3 The Effects of the Danish Support, Danish Environmental Protection Agency

Environmental Assistance to Eastern Europe 2001

3 The Effects of the Danish Support

Towards the enlargement - also for the environment.

In 2001, all countries made major progress towards complying with the EU environmental acquis. The special progress reports published by the Commission once a year give a more detailed account on this.

Summarising the progress of the applicant countries, EU emphasizes the need to further strengthen the countries' capacity concerning administration, monitoring and enforcement, especially in the fields of waste, water, IPPC and chemicals. Add to this an equally big need to strengthen the countries' capacity for administration of project programming and project preparation, project management and control, both in relation to the present pre-accession instruments and future funds from the Structural Fund.

By the end of 2001 the environmental chapter has been temporarily closed for eighth out of ten Central and Eastern European applicant countries. Only Romania and Bulgaria remain outstanding. A chapter being closed means that it has been assessed that no further negotiations are needed. A chapter is only temporarily closed inasmuch as 'No chapter is closed before all chapters are closed'. Contrary to a frequent misunderstanding, closing does not mean that the countries are in fact already living up to the requirements and enforcing them, nor that they are capable of a concrete followup on the interim arrangements.

The interim arrangements are negotiated according to the motto 'Limited in time and extent'. From the very beginning EU has emphasized that interim arrangements will not be negotiable on transposition (as opposed to implementation), on framework laws for air, water, waste, EIA plus access to environmental information, nature conservation and all product related environmental laws comprehended by the regulations of The Single European Market.

On the contrary, interim arrangements have been considered and negotiated, for example where large investments are involved for infrastructure projects, for instance for compliance with the Council Directive on urban waste water treatment. In each single case the grounds for interim arrangements have had to be given by means of implementation plans with time schedules and financial estimates.

For those countries where the environmental chapter has temporarily been closed, interim arrangements have been entered within a number of concrete directives, implying that within a time frame of typically five to ten years the countries must comply with these requirements. There are two to nine interim arrangements per country according to the national state of things. In particular they include directives, that require substantial investments and administratively complicated directives.

A large number of investments and preparations for such still remain to be made if the countries are to live up to the interim arrangements that have been negotiated. Here, both the EU preaccession facilities, primarily ISPA and PHARE are important instruments, available to the countries with project funds for the implementation of large environmental infrastructure projects. However, 2001 has shown that a faster and more flexible administration of especially the ISPA funds will be a prerequisite for the countries being able to comply with their interim arrangements in time. Already it is obvious, that the countries have considerable problems with the lack of capacity for efficient project preparation before they can really benefit from the ISPA pre-accession funds.

By the end of 2001 it must still be emphasized, that the countries still need to make a substantial effort within the administrative area, for one thing reforming the existing institutions, or creating new ones, to enforce the new national environmental laws that implement the EU regulations. Therefore, at the beginning of 2002 the EU Commission has decided to institute a number of Peer Reviews in the environmental area, enabling a detailed examination of the continuous problems with the implementation of the EU environmental acquis. The conclusions of the examination will be included in the 2002 Regular Reports from the Commission.

Primarily the purpose of Peer Reviews is to establish the administrative strength to implement the EU environmental acquis, and less so to measure the degree of implemented legislation or the size of the investment needs in the countries. Some areas have been preconceived as being difficult for all countries, especially the local level, waste management and IPPC-approvals. Thus Peer Reviews are to be instrumental in further targeting the existing EU support programmes to the country specific needs, including guidance on these to the bilateral donors in the environmental area.

Results of the Danish Assistance to the Water Sector in Central and Eastern Europe

In the past ten years Denmark has supported and implemented projects in fifteen Central and Eastern European countries within the areas of air pollution, aquatic environment, waste, nature and public administration. The total support from Denmark has been approx. DKK 3.3 billion. Within the aquatic environment 400 projects have been implemented, amounting to DKK 1.4 billion, 80% of which have been used for investment projects. The Danish Environmental Support Programme has financed the report 'Danish Support to Improved Water Quality in Central and Eastern Europe 1991-2001', in which COWI has made a survey of the effects of the Danish projects. The following paragraphs originate from the report.

