Compensation: Policy and Practice across Europe · obligation, thus greatly complicating their broader compensation and engagement activities. ... negotiates a framework contract

Compensation Briefing Document

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Compensation: Pol icy and Practice across Europe

I . Purpose of the work After ongoing discussions with several partner organisations, RGI initiated a work program relating to the topic of compensation. This discussion paper presents the initial research results from the programs study phase, including results from the questionnaires that were distributed to RGI members in December of 2014. The purpose of this document is to bring all groups to a similar level of understanding when discussing issues of what is broadly discussed under the term compensation, and to supply a platform from which both current practice and new ideas can be debated. After further discussion with partner organisations1, it was decided that the initial research document would address three aspects of compensation. These included;

o To clarify the difference between various “compensatory” practices (Landowners, Environmental, Community Gain etc.), and how these are legislated for between different countries.

o To share experiences of compensation practices that have been or are being implemented by members.

o To have an informed and open discussion on the role of “community” compensation/gain. Discussing its methods/desirability and addressing the role of legislators, both in a national and a European context.

There was a strong desire from RGI partners for case study examples that demonstrate the current activities of other European TSOs. Such examples have therefore been incorporated as an illustrative part of this discussion paper. As community and societal engagement has grown over the years, with new groups becoming engaged with the routing and permitting processes, TSOs often face a complex relationship with the residents and communities located in the vicinity of planned grid developments. In the past, compensation amounts were based on the recognized ownership of land along the route, with a mixture of formula and negotiation being used to set amounts that would be paid to the owner. Although this is still the case, the industry is also seeing other more broadly defined methods of “compensation” being used, with money going to local government, community groups or private individuals for a wide range of purposes. This new form of compensation is additional to money paid to landowners, and goes beyond money for any environmental mitigation work that may be stipulated in the environmental permitting process. Please see also the section ‘Defining community compensation/gain’ under chapter II with respect to terminology. Three reasons can be given for this shift; firstly, the growth in smaller more geographically dispersed generation facilities (especially onshore wind parks) have increased the number of people and communities being impacted by grid development projects. Secondly, community awareness and engagement with relationship to energy and environmental issues has increased markedly over the last 10-20 years. Thirdly, government policy has largely failed to keep apace with these

1 Discussions of the BESTGRID advisory board meeting, involving representatives from: Terna, RTE, REE, Eirgrid, REE, Italian Ministry of Environment, The Ministry for the Environment Lower Saxony, and the EU Commission among others.


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changing realities, thus leaving TSOs to define for themselves the scope of what compensation means. This paper is structured as followed: I I . How is compensat ion def ined and leg is lated for? This section will separate and define the different types of compensation, in order to isolate the form of compensation that is of most interest to member groups, with a section on terminology of the wording compensation vs. community gain schemes. It will also provide a brief description of the legislative environment relating to these different forms of compensation. I I I . Member exper iences This section will provide several case study examples of compensation practices that members have conducted. This will give members an idea of some ongoing practices that they may not be currently aware of, and open up a discussion on the positives and negatives of such approaches. IV . Conclus ions and next steps This section will supply a brief analysis of the challenges and open questions that exist in the field of community compensation/gain. Here questions relating to:

o Should/Can community compensation/gain measures solve consent issues o The role of the government and regulators o Ideas on how to continue the discussion


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I I . How is Compensation def ined and legis lated for? Through answers provided in the questionnaire and through further discussions, it was found that compensation could be split into three general categories. Defining and separating the different kinds of compensation is important, as it allows for a focused discussion on those aspects that members find the most interesting/challenging, whilst ensuring that all those in the discussion are talking about the same type of compensation. Below is a table that graphically demonstrates the differing definitions of compensation;

Def in ing community compensat ion/gain There has been much discussion in consultations for this document concerning how to define “community compensation/gain”. The reason for using both the words “compensation” and “gain” is that several commentators stated that, as you cannot be said to be compensating any form of tangible loss, then the word compensation alone is misleading. This links in to many TSOs concerns that declaring such payments or projects as “compensation” may open questions of legal obligation, thus greatly complicating their broader compensation and engagement activities. This document recognizes that, in English especially, the implication of the word compensation can be misleading. Many actors feel that payments to communities should be defined as a “benefit of hosting” such infrastructure, where any project or money spent in the community relates to spreading benefit (a “gain”) rather than compensating loss. This contention is recognized and has thus lead to the use of the wording “community compensation/gain”. When working across several countries, the differentiation between these concepts shifts by the language used, with “compensation” being widely understood by non-native English speakers. This topic of wording and its relationship to legal obligation and public perception will be a topic of future discussions in the mini-workshops to be held on this topic in the future.

