Examens environnementaux par pays

OECD Environmental Performance Reviews: Slovak Republic 2011 Assessment and Recommendations

 

         Slovak Republic                                                      

 

The OECD Working Party on Environmental Performance discussed the draft Environmental Performance Review of Slovakia at its meeting on 20 June 2011 in Paris, and approved these assessment and recommendations (pdf version). This Review aims to provide further support to Slovakia’s environmental progress. It presents 35 recommendations on how Israel's performance could be improved.

 

Assessment


Between 2000 and 2008, Slovakia enjoyed the highest rate of growth in the OECD. However, the country was severely hit by the economic downturn, and real GDP declined by almost 5% in 2009. The government adopted three separate packages of anti-crisis measures amounting to 0.4% of GDP in 2009 and an estimated 1% of GDP in 2010. Some of these measures were environment related such as projects to increase energy efficiency. In 2010, driven by exports, the economy recovered at a strong pace, but the budget deficit deteriorated badly and unemployment rose dramatically. The new government aims to reduce the budget deficit from 8% of GDP in 2010 to 3% in 2013.


In 2005, the government adopted an Action Plan for Sustainable Development for the period 2005 10. Environment has been further integrated into economic and sectoral strategies, in particular in the national strategic reference framework setting investment priorities supported by the European Union. However, there has been no strong political commitment for environmental policy integration other than to comply with EU requirements. The Environmental Strategy has not been updated and the evaluation of the Action Plan for Sustainable Development was largely formal. Strengthened capacity for economic analysis could provide valuable support for environment related policy development and implementation.


Over the past decade, Slovakia has broadened the use of economic instruments in environmental policy. It has made significant progress in expanding the use of environmentally related taxes by increasing taxes on transport fuels and broadening the energy tax base. In 2009, environmentally related taxes accounted for 6.6% of total tax revenue which, due to the relatively low tax burden in Slovakia, is above the OECD Europe average. However, they were equivalent to 1.9% of GDP, below the OECD Europe average. It is likely that this share dropped in 2010 due to the lowering of the tax on diesel. Slovakia is one of the few European countries not to tax private car ownership. Vehicles used for commercial purposes are subject to an annual road tax with a legal minimum rate which is not systematically linked to environmental performance. Increased water charges have contributed to more efficient water usage. However, current rates are not sufficient to support environmental infrastructure needs. Taxes and charges are often earmarked for the Environmental Fund and for the Recycling Fund, which may lead to inefficient spending.


Environmentally harmful subsidies have been reduced in the agricultural and energy sectors. However, preferential tax treatment offered to energy-intensive industries provides incentives to increase energy consumption. Electricity generation from domestic lignite has been supported to reduce dependency on energy imports and for social reasons, encouraging the use of this relatively more polluting energy source. Public support to rail transport failed to improve the performance and competitiveness of the sector which has contributed to the shift towards road transport. Reforming environmentally related taxes and environmentally harmful subsidies could contribute to fiscal consolidation.


Since its accession to the EU in 2004, Slovakia has increasingly relied on the EU to finance environmental infrastructure. In the 2007 13 programming period, about 16% of the budget for Slovakia under the cohesion policy, equivalent to EUR 1.8 billion, was devoted to the environment. In addition, about EUR 2 billion was allocated to indirect environmental investment, mostly for rail transport but also for renewables and energy efficiency. This assistance has significantly improved the share of the population with access to environmental services and infrastructure. However, further efforts are needed to achieve the service levels in other EU countries. To this end, Slovakia should do more to attract, absorb and efficiently allocate EU funds for environmental purposes.


Belatedly, innovation has emerged on the policy agenda as a potentially important driver of growth and long-term competitiveness. The government’s innovation policy (2007) and strategy (2008) established the framework for improving Slovakia’s poor innovation performance. However, overall innovation capacity remains weak; strengthening it, for example through more support for higher education and international co-operation on science and technology, is a key prerequisite for boosting eco-innovation. Environmental protection has represented an increasing share of the government R&D budget, growing from 1.3% in 2000 to 2.8% in 2009, slightly above the OECD average. However, much of this goes to traditional environmental areas (air, water, waste) with low potential for inventive activities, rather than to emerging areas that could help boost Slovakia’s long-term competitiveness. In addition, the engagement of the domestic private sector in innovation, including eco-innovation, is very weak. The number of patent applications in environment-related technologies remains limited. Slovakia needs to galvanise all the relevant stakeholders to strengthen its innovation performance, including in the environmental sector.


