THE ROLE OF ENVIRONMENTAL ORGANISATIONS IN BUILDING THE PUBLIC SUPPORT FOR THE PHASE-OUT OF ENVIRONMENTALLY HARMFUL SUBSIDIES

Dariusz Szwed Environmental Lobbying Support Office Greens 2004

In order to identify the influence of environmental organisations on state policies and the building of the public support for reforms, it is necessary to describe the different types of organisations and the ways in which they operate. From the point of view of the phase-out or restructuring of environmentally harmful subsidies, think-tank organisations, thematic coalitions and international networks of organisations are of crucial significance.

The basic group consists of so-called think tanks. Examples of such organisations in include: the Institute for , the Environmental Law Centre and the Institute for Environmental Economics. These organisations primarily focus on the development of analyses and proposals alternative to state policies and draft legal acts, which provide the basis for other organisations to take their lobbying measures.

Think-tank type organisations most often carry out expert analyses which are used by the same organisations, but they are also often sources of information for the state institutions, including the ministries responsible for the implementation of individual policies, parliamentary committees and parliamentary party groups.

Another group which takes active lobbying measures consists of thematic coalitions: - in the field of rural areas and agriculture – the Coalition for the Development of Organic Farming or the International Coalition for the Protection of the Polish Countryside; - in the field of energy policy and climate protection – the Climate Coalition; - in the field of accessibility, mobility and transport – Towns for Cycles. Given the significant share of environmentally harmful subsidies in these sectors of the economy these coalitions seem to be an important partner in the actions for subsidy reform.

An important new non-governmental initiative was the establishment of the Coalition of Polish ENGOs for the Funds in 2004. The main purpose of the activities of the Coalition is to monitor the manner in which the EU assistance resources are expended and their impact on the natural environment.

In turn, the role of coalitions is to co-ordinate joint actions under promotion and information campaigns. These campaigns serve to widely present and win support for postulates and proposals arising from the studies carried out by experts’ think tanks. In this range, the close cooperation between coalitions and think tanks seems to be of key importance. It seems that the establishment of a coalition for the reform of environmentally harmful subsidies could improve the co-operation between these two groups.

The main environmental non-governmental lobbying group at the level of the European Union is the so-called Green-9, a coalition of 9 European environmental non-governmental organisations. The members of Green-9 include: Birdlife International – European Community Office, Climate Action Network Europe, European Environmental Bureau, European Federation for Transport and Environment, EPHA Environment Network, Friends of the Earth Europe, EC-Unit, International Friends of Nature (IFN) and WWF European Policy Office. The aim of their activities is to mobilise Europeans for reform of the particular policies of the European Union.

In the Green-9 group, the European Environmental Bureau is the most specialised organisation in the range of taxes and subsidies. In Poland, the Institute for Sustainable Development and the Environmental Law Centre are members of the EEB network. Within the framework of international actions related to environmentally harmful subsidies, EEB organises workshops for European environmental organisations and co-ordinates the preparation of joint positions presented to the Institutions of the European Union – the Commission, the Council of the European Union or the .

Lobbying for subsidy reform – the most important political documents

The building of the public support for changing the volume and character of subsidies from the state budget requires reference to the most important government documents developed at national, regional and local levels.

National Development Plan for 2007-2013 With regard to actions for subsidy reform, environmental organisations should, in particular, present their position on the government draft of the National Development Plan for 2007- 2013. At present, public consultations (sectoral and regional) on this document are underway. The later monitoring of the implementation of individual investment projects provided for in NDP 2007-2013 will be extremely important. Given the combination of the resources from the state budget with the EU assistance resources, in a situation where the principles of the grant of state aid are violated, it will also be possible to refer such cases to the EU control institutions.

State budget Debates on the state budget provide a perfect period for promoting the postulates of environmental organisations concerning the green subsidy reform or, more broadly, a green fiscal reform, also covering tax reform in addition to subsidy reform. The presentation of an alternative, green state budget may additionally strengthen the support for green reforms. “Green Budget” campaigns are now conducted in two countries in our region, i.e. the Czech Republic and Hungary. Unfortunately, given e.g. the poor understanding of the intricate economic issues, they still fail to bring the expected public support for their proposals. Therefore, it seems that the actions for the “Green Budget” must be integrated with an economic education campaign at the level of secondary schools, or even those of gymnasiums and primary schools.

