| Contents |

Strategic Analysis of the Environmental Challenges for Northwest Russia

Contents

1. Introduction

Geographic focus

The geographic focus of this report is Northwest Russia and more specifically the Baltic Sea catchment area comprising the city of St. Petersburg, and the Oblasts of Leningrad, Pskov, Novgorod, and Kaliningrad.

Main geographic focus of this report

Sector Focus

The main emphasis is on analysing the local, regional and transbound-ary environmental problems and challenges that have direct impact on the population in Northwest Russia and on the Baltic Sea environment, i.e. water quality and waste management. Also energy is being included as air pollution is transboundary in nature and often ends up in water bodies. Furthermore, disposal of side products from energy production represents an environmental problem, which has significant impact on the water quality.

The report has been prepared by COWI AS, an independent Danish consulting company, having more than ten years of experience from working with environmental problems in Northwest Russia. The report is a desk study and data have been collected from the extensive literature, which exists on this subject. Data were extracted from reports and material published by convention secretariats, international research institutes, Danish Environmental Protection Agency, international donors, NGOs, official Russian statistics etc. Furthermore, material published on the homepages of various Russian ministries is included in the analysis.

2. Background

History

Some of the major environmental challenges faced by Russia today can be traced back to the start of the century when the centrally planned economic modernisation and industrialisation of the USSR were launched. The main focus was on optimising output levels and often neglecting ecological impacts. Based on the country’s abundant natural resources, extremely ambitious investment projects were launched in previously pristine environments (e.g. dams, mines, large-scale farms and industrial cities). Millions of people were moved to the cities with little consideration for the environmental effects of urbanisation. Massive clustering of industrial and agricultural activities has lead to high concentrations of pollutants with a highly negative impact on the environment.

Russia’s abundant natural resources were utilised by the state to boost production and public service levels with limited concern given to opti-mising the efficiency of these inputs, which has resulted in inefficient use of e.g. energy and water. Furthermore, due to cross subsidies from low energy prices, which are today still below world marked prices, energy intensive industries have been favoured.

Although the Soviet Union passed some of the earliest laws on toxic substance levels the second half the 20th century was marred by a long list of ecological disasters culminating in 1986 with the Chernobyl nuclear power plant meltdown.

2.1 The Reform Process

Since then the Russian governments have introduced a number of reforms to improve the environmental situation of the country. See summary in the text box below.

Environmental strategy

The National Environmental Action Plan (NEAP 1999-2001) is one of the Russian Federation’s most significant and comprehensive strategic documents for environmental protection. The National Environmental Action Plan outlined the objectives for: improvement of the environmental situation in Russia; conservation of nature resources; the effective participation of Russia in international environmental initiatives; and implementation of priority environmental protection activities. However, it was not developed as an operational document and consequently did not specify targets, offer a ranking of activities nor provide a clear indication of financial sources. A new National Environmental Action Plan for the period 2003-2005 is presently being prepared. Its main purpose is to concretise environmental goals outlined in the Environmental Doctrine of 2002.

In spite of the reforms initiated since the dissolution of the Soviet Union, the Russian society is still far more polluting and resource consuming than other OECD countries.

2.2 International Environmental Co-operation

Russia’s International Commitments and Targets for Environmental Performance

Up through the 1990s, Russia has entered into 25 multilateral agreements and 30 bilateral agreements, which are directly targeted at or include commitment towards improved environmental protection. Russia’s status regarding the most relevant environmental conventions and protocols are presented in the text box below.

Furthermore, environmental co-operation with EU and international organisations, such as e.g. the WB, OECD, WTO, has intensified significantly during the 90s.

EU

The cornerstone in EU’s relation to Russia is the "Partnership and Cooperation Agreement" (PCA). This agreement was signed in 1997 and has expanded the scope of previous relations remarkably as the parties hold summits twice a year. Russia states in its strategy towards the European Union an overall commitment to secure a close and co-operative relation between the two parties including amongst other an approximation to EU environmental legislation, framework directives and technical standards.

The TACIS Regional Co-operation Indicative Programme for 2004-2006 has sustainable management of natural resources as one of its priority areas, including in particular water issues, biodiversity and sustainable use of forest resources as well as climate change. The Northern Dimension

Of particular relevance is the Northern Dimension, which operates through EU’s existing financing instruments. The main instruments are the Tacis, Phare and Interreg programmes. Furthermore, a number of regional organisations and international financing institutes are active in supporting the Northern Dimension, including the European Bank for Reconstruction and Development (EBRD), the Nordic Investment Bank (NIB), the Nordic Facility for Environmental Finance Corporation (NEFCO), and the Nordic Project Fund (NOPEF).

An environmental partnership under the Northern Dimension Environmental Partnership (NDEP) was initiated during the course of 2001 in response to calls from Russia and the international community for a concerted effort to address environmental problems in Northwest Russia. Of particular concern was the legacy of environmental damage in the region concerning water, drainage, energy efficiency and nuclear waste. With the creation of the Northern Dimension Environmental Partnership together with its Support Fund, the Russian Federation, the European Union, the international financing institutes (EBRD, EIB, NIB and the World Bank Group), and bilateral donors have a cohesive institutional framework, backed by dedicated resources, to support the solution of these problems.

The Role of International Financing Institutions and Donors

International financing institutes and donor organisations are an important source of finance for environmental investments in Northwest Russia. However, given the sheer size of the financing need, international financing alone cannot solve the environmental problems.

From an environmental perspective, increased international co-operation and signing of various conventions and charters indicate a willingness to address environmental issues. Furthermore, it has the advantage that Russia, in order to live up to the agreed standards, is required to put the environment on the agenda. Through dialogue, and concrete international support, the various multilateral and bilateral agreements increase awareness of the environmental challenges and influence the Russian decision-making process towards making more environmentally sustainable priorities.

However, as will be further substantiated in the next chapters, Russia still has a long way to go before it overcomes the environmental challenges it faces today.

2.2.2 Baltic Sea Environment

One of the key areas today for Russia’s environmental efforts and international co-operation is the Baltic Sea.

An important international agreement guiding the co-operation relating to the Baltic Sea is the Convention on the Protection of the Marine Environment of the Baltic Sea Area, 1992.

The governing body of the Convention is the Helsinki Commission –Baltic Marine Environment Protection Commission – also known as HELCOM. The HELCOM works to protect the marine environment of the Baltic Sea from all sources of pollution through intergovernmental co-operation between Denmark, Estonia, the European Community, Finland, Germany, Latvia, Lithuania, Poland, Russia and Sweden.

Through its "Joint Comprehensive Environmental Action Programme" (JCP), HELCOM involves all neighbouring countries in the efforts to secure an environmentally sustainable Baltic Sea. The JCP is a 20-year programme of action approved by the Helsinki Convention in 1992. The programme was reviewed and updated in 1998.

The main objective of the JCP is to support both "preventive" and "curative" measures in the Baltic drainage basin to restore the ecological balance of the Baltic Sea by reducing pollution loads. This involves identifying key pollution sources – also called hot spots – and carrying out measures to reduce the inputs of nutrients and other harmful substances.

Key Facts on the State of the Environment in the Baltic Sea – 2001

Source: Helsinki Commission – Activities 2001 Overview

In 1992, HELCOM identified 132 environmental hot spots of which 18 were in Northwest Russia. The hot spots were identified by an international group of scientists, engineers, environmental managers, financial experts and national representatives on the basis of practical economic considerations and the seriousness of their impact on the environment and human health.

Today 51 of the original 132 hot spots¹ – or 39 per cent – have been improved to meet HELCOM requirements and thus deleted from the list. However, so far only one – or six per cent – of Northwest Russian hot spots have been removed from the list due to closedown of the polluting industry². Consequently, Russia still has 17 hot spots to address.

Source: Review of Progress at Industrial Hot Spots, Finnish Environment Institute, Helsinki 2002

According to HELCOM the Russian efforts have been encouraging but not sufficient to remove the hot spots from the list. There is a serious lack of funding and during 1991-98 only Euro 30.4 million were allocated for improving the environmental performance of the industrial hot spots in Northwest Russia³. As reference, a total financing need of Euro 313 millions was identified in the HELCOM Joint Comprehensive Environmental Action Programme for Northwest Russia’s industrial hot spots.

