Industrial pollution reform should not lead to a shutdown of industry in Ukraine

30/ 05/ 2024

The reform of industrial pollution is one of the most controversial issues in the field of environmental protection. The need for its adoption is defined at the level of the Association Agreement with the EU, and it is also included in the list of 9 environmental priorities in the National Recovery Plan for Ukraine after the war. Moreover, the Ukraine Facility Plan sets a specific timeframe - the 3rd quarter of 2024, when the relevant law should not only be adopted, but also come into force. We are talking about the draft law “On Ensuring the Constitutional Rights of Citizens to a Safe Environment for Life and Health” No. 6004-d of January 4, 2023, which is currently being prepared for adoption in the second reading. The document aims to implement Directive 2010/75/EU on industrial emissions, it applies to enterprises in the energy, metallurgical, cement, oil and gas, pulp and paper, chemical and other industries and provides for 1) transition to an integrated permit - a single permit document that should abolish the need to obtain separate permits for air pollutant emissions, special water use, and waste treatment operations; 2) creating a legal basis for the implementation of the conclusions of the best available techniques (BAT), i.e. a list of recommended technologies and emission and discharge standards for pollutants, as well as management methods, including environmental management, monitoring, etc. Over the past few years, the European Business Association has been actively cooperating with the drafters of Draft Law No. 6004-d and is grateful for the consideration of most of the comments and suggestions. At the same time, the maximum possible period for the transition to new environmental standards provided for in the Draft Law No. 6004-d - 7 years for existing installations at enterprises - is not sufficient. It is worth noting that, based on the EU experience, the European Union provided at least EUR 803.5 billion in state aid from the EU structural funds (grants, low-interest loans and long-term loans, tax breaks, etc.) to European enterprises in 2000-2022 for environmental protection and energy efficiency measures, including the introduction of BAT and the transition to new environmental requirements. Of these, almost €200 billion will be allocated in 2021-2022 alone. Domestic companies do not have access to state support for eco-modernization of industry either at the level of Ukraine or as an EU candidate. Of course, business understands the difficult situation in the context of financing, but it is still worth taking this situation into account by introducing certain rules and regulations for business. So, given the ongoing military aggression by the russian federation, increased mobilization, and uncertainty about the prospects for access to sources of funding for production modernization, it is likely that the vast majority of enterprises that will be subject to the reform will not be able to modernize within 7 years and will be forced to cease operations or shut down old facilities and build new ones. For this purpose, the draft law No. 6004-d sets 10 years for decommissioning such facilities. At the same time, in case of closure of enterprises or shutdown of old facilities, which are often city-forming for certain settlements, it is important that the decommissioning period takes into account the need to address the socio-economic problems that may arise. For example, it should be sufficient to open new production facilities in order to provide jobs and tax revenues that will be lost when the facility is closed. And, in general, we should think carefully about whether we, as a country, can afford to have a certain number of enterprises closed, even for a short period of time, in such difficult conditions for the country. . Coordinator of the EBA Industrial Ecology and Sustainable Development Committee. While we have been told for more than five years that eco-modernization and reduction of emissions from industry to the European level is a prerequisite for joining the EU, the Europeans themselves are taking a very balanced approach to this issue. Thus, according to the European Commission′s report, as of 2018, 133 derogations from BAT conclusions were granted for 98 installations operating in 15 member states, with the largest number of derogations in Sweden, the Czech Republic, and Italy. The longest derogation concerned BAT conclusions for glass production - 202 months, and 22 derogations were granted for an indefinite period of time. At the same time, each of these countries has access to the relevant EU funds, which are used to implement this green industrial transition. Perhaps it′s time for Ukraine to set an example of protecting its domestic economy, especially at a time when its best sons and daughters are giving their lives to preserve the state? Therefore, the EBA business community appeals to MPs to cancel the 7-year time limit for the implementation of BAT at existing enterprises, as well as to increase the corresponding possible deadline for decommissioning the plant to 15 years and to take into account the amendment No. 297 provided in the Comparative Table to the draft law No. 6004-d for the second reading.

