Improving the environment or worsening the business climate: what to expect from an extraordinary environmental meeting?
On Thursday, July 15, the Verkhovna Rada will consider a range of environmental draft laws during an extraordinary sitting. This concern namely draft Law №4167 on industrial pollution, draft Law №3091 on state environmental control, draft Law №5339 on monitoring of air pollution, and draft Law №4461 on the territories of the Emerald Network.
Each of these documents is important for business because it is designed to implement European approaches in environmental monitoring and protection, namely air and biodiversity, to Ukrainian legislation. The European Business Association has consistently emphasized the need to reform environmental inspection and the importance of modernizing industry to European standards, as environmental and climatic factors are increasingly influencing the international economic agenda. Moreover, the EBA experts constantly provide comments and suggestions on draft laws that should help implement European directives without suffocating business.
But so far, all the above documents are united by a potential corruption component, institutional failure, and disregard for Ukrainian economic and legal realities.
Thus, draft Law №4167, twice failed by Parliament in the first reading, after a range of revisions behind closed doors, it is still far from the concept of reform of the industrial pollution permit system, provided by Directive 2010/75 / EU on industrial emissions and introduction of best available technologies (BAT). In particular, the draft law still regulates activities that are not included in the list of the Directive and for which there is no European BAT; does not contain an exhaustive list of grounds for a refusal to issue, revoke, suspend the integrated environmental permit; provides for the installation of automated emission monitoring tools at all facilities, while in the EU such requirements are prescribed only in the BAT and not for all industries; does not include a transition period for activities in the energy category and concerning the National Emission Reduction Plan (NERP), which is part of Directive 2010/75 / EU; does not involve business in the development and approval of BAT; proposes too short deadlines and the absence of any state aid for the implementation of the BAT, the costs of which will be entirely borne by the business. That is why the question arises, will all the above-mentioned remarks be taken into account before the second reading, if during two years of governmental and parliamentary work on the text of the document they were not being considered?
Draft Law №3091 was immediately sent for revision and preparation for the second reading. According to the developers, the document will help change the negative image of the State Environmental Inspectorate by creating a new body and introducing European approaches to control. However, from the experience of other EU countries, for some reason, good practices were not taken in terms of separation of powers, the introduction of responsibility of inspectors for illegal actions, publicity of inspection results, cooperation with other state bodies, etc. At the heart of the revised version of draft Law, №3091 are still the same levers of pressure on business and the lack of strengthening mechanism in the fight against poaching, illegal logging, and mining, which cause the greatest losses to the state.
Most of the questions are that although the text of the draft law states that it adheres to the hierarchy of current legislation in state supervision (control) in the field of economic activity (Law №877), but most of the provisions still do not meet it. Thus, we are talking about the introduction of a 4-stage gradation of companies depending on the degree of risk to the environment; the possibility of indicating only the address in the inspection order and checking all entrepreneurs located there at once; authorization for creating obstacles to officials (non-admission). Besides, the draft law clearly defines the powers and responsibilities of both regulatory authorities and businesses, but liability for non-compliance is provided only for companies. A key “highlight” of the document is the provision on the installation of automated monitoring systems within 6 months after the entry into force of the draft law. Although this provision is already provided by draft law №4167.
Draft law №5339 amends the current legislation in terms of regulating emissions of pollutants into the atmosphere. At the same time, the draft law is a kind of synthesis of key provisions of the above-mentioned documents – the obligation of companies to install automated systems for controlling emissions of pollutants (provided in draft laws №4167 and №3091) without understanding how data will be collected and establishes liability for unreasonable non-admission of inspectors (provided for in draft law №3091), which eliminates the right of business to non-admission provided by current legislation.
Besides, the document gives companies no more than 10 years to implement measures to reduce emissions of pollutants, ignoring both European regulations, which have never limited the right of business to eco-modernization over time, and the practical experience of EU countries that still implement BAT given their high cost. Thus, the statement, fixed in the explanatory note to the draft Law, on improving the mechanism for regulating emissions of pollutants into the air, issuing permits for emissions, improving government regulation, economic relations, reducing administrative pressure on businesses, and reducing their administrative costs, seems questionable. And the document itself looks more like a “lifeline” that, in case of non-adoption of the two above-mentioned draft laws, will ensure the legislative consolidation of certain norms, which without comprehensive reforms will not help reduce the impact of industry on the environment.
