Standard Summary Project Fiche for the Transition Facility

Standard Summary Project Fiche for the Transition Facility 1. Basic Information 1.1 CRIS Number: 2004/16762.06.02. 1.2 Title Building Capacity to introduce the Polluter Pays Principle through Economic Instruments to Implement the EU Environmental Acquis 1.3 Sector Environment 1.4 Location Malta 2. Objectives 2.1 Overall Objective To achieve compliance with the EU Environmental Acquis. 2.2 Project Purpose To build the necessary capacity in the Maltese government to devise and implement a package of environmental economic instruments applying the Polluter Pays Principle in practice. 2.3 Justification The 2003 EU Commission Comprehensive Monitoring Report on Malta states the administrative capacities in the area of Environment are in place, but further work is needed within the Malta Environment and Planning Authority to ensure a proper implementation of the acquis. The Report also makes specific reference to this proposal under its Comments on Progress section. While the Twinning Project MT2002/IB/EN-01 Capacity Building in the Environment Sector forms part of the 2002 pre-accession programme in the field of environment, the introduction of economic instruments has not been encompassed to a sufficient extent. It is considered that the successful introduction of environmental economic instruments would be essential in enabling Malta to comply with the Acquis. The Treaty establishing the European Community (Article 174(2)) provides that Community environmental policy should be based upon certain basic principles among which is the polluter pays principle. In Article 3 of the 6 th Environment Action Programme of the European Community, strategic approaches to meet environmental objectives include the promotion of polluter pays principle, through the use of market based instruments, including the use of emissions trading, environmental taxes, charges and subsidies, to internalise the negative as well as the positive impacts on the environment. 1

3. Description 3.1 Background and Justification The present situation To date, in Malta, the use of economic instruments for environmental management has been limited to initiatives not forming part of a comprehensive strategy. Over the years, these have included: tiered water tariffs, higher duty on leaded petrol to encourage the use of unleaded petrol, road license surcharges for entry into Valletta and for heavy vehicles, interest rebates for solar water heaters, performance bonds for development applications, subsidies to encourage conversion of existing property as opposed to new build, deposit refund schemes on glass bottles and shopping crates, grants for historic building restoration, reduced registration taxes for electrically-powered vehicles, reduced import duties for environmentally friendly products, and VAT rebates to encourage rehabilitation of dilapidated buildings. In several areas however, charges do not even cover production and administration costs (e.g. household waste disposal, waste water disposal), and are certainly not reflective of environmental costs. It can safely be said that government in Malta is still mainly involved in command and control type measures and that plenty of potential exists for the introduction of various economic instruments. Although there has been assistance through preaccession funds for the implementation of various EU directives, there has not been any assistance to address the need to introduce the Polluter Pays Principle holistically and across the fields of the Acquis. Situation foreseen on the date of accession Whilst the 2003-2004 budget has introduced some additional economic measures for the environment, the absence of a strategy and unifying framework remains an issue of concern. Moreover, it is foreseen that this issue will not be sufficiently addressed through pre-accession assistance by the date of Malta s accession. What remains to be done beyond the accession date The introduction of economic environmental instruments after Malta s accession will be an opportunity to strengthen the implementation of the Polluter Pays principle, thereby facilitating the achievement of environmental objectives delineated in the Acquis. The introduction of such instruments will result in pricing mechanisms that would better reflect the value of environmental goods and services (thereby improving allocative efficiency), as well as generate revenue that could be utilised for environmental improvement. A considerable effort and specialised expertise must be directed towards strengthening institutional capacity and coordination between economic and environmental ministries, as well as towards increasing public awareness, understanding and acceptance of the need for such measures. 2

