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Romania’s Road to Accession - The Need for an Environmental Focus

4. Sectoral Integration Issues and their Relevance to EU Accession

The integration of environmental considerations into other policy areas, especially economically important sectors such as energy, industry and agriculture, is a legal obligation under the Treaty of Amsterdam. The obligation stems from recognition of the inadequacy of environmental policy per se for tackling the underlying causes of environmental deterioration.

To date, there is little EU legislation setting specific measures with respect to sectoral integration. However, the EU’s Sustainable Development Strategy adopted at the June 2001 European Council in Göteborg reaffirmed the importance of integrating environment into all relevant Community policy areas including via sector strategies. Member State efforts to integrate environmental concerns into other areas are also important guideposts for measures in the candidate countries.

Like many Member States, Romania’s efforts to take environmental concerns into account in developing policies in the energy, transport and agricultural sectors are not very advanced. The 2002 Regular Report on Romania’s Progress towards Accession concluded that integration of the environment into other policies was "hardly progressing". It noted, however, that the Inter-Ministerial Committee responsible for co-ordination to ensure that all concerned sectors were taking environment into account had met in February 2002 for the first time since 1999. The roadmap for Romania included as a short-term benchmark the need to reinforce structures and mechanisms to ensure integration of environmental protection requirements into the definition and implementation of all other sectoral policies with the ultimate aim of promoting sustainable development.

4.1 Energy

As the largest importer and the second largest consumer of energy in the world, the European Union is a key player on the international energy market. These trends are likely to be reinforced after enlargement, even though some candidate countries are energy producers, e.g., Romania for oil and gas. But to ensure a secure and competitive energy market, sustainability is needed. Priorities for integration of environmental considerations into this sector are therefore the improvement of energy efficiency, promotion of the use of renewable energy, and internalisation of environmental and other external costs.

The energy sector is by far the largest contributor to air pollution in Romania. Power generation is based almost 50/50 on domestic coal (hard coal and lignite) and natural gas. The change to natural gas is going slower than first forecast in the early 1990s, due to social difficulties in the coal-mining regions and the failure to create alternative jobs to compensate for the loss of mining industry jobs.

Though energy consumption in Romania has decreased regularly since the early 1990s, energy is still subsidised at all levels from exploration to consumption.

Because of the very high energy intensity of the national economy –around 8 times that of the average Member State – there is great scope for energy efficiency improvement in Romania. In 1998, Romania’s energy intensity level was 58,400 Btu per USD (1990). By comparison, Germany achieved energy intensity of 7,300 Btu per USD (1990). It is estimated that "no-cost" energy saving measures could cut present energy consumption by 15%.

The EU Directive on Renewable Energy sets an indicative target for the contribution of electricity produced from renewable energy sources to 12% of gross electricity consumption at Community level by 2010. Romania needs to begin taking active measures in order to contribute to meeting that target, since renewable energy sources play no role in current power generation.

The 2002 Regular Report notes Romania’s lack of progress in taking environmental considerations into account in its energy policies. It specifically mentions that recent medium-term and long-term energy strategies focus on increasing energy production without considering the impact on the environment or the potential for improving energy efficiency.⁹⁸

The Romanian Agency for Energy Conservation has only very limited financial and human resources for promoting energy efficiency, and this lack of resources is cited by the 2002 Regular Report as indicative of the low priority given by Romania to date to energy efficiency issues. Another major obstacle is lack of investment to boost efficiency of production and distribution networks. To address this need, in October 2002 Romania established the Fund for Romanian Energy Efficiency (FREE) with support from the Global Environmental Facility and the World Bank. FREE will be a revolving fund aimed at providing medium-term financing (2-3 years initially) for projects between 98,765 EUR and 1,481,481 EUR. The overall expected program life is 8 years.

4.2 Industry

EU industrial policy seeks to enhance competitiveness, thus achieving rising living standards and high rates of employment. Its aim is to speed up adjustment to structural change and to encourage industrial innovation and the development of undertakings throughout the Community. In order to cope with the pressures within the internal market of the Union, candidate countries need to achieve a certain level of competitiveness by the time of accession, while respecting the standards of the EU regarding environment protection.

