How to better apply the law to small hydropower in the Energy Community?

In the EU, a whole series of Directives govern whether a small hydropower plant can be built at a particular spot, including the Water Framework, Habitats and Birds Directives. Public consultations take place at different stages under the Strategic Environmental Impact Assessment (SEA) Directive and Environmental Impact Assessment (EIA) Directive.

As a result, only in very rare and exceptional circumstances can hydropower plants be built in locations where they will decrease water quality or damage Natura 2000 protected areas. When properly applied, this EU legislation ensures a high level of protection.

The Energy Community Treaty, which applies in the Western Balkans, Ukraine, Moldova and Georgia, currently includes only a limited range of EU environmental legislation. The EIA and SEA Directives are the most relevant for small hydropower plants. 

This leaves precious natural areas, including many of the Western Balkans’ stunning rivers, terribly under-protected. In the coming years, therefore, the Energy Community needs to adopt all the remaining Directives mentioned above to provide the same level of protection to its rivers as those in the EU.

But a lot of damage could already be prevented if the existing rules were properly applied in the Energy Community. It is this that the Secretariat has been consulting the public on for the last few weeks, with its new draft guidelines on small hydropower plants. 

In recent years, Bankwatch has unfortunately witnessed numerous breaches of the EIA Directive and State aid legislation in the region. Below we cite some of the most frequent problems emphasised in our input for the consultation.

Small hydropower is driven by an outdated and imbalanced incentives system

Small hydropower has disproportionately benefited from feed-in tariffs in the Western Balkans, receiving 70% of renewable incentives in 2018, while generating only 3.6 per cent of electricity. Solar and wind have been subject to restrictive quotas on how many plants can receive incentives, but small hydropower plants have had much higher – and in some cases unlimited – quotas. 

In North Macedonia, solar and wind must now undergo auctions, while an unlimited amount of small hydropower can still benefit from feed-in tariffs. This provides an unfair advantage for hydropower, especially as the level of support has not changed since 2007.

Likewise in the Republika Srpska entity of Bosnia and Herzegovina, small hydropower is practically the only form of renewable energy that can still receive support, since wind incentives were suddenly cut in 2019 and solar has always had a very low quota.

Feed-in tariff schemes are no longer allowed for renewable energy plants of more than 500 kW in the EU (though wind has a higher threshold) under the EU’s Energy and Environment State Aid Guidelines (EEAG), but some of the Balkan governments are dragging their feet about changing their incentives systems. 

Importantly, the EU rules also contain sustainability criteria, requiring incentives only to be provided for plants which are in line with the Water Framework Directive and other EU environmental legislation. Such criteria are mostly absent in the national legislation in the Balkans.

Lack of strategic planning and assessment

Strategic planning in the Western Balkans suffers from a lack of continuity, a lack of meaningful public debate, and a tendency to carry old projects over into new plans ad infinitum without reconsidering whether they are still relevant. 

Strategic Environmental Assessments are still not regularly carried out in some countries, and where they are, there is usually no real attempt to critically analyse the situation or take public comments into account. Sometimes they are carried out after the plan or programme they are analysing is already finished, so they cannot impact on choosing more environmentally acceptable options.

This results in a situation where planning is in reality stipulated by the development of a collection of individual projects, rather than projects being defined by the overall plan. In the case of small hydropower plants, this has resulted in “death by a thousand cuts” as concessions and permits have been distributed individually without considering the overall consequences for the region’s rivers and the people and animals who depend on them.

Small hydropower too often exempted from environmental impact assessment

Experience shows that even very small hydropower plants can cause serious damage when sited in sensitive areas, especially if several are built close together. 

The EIA Directive aims to take this into account by making sure that large plants are always subject to environmental impact assessments, while smaller hydropower projects are screened according to criteria laid out in Annex III of the Directive. 

But this second requirement is often ignored in the Western Balkans. In some countries, hydropower plants below a certain capacity threshold are automatically exempted from environmental impact assessments. In other countries, screening to see if an EIA is needed is required in theory, but is often mis-used in practice.

Serbia has not even transposed the Annex III criteria into its domestic legislation. Others like the Republika Srpska entity of Bosnia and Herzegovina have reasonable criteria in theory, but screening decisions like the recent one for Phase 1 of the Upper Neretva plants show that they are not used for decision-making in reality. Even within the same country, decisions on similar projects are often inconsistent with one another. 

One of the issues the draft guidelines need to emphasise more is that potential cumulative impacts with other planned or existing plants must trigger an EIA. This issue is very often ignored in the Western Balkans, for example in the case of Jošanička Banja in Serbia, where 14 small hydropower plants have been built in a very small area.

In the EU, even in cases where no full EIA is needed, under the Habitats Directive there is a requirement to carry out a so-called Appropriate Assessment in cases where projects are sited in Natura 2000 areas or could impact protected species. This option is missing in most of the Energy Community countries, because the Habitats Directive has not yet been transposed. It is therefore especially important to take a precautionary approach and require a full EIA even when the domestic legislation is ambiguous on whether it is needed or not.