3.2 Linked Activities This project is linked to the pre-accession Twinning arrangement (MT2002/IB/EN-01) Establishing Institutional Capacity in the Environment Sector and will build upon the training and administrative systems put in place as a result of the pre accession assistance. In particular, it is linked to the Service Contract 2, which provides for the development of an Integrated Communications Strategy (ICS) in the environment field. The consultants for the ICS will assess the legal requirements vis-à-vis communications; liase with all the players involved; provide an analysis of the current situation in the field of information, education, awareness and participation in environmental matters; draft a three year integrated strategy and formulate an implementation plan, as well as provide the relevant training and assistance to key beneficiaries. The strategy will subsequently be implemented by all the agencies involved in the environmental field, with MEPA being the main player. Public information activities proposed under this project will coincide with and benefit from the implementation of the ICS. This project is also linked to the implementation of all EU Directives concerned with the enforcement of the Polluter Pays principle through a series of economic measures (for instance, EU Directive 94/62/EC on Packaging and Packaging Waste, Directive 2000/50/EC on End of Life Vehicles, as well as a number of other directives provide for the establishment of economic incentives and obligations implementing the principle of producer s responsibility to meet the established targets). The project is also linked to the Twinning proposal submitted by the WasteServ Malta Ltd. titled Technical Assistance for the development of implementation systems for the producer responsibility directives, which focuses on the implementation of the Polluter Pays principle in the area of waste. The project will also benefit from the findings of another project Inventory of economic instruments used in environmental policy in selected EEA countries currently being carried out by the European Environment Agency (EEA), to update the joint EEA OECD database on the use of economic instruments applied in environmental policy. The aim of the database is to facilitate the exchange of experience and best practices across borders, so as to promote an improved use of these instruments in the countries. There are also potential synergies with projects under another area of the Acquis, namely Economic and Fiscal Affairs, for which the Ministry of Finance and Economic Affairs is responsible. As from 2002 there has been a commitment to introduce a number of environmental economic measures. The new batch has been introduced in the government budget for 2004. It is therefore considered necessary that this project builds upon the developments in this regard. 3

3.3 Results It is expected that this project will result in: A. A three-year plan for the introduction of a package of environmental economic instruments also identifying the institutional, legislative and public communication measures necessary for its successful implementation. The plan shall be prepared by the middle of November 2005. B. A pilot 3-month public information campaign to accompany the launch of the first package of environmental economic instruments. The campaign will consist of the design and production of information materials and their distribution to key target groups according to the communications plan. The pilot campaign will be carried out between November 2005 and February 2006. C1. A series of training workshops between November 2005 and December 2005, each targeting key experts from the MEPA, the Ministry for Rural Affairs and the Environment, the Ministry of Finance, as well as from the other government agencies listed under section 4 (Institutional Framework). C2. A national conference addressing the experts, industry & commerce representatives, NGOs, government departments & corporations, as well as other key stakeholders. The conference will be held in December 2005 for around 60 participants. D. A performance monitoring report, summarising the findings of the study of environmental, economic and social effects of the newly introduced instruments and outlining recommendations for their finetuning and improvement. The report and the recommendations will be finalised by October 2005, in time for the government budget for 2005-2006. 3.4 Activities The project will be implemented in two phases through one service contract. The phases will consist of the following: Phase 1. Provision of expert advice, coordination and training (October 2005 December 2005) A. Specialised consultancy is required to formulate the package of instruments and the three-year plan for their introduction. The package will establish a unified framework for the implementation of the Polluter Pays principle, containing measures to fulfil obligations and environmental objectives set out by 4

the EU environmental Acquis. This framework will also provide a tool for integrating the instruments already in place under a single umbrella. The package, containing a detailed description of the proposed measures shall be accompanied by the implementation plan that would incorporate the strategy outlining the legislative and institutional measures necessary for the successful implementation of the package. For this purpose, the services of two experts shall be required. Expert 1, having over 15 years of experience in the field of environmental economic instruments and an in-depth knowledge of the Community environmental legislation shall be required to spend a total of 60 days in Malta in one visit. Expert 2, having over 15 years experience and specialising in the economies of Small Island states (preferably the Maltese Islands) shall be required to spend a total of 30 calendar days in Malta in one visit. Expert 1 and Expert 2, working in close collaboration with the key officials from the Ministry for Rural Affairs and the Environment, MEPA and the Ministry of Finance and Economic Affairs shall assess the present situation regarding the instruments, identifying areas of deficiency in need of priority addressing. In assessing the situation, the experts will pay close attention to the linked activities (described under section 3.2) and collate the necessary data from existing reports and commissioned surveys. The preliminary groundwork as regards assessing the situation will be carried out by MEPA prior to the arrival of the consultants in mid-october 2005. As steering committee consisting of the representatives of the Ministries mentioned under Institutional Framework shall also be set up to ensure coordination. Once the assessment report has been prepared, the consultants will then proceed to develop the package of instruments, with due considerations being paid to social, economic and environmental impact, as well as prepare the introduction plan identifying the institutional and legislative measures necessary to implement it. B. At the final stages of the package development, Expert 3 would join the team and prepare a short to-medium term public communications plan to accompany the introduction of the package. Expert 3 will have over 15 years of experience in environmental communications, preferably specialising in the design of public information campaigns for the introduction of environmental instruments. He/she shall be required to spend a total of 14 days in Malta in one visit. The plan would contain an overall communications strategy (consistent with the linked activities described under section 3.2) and the detailed programme for the pilot 3-months information campaign to accompany the launch of the package developed by Experts 1 and 2. 5

