Article by Tetiana Tugolukova, Associate, Salans, Kyiv

The Environmental Acquis is applicable only to the extent where it concerns network energy and consists of four relevant pieces of legislation, namely:
(1)   Council Directive 85/337/EEC on the assessment of the effects of certain public and private projects on the environment, as amended by Council Directive 97/11/EC and Directive 2003/35/EC (the “EIA Directive”). The main objective of the EIA Directive is to ensure that any potential environmental consequences of projects are identified and assessed before authorisation is given.
The implementation deadline for the EIA Directive is 1 January 2013.

Key findings on implementation in Ukraine:

 (i)     Although the basic legislation is in place, it should be upgraded and harmonised in accordance with the principles and requirements of the EIA Directive.  In light of this, CMU Order No. 790-p envisages amending the List of Kinds of Activities and Objects Constituting the Increased Ecological Hazard, approved by CMU Resolution No. 554 of 27 July 1999.  To date, the respective draft CMU Resolution has been prepared by the Ministry of Ecology and Natural Resources of Ukraine; however, it has yet to be approved by the Cabinet of Ministers of Ukraine.

(2)   Council Directive 1999/32/EC relating to the reduction in the sulphur content of certain liquid fuels (the “Sulphur in Fuels Directive”). The main objective of the Sulphur in Fuels Directive is to reduce the emissions of sulphur dioxide resulting from the combustion of certain types of liquid fuels. 
The implementation deadline for the Directive expired on 1 January 2012.

Key findings on implementation in Ukraine:  

(i)     The Ukraine has yet to comply with the Sulphur in Fuels Directive.  Implementing the Directive implies that more stringent limits on the sulphur content of heavy fuel and gas oils must be adopted, together with relevant measures to meet those targets.  An analysis of public resources shows that nothing has yet been done in relation to this so far.

(3)   Directive 2001/80/EC on the limitation of emissions of certain pollutants into the air from large combustion plants (the “LCP Directive”). The main objective of the LCP Directive is to reduce and control atmospheric emissions from large combustion plants. 
The implementation deadline for the LCP Directive is 1 January 2018.

Key findings on implementation of the LCP Directive in Ukraine:

(i)     Proper transposition of the LCP Directive into Ukrainian law requires the reconstruction and re-equipping of the country’s Thermal Power Plants (TPP).  Currently in Ukraine there are 14 TPPs with 97 power units installed there, with a capacity of 150-880 MW.  According to the Energy Ministry, more than 90% of those power units require either modernisation or replacement. The Modernisation Plan of Thermal Power Plants Until 2020[1] estimates the cost of modernising the existing TPPs to be more than USD 20 billion. Due to the considerable cost of such investment and its own lack of experience in this area, Ukraine is now seeking an extension of the deadline for implementing the LCP Directive, to 2030.

(ii)   The national emission reduction plan detailing the total emissions’ targets and the measures needed to achieve the targets required by the LCP Directive, has not yet been adopted by Ukraine.

(4)   Article 4(2) of Directive 79/409/EEC on the conservation of wild birds (the “Wild Birds Directive”), requires that conservation measures be taken in relation to migratory bird species, with particular attention given to the protection of wetlands including those of international importance.

The implementation deadline for article 4(2) of the Wild Birds Directive is 1 January 2015.

Key findings on implementation of the Wild Birds Directive in Ukraine:

(i)     According to the Ministry of Ecology and Natural Resources of Ukraine, the effective Ukrainian legislation is basically in line with the Wild Birds Directive.  Slight amendments directed at better regulation for the protection of all wild bird species are planned to be introduced in the Law of Ukraine On Fauna.

Renewable Energy Sources Acquis

(1)   Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources in the internal electricity market.  The key objective of the Directive is to diversify and secure energy supplies, increasing environmental protection and providing sustainable development.  The Directive requires indicative national renewable energy targets are adopted in order to achieve these goals. It also requires the introduction of support mechanisms and certification schemes as well as streamlined administrative and grid access rules in order to provide an incentive for investing in renewable energy projects.

Under the Accession Protocol, Ukraine had to submit a Plan on the Directive’s Implementation to the European Commission by 1 July 2011. 

Key findings on implementation of the Directive in Ukraine:

(i)     A plan for the Directive’s implementation has still not been adopted by Ukraine.  Public sources do not contain any exact information on its elaboration and adoption.

(2)   Directive 2003/30/EC on the promotion of the use of bio-fuels or other renewable fuels for transport. The key objective of the Directive is to promote the use of biofuels or other renewable fuels to replace diesel and petrol for transport purposes, with a view to contributing to CO2 emission reduction and environmentally-friendly security of supply.  The Directive calls for indicative national targets to be set as reference values for the biofuel content of all diesel and petrol supplies for transport, namely 5.75% by the end of 2010.

Under the Accession Protocol, the Ukraine had to submit a Plan on the Directive’s Implementation to the European Commission by 1 July 2011.

Key findings on implementation of the Directive in Ukraine:

(ii)   A plan for the Directive’s Implementation has still not been adopted by Ukraine.  Public sources do not contain any exact information on its elaboration and adoption.

Conclusion

It appears that none of the Ukraine’s commitments under the Energy Community Treaty were carried out in full or on time.  Implementation of the necessary energy reforms is all yet to come.  The main challenges and risks for Ukraine in carrying out these commitments to the Energy Community are restrictive timeframes and the need to invest considerable sums in upgrading its generation and distribution capacities.

Tetiana Tugolukova

Associate
Real Estate, Energy & Natural Resources Groups

Salans LLC