Moreover, the Ukraine Facility Plan sets a specific timeframe – the 3rd quarter of 2024, when the relevant law should not only be adopted, but also come into force.

We are talking about the draft law “On Ensuring the Constitutional Rights of Citizens to a Safe Environment for Life and Health” No. 6004-d of January 4, 2023, which is currently being prepared for adoption in the second reading. The document aims to implement Directive 2010/75/EU on industrial emissions, it applies to enterprises in the energy, metallurgical, cement, oil and gas, pulp and paper, chemical and other industries and provides for

1) transition to an integrated permit – a single permit document that should abolish the need to obtain separate permits for air pollutant emissions, special water use, and waste treatment operations;

2) creating a legal basis for the implementation of the conclusions of the best available techniques (BAT), i.e. a list of recommended technologies and emission and discharge standards for pollutants, as well as management methods, including environmental management, monitoring, etc.

Over the past few years, the European Business Association has been actively cooperating with the drafters of Draft Law No. 6004-d and is grateful for the consideration of most of the comments and suggestions. At the same time, the maximum possible period for the transition to new environmental standards provided for in the Draft Law No. 6004-d – 7 years for existing installations at enterprises – is not sufficient.

It is worth noting that, based on the EU experience, the European Union provided at least EUR 803.5 billion in state aid from the EU structural funds (grants, low-interest loans and long-term loans, tax breaks, etc.) to European enterprises in 2000-2022 for environmental protection and energy efficiency measures, including the introduction of BAT and the transition to new environmental requirements. Of these, almost €200 billion will be allocated in 2021-2022 alone. Domestic companies do not have access to state support for eco-modernization of industry either at the level of Ukraine or as an EU candidate. Of course, business understands the difficult situation in the context of financing, but it is still worth taking this situation into account by introducing certain rules and regulations for business.

So, given the ongoing military aggression by the russian federation, increased mobilization, and uncertainty about the prospects for access to sources of funding for production modernization, it is likely that the vast majority of enterprises that will be subject to the reform will not be able to modernize within 7 years and will be forced to cease operations or shut down old facilities and build new ones. For this purpose, the draft law No. 6004-d sets 10 years for decommissioning such facilities.

At the same time, in case of closure of enterprises or shutdown of old facilities, which are often city-forming for certain settlements, it is important that the decommissioning period takes into account the need to address the socio-economic problems that may arise. For example, it should be sufficient to open new production facilities in order to provide jobs and tax revenues that will be lost when the facility is closed. And, in general, we should think carefully about whether we, as a country, can afford to have a certain number of enterprises closed, even for a short period of time, in such difficult conditions for the country.

Coordinator of the EBA Industrial Ecology and Sustainable Development Committee

While we have been told for more than five years that eco-modernization and reduction of emissions from industry to the European level is a prerequisite for joining the EU, the Europeans themselves are taking a very balanced approach to this issue. Thus, according to the European Commission′s report, as of 2018, 133 derogations from BAT conclusions were granted for 98 installations operating in 15 member states, with the largest number of derogations in Sweden, the Czech Republic, and Italy. The longest derogation concerned BAT conclusions for glass production - 202 months, and 22 derogations were granted for an indefinite period of time. At the same time, each of these countries has access to the relevant EU funds, which are used to implement this green industrial transition. Perhaps it′s time for Ukraine to set an example of protecting its domestic economy, especially at a time when its best sons and daughters are giving their lives to preserve the state?

Therefore, the EBA business community appeals to MPs to cancel the 7-year time limit for the implementation of BAT at existing enterprises, as well as to increase the corresponding possible deadline for decommissioning the plant to 15 years and to take into account the amendment No. 297 provided in the Comparative Table to the draft law No. 6004-d for the second reading.