Baltic 21 Series No 6/98

Sustainable Development of the Industrial Sector in the Baltic Sea Region

Preface
Executive Summary
1 Introduction
2 Industry and Environment in the BSR
3 Cross-sectorial issues and interlinkages between industry and other sectors
4 Goals and Indicators
5 Scenarios for the industrial sector 2030
6 Identification of Obstacles and Gaps
7 Action Programme for the Industrial Sector
Annex 1
Annex 2
Annex 3
Annex 4
Annex 5

Foreword

The mandate to develop an Agenda 21 for the Baltic Sea Region, with the objective Sustainable Development, stems from the Heads of Government of the region and the meeting of Ministers for Foreign Affairs of the Baltic Sea Region, within the framework of the Council of the Baltic Sea States, including the European Union. Because of this, Baltic 21 comprises all Nordic countries and all other countries around the Baltic Sea. For the Russian Federation only the north-western part is included. The European Union is also a participant in the elaboration of Baltic 21.

Baltic 21 was officially launched by the Ministers of Environment in October 1996 in Saltsjöbaden and the Saltsjöbaden Declaration provides the terms of reference for the Baltic 21 set-up and process. In their back-to back meeting, the Ministers responsible for spatial planning in the BSR also decided to concentrate work on sustainable development, and in particular to integrate relevant activities with the Baltic 21 process.

Baltic 21 is a democratic, open and transparent process. It is steered by the Senior Officials Group (SOG), with members from the Governments of CBSS and the European Commission, NGOs, intergovernmental organisations like HELCOM, VASAB, International Baltic Sea Fisheries Commission (IBSFC), Nordic Council of Ministers and the international development banks (World Bank, EBRD, EIB, NIB, Nefco). All Baltic 21 documentation; back ground documents, SOG meeting reports, workshop reports, draft texts, are published on the Baltic 21 website ( http://www.ee/baltic21).

The emphasis of Baltic 21 is on regional co-operation and on the environment and its bearing on economic and social aspects of sustainable development. The work focuses on seven sectors of crucial economic and environmental importance in the region. For each sector, goals and scenarios for sustainable development have been elaborated, as well as a sector action programmes including time frames, actors and financing. The responsibility for the sector work is distributed among the SOG members. The seven sectors and their lead parties are: Agriculture (HELCOM and Sweden), Energy (Denmark and Estonia), Fisheries (IBSFC), Forestry (Finland and Lithuania), Industry (Russia and Sweden), Tourism (Estonia, Finland Baltic Sea Tourism Commission) and Transports (Germany and Latvia). Work on the Baltic 21 initiative has involved some 300 persons in the region.

All sectors have presented their work in a sector report. This report is a result of the work carried out in the Industrial Sector. All Baltic 21 countries, the European Commission DG III, the International Chamber of Commerce, National Federations of Industries, World Business Council for Sustainable Development, Coalition Clean Baltic and Union of the Baltic Cities have participated in this work. The sector reports, and other working papers produced by i.a. VASAB, IFIs, the European Commission and Baltic Local Agenda 21 Forum constitute the background for the integrated and comprehensive Agenda 21 for the Baltic Sea Region. These reports are however not an integral part of the Agenda 21 for the Baltic Sea Region. The Agenda was adopted by the Council of the Baltic Sea States in June 1998, and will be reported to the Prime Ministers of the region at their next summit.

Industrial Sector Final Report

PREFACE

The Heads of governments of the Baltic Sea States and the President of the European Commission resolved in a summit meeting in Visby, 2-3 May 1996, to develop an Agenda 21 for the Baltic Sea Region (BSR) – Baltic 21. The Ministers of Environment of the Baltic Sea States and the Commissioner of Environment and Nuclear Safety of the European Commission agreed, in a meeting in Saltsjöbaden, October 20-21, 1996, on the general guidelines for the Baltic 21 working process.

The operational work of Baltic 21 has been divided into seven key sectors of which Sweden and the Russian Federation are responsible for leading the work on the industrial sector. The Baltic 21 project includes another six sectors: agriculture, energy, fishery, forestry, tourism and transport. Each sector is led by two countries from the western and the eastern (transition) part of the BSR or by one country from the western part and one intergovernmental organisation. The Baltic 21 process is governed by a steering group, the Senior Officials Group (SOG), which is composed of representatives of the governments being members of the Council of Baltic Sea States (CBSS) and the European Union as well as representatives from business, NGOs, intergovernmental organisations and International Financial Institutions (IFIs).

The different sector reports – that are due to delivery to SOG February 23, 1998 –will constitute an input and form a basis for the integrated and comprehensive Baltic Agenda 21 document that will be negotiated by the SOG during spring 1998. This document will be presented to CBSS in June 1998.

The industrial sector herewith submits to the SOG its final report "Sustainable Development of the Industrial Sector in the Baltic Sea Region" . Representatives from governments in the BSR, governmental agencies, the European Commission, business, NGOs, intergovernmental organisations and IFIs have been invited to participate and have also to a large extent contributed to the work in the industrial sector. EuroFutures AB and ÅF-Energikonsult Syd AB have been involved as consultants in the work of preparing the report. The participants in the industrial sector have reached a general consensus on the main principles and conclusions that are presented in the report.

Executive Summary

1. The potential for growth in the Baltic Sea Region

The dramatic changes in the Baltic Sea Region (BSR) during the late 1980's and in the beginning of the 1990’s – the German reunion, the independence of the Baltic States and the falling apart of the Soviet Union – have created a completely new situation in the region. From being divided in two parts by the "iron curtain" with negligible exchanges of ideas, goods and other contacts, it is now becoming a region with a rapidly growing number of co-operations, contacts, business deals and trade between people, enterprises, governments, agencies, municipalities and other organisations. In the transition countries also referred to as the EBR, the business sector has stepped up its activities considerably during the latest years. An increasing number of enterprises are rediscovering the region as offering good business opportunities. The BSR seems to be revived as an important cultural and business centre.

There are good reasons to believe that the BSR will be a region with favourable growth in the next ten to fifteen years. One basic argument for this prophecy is the great potential of exploiting the structural changes in the region. There are few regions in the world that exhibit within their borders such great differences and contrasts as the BSR in terms of living conditions, income levels, industrial structures and environment conditions. For instance, it can be estimated that the standard of living in the traditional market economies in the western part (WBR) is, on average, five to ten times higher than in the transition countries in the region, depending on if we turn to purchaser power parities or to GDP-comparisons at current exchange rates. This diversity can benefit the BSR over other regions, since the differences will give rise to possibilities of dynamic development. The inherent dynamism in the Baltic Sea Region can be further explored and turned into growth for all actors in the region by identifying and exploiting the comparative advantages in different countries with respect to wage levels, knowledge, natural resources and demand.

In addition, the whole BSR will likely rank highly on both "hard" and "soft" attractivity factors, such as the size of the market, political stability, local business climate, access to educated labour, R&D-activities, free trade, contact networks, cultural affinity, etc. Having high marks on these attractivity factors is a prerequisite for becoming a region with good growth in the international competition of the early 2000's. The BSR is also step by step being developed into a closely connected market. For example, telecommunications are improving, transport flows are increasing rapidly, closer integrated energy networks are considered and the air communication network has ameliorated considerably. The interest of international investors to establish operations in the region is already traceable. Inward foreign direct investments (FDI) have risen appreciably in the last few years in several countries in both WBR and EBR, especially in Estonia and Poland. In relation to the economic activities, the FDI are very important for some of the transition economies in the BSR. The stock of FDI in these countries is, in relation to GDP, highest or among the highest out of all the countries in the region.

Another positive factor is the economic development in the BSR which has reached a turning point. The economic collapse in the transition countries has come to a halt and several of the countries have now a decreasing inflation and a solid growth, although there are – with the exception of Poland – still much of the fall in industrial production to recover. Also the western countries in the BSR seem to be in better shape than before with relatively good growth prospects, low inflation and the imbalances in the government finances successfully tackled.

Putting the development in the BSR into a broader setting, it can be noted that the opening-up of the BSR coincides with a new global wave of structural changes. The established commercial and industrial centres of today will be challenged by new competitors because of globalisation and deregulation of markets in combination with radical changes in technologies. The turbulence around the world during the last decade underlines the fact that all countries and regions nowadays are involved in keen competition concerning consumer preferences and production facilities. Besides, markets are more sensitive than before to political measures and lack of initiatives, especially in the financial markets. Deeply rooted democratic institutions constitute a significant feature of confidence-building in a region. In the BSR, these institutions are now stable and are expected to be further strengthened. Democracy can therefore be a long term asset for the Baltic Sea Region in the international competition between regions; especially now when fundamentals of economic logic and driving forces are rapidly changing.

2. A golden opportunity for sustainable policies

The industrial sector will by its size and effects on other sectors in the society play an important part in the process of turning the structural diversities into a dynamic development. In 1996, the contribution of industry to GDP ranged in the region from 20 to 40 per cent (see figure 1). The industrial production of the countries in the EBR was more than halved during the 1990’s. A rather quick recovery of the production can be expected in most of these countries as the growth process proceeds at the same time as the industrial sector in the WBR will increase in absolute terms.

Figure 1. Contribution to GDP (%) from industry, agriculture and services in the BSR in 1995 or 1996

Sources: EBRD and OECD. The figures include the private as well as the public sector and they relate to 1996 for Estonia, Latvia, Lithuania and Russia and to 1995 for Poland, Finland, Sweden, Denmark, Norway and Germany.

The forecasted expansion of industrial activities will facilitate the accomplishment of economic growth in the whole region, but social conditions and environmental factors should also be taken into account to achieve sustainable development. The people in the transition economies will, for example, strongly desire a fast improvement of social and living conditions. As regards the environment, a steep increase of the industrial production might – if business is carried out as usual – lead to considerable stress on the environment concerning emissions, waste and misuse of natural resources. The main challenge but also a golden opportunity for the region is to design policies that combine progress in economic (industrial), social and environmental factors in a sustainable way.

The overriding aim of the Baltic 21 process is to succeed in harmonising economic and industrial growth with improvements in social conditions and less stress on the environment. There is a common interest of enterprises, governments and other actors in both the transition countries and the traditional market economies in the BSR in bringing this task to a successful completion since this would be the only feasible way to reap the benefits of the expected favourable growth conditions in the region. The goals and the action programme for a sustainable development in the industrial sector – that will be presented below –should be seen in this perspective.

3. The overall goal for the industrial sector

In formulating the overall goal for the industrial sector, the concept and ideas of the Brundtland Commission, the Fifth Environmental Action Programme of EU, the United Nations Environment Programme (UNEP), the World Business Council for Sustainable Development (WBCSD) and the goal for all sectors in Baltic 21 have been considered and used in appropriate parts. Eco-efficiency has in this process been singled out to be a central concept as it can be regarded as a rather comprehensive operationalisation of sustainable development for the industrial sector, since it – directly or indirectly – covers both environmental, economic and social factors. Eco-efficiency goes beyond resource use and pollution reduction by also emphasising value creation for business and society at large. The concept has also the advantage of embracing cleaner production ideas such as efficient use of raw materials, pollution prevention, waste minimisation, and internal recycling and reuse. The most prominent characteristic of eco-efficiency is that it captures the idea of pollution reduction through process change as opposed to end-of-pipe approaches. This reduction should be brought about with the consideration of economic efficiency and human and social needs. This is clearly spelled out in the overall goal for the industrial sector that reads as follows:

Sustainable Development for the industrial sector in the Baltic Sea Region is maintaining continuity of economic, social and environmental improvements. This means for the industrial sector in the region:

Delivery of competitively priced goods and services
Satisfaction of human and social needs and bringing quality of life by the products and services produced
Improvement of the working environment and the industrial safety for the workforce

Applying environmental strategies to resources, processes, products and services in order to progressively reduce ecological impacts and resource intensity throughout the life cycle, to a level at least in line with the estimated carrying capacity of the BSR with respect to biodiversity, ecosystem and use of natural resources.