Regional and local budgets It seems that, given their greater “proximity”, the actions taken at the level of regions or that of individual local communities should generate more public interest in, and support for, the phase-out of environmentally harmful subsidies. Unfortunately, to date there have been no examples of public campaigns at these levels in European countries. Most often, actions at these levels relate to selected subsidy streams for transport policy, water management etc. In the United States, the “Green Scissors” campaign has already entered these levels, developing State-level reports on the public expenditures which destroy the environment. It would be necessary to combine the campaign for subsidy reform at regional and local levels with the measures against corruption, e.g. the programmes “Transparent Local Government” and “Transparent Poland”, including the important component of co-operation between local governments and non-governmental organisations, aimed, inter alia, at enhancing the involvement of local communities in curbing corruption and improving the transparency of the activities of public institutions.

National Environmental Policy The conduct of lobbying for subsidy reform is also assisted by the provisions of the strategic government document “The National Environmental Policy for 2003 to 2006, with an Outlook for 2007 to 2010”, which provides that “the phase-out of environmentally harmful subsidies should be completed in the period from 2007 to 2010”.

Moreover, the government pledged to create an equal playing field in terms of competition by the full application of the “polluter pays” principle, along with the internalisation of external costs through the development of a programme for the full implementation of the “polluter pays” principle and the establishment of an inter-ministerial team to develop the scope and rules of the calculation of the external costs in all the major sectors: transport, energy, mining and manufacturing. The main task of the team is to prepare and conduct public consultations on the timetable for the internalisation of these costs (e.g. via the introduction of product and deposit charges).

Lobbying at national and EU levels

The fiscal policy still continues to fall within the scope of responsibility of the governments of EU Member States. In the European Union, the proposals for fiscal policy integration have for many years failed to win sufficient support from the national governments and societies of the Member States.

The situation in Poland is very specific – the level of state aid is about 3.5% of GDP, whereas e.g. this level in Germany is only 1%. Such a large share of state aid in GDP and the high level of corruption generate enormous pressures from the industrial interest groups as well as account for the limited effectiveness and efficiency of the actions for the reduction of environmentally harmful subsidies. This means that the actions for subsidy reform need to be planned for many years ahead and need to provide for the involvement of substantial resources (human and financial resources) in the conduct of the campaign.

National government The issues related to subsidies are mainly the responsibility of the Ministry of Finance, whereas the Office for the Protection of Competition and Consumers deals with state aid. However, environmentally harmful subsidies laid down in the National Environmental Policy for 2003 to 2006, with an Outlook for 2007 to 2010, should be considered by an inter- ministerial team, such as e.g. the Council for Sustainable Development. Unfortunately, as pointed out by criticisms of environmental organisations, the position of the Council is greatly limited, since in Poland it is headed by the Minister of the Environment, whereas e.g. in Finland its counterpart is chaired by the Prime Minister. In such a situation, it would be well- advised to consider lobbying measures for the establishment of an inter-ministerial team on environmentally harmful subsidies with a “strong” Ministry (e.g. of Finance or Economy) or to take action to strengthen the position of the Council for Sustainable Development. Certainly, the latter solution would be the better one, as it would strengthen the institutional position of sustainable development in the national social and economic policies.

In addition, at this point, it seems necessary to indicate the role of the Trilateral Commission for Social and Economic Affairs. The members of the Commission include representatives of the national government, employees and employers. The Commission was established in 1994 and its structure seems quite archaic in the context of changes in the government’s strategy for social dialogue, in giving a strongly privileged consultative position to employers and employees. It seems that this Commission should be reformed and transformed into the Commission for Social Dialogue, which would also include academic and non-governmental communities. An example of such institutionalisation of lobbying by different interest groups is the European Economic and Social Committee, which entails a much larger number of stakeholders – social partners.

Parliament In lobbying at Parliament in relation to environmentally harmful subsidies, it is necessary to monitor the work of its Committee on Public Finance, the Committee on Economy and Public Finance, the select committees set up to consider the particular draft Acts and the parliamentary teams. The meetings of the Committees are open and their course is recorded and disclosed in the form of meeting bulletins available on the websites. Because of lobbying- related scandals, for more than a year now meetings of the select committees have also been recorded; unfortunately, probably due to financial constraints, bulletins reporting on the work of select committees are, indeed, rare.

Among the dozen or so parliamentary teams, there is no team which would deal with the issues related to tax or subsidy reform. In contrast, there are fairly large “sectoral” teams: - the Parliamentary Team on the Restructuring of the Energy Sector, - the Parliamentary Team of Foundrymen, - the Parliamentary Team on the Protection and Use of Water Resources.

