May 4, 2012
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№ 4 (April 2011)

Environmental Impact Assessment: Domestic vs. International Approach

   Energy sector, particularly oil and gas industry, is the key factor in the development of the national economy. Many upstream projects, including some major fields, run jointly with foreign partners and use foreign investment.

By Kryvonos Eugenia Valentinovna, head of FRECOM public relations, marketing and legal support department

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   This puts certain bounds on design and operation of such projects, as seen, for example, in the environmental impact assessment (EIA) process. Such social and environmental assessment is a vital ingredient of positive funding decisions by international financial institutions, and is the subject of state examination in Russia; without a nod from such commission, just as without funding, these projects are just paperwork.

    This setup stimulates the subsoil users to pay extra attention to environmental and social assessments, which is undoubtedly positive. Yet this positive on the first glance situation has a number of potential problems. The first problem lies in the difference between environmental assessment methods in Russia and the Equator Principles adopted and used in industrialized countries (EU, US, Canada). As a result, in order to secure the foreign financing the subsoil user is forced to conduct international ESHIA – Environmental, Social and Health Impact Assessment, but the assessment based on domestic standards is also required – to get the needed approvals and positive conclusion of the state examinations. This means spending several times the required money, manpower and time. The situation hampers the efficiency of oil&gas segment and leads to unnecessary waste of resources.

   Moreover, subsoil user faces the challenge of Contractor selection to conduct an impact assessment. FRECOM Ltd. is among the few Russian companies skilled in development of OVOS according to Russian requirements and ESHIA in compliance with international standards. Such skills allow to produce aligned impact assessment documents based on integrated and systematic approach.
Given that the development of oil&gas industry in the coming decades is the key to the successful growth of the Russian economy, there is a pressing need in favorable working conditions in this sphere both for Russian and foreign companies. Optimization of the EIA process and its harmonization with international requirements is one of the steps towards this goal.

Russian EIA Procedure

   To date the Russian Federation has no methodology for social and environmental assessment. Currently, following the requirements of the City Development Code of the Russian Federation from 29.12.2004 No.190-FZ and the Governmental Decree of 16 February 2008 No.87 “On composing design documentation charters and on requirements to their content” (hereinafter – the Decree on the Composition of Design Documentation), the project shall include the section “List of environmental protection measures”.    Yet the above regulations specify neither guidelines for developing such section nor requirements for its content. The decrees regulate only overall composition of the section. The “Environmental Protection” section should have been developed prior to any changes to the City Development Code of the Russian Federation. This section was drafted in line with construction code SNiP 11-01-1995 “Instruction on the development, coordination, approval and content of project documentation for construction of enterprises, buildings and facilities as per provided recommendations” and Handbook to the SNiP 11-01-95 on developing “Environmental protection” section of design documentation (Moscow, 2000). Currently SNiP 11-01-95 is repealed. Which means that the domestic regulatory framework has no proper implementation of clearly defined EIA algorithm.
Stages of impact assessment are described in the Regulations on Environmental Impact Assessment of planned economic and other activities on the environment in the Russian Federation (approved by the Decree of the State Environmental Committee No. 372 of Russian Federation of 16 May 2000) (hereinafter – the EIA Regulation). However, over the past 10 years the legal and regulatory framework for the environment protection and expertise has changed significantly. As a consequence, the EIA Regulations apply only insofar as they do not contradict the standards outlined in later regulations. To date, no other relevant document has been developed.

   Consideration of project alternatives in the OVOS section is one of the problematic issues. The current legal framework is lacking requirements to consider project alternatives. Until recently, this fact did not matter as regulatory requirements dictate that the alternatives should be considered at pre-project stage – at the feasibility study stage, to be precise. Earlier, development of design documentation was done on the basis of approved (validated) studies of construction investments or other pre-project materials (in line with SNiP 11-01-1995).

