(This paper was written as an assignment for the Electric Vehicles Course offered by TU Delft. It discusses several aspects of the Polish electric mobility policy and reflects the opinions of the author only. No liability shall be taken for the correctness of the data or facts quoted.)

1. Introduction

1.1. Background information

Poland[1] is a medium-sized EU country, with a population of 38 million inhabitants on a surface area of 312 thousand square kilometers (slightly smaller than Germany). About 60% of the population lives in urban areas[2].The GDP per person is estimated at 16 180 US dollars, and the average gross monthly salary equates to 1133 euros. Economic growth in 2017 amounted to 4.6%, and may surpass 5% in 2018 according to various estimates, e.g. by the National Bank of Poland[3]. Inflation is moderately low at 2.0%. About 2 million Poles live and work abroad.

1.2. Automotive industry and market

In 2017, Poland exported goods worth about 203 billion euros, 27.4% of the export being destined for neighboring Germany. The automotive industry (mainly cars and parts) accounted for 9.7% of all exports, and produced 666 000 vehicles in the same period. None of the global car brands has its headquarters in Poland, but there are several recognizable Polish automotive brands such as Solaris (buses and trolleybuses), Ursus (tractors and buses) and Jelcz (buses), all of which also produce electric vehicles.

The current automotive car park in Poland consists of 29.8 million vehicles, 75.8% of which are passenger cars. The average age of a passenger car is 13.8 years (by comparison, it is only 8 years in Germany), with 35.1% of the car park being more than 20 years old.

New passenger car registrations in Poland amounted to 547 thousand in 2017, 69.7% of them being company cars. This is equivalent to 12 passenger cars per 1000 inhabitants, compared to an EU average of 30 cars[4]. The most popular car brand is Skoda, with about 12.8% of new registrations, followed by Toyota and Volkswagen. There is also a stream of aged used cars which arrive by import from more developed Western European countries, with the number of used car registrations more than twice as high as the number of new car registrations.

1.3. Transport electrification

Poland is a late comer to electric mobility. In October 2018, there were only 2133 plug-in electric vehicles on Polish roads[5]. Nevertheless, 17% of surveyed Polish citizens consider buying an electric car within the next three years, compared with 12% in May 2017[6]. The increase in EV registrations between 2016 and 2017 amounted to 110.6%, in line with EU trends, although only 439 cars sold in 2017 were BEVs.

Charging infrastructure also lags behind. In October 2018, there were only 259 publicly available charging points in Poland, including just four fast chargers with 120 kW power[7]. GreenWay[8] is the most widespread e-mobility services provider. Traditional fossil fuel companies such as Orlen and Lotos have also entered the market, in particular with a plan to establish fast chargers along the TEN-T transport corridors.

1.4. Energy and environment

The Polish energy grid is dominated by traditional sources, such as coal (70.7%)[9]. Although Poland is number two in Europe in terms of hard coal mining production, it is also a coal importer. The yearly consumption of coal (74.1 million tons) surpasses excavation (65.8 million tons). Nevertheless, only 30% of Poland’s energy supply depends on imports, compared with 53% in the EU average.

The share of renewables in energy consumption is about 12%. The main primary source of renewable energies are biofuels (44.7%), followed by hydroelectric power (14.3%) and wind power (12.4%). Solar energy only accounts to 6.2% of the total renewable energy sources. Correspondingly, only 5.5% of energy consumption is powered by wind energy and only 2.8% by solar energy.

Not surprisingly, Poland is also one of the countries with the highest air pollution in Europe, especially PM10 and PM2.5 solid matter[10], with yearly acceptable norms being exceeded in major Polish cities. Road transport has a contribution of 13.5% to the overall pollution, and the energy production sector directly contributes only 10%. The largest contributor (49.7%) is defined as “burning processes outside the industry”, which translates to coal-powered homesteads.

Electric energy costs are lower in absolute terms than in Western Europe, however, in terms of purchasing power, at 0.25 PPS/kWh, they place Poland within the top five EU countries with the most expensive electricity[11].