4. Subgoals and indicators

The indicators have been selected on the basis of relevance and data availability today. However, some important indicators, for which data at present would be difficult to collect, have been included, since data in the future might be accessible after some further work and elaboration. It should be emphasised that the chosen indicators have shortcomings as measures of achievements of the goals. This may, however, to some extent be remedied in the future by the development of new indicators and by improvements in the production of relevant data. This would bring other indicators to the fore as measures of sustainable development.

The subgoals can be grouped into three categories.

The first category is composed of two subgoals having a bearing on the framework for business operations, for example, in the form of legislation or other kinds of regulatory systems or practices. Having favourable and harmonised conditions in these respects can be seen as a presupposition for an industrial development that will be conducive for sustainable development.

Subgoal 1: Implementation of the conventions/agreements relevant to the BSR, inter alia, those mentioned in the Saltsjöbaden Declaration, the Kalmar Meeting and its Action Programme.
Subgoal 2: Harmonisation and enhancement of legislation and practices regarding state aid, competition, establishment, trade environment (incl. working environment and industrial safety) as pertaining to industry

Indicator of subgoal 1 is countries in the BSR having signed and ratified existing and new or revised conventions/agreements. A supplementary indicator is countries having enacted legislation in conformity with these conventions or agreements. Indicators of subgoal 2 are, i.a., countries having harmonised legislation with other countries´ legislation in BSR and/or complying with EU Directives and the decrease of distortive state aid in different industries.

In the second group, there is only one goal aiming at strengthening the market forces and the institution-building for a sustainable development in industry.

Subgoal 3: Implement a sustainable performance in industry that combines competitive production with reduction of detrimental ecological impacts and resource intensity (eco-efficiency)

Indicators of this subgoal are, inter alia, the number of firms – small as well as large – using Environmental Management Systems (EMS such as ISO 14001, EMAS or other systems), publishing environmental statements and reports and these firms´ share of total production. A related indicator is the number of companies requiring environmental performance of their subcontractors with respect to the use of different EMS.

Another indicator is number of firms (and share of production) publishing financial reports taking into account and disclosing environmentally related costs and investments, for example, regarding R&D in the field of environment. As regards environmentally-oriented cost accounting systems, there is an indicator counting number of firms having introduced Environmental Cost Management.

Other kinds of indicators are reduction of material and energy intensity. Waste handling is measured by the indicator number of companies (and their share of production) applying producer responsibility of products delivered. Finally, there is an indicator counting the number of companies using water processes that are closed or minimised.

In the third category of goals, two subgoals are grouped that catch up the monitoring aspects or the effects on environment, social conditions and industrial competitiveness in certain respects. The first two categories of subgoals have an impact on the subgoals in the third category; for example, if there is a great progress in harmonisation of legislation and implementation of conventions (subgoals 1 and 2) at the same time as eco-efficiency will have a vast application in industry (subgoal 3), that development would result in a less detrimental environmental impact (subgoal 5) and probably in better performance in social and industrial respects (subgoal 4).

Subgoal 4: Improvement of social conditions and of industrial competitiveness
Subgoal 5: Industrial environmental impact within the limits of the carrying capacity in the BSR

Indicators for subgoal 4 are, inter alia, the growth of industrial production and the change of productivity in companies applying eco-efficiency and EMS. A related indicator is the change of productivity in sheltered sectors and in sectors being under pressure of international competition. According to another indicator, it is of interest to get information on profitability in companies applying eco-efficiency and EMS as well as the amount of R&D-resources that are used. As regards the social conditions, there is an indicator for the average length of life for the industrial workforce. In addition, the extent of industrial injuries and occupational diseases are covered. The last indicator for this subgoal is the extent of training/education.

The indicators for subgoal 5 are more of a monitoring nature concerning ,i.a., releases of hazardous substances, emissions of substances giving rise to exceedances of critical loads and air imissions in accordance with WHO–standards. According to another indicator, there should be a recording of the implementation of the commitment of phasing out substances as set out in the Action Programme (Visby and Kalmar Meeting).

5. Problems and obstacles for sustainable development

There are several problems and obstacles of an economic, social and environmental nature that can impede or delay – or even make it impossible – to accomplish the overall goal for the industrial sector.

The good growth prospects for the BSR – which are essential for creating resources for a sustainable development – presuppose a favourable framework or climate in the region for business operations and establishments. Especially in the transition countries, there are, however, barriers to growth owing to incomplete legislation, weak enforcement of law, custom and certification problems (hindering foreign direct investments) and deficiencies in the taxation system. Equally important as obstacles are a burdensome bureaucracy, weak institutions supporting a proper functioning of the markets and insufficient infrastructure in certain aspects. Several of these problems can be said to be a reflection of lacking harmonisation in the region in the economic regulatory framework and in environment policies.

In the social field, it may be difficult to get the necessary mobilisation of the people for a market- and growth-oriented industry because of ill-functioning institutions for social welfare, poverty, miserable working environment and industrial safety and lacking education.

As regards environment, the development of technologies, methods and ideas in many branches of industry will facilitate the attainment of sustainable development. In addition, Environmental Management Systems (EMS) can, especially in combination with eco-efficiency, provide tools having a holistic and process-oriented approach. These tools can be used in efforts to govern the industrial production in a sustainable way with respect to all kinds of emissions, waste and use of natural resources instead of relying only on end-of-pipe solutions.

The implementation of EMS needs, however, to be improved; as yet there are too few companies using EMS to have any noticeable effect for the whole industry in the BSR. Nor are, for the time being, the market-driven forces or the market awareness of environmental effects sufficiently strong to bring about sustainable policies. Furthermore, the financial resources for environmental investments in industry in the transition countries are for the moment too scanty, not least due to the fact that the companies find the business climate not favourable enough (see above) and therefore hesitate to invest. Finally, the deficiencies in environmental monitoring systems constitute an obstacle for sustainable development.

6. The action programme

Considering the goals and the subgoals for the industrial sector as well as scenarios and the obstacles, the following areas have been assessed as being the most important ones for actions:

Framework for business operations
Development of market-driven tools within the enterprises for sustainable development and increasing market awareness of sustainability effects
Co-operation on R&D and on training/educational programmes in the BSR
Development of measures for monitoring the effects on environment, industry and social conditions and for promoting investments (BAT, etc.) having favourable effects on sustainable development

The action programme is not comprehensive in the sense that all possible actions for a sustainable development are included. Other fora for co-operation in the BSR are dealing with some of the issues. The Helsinki Commission (HELCOM), for example, is on the basis of the Helsinki Convention responsible for certain decisions, recommendations and measures in relation to pollution of the Baltic Sea Area. Another example of actions relating to the Baltic Sea is the project "The Baltic Sea 2008" which is an initiative taken by the International Chamber of Commerce in Sweden. As regards some aspects of the business framework, there is work under way, i.a., financially supported by the Phare- and Tacis-programmes, to improve the situation. It would within the scope of Baltic 21 be inefficient to duplicate this work in other fora.

Another characteristic of the action programme is the emphasis put on institution-building in a broad sense rather than on investment projects. In line with the re-orientation of EU´s policy on sustainable development the action programme embraces a rather broad spectrum of measures that includes the legal framework as well as economic incentives, strengthening of market forces, information, R&D and education.

Although the actors on a voluntary basis should – in their own self-interest – take on the responsibility for creating the networks and organisation that are vital to carry out the actions, it can be considered to somehow monitor the starting up and progress of the actions, for example, by reporting to a body within certain time frames. This is an issue for the overall Baltic 21 project which is not within the scope of this report.

The action programme does not necessarily require new financial means for countries beyond the financial resources that are available in existing budgets and programmes, nationally and internationally. The financial means that are required for the actions are to be borne by the actors and/or by changing the priorities in existing programmes.

The actions are primarily related to certain subgoals and perhaps indirectly linked to others. Although all actions are important, action II has been regarded as having first priority in the industrial sector since this action has the greatest potential of making progress in sustainable development.

The time frames and monitoring methods for the different actions should in principle harmonise with the arrangements made in these respects in the whole Baltic 21 project.

Action I: Improvement of the framework for business operations:

A. Development of economic incentives improving the management of environment in industry.
B. Harmonisation of legislation pertaining to industry as regards, state aid, competition, trade and environmental policy (including working environment and industrial safety).
C. Implementation of international conventions and agreements relevant to sustainable development in the BSR.

Action I should result in a harmonised framework of relevant legislations and practices that will both improve sustainability and create a level playing-field for the companies in BSR. This will hopefully remove several of the hindrances that have been identified for business operations in the BSR. The development of economic incentives and harmonisation of legislation in the BSR can and probably will go hand in hand with an international or a wider regional (EU) harmonisation. Today all countries in the BSR, except for the Russian Federation, are members of EU or have agreements with EU or are in a process of accession to EU. Consequently, the EU Directives and rules will be very important for sustainable development in the BSR.

The governments in the BSR are the most significant actor in this action. The Council of the Baltic Sea States (CBSS) should decide on the importance of harmonisation in the BSR and in regularly putting up the topics covered by Action I on the agendas of all ministerial meetings within the scope of CBSS. A decision should also be taken to set up an intergovernmental working group (incl. the EU Commission) with the following tasks:

Identifying needs for and assisting in training and education of government officials (incl. state agencies) in designing and enforcing legislation relevant to sustainable development.
Encouraging and supporting theapproximation process so that harmonisation will be achieved before the actual EU-accession, incl. finding ways to harmonise the Russian legislativeframework.
Assisting in building upenforcement institutions.
Development of economic incentives instrument.
Recording the actual progress in harmonisation and ratifications of international agreements.

Industry and trade organisations, Non Governmental Organisations (NGOs) and International Financial Institutions (IFIs) should participate as observers in the working group. These actors should also take part in education and training activities.

As regards financing of this action, the expenses should in principle be borne by the governments. The education and training activities should, however, also be financed through the technical co-operation programmes of the European Bank for Reconstruction and Development (EBRD) and the advisory services and learning programmes of the World Bank in collaboration with the aid agencies in the WBR. Other IFIs and the Phare- and Tacis-programmes may also provide means.

The working group should conclude its work within 5 years.

Action II: Implement eco-efficiency in industry in the following respects:

A. Development of eco-efficiency tools for different industries.
B. Implementation of Environmental Management Systems (EMS) with consideration of the special circumstances for SMEs.
C. Consideration of environmental factors in all activities and reporting, especially with regard to financial reporting of enterprises.
D. Promotion of pilot projects aiming at sustainable development.

Action II is considered to have the first priority among the actions in the industrial sector. The aim of action II is to develop and implement such governance structures in enterprises that are beneficial for the environment, social conditions and efficiency.

Industry and trade organisations are the most important actors for action II. Their interest and commitment to carry out this action is therefore decisive for a successful result. The following list can be seen as a suggestion of measures that later on can be adapted to specific circumstances:

One overriding task is to create networks between companies in the BSR, especially between companies in the same industry.
Development of the concept of eco-efficiency and elaboration of concrete and targeted eco-efficiency measures and methods in specific industries, for example with regard to material intensity, energy intensity, toxic dispersion and increasing material recyclability. This work could lead to handbooks or guidelines for eco-efficiency in different industries.
The industry and trade organisations should foster the implementation of eco-efficiency and EMS (EMAS, ISO 14001 and other systems), preferably through the work in the networks.
Setting up and running training programmes in, i.a., eco-efficiency, EMS and environmental auditing for personnel in enterprises, especially for the staff responsible for environmental issues.
In collaboration with governments work for the establishment of certification bodies (for EMAS, ISO 9000 and ISO 14000).
Development and implementation of an environmentally-orientedcost accounting system, "Environmental Cost Management", that helps to identify not only the environmental costs of different operations but also cost-reducing opportunities.
Co-operating with other actors (governments, accounting standard setters, etc.) in developing standards for including environment factors in external financial reporting of enterprises).
Developing standards and work – in collaboration with other actors – for the publication of environmental reports and statements.
Designing and implementing purchasing policies that require subcontractors to use EMS. In this work, it should be taken consideration of the specific circumstances and problems for SMEs in formally adhering to all items in the different standards, although the companies in practice apply EMS in their operations.
The industry and trade organisations should in the whole BSR engage in disseminating to companies and implementing in these the best existing systems and practices for managing the working environment and industrial safety.

