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The “Green Economy’s” Tools in Russian Law: Problems and Prospects

Inna A. Ignatyeva, Doctor of Law, Associate Professor, Department of the Environmental and Land Law, Law Faculty, Lomonosov Moscow State University, Moscow, Russia

In light of the agenda of the UN Conference on Sustainable Development, “green economy” tools applied in law of every country participant of the Conference acquire special importance. Not all the methods of promoting environmentally signifi cant economic activity known to the international community exist in Russian law. That is why creating a “green economy” is the purpose of the current stage of social and economic development of Russia.

The UN Conference on Sustainable Development held in Rio de Janeiro in 2012 and preparations for the said conference  became a good occasion to once again raise a question of effectiveness and completeness of legal regulation in the field of efficient use of natural, including energy, resources in the Russian Federation. It is known that one of the main goals of the UN Conference, which is usually called "Rio +20", is a "green economy", as it was reported by the Secretary-General as early as at the first session of the Preparatory Committee of the United Nations Conference on Sustainable Development (17?19 May, 2010) (A/CONF.216/PC/2).

But such a notion as "the green economy" is almost unknown to Russian law. Sometimes it is mentioned in the speech of Russian politicians. “Green investments”, "green" growth of the Russian economy”, "green" post-crisis economic recovery” are mentioned in some legal acts. And the designated phenomena and concepts are most frequently mentioned in the same row with the modernization and/or the provision of energy resources accounting, introduction of energy efficient technologies. It should be noted that the awareness of the relevance of "green" aspects of the modern economy shows in the documents mainly of software, strategic nature.

It is fair to note there is no common understanding of this concept in the international community either. According to the Preparatory Committee, these include in particular such instruments as:

“(a) Getting prices right, including removing subsidies, valuing natural resources and imposing taxes on things that harm the environment (environmental “bads”) in order to internalize externalities, support sustainable consumption and incentivize business choices <…>;

(b) Public procurement policies to promote greening of business and markets;

(c) Ecological tax reforms <…>;

(d) Public investment in sustainable infrastructure <…> and natural capital, to restore, maintain and, where possible, enhance the stock of natural capital <…>;

(e) Targeted public support for research and development on environmentally sound technologies <…>”[1] and others.

The analysis of the "green economy" instruments makes it clear that some of ideas of the green economy, not ever being described with the use of the new terminology, are implemented in the norms of Russian law, andexactly in a sense actualized for the UN Conference on Sustainable Development. Nowadays the instruments of the “green economy” in the Russian law are reflected primarily: a) in the area of taxation, penalty payments in the area of use of natural resources, and b) in the regulation of energy efficiency and energy saving. Both indicated areas are closely connected, since they are designed to encourage activities aimed at the rational, careful attitude to natural resources.

The most complete range of measures to support and promote environmentally significant activities is contained in the Federal Law "On Environmental Protection"[2], where several articles, united in Chapter IV, are devoted to issues of economic regulation in the environmental focus. These articles include: a) establishing of fees for negative impact on the environment, b) provision of tax and other benefits under condition of implementation of the best available technologies, alternative energy, the use of secondary resources and waste, as well as the implementation of other effective measures to protect the environment in accordance with the laws of the Russian Federation, and c) support for entrepreneur activity, innovation and other activities (including environmental insurance), aimed at the protection of the environment.

Forms of fees for negative impact on the environment are defined also in Art. 28 of the Federal Law “On Air Protection”[3], Art. 23 of the Federal Law of "On Production and Consumption Waste”[4].

The Federal Law “On Fauna” has provided a number of economic incentives for protection, reproduction and sustainable use of wildlife (Art. 54)[5]. Federal Law “On Fishing And Conservation Of Aquatic Biological Resources”[6] (Art. 2) and the Federal Law "On Hunting And  Conservation of Hunting Resources and on Amending Certain Legislative Acts of the Russian Federation"[7] (Art. 2, 42) provide only payment for use of living aquatic resources and payment for use of hunting resources respectively.

The Land Code of the Russian Federation provides the possibility of economic incentives for the protection and use of land (Art. 13).

Water Code of the Russian Federation and Forest Code of the Russian Federation establish the basis of payments for using respectively water bodies and forests. Economic instruments used in the Law “On Subsoil"[8] are mainly the payments for subsoil use (Section V).