Finally, draft Law №4461, which should ensure the preservation of natural habitats and species of natural fauna and flora in the Emerald Network. After a series of comments from various stakeholders, including the National Agency on Corruption Prevention and working groups, the wording of the document remained unchanged, much to the chagrin of business. In particular, some provisions of the draft law may have an ambiguous interpretation, and thus become a basis for potential corruption risks and complicate the implementation of business investment projects:
- companies will be forced to obtain any additional permit for economic activity, namely the conclusion on the impact assessment on the territory (the second conclusion on the environmental impact assessment – EIA), and twice carry out a procedure aimed at assessing and reducing the negative impact of planned activities on the environment;
- lack of criteria for assessing the presence/absence of adverse effects and a clear list of activities that will be restricted and prohibited due to incomplete implementation of Directive 92/43 / EC, which provides such information and makes exceptions for projects of public interest;
- the lack of a clear list of activities that need to be assessed for impact on the territory may lead to differences in the application of the draft Law, as well as corruption risks because such decisions will be made at the discretion of the authorities;
- the lack of a clear list of activities that need to be assessed for impact on the territory may lead to differences in the application of the draft Law and corruption risks, as such decisions will be made at the discretion of the authorities;
- the need to conduct an impact assessment on the territory in the process of land management, as well as before obtaining a range of permits. In practice, this may necessitate several procedures to implement a single project. Such an approach poses a special threat to subsoil use companies with activities for which they have acquired licenses through auctions for hundreds of millions of hryvnias may be blocked;
- lack of a transition period for the implementation of the Emerald Network management plans, which are being developed over 6 years and will potentially establish biodiversity conservation measures and a list of activities that are prohibited or restricted in the Emerald Network.
In conclusion, we would like to express the hope that behind the loud slogans of reforms in the field of environmental protection from the negative impact, MPs will be able to consider draft laws that are openly aimed at “protecting” the country from investors. We very much hope that this is not the goal of the people’s deputies and that this meeting will not be a failure in terms of eco-reforms. The European Business Association reiterates its readiness to provide its expertise and join the relevant discussion. We expect that multiple proposals sent by us to the respective authorities will still be taken into account!
On Thursday, July 15, the Verkhovna Rada will consider a range of environmental draft laws during an extraordinary sitting. This concern namely draft Law №4167 on industrial pollution, draft Law №3091 on state environmental control, draft Law №5339 on monitoring of air pollution, and draft Law №4461 on the territories of the Emerald Network.
Each of these documents is important for business because it is designed to implement European approaches in environmental monitoring and protection, namely air and biodiversity, to Ukrainian legislation. The European Business Association has consistently emphasized the need to reform environmental inspection and the importance of modernizing industry to European standards, as environmental and climatic factors are increasingly influencing the international economic agenda. Moreover, the EBA experts constantly provide comments and suggestions on draft laws that should help implement European directives without suffocating business.
But so far, all the above documents are united by a potential corruption component, institutional failure, and disregard for Ukrainian economic and legal realities.
Thus, draft Law №4167, twice failed by Parliament in the first reading, after a range of revisions behind closed doors, it is still far from the concept of reform of the industrial pollution permit system, provided by Directive 2010/75 / EU on industrial emissions and introduction of best available technologies (BAT). In particular, the draft law still regulates activities that are not included in the list of the Directive and for which there is no European BAT; does not contain an exhaustive list of grounds for a refusal to issue, revoke, suspend the integrated environmental permit; provides for the installation of automated emission monitoring tools at all facilities, while in the EU such requirements are prescribed only in the BAT and not for all industries; does not include a transition period for activities in the energy category and concerning the National Emission Reduction Plan (NERP), which is part of Directive 2010/75 / EU; does not involve business in the development and approval of BAT; proposes too short deadlines and the absence of any state aid for the implementation of the BAT, the costs of which will be entirely borne by the business. That is why the question arises, will all the above-mentioned remarks be taken into account before the second reading, if during two years of governmental and parliamentary work on the text of the document they were not being considered?
