Jaakko Henttonen, NDEP Manager EBRD St Petersburg EU Baltic Sea Strategy and the Northern Dimension 19th Baltic Sea Parliamentary Conference Mariehamn, 29-31 August 2010 Quickly go thru Rules of Procedure Jaakko Henttonen, NDEP Manager EBRD St Petersburg 1

Common issues for EU Strategy for Baltic Sea Region and NDEP Reduction of nutrient inputs into Baltic Sea Intensive cooperation with Russia following adoption of the HELCOM National Action Plan Development of working relations with Belarus Ensuring adequate funds for priority actions

Background: Plankton blooms in 2002 While the nutrient concentrations are peaking in winter their impacts in the living component of the ecosystem are seen during their growth season in the summer – most spectacular in the form of algal blooms, the effects of which are very distinct when during summer beaches need to be closed.

Baltic states, Poland and Belarus are also part of the Northern Dimension ► More than 50% of phosphorous load into the Baltic Sea from Poland ► Belarus and Russia need more effective municipal wastewater treatment

Belarus is part of the Baltic Sea catchment area Western Dvina Vitebsk ● ● Poletsk Neman Minsk ● ● Grodno Bug ● Brest

Map of 17 Poultry Farms in Leningrad Oblast Locations 2 Map of 17 Poultry Farms in Leningrad Oblast

NDEP Environmental Projects in 2010 for the Baltic Sea Region IFI Loan NDEP Grant Total cost PROJECTS COMPLETED: 1 St Petersburg Southwestern Wastewater Plant €96.55m €5.8m €193.6m 2 St Petersburg Northern Sludge Incinerator €58.18m €6.35m €90.4m 3 St Petersburg Flood Protection Barrier €277.5m €1m €2,000m PROJECTS UNDER IMPLEMENTATION: 4 Leningrad Oblast Wastewater System Rehabilitation €5.25m €4m €23.2m 5 Kaliningrad Project Implementation Unit n/a €3m €3.8m 6 Kaliningrad District Heating Rehabilitation €12m €7.3m €21.8m 7 Kaliningrad Water/Wastewater Plant Construction €23.53m €10m €110m 8 Novgorod Water/Wastewater Rehabilitation €7m €17.1m 9 Sosnovy Bor Wastewater Treatment Rehabilitation €0.75m €0.5m €3.3m 10 St Petersburg Neva Programme €60m €24m €563m 11 St Petersburg Ten Suburban Wastewater Plants €5m €3.75m 16m PROJECTS TO BE SIGNED: 12 PIU for Agricultural waste in Leningrad oblast €2m €3.5m 13 Petrozavodsk Water/Wastewater Rehabilitation €11m €32m TOTAL €556.76m €75.5m €3,078m

Northern Dimension Environmental Partnership (NDEP) – key points NDEP is recognised as effective model for international cooperation based on co-financing structure by loans, grants and local funds; extended until 2017 EBRD, NIB, NEFCO, EIB are the Implementing Agencies of NDEP projects to provide the inevitable loans for financial packages and to prepare project concepts NDEP delivers real projects - €112 million committed for 22 non-nuclear projects leveraging €3.5 billion in total investment; Present non-committed balance ca EUR15 million. Due to intensive project development new funds will be sought by the NDEP Steering Group shortly

NDEP Support Fund in 2010 €127.3m €157.1m €284.4m Environmental Nuclear €30m European Union €40m Russia France Canada €20m €10m Germany €18.9m Sweden €16m Finland €2m UK €23.6m Denmark €1m €1.4m Norway Netherlands Belgium €0.5m Belarus €127.3m €157.1m €284.4m

London London 3 2010 London 3 Dec 2010 3 December 2010 London 8 October 2010 Minsk 9 April 2010 London

Sosnovyi Bor Municipal Water and Wastewater Rehabilitation € 3.3m Equity Loans Grants

St Petersburg Neva Program € 186.9m

Kaliningrad Water and Wastewater Rehabilitation - €110m Equity Loans Grants

Environmental Benefits of NDEP Once implemented, the 16 environmental window projects will cut the pollution load by: Phosphorous – 1,840 tonnes per year Nitrogen – 5,568 tonnes per year BOD (Biological Oxygen Demand) – 32,284 tonnes per year SO2 – 2,680 tonnes per year CO2 - 351,000 tonnes per year