Payments for the use of natural resources are also provided for in Art. 40 of the Federal Law "On the Continental Shelf of the Russian Federation"[9], and Art. 34 of the Federal Law "On the Exclusive Economic Zone of the Russian Federation"[10].

Despite the wide range of legislative acts providing for measures of economic regulation of the use of natural resources and environmental protection, and declared diversity of these measures, practical implementation of methods of economic stimulation of environmentally sensitive  conduct of economic activity is substantially hindered by the lack of sufficient legal provisions in legislation of taxes and fees, banking, investment related legislation etc.

Certain aspects of the promotion of environmental activities are reflected in the Tax Code of the Russian Federation (the Tax Code). For example, paragraph 4 of Art. 270 of the Tax Code allocates payments for excessive emissions of pollutants of the environment to the costs which are not considered in tax purposes.

The fee rates for each object of wildlife or of aquatic biological resources, deemed to be an object of taxation in accordance with the Tax Code, shall be fixed at zero in cases where the use of such objects is carried out for  resource-saving purposes (Art. 333.3). According to Art. 333.9 of the Tax Code, certain activities related to environmental protection, protection of water and aquatic biological resources are not deemed to be an object of taxation upon payment of water tax.

Nevertheless, the overall fragmentation of the regulation does not provide a basis for positive conclusions. In the absence of rules which ensure a mechanism of providing economic incentives for environmentally relevant activities, the rules of environmental law should be characterized only as a declaration expressing the State's intention for the future.

It is noteworthy that the President of the Russian Federation is especially concerned about  the economic basis to improve environmental performance. In particular, following a meeting of the State Council Presidium of the Russian Federation of May 27, 2010, the President of the Russian Federation gave instructions to the government to submit to the State Duma of the Russian Federation drafts of federal laws aimed at:

  •   the development of economic instruments, including tax regulations, enabling economic agents to reduce the negative impact on the environment;
  •   the stimulation of economic activity in the field of waste management.

Some of the instructions of the President are aimed at expanding sources of funding of the environmental activities. In particular, the government should make proposals aimed at: a)  creating the federal and regional environmental funds, b) improving financial support instruments for environmental protection and the adoption of environmentally efficient technologies, and c) using voluntary mechanisms of environmental responsibility[11]. It is apparent that the possibility to use different sources of financing of environmental activities to encourage the various actors in the field of environmental protection will contribute to the development of elements of the "green economy" in Russia.

A year later, a meeting of Presidium of the State Council held on June9, 2011 concluded in the following request to the Government together with the State Duma of the Federal Assembly of the Russian Federation: they should “provide <…> the finalization and adoption in the first reading of the drafts of federal laws aimed <…> at stimulation of the economic activity for reducing the negative impact on the environment”[12]. However, so far these recommendations have not been implemented.

A characteristic feature of the "green economy" is also the activity of the state in the field of efficient use of energy resources. The legislation on energy efficiency is currently at a new stage of its development, which delineated the adoption of the Federal Law "On Energy Saving and Energy Efficiency Improvements and on Amendments to Certain Legislative Acts of the Russian Federation"[13]. The period of implementation of the provisions of this Law is about four years, and, therefore, it is right time to make an assessment of its effectiveness.

There are more than 40 by-laws adopted in this sphere, and some of them are temporary. Unfortunately, a substantial part of this number are acts of interim, preparatory character that contain only principles, requirements to further regulations and do not directly regulate social relations[14].

An important consequence of the chosen method of regulation of relations for energy conservation and energy efficiency ? through the adoption of a significant number of by-laws ? was a  substantial increase in the period of time needed for the general realization of the Law on Energy Saving and Energy Efficiency Improvements, because drafting and adoption of all the necessary by-laws, even under the plan, presupposed long terms of their enactment— up to 2012[15]. One of the deadlines set by the plan has been officially delayed, namely, the deadline set for drafting of the resolutions of the Government of the Russian Federation, which has been delayed for more than 18 months (from April 1, 2010 to the IV quarter of 2011).

There is a general slow pace in implementing the basic requirements for energy efficiency. The enforcement of Federal Law "Technical Regulations on Security of Low- Voltage Equipment"[16], which was adopted in order to ensure energy efficiency as it is provided, in particular, labeling of low-voltage equipment including energy efficiency class, wassuspended until January 1, 2014.