Other actors having important tasks in action II are stock exchanges, banks, IFIs, NGOs, accounting standard setting boards and governments. Stock exchanges can in their registration agreements with listed companies include a provision that requires companies to use, for example, EMS. Also banks should in their lending policies include a provision to consider the environmental policies of companies in connection with lending, for example, by according more favourable conditions to companies using EMS. IFIs should in their operations more systematically apply requirements of using EMS or other similar systems.

Governments have more a supportive than a leading role, i.a., by strengthening certain institutions and supporting or participating in different activities:

The governments already having an institutional machinery for certification should support other governments in their efforts to set up certification bodies.
The governments should – in collaboration with industry – design training programmes for SMEs to increase their knowledge and capacity of applying EMAS, ISO or other similar standards.
Appropriate government bodies, for example the Environment Protection Agencies together with other agencies related to industry, should bring about a co-operation and dialogue with industry on ways to achieve better environmental performance (eco-efficiency) in the operations of the companies.
Standards or guidelines for environmental reports should – in collaboration with industry and other actors – be issued by appropriate government bodies (see above).
The governments should in collaboration with industry and trade organisations support a limited number of pilot projects in companies situated in a certain region or belonging to a specific industry aiming at developing competence in eco-efficiency, the implementation of EMS and developing and implementing systems for producer responsibility in terms of reuse and recycle of components and material in products delivered. These projects could serve as a catalyst for other companies and industries.

In principle, the activities in action II should be financed by the respective actors. For some networking, training for standards, establishing of certification bodies, pilot projects and training programmes for SMEs, some outside finance might be needed. This might be available through the Structural Funds in EU and the Phare- and Tacis-programmes, which, i.a., can be used for institution-building and training.

Action III: Increasing consumers´ awareness of sustainable development.

Local Agenda 21 projects to increase public awareness of sustainable development regarding industrial activities and products.
Strengthening of public education and increasing knowledge of sustainable development.
Implementing eco-labelling systems.

Since one of the main driving forces for industry is market development, the view of the public on the industrial and product impact on environment is of great importance. Increased public knowledge and awareness of environmental, cultural and social issues connected with industrial production and products will thus have a strong influence on market development and on these subjects per se.

In order for the public to be able to make decisions and evaluate environmental and other effects, several information systems will have to be developed further. Possible information channels are environmental reporting from companies, environmental labelling systems, environmental impact assessments and compilation of environmental information through monitoring systems. Also media, consumer and environmental organisations may play an important part in providing the public with relevant information. In a somewhat longer time perspective, the internet will also provide a means to seek environmental information.

In order to increase the awareness of environmental, social and cultural values, local Agenda 21 projects may be initiated by different actors. The possibility for the public to more directly influence and participate in the local community development will increase the commitment to issues of importance for the development as well as the interest for information, knowledge and education by the public will increase. Education and knowledge about environmental problems related to industry are the basis for public awareness. All pupils and students should be provided with basic environmental knowledge no matter what their main subject of study is.

Important actors for Action III are consumer organisations, local authorities, governments, educational institutions, media, and industry (including trade organisations) and some possible areas for measures are the following:

Development of local Agenda 21 projects which aim at increasing the public involvement in local and regional development issues. These projects would comprise economic, social as well as environmental aspects of development.
Extended environmental education to young people and adults. Providing employees with environmental education, e.g. within the framework of environmental management systems.
Promotion of eco-labelling systems, especially eco-labels covering the BSR or being applicable in a wider international context. Also co-ordination, development and promotion of different eco-labelling systems, e.g. systems including social, cultural, equality and environmental aspects, should be carried out.
Development of plans and programs by media for increasing reporting of environmental, social and cultural issues connected with industry and consumption.
Production of industrial environmental reports and environmental impact assessments and making them easily accessible to the public.

Financing of Action III would split in accordance with different actors respective areas of activities but also IFIs and intergovernmental organisations are important to provide financial means for executing the action.

Action IV: Extended and improved co-operation on research and development, knowledge and technology transfer in the BSR.

Initiation and development of joint projects aiming at transfer of knowledge, technology and environmental techniques.
Improved and increased co-ordination of research and development activities, i.a. through the establishment of a research institute for support of sustainable development in the BSR.
Training and education programmes.

In many western societies (including those in the WBR) an environmental protection culture has gradually emerged and increased in importance for the individual as well as for industries and companies. In the EBR, on the other hand, the environmental issue has had low priority on the political agenda during the 1990s. Geographical closeness and historical links, however, make the new democratic states in the EBR and the WBR natural trading partners which facilitates a successive diffusion of knowledge and R&D regarding economy, management, technology, environment, social and cultural issues and values.

Transfer and diffusion of "know-how" through co-operation between countries is assumed to be an efficient way of implementing new ideas and new techniques. One way of transferring information and knowledge is the establishment of joint pilot projects and establishment of networks and partnerships (including companies, trade organisations and research institutions).

A continued development of regional initiatives in the field of education, research and professional and vocational training is of great importance for a successful development of the BSR. Support should therefore be given to the development and co-ordination of educational exchange and research and development programmes.

Research and development programs can be co-ordinated within existing universities and other research organisations but another complementary possibility is the co-ordination through a "Baltic Research Institute" for sustainable development. Research programmes which are cross-functional and inter-disciplinary, i.e. addressing the whole concept of sustainable development, encompassing technological, environmental, economic, social and cultural aspects of development should have a priority. If such an institute is appraised to be desirable, it should be co-financed by governments and industry in order to give it "legitimacy" and credibility among all actors and the public at large

Generally, there is a vast need for research and development of methods, materials and processes that can provide environmentally sound substitutes for what is used today. Other areas that should be addressed are, for example, product life time improvements and reparability. Biotechnology as a means for improving industrial processes, for production of substances and detoxification of hazardous waste and contaminated soils also has a great potential.

Some suggested measures to execute Action IV would thus be:

Encouragement of building-up of industrial co-operation by organisations such as the national Chambers of Commerce, national federations of industry and trade organisations. This would include the establishment of networks and projects for transfer of technology and R&D co-operation, especially relating to environment, between industries and trade organisations in countries in the BSR. Specifically, there should be a development of projects and programs for technology transfer from large companies to smaller companies within similar fields of production.
Educational exchange programmes between countries in the BSR for the staff in all levels in enterprises should be developed and implemented by governments and industry (trade organisations).
Development of programs for co-ordination and co-operation between industry, universities and other research institutes in order to get a better understanding of the interlinkages between industrial, environmental and social measures and policies. This could, e.g. be achieved by the establishment of a Baltic Research Institute for sustainable development. The governments should set up a working group – in which industry, research institutes and other interested parties can participate – to investigate on a preliminary basis the possibilities and modalities for a Baltic Research Institute, incl. the alternative of improving the networks between existing institutes and organisations.
Call on national and international research financing institutions, e.g. IFIs and EU funds, to develop programs directed at stimulating development of new technologies, products and processes, and specifically projects aiming at developing co-operation within the BSR.
Further promote co-operation between educational institutions and enforce rules making educational certificates and academic degrees in a country valid in all other countries in the BSR. Development of training and education programmes based on evaluations of industrial requirements should also be promoted.

Financing of Action IV would primarily be governmental and intergovernmental, but industry, including trade organisations, would be expected to contribute, e.g. through financing certain research and development projects.

Action V: Reduction of pollution according to the carrying capacity of nature

A. Development of critical loads corresponding to carrying capacity.

B. Promotion of investments in "best available technology" (BAT).

C. Development and implementation of environmental monitoring, and development of indicators for sustainable development.

Primarily, existing monitoring systems should be co-ordinated and further on an agreement between the BSR countries on a homogeneous and extended monitoring system should be worked out. The co-ordination efforts should be based on a set of "sustainable development" indicators that relates to the carrying capacity of different ecosystems. To be able to guarantee the quality of data, analysing methods at the laboratories have to be standardised and the laboratories should be encouraged to apply for accreditation. Thus it is also of importance that institutions for accreditation are built up and based on co-ordinated regulations within the common framework of the monitoring system.

The development of "sustainable development" indicators regarding environment is in turn dependent on the development of the carrying capacity and critical loads concepts on a detailed and concrete level. In order to operationalise these concepts, they have to be determined with respect to different substances in relation to different ecosystems as well as the exploitation pressure on ecosystems. A Baltic Research Institute with an inter-disciplinary approach and with an objective to promote development of the "sustainable development" concept might be an effective means to focus on the issues suggested in this Action programme as a whole (see also Action IV).

Main actors for Action V are governments, universities and other research institutions. Industry and trade organisations are important participants, primarily in projects aiming at developing products, processes and production. Some suggested measures are the following:

Co-ordination and development of environmental monitoring systems in the BSR and calling upon relevant bodies (for example EEA or HELCOM) for assistance and experience.
Evaluation of standardised sampling analysing methods and harmonisation of regulations for accredited laboratories. Also building-up and harmonising of regulations for institutions for accreditation and control of laboratories is required.
Development of "sustainable development" indicators and operationalisations of carrying capacity and critical loads. This work should also relate to BAT in industry and include social and economic aspects of sustainable development.
Promotion of investments in BAT.

Financing of Action V would largely be governmental and intergovernmental, but industry would be expected to contribute, e.g. through financing certain research and development projects.

Industrial Sector Final Report

1. Introduction

1.1 General background

The concept of achieving sustainable development for the 21st century was discussed and agreed upon at the RIO summit in 1992. During the RIO-conference a firm commitment was established: Agenda 21. This new concept has made a significant impact on many levels of society. The notion of sustainable development has come to fore as a political goal and has inspired many environmental action programmes on an international, national and local level.

Not least in the Baltic Sea Region (BSR) various national sustainability programmes were introduced as a consequence of the initiatives that were anchored during the RIO summit. The projects have been prepared at an interministerial level indicating a commitment by the states of the Baltic Sea Region to co-operate regionally on the issue of reaching sustainable development.

This positive co-operative climate in the region was further strengthened by the meeting of Heads of governments of the Baltic Sea States in Visby, Sweden, May 2-3, 1996. The Heads of eleven governments around the Baltic Sea and the President of the European Commission agreed on a regional, unified effort to obtain sustainable development, sustainable management of natural resources and protection of the environment. The Visby summit thus resolved to develop an Agenda 21 for the Baltic Sea Region: Baltic 21.

The Council of the Baltic Sea States dealt at its fifth ministerial session in Kalmar 2-3 July, 1996 with several of the issues brought up in the Visby meeting and adopted an action programme covering several environmental matters.

The Baltic 21 concept was further elaborated at the Saltsjöbaden conference 20-21 October, 1996 where Ministers of Environment of the Baltic Sea Countries and the Commissioner of Environment and Nuclear Safety of the European Commission agreed on the general guidelines for the Baltic 21 working process.

The Baltic 21 project is a regional development of the Agenda 21 which aims at finding a feasible implementation strategy for sustainable development in the Baltic Sea Region in which all sectors of society – governmental actors, private firms, NGOs and citizens – should be involved. In carrying out this task it has been decided that an Agenda 21 document should be worked out for the Baltic Sea Region containing, i.a., goals and an action programme for sustainable development. One salient feature of the Saltsjöbaden Declaration is that the Baltic 21 work should build on the work already carried out in various international fora, for example in the Helsinki Commission (HELCOM); it can implicitly be assumed from the declaration and the other documents that resources should not be invested in the Baltic 21 process to "invent the wheel again" but instead for certain aspects rely on the numerous international conventions being in force or in the process to be enforced.