C. After having prepared the strategy and the programme, Expert 3 would coordinate the onset of the pilot campaign, making the necessary arrangements in close liaison with the communications officials from the Ministry of Finance and Economic Affairs, the Ministry for Rural Affairs and the Environment and MEPA. The Commission will fund the pilot information campaign, which would initiate the process of public involvement and provide authorities with experience necessary for the subsequent implementation of the long-term communications strategy. The campaign would ensure the long-term sustainability of economic instruments that will be introduced as a result of this project and is therefore an integral part of the project itself. This component of the Phase 1 is a logical continuation of the first activity, whereby Expert 1, after having developed a proposal for the package of instruments and carried out other tasks therein specified, will provide the necessary training to the key government experts so as to enable them to subsequently devise, implement, monitor and review environmental economic instruments for Malta. This component will consist of the following: 1. Three (3) two-day workshops organised for the MEPA, the Ministry of Rural Affairs and the Environment, the Ministry of Finance, as well as other key government agencies identified in section 4 below. 2. A one-day national conference involving all the target groups, including representatives of industry & commerce, civil society and NGOs. Phase 2. Monitoring and Evaluation D. Once the package of instruments has begun to be implemented, the project entails a performance monitoring of the various economic instruments. The monitoring exercise will involve a study of environmental, economic and social effects of the instruments, which will subsequently guide the recommendations for fine-tuning and improvement. For this purpose, Expert 1, specialising in economic instruments, shall spend in Malta a total of 30 calendar days in one visit. Throughout both phases, MEPA undertakes to provide in kind office facilities for the experts, secretarial and administrative assistance for the duration of their stay, as well as any professional assistance relevant to the objectives of this project upon their request. Local transport for visiting experts, as well as venues and logistics for meetings shall be also provided by the beneficiary. 3.4 Lessons learned The experience earned from the limited use of economic instruments in Malta suggests that unless their future introduction forms part of a comprehensive strategy agreed by all the relevant parties, their potential will not be fully utilised. To date, there has been no significant attempt to analyse the performance of 6

environmental economic instruments and suggest a coherent strategy, thus there are no lessons learnt from the experience of similar projects. However on a broader level, various reports prepared by twinning experts as part of the project Establishing Institutional Capacity in the Environment Sector-MT2002/IB/EN (see Linked Activities) pinpoint to a potential common shortcoming of institution building and technical assistance exercises in the Maltese environment sector, a problem which is rooted in the chronic lack of adequate human resources to fulfil the necessary staffing requirements and further aggravated by the slow and complex recruitment process. However in the case of this project, which in the short to medium term does not envisage, nor rely upon the recruitment of any additional staff, it is highly unlikely that such potential deficiency could in any way impede the timely delivery of the project s results. 4. Institutional Framework This project necessitates the collaboration of MEPA, as the lead agency responsible for the implementation of the EU Environmental Acquis within the Ministry for Rural Affairs and the Environment, with the Ministry of Finance (MFIN). The EU & Multilateral Unit (EUMA) within MEPA will coordinate the project in collaboration with the MFIN and will provide input to the identification of priority areas in environmental sector to be addressed through the project. MFIN, as the Ministry with the remit to design and implement the national economic and fiscal policy will be primarily concerned with the economic and fiscal aspects of the project. The Department of Operations and the Office of the Permanent Secretary within the MFIN will be the focal points for this project. A number of other Ministries and national agencies will also provide input in the project directly by providing the necessary data during the monitoring phase and indirectly (outside the scope of this project) by actually administering the economic instruments. The following bodies with the remit in environmental protection are identified for this purpose: The Ministry for Resources and Infrastructure (MRES) The Malta Maritime Authority The Malta Resources Authority (MRA) The Malta Transport Authority The Superintendent of Cultural Heritage It is envisaged that this project would help to maximize the effectiveness of some of these institutions, without causing any substantial change to the existing institutional framework. The project is constrained by the fact that the abovementioned agencies fall under the responsibilities of different Ministries, therefore necessitating coordination at Cabinet level. Therefore a steering committee will be set up with the representatives of all the Ministries involved. Another constraint is the fact that the actual endorsement of the government budget and the introduction of fiscal instruments, as well as the adoption of any legislation is the prerogative of the National Parliament, thus falling outside the scope and control of this project. 7

