Climate Change Law – form or essence

Author: Danijela Božanić, climate change expert

Not many people still question the ongoing climate change and the impact of human activity nor the acceleration and intensification compared to natural trends and related damages and consequences. For example, member countries of the European Union, Iceland, Liechtenstein and Norway suffered combined economic losses of EUR 446 billion from 1980 to 2019 due to extreme weather linked to climate change.

Is it because science persuaded the common person that it is necessary to react? Maybe also the fact that there is a fourth industrial revolution underway, fueled by climate change? The European Green Deal, the response to the current industrial revolution?

Some of it or something completely different obviously influenced the Government of Serbia, which adopted the Draft Climate Change Law almost three years after the public consultation process was finished. Having in mind that the whole world is on a path consistent with reducing the contribution to climate change, particularly greenhouse gas emissions, and adapting to altered climate conditions, one can conclude that the law was adopted because the world trends were understood and because the Serbian economy needs to be prepared for the upcoming change in market environment and citizens’ right to live and work in a healthy environment must be secured.

Of course, apart from the Climate Change Law, it is necessary to implement a range of other laws, especially in the field of environment.

The basis for the reduction of human impact on climate change and the impact of climate change on economic and social development is to monitor the impact and report on it and to plan the reduction of the impact and emissions but also to adapt to altered climate conditions according to the current and expected situation.

All these activities are regulated by the United Nations Framework Convention on Climate Change (UNFCC) and the related Paris Agreement, and they are also subject of the EU’s future Climate Law and the Climate Change Law of the Republic of Serbia.

The Paris Agreement determines the targets for the period from 2021. to 2030.

LCDS stands for low carbon development strategy, which leads to net zero emissions by mid-century, and the NAP is the national adaptation plan with regard to altered climate conditions.

According to the rationale of the proposed Climate Change Law, it is derived from the ratification of the Paris Agreement and it transpones the key parts of EU law. Its aim is to reduce the damage and losses from natural disasters.

What does the future Climate Change Law regulate?

The law will introduce the obligation to produce a low carbon development strategy (LCDS) and an action plan for its implementation as well as a program to adapt to altered climate conditions (the national adaptation plan).

The draft stipulates that public policy documents must include a quantitative assessment of greenhouse gas emissions, and institutions and organizations including municipal authorities must conduct assessments of the effect of the policies and measures on emission levels and report their findings to the ministry.

A similar concept is foreseen also in the area of adjustment to altered climate conditions. Strategies for different sectors as well as programs and other public policy documents and planning documents of the Autonomous Province of Vojvodina and local authorities are developed in line with the adjustment program. The institutions responsible for creating and implementing the documents submit the reports every year by March 15 on the adjustment methods that were conducted and on events like floods, extreme temperatures and droughts and their consequences.

In accordance with the strategy and action plan, the government will regulate the allowed emission levels for each sector and the Ministry of Environmental Protection will prepare annual reports and propose measures every year by November 15. It has an obligation to inform the public on the draft strategy, action plan and adjustment program and enable the submission of opinions and objections.

Mirroring other states’ experience, the law establishes a national climate change council, made of representatives of the Ministry of Environmental Protection, other ministries and institutions, the scientific and expert community and civil society and a representative of the government’s Office of the Commissioner for the Protection of Equality.

Vehicle buyers will have access at points of sale to information on the cost effectiveness of fuel consumption and carbon dioxide emissions

The law will introduce the obligation to enable access to vehicle data, at points of sale, on the cost effectiveness of fuel consumption and carbon dioxide emissions. The main goal of this section is to raise awareness on CO2 emissions upon the purchase or lease of passenger vehicles. In other words, the law stipulates that the data that vehicle producers disclose must be published.

Large facilities will need licenses for CO2 emissions

Another section concerns the approval of greenhouse gas emission licenses for certain industrial and energy facilities and airline operators as a condition for the start of their operations. Existing plants are also subject to licensing.