In comparison, 17 – or 50 per cent – out of Poland’s 33 hot spot identified in 1992 have been removed from the newly updated list1. A map of the hot spots is presented below and a full list of all hot spots identified in 1992 and their present status can be found in Appendix 2.

Hot Spots in the Baltic Sea⁴

Source: www.helcom.fi

The 18 hot spots in Northwest Russia are divided into:

The problems in Northwest Russia are by far limited to the designated hot spot locations. In addition to being some of the most critical sources of the Baltic Sea pollution, the various hot spots indicate the type of problems to be found throughout Northwest Russia causing serious threats for the local environment and the health situation of the population.

3. Cross-Sector Challenges

This chapter highlights some of the cross-sector challenges related to public environmental management.

3.1 Legal and Institutional Challenges

Vertical structure

The three existing administrative levels in Russia – the federal, regional and local/municipal – all have legislative, executive and judicial bodies. The individual regions have extensive autonomy from the federal level, and the institutional set-up of the authorities at subfederal levels varies from region to region. In May 2000, seven Federal Districts were established to ensure that federal legislation is implemented throughout the country⁶, each headed by a socalled "empowered representative" of the president.

Each region is divided into a number of municipalities. The municipal level is responsible for a number of public services to the citizens, such as water supply, wastewater collection and treatment, district heating and waste collection.

Horizontal structure

The Ministry of Natural Resources is the main institution in the Russian Federation responsible for setting the overall priorities and administrative framework for the management of natural resources and environmental protection. It implements the state environmental policy of the Russian Federation⁷ and co-ordinates activities related to environmental protection. However, the Ministry of Natural Resources is far from the only ministry responsible for environmental protection. Although MNR has a responsibility to supervise the implementation of the environmental policy, it has no real power to control and co-ordinate environmental activities of other ministries and committees.

An important factor preventing the Russian public administration from functioning in an efficient manner is lack of co-ordination and knowledge exchange between the various institutions.

The picture gets even more complicated when taking into consideration that most governmental institutions have a "vertical" hierarchy of offices from the federal down to the lower administrative levels⁹. The newly established level of federal districts does not yet cover the full spectrum of establishments corresponding to the federal ministries and other executive power bodies, even though most of them are present within the lower administrative levels.

Each Federal District has an interregional department for natural resources located in the central city of the District. The Northwest Federal District is placed in St. Petersburg. Departments for Natural Resources likewise represent the Ministry of Natural Resources at oblast level and at local level by a corresponding department or just a staff member in charge.

The "Dual" Role of the Ministry of Natural Resources

As the Ministry and its regional and local network is overall responsible for both the exploitation of natural resources and environmental protection, these often conflicting interests demand strong co-ordination within the ministry. At the same time, this setup should facilitate a proper integration of environmental concerns when planning and executing the exploitation of the country’s abundant natural resources, though this opportunity does not yet seem to be fully utilised.

3.1.2 Legal framework

In 1991, the Law on Environmental Protection was signed. This was the first comprehensive environmental law of the Russian Federation. It was based on some of the principles of international environmental law contained in the Rio Declaration, i.e. "polluter pay" principle, public participation and access to environmental information.

Since 1991, a systematic revision of environmental legislation has taken place and new laws have progressively replaced those of the USSR. During 1991 and 2000 more than 30 new environment-related laws were adopted in Russia.

Despite the significant progress in developing environmental legislation, the environmental regulatory framework is still complex and sometimes inconsistent. The Regions may adopt their own legislation in areas of shared competence and in areas unregulated by federal legislation, e.g. regional norms and standards. Local administration may also lay down regulations in addition to or elaborating on federal and regional requirements.

Thus, the environmental regulatory framework leaves considerable room for regional and local environmental administrations to make discretionary decisions. As a result the present multilevel administrative system is complicated and incoherent, and it has numerous and not always compatible norms and standards and diverging permitted practices¹⁰.

Lacking "Rule of Law" Legislative Tradition

Traditionally Russia has not been a society based on "rule of law" principles. Rather, the governing of the country has been based on the administrative apparatus. During the past decade, a number of steps towards rule of law have been taken and a number of key pieces of legislation have been drafted and passed. However, there are still gaps and overlaps in regulation. Some areas are not regulated properly and other areas are subject to several provisions thus creating confusion concerning the actual legislation in force – i.e. confusion between old (Soviet) regulation and new regulation.

Changing the system towards "rule of law" is difficult due to resistance in the administrations. Individuals in the administrations have built up power bases, which secure influence and eventually economic gains. The World Bank report "Transition – the first ten years" points to the fact that these gains can be extraordinarily high in the context of a partly liberalised economy, and especially in economies rich in natural resources which is the case for Russia.

Source: World Bank, Transition – the first ten years, 2002

Administrative reforms would jeopardise these positions and consequently the reformers have to overcome shortterm losses for individuals in order to create longterm benefits for the society.

Standards

The present environmental effluent standards in Russia have been established during the Soviet period and are based on the "zero risk concept" i.e. maximum allowable concentrations of pollutants in effluents (e.g. air emission, wastewater discharge, waste disposal). On paper, the standards and norms established are very strict. However, since most industries and public utilities are unable to operate at those high environmental standards, so-called "temporary agreed standards" are usually negotiated. As such, the implementation of environmental laws and standards are based more on exemptions than enforcement.

3.1.3 Monitoring and enforcement

Even if normative standards were upheld, enforcement capabilities seem to be quite weak, both with regard to technical¹¹ as well as institutional capacity. Lack of capacity has lead to infrequent inspections and on-site controls. Inadequate and infrequent monitoring and inspection practices do not create incentives for compliance and for improving technological and environmental performance.

Source: Department of Natural Recourses and Environmental Protection of Kaliningrad Oblast

When it comes to standards for efficient use of natural resource, the Russian system is less restrictive. Whereas Soviet standards and norms on energy efficiency in the heat and power generation reflected state-of-the-art in 1960s and 1970s, they fall short when compared to today’s requirements in the European Union.

Source: Article by WWF Russia

3.2 Financing of Environmental Services and Investments

3.2.1 Challenges and problems related to financing

A major barrier to compliance with international conventions and targets for environmental improvements is to secure financing. Environmental targets in Russia have often been defined without regard to the related costs.

This issue of financing is in particular relevant to the provision of public services, i.e. supply of energy and water, treatment of wastewater and collection and handling of waste. These sectors suffer from out-dated and worn-out infrastructure, which has been left in disrepair for decades.

3.2.2 Financing need

No overall assessment has been made of the total financing need for bringing environmental services in Northwest Russia up to an acceptable standard.

The Russian National Environmental Action Plan (1999) does not contain costing estimates and contains no specific action plan covering Northwest Russia. Following the NEAP, some regions developed sector-oriented plans partly based on the National Environmental Action Plan, but they rarely encompassed the costing of planned interventions.

The total costs of bringing all 132 HELCOM hot spots up to environmentally acceptable standards were estimated by HELCOM in 1999 at about Euro 18 billion for all countries involved. According to the costing exercise, the financial requirements related to the hot spots in Russia within water supply and wastewater treatment was estimated to be Euro 1,400 Million and Euro 14 Million for hazardous waste management¹².

Today, the 1999 estimate of financial requirements for hazardous waste management seem too low as the reprocessing plant planned for the Krasny Bor hazardous waste landfill site alone represents an investment cost of app. Euro 45 million¹³.

In addition to the identified hot spots, there are a number of similar challenges throughout Northwest Russia, which likewise require huge investments.

3.2.3 The Financing Gap Related to Environmental Services

For many HELCOM hot spots, financing packages with participation from Russian sources, international financing institutes and bilateral donors have been identified.

However, the general picture is that significant underfunding marks the municipal services sector and the problems are worsening year-by-year. At present, many utilities have problems covering even their operational expenses within the present levels of revenue they can generate.

During the last two-three years, a number of environmental financing analysis – and subsequent strategy formulations – in selected regions in Northwest Russia have been carried out in the water and waste sectors with support from OECD and the Danish Environmental Protection Agency. The results from these initiatives serve to illustrate the significant amount of funding needed throughout Northwest Russia for environmental services. The strategies for Pskov, Novgorod, and Kaliningrad all concluded that there was a major gap between expenditure need for public utilities and available finance – even when aiming for a continuation of the existing moderate service level. Hence, the financing requirements related to a more ambitious service level – e.g. improved wastewater treatment – would lead to an even larger financing gap because of the required investments and subsequent needs for maintenance and operation.