5. Detailed Budget (EUROS) Technical Assistance Service Contract Transition Facility Support Institution Building Investment Support Total TF (=IS+IB) National Cofinancing IFI TOTAL Total 0 200,000 200,000 0 0 200,000 The amounts for co-financing indicated in the table correspond to cash co-financing. In addition, in-kind contributions from the Maltese administration for a good implementation of the /technical assistance may be developed in the terms of reference. The co-financing expenses will be monitored by the beneficiary and the NAO. For the earmarked co-finance, a clear and verifiable set of costs will be provided. The beneficiary will define which budget lines are the source for co-finance. The beneficiary together with the NAO commits to sound financial management and financial control 6. Implementation Arrangements 6.1 Implementing Agency: Malta Environment and Planning Authority (within the Ministry for Rural Affairs and the Environment) St. Francis Ravelin Floriana CMR01 Malta Tel.: 00356 2290 0000 Fax: 00356 2290 2295 Project Leader: Dr. Godwin Cassar, MEPA Director General Tel: +356 2290 1513 Fax: +356 2290 2295 Project Manager (MEPA): Ms. Marie Briguglio, EU & Multilateral Affairs Unit Manager Tel: +356 22901586 Fax: +356 22902295 Email: marie.briguglio@mepa.org.mt 8

Project Manager (MFIN) Mr. Tonio Briguglio Ministry of Finance Maison Demandols Tel: +356 25998256 Fax: + 356 21248291 E-Mail: tonio.briguglio@gov.mt Contracting Authority: Department of Contracts Notre Dame Ravelin Floriana CMR 02 Malta Contract Person: Mr. Dennis Attard Assistant Director Tel: +356 21247682 Fax: +356 21247681 Email: dennis.attard@gov.mt 6.2 Twinning N/A 6.3 Non-standard aspects N/A 6.4 Contracts This project will be implemented through one technical assistance service contract for the total amount of 200,000 Euro. 7. Implementation Schedule Contract Technical Assistance Service Contract Start tendering Start project Completion date date activities date March 2005 October 2005 October 2006 8. Sustainability The contributions of this project are in line with the long term strategic objectives of the government of Malta, in the fields of environment, economy, human resource development and citizenship. The human and financial resources to be provided by MEPA for this project are envisaged in the organisation s business plan. The Ministry of Finance has also provided for the human resources required for the implementation of this project. The project will be jointly managed by the EU & Multilateral Affairs Unit (EUMA) from MEPA and the Department of Operations at the MFIN. 9

9. Conditionality and sequencing This project is linked to but not dependent on other projects, as described in section 3.2. The progressing of this project will pay close attention to the developments in these related areas. In terms of conditionality, the project itself can proceed independently, although its results will have a bearing on the achievement of the objectives of the Acquis, and possibly on other sectoral projects. It must be noted that the full implementation of the second phase of the project, mainly the monitoring stage, will depend on the actual adoption of the proposed economic instruments by the National Parliament in the Government budget for 2005. The preliminary groundwork as regards assessing the situation will be carried out by MEPA prior to the arrival of consultants in October 2005. 10