License approvals depend on, inter alia, the applicants’ monitoring plans, and the entities report the results to the ministry every year. Stationary plants send it to the Serbian Environmental Protection Agency (SEPA) and airline operators send their reports to the Civil Aviation Directorate by March 31 for the previous calendar year.

The law will introduce emission monitoring and annual reports for every plant

Emissions from every facility in Serbia will become transparent and the ministry must make the reports public. The law introduces emission monitoring and annual reports for every plant. It is the base for a more precise long-term planning for the transition of the industry and the energy sector into a low carbon and climate neutral regime and, with it, for an increase in competitiveness on an international level. The clauses that concern the verification of the plant and airline emission reports open new business opportunities.

Of note, the draft law includes a delay of the implementation of the clauses regulating airline operators until January 1, 2023.

Having in mind that the section is linked to the European Union’s Emissions Trading System (EU ETS), it is clear that the following activities and facilities will be in the licensing system, even though it is not defined in the law:

Climate Change Law regulates creation of greenhouse gas inventory

According to the current Law on Air Protection, SEPA is responsible for the creation of a greenhouse gas inventory. The clause is transferred to the proposed Climate Change Law so that all obligations concerning climate change would be in the same law. The bill further elaborates the procedure for the gathering of the information necessary for the development of the inventory as well as for the quality assurance, improvement and archiving of the data. The law introduces an obligation for institutions and organizations that are responsible for the data necessary for the development of the inventory to deliver them to SEPA and ensure data quality.

The law makes the Ministry of Environmental Protection responsible for:

• making projections for greenhouse gases as the basis to determine and assess the possibility to reduce emissions and the measures for cost-effective limitations;
• the establishment of a system for reporting on policies and measures and projections;
• the preparation of an updated two-year report and Serbia’s report to the UN Framework Convention on Climate Change;
• reporting to the government on the implementation of the action plan, adjustment program, implementation of policies and measures, projections and the achievement of quantitative goals from the strategy, which the government submits to the National Assembly; and
• the institutions and organizations including those within municipal authorities that are responsible for environmental issues, so that they are assessing the effect of policies and measures on emission levels and report to the ministry about them.

The Climate Change Law defines the administrative fees for the submission of applications for licenses, approvals, changes in licenses and changes to monitoring plans. In short, it is an additional levy in the environmental segment and it becomes fiscal revenue.

EU is preparing CO2 tax

The bill is based on monitoring, reporting and verification (MRV) of the implementation of policies and measures that lead to emission reduction and the adjustment to altered climate conditions.

From the aspect of a candidate for membership but also because of the EU’s dominance in Serbia’s exports, the EU’s targets certainly have the biggest significance, especially having in mind that the European Union aims to become climate neutral by 2050. The EU is preparing measures to limit final emissions, especially those attributed to imports from other countries, in a way that would secure its economy’s competitiveness. That is why it announced it would introduce a carbon border adjustment mechanism – CBAM, a CO2 tax. The idea is to determine the rules as soon as in the second half of 2021 and to begin its introduction in 2023 at the latest.

The tax is planned for all imported products. It would be rolled out in 2023 for energy-intensive sectors: steel, cement, chemicals and fertilizers. In other words, having coal as the basis of Serbia’s energy system is becoming an issue linked to the survival of the economy in 2023.

The carbon border adjustment mechanism or CBAM, scheduled to be rolled out by 2023, could imperil Serbia’s economy because of the dependence of its energy system on coal

The future Climate Change Law is expected to include postulates that will reduce the economy’s vulnerability in this sense but also secure entire society’s resilience to ever more intensive climate change. That is why it is peculiar that it wasn’t harmonized with a decision within the Paris Agreement (Decision 18/CMA.1 – Modalities, procedures and guidelines for the transparency framework for action and support referred to in Article 13 of the Paris Agreement) from March 2019 and the current EU law.

Moreover, the law transpones EU legislation that fell into abeyance this year. It was announced in 2018 that that the law would be adopted so it seems the period was long enough to harmonize it with new demands.

With hope that the Climate Change Law can introduce basic order in its area, even though it is undergoing the adoption procedure as already obsolete, it is up to the public to follow the efficiency of its implementation.