The business sector continues to be faced with lack of predictability concerning the legal and institutional framework on environmental issues, despite continued efforts to engage with public officials on environmental legislation and institutional topics. This was most felt in the waste management sector from 2016, where the disproportionate regulation and enforcement of the packaging waste rules against private companies as opposed to entities responsible for municipal waste collection have led to a significant instability in the market.
Despite calls for reform of the entire waste system by both the business sector and Jaspers, the consultants hired by the European Commission and the Ministry of the Environment to analyze the waste sector in Romania, the authorities took only limited and delayed actions on waste packaging in 2016. At the same time, the authorities chose to introduce new environmental contributions affecting the business sector for waste electrical and electronic equipment and batteries, without taking steps at the same time to ensure the effective separate collection of municipal waste by public authorities. This lack of separate collection makes meeting waste collection, recycling and recovery targets almost impossible.
FIC members are committed to continuing to build stakeholder trust and simultaneously improving their business performance in a sustainable way and call on public authorities to engage in the process from the earliest stages of the decision-making process.
The environmental legal and institutional framework continues to raise difficulties for the business sector.
On the one hand, the FIC is concerned about the lack of impact assessments for implementing new norms and the authorities' lack of swift reaction to regulatory needs. For example, work on the adoption of the National Waste Management Plan for 2014 – 2020 started only in mid-2016, despite the instability in relation to waste management issues. Similarly, legislative proposals in Parliament, such as that potentially limiting the possibility to develop new waste recovery units, fail to consider their overarching effects from operational, competitiveness and sustainable development perspectives.
Commercial entities are also exposed to difficulties in implementing the permitting framework due to the lack of correlation of environmental permitting procedures with new legislation, as well as the different interpretations of the same regulatory requirements given by environmental protection agencies, water basin administrations and environmental guard authorities. The new permitting procedure, due after the enactment of Law No. 278/2013 on industrial emissions in December 2013, has yet to be submitted for public debate.
There is an urgent need for consistency in terms of interpretation of legislative provisions by all public authorities at central level and local level and in engagement in effective dialogue on new regulations from the earliest stages of the decision-making process.
Legislative predictability should be ensured and a uniform and consistent legislative framework should be created, based on EU principles.
Effective consultation with industry representatives should take place in sufficient time prior to the adoption of new environmental norms and regulations or prior to the amendment of existing ones.
New environmental and water management permitting procedures should be adopted after thorough and timely consultations with all stakeholders.
Uniform and consistent environmental practice at the level of all local relevant authorities should be developed in order to avoid different approaches to the same issue. A potential solution to achieve this would be the issuance of written guidelines by the national authority which would regulate the approach to be taken by local subordinated authorities.
Cooperation between the relevant environmental protection and water management authorities should be increased to avoid bottlenecks or contradictions in the regulation of various projects, as well as to ensure smooth implementation of projects which have a double dimension (e.g., remediation of soil and groundwater on contaminated sites).
In July 2015, the European Commission proposed amendment of Directive 2003/87/EC - called the EU ETS post 2020 Directive. A central element of the policy framework for 2030 is the binding target of reducing EU global emissions by at least 40% by 2030, compared to 1990 levels. To achieve this goal in a cost-efficient way, the sectors covered by the EU ETS Trading Scheme (EU ETS) will have to reduce their emissions by 43% compared to 2005. This means that the total number of allowances will decrease faster than before: by 2.2% per year instead of 1.74% starting from 2021.
The FIC appreciates the transparency demonstrated by the Ministry of Environment representatives during the transposition and implementation of revised EU-ETS legislation on climate change for 2013-2020. However, implementation of Commission Communication 2012/C158/04 on compensation of indirect emissions for 2013 – 2020 has yet to occur.
The FIC hopes that the cooperation between the authorities and business sector will continue for the full definition of the 2030 Energy and Climate Package.
Active participation by the Romanian authorities in discussions held at European level is of the utmost importance. It is equally important for the business sector to be properly consulted and its input taken into consideration in the positions taken by the Romanian authorities within the relevant technical groups and public consultations at EU level. Particular focus should be given to pending discussions on post-2020 carbon leakage provisions and EU-ETS reform.
The Romanian authorities should accelerate the implementation of Commission Communication 2012/C158/04 on compensation of indirect emissions in order to preserve the competitiveness of Romanian energy intensive industries compared to similar industries in other EU countries. An intergovernmental group should be formed with representatives from the Environment, Finance and Industry Ministries to implement this Commission recommendation, and in particular to produce and monitor the implementation of the national integrated energy and climate plan (NECP) for the period 2021 to 2030 by 1 January 2019, which is critical to the achievement of broader sustainable development targets.