The operational work of Baltic 21 has been divided into seven key sectors of which Sweden and the Russian Federation are responsible for leading the work focusing on the industrial sector. The Baltic 21 project includes another six sectors: agriculture, energy, fishery, forestry, tourism and transport. Each sector is led by two countries, from the western and eastern (transition) part of the BSR, or by one country from the western part and one intergovernmental organisation.

1.2 Aim of the report

The aim of this report is – within the terms of reference provided by the Saltsjöbaden Declaration for the Baltic 21 process – to work out goals and an action programme for regional co-operation on sustainable development in the industrial sector in the Baltic Sea Region. This would also include to identify the actors – industry, governments, NGOs, etc. – that will be responsible for carrying out the actions. The design of the action programme will, i.a., be based on the information on the economic and environmental situation in the BSR and the goals, obstacles and scenarios for sustainable development that will be presented in the report.

1.3 Points of departure for the report

The Baltic Sea Region is on the whole a highly industrialised area but encompassing parts with considerably different industrial structures. There are also great differences between the transition ("eastern") countries and the traditional market ("western") economies in the BSR in terms of the general economic, social and environmental situation. The countries included in the East Baltic region (EBR) are Poland, Estonia, Latvia, Lithuania and part of Russia while Sweden, Finland, Denmark and Germany are referred to as the WBR (West Baltic Region). Norway and Iceland are also included in the WBR in a wide sense.

Despite the differences in the BSR there is a common need and challenge to develop policies that will accomplish economic prosperity in all parts of the region in a sustainable way. This task will be of utmost importance in the years to come s since high growth rates in the EBR can be expected at the same time as the industrial sector in the WBR will increase in absolute terms. The desires of the people in the EBR for a fast improvement of social and living conditions and the expansion of foreign investments in the transition countries would also call for a rapid development of the industrial sector which diminished considerably during the first part of the 1990´s.

Such an expansion of the industrial activities will facilitate to meet the social and environmental demands but can as well lead to an increase of environmental damage in the region if business is carried out as usual. There are different views on the impact of industry and economic growth on sustainable development. Some argue that economic growth is a prerequisite for a sustainable development. Others hold the opinion that economic growth might be one of the most important sources of environmental damage. In the context of Baltic 21, this controversy seems somewhat academic since there is consensus that economic growth in the BSR, including an expansion of the industrial sector, must be a part of a sustainable development and a prerequisite to create resources for handling all the problems and meet all the expectations of the people in the region, especially in the EBR. The central issue is instead to govern the expansion of industrial activities in a sustainable way by designing policies and measures that are in conformity with sustainable growth; this is a challenge but also a golden opportunity.

This work should not be constrained by any ties to "old" thinking in the western countries but adopt a fresh and broad approach covering both conventional end-of-pipe solutions and new ideas on "upstream" reforms, waste-minimisation and the use of eco-efficiency and management practices having environment as an important component. The "institution-building" for a sustainable development in governments, companies, organisations and citizens is probably a key issue in accomplishing the aims of Baltic 21.

1.4 The coverage of the industrial sector

When using the term "industry" in this report it is referred to mining and quarrying, manufacturing and construction. The manufacturing activity involves transformation of raw material into products. This therefore includes processing of non-energy related material, and manufacturing activity in general, under normal operating conditions.

The definition and coverage of the industrial sector are in principle based on EU´s general classification of economic activities called NACE (Nomenclature Générale des Activités Economiques dans les Communautés Européenes), in which economic activities are classified according to a hierarchical grouping in five levels as shown below:

Section (for example, manufacturing)
Subsection (for example, manufacturing of transport equipment)
Division (for example, manufacturing of motor vehicles and trailers)
Group
Class

The NACE–system has great similarities with the United Nations system, ISIC, i.e. the International Standard Industrial Classification of All Economic Activities. Both of these system classify economic activities in terms of the nature of goods and services produced or by the nature of the production process employed. In Annex 1, it is given a list of activities included in the industrial sector on the level of section, subsection and division. Information on each branch in the BSR is presented in Annex 5.

Not all of the economic activities within the industrial sector will be of the same importance regarding the effects on the environment in the BSR as a whole or in parts of the region. Certain branches of the industrial sector can – as will touched upon in Chapter 2 (see also Annex 5) – have greater effects than others, owing to both the general nature of a branch and the different industrial structures in countries or in parts of the region.

1.5 The concept of sustainable development and the overall goal for all sectors in Baltic 21

The concept of sustainable development was originally established by the World Commission on Environment and Development (the Brundtland Commission) in 1987. Sustainable development is defined by the Brundtland Commission as a development that "seeks to meet the needs and aspirations of the present without compromising the ability to meet those of the future". The basic thought is that economic growth is to be directed with the aim to keep it within the frames of nature; in other words, the "capacity of ecosystems and finite resources put constraints on human activity". It is also a question to regenerate and transfer an intact resource base from one generation to the next.

The concept of sustainable development does cover environmental as well as economic and social factors. A sustainable environment is a precondition for maintaining an expanding economic activity and a viable social structure and vice versa; environmental, economic and social factors must all be considered to accomplish a sustainable development. This is explicitly mentioned in EU´s 5th Environmental Action programme, in which sustainability is defined as "maintaining continuity of economic and social developments while respecting the environment and without jeopardising future use of natural resources".

Even though there is no generally accepted definition of sustainable development and the concept is to some extent lacking in precision, sustainable development has become a key term in national and international work on environmental matters. Actors such as EU, UN, governments, international organisations and enterprises in the industrial sector are using sustainable development as a fundamental concept – being adapted to different purposes – for their respective programmes, action plans and management systems.

One explanation of the general attraction of the concept of sustainable development, may be that this concept is useful as a guiding principle for the direction of the improvement of the environment, although it is not always possible to define in state terms what actually constitutes a sustainable development. The implementation of sustainable development in this perspective has been carried out by setting up successive target levels or percentage reduction objectives for pollution. This kind of changes will clearly be on the road to sustainability, though one cannot tell if the improvements in all cases are sufficiently great to actually reach the terminus of the sustainability line.

In conclusion, sustainable development has, despite its imprecision, proved to be an operative concept for both private and public actors and has therefore permeated the whole process of Baltic 21. The overall goal for sustainable development of the BSR for all sectors included in the Baltic 21 process has been defined as follows:

The essential objective of Baltic Sea Region co-operation is the constant improvement of the living and working conditions of their peoples within the framework of sustainable development, sustainable development of natural resources, and protection of the environment. Sustainable development includes three mutually interdependent dimensions – economic, social and environmental.
This means for the region:
- a safe and healthy life for current and future generations
- a co-operative and prosperous economy and a society for all
- that local and regional co-operation is based on democracy, openness and participation
- that biological and ecosystem diversity and productivity are restored or maintained
- that pollution to the atmosphere, land and water does not exceed the carrying capacity of nature
- increased efficiency in the use and management of renewable resources, within their regeneration capacity
- that materials flow of non-renewable resources are made efficient and cyclic, and renewable substitutes are created and promoted.
The Baltic Sea Region recognises its interdependence with other parts of the world and makes its contribution to the fulfilment of sustainable development goals at the global and European level.

1.5.1 Eco-efficiency

It is of interest in relation to sustainable development in the industrial sector that the Industry and Environment centre of the United Nations Environment Programme (UNEP) has introduced the concept of "cleaner production". With cleaner production is meant the "continuous application of an integrated preventive environmental strategy applied to processes, products and services to increase eco-efficiency and reduce risks for humans and the environment". The concept implies that all phases of the life cycle of a product or process should be addressed in the prevention strategies.

A similar concept, "eco-efficiency", has been developed by the Business Council for Sustainable Development, which now is called the World Business Council for Sustainable Development (WBCSD); this organisation is working jointly with UNEP in environmental matters. Eco-efficiency is defined as being "reached by the delivery of competitively priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life cycle, to a level at least in line with the earth’s estimated carrying capacity".

It can be argued that this concept can be regarded as a rather comprehensive operationalisation of sustainable development for the industrial sector, since it – directly or indirectly – covers both environmental, economic and social factors. Eco-efficiency goes beyond resource use and pollution reduction by emphasising value creation for business and society at large. The concept has also the advantage of embracing cleaner productions ideas such as efficient use of raw materials, pollution prevention, waste minimisation, and internal recycling and reuse. The most prominent characteristic of eco-efficiency is that it captures the idea of pollution reduction trough process change as opposed to end-of-pipe approaches. This reduction should be brought about with the consideration of economic efficiency.

Although there is consensus on the broad meaning of eco-efficiency, the term is still lacking a strict definition that is generally accepted. The concept is under discussion and development in several international fora where eco-efficiency has become a topical issue in the efforts to reach sustainable development in industry. OECD and UN, for example, have dealt with the issue on several occasions and the topic will probably be on their agendas also in future meetings. Eco-efficiency – as a combination of economic and ecological efficiency – is also a tool that appeals to business and work is under way to develop measurement system and applications to specific industries, for instance the electronic industry.

Consequently, eco-efficiency is a viable and valuable concept when designing policies and measures for sustainability and it will in Chapter 4 constitute an important input in the work of formulating the goal for sustainable development in the industrial sector.

1.6 International and regional conventions/agreements

Ever since the first global meeting on the environment, the Stockholm Conference in 1972, activities for improving the environmental conditions have been an important focus for political leaders all over the world. International conventions and recommendations have committed nations to take part in the strive for continuous improvements of the environment.

There are now about 170 multilateral environmental treaties and instruments, covering subjects ranging from the atmosphere and the marine environment, to nature conservation and transboundary watercourses. The great majority of the agreements is of regional or sub-regional scope and only a part of the agreements does apply specifically on the industrial sector. There are a lot of international actors on the environmental scene. About 20 international institutions play an important environmental role in Europe, including several UN-institutions, the Economic Commission for Europe, OECD, GATT, WTO, EBRD and the Helsinki Commission. Especially important for Baltic 21 is the role of the European Union; there are a number of directives of EU that are of an imperative necessity to follow, at least by the present members of EU (see section 1.6.5 for description of the environment policy of EU).

1.6.1 From Stockholm to Helsinki

The global meeting in Stockholm in 1972 initiated the first regional marine convention - the Helsinki Convention - which was introduced in 1974 and was ratified in 1980. In 1992 a new convention was signed. Contracting parties are all the Baltic Sea States and the European Community. Participants also include a number of international governmental and non-governmental organisations which take part as observers.

The goal of the Convention is "..the reduction and elimination of pollution of the marine environment of the Baltic Sea Area from all possible sources". The Helsinki Convention was the first international agreement to cover all sources of pollution, both from land and from ships as well as airborne. As a result of the Convention, the Baltic Marine Environment Protection Commission - HELCOM - was established. Decisions by the Helsinki Commission are regarded as recommendations by the governments concerned and are to be incorporated into the national legislation of the member countries. About 100 recommendations have been adopted by the Commission, for example regarding emissions to the air from the iron and steel industry and requirements for discharging of waste water from the chemical industry.

1.6.2 The Brundtland Report

In 1987 the Brundtland Report, "Our Common Future", was released and the concept of sustainable development became a hot subject. Finally, environmental issues became a number one priority and calls for a long-range policy framework were raised. Important historical events, such as the political changes of the former Soviet Union, gave an obvious focus on the environmental vulnerability and the interdependency between states.

1.6.3 The Baltic Sea Declaration and the Action Programme (JCP)

In 1990, at the initiative of the Polish and Swedish premiers, all littoral states, observer countries, the Commission of the European Communities and international banks were invited to a Baltic Sea ministerial conference in Ronneby, Sweden. The conference resulted in an adoption of the Baltic Sea Declaration which called for a long-term, twenty year action plan "to assure ecological restoration and preservation of the Baltic Sea". In 1992, this declaration was endorsed by the Ministers of Environment as the Baltic Sea Joint Comprehensive Environmental Action Programme (JCP).