2. Policy motivations

2.1. A clean and modern Poland

The main policy drivers for electrification in Poland directly derive from Poland’s socio-economic and environmental situation, its ambitions and its contractual obligations, and can be described as follows:

Protecting the environment, in particular reducing pollution, which is a burden on the population and negatively impacts its health.
Meeting climate goals defined in the Paris climate agreement.
Using electromobility as an opportunity for a new economic opening, where Poland could enter as an important player as an innovative producer of electric cars and supplier of electric cars parts, services and software.
Optimizing the use of vehicles and modernizing transport patterns, thus reducing acute congestion problems in cities.
Enabling the transition to renewables, especially by providing a way to store energies produced by renewable sources.

Public declarations by the Polish government[12] mentioned a goal of 1 million electric cars on the roads by 2025. However, Poland currently does not have any official plans to withdraw internal combustion engine vehicles from circulation or to prohibit their sale. In fact, in view of these public declarations, the current legal and policy situation is modest.

2.2. Legislation

All legal aspects of electric mobility in Poland, including the role of public authorities, targets, incentives and disincentives, are regulated by the Law on Electromobility and Alternative Fuels (Ustawa o elektromobilności I paliwach alternatywnych), referred to henceforth as UoEiPA[13], passed on 11 January 2018[14]. Since the latter did not appear in a legal vacuum, it also required changes to the following existing laws:

Law on Public Roads (Ustawa o drogach publicznych)
Law on Road Traffic (Ustawa – prawo o ruchu drogowym)
Law on Public Mass Transport (Ustawa o publicznym transporcie zbiorowym)
Energy Law (Ustawa – prawo energetyczne)
Construction Law (Ustawa – prawo budowlane)
Law on Technical Inspection (Ustawa o dozorze technicznym),
Personal Income Tax Law (Ustawa o podatku dochodowym od osób fizycznych)
Corporate Income Tax Law (Ustawa o podatku dochodowym od osób prawnych)
Excise Tax Law (Ustawa o podatku akcyzowym)
Petty Offences Code (Kodeks wykroczeń)
Law on Revenue of Territorial Administration Authorities (Ustawa o dochodach jednostek samorządu terytorialnego)

The law sets the policy framework, duties for the public administration and some incentives for consumers. It does not define specific measures to subsidize or otherwise support electric mobility producers or service providers. Rather, such measures is in the hands of institutions such as the Polish Agency for Enterprise Development (Polska Agencja Rozwoju Przedsiębiorczości), which has initiated acceleration programs such as Elektro StartUp[15].

2.3. Recommendations

A successful implementation of electric mobility in Poland is currently hampered by the following factors:

The average income in Poland is low, and the costs of electric cars are relatively high. Mass introduction of electric cars will therefore require subsidies and significant tax breaks. An imminent problem is that diesel cars currently being phased out in Western Europe will find their way into Poland at affordable prices.
The use of renewable energy sources is still low, as the energy sector is dominated by fossil fuels.
The coal industry has substantial negotiation power, owing to its size and role in the economy, as well as to the strength of the trade unions. As an example, the Polish parliament (Sejm) has recently approved the withdrawal of low-quality coal[16], but only after a transitional period of two years.
The charging infrastructure is still inadequate, concentrated in a few main cities.

In order to reach all defined policy goals, the electromobility policy should dovetail into an energy policy with clearly defined goals for transition to renewable fuels, and into a transport policy furthering alternative means of transport, especially by developing mass transit solutions.

3. Institutions

3.1. Institutions and other players

UoEiPA foresees definite roles and duties, described in more detail in chapter ‎3.1 below, for the following major public institutions:

Ministry of Energy (Ministerstwo Energii), me.gov.pl, responsible for defining a national framework for the development of alternative fuel infrastructure, and is responsible for enabling and coordinating energy infrastructure projects and developing technical requirements for charging infrastructure.
Office of Technical Inspection (Urząd Dozoru Technicznego), udt.gov.pl – UDT, responsible for technical inspections of the charging infrastructure and maintaining the Register of Alternative Fuels Infrastructure (Ewidencja Infrastruktury Paliw Alternatywnych), which will be operational staring from 15 January 2019.
Energy Regulatory Authority (Urząd Regulacji Energetyki), ure.gov.pl – URE, responsible for energy concessions and detailed regulations regarding the energy infrastructure.
General Directorate for National Roads and Motorways (Generalna Dyrekcja Dróg Krajowych i Autostrad) (gddkia.gov.pl) – GDDKiA, , responsible for developing plans for electric charging points along national roads.
Local authorities, responsible for implementing charging point deployment plans in the local communes.
Central and local authorities, responsible for electrifying their fleets (see details below).
Polish Committee for Standardization (Polski Komitet Normalizacyjny), pkn.pl, responsible for standards development.