Recommendations

  • Review the efficiency and effectiveness of environmentally related taxes in achieving their environmental objectives, and their coherence with other economic instruments.
  • Consider extending the annual road vehicle tax to private cars and link the tax rate to environmental performance, particularly regarding carbon and other emissions that may pose risks to human health in urban areas.
  • Periodically assess the value-added of the Environmental Fund and Recycling Fund in terms of both their economic efficiency and environmental effectiveness in meeting their objectives; consider options for adjusting the objectives and operation of the funds, including eventually phasing them out.
  • Strengthen capacity to attract, absorb and efficiently allocate EU funds for environmental purposes.
  • Build capacity for economic analysis to support environment-related policy development and implementation; strengthen co operation between the Slovak Statistical Office, the Ministry of Environment and other relevant ministries and agencies to develop environmental accounting.
  • Improve general innovation capacity through greater support for higher education and international co operation in science and research; refocus public support for environment related R&D on selected areas and consider incentives to increase the private sector contribution in this regard; establish innovation clusters or other mechanisms to foster more intensive co operation among central and local governments, multinational and national enterprises, and universities and the financial sector to promote the development and diffusion of eco technologies.

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Assessment


Upon acceding to the EU in 2004, Slovakia made a huge investment to align its environmental regulatory framework with its new obligations as an EU member. Slovakia should be commended for broadly achieving this difficult objective on time. The speed and scope of the resulting changes generated complaints from the business community about additional burdens and the potential impact on competitiveness. Although some initiatives have been taken to simplify and reduce the administrative burden of environmental regulations and to clarify obligations, more could be done in this regard. More could also be done to engage the business community in a constructive dialogue on environmental issues, and to promote a more proactive approach in which environment is seen not just as a threat but also an opportunity.


After reforming environmental policies and institutions in the early 2000s, the Slovak environmental administration went through a period characterised by instability and deteriorating relations with stakeholders. Following a merger with the Ministry of Agriculture, the re-establishment of a separate Ministry of Environment in 2010 provides an opportunity for a fresh start. The ministry should take this opportunity to clarify its priorities, strengthen its relations with the business and NGO communities, and take the steps necessary to establish itself as a high-quality, professional organisation.


In line with EU policy, Slovakia has adopted an integrated approach to pollution prevention and control. Although a system of integrated permits has been developed, permits for large installations are issued in parallel with permits under media-specific laws, and requirements for small and medium-sized enterprises could be streamlined. The process of assuring compliance with regulatory requirements has gradually become more risk-based. The system for preventing industrial accidents has been effective. Some efforts have been made to strengthen compliance promotion. However, the adoption of an explicit environmental enforcement policy could clarify priorities and provide the basis for longer-term planning and performance assessment. More targeted inspection planning could result in efficiency gains, increased flexibility in reacting to potential risks, and improved effectiveness of response to non-compliance and pollution incidents.


Slovakia has developed an impressively comprehensive, policy-relevant system of environmental information. However, more could be done to include information on economic, financial and social aspects of environmental policies. Access to information has been strengthened in line with EU requirements. However, historically well-established provisions for public participation and access to justice have been weakened in recent years. Relations between NGOs and the environmental authorities have been difficult, and often adversarial. Public participation in environmental impact assessment and strategic environmental assessment procedures, especially for transport and energy related projects, has been a particular source of concern. The definition of standing, which determines eligibility to initiate legal proceedings, should be made consistent with that in the corresponding EU directives.


Recommendations

  • Develop a new environmental strategy as an integral part of Slovakia’s strategy for economic and social development; ensure that the environmental administration is stable, professional, efficient and open, dedicated to pursuing ambitious environmental goals.
  • Speed up the development of a comprehensive, user-friendly web-based guide to environmental legislation that can facilitate compliance of the regulated community, especially energy- and pollution-intensive companies, with environmental requirements.
  • Further streamline and simplify environmental permitting and integrate inspection procedures; develop an explicit environmental enforcement policy that includes enforcement priorities and policies for applying sanctions; strengthen compliance promotion efforts targeting small and medium sized enterprises.
  • Ensure that environmental impact assessment and strategic environmental assessment procedures are fully in line with EU requirements, particularly regarding public participation and access to justice.
  • Establish a forum in which the Ministry of Environment and NGOs meet regularly with a view to strengthening dialogue and co-operation.