3.2.4 Main Causes of the Financing Gap

There are four main explanatory factors for the serious lack of financing in the municipal environmental services. These are discussed below.

Low revenue from user charges

Traditionally municipal services have been provided to users at a very low cost intended to cover the operation of utilities, whereas financing for main repairs and investment in new equipment for utilities were to be provided by the public budget.

Lack of public funding

The Ecological Fund was established in the early 1990s and comprised the collection of revenues from pollution charges to be channelled

With respect to the public budget, ambitious federal target programmes were drawn up during the 1990s. However, these programmes have received only a fraction of the planned funds from the annual public budget due to the general economic decline in the country.

Earlier, the Ecological Fund of the Russian Federation was a source of into environmental financing for environmental projects. However, this Federal fund was activities. abolished in 2000 and consequently the regional and local environmental funds were consolidated with corresponding budgets. The revenue from pollution charges now goes directly to the public budget.

The loss of the centrally administrated Ecological Fund may have a negative impact on investment related to environmental problems of cross regional and/or cross boundary nature as these now have to be funded by regional and local budgets, which traditionally have a geographically more narrow focus.

There is a general lack of strategic sector-level planning. Programmes and action plans are often overambitious in terms of targets to be achieved and do not consider the financing constraints. This means that the few resources available for investments may not be used in the most effective way. Furthermore, new investments in public utilities and the subsequent need for finances for maintenance and operation drains the funds available for maintenance and operation of existing utilities.

Also, complicated ownership structures lack of clear divisions between utilities and municipal administrations and diversified responsibilities for investment actions form an important barrier to sound investment prac-tises.

Resource-intensive services and low maintenance levels

Resource intensity brings up the operating costs associated with the provision of services, and therefore has a negative impact on the financial situation of the utilities. Resource intensity stems both from the inefficiency of the utilities and overconsumption by the endusers.

Compared to levels in western countries, the utilities in Russia are not efficient in terms of energy and staff, which brings up the supply costs of each unit of e.g. water or energy. One main reason for this is that the infrastructure is so worn out that overly high operational costs are required to keep the utilities running. In both the water and the energy sector, there are high losses in the distribution system as a result of badly maintained supply systems.

In general, public utilities in Russia do not organise awareness raising campaigns focused on water or energy savings. Moreover, they may not be interested in such savings for economic reasons. Water consumption dropped significantly in the 1990s due to the economic decline. Many water utilities use only part of their capacity and have no incentive to decrease their production further.

However, the environmental consciousness among the population is slowly improving due to the efforts of state institutions, international organisations and NGOs (local and international) e.g. in the form of campaigns and distribution of information on rational use of natural resources.

Some elements of environmental education have also been introduced in all primary and secondary school programs as well as in all curricula of higher educational institutions.

3.2.5 The Reform Programme for Upgrading the Housing and Utility Sector in the Russian Federation during 2002-2010

The Government of Russia has over the past decade pursued a reform of the housing and municipal services sector. Lately, the reform process has taken an important step forward with the most comprehensive document spelling out the aims of the reform.

In response to the present financing gaps, the Programme for Restructuring and Modernisation of the Housing Sector was approved as part of the Federal Targeted Programme on housing by Government Resolution #797 in November 2001. It includes a wideranging, comprehensive package of development measures to improve the services provided and financial health of the municipal utility sector.

The specific budgets of each region are to be developed during the first stage of the programme i.e. 2002-2003. However, the investment pro-gramme is mainly to be based on regional and local funding, which are expected to cover 98 per cent of the financial needs (to be secured though increased user payments, improved cost efficiency and private investments). Federal funds are only expected to cover around one per cent of the estimated investment costs. International loans are likewise expected to cover one per cent whereas foreign grants are expected to cover some 0.16 per cent of the estimated costs.

With regard to the subsidy scheme, around 86 per cent of the budget are expected to be covered from regional and local funds whereas the remaining is expected covered by federal funds.

3.3 Increased momentum of the reform process

3.3.1 Institutional and legal reforms

To meet its environmental targets – as also demonstrated through Russia’s participation in a number of international environmental agreements – the process of reforming Russia’s legal and administrative framework must be further strengthened based on environmental and financial sustainable principles.

In order for Russia to pursue the overall environmental objectives it is important that the new National Environmental Action Plan for the period 2003-2005 is finalised in a manner that truly facilitates the achievement of the environmental goals outlined in the Environmental Doctrine of 2002.

In addition to the Programme for Restructuring and Modernisation of the Housing Sector, a new water law is also under preparation drawing on EU experiences and lessons and moving toward harmonisation with EU standards in particular the EU Water Framework Directive.

In the administrative system of Northwest Russia the co-operation between Housing and Municipal Services Companies, the Regional Committee of Natural Resources and the Regional Sanitary-Epidemiolog-ical Service must be further enhanced to secure a uniform and more effective approach toward regulating activities within the water, waste and energy sectors. Consequently, a strengthened co-operation is needed also at the federal level between the State Committee for Construction and Housing, the Ministry of Natural Resources and the Ministry of Health Protection.

This demand for a thorough analysis of shortcomings of the whole environmental administration (national, oblast, local level) to secure a proper distribution of tasks and responsibilities, which should be fol-lowedup by a capacity-building programme (targeted at human resources, IT, internal procedures, and co-ordination between ministries). Furthermore, the efficiency and willingness to continue the reform process within the public administration from the federal to lowest local levels must be secured.

3.3.2 Closing the Financing Gaps

Dealing with the underlying causes for the poor financial position of the public utilities is a key to improve financing in the municipal services sector. The main causes for the identified financing gaps in the waste, water and energy sectors can be summarised as:

1. Low revenue from user charges that do not reflect the cost of providing the service
2. Low level of public funding
3. Inefficient use of investment resources; lack of proper investment planning
4. The provision of services is resource-intensive; little focus on efficient utilisation of inputs in particular water and energy

The financing strategies carried out for several regions in Northwest Russia point to several policy options, which may be pursued in order to close the financing gap. Most importantly, closing the gaps requires realistic approaches to what can be achieved within a given financing framework. Therefore, the environmental targets and the cost of achieving these targets must be carefully considered in the light of the scarce supply of finance.

Source: OECD, Danish Environmental Protection Agency: "Short Justification for the Municipal Water and Wastewater Financing Strategy, Pskov", 2001.

Due to the socio-economic situation only gradual increase of tariff levels and collection effectiveness can be materialised. Today, such measures are based on initiatives and political courage of the local Dumas and its materialisation may not be likely (as the Duma’s risk hampering their reelection possibilities). Increased tariffs will lead to higher service expectation. Finally, if a significant part of the consumers have installed e.g. gas and water meters, this will allow them to pay only for their own consumption and not losses of municipal utilities due to e.g. leakage.

It is crucial for the environmental benefits of the Reform Programme for Re-structuring and Modernisation of the Housing Sector that the above issues are properly addressed during its implementation.

Areas of particular relevance for international co-operation

The most important instruments for international support to environmental financing in Northwest Russia include the Joint Comprehensive Environmental Action Programme and the Northern Dimension. However, donor and international financing institutions can not close financial gaps but contribute to more targeted, structured and effective efforts.

Looking for alternative financial solutions experience from EU countries should be considered in particular financing mechanisms from revenues from property tax (charges on land). E.g. costs of solid waste removal and further utilisation are financed through such mechanism in Denmark. However this method of financing requests that a significant part of collected charges on land and properties actually be spent for sector financing of municipal waste management.

3.3.3 Environmental Awareness – resource consciousness

One of the underlying causes for the problems in the water, waste and energy sectors in Northwest Russia is lack of common understanding –both among the civil society and the public administration – on the true economical value of natural resources like energy and water. One explanation is that Russia did not go through the energy crisis in the early 70ties as most of the western countries did, and – as a consequence – had to reform public sector services to reflect their improved costs. In fact, the low energy prices in Russia may have had the opposite effect.

As an integral part of the western countries’ reform of the public services, intensive awareness campaigns were initiated and are still being implemented, as mentalities cannot be changed in the short run. Similar efforts must be initiated in Northwest Russia to increase the public awareness to e.g. understand "affordability" rather than base behaviour on "wants".

