TL: Greenpeace on E. Europe Pollution SO: Iza Kruszewska, Greenpeace International DT: March 7, 1995 Keywords: toxics trade east europe greenpeace reports testimony gp hazardous chemicals banks aid pesticides poland / GREENPEACE MEMORANDUM TO HOUSE OF COMMONS ENVIRONMENT COMMITTEE INQUIRY INTO POLLUTION IN EASTERN EUROPE Prepared by Greenpeace International March 1995 Contents: Greenpeace Submission pgs. 1 - 8 Annex A pgs. 1 - 4 Glossary of Abbreviations Enclosures: "Poland - The Green Tiger of Europe? Clean Production - The Only Way Forward", Greenpeace, Warsaw, October 1994 "Critical Analysis of the Results of the Environmental Impact Assessment Concerning the Completion of the Mohovce Nuclear Power Plant", Osterreichisches Okologie-Institut, Vienna, Febuary 1995 "Statement Concerning the Least Cost Study for the Public Participation Programme Related to the Project "Completion of the Mohovce NPP", Oko-Institut, Frieburg, Darmstadt, Berlin, Febuary 1995 "Deadly Donations: EU and World Bank Pesticide Aid to Albania", Greenpeace, October 1994 "Evaluation of Industrial Waste Minimisation Initiatives in Central and Eastern Europe", report prepared by Thomas Lindhqvist and Hakan Rodhe, Dept of Industrial Economics, Lund University, Sweden, commissioned by the OECD, March 1994 "Introducting Cleaner Production in Eastern Europe", papers from the seminar held at Kaunas University of Technology, Lithuania, 8-9 September 1994, prepared by Lund University, Sweden "Preventative Integrated Environmental Protection in Eastern Europe", AG STENUM, Graz University of Technology, Austria with University of Maribor, Slovenia, September 1994 ============================================================== Greenpeace Submission to Pollution in Eastern Europe Inquiry Abstract This paper examines the environmental components of the UK's bilateral aid programme, the Environmental Know-How-Fund (EKHF), to Central and Eastern Europe (CEE) and Former Soviet Union (FSU). It also critiques the multilateral PHARE and TACIS programmes to CEE and CIS and the lending projects of other international funding institutions (IFIs) in which the UK has a stake. These include the European Bank for Reconstruction and Development (EBRD), the World Bank (WB) and its affiliates and the European Investment Bank (EIB). While this submission highlights some of the worst cases of aid and investment, it also gives examples of some of the best projects and programmes. It is to these that the UK can look to ensure that its taxpayers' money brings about environmental improvement in the former Eastern Bloc. Given the huge need for the transfer of know-how to the region and the small sums of aid and investment available, it is imperative that the funds be used as effectively as possible. Background The changing economic and political situation in the region provides enormous opportunities for environmental improvement but also poses innumerable threats. The opportunities are the potential for democratic participation in investment decisions and the adoption of a sustainable development model during industrial and agricultural restructuring. The dangers include: 1. The transfer of dirty or nuclear technologies, services or products which have already been or will soon be phased out in the west. These may be rationalised by both the need for economic growth and the argument that they may be better than that which now exists; 2. Becoming a resource bank to feed the West's wasteful consumption patterns; 3. The adoption of the western status quo that has simply become more sophisticated at hiding pollution using reactive pollution "control" technologies rather than preventing pollution at source using Clean Production methods. It is the role of international financial assistance to ensure that their funding policies do not encourage these threats and that the opportunities for "leapfrogging" the West in envionmental matters are fully supported. The CEE-CIS region is often portrayed as a one of environmental disaster that requires large injections of money for clean up activities. However a closer examination reveals regions of pristine and other relatively untouched ecosystems that are today threatened with nineteenth century style exploitation in the name of development. IFIs should ensure that finance is used - not to support such new incursions eg. the exploitation of timber and oil in the CIS - but for environmentally sustainable development. The region's positive environmental traditions should also be supported instead of undermined. These traditions include an efficient public transport system and effective re-use and recycling policies. The transfer of the Western misguided model of development financed by IFIs and supported by feasibility studies paid for out of aid programmes, places an over-emphasis on roads over railways, chemical intensive agriculture over organic systems and disposable packaging over re-useable or recyclable packaging. Greenpeace believes that instead of focussing on clean-up of existing pollution, aid and IFI investment should support the fundamental restructuring of industry and agriculture so as to prevent future environmental threats. This type of restructuring would be based on pollution prevention or Clean Production approach. Instead it is being allocated to treat pollution after it has been already been created. Western financial support for its nuclear industry is de facto