The key principles of the JCP are to harmonise economic and environmental objectives, to undertake both preventive and curative actions and to establish conditions for private sector participation. The programme consists of six elements covering policy and legal reform; institutional strengthening to design and implement environmental management systems; infrastructure investment to control both point and non-point sources of pollution; management of coastal lagoons and wetlands; applied research on pollution problems; and, finally, public awareness and environmental education.

The program is expected to run over a twenty-year period (1993-2012) at an estimated cost of 18 billion ECU. All major point sources of pollution (i.e. hot spots) have been identified and the programme is working on proposals for actions to be taken. A special body – HELCOM Programme Implementation Task Force (PITF) – initiates, co-ordinates and facilitates the implementation of the JCP.

1.6.4 The UN Conference on Environment and Development

In 1992 the UN Conference on Environment and Development (UNCED) was held in Rio. At the announcement of the conference, governments where induced to produce reports on environmental policies and the environmental status of their countries. The Rio conference resulted in five documents and three tangible commitments including the Convention on Biological Diversity, the Framework Convention for Climate Change and the "Forest Principles".

The most important outcome, however, was that environmental issues finally reached the top of the agenda, i.e. the environment became a top priority for nations as well as a global issue for common actions. The Rio conference agreed on a political framework which was given the name Agenda 21. The agenda constitutes a strategic platform for measures to be taken in order to shape a development in line with sustainability. The notion of sustainable development has thus been transformed into a political goal which has inspired many national and local environmental action programmes.

1.6.5 The environment policy of EU

Today four of the countries in the BSR – Denmark, Finland, Germany and Sweden – are members of the European Union and four additional countries – Estonia, Latvia, Lithuania and Poland – have applied for membership. This means that eight countries have environmental legislation in accordance with the EU law or are about to prepare themselves for an approximation of their legislation to EU policies. Moreover, Norway and Iceland have adjusted their legislation to EU law and have to do so also in the future through the agreement on the European Economic Area.

It should also be noted that countries in the EBR, except Russia, have already through the European Agreement accepted some of the EU rules. The agreement stipulates for example that the countries in the development policies should be guided by the principle of sustainability. In the context of the accession process, the EU Commission has performed an evaluation of the environmental policies in Estonia, Latvia, Lithuania and Poland. The Commission draws the conclusion that - in relation to EU standards – very substantial efforts will be needed, including massive investment and strengthening of administrative capacity to enforce legislation. Partial compliance with the EU "acquis" could be achieved in the medium term and full compliance only in the long run. The environmental standard in the Russian Federation in relation to EU is probably in a similar situation.

The European Council meeting in Luxembourg on 12 and 13 December 1997 decided to launch an accession process comprising ten Central and East European applicant States, among others Poland and the Baltic States, and Cyprus. The European Council has also decided to convene bilateral intergovernmental conferences in the spring of 1998 to begin negotiations with, i.a., Poland and Estonia on the conditions for their entry into the Union and the ensuing Treaty adjustments. At the same time, the preparation of negotiations with, i.a., Latvia and Lithuania will be speeded up in particular through an analytical examination of the Union acquis. This preparation may also be discussed at ministerial-level bilateral meetings with the member states of the Union.

It seems, against this background, appropriate to give a brief account of EU policies, since EU will directly or indirectly play an important role for sustainable policies in the BSR.

The environmental policy of EU aims towards sustainability based on the integration of environmental protection into EU sectorial policies, preventive action, the polluter pays principle, fighting environmental damage at the source, and shared responsibility. Overall, the design of environmental policies and measures should be performed with respect to maintaining continuity of economic and social developments. According to the Treaty, EU should, as regards environmental matters, contribute to the pursuit of:

preserving, protecting and improving the quality of the environment;
protecting human health;
ensuring a prudent and rational utilisation of natural resources; and
promoting measures internationally to deal with regional and world-wide environmental problems.

The environmental policy is to a great extent carried out through Directives, Regulations and Decisions which – when EU acts in a legislative capacity – are binding on the Member States, and can be enforced by the EU´s Court of Justice. There are now about 200 legal acts covering a wide range of matters such as the following issues:

Water pollution: The problem of reducing water pollution from industrial sources and sewage has been one of the Community´s first priorities. A number of directives deal with the protection of surface and underground water, both fresh and salt. Quality standards have been set for bathing water, drinking water, fresh water suitable for fish life and water used for rearing shellfish. The discharge of toxic substances is strictly controlled. A proposal which is currently considered demands all member states to ensure, by 2010, that all water prices reflect the full and true costs of supplying and maintaining high quality and reliable water supplies.
Atmospheric pollution: A series of directives (regarding ,for example, nitrogen dioxide and sulphur dioxide) have been adopted and further progress is being sought to deal with pollution from large combustion plants, particularly power stations, and the emission of gases from motor vehicles. With regard to the depletion of the ozone layer, EU adopted a series of measures to phase out the production and consumption of chlorofluorocarbons (CFCs) and other substances. The Community has managed to meet the international obligations regarding ozone depletion in stratosphere as well as the obligations to reduce SO2 and Nox set by the UN Convention on Long-Range Transboundary Air Pollution. However, the reduction of emissions of greenhouse gases and CO2 remains to be a problem. The Community has – as one way to deal with this problem – taken the initiative to bring up the issue of fuel consumption for discussion with the main motor vehicles corporations; the aim of these discussions is to arrive at voluntary agreements on specific targets for reduction of fuel consumption of vehicles.
Noise: Directives have been adopted fixing maximum noise levels for cars, lorries, motorcycles, tractors, subsonic aircraft, lawnmower and building site machinery. Proposals are under consideration concerning helicopters and rail vehicles.
Chemical products: Stringent measures have been taken to reduce the risks arising from the manufacture and disposal of chemical substances. Directives regulate the classification, packaging and labelling of dangerous substances, and the composition of detergents. According to one directive, manufacturers must inform the authorities about substances, plants and possible location of accidents.
Waste disposal: The collection, disposal, recycling and processing of waste is regulated by number of directives. Specific measures have also been taken to control transboundary shipments of waste, as well as in individual areas, such as waste from the titanium oxide industry and waste oil. Provisions for scrapping of cars are under consideration. They will imply some kind of producer responsibility of recycling or reusing a very large part (85-90 %) of the components and the material in a car.
Nature protection: Several directives have been adopted, for example, on the conservation of birds and habitats, and on the control and restriction of scientific experiments on animals.

As regards cities EU has launched a program, the Sustainable Cities campaign, which 300 cities in Europe have joined. The campaign aims mainly at giving support for waste management, sewage treatment and sanitation.

The primary responsibility of land use planning and management is retained by each individual member state. The Community is, however, increasingly active in spatial planning of transport, energy and communication networks as well as the protection of international rivers.

The environmental legislation of EU has developed within a framework set by series of Environmental Action Programmes. These periodically set out how the EU proposes to develop its environmental policy and legislation over the coming four or more years. The fifth programme (Towards Sustainability) tries to tackle the environmental challenges facing Europe in period 1992–2000. One way to make the general environmental objectives operative is to set up rather specific goals. In the fifth programme there are several reduction goals regarding, for example, NOx ( a 30 % reduction of 1990 levels to 2000), SOx (a 35 % reduction of 1985 levels to 2000), dioxins, general VOCs and heavy metals (at least 70 % reduction from all pathways of Cd, Hg and Pb emissions).

Despite the achievements in the environmental field, the EU policy has important limitations. There are significant gaps in coverage and legislation sometimes sets insufficient objectives. It is also a problem that legislation focuses on environmental media rather than on the environment as a whole. Although environmental legislation will continue to be necessary for setting fundamental levels of protection, the policy instruments – according to the fifth programme – should be broadened beyond "command and control" legislation. Examples of such new instruments are the following:

Economic instruments: Such instruments should make producers and consumers more sensitive to the responsible use of natural resources and the avoidance of pollution and waste.
Another potentially important instrument would be voluntary agreements and self regulation by industry (market-driven forces), including industry-wide pollution reduction targets, Environmental Management Systems (EMS), eco-labelling schemes, application of environmental product standards and purchasing policies with consideration of sustainability factors.
A more indirect but very effective measure would be improved information and education to enable the public to make competent choices and come to individual decisions (increasing market awareness). This should be accompanied with measures strengthening the participation in dealing with sustainable development, for example, by empowering people, local authorities and women with knowledge, capacity and responsibility of engaging in and having an influence on sustainable matters. It is also desirable that industry, trade unions and NGOs are involved in a dialogue in these issues.

This new trend in EU policy on sustainable development can be seen as a recognition that legislation may reflect a "top-down" approach to environmental protection in which responsibility for initiating action may be perceived to belong to governments alone. The scale of current environmental problems and the necessity to find solutions that are sustainable also in economic and social terms makes it indispensable of sharing the responsibility for tackling the issues between different actors. Such an approach will, however, also mean that better possibilities for exchange of information should be created as well as information to monitor the development of different sustainability targets.

As of interest to this report, it can be noted that the above given account of EU policies demonstrates that there should be a broad spectrum of measures in order to achieve sustainable development. A legislative framework is needed but this has to be complemented with economic incentives, a strengthening of the market-driven forces and an improvement in market awareness of sustainability effects. In addition, exchange of information and monitoring are important. This policy approach has great similarities with the design of the action programme for the industrial sector, which will be accounted for in Chapter 7.

1.7 Disposition of the report

After these introductory remarks on fundamental concepts, definitions and international and regional agreements, there will follow an account, preferably of the economic and the environmental situation in the Baltic Sea Region (Chapter 2 and Annex 5). Some cross-sectorial issues and interlinkages to other sectors and regions are briefly dealt with in the next section (Chapter 3) before turning to the goals and indicators for sustainable development in the industrial sector in the BSR (Chapter 4). This latter section and the scenarios on possible environmental outcomes in the future (Chapter 5) in combination with identified obstacles and gaps for a sustainable development (Chapter 6) will subsequently form the basis for the action programme for the industrial sector in the BSR (Chapter 7).

Industrial Sector Final Report

2. Industry and Environment in the BSR

In this section is given an overview of industry as well as the state of the environment in the BSR. More detailed presentations of the main branches of industry in the BSR, including their options for development in technological and environmental respects can be found in Annex 5.

2.1 Economic development in the Baltic Sea Region

A new economic structure in Eastern Europe as well as the completion of the common internal market in Western Europe are bringing about changes in the economic interaction among the countries around the Baltic Sea. New patterns of trade, co-operation and competition arise. The present foreign trade of the Nordic Countries is concentrated to EU-countries. This pattern is only changing slowly. More drastic changes are taking place in the intra-eastern trade which shows variations in both trade levels and structure. The transition economies´ trade with each other began to contract in 1989 but the trade relations are now recovering.

2.1.1 Growth in the Baltic Sea Region

The development in the transition countries seems to have reached a "point of no return" regarding their way towards market economy. Despite all Armageddon scenarios that was presented in the early 1990´s the countries seems to have come into a phase of real economic growth and low inflation. Poland has come the furthest in terms of macro-economic stability closely followed by Estonia, Latvia and Lithuania. Russia is still lagging behind but the development has improved slightly during 1997. As shown in the chart in figure 2.1 the development of GDP - one of the most significant macro-economic indicators - is on the "right track" for all the countries in the EBR.

