Environment and Sustainability

Positive Developments

The FIC appreciates the GOR’s efforts to be proactive in discussions about new or revised EU norms it needs to transpose, to ensure that these will not have significant negative effects on the business sector in Romania and that Romanian companies will retain their international competitiveness (e.g., implementation of EU-ETS for 2013-2020, revision of carbon leakage list for 2015-2019, etc.).

The GOR has initiated public consultation procedures giving interested parties the possibility to express their opinions on various environmental issues.

A new draft of the amendments to the National Forestry Code has been published and all stakeholders have been given the opportunity to be involved in the consultation process and participate in constructive debates, to improve the initial version. The FIC considers that the resulting legislative framework, including new application norms, can represent the starting point for addressing the problems of this sector and for implementing best practices in forestry sustainable management. At the same time, the FIC welcomes the enforcement of the new Norms on the source, transportation and trading of wooden materials (wood traceability), to establish the obligations vesting with wood and wooden products traders (the so-called “Forestry Radar”).

The GOR has continued the efforts made for proper waste management by adding a landfill tax to the existing legislative incentives. The effectiveness of this tax is however diminished by the delay approved by Parliament in its implementation date (i.e., until 2017). The FIC supports the incentive and considers that an earlier implementation date than that currently stipulated will be beneficial for Romania in achieving its European commitments and avoiding infringement proceedings with respect to European waste management norms.

The GOR has developed necessary procedures and put efforts into continuing supporting regional and local authorities to apply for and access EU funds (Regional Development European Fund and Cohesion Fund) to solve environmental problems, such as water and waste management.

Areas for Improvement

Environmental legal framework and institutional matters

During the last two years, the FIC has prepared over 10 position papers and comments to draft legislation in the environmental sector, as well as attending multiple meetings with the authorities in connection with the environmental topics raised in those documents. The actual authorities' feedback on these documents and meetings has been limited.

The FIC has some concerns about lack of legislative predictability and of feasibility assessments for implementing new norms and considers that any new environmental regulations and initiatives at both national and European level should be discussed in advance with the business sector representatives to allow the authorities to consider and integrate the business sector input when establishing the country position. There is a stringent need for consistency in terms of interpretation of the legislative provisions by all public authorities at central level and local level.

FIC Recommendations

Legislative predictability should be ensured and a uniform and consistent legislative framework should be created, based on EU principles.
Consultation with industry representatives should take place prior to the adoption of new environmental norms and regulations or prior to the amendment of existing ones. Likewise, the public consultation term should always be observed and increased in the future, also taking into consideration possible deadlines for transposing EU legislation.
In determining the need and priorities for legislative amendments, the authorities should consider the documented input provided by the business sector. In this context, the FIC deems that certain provisions of the authorization and re-authorization procedures might be subject to different interpretations, and this topic should be clarified as soon as possible. A uniform and consistent environmental practice at the level of all local competent authorities should be developed in order to avoid different approaches to the same issue. To this end, a potential solution would be the issuance of binding resolutions by the national authority which would regulate the approach to be taken by local subordinated authorities. A secondary legislative framework should be adopted to accommodate the new legislation with the existing framework (e.g., the Procedures for issuing the environmental authorization and integrated environmental authorization should have been revised from February 2014, following the enactment of Law No. 278/2013 on industrial emissions).
Cooperation between the relevant environmental protection and water management authorities should be increased to avoid bottlenecks or contradictions in regulation of various projects, as well as to ensure smooth implementation of projects which have a double dimension (e.g., soil and water remediation).

Climate Change Issues

The FIC appreciates the transparency demonstrated by the MEWF and by METT during the transposition and implementation of revised EU-ETS legislation on climate change, including the revision of the carbon leakage list for 2015-2019. The FIC hopes that the cooperation between the authorities and business sector will also continue for the full definition of the 2030 Energy and Climate Package.