Funds apportioned to key areas

The support has contributed to the planning and identifying of water and waste water projects in Eastern European cities like St. Petersburg, Kaliningrad, Vilnius, Kiev, Warsaw and Wroclaw. In 35 towns, the water supply has been improved and along with an improved quality of ground water more than 800,000 Eastern Europeans have benefited from investments in Danish equipment for water supply.

In 120 cities and towns existing waste water treatment plants have been rehabilitated or new treatment plants have been constructed with a total reduction of the discharge of organic matter by 60,000 tonnes/year, nitrogen, 17,000 tonnes/year and phosphorous 2,500 tonnes/year. Thus the discharge has been reduced by an amount equivalent to the pollution from three to five million people. The reduction in discharge of nitrogen is at the same level as the reduction in discharge from Danish waste water treatment plants during the Danish Action Plan for the Aquatic Environment in 1987 to 1995, but at 1/3 of the cost in Denmark (DKK 360 per kilo nitrogen removed in the Action Plan for the Aquatic Environment compared to DKK 135 per kilo nitrogen removed in the supported projects). Due to the high degree of co-financing, the Danish contribution to the nitrogen removal has been an average of DKK 22 per kilo nitrogen removed/year. The support to waste water treatment plants has led to a reduced discharge of heavy metals by more than 100 tonnes/year.

Comparison of costs of nitrogen removal

According to the monitoring carried out by the Helsinki Committee, the projects supported by Denmark have made a substantial contribution towards improving the condition of the Baltic Sea according to the monitoring carried out by the Helsinki Commission (HELCOM).

With the rehabilitation of sewers and cleaner technology in industries a number of projects have been implemented, demonstrating the efficiency of Danish methods and equipment in environmental protection. 20-30 kilometres of sewage pipes have been renovated as demonstration projects for Danish environmental technology in CEE. In ten different industrial sectors, the water consumption was reduced by up to 90%. The discharge of organic matter and heavy metals was also reduced by 90% and nitrogen by 50%. During these ten years the support has also comprised support to the improvement of the monitoring of the aquatic environment and an improved control with the oil pollution in the Baltic Sea.

The Danish support has been a major catalyst for the Central and Eastern European countries seeking membership of/admission to the EU. Assistance has been given to the approximation of the national environmental laws in the applicant countries to the EU directives in the water area, which is a prerequisite for admission to the EU. The momentum of the approximation process has been continuously supported by providing expertise, when technical problems have arisen in relation to obtaining of loans from various finance corporations. One example of this is the definition and preparation of the large environmental investments to satisfy the demands of the international banks. For 65 towns, the application for EU support through the ISPAprogramme was made with Danish support.

The Danish support of DKK 0.9 billion in the water sector has led to a total investment of 5.4 billion. For example, Poland itself has paid up to 90% of the investments in the projects supported by Denmark. This is taken as a proof that the Danish environmental support has managed to place the environment high on the agenda on both local and national levels. A popular support for environmental projects is necessary where limited resources must be prioritised. Besides, many investments must be financed by charging the consumers, and therefore it is important to ensure both the capability and the willingness to pay the water bill. Approximately 150 companies have supplied equipment or expertise to the water quality projects. A derived effect of the environmental support is, that today a large number of Danish companies have established a growing business in the Central and Eastern European market.

For the year 2000 the total turnover in the Central and Eastern European market is estimated to be in the area of DKK 2 billion. This level has been reached in a period of ten years.