In September 2003, the Parliamentary Team on the Use of the European Union Funds was established. To date, two plenary meetings of the Team have taken place. Unfortunately, the website of the Team does not provide information on the course of these meetings. It is similar with most of the teams, as their work is not subject to the same rules as applicable to the work of parliamentary Committees.

Parliament has its Bureau of Studies and Expert Analyses, which prepares expert analyses on request from the committee presidiums and MPs. It is very important to provide the library of the Bureau’s experts with publications, analyses and similar documents prepared by environmental organisations. The experience to date indicates that they are often used in preparing parliamentary analyses.

Mass media The mass media play quite an important role in building the public support for the subsidy reform. Due to the public campaigns which have taken place, the mass media devote increasingly large attention to corruption. They are also more and more interested in the expenditures of public resources to sustain state monopolies. In addition, mostly due to Poland’s accession to the European Union, there is a new wave of interest in environmental issues, for which Poland would allocate tens of billions of Euro in the nearest years. Certainly, the growing environmental awareness plays a role, too. All these factors indicate that a professionally prepared media campaign may be an important element to strengthen the lobbying in the scope of environmentally harmful subsidies.

Lobbying in the European Union

European Union budget The largest expenditures from the European Union budget go to agriculture – about 45% of the EU budget – and the structural measures within the framework of the Structural Funds and the Cohesion Fund – about 30% of the expenditures.

The European Commission is responsible for preparing the draft EU budget, which is formally adopted by the Council of the European Union and the European Parliament. With regard to social lobbying, the European Economic and Social Committee plays an important role.

European Commission The Commission prepares the draft budget of the European Union. The individual Commissioners who head the Directorates-General are responsible for the particular components of the budget. Each country has one Commissioner in the EC. Danuta Hübner is responsible for regional policy. It is self-evident from the practice to date that as the budget is developed the different Commissioners often present very varied concepts of how the EU resources should be spent; the publicity of these concepts and their impacts on the environment and sustainable development in the EU are some of the major elements of environmental lobbying campaigns.

European Parliament Environmental organisations conduct lobbying actions addressed to all the political groups in the European Parliament. In the institutional structure of the PE, the key role is played by the Economic and Monetary Committee. It is in this Committee that co-operation can be seen between the Conservatives from the faction of the European People’s Party and the Liberals from the Group of the Alliance of Liberals and Democrats for Europe. In order to ensure better monitoring and assessment of the activities of the particular political groups in the PE, European environmental organisations have opened the EU Vote-Watch portal – http://www.EU-votewatch.org. In its ranking, the Group of in the European Parliament is the first, followed by the Socialist Group and the Group of the Alliance of Liberals and Democrats for Europe. The Group of the European People’s Party, where the Citizens’ Platform and the Polish People’s Party are associated, have received the lowest score among all the political groups.

European Economic and Social Committee The so-called Ecosoc is an instrument designed to institutionalise the lobbying conducted by the different interest groups in the European Union. Ecosoc consists of more than 300 persons, who represent trade unions, employers, agricultural circles, consumers and non- governmental organisations. Ecosoc is responsible for drafting opinions on the proposals for legislation prepared by the European Commission. 21 persons from Poland in Ecosoc also include a representative of Polish environmental organisations from the Institute for Sustainable Development. The strategy for lobbying against environmentally harmful subsidies – the assumptions

In order to ensure a success, the strategy for lobbying against environmentally harmful subsidies should meet several basic assumptions. They are listed below:

1. Replacement of the existing harmful subsidies by support measures which are less damaging to the environment and the public The grant of subsidies by the state is the domain of powerful and strong interest groups, which defend their privileged positions. And, despite the fact that in environmental, social or economic terms the need to abandon subsidies seems self-evident, it is very difficult to convince representatives of the government or Members of Parliament that such action is necessary. Another important argument for the replacement rather than the abandonment of subsidies is that it would allow industry to adapt to the changing conditions. Examples of such change include the reform of the EU Common Agricultural Policy (CAP); specifically, the gradual shift of grants from the so-called first CAP pillar (payments for production) to the second pillar of this policy (rural development), which should, as a result, limit the harmful environmental and social effects of EU agriculture conducted on a commercial scale. A similar trend to change the purposes of subsidies can be seen in EU energy policy where subsidies to conventional energy generation are increasingly replaced by subsidies to programmes for energy efficiency and development.

