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EU Environmental Norms and Third Countries: The EU
as a Global Role Model
The European Principles for the Environment – EBRD
Experience
Dr Dariusz Prasek
Director, Project Appraisal
Environment and Sustainability Department
European Bank for Reconstruction and Development
The Hague
19 April 2013
© European Bank for Reconstruction and Development 2010 | www.ebrd.com
Agenda

Introduction – Key facts about EBRD

EBRD and the European Principles for the
Environment

Key challenges in implementing EU environmental
standards in non-EU Member States

Practical approach in structuring projects to achieve
EU standards

Q&A discussion
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What is the EBRD?
 International financial institution,
promotes transition to market
economies in 34 countries from
central Europe to central Asia
 In 2011, the Bank expanded its
operations to include Egypt,
Morocco, Tunisia, and Jordan
(Southern and Eastern
Mediterranean – SEMED region)
 Owned by 64 countries and two
inter-governmental institutions
 Capital base of €30 billion*
Cumulative commitments of €78.9bn
Note: Unaudited as at 30 December 2012
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EBRD: Shareholding Structure and AAA Rating
EBRD has a AAA rating from all three main rating agencies (S&P, Moody’s and Fitch)
Shareholding Structure
Japan
8.6%
USA
10.1%
Others
11.3%
EU 27
(1)
Countries
62.7%
EBRD region
excluding EU(2)
7.3%
As at 13th July 2012
Footnotes
(1) Includes European Community and European Investment Bank (EIB) each at 3%. Among other EU countries: France, Germany, Italy, and the UK each holds 8.6%
(2) Russia at 4%
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The EBRD and its objectives
The EBRD is
Objectives:
 Your engaged partner
 To promote transition to market
economies by investing mainly in
the private sector
 Operates in “business time”
 Private sector focused
 To mobilise significant foreign
direct investment
 Wide product, currency, tenor range
 Facilitates inward and cross border
investments in the region
 To support privatisation,
restructuring and better municipal
services to improve people’s lives
 Promotes policy dialogue with regards to
investment climate business environment
and policy matter
 To encourage environmentally
sound and sustainable
development
 AAA rating profitable, commercial focus
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EBRD’s objectives achieved through
financing the private sector
€ billion
 AAA/Aaa rated multilateral
development bank
 Invested over €78.9 billion
in more than 3,644 projects
since 1991
 As at end December 2012:
– €8.9 billion invested in
393 projects
– Private sector accounted
for 80% share
– Debt 83% & Equity 12%
Note: Provisional data as at 30 December 2012
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EBRD finances diverse range of enterprises
Agribusiness
9%
Power & Energy
14%
Manufacturing &
Services
10%
Information &
Communication
Technologies
2%
Natural Resources
7%
Property &
Tourism
3%
Equity Funds
5%
Transport
16%
Municipal & Env
Inf
7%
Unaudited as at 30 December 2012
Financial
Institutions
26%
Cumulative commitments €78.9bn
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Where we operate
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Bank’s Founding Agreement commits EBRD to:
“... promote, in the full
range of its activities,
environmentally sound
and sustainable
development.”
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Environmental and Social Policy

The Environmental and Social Policy commits the
Bank to promote European Union environmental
standards as well as the European Principles for the
Environment (EPE), to which the Bank is a signatory

The EPE commitment are reflected in PR1, 2, 3, 4
and 10
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Environmental and Social Policy and Performance
Requirements
PR 1 - Environmental and Social Appraisal and Management
PR 2 - Labour and Working Conditions
PR 3 - Pollution Prevention and Abatement
PR 4 - Community Health, Safety and Security
PR 5 - Involuntary Resettlement and Displacement
PR 6 - Biodiversity Conservation and Sustainable Natural Resource
Management
PR 7 - Indigenous Peoples
PR 8 - Cultural Heritage
PR 9 - Financial Intermediaries
PR 10 - Information Disclosure and Stakeholder Engagement
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PR 3: Pollution Prevention and Abatement

