Environmental Impact Assessment (EIA) in the extractive sector. Practice and problems in implementation

The topic of this study is the practice of applying the environmental impact assessment (EIA) procedure in the extractive sector and identification of problematic issues.

EIA is a tool for identifying potential negative environmental impacts of economic activities and establishing measures to minimize such kind of impacts at the project planning stage, which is effectively applied worldwide. In Ukraine, the EIA procedure was introduced in late 2017, in particular to implement the EU environmental legislation as provided in the Association Agreement between Ukraine and the EU. According to the new legislation on EIA, this procedure is carried out for projects that have a significant impact on the environment, in various areas, including extractive sector.

The purpose of the study is to analyze the practice of application of the Law of Ukraine “On Environmental Impact Assessment” in the extractive sector and develop recommendations for solving problems arising during this procedure at all stages.

Main conclusions of the study:

According to national legislation and international conventions of Ukraine, EIA should be conducted by a company at the planning stage of activities that may have a potential significant impact on the environment, before deciding to carry out planned activities (obtaining a permit, license, etc.). Based on the EIA results, the authorized state body develops an EIA conclusion, which provides the environmental conditions the company must comply with while carrying out the activities planned.

For the extractive industry, international and European legislation stipulates that EIA is needed for projects to produce hydrocarbons and other minerals, including those mined in quarries. In Ukraine, EIA is mandatory for extractive projects, including oil and gas and quarries mining, as well as for deep drilling (including geothermal drilling). In addition, extractive companies usually have to conduct EIA for related activities, such as reconstruction of facilities, waste disposal, construction of infrastructure etc.

According to the analysis of the EIA legal requirements and the current practice of their implementation, the EIA procedure consists of six steps, which in general can be taken in about 6 months (until the receipt of EIA conclusion). At the same time, there are some problematic aspects in EIA implementation identified, and their solution will simplify the procedure and increase its efficiency.

The study discovered 5 main problems faced by businesses during the EIA procedure application. Some of them are related to the specifics of the extractive industry, and some are just shortcomings in the implementation of the Law of Ukraine “On Environmental Impact Assessment” in general. Specific problems for the extractive industry that arise in the EIA process in Ukraine:

• a significant number of EIA procedures for the extractive company, and
• non-compliance with international legislation on EIA.

The general shortcomings of the EIA implementation in Ukraine, identified by the study:

• lack of standardized approaches to the EIA report and the EIA conclusion;
• no requirements for individuals / companies preparing a draft EIA report;
• “fictitious” public hearings in the EIA procedure.

The study analyzes the world best practices of EIA implementation and identifies optimal approaches to address selected issues. The study offers a number of recommendations for the implementation of the proposed approaches that can ensure the speed, efficiency and transparency of the EIA procedure in Ukraine, in particular:

For the Ministry of Environmental Protection and Natural Resources:

• develop criteria for the volumes of oil and gas production for EIA (jointly with the Ministry of Energy and other relevant authorities) and criteria for evaluating public proposals for their consideration / rejection;
• develop methodological documents on the preparation of EIA conclusions and reports for the extractive industry (together with the Ministry of Energy and other relevant authorities);
• provide recommendations for organizers, companies, and civil society on holding EIA public discussions;
• introduce, with the support of the Ministry of Education and international donors, voluntary certification of persons/companies preparing EIA reports (mandatory certification could be introduced at the next stage, if the voluntary one is demanded, companies apply it, and the government sees the quality of EIA reports increasing);
• sorting of information on the EIA Single Registry website and other resources administered by the Ministry.

For the subjects of legislative initiative:

• develop and submit to the Verkhovna Rada a draft law to ensure compliance of EIA procedures for draft PSAs with international and EU law. In particular, consider the possibility of conducting EIA by the government (in the period after a winner in the tender is announced, but before a PSA is signed).

For other authorities (jointly with the Ministry of Environment Protection and Natural Resources):

• provide consulting to business entities in various areas of environmental protection as one of the EIA stages;
• ensure access to open data required for the EIA report preparation, e.g. by posting relevant information about resources on their websites, which would allow use more relevant information during the EIA reports and conclusions preparation;
• optimize permitting procedures and EIA by creating a “single window” (provide an option to submit documents simultaneously to one authority for a special permit for subsoil use, other permits and for EIA), if necessary – initiate appropriate amendments to the legislation.

For extractive companies:

• provide appropriate organizational and technical conditions for EIA public discussions.

For the public (with other stakeholders):

• Continue awareness-raising activities on the opportunities for public involvement in the EIA process for various stakeholders at the local level.

In the European practice, EIA is an effective tool for economic activities planning and an important element to ensure sustainable development of the territories affected by these activities. The common task of the government and the civil society sector is to find a balance between environmental protection, business interests, and supply of strategically important resources.

This study is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents are the sole responsibility of DiXi Group and do not necessarily reflect the views of USAID or the United States Government.