Other benefits Prevention of further deterioration of municipal systems and services and associated adverse environmental and social impacts Transfer of modern project and investment planning, financing and management skills Paradigm shift from budgetary funding to self- financing through full cost recovery

Northern Dimension Environmental Partnership South-western Wastewater Treatment Plant in St Petersburg Case illustration Quickly go thru Rules of Procedure 1

ST. PETERSBURG - SOUTHWEST WASTEWATER TREATMENT PLANT (SWTP) in 2002

ST. PETERSBURG - SOUTHWEST WASTEWATER TREATMENT PLANT (SWTP) in 2005

Inauguration September 22, 2005 ST. PETERSBURG – INAUGURATION OF THE SOUTHWEST WASTEWATER TREATMENT PLANT (SWTP) Inauguration September 22, 2005

- Wastewater treatment plant EUR 149 million ST. PETERSBURG SOUTHWEST WASTEWATER TREATMENT PLANT (SWTP) Main Components: - Wastewater treatment plant EUR 149 million - Inlet pipeline EUR 15 million - Sludge incineration plant EUR 30 million (ready spring 2007) Total cost of project: EUR 194 million

ST. PETERSBURG SOUTHWEST WASTEWATER TREATMENT PLANT (SWTP) Environmental Effects: Reduction of nutrient to Gulf of Finland: - BOD 16.600 tons/year - Phosphorus 360 tonnes/year - Nitrogen 2.200 tonnes/year Enough treatment capacity for treatment of all municipal wastewater After SWTP, approx. 85% of the City of St. Petersburg municipal wastewater is treated

SWTP treatment results Parameter Concentration in influent, mg/l Concentration in effluent, mg/l Reduction % BOD5 245 3.2 98.7 Ptot 4.8 0.24 95.0 Ntot 29 6.7 76.9

SWTP nitrogen reduction

SWTP phosphorus reduction

Financial sources (1) ● Credits - where to borrow from? → International Financing Institutions: EBRD, NIB, NEFCO, EIB offer long-term loans, 10-15 year maturities; IFIs lead NDEP project preparation → NIB Baltic Sea Environmental Facility (EUR 500 million) → Commercial Banks: still short-term lending with various terms; guarantees possible

Financial sources for BSAP (2) ● International Grants - where to find them? → Active bi-lateral programs (SIDA, Finland, Norway etc.) → Multilateral: NDEP linked with IFI loans → European Commission: EU programmes with national/ local counterpart funding, ENPI; EU Baltic Sea Strategy → Private foundations: provision of catalytic seed money and bringing high-level publicity & increased awareness

Financial sources for BSAP (3) ● National funding sources → National Federal Programmes e.g. Clean Water coordinated by Ministry of Regional Development in Russia → Regional Allocations → Municipal Budget resources → Self-financing based on tariff revenues

NDEP - future activities NDEP cooperates closely with HELCOM and other regional organizations for good coordination of joint activities. EU Strategy for the Baltic Sea Region is a key guideline. Project preparation has commenced in Belarus in 2010 by NIB and EBRD; significant bilateral support from Sweden, Finland and Austria Coordination with national programs such as “Clean Water” in Russia and Belarus for multiple benefits. 2010 challenges: ensuring good progress for Neva-project and wastewater treatment in Kaliningrad; waste management of agro- industries by NEFCO in Lenoblast ; new projects in Pskov, Petrozavodsk and Lenoblast in Russia as well as in Belarus New funds required for the pipeline activities. EC and Russia lead financial contributors with Sweden, Germany and Finland.

Our common tasks “Every little counts” in the Baltic Sea basin International agreements are to be integrated into national targets and policies including necessary financial commitments National targets are applied into regional and municipal actions down to citizen level Every household and enterprise is equally responsible for their own share - for a Cleaner Baltic Sea

For more on NDEP… Please contact: Jaakko Henttonen, NDEP Manager EBRD RO, Nevsky Prospekt 25, St Petersburg Tel. +7 812 7035525; Fax: +7 812 703 55 26 Email: henttonj@ebrd.com OR Ewa Manik, NDEP Administrative Officer EBRD, One Exchange Square, London EC2A 2JN Tel. +44 207 338 7196, fax +44 207 338 7486 Email: manike@ebrd.com Or visit: www.ndep.org www.ebrd.com www.nib.int www.nefco.org