extending the life of an industry that would otherwise collapse. Genuine assistance to the region would use these funds instead for the promotion of energy efficiency allowing the closure of some of the most dangerous nuclear power plants. A close examination of aid and IFI investment projects does reveal some positive initiatives supporting energy efficiency, biodiversity, cleaner production, waste minimisation, eco- tourism, environmental education and other projects. It is to these that the UK can look to ensure that its bilateral aid is effectively used and to pressure its partners in multilateral aid and investment programmes to do likewise. General criticisms "Western aid is often a hidden form of subsidising western goods" -- Dr. Micha Wilczy~ski, deputy Polish Environment Minister. The above quotation provides a good insight into the dominant motivation behind aid programmes. Most bilateral loans and grant agreements carry tied procurement schemes. This means that donor countries provide funds for recipient states to buy services, commodities and technologies strictly from themselves. The effectiveness of these purchases in bringing environmental improvement is often secondary to the sale. The primary objective of this aid seems to be the support of the donor's domestic industry. In this respect the EKHF is no different, having for example, funded a UK consultancy to prepare an environmental impact assessment (EIA) for the Mohovce nuclear power plant in Slovakia. Lack of Strategy Most of the aid and investment programmes operate without a long term strategy. This is because they have no specific objectives and no timelines. The random selection of projects can result in duplication or lead to situations where one project damages another. PHARE has come under particular criticism for its lack of funding policy and poor coordination. One PHARE-funded study in the Czech Republic recommended flue gas desulphurisation (FGD) to reduce air pollution at the Prunerov power station. FGD requires limestone some of which will come from a protected area of karst limestone formation that a separate PHARE study is looking to protect. Lack of integration Another problem with most aid and funding programmes is their compartmentalisation into various sectors with a subsequent lack of integration. Sectors which require considerable environmental input include energy, agriculture and infrastructure. This compartmentalisation results in environmental sector programmes being marginalised to focus on reactive activities designed to treat or manage environmental problems after they have already been created. Typically environmental sector funding covers reactive activities such as sewage treatment and pollution control or diagnostic and prescriptive activities. Environmental issues need to be integrated into every sector funding programme and need to be addressed proactively and upstream from where the problems occur. Industry in the region looking for funding to change the production process to reduce pollution (instead of simply installing a filter) needs to be assured that funding will favour this type of preventative activity. Where PHARE has provided funding of pesticides export to Poland and Albania (see box), the environmental impacts of those decisions were not assessed. The question that should always be asked is whose needs the project fulfils. Environmental non-government organisations (NGOs) have a particular problem with submitting applications for funding in that their activities are generally a mix of several sectors, usually involving both environmental and democracy building activities. Too many Western consultants Funding of Western consultants has come under heavy criticism. Some of the allegations include the poor quality and high cost of some of the reports generated. Their outcomes often do not reflect the reality of the countries in transition. A major criticism of the early PHARE projects was that they consisted of too much diagnosis and prescription leaving no funds for the implementation of the recommendations of these studies. While PHARE funding policies have addressed some of those shortcomings, the same criticisms are now directed at TACIS (the Technical Aid programme for CIS). Indeed no feasibility study should be commissioned before funding for the implementation of the project under consideration is assured. Poisoned Donations EU aid (PHARE) to reform the agricultural sectors of a number of CEE countries has disproportionately concentrated on supplying inputs, primarily pesticides. Similar criticism could be made of World Bank agricultural sector funding. * In Febuary 1990, PHARE supplied some 5,700 tonnes of pesticides to Poland at a cost of 50 million ECU. The European Commission based its assessment of Poland's agricultural needs on a 1987 World Bank study and a document by the Foundation for the Development of Polish Agriculture (FDPA). The latter was sponsored by amonst others, the agrochemical company ICI. The FDPA coordinated the purchase of the pesticides which included some that were banned, severely restricted or not registered in numerous countries. Few Polish farmers could afford to buy the PHARE pesticides, many of which were consequently re-exported. * The EU did not learn from the Polish pesticide fiasco. In 1992 PHARE financed the export of 214 tonnes of pesticides to Albania. The pesticides constituted a significant part of