For the near future the projections look good and most indicators point to that growth will continue the coming years. The GDP figures for the EBR, however, reveal only partly the economic development. More than the usual degree of caution is needed when interpreting statistics from these economies. The translation of physical economic activity into monetary measures is difficult when the marketplace is incomplete or lacking, as to some degree is the case in the EBR. The unofficial economy in the EBR is substantial. The European bank of Reconstruction and Development (EBRD) has presented figures (see Annex 4) that indicate that over 40% of the Russian economy was unofficial in 1995 (the same figure for 1990 was about 15%). Taking the estimated growth in the unofficial economy into account, the Russian economy might have shown positive growth some years ago. This illustrates some of the difficulties when measuring the development in transition economies.

Figure 2.1. The development of GDP in the EBR 1990-1997

Source: The European Bank of Reconstruction and Development (EBRD) and OECD.

The economies in the WBR went through a rough beginning of the 1990's with declining growth and high to modest inflation (Figure 2.2). The economic development has more or less been similar in the traditional market economies in the BSR. It seems now, however, as the WBR has reached a stable period characterised by modest to good growth and low inflation.

The projections for coming years are promising with modest growth and continued low inflation. The EU-countries strive to meet the Maastricht criteria helps to keep inflation under control. Even countries like Sweden – with along history of inflation and continued devaluations – seems to have changed policy.

The Baltic Sea Region is now – in macro-economic terms – rapidly turning into a very dynamic region with growing economies on both sides of the Baltic Sea, low (or modest) inflation and structural changes within the economy.

Figure 2.2. The development of GDP in the WBR 1990-1997

Source: OECD and International Monetary Fund (IMF)

2.1.2 Trade in the BSR

It is striking to notice how fast the old trade relations between the countries in the BSR have been re-established (Figure 2.3). It is indeed promising for the future development of the BSR. On average, the trade flow between all countries in the region has increased by 32% annually (current USD values) between 1994 and 1996 and the growth of trade within the region is forecasted to continue.

Figure 2.3. Trade dependencies in the BSR in 1996

Sources: IMF, Directions of Trade Statistics Yearbook 1997

Today’s trade pattern in the BSR, as in the rest of Europe, is dominated by Germany. Every other country in the Baltic Sea Region is depending on Germany as an export market, while Germany, on the other hand, does not find any of its main export markets in the BSR vicinity. Poland has during the last few years exported to Germany about one third to half of its total export.

Another strong ’trade hub’ in the BSR is Sweden with its traditionally strong links to the Nordic neighbours. Finland is also again rebuilding its strong links to the Russian Federation and especially to Estonia. It is noteworthy that the break-down of the Soviet Union did not curb relations between the neighbours in the EBR. The trade dependence between the Baltic States and Russia is still important and new relations between the three Baltic States are now rapidly emerging. Poland, however, seems to have the most one-dimensional position due to its very strong dependence on Germany as an export market..

2.2 Industrial structure in the Baltic Sea Region

As in the rest of the industrialised world, the service sector in the BSR is dominating the economies., both in the EBR and the WBR. However, the structure of the service sector varies a great deal between the countries. Both Denmark and Estonia, for instance, have strong traditions in trading, while Germany has a relatively strong position in media and banking.

Generally, the service sector is larger in the market economies than in the transition economies - except for Estonia. This is mostly a historical consequence of the planned economy in the EBR which was focused mainly on producing industrial products and food. The system did not promote production of consumer products and services. Consequently, the service sector in the countries having a planned economy was underdeveloped compared to the market economies.

The size of the industrial sector varies from 19 to 39 per cent of total GDP in the BSR (figure 2.4). Estonia has in relative terms the smallest industrial sector (19%) and the Russian Federation the largest one, 39 per cent of GDP. This is partly a historical legacy from the planned economy era. The Soviet Union was "over-industrialised" (se above) – for example in terms of heavy industry and mining – as was the case for many of the other transition countries.

Agriculture is also a sector that contributes to more of total GDP in the EBR than in the WBR. Lithuania has the largest contribution from the agricultural sector in the BSR closely followed by the Russian Federation, Latvia and Poland. Lithuania (together with Ukraine) had a role as specialised producers of agricultural products within the Soviet Union.

Figure 2.4. Contribution to GDP (%) from industry, agriculture and services in the BSR in 1995 or 1996

When measured in per cent of the total labour force in different sectors it is obvious that agriculture still is labour-intensive in the EBR. For example, no less than 24 per cent of the labour force in Poland is working in the agricultural sector. However, its contribution to GDP is only 7 per cent. This can be seen as an indication of further structural reforms being needed in these countries. The negotiations with the EU for membership will also put pressure on the EBR-countries to speed up structural reforms within the sector.

Industrial output and structure within manufacturing

Germany is the dominating industrial nation in the BSR both as regards total industrial production and the amount of production per capita (table 2.1). Sweden and the Russian Federation are the second and third largest industrial producers in the BSR. The total German industrial production (in MECU) is, however, ten times as large as that in Russia and Sweden, respectively.

There are large differences between the countries in the BSR with respect to industrial production per capita. Estonia has, measured by this yardstick, the largest industrial sector in the EBR closely followed by Latvia and Poland. This is a reflection of the progress in structural changes, foreign direct investment and trade in these countries.

Table 2.1. Total industrial production and industrial production per capita in the BSR countries in 1994 (mining, quarrying, construction and nuclear industries are not included).

	Total industrial production	Industrial production per capita
	(MECU)	(ECU)
Denmark	52 594	10 102
Estonia	2 541	1 695
Finland	52 122	10 244
Germany	1 077 923	13 241
Iceland	1 974	7 395
Latvia	3 413	1 349
Lithuania	3 156	848
Norway	42 839	9 877
Poland	41 564	1 077
Russian Fed.	94 946	641
Sweden	96 667	11 009

Sources: OECD Database for industrial production, 1997; OECD Labour force statistics, 1996; International Yearbook of International Statistics, UNIDO, 1997.

The industrial structure (Figure 2.5) in the BSR differs very much from country to country. In the Nordic countries and Germany, the industry is in general diversified and at a high technological level. In the transition countries (The Russian Federation, Estonia, Latvia, Lithuania) the industry is more concentrated partly on labour-intensive branches at a rather low technological level and partly on heavy industry. The three Baltic States are similar in the way that they were – and in some respects still are – all dependent on food production and food industry. Textile industry is predominant in these countries as well. Lithuania has a very high dependence on the petroleum and coal industry since it for a long time had a position as an "import corridor" for the Soviet Union.

Today’s industrial structure of the Nordic countries (except for Denmark) still bears traces of early industrialisation. Heavy machinery, mining and forest processing are still dominating sectors, especially in Sweden and Finland. In the case of Norway these sectors have been surpassed by the gas- and petroleum sector. In Denmark food-processing is the largest sector while machinery is number one in Germany.

Figure 2.5. Output from different industrial branches in the BSR (%) in 1994

Sources: OECD Database for industrial production, 1997; OECD Labour force statistics, 1996; International Yearbook of International Statistics, UNIDO, 1997.

The structural differences of the various industrial sectors between the countries can also be measured by the distribution of employment. Striking characteristics are the importance of the food and textile industry in Denmark, Poland and Estonia. Wood, pulp and paper industry plays a crucial part in Sweden and Finland.

2.2.1 Foreign Direct Investments in the Baltic Sea Region

The Baltic Sea Region is a rather significant recipient of foreign direct investment (FDI). The countries in the region had a stock of inward FDI of about USD 270 billion in 1996 which corresponds to one quarter of the total stock of FDI in the European Union. Of course, not all of the FDI is directed to the areas being a part of the Baltic Rim. In the case of Germany many of the FDI:s are for example made in Bavaria and in the case of Russia in the Murmansk region. The Baltic Sea Region nevertheless accounts, in an international perspective, for an appreciable share of total inward FDI.

The western countries in the BSR, primarily Germany and Sweden, receive the lion’s share (90%) of the total inward FDI stock (Table 2.2). Among the eastern countries in the region, Poland and Russia have got the major part of the FDI flows.

Table 2.2. Foreign direct investment (FDI) in the BSR (end of 1995 or 1996)

	Stock of FDI	FDI per Capita in USD	FDI as percent of GDP
Denmark	23000	4100	12
Estonia	792	542	18
Finland	7500	1500	6
Germany	167200	2000	7
Latvia	662	266	13
Lithuania	298	80	4
Norway	17700	4000	12
Poland	12000	311	9
Russia	7700	52	2
St. Petersburg	880	185	-
Sweden	35000	4000	14

Source: OECD, the Stockholm Institute of Transition Economies and East European Studies and national material

There are also great differences between the countries as regards the stock of inward FDI per capita. Estonia has by far the largest stock per capita among the countries in the EBR and only Hungary and the Czech Republic in the whole of Central and Eastern Europe have a higher FDI per capita. In contrast, Russia receives only one tenth of the FDI per capita level of Estonia. St Petersburg has, however, attracted more foreign investments than Russia in general The countries in the EBR attracting most FDI:s (measured per capita) are characterised by having reached far (as Estonia and Poland) in the privatisation of firms and the implementation of economic and legal reforms.

In comparison with the stock of inward FDI per capita in the WBR, the FDI in the EBR may seem very limited or almost negligible in certain countries. However, the FDI is important for the economic activity in the EBR and plays in several cases a greater role for the development than in the WBR. In relation to GDP, the stock of FDI is higher in Estonia (18%) than in Sweden (14%) and other countries in the WBR. There are large diversities between the countries; for example, Russia receives very little FDI in relation to GDP (2%).

2.3 Economic and social welfare in the Baltic Sea Region

More than 300 million people live in countries having a coastline to the Baltic Sea of which 80 million live in the Baltic Sea catchment area. The proportion living in the three largest cites ranges from eight per cent in Poland and Germany to more than 40 per cent in Estonia and Latvia. During the period from 1970 to 1990, total population has increased in all these countries, with the exception of the former East Germany. Forecasts for 2010, however, indicate a stagnating rate of increase or even decrease in some regions. In for example St. Petersburg the population has decreased because of high (in comparison to the WBR) infant mortality rates, low nativity and a rather substantial emigration to other countries.

The transition from a planned economy to a market economy has caused tremendous strain on people in the EBR. The sudden exposure to international competition resulted in that old production structures fell apart and the standard of living decreased to almost third-world levels. At first, few reliable data sources were available to measure the pace of transition if the EBR. Today, however, we can begin to grasp the situation in statistical terms.

The differences between the traditional market economies and the EBR in economic welfare figures are huge. On average, one can say that today, the standard of living in the WBR is five to ten times higher than in the EBR, depending on if we turn to purchasing power parities (PPP) or to GDP-comparisons at exchange rates (Table 2.3).

Table 2.3. GDP per capita in the BSR in 1996

	GDP per capita at PPP
Denmark	22,620
Estonia	4,440
Finland	18,580
Germany	21,200
Latvia	3,420
Lithuania	4,260
Norway	22,670
Poland	5,700
Russia	4,070
St. Petersburg	4,140
Sweden	19,340

Sources: OECD, IMF, the World Bank and national statistics

Poverty and income inequality have increased in most transition countries during the 1990s, often as an result of the far-reaching structural change in the economies. Also problems with the governmental finances – as in the case of Russia – has decreased the possibilities of the state to mitigate these effects.

The differences in living conditions between the WBR and the EBR are great also measured with "soft" social indicators as for example life expectancy at birth and infant mortality rates. In Russia the infant mortality rate is 25 deaths/1000 live births. The same figure for Denmark is 5. The figures for life expectancy at birth also shows significant differences between the WBR and the EBR, e.g. the average life expectancy at birth for men in Russia is below 60 years whereas the figure for Sweden is 76 years.

The economic division that stretches across the Baltic Sea is very deep. To economists this is a certain sign of a region of economic turbulence which may be a ground for fast structural change and provide a huge growth potential, especially for the transition countries. However it is in the long run necessary to cope with the issues of the social welfare systems – for example pensions – in order to get acceptance for the further transition and structural changes in the countries.