Furthermore, there is a huge need in Northwest Russia to increase the quality and accessibility of environmental information. The Environmental Committees should strengthen ties with the NGO community.

Areas of particular relevance for international co-operation

Although Russia maintains a position as observer of the Aarhus Convention, the State of the Environment Report compiled by the Ministry of Natural Resources, clearly states the need for Russia to join the Convention.

Signing, ratifying and implementation of the Aarhus Convention is deemed needed in order to secure Russian citizens’ access to information, public participation and access to justice in environmental matters and strengthened international co-operation would facilitate this process.

4. Sector Specific Environmental Challenges

This chapter provides an overview of key environmental problems in three sectors, based on their significance for the people in Northwest Russia and the Baltic Sea environment.

1. The water sector (Section 5.1)
2. The energy sector (Section 5.2)
3. The waste sector (Section 5.3)

4.1 Environmental Challenges in the Water Sector

During the Soviet period Russia maintained – as compared to e.g. West Europe – a high service level in urban areas concerning water supply and wastewater collection and treatment. The problem today is therefore not always lack of access to these services because of their nonexistence but the poor or non-functioning of systems mainly due to lack of maintenance. Much of the equipment is broken down or heavily energy consuming, whereas structures are of sufficient quality or can be rehabilitated. Therefore, rehabilitation and retrofitting existing plants could be more cost-efficient and in general be more adequate than investing in new plants. Public utility systems in the water sector are generally designed for capacities much above required levels and are thus inefficient.

The following section focuses on problems related to protection of drinking water resources, water supply and wastewater disposal including collection, treatment and sludge handling. As signatory of the London Protocol, Russia is committed to address environmental and health problems related to water simultaneously. However, the implication of the present problems for public health is outlined first to illustrate the necessity to intervene now and in a cost-efficient manner.

www.helcom.fi, Press Release 27.04.01

4.1.1 Impact on public health

Outbreaks of infectious diseases related to water supply or recreational waters are frequent in the Russia. According to WHO Regional Office for Europe, Russia had in year 2000 an infant mortality rate of 18 per 1000 live births, more than double of Western Europe and an under-five mortality rate from diarrhoeal diseases of 9.3, more than 10 times higher than Western Europe.

In 1999, the Harvard School of Public Health conducted a detailed survey of the relationship between gastrointestinal diseases and microbiological pollution of drinking water in the City of Cherepovets, Vologda region. The study demonstrated that approximately 90% of adults had antibodies to cryptosporidium in their blood indicating a high frequency of exposure to this pathogen¹⁴.

In August 2001, the Russian Security Council Commission on ecological security stated that drinking water quality in Russia is endangering human lives because of its contamination with industrial waste¹⁵ (from old dump sites).

4.1.2 Drinking water resources

According to the national classification of surface water, most Russian rivers and lakes are classified as "moderately polluted" or "polluted" and less than 1% can be abstracted without treatment. Within this classification the Neva River, the main drinking water supply source of St. Petersburg, is characterised as "polluted"¹⁷. In Northwest Russia 40% of the drinking water does not meet chemical standards and about 25% does not meet microbial standards¹⁸. Poor raw water quality due to bacteriological and chemical contamination of water sources, inadequate water treatment facilities and leakages in the distribution systems are seen as main reasons for not maintaining a safe drinking water supply.

Figure 4.1
Water test from primary sources* not meeting hygienic and sanitary standards

* Including ponds, reservoirs, wells etc. Source: GOSKOMSTAT, 2001

4.1.3 Water supply

Figure 4.2
Total water consumption* 1990-2000

Source: GOSKOMSTAT, 2001

According to the National Environmental Action Plan for Russia, more than half of the country's water supply systems, including the central-ised water supply systems in virtually all cities and towns, need to be renovated or rebuilt. The present water losses are reported to be 40 -50% of the abstracted amounts of water, which is very high, compared to the levels of typical Western countries of 5 - 15%.

The poor condition of the supply system is also reducing the water quality when contaminants are entering the pipe system at low (or negative) pressure. This situation occurs when the water supply is interrupted either during repair or when pumps are stopped to save energy.

Intermittent water supply requires people to store water for periods of non-supply. This leads to risk of contamination during storage and poor hand hygiene as washing hands become unpractical (when you are used to having a tap). It also leads to wasting of excessive stored water when fresh supply becomes available.

Source: Danish Environmental Protection Agency project document, 2002

Water treatment plants do not sufficiently address the water quality problems of microbiological components like cryptosporidium (parasite). These parasites are a widespread problem in Russian water supply. Another problem encountered in many of Northwest Russia’s waterworks, using surface water, is pre-cautionary chlorination in the process of water purification, which leads to the formation of carcinogenic chlororganic compounds in drinking water.

4.1.4 Wastewater disposal

Wastewater collection and treatment represent another major environmental challenge for Northwest Russia. About 55% of the Russian population is serviced by centralised wastewater collection and treatment systems. The wastewater treatment facilities need maintenance: Of the 76% of wastewater treated, only about 10% is treated according to required standards²⁰.

The wastewater collection system (sewer network) in Northwest Russia is generally of a poor quality and has seriously deteriorated due to lack of repair and maintenance over a considerable span of years. Leaking sewers pose a considerable threat to aquifers and surface water bodies, endangering the drinking water supply. Sewer pumping stations face frequent breakdowns, which in combination with sewer blockages result in severe overflows.

Wastewater treatment

Urban wastewater

Most of Northwest Russia's wastewater treatment plants is designed for mechanical and biological treatment for removal of organic matter. Generally, there is limited removal of nutrients like nitrogen and phosphorus. Most of the plants do not comply with required standards, which result in excessive pollution loads being discharged into receiving waters with subsequent risk of health hazards, eutrofication and oxygen depletion.

The most widespread pollutants present in discharges into water bodies or catchment areas are oil products, suspended solids, nitrogen, phosphorus, synthetic surfactants, zinc and copper compounds, and phenols^21.

The treatment technology in Northwest Russian wastewater plants is, generally speaking, in line with internationally accepted principles as regards the process configuration. However, the plants suffer from severe lack of maintenance, obsolete and inefficient equipment and lack of appropriate control systems.

Rural wastewater

Wastewater treatment in the rural areas is characterised by low coverage by public utilities. A significant number of people living in rural areas are thus responsible on their own for handling and disposal of their wastewater. As the financial situation in rural villages is not favourable, the scope for improving or just maintaining local facilities is limited.

Sludge from wastewater treatment constitutes a severe threat to the soil quality and ground and surface water resources. The sludge is often poorly stabilised and previously contained large amounts of heavy metals and other toxic or recalcitrent substances. However, the decrease in industrial production has generally resulted in a substantial improvement of the sludge quality, thereby reducing the risk of contamination from sludge presently produced and disposed of.

Where sludge is still stored in lagoons it imposes a risk of contamination of streams and rivers due to frequent overflows of aquifers and due to pollutants seeping into the ground.

Energy consumption in wastewater pumping stations is generally excessive due to inefficient control measures, inadequate pumping equipment and lack of maintenance. The energy consumption is estimated to be two to three times larger compared to corresponding western installations of similar capacity and nature. The efficiency of wastewater pumping stations reaches only 15-20%, and electricity over-consumption for all Russia amounts to 2.5 billions kWh annually²².

Figure 4.3
Wastewater treatment efficiency (expressed as discharge/person equivalent (PE)/year in treatment plants larger than 30 PE of b) BOD5 (biological Oxygen Demand in 5 days), c) Phosphorous and d) nitrogen. Assessment from 1998 Kaliningrad (Russia), Elblag (Poland), Pârnu, Ostro-botnia (Finland), Fyn (Denmark) and 1999 Laholm Bay area (Sweden) and Schleswig-Holstein (Germany)

Source: Strategies for improved Eutrophication Management in the Baltic Sea Region, Bernet., p.

Energy consumption for groundwater pumping, water treatment and supply exceeds by a factor 2 to 3 the kWh/m3 needed when using modern pumping equipment combined with efficient operations control. Investments in pump replacements often have a payback period of less than 5 years. One reason is that pumping stations in Northwest Russia are not usually equipped with special devices regulating their output upon demand, and the regulation of output is carried out by manual operation of valves. As a result, the efficiency of the pumping station does not exceed 35-40%. For all Russia, the annual electricity losses amount to 5-5.5 billions kWh due to this reason only.

