Tartu, Pulp Mills and Water Quality

Over the past year, the people of Tartu, Estonia (where I happily live) have been grappling with a serious issue. It is not an issue that we brought on ourselves. It is more an issue that has been rudely imposed on us.

That sounds weird, and it is. But it gets more weird when you understand the story behind it.

The issue has to do with a proposed PPP (public, private partnership). On the private side, a group from the “forest industry” decided it would be a great idea to build a massive pulp mill upriver from Tartu. I will be calling these guys the “forest dudes”. The forest dudes put together a deal with the Estonian government to get the approvals for the project as well as a long term guaranteed  price for timber from public land to pulp.  You should know that PPP’s happen a lot in Europe, and have been criticized as a source of corruption.

This is not the first pulp mill to be built on the planet, so there are a few tidbits of information worth understanding before we get into the Tartu story. Pulp mills pollute the air and water. We know that. And that may be why you don’t see a lot of new pulp mills being built these days near cities in Scandinavia. There are old ones, but no one is seriously thinking of plopping a big pulp mill next to Stockholm or Helsinki or Copenhagen.  And the old ones are smelly, polluting messes. This is clear.

Not only that, but pulp mills use a resource that we are beginning to see as strategic – forests. Hundreds of years ago, deforestation was not considered an issue. But these days, we are more and more aware of the problems that deforestation causes. You can find articles in the media that raise the alarm about deforestation in Europe. And btw, Estonia is one of the member states that is mentioned as part of the problem. Because building a big pulp mill provides an incentive to cut down more trees, indeed lots and lots of trees, you might intuitively feel that it is not a great idea. And while we are assured that the pulp mill would only use the tops of trees, who will be policing that? Who actually believes that?

So yes, there are reasons to think that a proposal to build a massive pulp mill might be problematic. But set those concerns aside. Here comes the story!

Last year,the Estonian government started to fast track the forest dude project to get the big pulp mill built upriver from Tartu on the Emajõgi River (translated “mother” river). To get this approved quickly, the government changed the state planning law so that the pulp mill would be considered a “strategic” project for the country. Like an airport or defense facility.

That is a first for me. Is a pulp mill really like an airport?

Let’s set that question aside for a moment. You might think that if such a project was so important, that the government would assure itself that it has a firm foundation. Errr … in this case, not so. It turns out that the government did not look into the finances, or business plan,  or technologies that would be employed by the forest dudes in this project. Hmmm … that does make one wonder.

The forest dudes were coy about this. They initially said that they would put up the billion or so that is needed to get the project built from their own pockets.  Who does that? In fact, no one does. And not surprisingly, it came out that the forest dudes were being less than fully open. In fact, they plan to use bank financing from a consortium. From where? Errr … we don’t know, and the forest dudes are not talking. The rumor is that Chinese banks are  involved, though the details are murky. Chinese banks in a consortium financing a  highly important strategic project?  How secure would that be? And why don’t we know for sure about the financing?

And what about the business plan? We are told that this is confidential.  So a strategic state asset will be operated by forest dudes pursuant to a secret plan that could possibly end up in  bankruptcy to be taken over by Chinese banks? Apparently so. And short of that, what happens if  the forest dudes want to sell? Who controls who takes over?  Good questions. Again, for a highly important strategic project, these answers should be clear. Not so here.

And what tech will be used? The latest new stuff? The best? Heavens! That stuff would pollute less, but is expensive. The forest dudes have not committed to any particular technology so far.  Why not? We don’t know. And our inability to mail this down makes it harder to say how the pulp mill will affect the environment. Does that matter? Apparently ti did not at first, but does so now. That will become clear in a moment.

Not surprisingly, the folks who live in Tartu “became concerned”. That is polite talk for saying we are royally pissed off. We thought we lived in a  university town that had potential for a high tech future. And given that the Estonian national strategy for its future is to embrace high tech, we thought this was pretty important. Nope. We were to become residents of a smelly industrial town. And no one consulted us whether we wanted to live with this particular future. How would you feel?

And this is not just a matter for residents of Tartu. Estonians all over the country started waking up to the idea that something fishy is going on.

So you might expect that the democratically elected government to step back and think about this. After some grumbling, it did. Sort of. In fact, it did not immediately step back when the City of Tartu came out publicly to oppose the plan.  Instead, the government decided to commission an environmental study

Errr… isn’t it a bit late for that?  Shouldn’t the assessment have been done before the government changed the law to back the project? And if the environment is suddenly so important, why hasn’t the government partnered with top environmental experts in Estonia to use the data we already have about the effects the project will have?  In fact, those very experts complain that to the contrary, attempts were made to stifle their opinions.  How odd!