the EU's agricultural assistance to Albania, yet little assessment was made of the need for the pesticides or their health and environmental impacts. After the pesticides arrived, it was found that large stocks of pesticides already existed, most of the newly privatised smallholdings cannot afford to buy foreign pesticides and most of the new farmers do not have experience, information or protective clothing for handling toxic chemicals. One of the most pressing needs in the CEE region is how to restructure the agriculture sector without further damaging the environment. In January 1994 the European Parliament passed a resolution (A3-0361/93) stressing the importance that the PHARE programme examine "ecologically sound and organic farming". The agriculture sector in Albania, as in other CEE countries is in transition. Fundamental choices over its development part are being made. Despite the opportunities for organic agriculture that restructuring offers, evidence suggests that the EU is exploiting countries like Albania and Poland while they are at their most vulnerable to further the interests of its own chemical industry. Too little Pollution Prevention; too much Pollution Control "Pollution Prevention Pays; Pollution Control Costs" -- slogan of the Polish NIF-NOT Cleaner Production Programme As mentioned earlier environmental sector funding tends to favour reactive measures to deal with problems once they have been created. This over-emphasis on end-of-pipe solutions such as filters, scrubbers, diffusers and flue gas desulphurisation (FGD) units fails to prevent pollution and merely tranfers it from one environmental medium to another. Furthermore by diverting capital, these investments jeopardise the long-term development of an advanced, non-polluting industrial sector. Most environmental funding today focusses on management of waste, sewage or air pollution. Few of these projects examine the possibility of preventing the generation of pollution or waste at source through process or product changes. For example, none of the projects concerning sewage examine the possibilities of introducing dry toilets - a particularly appropriate solution for rural areas without sewerage and a shortage of water. However, there are a few positive initiatives funded by UK and Danish aid, for the use of reconstructed wetlands (use of reeds and willows) to treat sewage. Although air pollution from power stations is sometimes tackled by looking upstream at the fuel and changing to gas or by approaching the problem from the demand side by improving energy efficiency, too often it has been a reactive solution in the form of flue gas desulphurisation (FGD). These reactive environmental investments may solve one problem, but create several others. This is the main criticism made by the European Parliament's STOA and others of PHARE co-funded FGD plants in Poland and the Czech Republic. In resolving the problem of sulphur dioxide emissions from coal-fired power stations, FGD creates at least four new problems. These include the need for excavating and transporting lime, the need for water (water is piped 50 km to the Belchatow power station in Poland which has recently been fitted with FGD), the reduction in the efficiency of the power plant (resulting in additional emissions of carbon dioxide) and finally the need to find a use for the gypsum created by wet scrubbing. Insufficient attention is paid to energy conservation given the enormous wastage of energy in the region. By reducing energy consumption some of the worst polluting coal-fired power stations could be closed. Some of this criticism is being addressed. For example, the EKHF has funded studies into the opportunities for energy conservation in Romania and Hungary. More recently the EBRD has created an Energy Efficiency Unit within the Bank. In addition some of the joint funded WB/EBRD US$340 m loan for a heat supply restructuring and conservation project for Poland has gone to the purchase of insulated pipes. Waste incinerators likewise rely on a constant supply of waste while failing to address the prevention of waste at source or its reduction by recycling the non-toxic components of waste. Both PHARE and the EU's energy programme, THERMIE, have been funding waste management studies recommending incinerators as the panacea to the region's waste problems. In view of their toxic emissions and residues it is fortunate that to date little funding has been found to finance the widespread construction of incinerators. Only by ensuring that agriculture, energy and other sector aid programmes incorporate environmental concerns can "aid" programmes bring about environmental improvements rather than just improving the economies of the donor countries through the sale of expensive technologies and commodities. The Way Forward 1. More Communication; More integration More communication is needed between the national and international aid agencies to improve efficiency and effectiveness and avoid duplication. Environmental concerns must be addressed in all the relevant sector programmes including energy, industrial restructuring and agriculture. 