Green light for green investments
In Poland, both areas are underdeveloped and the need for improvement is clear. On both a micro and macro scale, Poland must adopt strict European environmental standards and rules. For entrepreneurs, this means nothing less than a green light for green investment.
Eco-friendly investments have a wide range of grant opportunities, but this doesn't mean that every green investment will receive funding - in the form of a preferential loan or other types of support. Moreover, since each program promotes a different type of investment, not every fund or program is suitable for every project. Very often, good projects are rejected because the entrepreneur has chosen the wrong program or fund.
The wide range of grant opportunities in this area does not always make it easy to choose the right source of financing. The entrepreneur has to decide whether to apply for funding from pre-accession funds, structural funds or community programs. Usually it is necessary to choose only one instrument and the choice is listed in the table below.
Sixth Framework Programme
Pre-accession funds (SAPARD) have been set aside for environmental investment support and are available directly to companies which make investments in rural areas and which specialize in food processing. Under the ISPA program, which supports big infrastructure projects, companies can act only as a subcontractors.
Structural funds are offered in the three main areas:
• new investments with a positive impact on the environment;
• support for investments that bring companies in line with environmental protection requirements; and
• environmental infrastructure projects in partnership with local communities.
The first two types of support are directed at entrepreneurs, the third mainly to local communities, but companies can act as partners in the projects. A separate group relate to investments by food processing companies, which can be financed from the European Agriculture Guidance and Guarantee Fund - Guidance Section (EAGGF GS).
Finally, eco-friendly investments can expect to attract financing from community programs. There are three key programs that should be considered during investment planning:
• Intelligent Energy - Europe, which supports:
- the use of alternative energy sources;
- improvements in energy efficiency;
- the promotion (internationally) and use of alternative energy sources and improvements in energy efficiency; and
- the implementation of new energy consumption solutions in transport.
• Life Environment supports innovative techniques and processing methods, by co-financing demonstration projects in the following areas:
- water management;
- reducing the negative impacts of business activity on the environment;
- waste management; and
- reducing the negative impact of products on the environment through integrated product policies.
• The Sixth Framework Program, which is aimed at funding research, technological programs and the implementation of activities in different areas, covers:
- renewable energy sources (i.e. clean or green energy) and their integration with existing energy systems, including storage, distribution and use;
- energy saving and energy efficiency, including improvements achieved through the use of energy-efficient raw materials;
- alternative fuels, mainly biofuels, natural gas and hydrogen;
- eco-friendly transport systems and means of transportation, state-of-the-art design;
- processes that increase the effectiveness, competitiveness and integration of various types of surface transport; and
- studies of the impact of emissions on climate change and ozone depletion.
As well as these options, the list also includes a cohesion fund. As with ISPA (pre- accession fund), the fund supports big infrastructure investments. Entrepreneurs can benefit from the fund only indirectly by acting as subcontractors on projects.
Once funding opportunities have been identified, the game moves on to the next stage: How to select the right program or fund for financing your investment, and how to increase the chances of receiving financial support? The easiest way to do this is to analyze the investment carefully and answer the three following questions.
What do I want to achieve with my investment? The answer will help with the selection of funds and ensure that the project aim is clear. For example, if you are planning an investment in renewable energy sources to diversify the activities of your company, it should be clear that the fund to apply for is ERDF. This is the fund for new investment, the other funds are for R&D projects under Intelligent Energy - Europe, LIFE - Environment or the Sixth Framework Program.
Are we planning to undertake our own R&D, or just to purchase and implement new technologies and machines? If R&D is unlikely, then we can exclude community programs and concentrate on pre accession and structural funds.
Do you want to act alone or as part of a consortium or partnership? Applying for funds as a sole contractor means that you cannot apply to community programs, the cohesion funds, ISPA or the infrastructure investments eligible under ERDF. On the other hand, if you plan to co-operate with partners from different countries and branches, then community programs can be the obvious choice.
These three steps should ensure that you choose the right type of funding, but of course, they are not enough to choose the right measure and priority of the fund or program. One thing is clear: When you plan an investment, which can directly or indirectly have a positive impact on the environment, you should start looking for investment support. EU funds cover almost every aspect of green investments and offer very attractive grant terms.
Pre-accession funds, such as, Intelligent Energy - Europe and the Sixth Framework Program, are available to Polish entrepreneurs now. From May, 2004, companies will also be able to apply for funding from structural funds and the LIFE-Environment program. With such a variety of funds on offer, the green light for green investments should be on by then.
