that have particularly high generation potential and investment in which will bring rapid results for the system. This concerns onshore wind farms and large-scale photovoltaics. Meanwhile, the 10H rule blocking the development of that form of energy generation is still in force and the investment in photovoltaics is currently not particularly supported in our country. The sdherence of a Polish legislator to the assumptions of the proposed Regulation would increase the potential of onshore wind farms by at least 10 gigawatts of installed capacity, and perhaps as much as 20 gigawatts of installed green energy in solar sources, which could translate into the production of 40 terawatt hours of green energy per year in 2030. The acts allowing that level of green investment are being prepared. Today, their adoption depends solely on the political will of decision-makers.

The Council encourages joint action and cooperation within the framework of the Single Market Enforcement Taskforce (SMET ), which seems particularly relevant for our energy sector as we could assimilate some best practices and also, through such cooperation, we could participate in shaping the future energy market in Europe.

According to the proposal, the Regulation would have direct and immediate application, which is expected to lead to a swift, uniform and EU-wide approach to the various legislative procedures in the green energy investment sector. The Commission plans to consult stakeholders to ensure that the Regulation is implemented as effectively as possible.

The strategic objective of the Regulation is to reduce energy demand and replace natural gas, oil and coal supplies with renewable energy – within a foreseeable time horizon.

The Regulation of the Council also draws attention to connection problems and suggests connection facilitation for renewable sources, which, in turn, fits in with the Direct Lines Act currently being developed.

The expansion and modernisation of existing power plants, in the opinion of the Council, is an extremely important part of increasing the generation potential of renewable energy sources. Maintaining or increasing the capacity of wind farms based on fewer, but more efficient, wind turbines should be an administratively straightforward task that would require no special paperwork.

This fits in with the law on the joint use of connection infrastructure by renewable sources (cable pooling) which the Ministry of Climate and Environment is currently preparing.

The Regulation pays particular attention to heat pumps as an extremely important solution for the future of modern district heating. District heating accounts for half of energy consumption in the EU countries. Heat pumps may also be of particular importance in Poland, especially in rural areas and small towns. Perhaps this is a solution for the country’s district heating systems, where heat pumps could be combines with a gas source – measurably reducing gas consumption.

The reality of ground pumps with a vertical collector and water pumps currently looks as follows: building permit is required to install a heat pump if the works are to be carried out in a building listed in the register of historic buildings. If the building itself is not listed in the register but the area is – an application must be submitted. Both of the above applications must be supplemented with a consent of the conservation officer. A building permit may also be required for the construction of a facility in ‘’Natura 2000’’ area. Additionally, ground and water pumps require geological works. For that purpose, a project of geological works needs to be created, which needs to be presented to the district governor. Water heat pumps also require a water permit if groundwater extraction of more than 5 m³ per day is planned or extraction from a water intake of more than 30 m depth is necessary. All of the above-mentioned permits are issued by the district governor, and the same applies to the applications – they must also be submitted to the district governor. However, it is a different unit in the district governor’s office each time. Furthermore, pursuant to Art. 29, sec. 4, pt. 3 c of the Act of 7 July 1994 Construction Law (consolidated text Dz.U. /Journal of Laws/ of 2021, item 2351), the installation of heat pumps with an installed electrical power of no more than 50 kW does not require a building permit or application.

The introduction of the proposed rule that the authorisation process for the installation of heat pumps should not exceed three months will help to unify the regulations in force in Poland.

The principle of energy solidarity, which is a general principle of the European Union invoked in the Regulation, may be of particular significance for Polish industry as it will make it possible to purchase green energy until the time the domestic sources will meet the needs of domestic factories. Although the Regulation only refers to new authorisation procedures, in our Polish circumstances it should be extended to include already initiated procedures for obtaining building permits and connection conditions.

Despite so many positive stimuli in the Regulation, the reality of the Polish energy market shows that the amendment of Directive (EU) 2018/2001 to increase the EU target for 2030 to 45%, compared to 40% in the previous proposal of 14 July 2021, is unlikely to be achievable in our country.

An EU-level approach is needed to create the right incentives for the Member States with different levels of ambition to accelerate, in a coordinated manner, the energy transition from a traditional fossil-fuel-based energy system to a more integrated and energy-efficient one based on renewable energy, which is rightly indicated in the Regulation with the statement “a higher level of funding should be introduced for investments in renewable energy sources for companies and individual citizens”.

What the Regulation does not contain, and should, is considering the specificity of the Polish market.

To simplify the licensing and operation of renewable energy power plants, they should be within the competence of a special administrative unit at a voivodeship level.

