Supporting the EU Green Recovery: the Croatian perspective

Julije Domac

SEI Forums webinar on Sustainable energy investment in Member State recovery plans on 30 June 2020

Setting the scene

• GDP per capita among the lowest in the EU

• Negative impact of COVID-19• Tourism (cca 20%) and the service sector play a major role in the Croatian

economy

• Questionable tourist season in 2020

• Zagreb earthquake (March 2020)• Major damage to the cities historical centre and the surrounding area

• High share of fossil fuels in the heating and transport sectors

• BIG problems = BIG opportunities! ☺

Green recovery potentials

• New business opportunities identified during the COVID-19 pandemic• Focus on reform and investments fostering green and digital transitions

• IT services, remote work, digitalization (schools!)

• Most promising sectors: Energy, Agriculture, health

• COVID 19 + Zagreb earthquake – combined impact and opportunity• Zagreb City Advisory for earthquake recovery – Strategic long-term vision

• Testing of a recovery model in Zagreb – potential national (and wider) deployment (green transition) - opportunity for the development of alternatives such as District heating, heat pumps, smart buildings

• Utilization of locally available resources (Local actions for local value)• PV + energy storage + EVs combined with a widespread renovation wave

Activities on national, regional and local level

• Kick-starting Integrated energy and climate planning• Integration of energy, climate and spatial planning

• Participatory approach for the development of strategic documents

• Innovative financial mechanisms for RES (PV) installation alreadystarted

• RES premium model adopted in May 2020

• Initiatives for strategic development of new funding models that combine different funding streams (the private capital inclusion struggle)

• Heat supply contracting in public buildings

Pre-COVID19 FIs for energy efficiency

4

Environmental Protection, Energy Efficiency and Renewable Energy Resources

3

2

1

Energy Renovation of Buildings

ESIF Energy efficiency loans

ESIF Public lighting loans

FIs implemented by HBOR complement ESIF grants

• Ministry of Construction and Physical Planning: 1st levelImplementing Authority

• Environment Protection and Energy Efficiency Fund: 2nd levelImplementing Authority

• Grants• For public authorities (public buildings), up to 50%

• For multi-appartment buildings, up to 60%

ELENA project: Sustainable Energy HBOR

• HBOR applied for ELENA funding, project approved and contractsigned (details available on EIB website, project factsheet)

• Project start 4Q 2019, project end 4Q 2022

• Main activities• Preparation and verification of energy audits, basic technical design

documentation preparation, development of technical solutions, business plan and procurement support for loan applicants

• Preparation for HBOR’s implementation of three types of ESIF loans for energy efficiency investment in the public and private sectors

• Support to HBOR’s lending programs in EE/RE and other sources of funding

ELENA project: Sustainable Energy HBOR (2)

• Investment Programme:• EE and RES in public buildings

• EE and RES in private buildings

• EE in street lighting

• 130.000 m2, 60.000 street lighting point

• 57.600.000 EUR (!)

• Total cost: 2.330.250 EUR• ELENA co-financing 2.097.225 EUR (90%)

Sustainable Energy for Households• Ministry of Construction and Physical Planning, National Working

Group• Established in July 2018

• Key stakeholders

• Ministry of Energy, Ministry of Social Affairs, FZOEU, 2 energy agencies, NGOs

• Preparation of Call for subsidies for households

• Regular households

• Energy Poor households (up to 100% subsidies!)

• Energy efficiency investments AND RES investments (!)

• Call text passed public consultation, finalised by June 17 2020• App 20 Meur total (grant component), no ESIF – only domestic funding!

What we expect from the EU?

• Holistic support in Green Deal implementation• Knowledge, experience, cooperation, financial schemes, smart specialization

• Enabling a Bottom-up approach for local and regional development• Decentralisation of legislative and financial structures

• Local authorities must be in the focus - development based on local potentials and needs

• Creation of local value – visibility of actions

• Different funding streams that will be made available need to be properly planned and managed to be in the service of green transition (e.g. Recovery Fund)

Croatia’s contribution to the EU

• Positive experience in the implementation of the ITI (integrated territorial investments) mechanism – decentralization of funding management to local authorities based on ex-ante evaluations

• Positive examples of sustainable development in adverse conditions• Considering overall economic situation + COVID-19

• Swift containment of COVID-19 outbreak, quick reaction on all levels resulting in low numbers of infected and deceased• Economic recovery much better than expected!

• Positive impact of digitalisation and implementation of IT solutions in public administration