Land Owners

Impact of land

Loss of income

Disruption

Environment

Habitat construction

"Eco-‐credits"

EIA stipulated measures

Community

Money to local municipality/Non Landowing individuals Projects of

community or mutual beneHit

Offerings and incentives


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Compensation for Land Owners For land owners (including those whose business is directly impacted by the development) there are often clear rules and entitlements that are defined legally, most often through a state or regional appropriation body. It was noted that many members were broadly satisfied with their current compensation activities for landowners, and possess standardized internal processes and formulae to assess, offer and negotiate on landowner compensation. Compensation for landowners usually take one of the following three forms:

• the right to use the land is granted along with the permits, and the compensation levels are determined by law;

• the right to use the land is granted along with the permits, and compensation levels are agreed individually between project developer and landowner;

• a private agreement is reached between project developer and landowner about the right to use the land and the compensation levels.

If a private agreement between the project developer and landowner subsequently breaks down, a court decision may establish the right to use the land and/or set the level of compensation.

It should be noted that, as of today, most TSOs keep their set formulas for calculating compensation as confidential. This means that it is not easy to assess the particulars of landowner compensation or present fully instructive case studies. Although compensation for landowners can be a challenging process, all respondents in both categories noted the existence of a relevant appropriation body, which is a public body that monitors and arbitrates on compensation practices, sets limits and handles complaints. Below is a table briefly outlining the legislatory requirements in three EU countries:

Country (Legislatory Reference)

Details

Germany Parameters set by the Electricity Network Charges Ordinance

Clear rules exist as to the methodology for calculating acceptable payments for landowners. This is followed by a period of negotiation (often a farmer´s association negotiates a framework contract with the developer on behalf of its members) in which a private law contract is agreed upon. If a contract is failed to be agreed upon, then the landowner can be partially expropriated at a lower rate.


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Chal lenges Some often expressed challenges of Land owner compensation include;

• How should the difference between those peoples land where the pylons are placed and those whose land is passed over by lines be managed.

• Several TSOs expressed their concern at compensatory inflation and the collective bargaining system of the unions, leading to increasing amounts demanded by the unions on behalf of their members. How can compensation for land be understood and trusted by stakeholders when the mechanisms for deciding on amounts are largely confidential.

Spain Act of Obligatory Expropriation, from 1954 (Ley de Expropiación Forzosa de 1954), the regulatory act of 1957 (RD 1957), and the new Refunded Land Act from 20th of June 2008

Administered though provincial government departments, with the final decision going to the provincial Tribunals of Expropriation (Jurado Provincial de Expropiación), with expropriation being the only process regulated within the law. Developers are free to reach individual agreements with landowners and pay them as necessary. Municipalities’ properties affected by grid installations are compensated as any other landowner.

UK Land Compensation Act of 1973

Easement agreements are made between the landowner and the developer after obtaining a Development Consent Order from the Planning Inspectorate. Payments are calculated by the developers internal payment schedules with some level of negotiation. If agreement is not reached, land can be expropriated with a lower rate of compensation legally required under the Planning and Compulsory Purchase Act of 2004. All decisions on compulsory purchase are taken by the Land Chamber Tribunal

I re land Electricity (Supply) Act, 1927 as amended. Acquisition of Land (Assessment of Compensation) Act, 1919

Prior to construction, wayleave notices are served on all landowners and occupiers. New transmission lines are constructed subject to the landowner’s entitlement to be paid compensation. If compensation cannot be agreed landowners can refer the issue of compensation to statutory arbitration under the provisions of the Acquisition of Land (Assessment of Compensation) Act, 1919.