The authorisation process for the installation of solar energy equipment and associated storage and grid connection facilities in existing or future constructions created for purposes other than solar energy production should be handled by the aforementioned special administrative unit.

The process of issuing permits for the construction of large PV farms should also be shortened (DSO grid connection conditions).

To achieve a rapid transition and to use renewable sources in Poland, the modernisation and construction of new grid infrastructure should be a priority – the grid is currently outdated and it is not possible to distribute renewable energy.

A system of gratification should be introduced for investors in the field of RES installations: PV installations, heat pumps, windmills, geothermal, biogas plants, hydrogen, etc. – introducing incentives to encourage entrepreneurs to invest in RES.

It should be possible for electricity or heat producers to demonstrate/report the percentage of RES (company- and country-specific) in the energy production process in return for appropriate incentives/allowance to reduce the financial burden on energy producers to invest towards climate neutrality.

Taking into account the direct cooperation of parties in the field of RES investments, rules of cooperation between the state, the energy generation company and a private person should be introduced: provision of property by a private person for a renewable energy investment to an energy generation company in exchange for discounts in the form of a lower price for electricity or a percentage share of the generated energy. The terms of cooperation could apply to individual persons as well as to a group of residents in a local community where the RES investment would be carried out. This would speed up the implementation of the tasks without having to go through the process of acquiring land for renewable energy investments.

We would like to request the deletion of the provision in Art. 4, sec. 2, ”unless there are justified safety concerns or there is a technical incompatibility of system components”. This provision leaves a lot of room for interpretation and may constitute a false argument based on which administrative authorities may refuse to grant permission for the expansion of RES power plants.

Last minute information

In the opinion of the ZPP, the proposal of the Regulation is a clear signal of the direction in which the European energy industry will go and that the decarbonisation process is irrevocable.

The issue of accelerating investment in RES is wildly topical. On 14 December, the European Parliament voted in favour of amendments in the REPowerEU document to speed up the licensing of renewable energy sources. An essential element of the document, which is part of the REPowerEU strategy, concerns the creation of “renewables acceleration areas”.

The purpose of the proposed law is to speed up the procedure of granting permits for new RES power plants, thereby increasing the domestic production capacity of the EU. The EU Member States still need to approve the text before it comes into force. The EU countries are currently examining the proposal of the Commission and are expected to take a position next Monday paving the way for talks with the Parliament with a view to finalise the bill after the new year.

The amended text proposes shorter deadlines for the approval of new installations – up to a maximum of nine months for the so-called “renewables acceleration areas”, which will be defined individually by each EU country depending on local circumstances. Under the principle of “tacit consent”, an application will be considered approved if the competent authority does not respond within the set deadline. Outside those areas, the acceleration process should not last longer than 18 months.

Under the proposal, renewable energy projects will be considered as projects of
“overriding public interest” and may therefore benefit from simplified procedures and specific derogations from EU environmental legislation.

Furthermore, the EU countries will have to ensure that permits for the installation of photovoltaic devices on buildings will be issued within one month, and a notification procedure will be sufficient for smaller installations, below 50 kilowatts.

While biomass incinerators were not part of the original proposal, a last-minute amendment by the EPP group gives the possibility for the EU Member States to include them in the fast-track permitting system.

“Renewables acceleration areas should be created at least for wind turbines and photovoltaics and could be created for biomethane plants”, reads the final text voted on by the MEPs. And while biomass plants are generally “excluded from renewables acceleration areas”, an exception could be made “for installations located in outermost regions”, it is added in the text.

According to the approved proposal, no revewables acceleration areas can be designated in nature conservation areas or bird and marine mammal migration routes – with the exception of artificial and built-up areas such as rooftops, car parks or transport infrastructure.

However, environmental groups have expressed concern that projects in “focal areas” will be exempted from environmental impact assessments (EIAs), such as those required under the Birds and Habitats Directives.

The Union of Entrepreneurs and Employers follows with interest the process of establishing the EU consensus in the area of accelerating investments in renewable energy sources and declares its readiness to issue an opinion on draft Polish laws arising as a consequence of that process.

See: 20.12.2022 Commentary of the ZPP on draft Regulation of the Council of the European Commission on the development of renewable energy as a key form of achieving energy independence of Europe

Warsaw, 24 November 2022 

 

Commentary by the Union of Entrepreneurs and Employers: economic regulations should come into force once a year, after at least 12 months – a recipe for regulatory instability

 

• According to a Grant Thornton study, in the period from January to September 2022, the average vacatio legis period for laws and regulations governing business in Poland was 31.9 and 6.9 days respectively.
• Year on year, the tendency to reduce the length of the vacatio legis period increases, forcing businesses to implement new regulations immediately, which becomes particularly difficult with the start of each new calendar year, when the accumulation of the introduction of new regulations is observed.
• Too short vacatio legis period is a real barrier to the development of Polish business, with particular emphasis on micro, small and medium-sized enterprises, which account for 99.8 per cent of businesses in Poland.
• For years, the Union of Entrepreneurs and Employers has been calling for the introduction of a principle whereby all economic regulations come into force only on 1 January of a given year and are preceded by at least 12 months of vacatio legis.