Michał Gwizda, Consultant, EU Advisory Services at Ernst & Young
Eco-friendly investments have a wide range of grant opportunities, but this doesn't mean that every green investment will receive funding - in the form of a preferential loan or other types of support. Moreover, since each program promotes a different type of investment, not every fund or program is suitable for every project. Very often, good projects are rejected because the entrepreneur has chosen the wrong program or fund.
The wide range of grant opportunities in this area does not always make it easy to choose the right source of financing. The entrepreneur has to decide whether to apply for funding from pre-accession funds, structural funds or community programs. Usually it is necessary to choose only one instrument and the choice is listed in the table below.
Sixth Framework Programme
Pre-accession funds (SAPARD) have been set aside for environmental investment support and are available directly to companies which make investments in rural areas and which specialize in food processing. Under the ISPA program, which supports big infrastructure projects, companies can act only as a subcontractors.
Structural funds are offered in the three main areas:
• new investments with a positive impact on the environment;
• support for investments that bring companies in line with environmental protection requirements; and
• environmental infrastructure projects in partnership with local communities.
The first two types of support are directed at entrepreneurs, the third mainly to local communities, but companies can act as partners in the projects. A separate group relate to investments by food processing companies, which can be financed from the European Agriculture Guidance and Guarantee Fund - Guidance Section (EAGGF GS).
Finally, eco-friendly investments can expect to attract financing from community programs. There are three key programs that should be considered during investment planning:
• Intelligent Energy - Europe, which supports:
- the use of alternative energy sources;
- improvements in energy efficiency;
- the promotion (internationally) and use of alternative energy sources and improvements in energy efficiency; and
- the implementation of new energy consumption solutions in transport.
• Life Environment supports innovative techniques and processing methods, by co-financing demonstration projects in the following areas:
- water management;
- reducing the negative impacts of business activity on the environment;
- waste management; and
- reducing the negative impact of products on the environment through integrated product policies.
• The Sixth Framework Program, which is aimed at funding research, technological programs and the implementation of activities in different areas, covers:
- renewable energy sources (i.e. clean or green energy) and their integration with existing energy systems, including storage, distribution and use;
- energy saving and energy efficiency, including improvements achieved through the use of energy-efficient raw materials;
- alternative fuels, mainly biofuels, natural gas and hydrogen;
- eco-friendly transport systems and means of transportation, state-of-the-art design;
- processes that increase the effectiveness, competitiveness and integration of various types of surface transport; and
- studies of the impact of emissions on climate change and ozone depletion.
As well as these options, the list also includes a cohesion fund. As with ISPA (pre- accession fund), the fund supports big infrastructure investments. Entrepreneurs can benefit from the fund only indirectly by acting as subcontractors on projects.
Once funding opportunities have been identified, the game moves on to the next stage: How to select the right program or fund for financing your investment, and how to increase the chances of receiving financial support? The easiest way to do this is to analyze the investment carefully and answer the three following questions.
What do I want to achieve with my investment? The answer will help with the selection of funds and ensure that the project aim is clear. For example, if you are planning an investment in renewable energy sources to diversify the activities of your company, it should be clear that the fund to apply for is ERDF. This is the fund for new investment, the other funds are for R&D projects under Intelligent Energy - Europe, LIFE - Environment or the Sixth Framework Program.
Are we planning to undertake our own R&D, or just to purchase and implement new technologies and machines? If R&D is unlikely, then we can exclude community programs and concentrate on pre accession and structural funds.
Do you want to act alone or as part of a consortium or partnership? Applying for funds as a sole contractor means that you cannot apply to community programs, the cohesion funds, ISPA or the infrastructure investments eligible under ERDF. On the other hand, if you plan to co-operate with partners from different countries and branches, then community programs can be the obvious choice.
These three steps should ensure that you choose the right type of funding, but of course, they are not enough to choose the right measure and priority of the fund or program. One thing is clear: When you plan an investment, which can directly or indirectly have a positive impact on the environment, you should start looking for investment support. EU funds cover almost every aspect of green investments and offer very attractive grant terms.
Pre-accession funds, such as, Intelligent Energy - Europe and the Sixth Framework Program, are available to Polish entrepreneurs now. From May, 2004, companies will also be able to apply for funding from structural funds and the LIFE-Environment program. With such a variety of funds on offer, the green light for green investments should be on by then.
Michał Gwizda, Consultant, EU Advisory Services at Ernst & Young