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Environmental compensation Compensation for the environment is seen in this document as a distinct planning and permitting issue. Seated within the EIA process of a country, different guidelines are given to the extent to which impacted environments (usually animal habitats) need to be compensated for. This usually means the receptor (the habitat) is given a value, with reconstruction of this habitat conducted in a different location (working under the principle of no net loss). To avoid confusion, we have placed the environmental legislation section in Annex I of this document, as we believe it is an aspect of compensatory practice that is important to understand, but not directly applicable to community compensation/gain measures. Community compensation/Community gain schemes Community compensation/gain was found by the members to be the most interesting and contentious aspect of compensation activities. This is because it is considered a poorly defined method of compensation and comes attached with certain ethical challenges and organizational risks. Community compensation/gain can be grouped under the following headings:

• To local authorities – This was the most common community compensation/gain method found and is defined by developer contributions to the local authority for either specified or un-specified works.

• Direct to stakeholder - Money paid directly to people living close to the project that own no land and who have no entitlement to compensation but may feel affected by the development due to its proximity

From the answers to the Questionnaire, many recipients operated in legislatory environments that gave them the opportunity to compensate the local authority/local people, while in others no provision was made for such a system of payment. Legislation for community compensation/gain was found to be more vague and poorly defined that for the other types of compensation. National authorities delegate a large amount of responsibility to the Local Authority, allowing them to set conditions on development that involve community payments. These categorisations are not mutually exclusive, in that many compensation mechanisms incorporate a mixture of the above. What is common amongst them is the idea that the recipients (villages, individuals or local authorities) do not suffer what would be considered a “direct impact”. Community compensation/gain can also be classified as environmental in nature and incorporated into the EIA process. But again, the distinction is that there is no original identifiable degradation or loss, it is based on a more general idea of the communities “bill” for hosting and is in a sense a kind of goodwill measure. Below is a table containing some of the guidelines several European countries are using to direct community compensation/gain activities:


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Details

Germany § 5 Abs. 4 Stromnetzentgeltverordnung, StromNEV

Municipalities that are directly affected by the grid expansion are able to receive compensation payments from the TSO that are determined in the Electricity Network Charges Ordinance (Stromnetzentgeltverordnung or StromNEV, §5(4)).

Based on this regulation, 50Hertz offers a compensation to municipalities directly affected by the route of the line. The exact amount paid is based on objective criteria and is bounded by a “model agreement”. Decisive factors are the number and the transfer capacities of the installed electrical circuits. An affected municipality can obtain up to 40,000 �€ in compensation per kilometer of overhead line. The money is paid after successful commission of the line. This is a voluntary system enacted by the TSO.

Spain N/A

There is no legal obligation for community compensation/gain since the “Law 54/1997” was repealed by the new electricity “Law 24/2013”. It is often policy for the TSOs in Spain to give to the municipality on a voluntary basis as part of their corporate social activities. Projects have included public parks, sporting clubs, social housing etc.

I ta ly Legislative act 239/2004

Regions and Local Authorities have the right to stipulate agreements with the TSO in order to request compensation measures. Italian TSOs sign agreements with Regions, Provinces and Municipalities identifying actions of public interest to be realized within the boundaries of that territory and on public soil, e.g. street lights, pedestrian/cycling paths, restoration of public schools or cultural/artistic heritages, municipality buildings, parks, play-grounds.

UK N/A

UK Legislation does not provide for any form of municipal or community compensation. All compensation is related to a loss of value of the property, if this cannot be demonstrated then compensation is not required. Payments to the municipality are only applicable if the development will place a strain on municipal resources, e.g. New housings impact on Schools, Roads etc. This is usually not applicable to Grid infrastructure.

France

French legislation enables local stakeholder committees to be set up by the relevant Préfet (local leader), to determine the scope and beneficiaries of the compensation measures, the Préfet can establish different committees for each topic and chooses its participants according to the themes. The TSO will then negotiate with these committee groups and the local authorities as to appropriate compensation measures to be conducted


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Chal lenges Some often-expressed challenges of community/gain compensation include;

• It is poorly defined by legislation and leads to a “slippery slope” • Measures that were undertaken were poorly designed, targeted or advertised • Measures were solely viewed from a “tree for a tree” perspective without looking for

further benefits for the community that could be drawn from the measure at little or no additional costs.

• It may not essentially solve the problems of acceptance for TSOs as it is often seen as bribery.

• Communities that suffer an “indirect” impact may not “deserve” compensation, as these amounts are funded by the ratepayers.

• Communities can miss out on the opportunity to get something beneficial from compensation because they perceive it as giving-in to a project.