Danish know-how

The Danish Action Plan for the Aquatic Environment has contributed to the development of equipment and technologies for the best possible treatment of waste water and protection of the ground water. Another major benefit has been the technological innovations, which have given Danish companies a large export potential in the international market. In 1998, Danish companies had an export worth more than EUR 270 million in the water sector alone. Approx. 12% of the Danish export of products for the water sector went to Central and Eastern European countries (CEEC). Of the total export of consultancy work, approx. 36% went to CEEC. Approx. 80 different companies and public institutions have implemented the 400 aquatic environment projects under the Danish Environmental Support Programme. In addition to this an equivalent number of sub-contractors have been involved. At the end of the 1990's OECD assessed the Danish environmental politics and concluded that in no way did it have a negative effect on the Danish economic growth or international competitiveness. On the contrary, OECD concluded that environmental protection is a major factor in sales drives for the Danish industry. In 1998 the value of export of equipment for the water sector was calculated to be more than EUR 220 million, equivalent to 0.5% of the total Danish export in 1998. The export to CEEC has been promoted through projects supported by DANCEE. In the beginning of the 1990's all export to CEEC by and large was financed by donors. Up through the 1990's a number of Danish companies have increased the export and at the same time reduced the dependency of Danish donor projects. Today Danish products are exported to projects financed with local and international support respectively.

Types of equipment

The export of equipment for water supply has mainly consisted of ground water pumps, valves, control systems for ground water supply plus equipment for waterworks and the rehabilitation of water mains. For waste water the export of equipment has consisted of online monitoring systems, valves, pumps and areation equipment for water treatment plants, equipment for dehydration of sludge, water treatment plants in all-inclusive contracts, automatic control systems and renewal of sewerages.

Projects on cleaner technology in the industry sector have included export of installations for the reduction of water consumption and various equipment for the reduction of consumption of resources adapted to the individual type of production. The export of products has also included an improvement of the working environment.

The Danish export of equipment for recipient monitoring has included systems for automatic water quality monitoring of rivers as well as nearshore waters, environmental information systems, modelling programmes, laboratory equipment and equipment for nature conservation work.

Equipment has been exported for the abatement of marine oil spills, including ships, containment booms, and equipment for removal of oil. The export has also included equipment for improvement of reception facilities for ship waste, including pumps and tanks.

Consultancy work

Today a wide range of Danish consultancies and institutes export consultancy work to the water sector. The Danish environmental support has contributed to developing the expertise of Danish consultancies in the work with environmental problems in the CEEC market. At the same time, this has prepared them for participation in the international competition to come.

For members of Foreningen af Rådgivende Ingeniører (Association of Consulting Engineers) the total turnover within water projects in the CEEC market has increased from almost nothing in 1990 to more than EUR 40 million in 2000. 35% of this are projects financed by DANCEE.

The Danish Effort within Geothermics in Eastern Europe

An integrated part of the DEPA support to Central and Eastern Europe has been to promote the transfer of environmental knowledge and environmental protection technology to the co-operating countries. The effort and the experience generated by the Danish geothermal experts have proven very useful in several countries in Central and Eastern Europe, where geothermal systems have been connected to district heating systems.

Geothermics is the exploitation of heat from the interior of the earth. This heat is not dispersed evenly over the surface of the earth, but geothermic energy potential exist on most continents. Typically, the heat rises by three degrees for every 100 metres you go down in the underground. There is hot water almost everywhere, but a profitable production of the heat from the water requires a favourable combination of aquifers and a good sales potential - typically a major district heating network. When the possibilities are present, this type of energy shows a good economy and have a large sustainability. In Iceland, for instance, they are far ahead and 90% of the households are heated by geothermal heat.

The most important environmental benefits are, that the surroundings are spared the emissions of CO₂ , SO₂ and NO_x, that are the consequences of traditional heat production based on the fossil fuels coal, oil and to a smaller degree, natural gas. The pollution with these substances results in both regional and global environmental problems such as acid rain and an increased greenhouse effect. The size of the reduction depends on how the district heating would otherwise be produced. In many of the former communist countries in East and Central Europe the district heating production is based to a large extend on mazut, which is a crude heavy heating oil which pollutes far more than traditional heating oil, due, among other things, to a high content of sulphur.