4.1.6 Water Sector Financing

4.1.7 Natural Resource Management

When analyzing the challenges faced in the water sector, there is an urgent need to understand the interrelationship between these challenges and issues related to biodiversity and Natural Resource Management.

Problems concerning biodiversity and nature protection include amongst other resource extraction and pollution, poorly planned and executed commercial forestry, construction and transport activities, insufficiently regulated hunting. Furthermore, these problems are aggravated by uncertainty about future ownership of land and resources and low environmental awareness among administrative staff, decision-makers, and the general public. Also, regional policies are lacking realistic implementation plans, and common principles and standards for resources management including overall strategy for development of protected areas, Ramsar sites etc. The planning is impeded by a lack of cost effective environmental monitoring systems which are able to provide reliable data and information for use in planning, management and conservation of natural resources.

There is a need to improve spatial planning/landscape planning tools to adequately preserve natural resources as eg. water bodies, streams and lakes, incl. ground water protection. The point of departure should be a holistic approach, with comprehensive co-ordination and co-operation between relevant regional and local authorities which would also be a mean to allocate resources more effectively.

Capacity building in North West Russia's environmental administrations with particular focus on implementation of international conventions and agreements relevant to nature protection is essential. Networking with other international protected areas should be encouraged as a mechanism for capacity building of protected areas staff.

4.1.8 Facing the challenges in the water sector

Because of the close interrelationship between wastewater disposal and water supply the concept of total water management must be empha-sised in Northwest Russia.

Part of this concept is to prioritise investment to ensure the best use of the limited resources. Proper planning and investigations of perceived problems like groundwater pollution or a health impact can confirm a problem or on the other side lower the priority for an intervention.

Furthermore, the total water demand concept demands for efficient water demand management to ensure lower water consumption and economically and environmentally suitable management of utilities.

Financing strategies carried out for the regions of Pskov and Novgorod also pointed to the need for strategic investments in energy saving equipment as well as renovation of the water supply networks and other water saving initiatives, including lower consumption levels. Relatively small pilot interventions in this area should be implemented to effectively demonstrate needed win-win solutions, that brings down operational expenses and hence have a short payback period.

Concerning health issues, there is a need to identify more precisely which infectious diseases are related to water quality and how they are most efficiently addressed. Similarly the chemical components that locally are having a potential impact on public health should be identified and monitored.

As laboratories in Northwest Russia at present can not analyse all drinking water standards, "problem" components must be identified and subsequent interventions should be initiated at the most efficient place. Some components must be removed at the source where others must be removed at treatment plants or prevented from entering supply systems.

It should be noted that contamination of sludge by heavy metals and other industry related toxic or otherwise dangerous substances must be handled at source i.e. at the industries.

Areas of particular relevance for international co-operation

Furthermore, future co-operation in the water sector shall be seen as a building block in the regional EU Water Initiative (WI) for the EECCA²³ region which was agreed on at the World Summit on Sustainable Development in Johannesburg in September 2002. The new regional TACIS programme has as a specific objective implementation of the EU WI focussing on water supply and sanitation as well as integrated water resources management and transboundary waters.

4.2 Environmental Challenges in the Energy Sector

Serious environmental challenges are related to the energy sector in Russia. These include specific environmental problems caused by air pollution and waste handling (see chapter 4.3), and excessive natural resource consumption due to inefficient use of energy.

Air pollution causes a wide range of health, environmental and socioeconomic impacts. While some air pollution problems have local causes and impacts, such as within an urban area, other problems have regional or global implications.

Table 4.1
Principal anthropogenic sources for major air pollutants.

Table 4.2
Overview of impacts of major air pollutants.

Russia has extensive fossil energy resources. Besides supplying its own consumption of fuels – energy exports, particularly oil and gas, account for the main part of export income to Russia. In domestic consumption coal accounts for 16% of the fuel consumption, natural gas for 54% and oil for 19%.

Historically, for various reasons (cheap energy, huge distances, severe climate, large proportion of energy intensive industries in the national economy) energy consumption in Russia has always been very high. The Russian economy is dominated by large energy-intensive industries. Furthermore energy use is in generally inefficient as compared to international norms due to low energy prices, lack of metering and controls and lack of market incentives to reduce costs.

4.2.1 Energy-related global and local environmental problems

Global/regional

Global and regional environmental problems related to energy production and conversion include emissions of CO₂ and other green house gasses and emissions of air pollutants leading to acid rain and eutrophication with transboundary implications, for instance affecting the environment of the Baltic Sea. Russia has met its international commitments to reduce its emissions of SO₂, NO_X, and CO₂. However, the reduction in emissions relates to the decline in the Russian GDP, and the emission reductions have even been slower than the decline in GDP.

The energy sector contributes with 90% of all green house gasses emissions in Russia. If Russia ratifies the Kyoto Protocol it commits itself to maintain its emissions of CO₂ and other greenhouse gases in 2008-12 at the same level as in 1990. The decline in the Russian economy following the transition of the economy has already reduced the energy consumption significantly and the country is expected to be in a position to sell carbon credits to other countries that are not able not meet their targets domestically.

Figure 4.6
Russian and IEA projection of CO₂ emissions

Source: IEA 2002, p. 262

Even though Russia has reduced its emissions they still amounted to 11 tonnes of CO₂ per capita in 2000. This is similar to e.g. Denmark, but remarkably high considering that the GDP/capita is 10-15 times lower in Russia. The low energy efficiency in Russia also results in high CO₂ emissions when compared to other countries.

The energy sector accounts for 50% of all harmful emissions to the atmosphere. In the figure below emission of different pollutants has been added in order to provide a very rough indicator for the emissions of pollutants to the air to provide an overview of the main sources of these pollutants. The figure discloses the electricity sector (including heat generation) as the main source of emission.

Figure 4.7
Percentage breakdown of emissions by sector in 1999

Emissions include SO_x CO NO_x Methane, VOCs and Particulate matter.
Source: "State Report on the Ecology in 1999", Moscow 2000

Source: IEA 2002, p. 245

Details on the individual emissions from the energy subsectors are provided in the table below.

Table 4.3
Air pollution emissions from the energy sector 1993-99 (1000 tonnes)

* Comparison of coal sector emissions of methane is far 1994-1999.
Source: IEA 2002, p.246

Local/regional

Apart from the global implications on the environment, energy production has other negative side effects. The establishment of energy plants and the disposal of by-products from energy production represent an environmental problem for the local environment, but can also have regional implications as pollution is washed into the Baltic Sea (see chapter 4.3).

Health Impact

During the first half of the 1990s pollution levels exceeded Russian air quality standards (maximum allowable concentration) in cities covering 62% of the Russian population. One-third of the entire population lives in areas with high pollution peaks. Emission per unit of GDP of SO_X, NO_X, particulates, CO, VOCs, and CO₂ have all increased during the 90s and remain much higher than the OECD average.

OECD Environmental performance review, p. 56

The severe air pollution leads to high frequencies of respiratory diseases in Russian cities²⁴.

Excessive energy consumption and losses in energy conversion and supply are at the core of the energy related environmental problems in Russia. The Russian energy consumption in 1999 totalled 6.8% of world total²⁵, making Russia the third largest energy consumer after USA and China. The industrial sector accounted for 65% of the consumption, the remaining was split evenly between transport and residential sectors.

Energy consumption

Households heat and hot water consumption are high – not only due to Russia’s severe climate – but to a higher degree due to technical deficiencies and inadequate behaviour. Consumers cannot control their individual heat consumption, as there are often no thermostatic valves on the radiators as central heating systems are normally one-stringed. At the same time they also lack incentive to reduce consumption of heat and hot water, as billing is often independent of the actual consumption of the individual household.

Industries in Russia are very energy intensive, which is reflected in an overall energy intensity of the country of 84 MJ/$ GDP in 2000, compared to for instance 12 MJ/$ GDP in USA. Energy consumption in industry includes district heating, electricity and primary fuels. Historically low energy prices paved the road for heavy energy intensive industry and little awareness to energy efficiency and officially required energy standards. Inefficient design and control measures, inadequate pumping equipment, leakages and insufficient insulation of boilers and pipes often result high electricity and heat consumption in industries. Further more overdimensioning of pipes, valves and pumps often causes electricity consumption for pumping purposes to be very high compared to western systems.