I re land Strategic Importance of Transmission and Other Energy Infrastructure 2012

The 2012 Governments Policy Statement on the “Strategic Importance of Transmission and Other Energy Infrastructure“, underlined the appropriateness of incorporating community gain considerations into major infrastructure projects. This gave companies working in the energy sector encouragement to start proactively involving community compensation measures into their activities.


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I I I . Member case studies With the above legislation in mind, below are a selection of case study examples that specifically illustrate the different forms community compensation has taken across our members. These come under two categories. Firstly listed are specific community projects taken on the initiative of the TSOs or their NGO partners, the second are community compensation/gain schemes that are run through the municipality. E irGrid: Community Gain Type of compensat ion: D irect payments through Community and Proximity Payments

In recognition of the visual impact of transmission infrastructure EirGrid has proposed a community gain mechanism with two elements:

1 . Community Payment A once off community payment is made on completion of the new line and/or rural transmission station. The total amount of money that will be made available will directly relate to the length and voltage of the new overhead transmission line or new rural transmission station that is being constructed. The rate at 400 kV is �€40,000 per kilometre for communities in vicinity to new 400 kV transmission lines and new rural transmission stations.

2 . Proximity Payment

A once off payment to owners of occupied residential properties (or sites with full planning permission) that are located within 200 metres from the centre of new 400 kV and 220 kV transmission lines or the from the centre of a 110 kV pylon or 200 metres from the compound fence of the new rural transmission station.

For new 400kV lines and stations there would be a payment of �€30,000 for residences at 50m and this would decrease (on a sliding scale) to �€5,000 at 200m.

On the grounds of residential amenity, EirGrid seeks to locate new lines at least 50m for homes, in exceptional cases where this is not achievable, EirGrid will deal with the affected property owners on an individual basis.

This scheme was initiated after the Irish Government published a policy statement on the Strategic Importance of Transmission and Other Energy Infrastructure in July 2012. The policy statement stated what it considered the appropriateness of incorporating community gain considerations into major infrastructure projects.

“Government underlines the imperative for the State Companies, and all developers of energy projects, of early, transparent engagement and consultation with local communities and stakeholder and the appropriateness of building community gain consideration into project planning and budgeting and as an intrinsic part of the ongoing consultation with local communities and local authorities.” Strategic Importance of Transmission and Other Energy Infrastructure 2012


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50Hertz-Entdecker-Wiese – (Orchard experience)

Type of compensat ion: Community compensat ion attached to cooperat ion with loca l NGO

As part of 50Hertz’s environmental compensation mechanism, Berliner Stadtgüter, (a municipal real estate company) proposed the utilisation of fallow land at the outskirts of Berlin to implement a tree planting measure as compensation for anticipated environmental effects resulting from the planned construction works for the Uckermark line. The 380 kV line will connect Berlin with electricity generation in the very north-east of Germany. Assigned by 50Hertz, Berliner Stadtgüter cultivated an orchard near Rüdersdorf (approx. 10 km away from the line) and planted 200 fruit trees, most of which are apple trees.

Based on this initial environmental compensation scheme, 50Hertz was approached by Mundraub (an NGO) who developed a concept for 50Hertz on how to utilize the orchard area with a larger social impact and participation of stakeholders.

Th is new “community” ut i l isat ion involved:

o the involvement of stakeholders, such as schools, municipalities, and associations to become active in growing and harvesting of the fruit trees.

o the juicing of the apples on site with the juice being distributed at other 50Hertz community events.

o In cooperation with Mundraub, the planned development of a combined theoretical education with practical hands-on experience, such as tree cutting courses, an introductory course to plants and animals living on the orchard, fruit harvesting and pressing juice as well as placing bee hives to stimulate plant pollination.

The basis of this project was to create value by exploring new means of utilisation and exploiting potential synergies, thereby going beyond the obligatory measures that have to be taken in terms of legally defined compensation activities.

The below advantages to this approach were described by 50Hertz as the following:

o Improved engagement with local stakeholders and the public, ensuring they are reached, thereby ensuring community engagement at each stage of the implementation. A mapping of stakeholders was carried out in the starting phase of the project, which helped to identify relevant stakeholder groups and to prioritize.

o Public awareness is raised by promoting the measure through various communication channels.

o Stakeholders and interested circles will be invited to take part in various activities as described above.

o The concept enables 50Hertz to actively engage (with) the affected community beyond the measure submitted to the regulatory authoritie.s

The project will be expanded in the years 2015/16. Mundraub is screening more compensation measures for similar community activities that contribute to enrich the affected area’s social life and to link 50Hertz positively to the local communities.