Romania lacks the resources to confront its industrial pollution problems and protect its environment adequately.⁹⁹ As a result, Romania continues to suffer from high levels of industrial air pollution, as well as water pollution by industrial and municipal wastewater discharges, agricultural runoff, and insufficient treatment of toxic pollutants discharged by industry into municipal sewers.

Romania’s privatisation programme has included efforts to bring in strategic foreign investment and technology transfer for upgrading of Romanian industries, but continues to proceed at a slow pace.¹⁰⁰ Moreover, privatisation has not always succeeded in overcoming a facility’s legacy of under-investment and past pollution damage. The 1998 priva-tisation of Copsa Mica to a Greek corporation, for example, included strong commitments to invest in restructuring and environmental needs. But as of 2002, less than 10% of the amount proposed for environmental improvements had been spent,¹⁰¹ even as greater industrial activity at the factory had brought polluting emissions back to 1980s levels, when the environmental plight of Copsa Mica first came to international attention.

The 2002 Regular Report recognises that Romania has made progress in developing a coherent industrial policy, but notes that progress with privatisation has been relatively slow. Moreover, Romania continues to lag behind other candidate countries in its ability to attract the foreign direct investment needed to modernise its industries and to tackle industrial pollution problems.

In November 2001, Romania split responsibility for privatisation between the Authority for Privatisation and Management of State Assets (APAPS) and a new Office of State Ownership and Privatisation in Industry (OPSI) within the Ministry of Industry. OPSI took over responsibility for privatisation of companies in strategic sectors (energy, oil and gas, mining, defense), representing 75% of total state assets.

In March 2002, new legislation was adopted with the aim of speeding up the privatisation process, but in the year since its creation, OPSI has not yet carried out a privatisation. Thus privatisation and restructuring remain areas where major additional efforts are still needed. At the same time, Romania needs to pay careful attention to how environmental pollution problems are handled in the privatisation process, so its efforts to restructure industry in the short term do not exacerbate long term pollution problems.

In the long term, Romania's commitment and ability to protect its environment from industrial pollution depends on how it addresses such interwoven problems as insufficient financing mechanisms, lack of analytical capacity for development and implementation of sustainable environmental management, and inadequate resources for monitoring, enforcement, and information dissemination at local level.

4.3 Agriculture and forestry (including SAPARD)

The Common Agricultural Policy (CAP) of the EU, created at a time when Europe was in deficit for most food products, has come under fire in recent years for its emphasis on subsidies tied to agricultural productivity. The CAP is currently linked to problems ranging from environmental pollution stemming from overuse of chemical fertilisers and pesticides to subsidised agricultural surpluses sold on the world market at prices undercutting the products of other countries. Agri-environmental measures introduced in 1992 have aimed to encourage environmentally sound agricultural practices, but the financial support for such measures represents only a fraction of the overall CAP support.

Romania’s challenge is to develop an effective capacity to elaborate and implement agricultural policies compatible with the CAP, and additionally to incorporate environmental protection within these policies.

Agriculture is important for the Romanian economy, accounting in 2001 for 14.6% of Romania’s gross value. Approximately 62% of Romania’s total land surface is agricultural, and from this, 63% is arable, 33% pastures and meadows, 2% orchards and 2% vineyards. Romania is the largest maize producer in Europe after France, and it has about 6,370 thousand hectares of forest.

During communism, 90% of agricultural land was owned by the State, with 55% farmed via collective farms. Following the collapse of communism, most collective farm land was privatised, creating 4 million private households farming newly privatised plots. Larger scale farming still exists, however, with 40% of land being used by family associations or by farms remaining under state ownership.

For most small farmers, the impacts of economic transition have rendered most agricultural inputs such as chemical fertilisers and pesticides unaffordable. The de facto situation today of widespread areas farmed without chemical inputs represents a unique opportunity for Romania to tap into the Western European market for organic foods, if it could set in place the structures needed to certify its agricultural products as organic and for timely distribution.

As in other countries, large-scale agricultural production poses particular environmental problems. Large pig farms generate large amounts of manure which have led to effluents as much as "100 times higher than the limits set in the water permit"¹⁰² and are a major source of heavy continuous pollution of the waters in the region". These pig farms also cause local air pollution. Romania will need to ensure that the measures required under the Nitrates Directive to prevent this type of pollution are set in place.

