WORKSHOP SUMMARY
In the first two years following the revolution the government was successful in passing a large number of environmental laws, many of which are useful and demonstrate the Czech government's attempt to conform to Western countries' legislation. However, much of the new legislation has been adopted quickly, often resulting in inconsistencies and oversights. An example of this can be found in the Waste Act (No. 238/1991), where areas of the law actually restrict business activities such as waste export and import. Also, terminology in this law, waste categorization and cataloging, needs to be rewritten to match EU legislation. Enforcement is another concern with the Czech Republic's rapid move to adopt and pass environmental legislation. Enforcement has become more stringent over the past few years, but still lags behind legislation.
During this process of transforming environmental legislation, the Czech Republic followed the model developed by Western countries, principally neighboring Germany and Austria, and adopted many of these countries' environmental regulations. This is the reason much of the current Czech environmental legislation does not need to be amended to correspond with the EU. According to Alena Burianova, head of the Legal Department of the Ministry of Environment (MoE), sixty to seventy percent of the current legislation is already harmonized with the EU. This even includes environmental fields that had not previously been addressed such as environmental impact assessment.
The goal of the Czech government is to harmonize all legislation, including environmental legislation, with the EU by 1998. However, this time frame is opposed by some officials who question the capability of the Czech economy to fully comply. Zdenek Musil, Director of the Department of State Administration and Control at the MoE, voiced this point of view during the roundtable discussion.
In large measure, Czech environmental legislation follows the White Paper, passed by the European Commission, May 3, 1995, that states the situation in the associated countries, and outlines the priorities for obtaining membership. The MoE is not responsible for all issues relating to the environment addressed in the White Paper. Some responsibilities fall under other ministries, such as the Ministry of Health Care. Burianova stated that the collaboration between these different ministries is crucial for developing an effective and cohesive set of regulations.
According to Burianova, the most difficult parts of harmonization for the Czech Republic are issues relating to chemicals because it involves input from different government agencies. The Chemical Reporting Act is being prepared by the Ministry of Health Care in cooperation with the MoE. While at the same time, the MoE is also preparing a related law on the production, export and import of hazardous waste, issues that are closely connected to hazardous chemicals. Burianova went on to state that the process will require a unified approach because other ministries will also issue regulations to implement these laws.
Burianova added that the three main challenges in harmonizing Czech environmental legislation with the EU are:
Burianova also said, that it is important to note some existing Czech regulations are even stricter than those of the EU.
George Kremlis, head of the Legal Department for the European Commission DG XI, said in response to Burianova's statement, EU Member States can introduce stricter regulations if they choose, and in this case it is less important that they exactly match those of the EU.
Some regulations important to the business sector have been passed recently. For example, the Forest Act enacted in November 1995, defines ownership of forests and business plans for forest land management. Environmental laws currently under preparation at the MoE or under discussion at parliament that may impact business are:
Most are expected to be passed sometime in 1996. The Waste Act is expected at the beginning of 1997.
The proposed Water Act will provide a radical departure from the existing Act passed in 1973. It will define water ownership and update the level of responsibility for waste water discharges. Also, it will redefine the responsibilities of state control agencies that have authority to monitor waste discharges and construction permits.
The proposed Act on Packaging regulates package waste disposal practices and establishes producer, retailer and consumer responsibility (charges) for package waste.
The proposed Waste Act redefines the terms for the waste management field and establishes different responsibilities for waste production, transport and disposal. It may also contain a new waste categorization and cataloguing system that will be in accordance with EU legislation.
The proposed Act on Hazardous Chemicals will establish guidelines for use, production and transport of hazardous chemicals.
All the above mentioned Acts are currently proposals before Parliament. Although their actual titles will probably remain the same, the substance of the specific proposals may change dramatically based on Parliamentary review. (Information was gathered from ministerial sources).
Jaroslav Ruzicka, of the National Property Fund's (NPF) Department of Environmental Compensation, presented the environmental liability issues as related to the privatization process. Before 1992, environmental liability was largely ignored in the Czech Republic although it has had a large impact on businesses, both environmental firms and industry. The issue has since come to the forefront due to the large scale privatization of state enterprises.
When a state enterprise is privatized, the environmental damages and liabilities associated with the property are evaluated and often used to determine the degree of 'compensation' the purchaser may receive. The NPF awards compensation for contamination of soil, groundwater, and that caused by hazardous waste landfills. This may be used for remediation depending on agreement between the purchaser and the NPF. The evaluation process includes an assessment of the severity of environmental damages and future risks (contamination spread etc.). However, this procedure is not standardized since risk analysis guidelines are not addressed in Czech legislation.
Although important on the domestic front, environmental liability was not a central topic in the approximation discussions. According to George Kremlis, the EU has focused on standardizing environmental liability laws among Member States. The new standards are expected to establish guidelines for fault-based and 'strict' environmental liability. It is still unknown how these new standards will be incorporated into the approximation process and what impact they will have on associate countries.
Mr. Musil opened the panel discussion for the government initiatives session. He pointed out that the most difficult point of harmonization with the EU is enforcement. Enforcement has a direct impact on the private sector as well as municipalities. He said there are no problems adopting a full set of environmental legislation in the next three years. The problem would come when the government tried to enforce compliance because the Czech market would not be ready in the one to two year time horizon. Musil went on to state that the quality of the environment reflects the strength of the economy of a country. He remarked that full enforcement in a country that is not ready might result in collapse of the economy or particular industrial sectors.