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Assessment

 

There are several strong reasons for the Slovak Republic to play an active role in international environmental co-operation, particularly with neighbouring countries. Slovakia is both a major source and a recipient of transboundary air pollution; it shares watercourses which are subject to floods and transboundary pollution; and it is at the intersection of important ecosystems and hence a host to rich biodiversity. Slovakia has taken these responsibilities seriously, becoming a party to a range of international environmental agreements and actively supporting their implementation. For example, it hosts the International Water Assessment Centre that supports the Convention on the Protection and Use of Transboundary Watercourses and International Lakes; it initiated and co-ordinates the Carpathian Wetland Initiative; and it hosts the Basel Convention Regional Centre for Central Europe, which promotes implementation of the convention. Nevertheless, further efforts are needed to implement provisions of some multilateral environmental agreements, including the Convention on Biological Diversity and the Stockholm Convention on Persistent Organic Pollutants. EU membership in 2004 created new obligations and put pressure on the limited resources available for international environmental co operation. In recent years, staff changes and budget cuts have contributed to a weakening of participation in international environmental processes. Slovakia now needs to elaborate a strategy for international environmental co operation that has clear priorities and addresses implementation issues.


Slovakia has a small, open economy, underlining the need for appropriate measures to manage trade-related environmental risks. It has taken steps to implement the OECD Guidelines for Multinational Enterprises and OECD recommendations concerning the potential environmental impact of activities supported by export credits. Consumption of ozone depleting substances (all imported) significantly decreased during the review period. Some progress has been made in enforcing trade-related conventions, but more and better-targeted inspections are needed. The monitoring and inspection of potentially illegal shipments of ozone-depleting substances are probably not sufficient for detection of violations, and the number of controls on shipments of hazardous waste has declined even though illegal movements have been detected. Since 2008, neither the Slovak Environmental Inspectorate nor district environment offices have been able to impose penalties for breaches of the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES).


Slovakia has been a donor country since 2003 and graduated from World Bank assistance programmes in 2008. As a member of the EU, it has accepted obligations to increase its provision of official development assistance (ODA). Nevertheless, in 2010 its ODA amounted to 0.09% of gross national income, well short of the 0.17% 2010 target for countries that joined the EU after 2002. Environment accounted for about 14% of development projects between 2004 and 2009. Bilateral assistance represented, in turn, about 27% of total ODA in 2010.


Recommendations

  • Establish clear priorities for international environmental co operation and strengthen related capacity.
  • Strengthen implementation of ratified multilateral environmental agreements, and promote better co ordination and communication among ministries, state agencies and other stakeholders involved (for example, in relation to the Convention on Biological Diversity and the Stockholm Convention).
  • Strengthen bilateral and regional co operation for the protection of transboundary waters, and promote implementation of the Danube River Basin Management Plan.
  • Further strengthen inspection and enforcement of trade-related environmental conventions, remove legal obstacles to imposing penalties for infringement of CITES on Slovak territory, and continue programmes for training judges and prosecutors in environmental matters.
  • Increase official development assistance, and its environmental component, in line with EU obligations.

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Assessment

 

As of 2008, the Slovak Republic had already overachieved its target under the Kyoto Protocol of reducing its greenhouse gas (GHG) emissions by 8% in the 2008 12 period compared with 1990 levels. Economic restructuring, changes in the fuel mix, and efficiency gains were the main drivers for the dramatic decrease in GHG emissions in the 1990s. Emissions stabilised between 2000 and 2008 despite rapid economic growth. This resulted in a marked drop of the energy and carbon intensities of the economy, the largest decreases among OECD countries. However, Slovakia remains among the most energy  and carbon intensive OECD economies. Emissions are projected to grow in the post Kyoto period, especially in the transport and industry sectors, creating potential challenges for Slovakia to meet its mid- and long-term reduction targets.

