PRIORITIES FOR ENVIRONMENTAL EXPENDITURES IN INDUSTRY EASTERN EUROPE AND THE FORMER SOVIET UNION Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized MARK AMBLER AND JOHN MARROW WITH CONTRIBUTIONS BY WYNNE JON ES, GORDON HUGHES, DAVID HANRAHAN, AND MAGDA LOVEI Public Disclosure Authorized A REPORT FOR THE ENVIRONMENTAL ACTION PROGRAMME FOR CENTRAL AND EASTERN EUROPE PRIORITIES FOR ENVIRONMENTAL EXPENDITURES IN INDUSTRY EASTERN EUROPE AND THE FORMER SOVIET UNION MARK AMBLER AND JOHN MARROW WITH CONTRIBUTION FROM WYNNE JONES, GORDON HUGHES, DAVID HANRAHAN, AND MAGDA LOVEI A REPORT FOR THE ENVIRONMENTAL ACTION PROGRAMME FOR CENTRAL AND EASTERN EUROPE THE WORLDBANEC * WASHINGTON,D.C. ORGAMSATIONFOR ECONOMICCO-OPERATION AND DEVELOPMENT* PARIS ' IV Copyright © 1998 The Intemational Bank for Reconstruction and Development/THEWORLD BANK 1818 H Street, N.W. Washington, D.C. 20433,U.S.A. All rights reserved Manufactured in the United States of America First printing May 1998. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Di- rectors or the coiuntriesthey represent. The World Bank does not guarantee the accuracy of the data included in this publi- cation and accepts no responsibility whatsoever for any consequence of their use. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal statLs of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the Office of the Publisher at the address shown in the copyright notice above. The World Bank encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. Permission to copy portions for classroom use is granted through the Copyright Clearance Center, Inc., Suite 910,222 Rosewood Drive, Danvers, Massachusetts 01923,U.S.A. Libraryof Congress Cataloging-in-PublicationData Ambler, Mark. Priorities for environmental expenditures in industry: Eastem Europe and the former Soviet Union / Mark Ambler and John Marrow, with contributions by Wynne Jones . et al.l. p. cm ISBN 0-8213-4086-7 1. Environmental protection-Europe, Eastern-Cost effectiveness. 2. Environmental policy-Europe, Eastern-Cost effectiveness. 3. Environmental protection-Former Soviet Republics-Cost effectiveness. 4. Environmental policy-Europe, Eastern-Costs. I. Marrow, John. II. Jones, Wyrune III. Environmental Action Program for Central and Eastem Europe. IV. Title. HC244.Z9E513 1997 363.7'00947-dc2l 97-35148 CIP ii Contents Preface ix Acronyms xi Executive Summary xiii Chapter 1 Approach 1 The EnvironmentalAction Programme I Setting environmental priorities 1 C:hapter2 Sector Studies 5 Inventory 5 Environmental audits 5 Technicalreviews 6 Economicprofiles 6 Determinationof expenditure priorities 7 Chapter 3 Analytic Framework 9 Overallapproach 9 Scope 9 Conceptualframework 10 Measuring human health gains 11 Structural and policy changes 12 Chapter 4 Results of Sector Studies 13 Overallfindings 13 Sectorfindings 17 Next steps 18 Chapter 5 Implementing Priorities 19 Economicand environmental management background 19 Approach to setting environmental expenditure priorities 19 Financing mechanisms 21 Institutional issues 21 Longer-termpolicy development 22 iii iv Priorities for Environmental Expenditures in Industry Annexes A Inventoxy of Major Pollution Sources 23 B Major Industrial Plants Located in Pollution "Hot Spots" 57 C Power and District Heating 68 Ostrava case study 75 Riga case study 79 D Refineries and Petrochemicals 81 Plock case study 86 Burgas case study 92 E Inorganic Chemicals 117 Chimcomplexcase study 124 Azot Grodno case study 129 Kaustik case study 134 Borsod Chem case study 140 F Organic Chemicals 147 Carom casestudy 154 G Iron and Steel 160 Kosicecase study 170 Krivoi Rog case study 177 H Non-Ferrous Metals 184 Ziar case study 196 Plovdiv case study 200 CopsaMica case study 209 I Pulp and Paper 220 Slokacase study 230 J Small Boilers and Households 247 Boxes 1 The diversity of pollution problems and remedies 16 Tables 1 Capital expenditure estimates for priority measures at selected plants xi 2 Products covered in sector reviews 3 3 Rapidl environmental audit sites 6 4 Priorities for pollution control within the sectors studied 14 5 Costs of controlling emissions from the power and district heating sectors 15 6 Costs of controlling particulate emissions in various sectors 16 7 Capital expenditure estimates for priority measures at selected plants in CEE countries 18 Annex Figures G.1 Airborne emissions -Krivoi Rog Steel Works, Ukraine 1992 180 G.2 Airborne emissions -Krivoi Rog Steel Works, Ukraine 1992 181 G.3 Process