Commercial entities mentioned by the law are seen in the following generic roles:

Distribution System Operator (Operator Systemu Dystrybucyjnego Elektronergetycznego) – DSO
Transmission System Operator (Operator Systemu Przesyłowego) – TSO
Charging Services Provider (Dostawca Usługi Ładowania)
Publicly Accessible Charging Station Operator (Operator Ogólnodostępnej Stacji Ładowania)
Electrical Energy Provider (Sprzedawca Energii Elektrycznej)

The law does not explicitly name any non-profit organizations. However, the Polish Alternative Fuels Association (Polskie Stowarzyszenie Paliw Alternatywnych), www.pspa.pl, member of the European Association for Electromobiliy (AVERE), groups enterprises from the automotive, infrastructure, finance, energy etc. sectors, which work together to shape a favorable economic environment in Poland, help startups and lobby for electric mobility.

3.2. Targets for public institutions

UoEiPA requires public institutions to set an example by initiating the transition to electric mobility themselves. According to article 34.1, 50% of fleets operated by central institutions, such as government ministries, must be electric by 2030 (with a few exceptions, e.g. police, military and so on). Local authorities have less ambitious targets described in article 35.1, e.g. fleets used for own purposes must 30% electric, fleets used for public purposes must be 30% electric or run on LNG/CNG, public transport for communication in urban areas must include 30% zero-electric buses. These measures will be introduced in stages according to the provisions of article 68.1, i.e. 10% electrification by 1 January 2020, 20% by 1 January 2022 etc. A further constraint is imposed by article 83, which caps the amounts allocated from the Polish state budget to central authorities so that they can fulfill the duties arising from UoEiPA. These amounts are fixed absolute amounts and not very high, e.g. in 2018 only 4 010 000 PLN (less than 1 million euros) is foreseen. If these limits are threatened, the amount of compulsory electric cars can be downsized.

In addition to funds guaranteed by this legal act, there are also dedicated programs for local authorities. One example is the program offered by the National Fund of Environmental Protection and Water Management (Narodowy Fundusz Ochrony Środowiska i Gospodarki Wodnej) with a budget of 10 million PLN (ca. 2.2 million euros)[17]. Several institutions, such as the Polish Mail (Poczta Polska) are currently testing potential deployment of electric vehicles as part of their fleet.

A snag is that public institutions are required to carry out a cost and benefit analysis every 36 months. Based on that, communes can decide to discontinue electric fleet operation if the analysis shows that benefits are not being reached.

3.3. Recommendations

Poland is a centralized country, and Polish legislation tends to follow a top-down approach, with central authorities being in the lead as policy makers, and local authorities having assigned roles to fulfill. This approach can also be seen in the UoEiPA. In addition, public-private partnerships are not one of Poland’s strong points, and the consultative process – though transparent – leaves a lot to be desired, as it focuses on trade-offs between various ministers rather than on a dialogue with the industry and NGOs.

In order to ensure a harmonious set of policies covering both the electromobility and the energy sector, both the way in which actors participate in the process should be changed, as well as some of the targets of the legislation:

Representative bodies of the automotive, finance, energy and transport industries ought to play an active role in order to develop the proper incentives, and ensure that the legislation is realistic and takes future technologies into account. One example of this not happening is that the current law does not address alternative charging methods, such as mobile inductive charging, or battery swap. Neither does it address vehicle-to-grid technologies.
Regulations should be first tested in pilot projects. Local authorities and associations of local authorities (such as communes) should be allowed to put forward ideas for pilot projects and receive funding and support.
Professional associations of car users (e.g. taxis, truck fleets etc.) should contribute by formulating the best conditions under which they would be willing to carry out the transition to electric mobility.
Local authorities should be encouraged to carry out mass tenders in order to ensure economies of scale. (An example is the joint tender for electric buses, agreed by 41 Polish cities in 2017[18].)

