Draft Law No. 11355 on Industrial Waste Management Reform needs improvement

The lack of corrections in the document poses a high systemic risk for the industry

Taking into account the terms and current realities of the war, the state of the country’s economy, these factors create high risks of inability of enterprises to fulfill the relevant requirements in practice.

On June 20, the Verkhovna Rada approved as a basis bill No. 11355 «On Integrated Prevention and Control of Industrial Pollution.» It provides for the implementation of the 2010/75/EU Directive on industrial emissions in Ukrainian legislation and the introduction of the best available management technologies and methods (NDTM) in production.

This is an extremely important reform, since this is required by the Association Agreement with the EU, the Energy Community Treaty and the declared political vectors of the country’s development. It is also mentioned among the points of the €50 billion Ukraine Facility assistance plan. The law should be finally approved in the third quarter of 2024.

But reform is not only a law, but also many by-laws and financing mechanisms. Besides, the text of the bill contains positions that create significant risks, since it is necessary to take into account the military situation in the country, systematic shelling of critical infrastructure, leading to destruction of infrastructure and loss of production capacity by the Ukrainian industry and deterioration of the general state of the country’s economy.

PAEW’s proposals for Bill No. 11355 are as follows.

1. It is necessary to postpone the timing of the entry into force of the law until the termination or abolition of martial law. No one knows when the war will end, and the provisions of bill No. 11355 provide for its implementation by enterprises from the third quarter of 2025.

According to Part 1 of Art. 29 of the bill provides that the law comes into force twelve months from the day following the day of its publication, except for paragraph 9 of this article, which comes into force from the day following the day of publication of this law.

According to the Ukraine Facility, the bill should be finally approved in the third quarter of this year. Accordingly, the obligations stipulated by the bill provide for its implementation by enterprises from the third quarter of 2025. Taking into account these terms and the current realities of the war, the state of the country’s economy, these factors create high risks of inability of enterprises to fulfill the relevant requirements in practice.

Given the existence of a direct legislative requirement for economic activity on the basis of an integrated environmental permit (Part 8 of Article 3 of the bill), the country will receive a high systemic risk – to remain without a functioning critical infrastructure and industry during a full-scale war. Given this, it is important to postpone the timing of the industrial pollution reform to the post-war period.

2. It is required to extend the validity of the existing permits of the plant operator for the period of martial law and provide sufficient time to bring its documentation into compliance with the law.

Taking into account the requirements of the Ukraine Facility and the projected deadline for the adoption of bill No. 11355, its entry into force (October 2025) permits will expire in October 2029, and plant operators must apply for an integrated environmental permit by October 2028. Taking into account the requirements stipulated by the bill, plant operators are obliged to carry out certain preparatory actions and finance them during 2027. However, our country is at war for the third year, that is, no one knows the date and conditions for its termination, as well as the ability of enterprises to obtain an integrated permit in 2027-2028.

Given the martial law and the state of the country’s economy, it is necessary to extend the validity of permits and the obligation of plant operators to apply for an integrated permit no later than four years after the termination or abolition of martial law.

3. The requirements for arrangement of automated monitoring systems (AFS) on installations subject to decommissioning shall be excluded.

According to Part 5 of Art. 29 of the bill, plant operators intending to decommission the plant can do this within a period that cannot exceed 10 years from the date of entry into force of this Law (approximately until 2035).

In accordance with Part 2 of Art. 29 of the bill, the conclusions of the NDTM are applied no earlier than four years from the date of termination or abolition of martial law, except for installations put into operation for the first time, to which the conclusions are applied from the day they enter into force.

Accordingly, for operators from the date of entry into force of the Law, the 10-year period for decommissioning the plant is reduced. In turn, the installation by the operator of the AFM installation on stationary emission sources is a rather capital-intensive and lengthy construction/reconstruction project. Taking into account the general condition of the installation and the need for its decommissioning, the economic and environmental feasibility of installing AFM on it is absent.

4. It is important to exclude from the text of the draft law the norm (Article 29, part 8, paragraph 5), which provides for amendments to the Law of Ukraine «On the permitting system in the sphere of economic activity» in terms of non-application of the principle of tacit consent in legal relations regarding an integrated environmental permit.

The provision given in Art. 29 is unacceptable and needs to be deleted in view of the fact that the integrated permit is a document of a permissive nature, since without its presence the entity cannot carry out economic activities.

The norm on «non-application of the principle of tacit consent» in legal relations arising in the process of issuing an integrated permit by the permitting authority is a violation of the rights of business entities in case of non-compliance with the deadlines for issuing documents and requires withdrawal.

5. Funds for issuing an integrated environmental permit (amending it) should be credited to a special fund of the state budget.

According to Part 6 of Art. 3 of the bill No. 11355, a fee of 30 living wages is charged for issuing an integrated environmental permit (amending it). Funds for issuing an integrated permit (amending it) are credited to the state budget.

The fee for issuing an integrated permit, as one of the mechanisms for implementing the «polluter pays» principle, should be targeted and directed to environmental projects and stimulation of eco-modernization. It is advisable to provide that funds for the issuance of an integrated environmental permit are credited to a special state budget fund.