During the last nine years DEPA has initiated and co-financed six geothermal energy projects in Central and Eastern Europe. The projects have been in Pyrzyce (the western part of Poland), Zakopane (the southern part of Poland), Klaipeda (Lithuania), Ziad nad Hronum and Kosice (Slovakia) and in Decin (the Czech Republic) respectively. In total, DEPA has invested more than DKK 72 million in geothermal projects in East and Central Europe, which again has generated a cofinancing of DKK 1,184 billion from international finance corporations and national sources. This is expected to result in reduced CO₂ emissions of up to 427,900 tonnes/year.

Breakthrough for Danish Policy on Nuclear Safety in Eastern Europe

Since the disaster at the Chernobyl power station in 1986 - and with renewed strength after the dissolution of the Soviet Union unveiling new information on the lack of safety at the former Soviet nuclear power stations - Denmark has had a strong wish for the decommissioning of the unsafe nuclear power stations in Eastern Europe. Naturally, in this connection the highest priority has been given to the Chernobyl power station itself and the Ignalina power station, being the world's largest nuclear power station of the particularly unsafe RBMKtype, which was also used in Chernobyl.

Denmark was not the only country being concerned about the nuclear safety in Eastern Europe. Thus, at their meeting in 1992 in Munich the G-7 countries passed a declaration saying, that G7 found the two types of reactors in the former Soviet Union to be of a construction so unsafe, that an upgrade to western safety standard is not likely and therefore should be decommissioned as soon as possible. The one type of reactor is the RBMK reactor, known from Chernobyl and Ignalina. The other type is the oldest of the VVER reactors, the so-called model 440/230.

In the applicant countries these not-upgradable types of reactors exist in Lithuania (Ignalina), in Slovakia (Bohunice) and in Bulgaria (Kozloduy). In The Ukraine there is the Chernobyl power station with four RBMK reactors, and in Russia there are RBMK reactors at Sosnovy Bor 1/2/3/4, Smolensk 1/2/3 and Kursk 1/2/3/4, and VVER 440/230 reactors at Kola 1/2 and Novovoronezh.

Based on the economic and political situation in those countries and the lack of understanding of the danger involved in the running of the power stations, it is difficult to convince the countries' governments of the necessity of decommissionings. Among other things, the countries have stated the costs involved in the decommissionings as being so large, that decommissionings are economically impossible to implement. As the states are sovereign and not effectively bound by international conventions, so far it has not been possible to advance the Danish points of view.

Therefore, in practice the Danish policy has been in a dilemma between the wish to support immediate safety improvements at the power stations and the potential extension of the power stations' lives that such safety improvements would mean. As a result, that support has been given to short-term safety improvements, partly through the Danish Environmental Support Programme for Eastern Europe and the sector programme for nuclear safety under The Danish Emergency Management Agency, partly multilaterally by the Danish Environmental Support Programme for Eastern Europe through the Nuclear Safety Account under the European Bank for Reconstruction and Development, EBRD. The support for these safety improvements has been given with the obvious risk, that it may result in an extension of the power stations' lives.

The applications for admission to EU from 10 Eastern European countries, including Lithuania, Slovakia and Bulgaria, each having several not-upgradable nuclear reactors, gave the negotiations on the future of the power stations a new dimension in these countries. The discussions on decommissioning became a substantial element in the countries' negotiation on admission.

In particular, Denmark supported the negotiations on decommissioning of the Ignalina power station with an undertaking of a total support for a prospective newly set up fund and for related projects in support of the necessary re-structuring of the Lithuanian energy sector with a total sum of DKK 120 million. The Danish effort is estimated to have been instrumental in the negotiations being brought to an end with a positive result. Subsequently Lithuania has informed the EU Commission that the two RBMK reactors at the Ignalina power station will be decommissioned.