2.4 State of the environment in the Baltic Sea Region

In the DOBRIS assessment of 1995 it was concluded that certain environmental problems occur in all European countries and may be considered pan-European; climate change, decomposition of stratospheric ozone, tropospheric ozone and other photo-chemical oxidants, acidification, use and pollution of water, over-use of forest resources, loss of biological diversity, threats to coastal areas, chemicals, waste and waste handling, and environmental and health effects in urban areas.

In the text below, an overview of the state of the Baltic Sea and of the environment in the BSR is made. The situation in each country in the BSR can be found in section 2.6.

2.4.1 The Baltic Sea Region

The environmental situation in Eastern Europe have been characterised as severe, but it has turned out that this to some degree have been exaggerated. Severe problems exist, but they are usually limited in their geographical extension, i.e. locally the pollution load has been heavy, but large areas are not very exploited and consequently the pollution load in these areas have been limited. The local severe environmental effects are for instance bad health condition in urban and heavily industrialised areas, forest damage, soil destruction due to heavy agricultural pressure, nutrient leaching, eutrophication and ground-water pollution.

In larger urban and industrialised areas in Europe air pollution cause adverse environmental and health affects. Besides the negative effects on health, SO2, NOx and tropospheric ozone cause damage on vegetation which leads to reduced agricultural and wood production. These substances also contribute to acidification which locally causes severe damage on inland waters, forests and soils. Acidification is most predominant in the Nordic countries, parts of Russia and northern Germany where low-buffered soils occur, but also more well-buffered soils in the southern part of Poland and eastern Germany are affected.

Eutrophication, primarily of inland and coastal waters, but also of land, are other urgent issues on the European environmental agenda. Land eutrophication caused by nitrogen deposition have been detected in large parts of Europe and the southern part of Scandinavia. Eutrophication of inland and coastal waters is a local and regional problem that can be related to specific stationary and municipal source and to diffuse nutrients loads from, e.g. agriculture. The water quality in Central European rivers that discharge in to e.g. the Baltic Sea is generally bad.

Thanks to work to reduce emissions of heavy metals and the use of un-leaded petrol the problems related to heavy metals are now largely concentrated to local effects, at least in the WBR. However, problems related to the use of mercury, cadmium and lead still have to be addressed. The occurrence of other toxic substances such as stable organic compounds in Europe is not known in detail, but high concentrations of poly-aromatic carbohydrates (PAH) (that may be cancerogenic and allergenic, and contribute to the formation of tropospheric ozone and smog) occur in large cities, especially in winter. Other substances such as PCB can still be found, e.g. in the Baltic Sea, although the use is strictly controlled or banned since many years.

The generation of waste per capita is somewhat lower in the EBR than in the WBR. Increased economic growth, however, may lead to an increased generation of waste also in the EBR. The ambition is, as with pollution, to de-couple this relation between economic growth and environmental impact. Waste is to a large degree deposited which often leads to pollution of soil and ground water from contaminated leachates and emissions to air of CO2, methane and other toxic gases. Knowledge about the extent of this problem is very limited. Incineration of waste for energy production is increasing today, especially in the WBR.

2.4.2 The Baltic Sea

The Baltic Sea is a vulnerable ecosystem due to natural conditions such as a reduced exchange of water. In addition to the natural non-favourable conditions, contaminants enter the Baltic Sea from many sources, e.g. industrial, agricultural, forestry, and traffic activities caused by about 80 million people that inhabit the drainage area. The environmental condition of the Baltic Sea and the pollution load is evaluated every fifth year by HELCOM. They have concluded that the most severe threats to the Baltic Sea are the load of eutrophying substances (nutrients and organic material), stable (toxic) organic compounds, heavy metals and oil spills.

The environmental situation in many parts of the Baltic Sea has deteriorated rapidly during the last 40 years. The pollution of the Baltic Sea has become a threat to its living resources and eutrophication affects the whole Baltic Sea, especially the coastal areas where the intensity of toxic algae blooms are increasing. DDT, PCB and heavy metals (e.g. mercury) have caused severe reproduction problems e.g. for seals, eagles and sea-fowl. Banned and strictly reduced use of these compounds have, however, resulted in that populations are again increasing.

The will to improve the condition in the Baltic Sea is now wide-spread. A progressive initiative is the one from the International Chamber of Commerce in Sweden (ICC Sweden). The project "The Baltic Sea 2008" has the ambition to reduce the pollution load on the Baltic Sea to the levels from the 1940s. The project will be initiated in 1999 and will run for ten years. It is a cross-sectorial project that will involve the ICC members« governments, municipalities and other relevant organisations in the BSR. The project emanates from the ICC Business Charter for Sustainable Development and is endorsed from the ICC council in Paris.

2.4.3 Environmental policy

In a number of areas in the EBR environmental legislation is not structured as in the WBR. General legislative instruments, such as framework laws, are more frequently used while technical issues are left to be governed by regulatory instruments. Western countries typically identifies individual sector regulations. However, the polluter pays principle is at least partly reflected in the environmental legislation in all countries and the use of environmental impact assessments (EIA) have been more or less fully adopted. Several western and EBR organisations are working on the harmonisation of environmental and other legislation.

As a result of the adoption of the Environmental action plan for Europe (EAP) in Dobris in 1991, national environmental action programmes (NEAPs) are being adopted in the BSR. Several countries have also established environmental funds, earmarked for supporting environmental investments, e.g. investments for pollution control and prevention technology. The phasing-out of subsidies for consumption of energy, water and natural resources in the EBR is an excellent example of a win-win policy that improves economic efficiency and reduces the environmental impact.

2.5 Environmental Impact of Industry in the Baltic Sea Region

The environmental impact of industry on a more general level will be presented in this chapter. The situation in each of the BSR countries can be found in chapter 2.6 whereas the environmental aspect related to different branches of industry can be found in Annex 5.

Industrial production can be described in terms of an input-output flow model. Output from an industry constitutes input to other sectors in complex production chains. Each part of the production chain might be more or less related to environmental problems and thus give rise to waste, emissions and consumption of resources (Figure 2.6).

To minimise the waste, emissions and misuse of resources but also to reach maximum efficiency, industrial production has to be put under governance. Primarily, the board and the management of companies are responsible for the governance. Practices developed in the whole of the business sector as well as contacts between enterprises within the business community have also importance for the management of environmental matters.

However, the local community, regional authorities, international agencies, non-governmental organisations and the governments do also have their responsibility in formulating the competitive agenda, in setting up rules for different actors etc. Thus, to reach a sustainable development Markets and Politics have to work in harmony and impose changes that affect industrial production in a constructive way.

Figure 2.6. Industrial production from an ecological view.

When trying to create a more comprehensive picture of the environmental aspects of industry, a connection to different phases of the life-cycle of products, i.e., from the production of raw material through production and use to the waste phase, can be made. This approach is used for making life-cycle analyses (LCA) for products, e.g. as a basis for eco-labelling. Alternatively, the environmental problems related to industry can also be divided into those problems which are related to the exploitation of natural resources, those which are results from emission of pollutants and those which are related to the generation of waste.

An estimate of the industrial contribution to environmental pollution in OECD countries in the beginning of the 1990s countries that this sector accounted for about 15% of the water use, 25% of NOX emissions, 35% of final energy use, 50% of green house gas emissions, and 75% of non-hazardous inert waste generated. Unfortunately, no comprehensive compilation of data for the BSR have been found.

However, within the JCP (Joint Comprehensive Environmental Action Programme) a number of 122 hot spots were identified in the Baltic Sea Region of which two thirds were located in the EBR. Almost 50% of the hot spots were municipal, 42 hot spots were industrial and 35 of those were located in the EBR. The most prioritised industrial sectors identified by the JCP were pulp and paper industries, chemical industries and metal producing and processing plants. The industries listed among the hot spots are naturally those in the worst condition. They mostly represent large enterprises were privatisation has been slow and where competitiveness still remains low. Huge investments will be needed for environmental improvements. Thus, investments in these industries are often not regarded as financially viable. As a consequence, investments have till now (1997) been initiated only at 11 of the 35 hot spots.

Besides the major spots there are several minor local spots having environmental detrimental effects in the local or regional environment; these problems should preferably be identified by the local and regional authorities in the different countries. To the best of our knowledge, no overall information is available making it possible to conclude on the structure of these sources in terms of industrial branches involved.

The drop in industrial activity in the EBR in the beginning of the 1990s, that was also accompanied by a sharp decline in the use of commercial fertilisers, has contributed to reductions of resource use, air and water pollution in these countries. Since then, environmental policies and instruments have started to bear fruit, e.g. municipal discharges have been reduced in some countries. The challenge for the EBR is now to resume economic growth without a resurgence of the emissions of pollutants, i.e. to de-couple economic growth and pollution intensity. The challenges are major and profound; energy intensity and air pollution remain between 2 to 3 times higher than the OECD average and additional pressure is likely to arise from economic restructuring, e.g. increased public consumption and expanding motor vehicle use.

2.5.1 Use of resources

Industry is a major contributor to the exploitation of natural resources. In order to create an overview of the situation, industries can be divided into three different groups according to their intensity of resource use:

"Resource-intensive industries" such as metal-smelting, food, pulp and paper, and wood industries.
"Energy-intensive industries" including non-ferrous smelting and refining, cement industry, utility industries, pulp and paper industries.
"Water-intensive industries" including non-metallic mineral industries, some engineering industries, food and pulp and paper industries.

Today Europe has only a small part of the world’s reserves of important minerals. However, the Nordic countries and parts of Russia are exceptions where rich mineral resources still exist. This might have caused a somewhat reluctant attitude which is reflected in a still very high production and consumption. In the beginning of the 1990s the former USSR and Eastern Europe together accounted for 21 per cent of the world’s steel consumption and they also used the largest world share of scrap metal for steel-making (31 per cent).

A major area of exploitation of natural resources by industry is energy use. Between 1970 and 1990 energy consumption by industry increased all over Europe. However, industry’s share of energy consumption declined from 49 to 41% of total final energy consumption. Many Central and Eastern European countries are depending on energy intensive industries. In a number of these countries industry accounts for over 50% of electricity consumption. In the EU, industry consumption of electricity fell from around 48% in 1980 to 44% in 1990. The emphasis on the production in heavy industry, based on high material inputs, and the failure of the price system to reflect even economic costs have greatly contributed to an inefficient resource allocation and high energy intensity causing high levels of air and water pollution in the countries in transition (EBR).

Considering water use by industry, many branches use large amounts of water and just over half of the total water withdrawals in Europe are related to the industrial sector. Most industries make use of water, either directly as raw material which is part of the manufactured product or indirectly for cooling, steam source, cleaning and circulation. About 70-80% of the water use in the sector is used for cooling, particularly in power generation.

Many of the large industrial branches are also dependent on the availability of renewable raw material, primarily provided from agriculture, forestry and fishery. For a discussion of the consequences of a heavy demand of primary produce we refer to these respective sector reports. For an extended discussion on energy use and the use of different energy sources we refer to the energy sector report.

2.5.2 Emissions of pollutants

The energy-intensive industries are large contributors to atmospheric emissions, e.g. basic metal, chemical and cement industries, but also oil refineries and petrochemical industries contribute. Energy related emission are primarily SO2, NOX, CO2 and dust.

About 40% of the European industrial emission of SO2 originated from the BSR in 1990 (including the European part of Russia and the whole of Germany). Main contributors to the SO2 emissions in the BSR are the Russian Federation (European and Asian), Germany and Poland (Table 2.4). The same countries also dominate the NOX emissions. In most countries, however, road transport and the fossil fuel-based production of electricity are the main sources of NOX emissions. When related to population the highest SO2 emission rates are found in the EBR, the highest per capita emissions of NOX, on the other hand, are found in Iceland and the Nordic countries.

Table 2.4. Industrial emissions of SO2 and NOx in the BSR, 1994.