   However, after the adoption of the Federal Law No.184-FZ “On technical regulation” of 15 December 2002, SP and SNiP construction regulations, just as other standardization papers, are only advisory and applied voluntarily.
As a result, there is now no need for compulsory development of Declaration of Intentions (DoI) and Justification of Investments (JoI) pre-design documentation as one of the stages of the investment project. And after the adoption of the Federal Law No. 232-FZ of 18 December 2006 “On amendments to the Urban Planning Code and certain legislative acts of the Russian Federation”, the list of facilities obligatory for State Expertise has been changed considerably. Pre-design documentation (DoI and JoI) is also deleted from the list.

   On the one hand, this setup simplifies the process of obtaining building permits and shortens the timeframe from conception to implementation of the development project. However, on the other hand, removal of pre-project documentation from the list of assessment requirements revoked the mandatory nature of pre-design documentation. All this reduced the efficiency of preliminary safety control: earlier, comments from pre-project documentation assessment helped to avoid similar mistakes in the actual project, which requires more time and money.

   As FRECOM experience confirms, the situation with domestic EIA – OVOS is controversial: all documents containing detailed EIA recommendations either canceled or outdated and do not meet the modern regulatory framework. New documents of this type are not developed. The latest changes mean that the EIA process, in fact, excludes the key stage – assessment of alternatives, which earlier was a part of feasibility study EIA. Moreover, to get foreign investments, nowadays subsoil user is forced to develop two documentation sets due to non-compliance or Russian requirements with international impact assessment standards.

International EIA Procedure

   The main international instruments regulating the social and environmental assessment are the Equator Principles and the requirements of the World Bank (WB), in particular – the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD). These requirements are similar and rely on international best practice in the sustainable development field. International financial institutions have developed specific requirements on key environmental issues that are mandatory for social and environmental assessment of the project.

   These requirements are not completely similar to each other, but key general aspects are typical for international approach to environmental assessment. First of all this is a need to consider potential alternatives of the planned economical activity, focusing on biodiversity protection and conservation, assessment of cumulative and transboundary impacts. Besides that, special attention to human rights protection, health and safety of population and personnel, as well as public consultations and consideration of public view, primarily with respect to indigenous peoples and minorities rights, is typical for all international guidelines.

   It should be noted that international practice includes project ranking procedure. In line with EBRD Environmental and Social Policy, this is done for due consideration of potential environmental and social impacts and problems associated with the proposed project, as well as for determination of nature and scope of environmental and social aspects required for each project, levels of information disclosure and interaction with stakeholders, considering the nature, location, environmental sensitivity and scope of the project, as well as the nature and seriousness of the associated potential environmental impacts and problems.

International vs. Russian EIA Procedure

   Therefore it is clear that domestic system of environmental assessment needs optimization and reformation, in particular harmonization with international requirements.

   In view of this, basic differences between Russian and international requirements to impact assessment and its outputs shall be identified in the first turn.

   These differences could be clearly seen by comparing the requirements to the scope of OVOS and its rough structure with those to ESHIA.
Key differences in approaches and criteria for environmental impact assessment according to Russian and international requirements are represented in the table.

   Despite the fact that Russia’s approach to social and environmental assessment is different in methods, approaches and key focuses, a comparison shows that domestic and foreign procedures are pretty much similar and could be harmonized.

   Domestic OVOS procedure shall adopt a number of approaches from the international ESHIA. We believe that harmonization of domestic and international approaches require the following steps:
To develop an actual instructive and methodical guidelines for OVOS;
To include an assessment of the planned activity impact upon the climate, as well as GHG emissions assessment, both baseline (pre-investment) level and GHG emissions after Project implementation;
OVOS assessments should not be limited to certain environments, flora and fauna, but also identify potential consequences from the Project for biodiversity;
When developing impact mitigation measures, one shall relay on the Best Available Technologies, but not on declared, often inaccessible, standards;
To develop the grievance mechanism.

   However, attention must be paid not to lose Russia’s own experience in assessing the environmental impacts, not to exclude the existing traditional regulations as it seems counter-productive to revoke these in favor of international demands. Such requirements are sometimes more strict but at the same time they give a guarantee of greater environmental security in the implementation of planned activities.

   Updating and harmonization of the Russian environmental assessment system in line with international requirements will bring social and environmental assessment in Russia to a new level of quality, also easing the work on investments, design, consultation and making the operation of energy sector more efficient and less costly.

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