Draft Law №3091 was immediately sent for revision and preparation for the second reading. According to the developers, the document will help change the negative image of the State Environmental Inspectorate by creating a new body and introducing European approaches to control. However, from the experience of other EU countries, for some reason, good practices were not taken in terms of separation of powers, the introduction of responsibility of inspectors for illegal actions, publicity of inspection results, cooperation with other state bodies, etc. At the heart of the revised version of draft Law, №3091 are still the same levers of pressure on business and the lack of strengthening mechanism in the fight against poaching, illegal logging, and mining, which cause the greatest losses to the state.
Most of the questions are that although the text of the draft law states that it adheres to the hierarchy of current legislation in state supervision (control) in the field of economic activity (Law №877), but most of the provisions still do not meet it. Thus, we are talking about the introduction of a 4-stage gradation of companies depending on the degree of risk to the environment; the possibility of indicating only the address in the inspection order and checking all entrepreneurs located there at once; authorization for creating obstacles to officials (non-admission). Besides, the draft law clearly defines the powers and responsibilities of both regulatory authorities and businesses, but liability for non-compliance is provided only for companies. A key “highlight” of the document is the provision on the installation of automated monitoring systems within 6 months after the entry into force of the draft law. Although this provision is already provided by draft law №4167.
Draft law №5339 amends the current legislation in terms of regulating emissions of pollutants into the atmosphere. At the same time, the draft law is a kind of synthesis of key provisions of the above-mentioned documents – the obligation of companies to install automated systems for controlling emissions of pollutants (provided in draft laws №4167 and №3091) without understanding how data will be collected and establishes liability for unreasonable non-admission of inspectors (provided for in draft law №3091), which eliminates the right of business to non-admission provided by current legislation.
Besides, the document gives companies no more than 10 years to implement measures to reduce emissions of pollutants, ignoring both European regulations, which have never limited the right of business to eco-modernization over time, and the practical experience of EU countries that still implement BAT given their high cost. Thus, the statement, fixed in the explanatory note to the draft Law, on improving the mechanism for regulating emissions of pollutants into the air, issuing permits for emissions, improving government regulation, economic relations, reducing administrative pressure on businesses, and reducing their administrative costs, seems questionable. And the document itself looks more like a “lifeline” that, in case of non-adoption of the two above-mentioned draft laws, will ensure the legislative consolidation of certain norms, which without comprehensive reforms will not help reduce the impact of industry on the environment.
Finally, draft Law №4461, which should ensure the preservation of natural habitats and species of natural fauna and flora in the Emerald Network. After a series of comments from various stakeholders, including the National Agency on Corruption Prevention and working groups, the wording of the document remained unchanged, much to the chagrin of business. In particular, some provisions of the draft law may have an ambiguous interpretation, and thus become a basis for potential corruption risks and complicate the implementation of business investment projects:
- companies will be forced to obtain any additional permit for economic activity, namely the conclusion on the impact assessment on the territory (the second conclusion on the environmental impact assessment – EIA), and twice carry out a procedure aimed at assessing and reducing the negative impact of planned activities on the environment;
- lack of criteria for assessing the presence/absence of adverse effects and a clear list of activities that will be restricted and prohibited due to incomplete implementation of Directive 92/43 / EC, which provides such information and makes exceptions for projects of public interest;
- the lack of a clear list of activities that need to be assessed for impact on the territory may lead to differences in the application of the draft Law, as well as corruption risks because such decisions will be made at the discretion of the authorities;
- the lack of a clear list of activities that need to be assessed for impact on the territory may lead to differences in the application of the draft Law and corruption risks, as such decisions will be made at the discretion of the authorities;
- the need to conduct an impact assessment on the territory in the process of land management, as well as before obtaining a range of permits. In practice, this may necessitate several procedures to implement a single project. Such an approach poses a special threat to subsoil use companies with activities for which they have acquired licenses through auctions for hundreds of millions of hryvnias may be blocked;
- lack of a transition period for the implementation of the Emerald Network management plans, which are being developed over 6 years and will potentially establish biodiversity conservation measures and a list of activities that are prohibited or restricted in the Emerald Network.
In conclusion, we would like to express the hope that behind the loud slogans of reforms in the field of environmental protection from the negative impact, MPs will be able to consider draft laws that are openly aimed at “protecting” the country from investors. We very much hope that this is not the goal of the people’s deputies and that this meeting will not be a failure in terms of eco-reforms. The European Business Association reiterates its readiness to provide its expertise and join the relevant discussion. We expect that multiple proposals sent by us to the respective authorities will still be taken into account!