4. Incentive schemes

4.1. Current incentive schemes

The only financial incentive scheme for the private consumer foreseen by UoEiPA is an excise tax waiver for zero-emission electric cars, and a temporary excise tax waiver for plugin hybrid cars until 1.02.2021. This waiver only applies to passenger cars, as does the excise tax itself. The excise tax is currently 3.1 % of the net value for passenger cars for engines below 2000 cm³, and 18.6% for remaining passenger cars.

This policy obviously favors premium cars with large engines, and discriminates middle-class cars. However, financial incentives for the premium car market segment have a far smaller effect on sales than incentives for cheaper cars. This undesirable effect will probably be even stronger in Poland due to the relatively low average income of the population, i.e. potential customers for cheaper electric cars will avoid them altogether.

The only indirect incentives for commercial users are currently the higher tax-deductible depreciation amount for electric vehicles (i.e. 30 000 euros) than for other vehicles (20 000 euros), paralleled by a similarly higher tax-deductible cap for EVs in the case of leased vehicles. However, these measures are pending approval by the European Commission.

Non-financial incentives include:

Access to bus lanes, which is at the discretion of the local authorities. This right can be modified depeding on the number of persons traveling in the car, thus encouraging car sharing.
The right to define emission-free zones in cities that will not be accessible to internal combustion engines.

The law foresees that other detailed subsidy measures will be defined by the Minister of Economy together with the Minister of Energy. However, no such measures are available yet. On the other side, the law provides a set of sanctions for transgression against all the actors involved, e.g. a sanction against charging point operators for making the charging service subscription-dependent (subject to a fine of up to 50 000 PLN – ca. 12 000 EUR).

Indirect incentives are defined in the transitional regulations (przepisy epizodyczne). For example, UoEiPA defines the minimum number of charging points depending on the size of the population and the number of registered cars:

1000 CPs in communes with more than 1 million inhabitants, at least 600 thousand registered cars and more than 700 cars per 1000 inhabitants, down to
60 CPs in communes with more than 60 thousand inhabitants, at least 60 thousand registered cars and at least 400 cars per 1000 inhabitants.

This is equivalent to 1 charging point per ca. 1000 inhabitants and / or 400-700 cars depending on the size of the commune. The number of charging points specifically includes charging points located along the TEN-T road network corridors. In this case, the chief officer of URE indicates the energy company that will carry out the function of a charging point operator. This should be the company which provides energy to the maximum number of recipients. The charging station will be then passed over to a supplier chosen in the result of a tender procedure.

According to declarations by the Ministry of Energy, this process should result in 400 fast chargers and 6000 slow chargers until 2020[19], with 150 fast chargers that should be ready until the end of 2018.

4.2. Recommendations

Incentives for individual users should be easy to apply and ideally present during the purchase of the vehicle, without unnecessary bureaucratic burdens. This is the case with the excise tax waver, which, however, is not sufficient to cover the cost gap for the less affluent parts of the population. The following measures could help to make electric vehicles more attractive:

Full or partial VAT tax waiver for electric vehicles. This would also provide a financial incentive for electric commercial vehicles, which currently have no tax incentives.
Additional premiums for returning an ICEV to the dealership, depending on the pollution class of the vehicle. These premiums could be distributed directly by the dealerships.
Subsidies for electric vehicles on conditions that the car will be charged using renewable energies, e.g. upon presentation of a photovoltaic cell installation certificate.
Schemes allowing the consumer to turn into a prosumer, feeding electric energy from the vehicle to the grid. (This particular measure would require an overhaul of the energy law).
Free parking and unrestricted access to bus lanes in urban areas.
Free or discounted access to motorways.
Regional variation of financial incentives, depending on the pollution in the region.
Disincentives or bans on purchasing used internal combustion cars beyond a certain age and pollution threshold.

Incentives for commercial users, encouraging them to switch entire fleets to electric cars, could be similar to incentives for individual users. On top of that, the fiscal system should allow more flexible depreciation schemes and classify the investment into charging infrastructure similarly to research and development expenses, which are subject to tax breaks.

Another possible incentive scheme could involve tax breaks or subsidies companies which develop e-mobility transport solutions, such as car sharing companies, taxi companies etc.