As for the Bohunice power station in Slovakia and the Kozloduy power station in Bulgaria, the governments of the two countries, during negotiations on admission to EU, signified that they would decommission the VVER 440/230 reactors, a total of 6 reactors, at these power stations. EU and a number of other countries, including Denmark, subsequently signified that they would support the two decommissioning funds under EBRD, which were to support the decommissionings. The Danish support amounted to DKK 12 million for each of the two funds.

Thus, in 2001 three funds were set up for decommissionings of the unsafe nuclear reactors in Lithuania, Slovakia and Bulgaria, designated Ignalina, Bohunice and Kozloduy International Decommissioning Fund respectively, with EBRD managing the activities of the funds led by contributors' boards. Denmark has a seat in all three boards.

As for the Chernobyl power station, The Ukraine was bound by the international agreement Memorandum of Understanding, including an agreement on decommissioning the power station before the end of year 2000, credit operation for the completion of two halffinished nuclear reactors in The Ukraine with EU and EBRD funds, plus the setting up of an international support fund for clearing and securing the burned-out Chernobyl reactor through the construction of a sarcophagus over the burnt out reactor. The Chernobyl Shelter Fund (CSF) was established in 1997 and has received contributions of DKK 18.5 million in 1997 and also DKK 18.5 million in 2001 from DANCEE. The Danish contributions were given with the clear intimation that it was a prerequisite that The Ukraine would decommission the Chernobyl power station no later than by the end of year 2000.

On December 15. 2000 The Ukraine finally shut down the last reactor at Chernobyl. The decision to decommission the reactor should be seen in the light of The Ukraine requiring renewed international financial support for the work to secure the sarcophagus. Furthermore, the first collection stipulated a commitment to decommission the power station in year 2000.

During the period 1991-2001, Denmark has supported the nuclear sector both bilaterally and multilaterally in addition to the multilateral support given as a member of EU. The bilateral support has been given as support for individual projects under the The Danish Emergency Management Agency, totalling approx. DKK 104 million, and to a smaller extent under DANCEE, where support has been given to individual projects, totalling approx. DKK 17 million. The multilateral support (from DANCEE) has been given to Nuclear Safety Account and Chernobyl Shelter Fund, amounting to DKK 31 million and DKK 18 million respectively. Thus, the total support has amounted to DKK 170 million in the period 1991-1999.

In addition to this are 'The Nuclear Package' for 2001 having granted a total of DKK 65.5 million and the undertaking to Lithuania to grant additional approx. DKK 100 million to support activities in connection with the decommissioning of the Ignalina power station which will be implemented in the period leading up to Lithuania's expected admission to EU in 2004.

As a preliminary conclusion on the Danish support, a total sum of DKK 332.5 million has been granted to improve the Danes' protection against the danger from unsafe Eastern European nuclear power stations. This is a very substantial amount, but then very big results have been achieved in the form of undertakings to decommission the nuclear reactors that topped the Danish want list.

Besides the effort with the nuclear power stations, DANCEE for Eastern Europe has supported a number of projects on the removal of radioactive power sources, the so-called RITEC generators, based on a radioactive Sr.90, on lighthouses in the Baltic Sea.

A project has been implemented removing 15 of these RIREC generators on 5 lighthouses in Latvia and Estonia. The 15 generators were removed by the Russian navy, who had installed them, while the Danish project included the setting up of modern low energybased lighthouse technology.

A similar project has been started on 75 lighthouses in the approach to St. Petersburg and Kaliningrad, where alternative light sources so far have been set up. The continuation of the project awaits the Russian navy's approval of these test lights and the removal of the RITEC generators.

In 2001, support has been granted for the preparation of a major international project aimed on removing up to 400 RITEC generators in the Northern Sea Route north of Russia and replacing them with technical solutions similar to the ones in the Baltic Sea.