And this takes me to the most interesting part of the story. As it turns out, some years ago, the European Union enacted a law called the Water Framework Directive. That directive sets forth the ambitious goal of developing European wide standards for water quality. A unified and comprehensive approach!  As a member state, Estonia must comply with the water framework directive.  What a great idea! Clean water throughout Europe! Clean water in Estonia! Clean water for Tartu!

Before getting into how the water framework directive plays a role in this story, we should be clear. You cannot develop a unified European water quality standard if you cave in whenever a member state complains that raising water quality is too tough and submits that substandard water quality should be accepted as permanently ok. You might extend the amount of time a member state has to comply, but you cannot just give in on the standards to accommodate one member state and expect the others not to notice. Give in once, and you will have to give in again and again. That is why the Commission is not likely to accept member states asking if they can lower water quality standards for a given body of water. It would be bad policy. One might even say that it would be stupid. As you will see, this is an important point.

Back to the story.

As part of its compliance efforts with the directive, Estonia designated to the Commission that the water quality in the Emajõgi is below standard.  Nicht gut! Estonia is obligated to raise the quality of water in the river within a fixed time frame. Hmmm … yes, that is the same water that will be used by the pulp mill … that is highly likely to lower water quality. Ooops!

One does not need to be a genius to see a contradiction here.

And it gets worse. A few years ago, the European Court of Justice (ECJ); ruled in the Weser case, that member states may not lower the quality of water while they are supposed to be raising the quality of water. That makes sense, right?  In other words, a member state cannot argue that because the deadlines for meeting water standards have not arrived yet, it can do what it wants for the time being. Nope! And this aspect of the directive is clear and important enough that citizens can go to court to block these types of dirty deals. It might be the basis for claims against the government and possibly against the forest dudes themselves!

So the Emajõgi pulp mill project should be dead in the water, right? Please forgive the pun!

Not so fast. We are told that the Estonian government may ask for a derogation (an exception) from the water framework directive. Ironically, the government apparently is keeping this option open at a time when it knows there would be opposition to it, that it is unlikely to be taken seriously by the Commission, and at the same time that the Commission is complaining that the Estonian government is not doing very well in developing a dialog with the Estonian people about water quality management — something required by the water framework directive. I wonder why anyone would think that this would be a problem?

Errr … just to be clear. Remember what I wrote above about lowering standards for one member state and the slim chance of others not noticing? While much has been made about the potential Estonian request for an exception, no one has brought out the negative effects granting such a request would have on European policy. And no one has said that the Commission would welcome the request or say “What a great idea!” It is, to be blunt, a terrible idea that will not likely fly in Brussels. Lastly, even if the Commission wanted to give a derogation, that would have to be — by law — temporary. No more than 3 years. Errr … in other words, this argument is a non-starter.

So here we are. As I mentioned, the Estonian government is now attempting to do an environmental assessment whether the project could go forward without lowering water quality. Any guess how that will come out? And here is the weird thing — Estonia’s obligation pursuant to the water framework directive is to improve the water quality of the Emajõgi. Even in the unlikely event that a way could be found to build a massive pulp mill that maintains water quality at current levels, that is not enough. The operation of the pulp mill must also not block ongoing improvement. And this basic idea should have been clear to policy makers from the start.

Call me crazy, but it would appear that this whole process would blow up sooner or later. Either the project would be blocked, or if it goes forward, and makes a mess of the river, would be the subject of litigation and potentially state liability. Whatever history writes about this, it is not likely that it will be held up as an example of good governance.

Stay tuned on this one. We are not at the end of the story yet.

A quick follow up – I am told that recent articles in the Estonian press reflect a certain grumpiness about opposition to the project. Maybe the project now will be moved to Latvia!!! Errr …  the articles apparently do not mention that Latvia is also bound by the same EU water framework directive. Even if the Latvians are tempted to build the big pulp mill on one of their rivers, they will face the same  problem. Unless the forest dudes can show that pulp mill operation will not lower water quality or block raising quality as required, the project violates European law and Latvia will be on the hot seat. Let’s hope that this issue is made clear from the outset rather than after the forest dudes get their advocates, lobbyists and PR machine working there.