comparisons for bloom/slab products 183 H.3.1 Sketch map of area surrounding Copsa Mica 210 H.3.2 Simplified process flowsheet 212 1.1.1 Process flow schematic -major emissions 233 I.1.2 Process schematic -wastewater treatment plant 236 Contents v Annex Tables A.1 Thermal power and heat plants in Central and Eastern Europe 25 A.2 Iron and steel plants in Central and Eastern Europe 37 A.3 Pulp mills (including integrated mills) in Central and Eastern Europe 40 A.4 Petroleum refining and petrochemical plants in Central and Eastern Europe 44 A.5 Major inorganic chemical plants in Central and Eastern Europe 47 A.6 Major organic chemical plants in Central and Eastern Europe 51 A.7 Non-ferrous metal plants in Central and Eastern Europe 54 B.1 Major industrial plants located in pollution "hot spots" 58 C.1 Power generation capacity in CEE countries at the end of 1991 69 C.2 Electricity production in CEE countries in 1990 69 C.3 Share of electricity production from thermal plants by type of fuel in 1990 70 C.4 Consumption of coal and brown coal/lignite in thermal power plants in 1990 70 C.5 Pattern of electricity supply in CEE countries in 1990 70 C.6 Typical emission levels from a 500 MWe coal-fired power plant 71 C.7 Summary of pollution control costs of typical plants - power and district heating sectors 73 C.8 Overall environmental expenditure estimates - power and district heating 74 D.1 Refining and petrochemicals capacity 81 D.2 Refinery production and petrochemicals output, 1988 82 D.3 Typical pollution problems in the refining and petrochemicals sector 82 D.4 Summary of costs of pollution control -refining and commodity petrochemicals 83 D.5 Competitive strengths and weaknesses 84 D.6 Overall environmental expenditure estimates - refineries and petrochemicals 85 D.1.1 Refining process plants 86 D.1.2 Petrochemical process plant 87 D.1.3 Emissions of sulfur dioxide in 1991 88 D.1.4 Emissions of hydrocarbons in 1991 88 D.1.5 Average treated wastewater 89 D.1.6 Indicative environmental expenditure 90 D.2.1 Overall material balance 93 D.2.2 History of Neftochim production units 94 D.2.3 Crude throughput 96 D.2.4 Air emissions 102 D.2.5 Sulfur balance 102 D.2.6 WWTP concentrations 105 D.2.7 Sea water pollutants, 1991 105 D.2.8 Neftochim's program for protection of the environment for the period 1992-96 111 D.2.9 USAID 1991 program for protection of the environment 115 D.2.10 Overall cost breakdown 109 E.1 Inorganic chemicals capacity 118 E.2 Production of inorganic chemicals, 1989 118 E.3 Production of fertilizers, 1989 118 E.4 Typical pollution problems in the inorganic chemical sector 119 E.5 Summary of costs of pollution control at typical plants -inorganic chemicals 121 E.6 Competitive strengths and weaknesses of the inorganics sector 122 vi Priorities for Environmental Expenditures in Industry E.7 Overall environmental expenditure estimates for the inorganics sector 123 E.1.1 Principal production units 124 E.1.2 Local communities 125 E.1.3 Gaseous emissions in the workplace 125 E.1.4 Abatement equipment used for gaseous emissions 126 E.1.5 Sources and destinations of wastes 127 E.1.6 Chimcomplex environmental investment plan, 1992-95 128 E.2.1 Principal emissions from Azot factory 131 E.2.2 Air emissions, 1991 132 E.2.3 VOC emissions, 1991 132 E.2.4 Effluent water after treatment 132 E.2.5 Indicative environmental expenditure 133 E.3.1 Plant capacities 135 E.3.2 Principal emissions 136 E.3.3 Emissions of atmospheric pollutants, 1992 137 E.3.4 Water characteristics, December 1992 137 E.3.5 Solid wastes 138 E.3.6 Indicative environmental expenditure 139 E.4.1 Production facilities at Borsod Chem 144 F.1 Organic chemicals capacity 147 F.2 Organic chemical production, 1988 148 F.3 Typical pollution problems in the bulk organic sector 149 F.4 Summary of costs of pollution control -organic materials 151 F.5 Competitive strengths and weaknesses of organic chemicals sector 152 F.6 Overall environmental expenditure estimates for the organic chemicals sector 153 F.1.1 Main processes 155 F.1.2 Atmospheric pollutants-gaseous 156 F.1.3 Gaseous emissions in the workplace 157 F.1.4 Wastewater quality 158 F.1.5 Sources and destinations of wastes 159 F.1.6 Environmental investments 159 G.1 Summary of capacity and production in the iron and steel sector 161 G.2 Typical particulate emissions in the iron and steel sector 163 G.3 Summary of particulate emissions control costs-iron and steel 164 G.4 Com]petitive strengths and weaknesses of the iron and