Management in the field of energy efficiency tends to fragmentation of functions and powers of the various government bodies. Currently, certain management functions in the field of energy conservation is carried out by nine (!) special authorized federal bodies. Such functions as controlling, monitoring, planning and programmes development are fulfilled simultaneously by several authorities (within the framework of its own sphere of competence). Such a management model increases the risk of inefficiency of management and respectively can affect the effectiveness of legal norms.

In general, energy saving is the activity unusual for the Russian society, which requires the promotion of new ideas. It is evident that the success of the norms of the Law depends  considerably on each energy user. Therefore, the question of securing the necessary public understanding of ongoing processes, the formation of social and individual consciousness in terms of energy conservation is of particular relevance and importance.

There is no doubt that to a large extent, the analyzed Law is looking into the future. I suppose that at least the younger generation should grow up based on new principles. In this situation, the important role is normally assigned to the educational process. However, the Law provided only for a possibility of education in this field (Art. 22, 27).

Thus, it is obvious that the practical implementation of the idea of energy conservation and energy efficiency faces serious difficulties. To a large extent. it is hindered due to reasons that are rooted in the approach to the management of the relationship in the sphere of energy saving and energy efficiency improvements.

Thus, the legislation in its current condition cannot ensure the creation of  "green economy". To improve the situation, the following steps are to be made:

  •    It is necessary to create a clear concept of the system of economic regulation instruments that should be enshrined in various  legislative enactments  aimed at regulating of economic relations in general.
  •    It is necessary to make a profound revision and substantial development of the legislation on taxes and fees, banking, budget law. This is needed, firstly, to support the implementation of the legal norms on economic regulation contained in the legislation on the protection of the environment and natural resources, and, secondly, for creating a legal basis for various sources of financing of environmentally significant activities.

The process of preparation of the national report of the Russian Federation for the UN Conference "Rio +20" and subsequent participation of the Russian Federation in this UN Conference provide a good possibility to review the priorities of the state in economic and environmental spheres. Moreover, the measures necessary to implement the said priorities should be comprehensive, timely and effective. This conclusion is based on almost five years’ experience in the implementation of legislation on energy conservation and energy efficiency.



[1]A/CONF.216/PC/2. Para 44.

[2] Federal law of January 10, 2002, No. 7-FZ.

[3] Federal Law of May 4, 1999, No. 96-FZ.

[4] Federal Law of June 24, 1998, No. 89-FZ.

[5] Federal Law of April 24, 1995, No. 52-FZ.

[6]Federal Law of December 20, 2004, No. 166-FZ.

[7] Federal Law of July 24, 2009, No. 209-FZ.

[8] Zakon Rossiiskoi Federatsii o nedrakh No. 2395-1 [Law of Russian Federation “On Mineral Resources” No. 2395-1]. February 21, 1992 (as amended by Federal Law of March 3, 1995, No. 27-FZ).

[9] Federal law of November 30, 1995, No. 187-FZ.

[10] Federal law of December 17, 1998, No. 191-FZ.

[11]Available at: Instructions followingthe meetingof the State Council held on 27 May 2010. Para1 (d) //, http://state.kremlin.ru/state_council/7980 (last accessed October, 2013).

[12]Available at: Instructions following the meeting of the State Council held in the 9th June 2011. Para 1. http://президент.рф/%D0%BF%D0%BE%D1%80%D1%83%D1%87%D0%B5%D0% BD%D0%B8%D1%8F/11642 (last accessed October, 2013).

[13] Federal Law of November 23, 2009, No. 261-FZ.

[14]I.A. Ignatyeva. Budet li effektivnym zakonodatel'stvo ob energoeffektivnosti? [Will the Legislation on Energy Efficiency Be Effective?]// Energetika i pravo [Power Engineering and Law]. No. 2, 2010, pp. 15 – 22.

[15]Action plan for energy saving and energy efficiency in the Russian Federation aimed at implementation of the Federal law “On Energy Saving and Energy Efficiency Improvements and on Amendments to Certain Legislative Acts of the Russian Federation”, approved by the Federal Government on December 1, 2009, No. 1830-r.

[16] Federal Law of December 27, 2009, No. 347-FZ.

Bibliography:

  1. I.A. Ignatyeva. Budet li effektivnym zakonodatel'stvo ob energoeffektivnosti? [Will the Legislation on Energy Efficiency Be Effective?] // Energetika i pravo [Power Engineering and Law]. № 2. 2010. pp. 15–22.