Compliance with EU and national environmental
requirements

Pollution prevention & resource efficiency

EU environmental standards can be applied at the
project level where the EU legislative document
contains clear quantitative or qualitative
requirements that are applicable at the facility level
(e.g. based on use of BAT, taking into consideration
the technical characteristics, geographical location
and local environmental conditions)
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Key Drivers for Clients to Adopt EU Standards
• Compliance with EU regulations demonstrates Best
Practice and therefore opens alternative routes to
finance;
• Export markets for ETC country products are more
accessible when companies can demonstrate that
they operate to standards that the markets
understand;
• Corporate global performance requirements and
their requirements to localise suppliers.
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Environmental and Social Appraisal - Key
Determinants
Project:
•
Business activity for which EBRD financing is sought
Area of Influence:
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Project assets and facilities owned or managed by the
client
•
Contracted supporting activities, assets and facilities
•
Associated facilities or businesses - not part of the project
but exclusive and essential for the project
•
Security package
•
Cumulative impacts
•
Induced developments caused by the project
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Key Challenges
• EU law addressed to Member States and not to project
developers;
• Lack of Competent Authorities in non-EU countries to
take appropriate actions to implement provisions of the
Directives (e.g. Appropriate Assessment under the
Habitats Directive);
• Unclear how to apply derogation periods in agreeing
action plans to achieve compliance with EU standards
(e.g. IED Directive);
• Unclear how to treat protected areas without designation
of the Natura 2000 sites (official vs shadow lists);
• How to apply the provisions of the EU regulation which
go beyond the project boundaries and beyond the control
of the Client (e.g. EU Waste Directive).
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Practical Approach to Ensure Compliance with EU
Standards in non-EU countries
•
•
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The Bank uses the Environmental and Social
Action Plan (ESAP) to enable and enforce the
implementation of the Bank’s Policy and PRs :
•
This is included in all legal agreements based on a
negotiated process.
•
ESAP outlines time and resources needed to
comply, with specific implementation targets and
milestones
Policy states:… existing facilities do not meet
the PRs at the time of Board approval, the
client will be required to adopt and implement
an ESAP, to the satisfaction of the EBRD, that
is technically and financially feasible and costeffective to achieve compliance…
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Practical Approach to Ensure Compliance with EU
Standards in non-EU countries
• Most new Projects use state of the-art- technology:
•
The Bank will not support outdated technology transfer
•
Each Project is assessed against EU and Bank PRs
as part of the ESDD.
• If an implementation period is needed to meet PRs
then time and resources are agreed through the
ESAP
• Derogation requested from the Board, if an ESAP
can not be structured to allow an operation to meet
the Bank’s requirements within the Bank’s financing
period or reasonable time.
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Examples of Utilising EU Regulationss in non EU
Member States
•
Mine Waste Directive – removing cyanide in gold processing wastes within
the milling facilities prior to discharge to the TSF is now seen in Russia and
has been applied in Mongolia. High profile and controversial issue which,
when in combination with the ICMC, can provide an effective response to
community concerns and improve overall risk management.
•
Automotive part manufacturers in Russia – applying EU EHS standards
to operations enabled local manufacturers to meet the criteria to supply
major inward investors such as VW, Peugeot, Renault et al.
•
Habitats Directive – in Mongolia, the use of the Habitats Directive has
enabled the Bank, working alongside a number of different Projects and
government at various levels, to promote a regional approach to biodiversity
conservation which is vital when considering flora and fauna in the
country. This produces practical benefits in the regions around the Project
developments, but also nationally as government capacity is raised.
•
Passenger safety – utilising EU requirements for product quality and
specifications has improved the safety characteristics of rail coaches
manufactured in Russia.
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Areas where compliance is not possible
• Practical issues:
• It is not uncommon that the infrastructure required to meet EU
regulations is not in place. There is no gas or other fuel
distribution system in Mongolia; heat and power must be
supplied by available fuels, often poor quality coal. Emission
limits for SOx and NOx may not be reasonably achieved.
Many of our CoO lack the facilities to handle hazardous
wastes in an appropriate manner.
• Technical issues:
• Technologies and techniques designed for EU Member
States may simply not work in other territories. For example,
floating roof tanks for the storage of volatile fuels often rely on
rubber seals. These can become brittle and ineffective at low
temperatures and our CoO have areas where the temperature
falls to 50 below zero.
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Conclusion and Summary
• Projects have to comply with national legislation and be
structured to meet EU environmental standards
• Appraisal and due diligence of all projects to assess
compliance with EU standards irrespective of sector or
geographic region
• Mechanisms available to develop compliance action plan
to meet Bank requirements (inability to achieve
compliance can affect the Bank’s participation)
• agreed through negotiated approach
• enforced through legal covenants
• Derogation:
• has to be justified and substantiated
• used with care
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Questions?
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