2. Emphasis on the positive effects of the subsidy phase-out or restructuring Depending on the target group of lobbying measures, the different positive effects of the phase-out or restructuring of environmentally harmful subsidies should be emphasised. In general, these effects can be divided into three groups: • the economic effects – they include e.g. the improved effectiveness of public resource spending, the enhanced competitiveness of the economy and the budget consolidation; • the social effects – e.g. the creation of stable jobs, based on renewable local resources, support for innovation and the reduction of state expenditures contributing to social inequalities; • the environmental effects – this group includes pro-health changes; the improvement of the quality of the air, water or food and the environment; the limitation of the adverse impact of production and consumption on the state of nature; an important argument at the interface between environmental protection and economics is the reduction of the volume of investment expenditures necessary to achieve the EU environmental standards by remedying a problem “at source”, and, thereby, eliminating the costly “end of pipe” methods.

3. Focus on the subsidies which are most harmful for the environment and which must be reformed immediately In the lobbying strategy of environmental organisations, it is not only important to identify environmentally harmful subsidies and to exactly determine their adverse impacts as well as the economic, social and environmental benefits from their restructuring or phase-out. On the basis of these data, it is necessary to focus on the most harmful subsidies and to take intensive action for their fast and effective subsidy phase-out or restructuring. The selection of the most harmful subsidies through consultations with the different actors of public life may, in addition, contribute to increasing the public support for the measures to be taken. 4. Postulate of transparency – access to information The key element of the action for the reform of environmentally harmful subsidies is access to information concerning public finance. Due to the lobbying conducted in recent years, Poland ratified the Aarhus Convention and adopted the Act on Access to Public Information, which significantly enhanced access to information concerning the public institutions. However, in using this information, environmental organisations should “translate” it into campaign materials, which would be interesting to the public and the mass media, thus providing the basis for exerting social and political pressures. In the 1990s, the so-called “List of 80” was a very effective instrument for influencing the worst polluters in Poland. The “List of 80” included the companies with the highest levels of adverse impact on humans and the environment. Due to its public nature and negative message, companies took all measures to limit their harmful impact so as to be deleted from this list. Another positive example is the list of environmentally unsound projects subsidised from the United States federal budget, as prepared by the Friends of the Earth in the United States.

5. Emphasis on the role of public consultations Due to the process of Poland’s accession to the European Union, too, recent years saw a change in the approach to the issue of public participation in decision-making processes. As a result of the principle of partnership, non-governmental organisations are included in public consultations. Still, there is no uniform government strategy for public consultations which would lay down the rules of conduct of public consultations and the budget resources for their implementation. What also continues to persist is the perception of public consultations as additional costs (time and money) with a relatively poor understanding of its benefits (better decisions, higher public acceptance and involvement). Until now, in addition to limited human and financial resources, another important barrier was the huge number of government-drafted strategies, policies, plans or programmes, which were very often abandoned with the change of particular ministers or the entire government. It seems that Poland’s entry into the EU and the combination of the public resources from the state budget with EU assistance funds (e.g. under the National Development Plan for 2007-2013) will help non-governmental organisations take action to gradually order this situation.

6. Neutral effect of the subsidy reform on the budget Given the very critical evaluation of the effectiveness of public spending in Poland, a major argument which would enhance the public support for the reform of subsidy-granting policies is to emphasise that taxes and other fiscal burdens would not grow as a result of the reform. In addition, the public support would grow if it were clear that, as a result of the reform, the public money would be spent for purposes which the public would be more willing to accept, such as the development of schools and science, the provision of equal development opportunities for marginalised groups, the improvement of the quality of life or the development of modern and cleaner technologies. The implementation of the principle of neutrality of the proposed subsidy reform on the budget would be assisted by an annual analysis of the state budget and the presentation of its alternative, green version, covering e.g. the subsidy reform.

7. Presentation of the reform process in a dynamic manner with specific targets In order to gain greater public acceptance for the reform, it is necessary to present the government strategy for the gradual and targeted subsidy phase-out (e.g. the reduction of subsidies by 5% a year until 2002), with the simultaneous provision of a programme for the use of the public resources released. This would allow companies to plan and implement adjustment programmes and to use the new subsidies for job creation purposes. 8. Co-operation and the building of coalitions of the “winning” economic sectors, public institutions and social groups In order to ensure a success in the restructuring or phase-out of environmentally harmful subsidies, it is extremely important to ensure co-operation among representatives of the groups which may enjoy benefits from the subsidy reform. They include e.g.: • trade unions – both in the modern, environmentally sound industries, mostly with focus on the winning a market, and in the “old” economy, where the main argument is the improved working conditions; • non-governmental organisations, including e.g.; o consumer organisations – lower prices or better quality of products/services, o pro-health organisations – improved health or quality of life, o environmental organisations – reduction of the environmental pressures of consumption or production, • organisations associating employers and producers – the improved conditions for competition, support for innovation in technology and management; • Members of Parliament – interested in the positive aspects of subsidy policy reform (e.g. the Green Scissors Campaign brought about the establishment of a group with the same name in the United States Congress).

