May 19, 2017
On 18 May, during the VII St Petersburg International Legal Forum, Nornickel collaborated with Pepeliaev Group to host a discussion session on optimising the regulation of environmental operations, which is of great concern to both government authorities and large companies.
The session was attended by the representatives of the Ministry of Natural Resources, the Ministry of Economic Development, the dedicated committee of the Russian Union of Industrialists and Entrepreneurs (RSPP), and by the scientific and business communities. It was moderated by Alexander Zavtrik, Director of Nornickel’s Legal Department, and Sergey Pepeliaev, Managing Partner at Pepeliaev Group.
The discussion revolved around environmental regulation matters most relevant for large businesses. The participants discussed whether the government should use administrative or economic measures to tackle environmental problems, what needs to be done in the sphere of administrative regulation, whether the economic incentives are enough to ensure proper environmental performance, what would be the optimal tax incentives to make businesses more environmentally friendly, and many other topics. The guests too had a chance to participate in the discussion by voting on the measures that are best suited to stimulating environmental initiatives across businesses.
The same topics had previously been presented to a large number of environmental legislation experts, including those attending the research and practice round table organised at the Siberian Federal University in Krasnoyarsk on 12 May.
Both the session participants and the experts interviewed in advance made a case for a wider use of statutory economic and legal incentives for the purpose of solving pressing environmental problems. In addition, the majority of the respondents were against the increased administrative liability for the breach of environmental requirements.
The experts agreed that it is not only the use of the best available technologies that should be incentivised but also other environmental initiatives. The discussion participants spoke in favour of streamlining environmental permit issuance procedures and introducing investment benefits for the best available technologies and other environmental endeavours allowing to deduct environmental capex for profit tax purposes with subsequent accelerated amortisation. The majority of the participants also agreed that the current legislation needs to be amended to make the mechanism of adjusting pollution fees truly effective.
The conclusions made by the discussion participants by way of recommendations on improving the environmental legislation will be sent to the relevant governmental agencies.
Alexander Zavtrik said: “A key goal of the government is to create the optimal regulatory framework to maintain a sustainable balance between the industrial growth and the environment. This would be impossible to achieve without close interaction between all stakeholders, i.e. the government, the business community, and independent experts. Our session became the perfect platform for expert discussion on the legal mechanisms aimed at mitigating the negative environmental impact and helped to work out specific steps to improve the environmental legislation.”
Sergey Pepeliaev mentioned one of the key objectives of environmental legislation improvement: “Environmental payments are an important legal instrument that helps to take care of nature and encourages businesses to do so. There are two criteria that these payments should meet: the funds should be spent on environmental programmes, and the calculation procedure should take into account the payer’s investments in industrial ecology. However, neither of these are observed in Russia: the funds are not ring-fenced and the spending is not regulated. We need to make these payments work as an incentive again, as this was their initial purpose, so that they are no longer viewed as just another fiscal burden.