FIC Recommendations

Continuous close cooperation is needed with the environmental authorities to implement and improve the existing national secondary EU-ETS legislation related to the procedure for issuing authorizations for greenhouse gas emissions for the period 2013-2020 and related reporting.
Active participation of the Romanian authorities in discussions held at European level and the involvement and consideration of business sector input in the positions to be taken by the Romanian authorities within the relevant technical/expert groups and public consultations at EU level are of utmost importance, especially in those relating to post-2020 carbon leakage provisions and EU-ETS reform.
The authorities should support full implementation of the energy efficiency norms, which would lead to a positive effect from environmental and climate change perspectives. Adequate planning for this, including for achieving various mandatory targets at EU level, would allow for the identification of the most cost effective solutions, including in the public sector.

Remediation of contaminated sites

The remediation of contaminated sites is currently governed by Ministry of Environment Order no. 756/ 1997 approving the Regulations on the evaluation of environmental pollution, by GD no. 1408/2007 on the methods of investigation and assessment of soil and subsoil contamination, by GD no. 1403/2007 on the remediation of the areas where soil, subsoil and terrestrial ecosystems have been affected and by GD no. 53/2009 on the approval of the National Plan on the protection of groundwater against pollution and deterioration.

FIC Recommendations

A correlated methodology for applying these regulations is needed to ensure transparency, predictability (in terms of timing, actions required, etc.) and to avoid misinterpretations of or contradictions in them. Detailing the framework for contaminated sites may also ensure a better clarification of potential liabilities for private companies operating on historically contaminated sites, as well as the possibility for such private companies to access state aid or EU funds for decontamination works.
A secondary legislative framework should be adopted to allow a proper implementation of environmental general principles (e.g., a Technical Guide regarding methodology, evaluation criteria and content of the geological report for investigation and evaluation of soil and sub-soil should have been adopted since 2008).
A secondary legislative framework is needed to facilitate access to EU funds for environmental decontamination works. The preparation of the National Strategy and the National Action Plan for Managing Romanian Contaminated Sites is an ex-ante condition imposed by the European Commission on Romania to co-finance contamination sites remediation projects from EU funds within the 2014-2020 program. Consequently, approving and publishing a national list of contaminated sites is a mandatory milestone in the process of accessing European funds. This list should be completed and published as soon as possible.

Waste Management

The Waste Management Framework Directive was transposed into Romanian legislation through Law no. 211/2011 on waste, as further amended. In December 2013 the Government published the National Strategy for Waste Management during the 2014 - 2020 period (approved via GD no. 870/2013). The waste management framework is characterized by a large number of enactments regulating waste management generally or setting forth rules on specific types of waste.

FIC Recommendations

The FIC recommends that the authorities should give particular attention to:

Achieving a balance between local authorities’ and industries’ responsibilities, as well as transparency and clarity with respect to obligations vested with operators performing similar activities. The local authorities should also be made accountable for the selective collection of post consumption waste (e.g., packages, electric and electronic equipment waste), as this legal obligation lies with them.
Clarifying whether the GOR intends to adopt a decision setting forth a special regime for additional specific types of waste (aside from the decisions already in place). The GOR should also clarify whether it intends to set out rules on how waste management costs are to be allocated based on the “polluter pays” principle, including in the context of preparing and adopting a National Waste Management Plan in line with the new National Strategy for Waste Management.
Clarifying the by-products concept and the cessation of waste status versus recovery in waste reporting.
Clarifying the waste treatment reporting obligation for treatment operations that represent both recycling and energy recovery (e.g., waste co-processing in cement plants).

Better implementation of the EC recommendations in support of various waste-related directives (e.g., recognition at national level of co-processing in cement plants as simultaneous mineral recycling and energy recovery, as well as best practice for resource efficiency).
Clarifying the legal framework to support domestic waste transportation collected from multiple sources in one transport.
Setting a methodology for waste flow registration (traceability) from the generation/collection place to the storage, transport, treatment and final recycling/recovery/disposal, and related reporting.
Upgrading existing databases, as the least costly solution, to allow online integration and correlation of all reporting obligations with adequate security features (including to ensure confidentiality), which should allow the generation of all reports required by the waste management regulations and the traceability of waste flows. The FIC offers its support for the design, testing and operation phases of this database.

