EU environmental law too much too soon for Poland

Sluggish implementation of new environmental laws designed to bring Polish legislation up to European Union standards could be discouraging potential investment in the sector, environmental consultants said last week. The laws, approved in October, refer to everything from waste to air pollution but are unclear until specifically defined by secondary legislation. Until such details are known, investors will be hesitant to commit to new projects that might later be penalized, consultants said. "Until the new law is enforced with ministerial regulations, industries are left in the dark," said Joanna Witczyńska, a legal specialist at Atmoterm, an environmental consulting firm based in Opole. "At the moment, there are some old legislative decrees that are still valid and there are also some new ones, so there are many loopholes. From a legal point of view, everything is really unclear." It will also cost the government and private enterprises from €30 billion-€40 billion collectively to bring standards up to union norms, according to the European Pro-ecological Center - something Poland cannot afford.

Under EU regulations, if firms don't comply with environmental law, they risk being fined or shut down. But since the law requires that companies use the latest environmental technologies, the financial burden of compliance is often more than some industries can bear, environmental specialists said. "We have a certain time frame to undertake this, but it's possible we won't fulfill it in time," said Marcin Skoczkiewicz, a lawyer at the Environmental Law Center. Deadlines vary from immediate implementation to implementation in 2008, but all laws must be passed nationally by the end of the year. "It could be the case that Poland would have to pay fines for not fulfilling the requirements," Skoczkiewicz said. "Under the old law, if a plant emitted more pollution than allowed, it could pay a fine and continue to operate. But the new rules say that if you exceed the permitted pollution levels, you will have to be closed."

Deadline looming Poland will have to conform to most EU environmental directives by the country's planned accession in 2004. "However, for some directives that imply heavy costs, Poland has negotiated longer adjustment periods - so-called transition bids," said Pia Ahrenkilde Hansen, the spokeswoman for the European Commission's environment commissioner. "But there are strict conditions for these exceptions. Also, most of these longer periods do not concern industry with the exception of the IPPC directive, which ensures that companies active in Poland apply EU directives along the same lines as in the present EU member states." The International Plant Protection Convention (IPPC) directive, which outlines standards for particular industries, is among the laws that have yet to be implemented. "We know some industry types will be found there (in the list) but the Polish government has some room to maneuver and avoid certain industries; and until they publish the list, investors will not know if their operation falls into the strictest environmental standards," Skoczkiewicz said. "This will certainly discourage investors in the meantime."

Companies worried Even national industry giants such as oil refiner Polski Koncern Naftowy Orlen (PKN Orlen) fear that the EU's tough environmental standards will be impossible to meet by the deadlines and hurt the company's financials. "It's a difficult position as we are required to follow the new directive, and our structure is based on the old law," said Beata Karpińska, PKN Orlen's spokeswoman. "And this will be particularly difficult regarding emission targets ... These will require major investments. We still don't know how large the investments will be, but the cost will have to be carried by the shareholders, and we will have to have their agreement to go ahead. For us, it would be best if there were a longer transition period with a step-by-step process of implementation." According to Jerzy Kździerski, the deputy president of Proeko, an environmental consulting firm, EU environmental compliance will be most difficult for industrial companies already in financial trouble. "Their restructuring will require a great organizational and financial effort, including usage of assets collected by eco-funds along with the 'who pollutes pays' rules," he said.

Buckets of cash The EU has set aside as much as €180 million to help Polish companies bring their environmental standards up to union norms, but the lack of adequate administrative channels to distribute the funding means the money has been largely unused. "There is a difficult process of preparing investments," Kździerski said. "Local authorities don't have the expertise to prepare the projects that need to be done also with (companies') own financial investments. (They) need about 25% of their own (capital), but it's a little better than what Sapard (Special Accession Program for Agriculture and Rural Development) (requires). There were many that were interested, but their applications were rejected. I don't think the government realized how difficult it would be to generate satisfactory applications, and there are few well-developed projects." While most environmental professionals approved of the legislation as a step in the right direction, when it comes to helping Poland's environment, many also see the EU's demands as being too much too soon. "As an environmentalist friend of mine said, 'to have environmental development, you first need development,'" Skoczkiewicz said. Others cautioned that Poland must not allow the law to paralyze the nation's economy and, therefore, must achieve some sort of a compromise with the EU. "I am an optimist if the law is correctly realized," Kździerski said. "But to achieve the overall ecological effect desired, you have to make sure the law is beneficial, rather than costly, to firms."