The authorities should support full implementation of energy efficiency norms, which would have a positive effect from environmental and climate change perspectives. Effective and transparent planning for this, including on how to achieve various EU mandatory targets, would allow for the identification of the most cost effective solutions, including in the public sector. Consistency with existent policy provisions is also required to achieve this purpose.
The Waste Management Framework Directive was transposed into Romanian legislation through Law No. 211/2011 on waste, as further amended. 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. Although later than initially planned, in 2016 the Government started work on the National Waste Management Plan for 2014 – 2020.
In December 2015, the European Commission issued the Circular Economy Package, which includes proposals for amending Directives on waste; packaging waste; waste landfill, etc. The main provisions within these directives stipulate:
This package was first discussed with experts from member states in 2016 and the discussions will continue throughout 2017.
The FIC recommends that the authorities should give particular attention to:
Romania has one of the lowest rates for recycling and landfill diversion. Although official data showed that recovery & recycling targets for packaging waste were met up to 2013, since then the situation has steadily deteriorated. This makes it difficult to believe that the same targets (55% for recycling and 60% for recovery) can be met in the next few years, under present conditions, because it is difficult to recover packaging waste from households. 2015 and 2016 were years with a major negative impact on packaged goods producers, which had to pay a heavy penalty to the Environmental Fund of 2 RON/kg (approx. 450 eur/t) for not meeting their obligations, mainly due to:
Source: Eurostat
Although the above-mentioned faults are not the producers’ responsibility, they were the only ones penalized, thus leading to the collapse of the system of collective organization and also to unfair market conditions and speculative leverages by other actors in the value chain.
Romania has so far complied with its EU obligations on packaging waste, 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 the future, but this is conditional upon the authorities ensuring a level playing field and enforcing the existing rules with respect to all actors in the market.
A working group should be formed by the authorities, in which all the stakeholders will participate (including FIC representatives) to develop a Plan of Action for 2017-2020 that stipulates clear responsibilities and terms for the actions that should be taken in order to make the whole integrated waste management system functional at national level and allow Romania to meet the new objectives proposed by the Circular Economy Package. These actions should include:
Specific requirements for the traceability of waste (including various types of materials which originate 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 Government’s ongoing efforts focused on implementing selective 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, Sectorial Operational Program Environment). Taking into consideration Romania’s economic capacity, the implementation of a deposit system puts an additional disproportionate burden on the shoulders of industry (producers and importers).
Government Emergency Ordinance (GEO) no.5/2015 on WEEE was published in the Official Journal of Romania in April 2015. Following that, Government Emergency Ordinance no.39/2016 amending GEO no. 196/2005 the Environment Fund framework was published in the Official Journal of Romania on 30 June 2016.
GEO no.39/2016 on the Environment Fund introduces a penalty for those not achieving the collection target for WEEE management of 4 lei/kg.
The new legislation makes no improvements to GD no. 1037/2010 (which transposed the old Directive 2002/96/EC). It fails, once again, to address the concerns expressed by industry, or to integrate its proposals, and instead maintains or aggravates the problems identified in the previous legislation:
The municipalities and the authorities that are responsible for the enforcement of legislation should be taken into account in defining responsibility for national targets.
Appropriate infrastructure should be developed for WEEE collection. The producers have no legal power to order and to implement any rules in the market to increase collection performance. Only the state authorities have this kind of power – to impose responsibilities and to apply fines. Without state action, the producers themselves cannot stop illegal collection (i.e., the black market continues).
The responsibilities for WEEE management should be shared by “all actors” i.e. producers, collective organizations, recyclers, distributors and local municipalities, just as in other EU countries. A system should be developed which includes all actors and in which all the amounts collected and treated are reported.
A system should be set up under which the fine for not achieving the target is distributed proportionally to all actors that handle WEEE. Otherwise, producers will eventually pass the burden of fines on to consumers and retail prices of home appliances will increase. This additional cost will generate particular difficulties for people with low incomes. Consequently, the market size will shrink and the inflation rate for domestic appliances is likely to rise. In this context, a decrease in the production rate and market flow is a significant concern for producers, which could also result in a decline in employment in the sector.
Strong enforcement of legislation should be carried out, especially in relation to illegal collection and dismantling.
The rehabilitation of contaminated sites is currently governed by Ministry of Environment and Forests 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 rehabilitation of 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.
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 terms. Detailing the legal framework for contaminated sites may also ensure better clarification of potential liabilities for private companies operating on historically contaminated sites, as well as the possibility for these private companies to access state aid or EU funds for decontamination work.