The table below summarises the key milestones of the project: Mar- Phase Component 05 Oct- 05 Nov- 05 Milestone Start tendering 0 0 X Start of project activities 0 0 X Assessment report 1 A X Package of economic instruments 1 A X Introduction plan - Legislative & Institutional 1 A X Communications plan 1 B X Pilot public information campaign 1 B X X X 3 training workshops 1 C X National Conference 1 C X Monitoring of the instruments performance 2 D X Report of recommendations 2 D X Below is the schedule of expert visits: Phase PHASE 1 PHASE 2 Month Oct-05 Nov-05 Dec-05 Sep-06 Oct-06 Week Week 3 Week 4 Week 1 Week 2 Week 3 Week 4 Week 1 Week 2 Week 3 Week 4 Week 1 Week 2 Expert 1 X X X X X X X X X X X X Expert 2 X X X X Expert 3 X X Dec- 05 Jan- 06 Feb- 06 Mar- 06 Apr- 06 May- 06 Jun- 06 Jul- 06 Aug- 06 Sep- 06 Oct- 06 11

ANNEXES TO PROJECT FICHE PAF log frame template LOGFRAME PLANNING MATRIX FOR PROJECT Building Capacity to introduce the Polluter Pays Principle through Economic Instruments to Implement the EU Environmental Acquis ANNEX I Programme name and number Transition Facility Contracting period expires: 15/12/2006 Disbursement period expires: 15/12/2007 Total budget: 200,000 TF Budget: 200,000 Overall objective Objectively verifiable indicators Sources of Verification Assumptions To achieve compliance with the EU Environmental Acquis. Malta s timely and successful achievement of targets set by the EU environmental Acquis Government of Malta reports on progress in the environment sector MEPA annual reports for 2005 and 2006 Government State of the Environment report (2005) Successful implementation of this project and other capacitybuilding projects in the field of environment Cooperation of key players 12

Project Purpose Objectively verifiable indicators Sources of Verification Assumptions To build the necessary capacity in the Maltese government to devise and implement a package of environmental economic instruments applying into practice the Polluter Pays Principle. By January 2006 a pool of up to 60 experts from the key government agencies is trained in the design, implementation and monitoring of environmental economic instruments The first package of instruments is introduced with the government budget for 2006 Between November 2005 and February 2006, a pilot public information campaign is implemented Description of the package of instruments and plan for their introduction Communications plan Proceedings of workshops and conference Proceedings of meetings Government budget for 2006 Annual report of MEPA for 2005 Adoption of the package by the National Parliament 13

Results Objectively verifiable indicators Sources of Verification Assumptions A. A three-year plan for the introduction of a package of environmental economic instruments also identifying the institutional, legislative and public communication measures necessary for its successful implementation. The full report and the detailed plan is drafted by the middle of November 2005 in agreement with the MFEA and MEPA. The report document Cooperation of key players B. A pilot 3-months public information campaign to accompany the launch of the first package of environmental economic instruments. The campaign will consist of the design and production of information materials and their distribution to key target groups according to the communications plan. The pilot campaign will be carried out between November 2005 and February 2006. The pilot public information campaign plan is drafted The design, production and distribution of public information materials is commissioned in accordance with the plan The communications plan document Designs, artwork, samples of materials, publications, etc Financial proofs of communications services procured during campaign Press clippings Campaign designed and implemented in accordance with the framework provided by the ICS (see section on linked activities) C1, A series of 3 two-day training workshops in December 2005, each targeting around 20 key experts from the MEPA, the Ministry for Rural Affairs and the Environment, the Ministry of Finance and Workshops are held in December 2005 Workshops attendance and participation Workshops proceedings Experts are available to attend workshops 14

Results Objectively verifiable indicators Sources of Verification Assumptions Economic Affairs, as well as from the other government agencies listed under section 4 (Institutional Framework). C2. A one-day national conference addressing the experts, industry & commerce representatives, NGOs, government departments & corporations, as well as other key stakeholders. Conference is held in December 2005 Conference attendance and participation Conference proceedings Media coverage D. A performance monitoring report, summarising the findings of the study of environmental, economic and social effects of the newly introduced instruments and outlining recommendations for their fine-tuning and improvement. The report and the recommendations will be finalised by October 2006, in time for the government budget for 2007. Monitoring is carried out and the recommendations are given by the middle of October 2006 Monitoring, evaluation and recommendations report Availability of the required data 15

