Background information

The National Decarbonization Fund (NDF) aims to support investments in low-carbon development through sustainable and targeted financing for a broad group of beneficiaries. It is planned to be a major financial scheme to support the renovation of the building stock in Bulgaria. The NDF will adapt the financial instruments or structure additional ones as necessary, in order to dynamically address the barriers to increasing energy efficiency.

According to the National Recovery and Resilience plan, the Fund foresees the establishment of a single point of technical assistance for applicants through a one-stop shop or similar mechanisms. The involvement of local banks/financial institutions in this financial scheme will be a key element for the success of the Fund as, in their role as financial intermediaries, their participation will not only contribute to leveraging investments in the form of co-financing, but should also greatly simplify the project financing process.

Content of measure

The new National Decarbonisation Fund (NDF) shall be one of the main financial schemes in support of the Bulgarian Long-Term Renovation Strategy (LTRS) and shall provide a decisive contribution to achieving the national targets in terms of decarbonising the economy in accordance with the National Energy and Climate Plan. This NDF may also be a key instrument to deliver the low carbon priority of the Bulgarian Resilience and Recovery Plan (RRP), and thereby possibly be used to channel current and future EU funding programmes, including Cohesion and Recovery and Resilience Facility (RRF) funds.

In the course of project implementation, an assessment of the national regulatory framework for energy efficiency was carried out, which has a direct impact on the planned business model and the way the decarbonisation fund will operate. Amendments and additions that can be made to the regulatory framework and lead to a faster and more sustainable green transformation of the national building stock have been proposed to structure its successful market strategy.

Use of measure

The Green Transition takes a leading position in the Bulgarian Recovery and Resilience Plan, concentrating 53.66% of the total foreseen expenditure, with a minimum of 37% set by the European Commission Regulation.

The project 'Support for the establishment of a National Decarbonisation Fund (NDF)' has been implemented under Reform C4.R1 'Establishment of a National Decarbonisation Fund' of the National Resilience and Recovery Plan, with the support of the European Commission's DG 'Reforms' and with the cooperation of the European Investment Bank, PricewaterhouseCoopers and Ecoris. This effort marks the successful completion of the first key stage in establishment of the National Decarbonisation Fund.

In 2024 a fund manager will be appointed, an advisory board as well as sub-funds will be established, and a procurement process will be launched to select fund managers for the different sub-funds - public sector, corporate clients and residential buildings.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Applies to all businesses	Applies to all citizens

Actors and funding

Actors	Funding
National government EU (Council, EC, EP)	European Funds National funds National Recovery and Resilience Facility

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Any other form of consultation, institutionalised (as stable working groups or committees) or informal	Any other form of consultation, institutionalised (as stable working groups or committees) or informal

Social partners' role in the implementation, monitoring and assessment phase:

• Social partners jointly
• Main level of involvement: Peak or cross-sectoral level

Involvement

Social partners provided comments on the content of the National Recovery and Resilience Plan, part of which is the reform, including the creation of the National Decarbonisation Fund.

Views and reactions

Confederation of Independent Trade Unions in Bulgaria (CITUB) commented on the creation of the National Decarbonisation Fund, expressing the need for greater clarity on its functions, capitalisation and project financing modalities. It is not clear to what extent this new fund would differ from other instruments for financing low-carbon investments. CITUB insists on a clear link between the objectives of the Fund and the priorities of the just transition.

According to the Bulgarian Industrial Association (BIA), the National Recovery and Resilience Plan includes unclear status of the National Decarbonisation Fund and does not define the beneficiaries. Significant reforms, including administrative and legislative, are needed to achieve the goals. The establishment of a national decarbonisation fund should be reconsidered in terms of practicality and effectiveness, as the experience of such structures so far shows delayed organisational establishment, non-transparent funding and lack of interest from potential beneficiaries. Access to funding for infrastructure related to the hydrogen economy, electro-mobility and other leading areas of the carbon-free economy, where the country is lagging significantly behind the latest developments, should be regulated. It also lacks the necessary specificity to show its intentions and its link to overall policies and measures. It is clear from the description that the Fund is to be financed by public funds - from the EU, the State Budget and loans from international financial institutions. This is far from the policy adopted in the EU to involve more private capital through financial mechanisms, stated BIA.

Sources

• 26 November 2020: ON: Draft Recovery and Sustainability Plan for the Republic of Bulgaria (www.bia-bg.com)
• 30 November 2020: Opinion of CITUB on the draft "Recovery and Resilience Plan" of the Republic of Bulgaria. (knsb-bg.org)
• 10 January 2023: Bulgarian National Decarbonisation Fund (www.me.government.bg)
• 15 January 2023: The first key stage for the establishment of a National Decarbonization Fund is completed (www.me.government.bg)
• 03 May 2023: National Recovery and Resilience Plan (www.mig.government.bg)
• 25 May 2023: Ordinance No 83 (25.05.2023 (www.ciela.net)