 

Slovakia has made progress in mainstreaming climate change consideration in sectoral policies. It reinforced inter-institutional co ordination on climate change and energy policies, with the establishment of a working group (in 2005) and a high level Commission for the Climate and Energy Package (in 2008). However, climate change has not been high on the political agenda, partly due to the lack of demanding international commitments in the last two decades. The national climate change policy is largely shaped by energy security considerations and the EU energy- and climate related legislation. Slovakia has not yet developed a clear and comprehensive framework linking climate, energy and transport policies at the national level, as well as a climate adaptation strategy. Looking forward to the more challenging future emission trends, there is a need for strengthened economic and scientific analyses to support decision-making and to enhance Slovakia’s participation in the climate debate at European and international levels.

 

Slovakia’s participation in the EU Emissions Trading System (EU ETS) has been characterised by an overallocation of allowances, all given for free. This has represented an implicit subsidy to participating installations and has reduced the effectiveness of the system. The revision of the EU ETS for the period 2013 20, with an EU-wide emissions cap and the auctioning of allowances, is expected to improve effectiveness and efficiency. In 2011, the government levied a tax on windfall profits deriving from the excess allocation of allowances, although this approach has been questioned by the European Commission. Slovakia removed several energy subsidies and tax exemptions, including on natural gas and coal used by heating companies. However, it continues to support electricity generation from domestic coal; several exemptions from excise duties continue to apply, including to households and energy intensive industries. This could encourage wasteful consumption. Prices of energy products used in the residential sector and in industries not covered by the ETS are relatively high; however, their tax components do not always adequately reflect GHG emission costs.

 

Slovakia has made limited use of the Kyoto Protocol flexible mechanisms. Due to the dramatic decrease in GHG emissions in the 1990s, and the overachievement of the Kyoto target, Slovakia has a large surplus of government emission rights that can be traded in the global carbon market. Slovakia established a Green Investment Scheme (GIS) in 2009, subsequently revised, to collect proceeds from the sale of these rights and to reinvest them in environmental and climate mitigation projects. However, the delay in setting up a GIS has hindered effective and transparent use of the trading mechanism.

 

Transport is one of the few sectors in which energy consumption and GHG emissions have increased since 2000, and are projected to grow faster. Freight road transport increased significantly, especially after Slovakia’s accession to the EU. Rapid economic growth and rising international trade volumes, supported by heavy investment in road infrastructure, stimulated road transport. Rising living standards have also stimulated car ownership and use. This, together with the lack of efficient and reliable alternative transport modes, including rail and urban transport, may explain the growing demand for road transport despite increasing fuel prices. A positive step forward was the recent introduction of a distance- and emission-based electronic toll system for heavy vehicles travelling on main roads. Some regional authorities also differentiated the annual tax on commercial vehicles by emission levels. However, in 2010, the government lowered the diesel tax rate, aiming to compensate for the increase in road tolls and to attract freight transit.

 

Until recently, Slovakia had made relatively slow progress in developing renewable energy sources. Preliminary data indicate that the 2010 target to provide 19% of gross electricity consumption from renewables was met, although mainly due to a decrease in electricity consumption. In the second half of the 2000s, a feed-in tariff was introduced, which stimulated production of electricity from renewables, especially biomass, and from cogeneration. Several other forms of investment subsidies have also been made available. However, they entail potential overlaps and oversubsidisation. The 2010 National Renewable Energy Action Plan aims at obtaining 14% of final energy consumption from renewable sources by 2020. The plan correctly targets the sectors with the highest potential, such as small-scale power generation and biomass for heating. Despite recent progress, non-economic barriers, such as complex administrative procedures, insufficient grid capacity, and lack of information and technical expertise, remain major obstacles to extensive use of renewable energy.

 

An energy efficiency legislative framework, mostly based on EU directives, is in place. However, more resolute efforts on implementation are needed to reap the benefits of low-cost energy-efficiency improvements, especially in the building and transport sectors. Slovakia’s first National Energy Efficiency Action Plan (NEEAP 2008 10) identifies the intermediate and final energy saving targets, the measures to achieve them, the expected impacts and costs of each measure, and the associated financial requirements. The NEEAP addresses the main barriers to the adoption of energy-efficient solutions in the various sectors of the economy, including weak participation of the private sector and insufficient public awareness. Commendably, it places emphasis on developing an appropriate monitoring, evaluation and enforcement system. However, it is unclear how the measures were selected, how their potential impacts and costs were assessed, and whether such measures will achieve the energy-saving target at the least cost. The NEEAP focuses on technical energy efficiency and awareness raising, and less attention is given to developing economic incentives for energy and emission saving behaviours. In May 2011, the second NEEAP (2011 13) was adopted.