Packaging and Packaging Waste (PPW)

Romania has so far complied with its EU obligations on PPW, primarily due to the continuous efforts made by industry to achieve the stringent packaging waste recovery and recycling targets. It is to be expected that these efforts will continue in future.

FIC Recommendations

Specific requirements for the traceability of waste (including various types of materials coming from waste) should be regulated and upgraded and reporting procedures correlated at national level to secure accurate data submissions with the European Environment Agency, reduce free riders, and create the premises for a level playing field for all responsible economic operators.
The deposit system should be avoided as it leads to parallel collection systems at municipality level and to unnecessary multiplication of costs. It undermines the GOR’s ongoing efforts focused on implementing separate collection at national level as Romania’s strategic option, which benefits from substantial EU funding (i.e., EUR 1.17 billion – Axis 2 Waste Management, SOP Environment). Taking into consideration Romania’s economic capacity, the implementation of a deposit system puts an additional disproportionate burden on the shoulders of industry (fillers and importers).

National Sewage Sludge Strategy

The FIC appreciates the Ministry of Environment approach to establishing a national strategy for this specific waste stream. Currently most waste water treatment facilities are planned to be fitted with dehydrating facilities to reduce the water content in the resulting sludge (from 96-98% to 70-85%).

FIC Recommendations

Further reduction of the amount of sewage sludge to be treated, by setting up of drying facilities as close as possible to generating sources should be included in this strategy as one of the main targets. This would allow for lower logistics costs, as well as increased treatment alternatives including recovery of this sludge by co-processing in cement plants (simultaneous mineral recycling and energy recovery).
To make the use of sewage sludge more attractive for farmers, the authorities should review and simplify the authorization procedures by appointing a single issuing body and/or requesting the authorization from one side only (either the producer or the farmer) and by drafting a “Best Practices” Guide, in cooperation with FIC members, for the management of sewage sludge.

Waste Electrical and Electronic Equipment (WEEE)

GD no. 1037/2010 on WEEE fails to address the concerns expressed by industry, or to integrate its proposals to remedy the problems:

The responsibility to reach the WEEE collection targets has been totally transferred to producers, under the threat of the suspension of their activity, even though, according to the same GD, WEEE collection from households should be carried out by local authorities.
There are no measures stated in the GD to require the other actors from the so called “parallel flows” to register and report the quantities of WEEE collected and treated.
There are no penalties set out for illegal WEEE collection and treatment. Only those operators which have environmental permits for collection and treatment of WEEE can be fined for breaching the provisions of the GD. Non-authorized collectors are not mentioned so they are subject only to the provisions of the general legislation, which sets much lower penalties.
Despite the provisions of the EU Directive and the EU Commission's opinion, the GD still maintains the provision that the guarantee for “orphan new waste” will be managed by the Environmental Fund Administration.

FIC Recommendations

Moreover, the new directive on this subject, Directive 2012/19/EU, has yet to be transposed in Romania, despite the transposition deadline having elapsed on 14 February 2014. The transposition process, initiated on January 2014, lacks transparency and so far has been carried out without a thorough consultation with stakeholders, disregarding the provisions of Law no. 52/2003 on decisional transparency in public administration. The drafts for transposition (at least three versions have been circulated) do not address the flaws of the existing GD no. 1037/2010 (in fact, these are made more acute), while they also add new points of potential infringement, such as the de facto prohibition of WEEE collection for producers and their collective schemes.

The FIC has been actively involved in the implementation process by submitting comments and attending meetings with the Ministry of Environment representatives, but without receiving any feedback on its input or being able to verify whether the submitted comments have been analysed and implemented by the authority.

