In today's article in the series "Tuesday Mornings for Construction," we return to ESG issues in real estate and introduce you to solutions in the form of green investments. This is an important topic, as, in conjunction with the EU's commitment to reducing greenhouse gas emissions across all sectors of the economy by 2050, a growing number of companies are emphasizing greater energy efficiency. Therefore, so-called "green investments" are gaining in importance, as they aim to slow the release of heat-trapping gases such as carbon dioxide, methane, nitrous oxide, and others into the atmosphere.

Green investments are primarily legal solutions designed to accelerate the achievement of climate goals, including increasing energy efficiency and the importance of renewable energy sources in the economy, implementing solutions supporting circular economy , developing financial instruments promoting green investments , promoting standards that emphasize energy efficiency and sustainable planning, and building environmental awareness in society through the dissemination of educational programs on more environmentally friendly living.

A circular economy is a development strategy that minimizes resource use and waste generation by creating closed-loop processes in which waste is treated as reusable resources. It is based on the six "R" principles: Refuse , Reduce , Reuse, Recover , Recycle , and Rethink . - refund system, and to maximize energy efficiency through the production of devices such as wind turbines, heat pumps, batteries, solar panels, carbon capture, utilization, and storage (CCUS), electrolyzers, and others.

Financial instruments promoting green investments are legal instruments described, among others, in the Regulation on sustainability-related disclosures in the financial services sector (Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector; " SFDR "), the Regulation on the establishment of a framework to facilitate sustainable investment (Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088; " Taxonomy ") and their delegated acts. Generally, green investments can be categorized into two groups: " light green financial instruments " and " dark green financial instruments ". " Light green " is described in Article 8 of the SFDR. By definition, they do not have to pursue environmental or social objectives, but merely "promote" them. " Dark green financial instruments, " however, are described in Article 9 of the SFDR and have a more significant purpose – namely, implementing the concept of sustainable investments. It should be emphasized that this is solely a system intended to streamline the process of disclosing information on sustainable development, not a tool for certification or assessing product quality in this regard.

“Energy efficiency” is a concept introduced into Polish law based on the Act of 20 May 2016 on Energy Efficiency, which sets a target for Poland’s energy consumption to reach 5,580,000 tonnes by the end of 2030, through the implementation of a system of energy efficiency certificates (“white certificates”) and alternative measures.

"White certificates" are awarded to companies selling electricity, district heating, gaseous fuels, as well as fuel entities introducing liquid fuels into the market, brokerage houses and end users, i.e. users purchasing fuels or energy for their own use, who undertake actions that contribute to saving electricity by improving the energy efficiency of the end user.

"Alternative measures," on the other hand, are substitute measures available to the aforementioned entities that choose not to pursue "White Certificates." These are programs and instruments aimed at improving energy efficiency, financed, among others, from the state budget, local government units, EU funds, aid provided by EFTA member states, the National Fund for Environmental Protection and Water Management, and the sixteen provincial funds for environmental protection and water management. State aid for micro, small, and medium-sized enterprises is intended to support entrepreneurs in the "green transformation" process.

Pursuant to the noteworthy regulation of the Minister of Development and Technology of September 29, 2023, on granting public aid for the implementation of investment projects of strategic importance for the transition to a net-zero emissions economy, facilitations have been introduced for entrepreneurs wishing to invest in a "low-emission project." Thus, an entrepreneur wishing to invest in a "low-emission project," as defined in the regulation, must meet a total of five criteria:

1. plan to carry out an "initial investment" within the meaning of Article 2(49) of Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty,
2. incur costs of at least EUR 110 million in connection with the investment,
3. in connection with the investment, plan to create at least 50 new jobs,
4. guarantee that the investment will be completed no later than 7 years after the commencement of work,
5. meet at least 5 of the additional conditions – these include: investment in renewable energy sources, location in an area at risk of exclusion, creation of regional connections, robotization and automation of processes, use of human resources potential or undertaking employee care activities, while the total amount of aid for one entrepreneur cannot exceed EUR 150 to 350 million.

At this stage, it seems that the biggest barrier to submitting an application is the amount of costs that a novice entrepreneur would have to allocate for the investment, i.e. the amount of EUR 110 million.

Not so long ago, green investments were perceived as legal solutions applicable only to a narrow group of entrepreneurs. Today, sustainable investing is gaining interest among an increasingly broader audience. It's becoming a rapidly growing industry, not only generating significant financial returns but, above all, promoting sustainable development.

This article is for informational purposes only and does not constitute legal advice.

Legal status as of January 13, 2025

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Michał Kijewski

Legal Counsel, Partner
+48 502 047 489 | m.kijewski@kglegal.pl

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