A long-term programme promoting biofuels and other renewable fuels for 2008-2014 adopted by the government in July 2007 is on the one hand in keeping with putting into practice the Act passed in August 2006 in regard to biocomponents and liquid biofuels, while on the other, it is essential to the fulfilment by Poland of European Council directives of March 2007.
The document provides solutions which are to ensure the economic viability of the whole production process of biocomponents and liquid biofuels, as well as the mechanisms leading to the increase in demand for them.

Support for production of biocomponents
The essential condition for the development of the market for biocomponents and liquid biofuels are solutions guaranteeing sufficient support, which would make the price of fuels containing biocomponents competitive with the price of mineral fuels.
One of the more effective tools in promoting the use of biocomponents, liquid biofuels and other renewable fuels is the long-term stable and predictable system of support through preferential taxation of fuels with these components.
The government programme provides solutions in the area of excise duty and corporate income tax and in the area of fuel charges (biocomponents making up intrinsic fuels will be exempt).
The system of preferential solutions for excise duty should take advantage of all opportunities which the Directive 2003/30/EC provides in regard to the restructuring of Community regulations for taxing energy products and electric energy. Whereas there is a proposal to introduce deductions from corporate income tax that would compensate for part of the biocomponent production costs.

Biodiesel with FAME
One of the first and most modern installations in the country for the production of biocomponents added to diesel oil and for the production of fuel commonly known as biodiesel was opened in May this year in the Lotos Group’s oil refinery in Czechowice-Dziedzice in southern Poland.
The installation has an annual production capacity of 100,000 tonnes of fatty acid methyl ester (FAME) and 12,000 tonnes of technical grade glycerine. The production process is based on the concept for producing biofuels from vegetable oils and animal fats as well as methanol using esterification methods used in the flow process. At the same time, an installation was built for storing and adding esters to diesel oils. As a result it is expected that air pollution will be reduced, including carbon dioxide emissions by 186,000 tonnes annually.
The whole project is valued at PLN80 million, of which more than 40%, that is PLN35 million, was lent by the National Fund for Environmental Protection and Water Management. “The loan was made in 2007 according to the priority programme for air protection and for increasing the production of energy from renewable sources, including biofuels,” explains Małgorzata Skucha, deputy president of the National Fund. “It is the biggest loan in our nearly twenty-year old history for the building of the installation for the production of components to be used for the biofuels market.”
“The investment by Lotos Group in Silesia was made to principally meet the needs of the Polish market,” stresses Paweł Olechnowicz, president of Lotos Group. “Today, Lotos Group is joining the action for the biofuels markets. We are not worried about competition. Firstly, because we have a lot of experience in the production of biofuels; we have been selling fuels with bioethanol additive since 1997. Secondly, the biocomponent from Czechowice-Dziedzice will be a product of the highest quality on the market, because of the advanced production technology used in the planning and building of the FAME factory.

Funds for the cultivation of energy crops
In order to ensure the stable supply of raw materials for FAME production, Lotos Biopaliwa, a member of Lotos Group, entered in 2007 into important contracts until 2012 for the supply of raw rapeseed oil. The cost of the raw material makes up the greatest part of the cost of biocomponent production.
Production viability can be ensured by using resources from European funds and national public funds allocated for the support of agricultural production.
The amended Council Directive 1782/2003, determining the principles for direct support systems within the Common Agricultural Policy and establishing specific support for farmers, from 1 January, 2007 enables the receipt of subsidies by farmers from European Union resources (up to EUR45/ha) to cultivate energy plants, which also includes plants for biocomponent production. In the amendment to the regulation, cultivation over many years qualifies within payment for land and additional assistance from national resources has been made possible.

EU Funding
Investments associated with biocomponent production are eligible for partial funding from 2007-2013 Operational Funds. Hence, Priority 10 of the Infrastructure and the Environment Operational Programme, “Environmentally Friendly Energy Infrastructure,” includes measure 10.3 - “Development of Industry for Renewable Sources of Energy”. Within it funding may be provided to projects involving the construction of plants to manufacture equipment for the production of biocomponents and liquid biofuels constituting intrinsic fuels, bioethanol from agricultural products and pure vegetable oil (where minimum value of the project is EUR5 million). It is expected that EUR69 million from the Cohesion Fund and EUR8 million from national public funds will be provided for this activity. Also, Operational Programme “Innovative Economy” provides funds within Priority 4 “Investments in Innovative Enterprises”.
The Rural Development Programme for 2007-2013, Priority 1 “Improvement of Rural and Forestry Sector Competitiveness” also includes funding for investment projects that produce bioethanol (production of ethyl alcohol together with dehydrating) and production of unpurified or refined oils and fats for biofuels. Any one recipient can obtain funds of up to PLN20 million, while funds approved for one project cannot be lower than PLN100,000.

Shaping demand
The proposed incentives are principally aimed at guaranteeing appropriate levels of supply of biocomponents and liquid biofuels on the Polish market. However, to increase the consumption of liquid biofuels, it is essential that supply be met with an appropriately large demand for this product. Hence, the programme proposes activities to support the increase in demand for liquid biofuels. They include the creation of zones for ecological public transport, exemptions from payment for parking, and – for companies – exemptions from charges for the use of the environment and preferences in the purchase of vehicles and machinery equipped with engines adapted for liquid biofuels usage within public tenders.


It is predicted that the path to reaching these amounts in Poland between 2007-2014, equivalent to the levels of the so called National Objectives Indicator, will be as follows: 2008 – 3.45%, 2009 – 4.6%, 2010 – 5.75%, 2011- 6.2%, 2012- 6.65%, 2013 – 7.1% and 2014 – 7.55%.