Energy networks

District heating networks are gradually deteriorating due to lack of maintenance (e.g. leakage and poor insulation of pipes) and reinvest-ments, and some 15% of the pipes in Russia need urgent replacement.

This results in increasing heat and water losses from the networks. The consequence is heat losses that on the average are assessed to some 30%.

Emissions and leakages from the oil and gas industries are of significant environmental importance. Emissions of CO₂ and leakages of natural gas from production sites and the pipes of the national gas company Gazprom alone accounted for 11% of the total CO₂ emissions in Russia in 1999²⁶.

Energy Conversion

Power generation in Northwestern Russia amounts to 5.6% of total power generation in Russia and is distributed on thermal power production (coal, gas and oil) 33%, hydro 18%, nuclear 41% and others 9%. Coal is playing an increasing role as fuel for power production in Russia, and this is expected to continue at the expense of gas and oil as fuel. The recent economical recovery has resulted in increased electricity consumption in households and industries.

Most power plants in Northwest Russia are obsolete by Western standards and seriously need maintenance and upgrading, resulting in low efficiency power plants. If investments stay at the present low level, 32% of the current generating equipment is forecasted to be out of commission by 2005, which may give rise to crisis in electricity production and lead to regional power shortage²⁷.

Figure 4.8
Electric power and Heat generation

Source: Energy Strategy of Russia (1990 index 100)

District heating consumes about 280 million tons of oil equivalents, corresponding to about 44% of Russia's total fossil fuel demand.

The overall energy efficiency of combined heat and power plants production in Russia is around 75-80%. When comparing with international best-practise it should be possible to reach efficiencies in Northwest Russia of not less than 90% which would imply a reduction in fuel consumption and emissions of at least 25%.

However, rehabilitation of district heating systems and introduction of decentralised solutions will entail huge investments, which are also needed to remove pollutants from flue gases of central heating plants and boiler stations.

4.2.3 Energy sector reforms and strategy

In 2001, the Main Provisions of the Russian Energy Strategy to 2020 was approved by the Russian government. The Strategy provides an overview of problems facing the energy sector and resolutions needed to support general economic growth and reform. However, due to criticism as to the reality of the implementation of the Strategy a revised version is presently under preparation.

4.2.4 Difficulties related to institutional and pricing issues

Organisational and financial difficulties are at the heart of the environmental problems in the energy sector and need to be addressed. Difficulties arise in the interface within the energy sector and between energy companies and consumers.

Fuel prices

Low fuel and energy prices have a long history in Russia and this has negatively influenced incentives for heat and power plants, industries and public utilities to increase energy efficiency.

Tariffs

In the Energy Strategy, tariffs were planned to increase to cover longterm costs by 2010. In reality, however, the tariffs recently approved by government on gas and electricity as well as the planned increases announced for 2003-2005 fall significantly behind the tariffs envisaged by the Energy Strategy.

Table 4.4
Selected tariffs and fuel prices

1. Average for households and industry in Russia

Sources: Energy Strategy of Russia, EIA 2002, p.209, and data collected by COWI Moscow

The tariffs on electricity for Russian industries are higher than for households and traditionally large cross subsidies have been provided from industry to the residential sector.

Figure 4.9
Residential and industrial electricity tariffs in Russia

Source: IEA 2002, p. 209

Lack of funding

Similar to the public utilities in the water sector, energy companies lack funds to finance maintenance and investments. Tariffs typically only cover operational costs, i.e. fuel, operation and limited maintenance costs.

4.2.5 Environmental nuclear challenges

15% of Russia’s energy production originates from 9 nuclear power plants with 29 reactors in total. While European countries as Sweden, Germany, Belgium and the Netherlands are aiming at a downscaling their present levels of nuclear power production, Russia is expanding its nuclear power production capacity.

Russia is currently planning to upgrade/renovate a number of reactors and plans to construct five new reactors in the coming 5 to 7 years and additional 10 reactors in the following 10 years²⁸. The realisation of these very ambitious plans is threatened by lack of financial resources. Minatom receives limited revenue for the electricity delivered (65% in 2000) and consequently the investments are only 20% of what was originally planned. The major non-paying consumers are mainly state-owned companies.

It is the declared objective of the Minister of Minatom that Russia should be an important player on the international market in relation to nuclear issues. Russia exports nuclear power plants to, amongst others, China, India, Iran, and exports uranium and electricity and has lately started to receive used nuclear fuel for storage.

International support

A long range of countries have on a bilateral basis been involved in tackling the nuclear problems Russia faces and e.g. the US has contributed with 7 Billion USD since 1992²⁹. The EU and Russia are currently negotiating on the terms for a "Multilateral Nuclear Environmental Pro-gramme in the Russian Federation (MNEPR)" which is supposed to become the framework for donors who seek to contribute to the nuclear stability and safety in Northwest Russia. However, it has not yet been possible to conclude this agreement.

In the summer 2002, the Northern Dimension Environmental Program-me pledged Euro 62 Million earmarked for nuclear projects in Northwest Russia including handling of spent nuclear fuel (see chapter 4.3.6). However, the implementation of these projects is dependent on the successful signing of the Multilateral Nuclear Environmental Programme in the Russian Federation.

Safety

The 1986 Chernobyl disaster is a clear illustration of the risks connected to old and worn-out nuclear power plants. Today, 16 years later nuclear generated power still represents an important part of Russia’s energy production and although the safety-conditions in the Russian nuclear power plants have been considerably improved during the 1990s they still give rise to concern³⁰.

www.bellona.no

4.2.6 Facing the challenges in the energy sector

Reduced energy consumption and increased efficiency in energy production and supply are the most efficient ways – and must be pursued – to reduce the environmental and health problems caused by the sector. This calls for establishing an institutional and financial set-up that provides these means and incentives.

Areas of particular relevance for international co-operation

Co-operation could include preparatory work still needed for Russia's signing of the Kyoto Protocol e.g. technical support, awareness raising and demonstration activities Furthermore, the scope for Joint-Implementation activities should be pursued.

Finally, Russia should further strengthen its international alliances and efforts toward fulfilling the obligations of being signatory to the Geneva Convention on Long-Range Transboundary Air Pollution as well as the Vienna Convention on Protection of the Ozone Layer, specifically the Montreal Protocol and its amendments.

4.3 Environmental Challenges in the Waste Sector

There are several critical environmental impacts linked to the practises for handling waste in Northwest Russia. Deficient waste management has a major bearing on the state of the environment in the Baltic Sea and on issues related to water quality, soil pollution, and human health. A number of the HELCOM hot spots in Russian territory are in fact related to waste issues, and are attributable directly to waste management plants or industries’ discharge of various hazardous substances.

4.3.1 Municipal solid waste

In Northwest Russia, municipal solid waste³¹ is almost exclusively disposed of in landfills that do not meet requirements and are subject to growing capacity constraints. There is very little focus on waste minimi-sation and recycling.

The legal framework for activities related to municipal solid waste was established during the Soviet period. Most Acts and Ordinances adopted before 1991 are still in force. For instance, sanitary norms and rules (Sa-nPin), State Standards (GOST) established requirements to the Municipal Solid Waste landfills and municipal services involved in waste collection. In order to promote a new legal basis, the Federal Law "On waste of production and consumption" was approved in 1998. Based on this Law a number of new governmental Acts must be adopted.

Waste collection

Urban solid waste collection equipment and transfer stations work fairly well in the sense that main streets are generally kept clean. However, there are suburban and rural areas, which are not serviced by regular collection services, which mean that residents must resort to illegal dumping of waste. There are problems related to an outdated system of waste collection and storage within and near houses, which requires a lot of manual labour for waste handling, creates unsanitary conditions within multistorey apartment houses and around collection points because of odour and contamination of surroundings by waste. As a result of improper management, waste is readily accessible to rodents, flies and other insects, which creates a nuisance and risk for human health.

There is a widespread lack of organised collection and treatment of Household Hazardous Waste (e.g. used accumulator batteries, PVC, mercury lamps etc.). Consequently, these categories of waste are either not collected, or disposed at unauthorised dumps or at municipal facilities not equipped to handle this waste segment properly.

Modern waste management practices such as separate collection, recycling and recovery are almost non-existent in Northwest Russia. In St. Petersburg approximately 15% of the solid domestic waste is recycled³².