The 2002 Regular Report recognizes Romania’s progress in harmonizing its agricultural and agri-environmental policies with the EU requirements, and notes recent initiatives demonstrating that Romania is moving towards the development and implementation of a coherent rural development policy. For example, in 2000, Romania’s Agency for Regional Development drew up a National Plan for Agriculture and Rural Development under the pre-accession EU programme SAPARD. The emphasis is on improving product processing, marketing and quality control, as well as veterinary and plant-health controls, while ensuring respect for the environment. In particular, 20% of the SAPARD funding will be allocated to rural communities in order to help fight against drought. Measure 3.5 of SAPARD concerns forestry specifically, and puts in place measures to support reforestation programmes.

On the other hand, changes to Romania’s agricultural policy in 2002 replaced an earlier support scheme targeting small family farms with a direct payment system for several agricultural crops and a premium system for animal products. This has the effect of making commercial farms eligible for domestic support, while family farms can receive only free consultancy services and incentives for organic farming. The 2002 Regular Report notes that focusing domestic support on a small percentage of large-scale commercial farms could have negative social and economic implications for rural communities, and that Romania’s support policy should give much more consideration to rural development.

The Ministry of Agriculture, Food and Forests and the Ministry of Waters and Environmental Protection cooperate with a view to integrating ecological concerns into agriculture, but a recent UNECE report noted that this cooperative relationship did "not seem to be all that effective". The opportunities for developing an environmentally sound agricultural economy are strong in Romania, if the right policies and support pro-grammes are set in place.

4.4 Transport, including infrastructure (ISPA)

Transport is a crucial sector in order to ensure smooth movements of people and economic operators within the EU, and also with the outside world. But sustainable transport policies are needed to address rising volumes of motor vehicle traffic and increased levels of congestion, noise and pollution. The 2001 European Council in Göteborg noted the need for actions to encourage the use of environment-friendly modes of transport as well as full internalisation of social and environmental costs. It particularly noted the need to de-couple transport growth from growth in GDP, in particular by a shift from road to rail, water and public passenger transport.

Romania faces particular challenges in this sector. Since the transition to a market economy in the early 1990s, Romania has witnessed a tremendous increase in the number of passenger cars (more than 75% increase in motor vehicles between 1990 and 1997), and a decline in the development of public transport. The share of freight transported by rail started to decline some twenty years ago, with road transport taking a larger share.

In 1997, the transport sector contributed 50% of the total emissions of NOx and about 20% of other air pollutants. Assuming that no new measures are implemented, CO2 emissions from transport are expected to increase by about 50% between 1995 and 2010.¹⁰³ However, total emissions of lead have slightly decreased over the years, due to the step-by-step introduction of unleaded petrol and the gradual replacement of older cars by more modern vehicles.

Romania’s ability to change these trends will depend on the policies and programmes set in place for rehabilitation and strengthening of its transportation infrastructure, and to link that infrastructure to the EU’s transport network as an important element for economic growth and the internal market. The EU programme to develop a Trans-European Transport Network (TEN) linking the regions and national networks of the Member States is key here. In 1996, the EU initiated a process of Transport Infrastructure Needs Assessment (TINA) to coordinate the development of an integrated transport network in the CEE candidate countries, including Romania. The EU’s Instrument for Structural Policies for pre-Accession (ISPA) has earmarked 50% of its funds for transport infrastructure, giving priority to investments related to integration of candidate country transport with that of the EU and the future TEN.

The construction of new transport infrastructure in Romania requires an environmental agreement with the Ministry of Waters and Environmental Protection and the local EPIs. Although applications for environmental agreements are subject to an environmental impact assessment (EIA), to date there has been no strategic assessment (SEA) of the overall environmental impact of the proposed infrastructure. Issues to consider should include, e.g., the affect of planned transport infrastructure projects on the future development of protected areas and corridors or whether the right balance between road and rail infrastructure is proposed. A first step would be for the MWEP to prepare a map of Romania’s future network of protected areas, to guide decisions on transport infrastructure trajectories. It would also be useful to strengthen the EIA process in general, including structures for public participation, to ensure that environmental issues are fully taken into account in decisions concerning transport infrastructure.