2. More focus on proactive activities The EKHF and PHARE provide some excellent examples of environmental educats for sewage treatment. Cleaner Production Initiatives in CEE-CIS * The Norwegian government funds Cleaner Production training programmes in the region. The programme which started in Poland in 1990, trains engineers in waste minimisation tecumption with zero or low investment and with pay-back of periods of less than one year. This Norwegian programme also covers the Czech Republic and Slovakia. It has recently been extended to Ukraf money to be disbursed to individual clean production projects. The EBRD's EEU is already tackling this issue. Other IFIs need to follow suit. 3. Small is Beautiful The size of a given project generally reflects it eco-benigness. A shining example is the EKHF funded training in Poland in the use of reed beds for sewage treatment. Cleaner Production Initiatives in CEE-CIS * The Norwegian government funds Cleaner Production training programmes in the region. The programme which started in Poland in 1990, trains engineers in waste minimisation tecumption with zero or low investment and with pay-back of periods of less than one year. This Norwegian programme also covers the Czech Republic and Slovakia. It has recently been extended to Ukraine and Russia. * US AID (U.S. Agency for Industrial Development) funds Waste Minimisation Demonstration Projects throughout the reion. The projects are organised by the World Environment Center (WEC), which has some 22 projects in CEE. * The working group STENUM (Stoff-Energie-Umwelt; Material- Energy-Environment) at the Graz University of Technology is working on two preventative integrated environmental protection projects in Slovenia and Hungary, in the textile and food processing industry respectively. STENUM is working within the auspicies of the OECD's PREPARE (Preventative Environmental Protection Approaches in Europe) under the auspices of EUREKA EUROENVIRON. * The University of Lund, Sweden is working with other Nordic institutions and industry in the Baltic States in preparing waste minimisation opportunity audits to introduce cleaner technologies. In addition several bilateral aid programmes fund their academic institutions to work with academic partners and industry in CEE and Baltic States. The key Western European players include: Lund University, Sweden; the Danish University of Technology (DTH); IVAM Environmental Research, University of Amsterdam; Erasmus University, Rotterdam. There are also numerous national activities which deserve support. The following are some examples from Poland: * the dynamic growth in organic agriculture; in future organic agriculture will provide not only chemical-free food, but also clean bio-based materials such as fibres for the textile, pulp and paper and chemical industries and biomass for energy. The Polish Committee for Scientific Research is currently coordinating research into bio-based materials for industrial use. * the use of these financing problems, it is recommended that it use this experience to create a Cleaner Production Unit (CPU). This role of this unit would be to support the various pollution prevention/cleaner production initiatives (see box above) in the region. A e local population who will then see something of the much-talked-of aid to the region. Prepared by Iza Krulution preventionstance from Antony Froggatt and Roger Manser minimum loan that the EBRD will countenance is ECU 5 million. The same holds for other IFIs. Most proactive projects require a fraction of that sum. The recently created Energy Efficiency Unit (EEU - see Annex A) at the EBRD is investigating appropriate funding mechanisms for disbursing small loans. Once the EEU has resolved some of these financing problems, it is recommended that it use this experience to create a Cleaner Production Unit (CPU). This role of this unit would be to support the various pollution prevention/cleaner production initiatives (see box above) in the region. A e local population who will then see something of the much-talked-of aid to the region. Prepared by Iza Kruszewska with assistance from Antony Froggatt and Roger Manser References Annex A An overview of the various aid programmes and IFIs Environmental Know-How Fund (EKHF) and KHF The EKHF was set up in 1992 and comprises a small part of the larger KHF. Since its inception the KHF has spent some 158 million, of which just 3% or 5 million was allocated to the EKHF. The small amounts of EKHF funding have been used mainly in training activities and the preparation of studies. Typical projects involve educational and training programmes to increase institutional and NGO capacity and effectiveness. Training programmes tend to focus on areasdone by the KHF in Russia where it is also funding 'energy buses' which travel from factory to factory, fitted with meters for detecting energy loses. Perhaps this proactive project could be extended to other countries in the region. As mentioned earlierfeasibility studies and master plans recommending inappropriate or nuclear technologies for which there was no funding anyway. Fortunately by 1992 some of the emphasis of the PHARE projects ciated with accidents, earthquakes, waste storage and decommissie ing are inadequately examined. Meanwhile the alternative possibilities of reducing Slovakia's energy needs were under-investigated (see also box - Mohovce). Instead KHF funding should be allocated to energy efficiency training. This is already being done by the KHF in Russia where it is also funding 'energy buses' which travel from factory to factory, fitted with meters for detecting energy loses. Perhaps this proactive project could be extended to other countries