LFMI response to Public Consultation Permit granting procedures for energy infrastructure projects

Q1. As explained above, a complex and non-transparent procedural framework as well as poor administrative practice are major reasons for delays. There are different options which could help to facilitate administrative procedures. These include, as outlinedin the Communication “Energy infrastructure priorities for 2020 and beyond – A Blueprint for an integrated European energy network”, the establishment of a national contact and coordination body (“one-stop shop”) per cross-border project, the introduction of a time limit, and the provision of rewards and incentives to regions or Member States which facilitate the permit granting process. Would you consider these measures as useful? If so, under which conditions? Are there any additional measures you would propose to facilitate the administrative procedures? Please explain briefly.
All of the initiatives would have a positive effect on development of energy infrastructure. Yet it should be understood that even the best sounding initiatives (e.g. one-stop-shops) can be bogged down by the intricate legislation. Imposing time limits is a good idea, but measures must be taken that they do not create negative effects on their own.
Time limits would lose their purpose if they are too long. In the same time the existence of time limit on the permit can result in the permit not being issued at all because the time limit ran out.
But the most effective way forward is to reduce the number of procedures necessary to implement the project. Certain initiatives to reduce bureaucracy and administrative burden could be introduced.
When it comes to rewards, if EU is providing some of the funding for the infrastructure project, a mechanism could be designed, where the size of funding would depend on the rapidness of implementing a project. For example states could receive 100 % of proposed funding if the permit is issued within six months of application, 90% if permit is issued within one year and so on. This would create an incentive for governments involved to streamline their permit-granting procedures or at least use their weight to force through the existing procedures. In any case that would result in faster granting of permits.
Q2. To increase the transparency and predictability of the permit granting process for all parties involved, guidelines targeted at ministries, local and regional authorities, project developers and affected citizens could be developed. Would you consider them useful? Which issues should they address?
Please explain briefly.
The permit procedure should rest on these general principles:
·         Purpose. Permits should be needed only if it has concrete purpose and the permit allows meeting this purpose. Purposes of permits (permit procedure) should be included in relevant laws. The purpose of permit must be reviewed periodically.
·         Neutrality. Permit procedure should have  a minimal effect of decisions of market agents and not create additional negative side-effects. Permit procedure should not create impact for market agents and processes not directly connected to the purpose for which the permit is issued.
·         Transparency. The laws must have accurate, unambiguous and finite criteria for the permit procedure. The institutions, issuing the permits must not be allowed to change the criteria or apply additional criteria.
·         Non-discrimination. The permit procedure should ensure that equal treatment is given to private and public projects and that public projects do not receive favorable treatment over private projects. Permits should not be used as a means to prevent entry into the market or regulate the number of market agents.
·         Rationality. The criteria for issuing permits, standards and requirements for technology, safety etc. must be reasonable.
·         Effectiveness. Issuing of permits must create minimal financial and administrative burden. The burden and costs created by the permit procedure must be compared with alternatives methods of achieving the same purposes (for which the permit procedure was designed to begin with).
·         Separate institutions should issue permits and oversee activities for which the permit is needed.
·         Publicity. The draft laws and other documents must be public and accessible by all parties, including market agents. If the law which changes to the procedure of issuing permits is approved, there should be a period of at least 6 months before the law enters into force.
Another effective way to increase transparency and predictability is to fundamentally change the manner in which the permits are issued. Currently the existing algorithm for permits is “Permit is not issued unless certain requirements are fulfilled”. This means that the party applying for a permit must prove to the authorities that the project meets certain criteria.
If the algorithm were changed to “permit is issued, unless certain requirements are not fulfilled” that would shift the administrative burden from the applying party to the authorities. If the authorities wanted to deny the permit they would have to prove that their decision is sound. This would have several effects. First, the burden of proof would be lifted from the investors and that would reduce the regulatory burden. Second, authorities would be less likely to deny permits if authorities had to prove the soundness of their denial.
Q3. The lack of public acceptance poses a major hindrance for the implementation of energy infrastructure projects, and the associated achievement of energy and climate policy objectives. What should be done, apart from efforts to increase general transparency, to improve communication with citizens at an early stage of the project and to ensure that the environmental, security of supply, social and economic costs and benefits of a project are correctly understood? Who should be responsible for / involved in this communication?
Please explain briefly.
Explanation of potential benefits of the projects to the communities involved could be very beneficial. Effective communications must be done during the planning procedure. Here investors and central government should work closely with the local government (e.g. municipalities). Clear and transparent procedures and sound time limits on discussions are necessary so that the discussions do not become a means to halt the implementation of the project.
On a very different note, the reluctance of public to accept energy infrastructure is partly fueled by opposition to development. Here the EU is partly responsible. Various EU funded initiatives and NGOs act directly against infrastructure projects and development in general. The EU officials and authorities completely misuse the term “sustainable development” as if sustainable development equated with no development.
As discussed before, the permit procedure should not discriminate the projects due to their nature (e.g. whether the project is in tune with climate policy objectives).
Q4. Requirements for compensation mechanisms: In your opinion, could minimum or harmonised requirements on compensation of affected populations, targeted at individual or community level, help to increase public acceptance? Which compensation schemes would you deem useful, and who should provide for the compensation?
Please explain briefly.
Compensations need to be aimed at the affected people. People whose livelihoods, businesses are negatively affected by infrastructure projects are the most vocal opponents and the most suitable people to receive compensations. There the emphasis should be placed not on harmonization of the rules but on compensating the right people. In this respect compensations should be handled on individual level.
The compensations or payoff from public coffers should not be used to entice the local community into accepting the project. Compensations must be understood in terms of respecting property rights.
In this light compensation should be seen not as much as “compensation” but as a transaction between the holders of property rights and the ones who infringe upon these rights. Compensations should be paid out by the ones infringing upon the property rights others to the ones whose property rights are infringed upon. Therefore compensating the holders of property rights should be included in the budget of project and paid by the parties financing the project.