Activities Means Assumptions Preconditions A. Formulation of the package of instruments and the three-year plan for their introduction. The package will establish a unified framework for the implementation of the Polluter Pays principle, containing measures to fulfill obligations and environmental objectives set out by the EU environmental Acquis as well as integrate the instruments already in place under the single umbrella. B. Preparation of the short to medium term public communications plan to accompany the introduction of instruments, as well as the design and coordination of the pilot 3-months public information campaign to be funded through this project. Consultancy and coordinating input of two visiting experts Specialised consultancy and coordinating input from one visiting expert in environmental communications Funding of 52,000 Euro for the pilot campaign Consultancy will begin in mid-october 2005 The package and the plan will be drafted in close liaison with MEPA and MFEA. The work on the communications plan will commence when the package of instruments and the implementation plan are in the final stages of preparation Preliminary groundwork in collating data has been carried out by MEPA prior to the commencement of the consultants work The communications plan is to be consistent with the overall framework established by the ICS (see section on linked activities) 16

Activities Means Assumptions Preconditions C. Organisation of 3 two-day training workshops for local experts and a national conference addressing the main target groups Training workshops and the conference will be organised and carried out by the visiting expert in environmental economic instruments who had provided consultancy to devise the package Local experts are available to attend the workshops Cooperation of the key players D. Carrying out the performance monitoring exercise to evaluate the social, economic and environmental impacts of the instruments introduced, as well as to provide recommendations for finetuning and improving of the package to be incorporated in the government budget for 2007 Data collation, analysis and specialised consultancy by the visiting expert in environmental economic instruments Availability and reliability of the data required The package had been already introduced in the national budget for 2005 17

SUMMARY DETAILED TIME IMPLEMENTATION CHART FOR THE PROJECT Annex 2 Title: Building Capacity to introduce the Polluter Pays Principle through Economic Instruments to Implement the EU Environmental Acquis 2005 2006 CONTRACT J F M A M J J A S O N D J F M A M J J A S O Technical Assistance Service Contract D D C C C C C C C I I I I I I I I I I I I X D = Design C = Contracting I = Implementation X = Closure 18

CUMULATIVE CONTRACTING AND DISBURSEMENT SCHEDULE OF EU FUNDING Annex 3 Title: Building Capacity to introduce the Polluter Pays Principle through Economic Instruments to Implement the EU Environmental Acquis All figures in Euro Technical Assistance Service Contract Q1 Q2 Q3 2005 Q4 Q1 Q2 Q3 Q4 2006 TOTAL CONTRACTED Total 200,000 200,000 DISBURSED Total 159,520 200,000 200,000 19

DETAILED BUDGET BREAKDOWN Annex 4 Title: Building Capacity to introduce the Polluter Pays Principle through Economic Instruments to Implement the EU Environmental Acquis Technical Assistance Service Qty (days / Rate Contract Total (Euro) items / flights) (Euro) Phase 1 Fee Expert 1 48000 60 800 Fee Expert 2 24000 30 800 Fee Expert 3 11200 14 800 Flights E1 600 1 600 Flights E2 600 1 600 Flights E3 600 1 600 Lodging E1 5880 30 196 Lodging E2 5880 30 196 Lodging E3 1960 10 196 Data collation 5000 Training materials 2500 Pilot information campaign 52000 National conference 1300 Total Phase 1 159520 Phase 2 Fee E1 24000 30 800 Flights E1 600 1 600 Lodging E1 5880 30 196 Data collation 10000 Total Phase 2 40480 Total Service Contract 200000 During the course of this project, MEPA undertakes to provide in kind office facilities and secretarial & administrative assistance to the visiting consultants, as well as any professional assistance relevant to the objectives of this project upon a specific request of the experts. Local transport for visiting experts, as well as venues and logistics for meetings shall be also provided by the beneficiary. 21