Musil said in the future the MoE's role should just be that of a watchdog; to look for gaps where the market fails and to enforce regulations. This could only take place when legislation has been enacted and fully enforced and the economy is strong enough to accept full enforcement. However, because the Czech Republic's goal is to become an EU member before the year 2000, companies are likely to experience increasingly stricter legislation. Therefore, Musil urged the private sector to play a larger role in the preparation of environmental laws.
Professional associations have participated in the development and review of new environmental legislation. Organizations active in this process include the Czech Environmental Management Center (CEMC), an association of Czech businesses established to provide environmental management information to Czech industry, and the Czech Council for Sustainable Development, a non governmental organization. The 64 member companies of CEMC represent large industry, small-to-medium size consulting companies and individuals. According to Zdenek Suchanek, Program Director for CEMC, these organizations have advised the MoE on key environmental legislation, but so far it has not included their commentary in the actual legislation.
Pavla Kocikova, a private environmental consulting company owner, addressed this issue during the panel discussion. Her firm collaborates with 8 other environmental firms to review draft legislation. She also said that the MoE generally did not incorporate their comments.
Bedrich Moldan, Chairman of the Board of Directors of the REC, moderated the panel discussion and stated that the process of mutual interaction between the MoE, companies, professional individuals and associations has just begun. He hopes that collaboration will grow, especially from the side of private business, and will benefit all sides.
Generally, companies working in the environmental field are young with the majority founded in 1991 or later. Most of these companies are small and have up to ten employees. 86 percent of environmental companies are private enterprises. (The REC's report "The Emerging Environmental Market", contains additional results of a survey of Czech environmental companies.)
The REC estimated that the combined revenues of the 150 companies surveyed in the Czech Republic ranged from USD 180 to 300 million in 1994. This is just a rough estimate, however, because there is no central filing system or records kept on environmental firms.
According to the January 29 issue of the Czech Republic's Hospodarske noviny daily newspaper, total investments in the environment in 1995 amounted to 28 billion crowns (USD 1.026 billion). The MoE expects annual investments to average 20 billion crowns (USD 733 million) till the year 2000.
According to a study issued in autumn 1995 by the MoE, 200 to 400 billion crowns (USD 7.33 to 14.66 billion) is needed just to meet present regulations for air protection, water, and waste management. An additional 56 billion crowns (USD 2.05 billion) is expected to be spent on remediation projects and 13.5 billion (USD 490 million) for land reclamation activities.
As Ruzicka said, estimates for the total sum of remediation work connected with state environmental liability in privatization ranges from 200 to 300 billion crowns (USD 7.33 to 11 billion). These estimates represent all expenses to clean up all sites. In practice, only the worst and highest risk locations will be remediated. At present, about 50 companies provide remediation services. By autumn 1995, 127 risk analyses had been carried out and only 1.5 billion had been spent of the 50 billion crowns allotted for remediation of privatized facilities.
As Jan Mikolas, head of the Environmental Management Office, a private consulting firm, said, out of the some 300 to 350 environmental consulting firms working in the Czech Republic, not one specializes in cleaner production. For example, companies can usually reduce waste production 25 percent just by taking simple and financially affordable measures. Unfortunately, there are almost no consultants active in this field.
A nationally recognized certification was introduced in 1992 with the enactment of Act No. 244/1992 on Environmental Impact Assessment (EIA). This requires the completion of an examination which covers a broad range of environmental issues including air and water protection, waste management, health care, nature and landscape protection, and the EIA process. Various higher education courses have since been introduced to prepare individuals for this examination. Doubrava emphasized, however, that in spite of the 410 certified professionals now registered by the MoE, it is apparent that certification cannot be based purely on an assessment of education and examination, but must also include experience, since this is where true in-depth understanding of environmental processes and issues can be gained. There are no plans, however, to modify the current system.
The main issue during the final roundtable discussion was how to introduce international standards for environmental consultants and companies. During the roundtable discussion, Suchanek reviewed the certification situation in the Czech Republic. There are 18 registered Czech companies that provide certification. Some 300 to 400 companies have received some type of certification from the 18 registered companies, but not all focused on the environment. In addition there are nine foreign companies also providing certification. However, the actual number of accreditations made by these companies is not known because these are not required to be registered.
Tor Medalan, from the International Federation of Consulting Engineers (FIDIC), stated companies should first concentrate on compliance issues rather than on obtaining certification. He presented the Environmental Management System (EMS) kit, developed by FIDIC, UNEP (United Nations Environment Programme) and the International Chamber of Commerce as a guide to meet compliance.
Mikolas concluded there are two forces pushing companies to obtain certification and to comply with harmonized legislation: first, to improve or achieve compliance with existing and future EU requirements, and second, to reap the economic benefits of sound environmental practices.
In conclusion, Jordan Greene announced Mees Pierson Financial Services is teaming up with the EBRD to establish the Central and Eastern European Infrastructure Resources Partners Fund. This environment-focused venture capital fund, worth USD 40 to 65 million, will look to invest in companies undertaking environment-related projects in the Visegrad countries and the Baltic States.