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RTE - Community compensation/gain (Direct payments through Proximity a l lowance)

Type of compensat ion: D irect payments through Proximity a l lowance

RTE compensates every farmer who owns land less than 200 metres from the line. The amount of money is decided on a project-by-project basis, and is discussed as part of the stakeholder dialogue. A “responsible committee” also evaluates the “loss in landscape” that the project creates; this translates into a figure, which RTE has to pay to people living within 200 metres around the future line. People living further have to ask the commission to visit them at home and determine their possible specific loss in landscape. During the Cotentin-Maine project, a commission for economic losses was established for the project. This was a recommendation from the public inquiry, which RTE and the Préfet (municipality leader) conducted. In this commission, economic losses for single people affected by the project are determined and they are compensated accordingly. RTE also offers to check electrical stability inside farmer’s houses (check if lines are correct, RTE repairs if not) at the Cotentin-Maine line. RTE has also done this previously at other projects if it has been requested from the farmer or landowner, but not proactively. During the next 80 years, the committee monitors the situation for farmers at the line and checks continuously if something needs repairing, upgrading etc. In addition to the 160 km very high voltage line, RTE will build 165 km of low voltage line at Cotentin-Maine, so that the region can benefit from the line. Moreover, new lines near the project will be built underground. These measures are decided within the dialogue process on a case-by-case basis. RTE has assessed their economic and environmental compensation measures as offering a positive contribution to the public acceptance and permitting processes. They give stakeholders the opportunity to negotiate and establish benefits for the affected region. These decisions are made on the initiative of RTE, no regulation stipulating the above has been enacted.

Compensation for Municipal i t ies (Germany, Spain, I ta ly, France and Ireland) Type of compensat ion: Community/gain through munic ipa l i ty Several organisations that responded to the questionnaire detailed experiences of the opportunity for them to “compensate” directly to the municipality, either financially or by projects that are specified with the participation of the TSO, community and local government agency. Below is an outline of three of these municipality led community compensation/gain practices: Germany: As stated in the legislation section above, the German government passed a ruling allowing TSOs to contribute a fixed sum to municipal government. This contribution scheme is voluntary, and is limited to an amount of 40,000 Euro per KM of line constructed. It is based on an internal legal assessment and compliance oriented implementation. The amount is determined by criteria such as if the line under construction is replacing an old line/is an entirely new line or the number of line systems (which usually determines the height of the pylon). The TSOs have, so far, not been involved in how the money is currently spent by the municipality.


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50Hertz has been active in deploying this compensation measure. The connection between substations Görries near Schwerin and Geesthacht near Hamburg was the first line construction project where 50Hertz applied this approach. Compensation was paid to a total of 23 municipalities, whose territories are crossed by the 88 kilometre long overhead line. All finalized agreements are at the discretion of the municipality. Furthermore, compensation measures are currently being determined for the second part of the South-West Interconnector. Payments will be made once the line is put into operation. Spain: In Spain it is common for municipalities that host substation and pylon infrastructure in their areas of jurisdiction to receive funding for a set of built projects, these have included

• public parks, • sporting clubs, • social housing etc.

Often projects of this nature take 4% of cost of the substation. Under the previous, now repealed legislation, the municipality of Sagunt was offered EUR 600,000 in financial compensation by the TSO REE for an offshore high-voltage transmission cable. Roughly EUR 500,000 of this was to be used to compensate fishermen for the impact on their income. However, Sagunt rejected the offer and the case was brought to court as the municipality found the sum too low compared to the compensation paid to other municipalities.

I ta ly : As in Spain, it is common in Italy for grid operators to reach compensatory agreements with the local authorities. Regions and Local Authorities have the right to stipulate agreements with the developer in order to request compensation measures. Terna signs agreements with Regions, Provinces and Municipalities identifying actions of public interest to be realized within the boundaries of that territory and on public soil.

France: In France, additional to a proximity allowance that is paid to landowners and households within 200m of the line, the Préfet also decides on a commission (e.g. local politicians, agricultural association, chamber of commerce, commission for tourism, ERDF (DSO)) for every new overhead line project. This commission can decide on 10 % for 400 kV OHL or 8 % for other voltages of the overall project costs. These are dispensed directly (as decided by the commission) to affected municipalities, and can be spent on local projects, e.g. undergrounding existing distribution lines or fixing local buildings.