International co-operation is also important; it is particularly important to organise contacts of the same groups in the country with their counterparts abroad: trade unionists with trade unionists, Members of Parliament with Members of Parliament etc. allowing them to share their experiences from their actions conducted against environmentally harmful subsidies. The European Commission is another important ally at the international level in actions for the phase-out of environmentally harmful subsidies. One of the basic tasks of the EC is to ensure consistency between the allocated state aid and the EU legislation, and all the complaints claiming related inconsistency which have been submitted to the EC must be carefully considered.

It seems that in order to win greater support for the subsidy reform it would be necessary to establish a coalition of non-governmental organisations from the different “sectors” mentioned above.

9. Neutrality or the limitation of social stratification The last 15 years long period of social and economic reforms in Poland have increased social stratification. This gives rise to growing public objections. The subsidy reform must not strengthen this process; on the contrary, it would be well-advised to ensure that it is one of the instruments designed to diminish the differences among the incomes of individual social and vocational groups, thus providing an additional argument for the public support for the implementation of the subsidy reform. In discussion on the subsidy reform, it is also necessary to point out the instruments for limiting the adverse effects of such measures on low-income social groups.

Instruments for the implementation of the lobbying strategy

Non-governmental organisations have at their disposal an enormous variety of lobbying instruments and the decision to apply them should depend on the resources in place, the target group, the proposed time for the action etc. The most important instruments, which can be used in lobbying for the phase-out or restructuring of environmentally harmful subsidies, are enumerated below.

An information and promotion campaign is the basic element of the action strategy. The aim of such a strategy is to ensure that the postulates of an organisation reach the public to widest possible extent and that people are convinced of the need to take the actions promoted. Subsidy-related campaigns are mainly conducted in Europe and Northern America. The most extensive campaigns include the Green Scissors campaign in the United States, which boasts of having brought about the deletion of subsidies worth 16 billion USD from the federal budget the State budgets. The Green Scissors uses the standard elements of such campaigns, which include: a website, an annual publication pointing out the most harmful subsidies, articles (including those in the economic press), e-mailing, e-cards, training courses for non- governmental organisations and expert analyses. An element which makes this campaign different from others is that the Green Scissors brought about the establishment of a group with the same name in the United States Congress – this non-partisan group is an important partner in the implementation of the objectives of this campaign.

At present, in Poland e-mailing and e-cards enjoy their particularly dynamic growth; this method consists in sending e-mails and e-cards from websites to the institutions responsible for specific decisions. This method is very cost effective and, at the same time, successful. Its efficiency is indicated by the fact that more and more often Members of Parliament refer in their legislative work to the “thousands of e-mails” which they have received.

The campaigns for the subsidy reform in the Czech Republic and Hungary also use another important lobbying instrument: an independent analysis of the state budget and an alternative proposal for a “green” state budget. It is presented every year and provides an excellent tool for strengthening the public debate on the manner in which public resources (including subsidies) should be expended.

Important tools of the lobbying strategy also include enquiries by Members of Parliament or inspections carried out by the supreme control authorities; in Poland, this is the Highest Control Chamber.

Given the aforementioned low level of economic knowledge, also among non-governmental organisations, economic training for non-governmental organisations is a strategic factor in building the public support for the subsidy reform.

Poland’s accession to the European Union expanded the rights to appeal and submit complaints against national public institutions to the EU institutions. In relation to the use of the EU assistance within the Structural Funds and the Cohesion Fund, the most relevant institutions include the European Commission and the political groups in the European Parliament, which, just as at the national level, may request the Commission to clarify the uses of public funds.

At European Union level, a very valuable instrument are comparative analyses concerning all the EU Member States which are presented in the annual reports of the European Environment Agency; such analyses should take into account the levels of subsidies to the particular sectors of the economy and the estimated external costs. Examples of initiatives taken by non-governmental organisations in relation to the restructuring or phase-out of environmentally harmful subsidies:

The Green Scissors Campaign – Friends of the Earth, United States – www.greenscissors.org The Campaign for Environmental Fiscal Reform – European Environmental Bureau, Brussels – www.eeb.org The Campaign Green Budget Germany - http://www.eco-tax.info The Platform for Environmental Fiscal Reform in the Czech Republic – www.ekoreforma.cz