in the region. As mentioned earlierfeasibility studies and master plans recommending inappropriate or nuclear technologies for which there was no funding anyway. Fortunately by 1992 some of the emphasis of the PHARE projects seems to have changed. Less attention is paid to studies and more on prevention and proactive measures such as training and education programmes. Unfortunately many of the early shortcomings of PHARE are now being found in TACIS. TACIS, set up in 1991, is the EU's assistance programme for the CIS. As with the KHF, the small size of both PHARE and TACIS projects is ideal for setting up demonstration projects and training in proactive environmental management. A positive example is THERMIE funding for an Energy Centre in Elblag, Poland. This regional centre, promoting wind, solar, water and geothermal power and is part of the EU's programme for the development of renewable energy. CEE-FSU countries bordering the Baltic or Mediterranean are also eligible for the EU's LIFE programme. Founded in 1992, LIFE provides grant funding for demonstration projects, public awareness projects and technical assistance. LIFE also provides grants specifically for cleaner technology demonstration projects. However, awareness about this programme in the region is poor. More active promotion of this grant programme in the eligible countries is recommended. International Funding Institutions (IFIs) The UK contributes to several IFIs including the EBRD, EIB and the WB. This paper examines the EBRD as this bank was founded solely to support the transition in CEE-CIS. Its funding structure mirrors that of the other IFIs with whom it often co- finances projects. EBRD The UK has a 8.52% stake in the EBRD. In addition the UK gave the EBRD a 40 million sweetener to entice it to locate in London. Moreover EBRD employees do not pay UK taxes. Despite the Bank's strong environmental mandate, bank projects are assessed largely on financial profitability, not their environmental and social value. Most EBRD money has gone into co- financing large infrastructure projects or supporting TNC investment in the region. In the transport sector, EBRD's loans seek to encourage the shift towards road traffic. In EBRD's view, the railway system in CEE is oversized and will have to face "structural retrenchment", while road transport is underdeveloped and will have to be expanded. Consequently, the EBRD has lent threntify and develop energy efficiency projects in the region. One of the tasks of the EEU is to develop the appropriate financing mechanisms for disbursing small loans. Mohovce and the UK Connection The decision to construct the Mohovstarted soon afterwards. Despite the massive safety risks inherent in this type of power plant the EBRD intends used". A snce its completion. Reactors of this type, such o Poland does demonstrate some committment to energy efficiency. Examples include a loan of ECU 6 million to a Rockwool insulation production facility and some co-funding with the World Bank of pipe insulation. In addition, the Bank has recently created a specialist team known as the Energy Efficiency Unit (EEU). Its role is to identify and develop energy efficiency projects in the region. One of the tasks of the EEU is to develop the appropriate financing mechanisms for disbursing small loans. Mohovce and the UK Connection The decision to construct the Mohovstarted soon afterwards. Despite the massive safety risks inherent in this type of power plant the EBRD intends to partly finance its completion. Reactors of this type, such as in Griefswald in the former East Germany have been shut down. The UK is involved in several phases of this project. Firstly the UK holds an 8.5% stake in the EBRD. The UK consulting firm Putnam, Hayes & Bartlett Ltd. prepared a Least Cost Study paid for by the Bank. PHARE funds paid for part of the safety study. Finally the EKHF financed another UK company, AEA to prepare the Environmental Impact Assessment (EIA). The inadequacies of the EIA have already been discussed (see EKHF). The objective of the Least Cost Study (LCS) was to prove, in the context of the public participation programme for the Mochovce project, that the completion and "safety upgrade" of the Mohovce NPP constitutes the most cost- efficient option for the Slovak Republic. This the LCS managed to demonstrate, but some of the assumptions, such as energy demand forecasts, cost of alternative energy sources etc are in dispute. (For full critique see attatched report prepared by Oko-Institut). This is a clear example of how UK aid and investment is being misused to promote an ill-fated industry. References Glossary of Abbreviations used in the Greenpeace Submission CEE Central and Eastern Europe CIS Confederation of Independent States EBRD European Bank for Reconstruction and Development EEU Energy Efficiency Unit at the EBRD EIA Environmental Impact Assessment EIB European Investment Bank EKHF Environmental Know How Fund FDPA Foundation for the Development of Polish Agriculture FGD Flue Gas Desulphurisation FSU Former Soviet Union GEF Global Environment Facility IFI International Funding Institution KHF Know How Fund NGO Non Governmental Organisation PHARE Poland and Hungary Aid for Reconstruction of Economies (EU aid programme extended to rest of CEE) STOA Scientific and Technological Options Assessment TACIS Technical Aid for the CIS TNC Transnational Corporation WB World Bank =end=