A secondary legislative framework should be adopted to allow effective implementation of the general environmental principles (e.g., a Technical Guide on methodology, evaluation criteria and content of the geological report for investigation and evaluation of soil and sub-soil should have been in force since 2008).
A secondary legislative framework is needed to facilitate access to EU funds for environmental decontamination works. Approving and publishing a national list/inventory 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.
Under the 2014-2020 programming period, the Large Infrastructure Operational Program (LI OP) will be the most important program providing EC financial support to environmental projects.
Regional Operators will continue to receive European Funds to extend drinking water networks and wastewater treatment facilities according to the investments included and prioritized in the Master Plans. The development of waste infrastructure will also continue to be financed in the current programming period enabling Romania to comply with the Landfill Directive, to promote more efficient use of resources and to increase the waste recycling ratio.
When deciding the priorities for awarding funds for environmental projects, the Romanian authorities should consider the latest European Commission recommendations, such as that of January 2017 to promote waste-to-energy capacities for the treatment of non-recyclable waste, including co-incineration in combustion plants and in cement and lime kilns, as part of the new national waste management plan.
Protection of biodiversity should also be given priority under the LI 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 LI 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 LI OP will also support the development of National Air Quality Assessment, the rehabilitation of contaminated sites, including preparation for their economic re‐use, and the promotion of activities with low carbon emissions.
The business sector should be invited to participate in working groups with the relevant authorities to define and improve secondary legislation, as well as the applicant’s guidelines for the environmental projects to be financed under the ongoing programming period.
All ex-ante conditionalities should be fulfilled as soon as possible (National Plan for Waste Management, risk evaluation for the management of disasters, tariff policies for water usage, river basin management plans, mechanisms for correct implementation of EU legislation on public procurement). The most important of these conditionalities is the adoption of the National Plan for Waste Management, because financing might be suspended if this is not enacted.
The business sector should be involved in at least the final analysis of the options proposed by the consultant and in the debates on the draft National Plan for Waste Management, while the EU’s latest guidance and recommendations should be incorporated.
Allocation of the funds should be prioritized, based on a risk evaluation, taking into consideration the most urgent needs (e.g. improvement of waste management, etc.)
The FIC appreciates the authorities’ initiative to “incentivise” actions to promote environmental improvements (e.g., “First reforestation” program offering first year aid of Euro 6000 for each hectare to be planted, followed by annual financial support of Euro 2700/ha for an average of 12 years), but strongly recommends the incorporation of more incentives into Romanian legislation to promote environmentally friendly behaviour by companies, authorities, as well as individuals.
“Green” incentives should include and promote: brownfield redevelopment (including redevelopment of contaminated sites), energy saving buildings and building improvements, reduced VAT for environmentally friendly products, tax exemption for bicycles used for travelling to work, the promotion of electrical and electronic equipment which is energy efficient, as well as recycling of waste and other materials.
Sustainability involves economic development which respects long term environmental and social well-being and Corporate Social Responsibility (CSR) involves companies, as well as the authorities, developing sustainably and supporting the wider community. The adoption of the 2030 Agenda for Sustainable Development and the related 17 Sustainable Development Goals (SDG) by all 193 United Nations (UN) member states during the summit in New York (25 – 27 September 2015) was a strong signal that cooperative action is needed to address some of the world’s most pressing issues (e.g., climate change, extreme poverty, inequality, etc.), providing an essential window of opportunity to rethink approaches to sustainability and a common language for governments, business, and others for addressing systemic interconnected development challenges. However, the Romanian authorities have still not yet drafted a national plan for implementing the 2030 Agenda for Sustainable Development, which should translate each target of the SDGs into action plans for Romania.
There have been several positive initiatives in Romania in relation to sustainability, such as the National Sustainable Development Strategy (NSDS) for 2013-2020-2030, the National Strategy on Climate Change and Low Carbon Economic Growth 2016 -2020 and the National Action Plan on Climate Change. Given the importance of sustainability, Romania should increase its focus on achieving the objectives set out in these documents.
On CSR, there is little evidence of tangible results from the implementation of the National Strategy on Social Responsibility Promotion 2011 – 2016, which focused on the three directions (social, environmental protection and education and research). Moreover, a new strategy has not yet been proposed.
Limited data on the progress of implementation of these strategies is publicly available. Consequently, the tracking of progress should be enhanced and publicly communicated. Continuous communication and dialogue between public and private sectors and coordinated efforts are key for addressing these development challenges so that they achieve their objectives.
The FIC’s members are investing in building stakeholder trust while also improving their business performance and enabling opportunities for long term value creation. FIC members encourage transparency in all sectors.