I re land: In addition to the proximity payment to owners of houses, a once off community payment is made by EirGrid. The total amount of money that will be made available will directly relate to the length and voltage of the new overhead transmission line or new rural transmission station that is being constructed. The rate at 400 kV is �€40,000 per kilometre for communities in vicinity to new 400 kV transmission lines and new rural transmission stations. Community payments will be managed by EirGrid and implemented with external bodies including local authorities and will be made on completion of the line and/or station. The money itself can be used for community initiatives which may include enhancements to community amenities, tidy town and village initiatives, provision of leisure amenities, educational and sporting facilities, local heritage and cultural initiatives etc. With reference to the ‘ Community Payment’, the proximity area has not been fixed so as to allow flexibility to work with communities. The fund will benefit new community initiatives, groups and projects within the area.


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IV. Conclusions Compensation and its corresponding legislation does vary across Europe. That being said, the basis for landowner and environmental compensation in the study countries has noticeably similar foundations. In terms of Landowner compensation, this can be seen in the role of the various Appropriation Authorities, the process of negotiation, and the final authorities decision to force the sale of land. With regards to Environmental Compensation, most EIA processes incorporate this as part of their Mitigation processes that are embedded in the EIA, this in-turn is routed in the EU’s EIA Directive (85/337/EEC). What differs more substantially is the breadth of legislation relating to community compensation/gain, where formal legislation is vague, voluntary, limited, or non-existent, with no overarching legislation or guidelines at a European scale.

Through the questionnaire, it was found the most prevalent forms of community compensation/gain were the “proximity payment” for residents and landowners (Eirgrid and RTE) and compensation practices that go through the municipality (Eirgrid, RTE, 50 Hertz, REE and Terna). Several TSOs that did not take part in the questionnaire had also indicated that no such forms of compensation were employed, nor were they being explored as an option.

There is a much work ongoing in this field, coming from both private industry and academic/research institutions. Some other examples of community compensation/gain that were also picked up from both in and outside the Grid/Energy sector, these included

• Citizen bond/investment schemes that allow local residents to invest in the new line (please see our report on TenneTs citizen bond for more information.)

• Sponsorship of local events or projects that increase the touristic potential of a region, i.e. sponsoring art projects

• Measures that are supplied in-kind, such as offering individually assessed visual screening from the project (such as trees and shrubbery)

Many readers will have knowledge of the ideas presented both in the case studies and in the points above. Many of these ideas come with already defined project specific and operational hurdles that do not make the appropriate deployment of these “community compensation/gain” schemes easy. Such challenges include

• Some developers see a failure from the municipality in contributing to the developer's effort to convince local stakeholders, with them largely “pocketing” the contributions

• When there is fundamental opposition to a project, it is very difficult to change opinions with these community based schemes

• Appropriately identifying threshold values (such as acceptable impact levels and minimum distances) that can constrain “compensatory creep”

• Communities may not possess the resources or expertise to negotiate for and use the money effectively

The role of the government and the regulators was also stressed. Many TSOs are pushing for consistent national legislation that not only defines how much to pay farmers groups, but also (in Germanys case especially) how much the municipality should receive. It is felt by many that a clearer picture from government would do much to define expectations and obligations in a consistent and fair way.


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The European context with regards to regulation should also not be overlooked. How the cross border PCIs are regulated with regards to community compensation/gain will be revealing in defining different countries attitudes to community compensation. The role community compensation/gain will play in the engagement processes for such cross border projects has the potential to be a source of confusion, as the regulatory environments do not correspond. This is one of the issues any future discussions on compensation will focus around.

Based on the answers to the Questionnaire provided by RGI partners and further discussions, it was believed that financial payments alone cannot “buy” the support of local people. Indeed, some research advises against extending the eligibility of compensation. This derives directly from the complexities of the motivations that underpin support and opposition to infrastructure projects. They typically involve people’s perceptions about positive or negative impacts of a project, the trustworthiness of the participants, and the perceived fairness of the process and the outcome. Money itself is unable to solve these complex issues but rather compensation combined with sophisticated forms of engagement with the local communities is more likely to lead to a more successful outcome.