 

Recommendations

  • Consolidate the inter-institutional co-operation platform and extend its activities to the strategic design and assessment of climate change, energy and transport policies; strengthen the system to monitor implementation of GHG emission reduction policy measures, extending it to their related financial and economic costs, with a view to assessing and improving overall cost-effectiveness.
  • Regularly assess the efficiency and effectiveness of mechanisms to support renewable energy sources, considering their environmental and economic implications, the impacts of feed-in tariffs on electricity prices, and the potential overlap among different forms of support; decrease feed-in tariffs in line with technological progress and phase out all support schemes for renewable energies as they become competitive with conventional energy sources; further streamline administrative and permitting procedures for the installation of renewable energy plants.
  • Improve the effectiveness of Slovakia’s participation in the EU ETS and use of the Kyoto Protocol flexible mechanisms by ensuring transparency of transfers of emission allowances and revenue use, and fully implementing the Green Investment Scheme.
  • Continue to gradually phase out coal subsidies and tax concessions for energy use by households and in energy-intensive industries, with a view to encouraging changes in energy-consumption patterns and contributing to fiscal consolidation.
  • Consider restructuring taxes on energy products used in sectors not covered by the EU ETS by including a CO2 tax component; consider raising the tax rate on diesel with a view to making the tax treatment of automotive fuels consistent with climate change objectives.
  • Extend to cars the existing distance-based and emission-differentiated road tolls applied to heavy goods vehicles.
  • Speed up modernisation of rail infrastructure, improve public transport services and develop alternative modes to road transport.

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Assessment

 

The transition of the Slovak Republic towards a market economy, initiated in the 1990s, substantially reduced environmental pressures from agriculture. Pressures were further reduced in the 2000s due to policy reforms and investments linked to EU accession. As a result, many agri environmental indicators (e.g. nitrogen and phosphorus balances, water use, ammonia emissions) showed positive trends in the 2000s. Nevertheless, agricultural practices still exert important pressures on the environment. Almost 60% of farmland is located in nitrate vulnerable zones requiring protection policies. Soil erosion is a widespread problem for arable land in mountainous (“less favoured”) areas, which make up 50% of agricultural land.


Rural areas account for 86% of the territory and 40% of the population. A significant part of EU farm support is channelled through a harmonised rural development programme that aims to improve competitiveness in the agriculture, food and forestry sectors, promote sustainable farming and forestry, and improve quality of life in rural areas. Although the programme has contributed to a decoupling of support payments from agricultural production and the associated environmental pressures, more could be done to link payments to environmental outcomes. A positive step has been the introduction of payments to help manage biodiversity on Natura 2000 sites which cover a high share of Slovakia’s territory. One outcome of agri-environmental policies is that, in 2009, organic agriculture accounted for 7.6% of farmland, exceeding the 2010 target of 7%. Payments to less favoured areas have helped maintain extensive forms of farming and prevent land abandonment in areas of high environmental and recreational value.


A fundamental challenge to improving environmental performance in the sector is the matter of property rights. Since transition to a market economy began, there has not been much progress in identifying landowners. As a result, the agricultural land market is not well developed, and 85% of farm operations are on leased land. From an environmental perspective, this reduces incentives to manage farmland in a longer-term, environmentally sound perspective. It also creates problems regarding management of voluntary agri environmental programmes, which must be implemented for five consecutive years to receive payment.


Recommendations

  • Promote voluntary farm management plans in which environmental objectives going beyond national requirements would be eligible for additional support; promote fertiliser and manure management plans at the farm level in nitrate vulnerable zones.
  • Consider how environmental outcomes could be better targeted in payments under the harmonised rural development programme, including Natura 2000 payments, other agri environmental payments, and payments to maintain farming in less favoured areas.
  • Strengthen incentives for more environmentally sound agricultural practices by accelerating the identification of landowners and the development of the land market.

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For more information please contact Frédérique Zegel or Shayne MacLachlan 

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www.oecd.org/env/countryreviews/slovakia

 

 

 

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