FIC Recommendations

The transposition of the new Directive 2012/19/EU should be completed as soon as possible in order to avoid the risk of infringement procedures being instigated against Romania. At the same time, the final transposition draft should address the flaws mentioned above, as well as consider the following reforms:

Imposition of clear responsibility on the authorities for the achievement of the WEEE collection targets (collection objectives for local authorities and strong enforcement to combat illegal “parallel” flows).
Imposition of clear responsibilities on each actor that handles WEEE depending on its role.
Cancellation of the current legal provisions which make producers responsible for the result of an activity (collection of WEEE from households) which should be performed by local authorities.
Requirement that all actors that handle WEEE should register and report. High penalties should be imposed for illegal collection and treatment and measures to support effective enforcement of such penalties should be put in place.
Establishment of an entity for coordinating, monitoring and compensating the obligations of WEEE producers and local authorities (clearing house).

Eliminating the involvement of the Environmental Fund Administration (AFM) in the management of guarantees. The management should instead be carried out by the authorities with a role in the implementation of WEEE legislation.
Setting of the right of WEEE producers and/or their collective organizations to organize and operate their own collection facilities, if they choose to do so.
Consultation with the industry before adoption of any WEEE norms, as well as before the final approval of the enactment transposing the WEEE Directive 2012/19/EU.

Additional elements that should be put in place when the new Directive 2012/19/EU is transposed into Romanian legislation are:

Introduction of obligations proportional with their responsibilities for all parties which collect and treat WEEE. These obligations should include following the minimum treatment requirements, achieving the recovery and recycling targets included in the Directive and reporting the results to the authorities.
Regulation of the possibility to use a visible fee.

Funds for environmental projects

EU Funds

Under the 2014-2020 programming period, the Large Infrastructure OP will be the most important program providing EC financial support to environmental projects.

Regional Operators will continue to receive European Funds to extend the drinking water networks and wastewater treatment facilities according to the investments included and prioritised in the Master Plans. The development of waste infrastructure will also continue to be financed in the future programming period enabling Romania to comply with the Landfill Directive, to promote a more efficient use of resources and to increase the waste recycling ratio.

Protection of biodiversity will also be given priority under the Large Infrastructure OP. Investments will be targeted for the protection and restoration of the most valuable ecosystems and endangered animal species. Measures will be undertaken as part of the Large Infrastructure OP to set up and improve risk monitoring and prevention systems, to enhance the professional emergency response services and to reduce risks and damage from flooding, drought and coastal erosion.

The Large Infrastructure OP will also provide support for the development of the National Air Quality Assessment and for rehabilitation of contaminated sites, including preparation for their economic re‐use.

FIC Recommendations

The business sector should be invited to participate in working groups of relevant authorities to define and improve application rules and procedures, as well as the applicant’s guidelines for the environmental projects to be financed under the upcoming programming period.
Selection of the environmental projects and activities related to management verifications (administrative verifications during project implementation, on-the-spot verifications during and after project implementation) should be entirely outsourced to the business sector (Framework Contracts).
A secondary legislative framework is needed to facilitate access to European funds for remediation of historically contaminated sites (i.e., enactment of a coherent National Strategy and a National Action Plan for Managing Romanian Contaminated Sites, in line with the existing legislation, and approval and publication of a national list of contaminated sites mentioned in GD no. 1408/2007).

Environmental Fund allocations

The Environmental Fund was set up as an economic-financial instrument and designated to co-finance various environmental projects. The Fund’s incomes come mainly from environmental taxes the industry sector pays for various activities (e.g., air emissions coming from fixed sources, metallic and non-metallic waste recovery; packaging, tyres and electric and electronic equipment waste recovery and recycling, etc.).

The FIC welcomes the AFMs achievements on financial support for environmental projects. However, the FIC has noticed that during the last few years, most projects financed through the Fund were mainly related to the fleet renewal scheme (old cars scrapping scheme), heating systems in houses, renewable energy and some water and forests projects for local authorities. Private companies did not have the opportunity to apply for financing to support their environmental projects and needs.