Landfill capacity

Source: Proceedings, EcoTech, Sweden, September, 1999

Northwest Russia’s treatment facilities do not comply with international or Russian Standards. St. Petersburg has two treatment plants, which treat approximately 30% of the domestic waste. An example of the waste problems is insufficient quality of the compost produced, which contains too high levels of plastic and glass material. At one of the St. Petersburg treatment plants 7 years of production is accumulated on the site³³.

Insufficient waste collection systems lead to a high level of unauthor-ised dumping. In St. Petersburg City and Leningrad Oblast there are approximately 75 registered landfills but also approximately 1,000 unau-thorised dumps of various size³⁴.

Lack of control of waste streams

There is a lack of continuous (from top to bottom) control of the waste streams from their places of origin to final operations on their disinfecting and recycling. The main causes of these shortcomings are a weak institutional and legal framework combined with a widespread lack of co-operation both between the subjects of Northwest Russia and between the various municipalities.

Privatisation

Even though a privatisation process has been pursued, a de facto monopoly situation is still the case in many places in the waste sector, even if private enterprises have taken over provision of most of the service. These companies are either owned by the public authorities or privately owned (or a combination) and it appears that open tender procedures based on real competition is not common.

Figure 4.4
Main problems of the St. Petersburg region in the solid waste management sphere.

4.3.2 Industrial hazardous waste

Waste Generation

The most urgent environmental concerns in Northwest Russia are related to industrial hazardous waste. In spite of the general decline in industrial production during the 1990s and specifically the economic crisis in 1998, annual industrial hazardous waste quantities are not reported to have fallen during the period. The Russian industry generates more hazardous substances in the industrial processes than European industries.

Figure 4.5
Industrial production* and generation of toxic waste. Northwest Russia

* Industrial production in real prices, using the consumer price index for the area as deflator

Source: GOSKOMSTAT, 2001

Waste disposal

In the former USSR the problem of hazardous waste was usually solved in a very simple way, i.e. by disposing such wastes in special landfills. Many of these hazardous waste landfills still exist and in many cases they are the only place where it is officially allowed to bring hazardous wastes.

Between 1970 and 1990 a number of hazardous waste incineration plants were built all over the Soviet territory. Such incineration plants were usually constructed near e.g. major industries and big chemical plants and were only capable of treating liquefied wastes. Moreover, none of them were designed for PCB destruction. After 1991, most incineration plants were closed down for economic reasons, though some are still in operation. However, nearly all of them require fundamental modernisation and upgrading to meet international environmental standards.

In Northwest Russia, there are also cases of hazardous waste being dumped at disposal sites for municipal solid waste although they are not equipped for this purpose – because no proper site for hazardous waste is available. Also, industries often do not separate and treat their hazardous waste according to the environmental requirements. In such cases the hazardous substances are discharged with industrial waste-water into surface waters.

Large accumulations

Capacities of recovery and disposal facilities for hazardous waste in Northwest Russia are by far sufficient to cover the present needs. Therefore, large accumulations of industrial and hazardous waste are growing at industrial sites, particularly in the metallurgical and power generation industries. By the year 2000, it is estimated that more than 120 million tonnes of hazardous waste have accumulated in Northwest Russia³⁵.

As a comparison, the facility serving the entire territory of Denmark, i.e. more than 5 million people, treated about 110,000 tonnes of hazardous waste in 2000. The accumulated amount of hazardous waste in Northwest Russia, hence, constitutes more than 1,000 times the annual treatment capacity of this facility³⁶.

Improper storage

The industrial hazardous waste accumulated at industrial sites or deposited at old hazardous waste landfills in Northwest Russia represent a major environmental problem as the waste is seldom stored in an environmentally safe manner. Hence, there is a risk of dangerous substances seeping into, or being washed out from storage sites and polluting the soil and ground and surface waters, thereby endangering drinking water resources and human health.

In the Leningrad region, the official hazardous waste disposal site does not meet environmental requirements (see Box 3.1). Around 800,000 tonnes of unprocessed industrial hazardous waste, such as chlorinated substances and heavy metals are improperly stored in open pits³⁷. This implies a serious risk of soil and ground water contamination, and stormwater may cause substances to wash into the Neva River and thereby the Gulf of Finland.

Kaliningrad has similar problems related to storage and processing of hazardous waste, however, on a smaller scale. Today 6,000 tons of hazardous industrial waste is deposited in temporary storage houses that were not designed for this purpose. The risk of hazardous substances leaking into the ground is considered very high³⁸.

4.3.3 Persistent Organic Pollutants (POPs)

Effects of POPs

Of all the pollutants released into the environment every year by human activity, POPs are among the most dangerous. They are highly toxic, causing an array of adverse effects, notably chronic diseases, and birth defects among humans and animals. This report will briefly describe the 3 categories of POPs: POP pesticides, PCBs (industrial POP) and Dioxin.

POP pesticides

Northwest Russia has large stocks of POP pesticides to be dealt with in the future (estimated 21,000 tonnes), though exact figures are not available.

PCBs

Another important POP is the PCBs, which were produced by two factories in the former Soviet Union. From 1939 to 1993, the factories produced a total of about 180,000 tonnes of PCB³⁹.

It is estimated that some 17,000 tonnes can be found in transformers and 7,000 tonnes in capacitors.

Amap estimates in its report "PCB in the Russian Federation" that between 1000 and 2000 tonnes of PCB is stored in PCB containing equipment in the Northwest Russian territory⁴⁰.

From the point of view of collection or substitution, the transformers are probably the application areas offering the highest "cost-benefit" ratio with the present plans for incineration⁴¹.

Dioxins and Furans

Dioxin and Furans are by-products of e.g. incineration of POP pesticides, PCB and waste in general. A large scale US-Russian project provides estimations of dioxin emissions by different sources. According to the inventory, total annual dioxin emission to the air from Russian sources was estimated to be within the interval of 6900 to 10900 g I-TEQ (International
Toxic-equivalent)⁴².

The most urgent problems regarding dioxins in the Russian federation have until now been pollution within and around chemical plants producing chlorinated and brominated compounds. When considering 3 of the most polluting chemical plants, each of them have an emission about 10 times higher than the entire Danish emission (all sources included).

In Russia domestic waste is primarily deposited at landfills, often together with industrial wastes. Smoking landfills can be seen in many Russian regions all year round. Often landfills are set on fire in order to reduce the volumes of waste. No quantitative estimates of Dioxins and Furans formation from burning landfills are available but there are reasons to believe that such formation is not less hazardous than emissions from the waste incineration plants and the burning of landfills represents thus an environmental challenge that should be dealt with.

4.3.4 Financial challenges in the waste sector

Tariffs

The waste sector in Northwest Russia is in dire need of heavy investment in order to overcome the challenges indicated in the above sections and establish an environmentally sustainable waste management system.

Tariffs are collected by the Municipalities/City administrations, but there are a series of problems related to the collection of tariffs which is similar to those identified in the water sector (see section 4.1).

4.3.5 Waste problems related to the energy sector

Oil spills and leakage

The Russian oil and gas industries are responsible for spills and leakages that contaminate soil and waters in many areas. Environmental standards are not enforced and international petroleum standards are not yet in place. Spills arise from pipeline leakages, accidents and tanker spills.

Additional refinery capacity has been established in St. Petersburg and the export of Russian oil products through the Baltic Sea is planned to triple within the coming years. Consequently, the risks of accidents and of oil spill will increase if measures to reduce these risks are not taken.

In total, more than 39 thousand ha of Russian land are contaminated with oil products of which military sites accounts for more than 70 per cent⁴³. It is estimated that over 3 billion roubles (2001 prices) or more than USD 100 million are required only for the priority clean-up activities.

A significant part of these military sites are located in Northwest Russia, though, more detailed studies are needed to assess the full volume of this problems and the impact on the environment in particular on the ground water, local and regional water bodies.

Source: National Report on Status of the Environment, Russian Federation, 2001

Waste from energy production

Storage and reprocessing of used fuel

Apart from the safety issues relating to the nuclear power plants there are a series of problems relating to storage and reprocessing of Spent Nuclear Fuel and other contaminated wastes.

The only facility for reprocessing used fuel is the Mayak plant which is situated in the southern part of the Urals. Thus, the used fuel is transported from all over Russia to this plant which has severe security related implications.