An important step made in 2016 was the early transposition of the provisions of Directive 2014/95/EU amending Directive 2013/34/EU on disclosure of non-financial information by certain large undertakings and groups, by the appropriate national authorities (Ministry of Public Finances, The National Bank of Romania, The Financial Supervisory Authority).
Consequently, public interest entities (e.g., state owned companies, listed companies, insurance undertakings, private pensions, credit institutions) with over 500 employees are required to disclose information on policies, risks and outcomes related to environmental matters, social and employee-related issues, respect for human rights, anti-corruption and bribery issues, as well as diversity starting from the 2017 reporting year. The required non-financial information can be disclosed either as a distinct report or as a “non-financial statement”. The financial auditor is required to verify that the non-financial statement or the separate report has been provided.
The Directive states that reporting entities can use any local, European or internationally recognized non-financial reporting standards/guidelines, and this recommendation is repeated in the Romanian regulations which transpose the Directive.
Consultation should take place with business environment representatives on the development of national non-financial information reporting guidelines and recommendations.
A team of experts should be set up from all appropriate authorities in charge of the implementation of Directive 2014/95/EU to oversee the application of its provisions by the companies covered by it, and progress should be monitored over time.
The opportunity should be taken to enlarge the scope of the non-financial disclosure requirements (e.g., also to include other large entities operating in Romania) for the development of a competitive and ethical business environment.
A national plan should be drafted for the implementation of the 2030 Agenda for Sustainable Development, which should translate each target of the SDGs into action plans for Romania.
Transparency should be promoted in relation to the application of social, ethical and environmental standards by the business community, as well as public institutions.
A “Stakeholder Engagement Plan/Dialogue” guideline should be drafted, to be applied by companies/authorities, according to their type of activity.
Initiatives should be promoted focused on responsible production and consumption, sustainable management and efficient use of natural resources.
A detailed programme should be developed and implemented to increase public awareness of sustainable behaviours, comprising practical recommendations on how each individual can contribute.
Action Plans should be prepared for sustainable development at County level.
Permanent dialogue should take place between the public authorities and business environment on how best to give incentives for responsible business conduct, as well as on specific sustainable development issues.
A new National CSR Strategy should be promoted, by involvement of all stakeholders, and clear opportunities should be created for strong cooperation between authorities and the business environment in support of our communities.
Romania transposed the provisions of the Energy Efficiency Directive (EED) into national legislation by Law no.121/2014. This Directive also contains a number of provisions concerning buildings, i.e. building renovation and the special role of public buildings.
The Energy Performance of Buildings Directive (EPBD – 2010/31/EU) EPBP was transposed in 2013 with the update of Law no.372/2005. On 30 November 2016, the Commission proposed an update to the Energy Performance of Buildings Directive to help promote the use of smart technology in buildings and to streamline the existing rules.
All studies indicate that around 40% of the final energy consumption in Romania is associated with buildings. This is fully in line with EU statistics, the reason for including this topic in the Environment chapter of this White Book.
The practical implementation of the EPBD in Romania should involve the creation of a methodology for calculating the energy performance of existing buildings, new constructions as well as for renovated buildings from the existing stock.
The development of a new methodology for the calculation of Nearly Zero Energy Buildings (nZEB) should be speeded up.
All new buildings must be nearly zero energy by 31 December 2020 (public buildings by 31 December 2018).
Renovation efforts should be enhanced. EU countries have agreed a 3% renovation target for public buildings according to the EED (2012/28/EU) beginning from January 2014.
The current Romanian programme for apartment buildings should focus on the quality of the materials used (which should be similar to those used in new build) since lower costs are associated with poorer quality and in general do not generate best performance or best durability.
The FIC further recommends that the MDRAP should actively consult influential factors (construction products producers, professional associations and organisations, universities, etc.) before and during the preparation of guidelines on the financing of energy efficiency programmes, or those governing access to financing programs developed via POR programs.
The FIC also recommends the adoption of programmes similar to those in many western countries, whereby the state gives incentives or tax reductions for energy efficiency programmes. The best solutions for thermal insulation or thermal rehabilitation should receive the highest incentives, while the less well-performing ones should receive only minimal incentives.
The Energy efficiency plans should be drafted while consulting with the factors involved in the field. The Application Norms for energy efficiency financing programs should be approved as a priority.
EE measures for buildings (public or private) should be correlated with the strategy and planned investments in district heating systems.
The FIC further recommends the adaptation of the current legal framework, so that Energy Performance Contracts (EnPC) / ESCO type EE projects can be successfully implemented for buildings in Romania.
Moreover, efforts should be made to raise public awareness of the benefits of investing in energy efficiency when existing dwellings are renovated.