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Annex I

Compensation with regards to the environment is treated as a distinct planning issue in every country studied, for this reason it has been included as an Aneex in this document. Environmental compensation is usually stipulated in planning or EIA regulations and sits within the mitigation hierarchy that most are familiar with (see below diagram). “Compensation” differs from “Mitigation” in that it involves measures to replace lost or adversely impacted environmental values with those of an identical or “as close as possible” value, while mitigation aims for the avoidance and reduction of project related impacts. Environmental Compensation measures are therefore primarily aimed to ensure at least ‘no net loss’ is suffered, even after damage or destruction of the original habitat etc.

Compensating environmental impacts is often a stipulated activity enforced by the relevant Environmental or Planning Authority, these activities are used in order to offset direct impacts of the projects, and are tied to the projects permitting processes. When Environmental compensation activities are conducted apart or separately from this process, and it is not linked to any identifiable damage, for the purposes of this brief this is considered as “community compensation/gain”, as a quantifiable environmental “receptor” has not been identified to compensate for. This being said, community compensation projects can be built into Environmental Compensation measures if they go beyond a one-for-one replacement of an environmental impact (e.g. adding bird watching facilities to a compensated piece of wetland).

Mitigation Hierarchy (Source United Nations University, eia.unu.edu) Within the EU, environmental compensation is provided for by all three Directives concerning EA procedures, related to projects (EIA Directive (85/337/EEC), Natura 2000 sites (Habitat Directive 92/43/EC) and plans/programs (SEA Directive 2001/42EC, Annex I). The wording in these is broad and provides limited guidelines for explicit methodologies. Below are examples of national legislation of some selected countries.


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Details

Germany Legislated under Section 15 Federal Nature Conservation Act. And 92/43/CEE Habitats Directive (Concerning Natura 2000 Sites)

The Federal Nature Conservation Act provides the legal basis for ecological compensation and landscape management in Germany and clearly defines the main aspects of environmental compensation and the responsibilities between federal and state governments.

“eco-accounts” are also used in Germany. This involves the bundling of all impacts into a created “eco-account” and is part of the German Impact Mitigation Regulations. These impacts create a deficit of “eco-points” on the account that needs to be discharged by compensatory actions. Further information on this can be found here.

Spain 92/43/CEE Habitats Directive (Concerning Natura 2000 Sites) and any conditions stipulated in the EIA procedure (regionally set)

Spain’s regulations centre on Natura 2000 Network sites. The Spanish Environmental Ministry delegates responsibility to the regional governments who enforce environmental compensation on a case by case basis during the EIA process. There is varying practice across the regions. A common feature is the compensation measure required for lost woodland, compensatory re-planting must take place.

I ta ly EIA requirements set by Regional Authority

Compensation schemes are submitted as part of the pre-EIA process, these are then accepted by the ministry with certain conditions. The Ministry is currently looking into ways to try and improve compensation in the EIA process and monitor its relative effectiveness.

UK 92/43/CEE Habitats Directive (Concerning Natura 2000 Sites) and project EIA legislation

Environmental Compensation is addressed under the Habitats / Birds Directives with the objective of preserving the integrity of the Natura 2000 network. Outside the Hab/ Birds Directives framework EIA legislation provides that impacts should be compensated for, but specifics and methodologies are not stated. NGOs play a checks and balances role and some level of negotiation goes on. The Planning authority has the final say over the EIA and whether the compensation measures satisfy.

I re land Avoidance of significant potential environmental impact is the key objective, in particular for transmission infrastructure projects. Environmental mitigation measures are implemented where potential impact is identified, to reduce or avoid significant impact. Ireland has not had any requirement to implement environmental compensatory measures for its grid infrastructure development, or any other similar development, with the exception of a single project - a regional port expansion – which was an IROPI project.


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Challenges Some often-expressed challenges of environmental compensation include;

• overall feasibility, quantity and quality of the compensation measure that is proposed (e.g.is it large enough to be viable? is it to expensive?); resulting potential conflict of regulatory focus on cost reduction

• problem in deciding on effective environmental compensation measures when the route of a project has already been decided upon

• the subjectivity of the value of a lost or damaged environmental receptor (habitat etc) • farmers see a critical point in increasing the amount of land used for environmental

compensation, limiting their usable farmland.

Documents

Compensation: Policy and Practice across Europe · obligation, thus greatly complicating their broader compensation and engagement activities. ... negotiates a framework contract