5. Social aspects

5.1. Current situation

Poland’s economic situation has been outlined in chapter ‎1. Additionally, it is worth mentioning that, contrary to several European countries, Poland does not have mega-cities. The largest conurbations are the Silesia and Warsaw metropolitan areas, both housing about 3 million people. Poland is a country with an aging population (ca. 15% over 65)[20]and a low birth rate. The income distribution similar to other EU countries (ranked 122 on the Gini coefficient, by comparison, Germany is ranked 132[21]), however as the income is lower than the EU medium, purchasing a car is a comparatively larger expense for a Polish family, and the car price is by far the most important decision factor, in spite of increasing environmental awareness. Polish car dealers are used to hard price bargaining by customers. Since Poland is a booming market for used cars, premium used cars often compete with new compact cars.

The young population is less attached to cars than preceding generations, but alternative forms of transport are hampered by the poor railway network and, in Warsaw, a subway network that is only developing. Therefore 55% of Poles use cars on their way to work[22], often driving children to and from school. Shopping is usually done in shopping malls, which again contributes to the high use of cars. Therefore, jobs with company cars are quite coveted, and the car is still a status symbol.

Purchasing electric vehicles is related to significant transactional costs, since dealerships often do not provide adequate information and are incapable of educating customers in terms of operation, charging or range anxiety problems. It is also difficult to find adequate financing models for electric cars.

5.2. Recommendations

Taking the social factors into account, the industry and the government should work together to provide an acceptable model for financing electric cars, e.g. with separate battery financing, as well as charging point financing.

In a status-aware society like Poland, electric cars can be promoted by the fact of becoming a status symbol. However, for this to happen, range anxiety must be overcome both physically (availability of charging points, but also emergency mobility services) and mentally, by educating the population. This is an area where the government, the automotive industry and the renewable energy industry should work together.

In addition, encouragement of car sharing, other new mobility solutions based on electric vehicles and the development of mass rapid transit systems could help transform car usage patterns, thus reducing the burden on the environment related to the inefficient use of cars, and thus the negative health impact.

6. Looking back

In order to reduce pollution and reach climate goals, much more needs to be done in order to reduce the environmental impact of the Polish energy mix, which is dominated by fossil fuels. However, the strength of the coal lobby is still a considerable factor, which should be overcome by a joint government policy clearly favoring the shift towards renewables.

The financial incentives to stimulate the electric car market are very limited. A VAT reduction or waiver would have a far larger impact on the affordability of electric cars than the excise tax waiver. This should be couple with a number of other financial incentives, developed together with the energy sector, that would encourage the comparatively low-income Polish population to migrate to electric cars.

The remaining non-financial incentives, such as access by electric cars to bus passes and limited access zones, will not be sufficient to encourage purchase and ownership of electric cars. In addition, the Law on Electromobility gives local authorities a lot of leeway to water down the regulations, such as allowing them to demand fees for access by ICEVs rather than keeping them out altogether. Since the amount of the fees is capped, the deterrent to use ICEVs may not be sufficient. Therefore, the catalogue of non-financial needs to be expanded, and their application made persistent by appropriate regulations.

[1] https://pl.wikipedia.org/wiki/Gospodarka_Polski, https://pl.wikipedia.org/wiki/Polska

[2] https://www.liczby.pl/baza-wiedzy/ludnosc/pytania/jaki-procent-ludnosci-mieszka-na-wsi

[3] https://www.nbp.pl/home.aspx?f=/polityka_pieniezna/dokumenty/projekcja_inflacji.html

[4] Polish Automotive Industry Association (Polski Związek Przemysłu Motoryzacyjnego), http://www.pzpm.org.pl/Rynek-motoryzacyjny/Roczniki-i-raporty/Raport-branzy-motoryzacyjnej-2018-2019

[5] http://pspa.com.pl/en/

[6] http://www.orpa.pl/polacy-przekonuja-sie-elektromobilnosci/

[7] http://pspa.com.pl/

[8] https://greenwaypolska.pl/

[9] https://stat.gov.pl/files/gfx/portalinformacyjny/pl/defaultaktualnosci/5485/1/6/1/energia_2018.pdf

[10] https://smoglab.pl/jakosc-powietrza-w-polsce-na-tle-unii-europejskiej

[11] https://stat.gov.pl/files/gfx/portalinformacyjny/pl/defaultaktualnosci/5485/1/6/1/energia_2018.pdf

[12] https://autokult.pl/27922,milion-samochodow-elektrycznych-na-polskich-drogach-do-2025-roku