Common problems with EIA studies for small hydropower

One of the areas where the draft guidelines could be more explicit is about common mistakes made in developing EIA studies. Bankwatch’s experience shows that EIAs for small hydropower plants, where they are carried out at all, usually suffer from the following issues:

• Baseline data is missing. Biodiversity fieldwork is needed in locations that are not well-researched – ie. most of them. For too many EIA studies the authors have needlessly spent time and resources measuring the air quality in pristine mountain regions (eg. for the Ulog and Upper Neretva plants in Bosnia and Herzegovina) but failed to do biodiversity fieldwork. This makes it impossible to assess the real impacts.

• The use of old data eg. for hydrological measurements and biodiversity is extremely common and must be avoided as it tells us nothing about the current situation. Guidance from the Energy Community on what constitutes sufficiently updated data would also be useful.

• The cumulative impacts of existing and planned projects must be analysed. We have observed a trend of mentioning the word “cumulative” in EIA studies without actually analysing what other projects are planned or existing and what impacts these would have all together.

• Project alternatives need to go beyond claiming that there is no alternative and seriously examine the options.

• Maps need to be clear and show in detail what land is affected.

• Mitigation measures need to be realistic, effective, and enforceable (see below). If no such measures exist, the project should not be allowed to proceed.

Public excluded from decision-making

In cases where no EIA is carried out, there is often no public consultation on the project level at all (eg. North Macedonia, Serbia). This is a risk for local people, the environment and the investor, as it often leads to unpleasant surprises later, ranging from public resistance to landslides and floods damaging the projects.

Even where there is an EIA process and public consultation, this does not take place when all options are still open as required by the Aarhus Convention. Instead of truly consulting the public, it is carried out as a pro forma procedure. Where public hearings are held, local people often do not know. Sometimes they are only advertised on the Ministry’s website, or in obscure publications, or not at all or only specific people are invited. Sometimes they are held far from the project site. 

Deadlines for commenting on EIA studies are often too short (ie. often 20 days in Serbia) and not clearly stated on the consultation announcement. Announcements are commonly made just before the summer or Christmas holidays when people are least likely to notice them.

Public comments are hardly ever really taken into account. Even when comments are “accepted”, they do not lead to reconsideration of the project or real improvements in the project design. At best they lead to some text being added to the EIA, without any change to the overall conclusions.

The draft guidelines therefore need to underline the need for decision-makers to lose their fear of truly consulting the public. They also need to emphasise the need to duly take public comments into account, and the need for all options – including no project – to still be open when public participation takes place.

Access to justice

Given all the above deficiencies, it is frequently necessary to challenge permitting decisions for small hydropower plants. The EIA Directive, following the Aarhus Convention, is supposed to ensure access to justice on environmental issues. But in the Western Balkans there are two main problems with this: 

• becoming aware of a decision on time to mount a legal challenge and 

• the judiciary’s lack of independence and knowledge about environmental law/issues.

Screening decisions on whether an EIA is needed are not always available to the public, so it is very hard to challenge them. E.g. in Republika Srpska the law requires publication only 30 days after the decision is made, and in reality not all decisions are published. Decisions on whether EIAs are needed after changes in projects are not required to be published at all.

In Serbia, poor legislative wording enables construction permits to be issued before EIA decisions are made, thus prejudicing the outcome of the EIA process and any legal challenges made afterwards. Appeals can be made against EIA decisions, but are unlikely to be successful if a construction permit has already been granted. 

Going beyond the hydropower sector, in Bosnia and Herzegovina, access to justice provisions were clearly violated in 2019 when a legal challenge against an environmental permit by a Sarajevo-based NGO on a coal power project in Tuzla was dismissed, based solely on the organisation’s address. 

Construction permits often cannot be challenged in court because the deadline is too short to really allow this and it is not known on time that they have been issued. In Serbia, they can be challenged in theory, but unsuccessful challenges can lead to the complainant having to pay damages and lost profits to the investor, thus representing an implicit threat against those considering such action.

Mitigation measures, monitoring and inspection

The guidelines need to be strengthened with regard to mitigation measures, monitoring and inspection. Too often EIAs and environmental permits for small hydropower plants prescribe unrealistic, ineffective or harmful mitigation measures, while implementation is not monitored and violations are not penalised. 

Too often fish passes are prescribed as a mitigation measure despite the lack of evidence that they can be effective. Stocking is also a commonly stipulated measure, despite its ineffectiveness and negative impacts on the genetic structure of autochthonous fish populations, while requirements for how much residual flow needs to be left downstream from the water intake are usually woefully inadequate across the region.

Monitoring is very difficult given the locations of most small hydropower plants, and the use of ad-hoc measures such as blocking fish passes with boards. Operators can also install automated systems to increase the residual flow when someone approaches. This has to be taken into account when deciding whether the impacts of a project will be acceptable. If it is impossible to ensure that a project can be monitored to the extent needed to keep its impacts at a reasonable level, it should not go ahead.

Enforcement is key

The issues above result from lack of knowledge on environmental issues and legislation by government bodies and courts, coupled with corruption and a lack of political will to properly implement existing legislation on environment and State aid. 

The Energy Community’s guidelines on small hydropower can therefore play a role in educating relevant actors but need to be coupled with continued enforcement efforts. The Energy Community Secretariat is playing an active role through its dispute settlement mechanism and activists across the region are stepping up the pressure on national authorities to do their job. There is still a long way to go, but it can and must be done. The region’s unique rivers depend on it.