The stability and predictability of the legal and regulatory environment is one of the basic elements necessary for the continuous development of domestic enterprises. Meanwhile, the law in Poland changes too often and entrepreneurs have far too little time to adapt to new regulations. Companies’ confidence in the state therefore remains limited, and this translates into a decline in investment potential.

The Union of Entrepreneurs and Employers has long taken the view that all new economic regulations should come into force simultaneously on the first day of January with a 12-month vacatio legis. This will give businesses a year to adapt to the changes in the law and reduce the amount of time needed to implement new procedures and requirements. This bold move would definitely change entrepreneurs’ perception of Poland as – in many cases – a business-hostile environment in terms of the quality and pace of legislative change. Such a pro-business refocusing would also help officials, who, with more time to refine documents, could improve the quality of legal acts, which today are often drafted in haste and enacted in the same way – many times with numerous errors.

As calculated by Grant Thornton analysts in the study Zwolnij, szkoda firm! Vacatio legis w polskim prawie gospodarczym as recently as 2011, the average vacatio legis of legal acts regulating the rules of conducting business activity in Poland was 53.2 days for acts and 19.8 days for regulations. At the time – from today’s perspective – it was a relatively comfortable situation. In 2022, in the period from January to September, as the referenced report reads, this time has decreased to 31.9 days for acts and 6.9 days for regulations. At a time of rising business costs, these figures cannot instil optimism – especially when one considers the continuing trend of reducing “response times” to new legislation.

Data provided by Grant Thornton also shows that as many as 44 of the 78 laws that came into force in 2021 had a vacatio legis of between 0 and 14 days. Similarly, as many as 178 of the 355 regulations that came into force in 2021 were implemented “on the fly”. Of the 78 laws that came into force last year, only 4 were subject to a minimum six-month vacatio legis. Similarly, only 4 out of 355 regulations received a vacatio legis of minimum three months. Statistics show the abuse of Art. 4 of the Act on promulgation of normative acts and certain other legal acts, and the use of provisions on “important state interest requiring immediate entry into force of a normative act”.

The tendency to abruptly shorten the vacatio legis in the context of laws entering into force with the arrival of the new year is also worrying. Here, the average vacatio legis for laws is 25.8 days, and for regulations 5.9 days. This only demonstrates an unnecessary haste in the creation and implementation of laws, which entrepreneurs often cannot keep up with. However, once they manage to implement the new regulations in their business, it often turns out that – while the vacatio legis is still in effect or immediately afterwards – numerous amendments are introduced, destroying the new order that has just been established.

Meanwhile, while in 2021 the average vacatio legis of the Polish law was 33 days, in the Czech Republic it was 98.7 days, and while in the same year the average vacatio legis for regulations was 7.2 days, in Sweden it was 76.6 days. Both countries compared with Poland are members of the European Union, so they are bound by similar procedures to our country. 

The problem is relevant for all businesses operating under Polish law, but it is most acutely felt by representatives of the SME sector, which often does not have specialised units responsible for thorough analysis of legislative acts. It is worth mentioning that SMEs account for as much as 99.8 per cent of domestic enterprises, while employing 67.4 per cent of those working in the business sector. Therefore, the “problematic” vacatio legis particularly affects companies generating every second zloty (49.6% of GDP according to PARP data), which are the flywheel of the Polish economy.

It should be remembered that the creation of a business-friendly legal and regulatory environment should be one of the main objectives pursued by the state. This is particularly important at a time of economic turbulence and general uncertainty about the development of the macroeconomic situation. Today, however, the legislative environment forces companies to adapt immediately to new regulations, which is time-consuming and costly – often companies in the SME sector have to use the services of specialised external entities in order to implement new regulations immediately. The lack of order in the issue of vacatio legis – bearing in mind also the tendency to reduce it every year – already makes companies take a close look at the issue of planning investments in Poland, which should be treated as a priority in the current economic situation. The uncertain legislative environment disturbs continuous economic development.

For years, the Union of Entrepreneurs and Employers has been calling for the introduction of a principle whereby all economic regulations come into force only on 1 January of a given year and are preceded by at least 12 months of vacatio legis. We believe that this solution would be a good answer to the problem of an increasingly unstable regulatory environment for companies.