However, Mayak is not capable of treating all types of used fuel elements produced in various nuclear powered generators and nuclear power plants. Furthermore, long-term storage facilities are not available and approximately 14,000 tonnes of spent nuclear fuel is stored at Mayak and at various plants⁴⁴. OECD estimates that approximately 1 billion tons of high and low level radioactive waste is stored in Russia. However, the larger part is related to low-level radioactive waste from uranium and thorium mining and processing.

www.bellona.no

The naval nuclear decommissioning

Northwest Russia is awash with laid-up nuclear powered submarines and ice-breakers waiting to be decommissioned. Out of the 248 nuclear submarines built by the Soviet Union and Russia for the Northern and Pacific fleets, 191 are laid-up. 115 of these are located in Northwest Russia, of which only 32 have been dismantled. Only 10 submarines have been defuelled and 71 are laid-up with spent nuclear fuel onboard⁴⁵.

Source: The Russian Northern Fleet: Handling of Spent Fuel Assemblies, Bellona, 2002

Another source of nuclear waste is spent strontium-90 fuel used to power lighthouses in the northern region. This method of powering lighthouses was also tested in the west but abandoned since it was difficult to ensure the safety of such large sources at remote and isolated locations. The source from lighthouses no longer in use is now taken care of with international assistance⁴⁶.

4.3.7 Facing the challenges in the Waste sector

Russia should continue the work towards creating an efficient legal and institutional framework for the waste sector. Russia’s waste handling strategies should relate to internationally recognised principles for waste management i.e. the "waste hierarchy" (highest priority given to prevention, followed by recovery and lowest priority to safe disposal).

As signatory to the Basel Convention Russia should continue pursuing that a) transboundary movement of hazardous waste should be reduced to a minimum, b) hazardous waste should be treated and disposed of as close to their source of generation as possible. c) hazardous waste generation should be reduced and minimised at the source.

Finally, safe handling of nuclear waste demands for close international co-operation, as Northwest Russia apparently is not able to handle the situation. Dependent on the successful signing of the Multilateral Nuclear Environmental Programme in the Russian Federation, Euro 62 Million have been earmarked for nuclear projects in Northwest Russia under the Northern Dimension Environmental Programme.

5. Summary and perspectives

6. Summary in Danish

Denne rapport er en strategisk analyse af de miljøudfordringer, som den nordvestlige del af Rusland står overfor. Rapportens indhold er blevet efterspurgt af de russiske miljømyndigheder i et samarbejde med Mil-jøstyrelsen, som en form for afslutning på det dansk-russiske arbejde. Formålet er at vise status og påpege muligheder for løsninger af opga-verne. Udgangspunktet for analysen er de miljøproblemer, som har en konkret indvirkning på Østersøen, nemlig vandkvalitet, affaldsbehand-ling og luftforurening fra energisektoren. Østersøen er verdens største brakvandsområde, dels på grund af den ringe vandudskiftning, dels på grund af de mange floder, der udmunder i havet. Østersøen er afvandingsområde for den mest befolkningstunge del af det nordvestlige Rusland.

6.1 Miljøsituationen i Nordvestrusland

Spildevandsrensning

En af Østersøens væsentligste forureningskilder er urenset spildevand, hvoraf hovedparten kommer fra Nordvestrusland. En stor del af befolk-ningen er ikke tilknyttet offentlige kloaksystemer og spildevandsrens-ningsanlæg, og de systemer, der er adgang til, er utætte og i stigende grad ineffektive. På grund af de helbredsmæssige konsekvenser og den direkte trussel mod vandreservoirer er dette miljøproblem presserende.

Selvom vandforbruget per person er faldet væsentligt, er det stadig dob-belt så stort som i Vesteuropa, nemlig hele 260 liter/capita/dag. Det voldsomme overforbrug er resultatet af et dårligt vedligeholdt distribu-tionssystem og et ineffektivt afgiftssystem.

Helbred

Ifølge Ruslands egen klassificering er de fleste russiske floder og søer registreret som "moderat forurenet" eller "forurenet". Forureningen er af bakteriologisk og kemisk art og skyldes primært utilstrækkelig spilde-vandsrensning. Da 70% af drikkevandet er overfladevand, udgør drikke-vandet en stigende trussel mod befolkningens helbred.

Mangelfuld og/eller utidssvarende affaldsbehandling i Nordvestrusland er medårsag til forureningen af Østersøen og til forringet vandkvalitet og forurening af jorden.

Farligt affald

Den klart mest presserende miljøtrussel er farligt affald. Den russiske industri producerer enorme mængder af farligt affald, og systemerne til indsamling og bortskaffelse er helt utilstrækkelige. Dertil kommer som et levn fra Sovjettiden mængder af farligt affald i usikrede lossepladser. Man regner med, at den akkumulerede mængde af farligt affald var 120 millioner tons i år 2000. Til sammenligning behandlede KommuneKemi, Danmarks behandlingsanlæg for farligt affald, 110.000 tons i år 2000. Det vil sige, at den samlede mængde farligt affald i det nordvestlige Rusland er mere end 1000 gange så meget, som KommuneKemi be-handler om året.

Nukleart affald

Omkring 14.000 tons nukleart affald er oplagret i Nordvestrusland under mere eller mindre forsvarlige forhold. Store dele kommer fra nukleare energianlæg, men et særligt problem er brændsel fra 115 atomdrevne ubåde, der er taget ud af service. Nordvestruslands eneste facilitet, der kan behandle nukleare affald – men ikke alle former – er Mayak, hvor størstedelen af de 14.000 tons er opmagasineret.

Miljøproblemer i energisektoren

Stort energiforbrug

Den russiske økonomi er præget af et intensivt energiforbrug. Det er dels strukturelt betinget – Rusland har store energiintensive industrier, dels resultatet af et stort overforbrug på grund af lave energipriser. Ganske vist opfylder Rusland sine internationale forpligtelser til at redu-cere udslippet af SO_x, NO_x og CO₂. Men reduktionen hænger nøje sammen med faldet i Ruslands bruttonationalprodukt og ikke med reelle forureningsnedsættende aktiviteter.

Institutionelle rammer

Tre niveauer

Forvaltningen af miljølovgivningen foregår i en lang række instanser, som findes på tre administrative niveauer: Føderalt, regionalt og lokalt/ kommunalt. Samarbejdet mellem instanserne er ofte mangelfuldt. Ofte modarbejder de hinanden eller undlader at dele viden med hinanden.

Lovgivning

Selv om miljølovgivningen i de senere år har været genstand for et stort reformarbejde, er der lang vej igen. Lovgivningen er kompleks og in-konsistent, og det giver de regionale og lokale administrationer store muligheder for individuel fortolkning.

Dobbeltarbejde

Et konkret resultat af de forskellige fortolkninger af lovgivningen ud-møntes i en lang række standarder, som hver for sig monitoreres af hver sin instans. For eksempel overvåges vandkvaliteten i Kaliningrad af ikke færre end otte forskellige instanser.

Behovet En af de største barrierer for at opfylde internationale konven-tioner og mål på miljøområdet er at finde finansiering. Behovet er enormt. Alene de HELCOM "hot spots", der er relateret til kommunal miljøforsyning i Rusland, blev i 1999 vurderet til at kræve investeringer på ca. 1.4 milliarder Euro.

Finansieringsproblemerne

Der er identificeret fire faktorer, som bidrager til finansieringsproblemerne: Lav indtjening fra brugerbetaling, få offentlige subsidier, ineffek-tiv planlægning og investering samt højt ressourceforbrug og ineffektivitet.

Finansieringsanalyser viser, at selvom hele investeringen i at forbedre den kommunale miljøforsyning kom som en gave, ville kommunerne ikke kunne bære de øgede drifts- og vedligeholdelsesomkostninger ved nye og mere avancerede anlæg.

Internationale finansieringsinstitutioner og multi- og bilaterale donoror-ganisationer kan bidrage, men det mest presserende behov er at gen-nemføre nationale reformer, der kan rette op på de fire grundlæggende problemer. Rusland har dog taget et første, vigtigt skridt med sit nye otteårige reformprogram, der blev vedtaget i 2001.

6.2 Miljøudfordringerne fremover

Appendix 2: Hot spots identified in 1992 and their present status

(the shadowed lines indicate the Hot Spots deleted from the list as per 20 November 2002)