Theoretically, the AFM should organize periodic rounds for selection of proposed environmental projects related to various environmental issues (e.g., pollution prevention, reduction of impact on air, water and soil, use of clean technology, waste management, etc.) and any company (private and state owned) should be able to apply to obtain funds from the AFM.

As many companies contribute to the Fund and most of the Fund’s income comes from industry, the FIC is concerned about the limited access which industry has to this Fund.

FIC Recommendation

The AFM should take into account a range of subjects when developing its annual working plan and priorities, so that industry may also apply for funds to finance its environmental projects. The related financing guides should set eligibility criteria that are accessible for companies.
The FIC considers that an early implementation of the existing landfill tax will provide an incentive for proper waste management that will significantly support Romania in achieving its commitments, especially provided the resulting income will be used only for co-/financing projects (investment and operation) needed for developing the waste management infrastructure.
The Environmental Fund legislation should be updated to ensure correlation with waste management legislation, to avoid contradictions in norms or interpretation thereof, with an immediate financial and operational impact on the business sector.

Regulatory & Tax incentives

The FIC recommends the incorporation of more incentives into Romanian legislation to promote environmentally friendly behaviour by companies and individuals.

FIC Recommendation

“Green” incentives should include and promote: brownfield redevelopment, energy saving buildings and building improvements, reduced VAT for environmentally friendly products, tax exemption for bicycles used for travelling to work and the promotion of electrical and electronic equipment which is energetically efficient.

Sustainability and Corporate Social Responsibility

Sustainability involves economic development which respects long term environmental and social well-being and Corporate Social Responsibility (CSR) and is a way in which companies can develop sustainably and support the wider community.

There have been several positive initiatives in Romania in relation to CSR: (i) the National Strategy on Social Responsibility Promotion 2011 – 2016, which focused on the three directions (social, environmental protection and education and research), and (ii) the National Sustainable Development Strategy (NSDS) of Romania for 2013-2020-2030.

However, limited data on the implementation progress of the above mentioned strategies is publicly available. Cooperation between authorities, the business environment and other stakeholders is necessary for the successful implementation of both Sustainable Development and CSR strategies, as well as for the development of the National Action Plan on CSR.

FIC Recommendations

The FIC members are investing in building stakeholder trust while also improving their business performance and enabling opportunities for long term value creation. Currently, a limited number of companies in Romania (i.e., only listed ones) are required to report some non-financial information, but voluntary rules and guidelines (e.g., Global Reporting Initiative) are considered by organisations (most of them multinationals) when disclosing their sustainability performance.

Meanwhile, Directive 2014/95/EU amending Directive 2013/34/EU on disclosure of non-financial information by certain large undertakings and groups introduces mandatory non-financial reporting requirements for certain types of companies (e.g., public interest entities with over 500 employees) starting from April 2017, the first reporting year on the data related to the 2016 financial year. This Directive is due to be transposed by October 2016 at the latest. Companies covered by this Directive will be able to disclose their non-financial information in line with whichever international, European or national guidelines they deem appropriate.

FIC Recommendations

Early consultation with industry representatives should take place during the transposition process of Directive 2014/95/EU and development of a national reporting Guideline.
Promotion of transparency in relation to the application of social, ethical and environmental standards by the business community, as well as public institutions. The use of internationally recognized reporting standards/guidelines (e.g., GRI, IIRC Framework, UNGC) should be encouraged, as well as external verification of the reported information.
Promotion of a legislative requirement on limited sustainability/CSR reporting by all large companies operating in Romania.

Involvement of companies (as main stakeholders) in the implementation process and technical inter-ministerial working groups aimed at further developing the NCSR and NSD strategies, as well as of the National Action Plan on CSR.
Drafting of a “Stakeholder Engagement Plan/Dialogue” guideline to be applied by companies/authorities, according to their type of activity.
Ensuring of a permanent dialogue between the public authorities and the industry on how best to give incentives for responsible business conduct, as well as on specific sustainable development issues.
Development and implementation of a continuous program on increasing awareness among public authorities, industry, NGOs, etc. in relation to sustainable development, as well as CSR.