	SO2		NOx
Year 1994	kton/year	kg/capita	kton/year	kg/capita
Denmark	156	30	272	53
Estonia	141	88	43	27
Finland	117	23	283	57
Germany	2997	38	2872	36
Iceland	9	33	24	88
Latvia	115	43	93	34
Lithuania	222	60	158	43
Norway	35	8	225	54
Poland	2605	68	1105	29
Russian Fed.	6400	43	2000	13
Sweden	97	11	392	46

Source: International Business Statistics, Environment, November 1997, Statistics Finland. Miljön i ett utvidgat EU, SOU 1997:149, Miljödepartementet, Sweden. (In Swedish)

The main environmental problems related to SO2 and NOX emissions are acidification of land and water and damage on crops and forests and eutrophication of soil and water (NOX) whereas CO2 contributes to the greenhouse effect. Emissions of dust causes local pollution and health problems. Whereas the emissions from stationary sources tend to decrease, the emissions from mobile sources (i.e. traffic) probably will increase due to an increased traffic load, especially in the EBR. On a longer term basis a reduced emission intensity from traffic may be expected.

Industrial emissions of heavy-metals include: discharge of heavy-metal solutions from smelting and metal processing, use of metals and metal compounds in manufacture of paints, plastics and batteries, and tanning. These industries generate liquid effluents which may contain many different chemicals as well as organic matter. Heavy metal emissions to air result from non-ferrous metals processing and iron and steel manufacture. Emission of dust from industrial activities is significant in certain areas, especially in Eastern and Central Europe where many plants are operating without or with poorly functioning dust filters.

Industry, including mining, are the main sources of synthetic organic chemicals and heavy metals in freshwater. Most synthetic organic chemical pollution is from chemical and petrochemical refineries, pharmaceutical manufacturing, iron and steel plants, pulp and paper processing, and food processing. The occurrence of e.g. stable organic chemicals in the European environment is generally poorly known.

Industry is also a source of nutrients, nitrogen and phosphorus, emissions to water, but municipal sewage and agricultural leachates dominate. Food and agro-product processing industries are large producers of nutrients and organic waste and result in emissions to water containing e.g. oxygen-demanding organic matter (measured as biological and chemical oxygen demand; BOD and COD). In western Europe concentrations of organic matter in rivers has decreased in the last 10 years whereas the situation in eastern and central European rivers has been unchanged or in some case it has worsened.

The major industrial source of hydrocarbons emissions is evaporation from solvents use, e.g. in engineering industry.

In general very little data on discharge of wastewater and polluting substances by sectors of industry are available. Reporting and methods of measuring pollution and emission inventories differ between countries which makes relevant comparison difficult. The build-out of waste-water treatment plants in the EBR has started but still only a limited part of waste-water is treated before it is discharged to recipients.

2.5.3 Generation of waste

Industrial waste contain varying proportions of organic and inorganic compounds and major categories of industrial wastes are considered hazardous, e.g. solvents, waste paint, waste containing heavy metals, acids and oil waste. Waste from mining activities, which are often a major problem in Central and Eastern Europe, includes topsoil, rock and dirt and may occur as inert or mine tailings which are contaminated by metals and chemicals from the mining process.

The generation of waste related to industry can also be defined as covering the waste generated during use of industrial products. In their work for cleaner production and eco-efficiency, the World Business Council for Sustainable Development and UNEP, has included the product’s negative impacts along the life cycle; from the use of raw materials to the ultimate disposal. Each inhabitant in Europe produces between 150 and 600 kg waste per year. This amount has shown to correlate with the level of industrialisation and income and the per capita production of waste in the EBR is consequently lower than in the WBR.

The relation between different types of waste can be illustrated with figures from OECD where the total amount of waste produced in 1990 in OECD countries was 9 billion tonnes. Of those, 1.5 billion tonnes were industrial waste, including more than 0.3 billion tonnes of hazardous waste. The amount of waste is increasing at a rapid pace in these countries. Between 1985 and 1990, industrial wastes increased annually on an average rate of 3%. Concern over the environmental impact of the increasing volume and toxicity of waste have emerged dramatically in the last two decades. The UNCED conference in 1992 strongly pointed out that the increasing production of waste poses significant threats for the environment and is no longer acceptable.

Waste statistics across countries are often not comparable due to diverging definitions, classification systems and scope. The importance of co-ordinated actions to control waste movements and to reduce the potential environmental threats of improper waste management practices has been recognised. Thus, there is a need to harmonise classification systems at the international level.

Today, it is estimated that between 30 and 40% of municipal waste produced in OECD European countries, are recycled. Recovered materials are mainly paper and cardboard, aluminium and glass.

2.6 Country overview

2.6.1 Denmark

Resources

The whole country has an area of 43,070 km^² and consists mainly of low lands. 61% is arable land and 12% is covered by forests and woodland. Important natural resources are petroleum, natural gas, fish, salt and limestone. The total population in Denmark was 5.20 million in 1994. The labour force amounts to approx. 2.6 million of which 20% are occupied in the manufacturing and mining sector and 6% in the construction sector.

Economy

Denmark’s modern economy features high-tech agriculture, up-to-date small-scale and corporate industry, extensive government welfare measures, comfortable living standards and high dependence on foreign trade. The government will concentrate on reducing the high unemployment rate of 10% (1995) and the budget deficit as well as maintaining the low inflation (2.4%, 1995). It also hopes to boost industrial competitiveness through labour market and tax reforms and increased research and development funds.

Industry

The industrial contribution to GDP in Denmark is 24%. Service is the main contributor with 72% and agriculture contributes with 3%. The main branches of industry are: Food, drink and tobacco (28% of industrial output within the manufacturing industry), machinery equipment (24%) and chemical substances (11%). Around 10% is also pulp and paper and metal products.

Environment

The three largest branches also encompass the largest polluters, most of the problems being attributable to various discharges from the trade sector. On the other hand, there is little heavy industry in Denmark and hence no pollution from associated mines and blast furnaces. Denmark’s major environmental problem are air pollution, principally from vehicle emissions; nitrogen and phosphorous pollution of the North Sea; and polluted drinking and surface water, due to animal wastes.

Industry accounts for 28% of total energy consumption in Denmark. Energy consumption per unit produce is tending to fall since industry has enhanced its energy efficiency. Approximately 50% of industrial effluent is led directly to the sea. The remaining 50% of industrial effluent is discharged to the municipal sewage system and is treated along with other urban sewage. Put simply, industrial effluents cause twice as much pollution as sewage from the population. SO2, NOx and CO2 emissions to air from industry are secondary in relation to other sources, accounting for 16%, 17% and 15%, respectively, of total Danish emissions. The major contribution of air pollution come from vehicles. Danish emissions of ozone depleting substances have been reduced by over 50% between 1986 and 1993. All relevant substances, including halons, should be phased out by 1999.

Approximately 10 million tonnes of waste are produced in Denmark each year, of which 80% stems from commercial sources (industry, building and construction, power stations and sewage treatment plants) and 20% from households.

2.6.2 Estonia

Resources

The total area of Estonia is 45,100 km^² of which 22% is arable and 31% is forest and woodland. The natural resources found in the country are oil shale, peat, phosphorite and amber. Estonia has a population of 1.5 million people from a wide variety of ethnic divisions. The labour force account to 750,000 of which 42% are occupied within industry and construction and 20% within agriculture and forestry.

Economy

During the first part of the 1990s, the industrial production decreased sharply, but since 1994 there has been a recovery and the production is increasing rapidly. Estonia has followed a rapid and determined privatisation policy, and nearly all enterprises are now private-owned. In 1996, the private sector contributed to about 70% of the GDP. The foreign investments in Estonia are rapidly rising. Estonia has to a great extent eliminated both tariff and non-tariff barriers, and is one of the most liberal external trade regimes in the world. Despite various progress, Estonia faces a complex reform agenda to complete the transition to a market-based economy. The country will require financial and technical assistance to support reforms and investments conducive to export-led growth. Bolstered by a widespread national desire to reintegrate into Western Europe, Estonia has adhered to disciplined fiscal and financial policies. The growth of GDP for 1995 to 1997 was about 5%. Despite these positive indicators, unemployment - 8% in 1994 - is on the rise, and wages have not kept pace with inflation.

Industry

Industry is a fairly small part of Estonia’s economy. The industrial output was about 2.5 billion ECU in 1994, which is about 19% of GDP. Industry accounts for 28% of total employment.

The food industry is the largest sector in the Estonian industry (40% of the industrial output, 20% of industrial work force). Steps are now taken towards EU market which include improvement of technological level, improvement of quality and adjustments to meet EU requirements. The long-term outlook for especially fish products, beverages and dairy products is relatively good.

The textiles and clothing industry is the second most important sector (11% of industrial output, 19% of industrial work force). Since labour costs are low and low capital investments are needed, this branch has been attractive for sub-contracting and outward processing trade, primarily with Sweden and Finland. However, the trend now is that Estonian companies are increasing their export of own collections. Labour costs are also expected to rise in the future.

The wood industry is the third major branch due to vast natural resources (11% of industrial work force). Furniture accounts for more than half of total output in the forest sector, and has competitive advantages due to low wood costs, a very skilled low-cost labour force and low capital investment need. The furniture industry has strong trade links with the EU, and should develop well in the future. The chemical forest industry, especially the pulp industry, has a low technological level and causes great environmental damage. Large investments are needed to make this sector competitive on the international market.

Also engineering and metal processing industry is a large employer (19%). Furthermore, Estonia has chemical and petrochemical industry, electro- mechanical plants and mining of oil shale. The oil shale is mainly used for fuel. Nearly all industrial enterprises are small or medium-sized (SMEs). Estonia is heavily dependent on imported energy.

Environment

Because of the decline in industrial and agricultural production and as a result of high levels of environmentally related investments, the environmental situation in Estonia has improved somewhat in recent years. However, there are still major problems related to the oil shale industry, which is the base for power generation. The use of oil shale causes large emissions of sulphur dioxide as well as leaching of metals from toxic ash dumps and contamination of agricultural land by particles from the combustion. Estonia has accumulated significant quantities of waste: military, industrial, hazardous and also radioactive waste.

Some important environmental legislation was passed in 1994, e.g. a water act and regulation of waste water discharge. The new legislation tends to be of a framework nature and needs to be completed with standards and implementation measures.

2.6.3 Finland

Resources

Finland is covered by forest and woodland to 76% of the total area (337,030 km²). The natural resources are, therefore, mainly timber, but also copper, zinc, iron ore and silver exist. Only 8% of the land is arable. The total population in 1996 was 5.1 million. The labour force amounts to 2.5 million; 21% work in the industry sector and 15% in commerce. As a result of the recession and productivity gains unemployment is still 14%.

Economy

Finland has a highly industrialised, largely free-market based economy. Its key economic sector is manufacturing - principally wood, metals, and engineering industries. Except for timber and several minerals, Finland depends on imports of raw material and energy. The Finnish government has proposed efforts to increase industrial competitiveness and efficiency by an increase in exports to Western markets, cuts in public expenditures, partial privatisation of state enterprises and changes in monetary policy.

Industry

During the 1990s, industrial production has increased its share of GDP to 31% at the same time as the figures for service, building and construction, and agriculture have declined. Finland’s ore body is relatively scarce compared with the demand in industry. In the future, the metal industry has to rely on imported raw materials and recycling. Environmental investments by Finnish metal industry consist primarily of traditional purification technology to reduce emission levels.

The production of paper and forest industry products has been at record-high levels in recent years. At the same time the environmental impact of the industry relative to production volumes has been significantly reduced. In 1996, Finland produced a total of 10.4 million tonnes of paper and board, of which 90% was exported. A total of 563,000 tonnes of paper was recovered through recycling, representing 60% of the end-consumption of paper and board in Finland.

The chemical industry has taken important voluntary steps to raise the standards of its environmental protection within the context of the international Responsible Care programme. The chemical industry has managed to reduce some of its emissions into the atmosphere and water bodies. In addition, waste volumes have decreased since 1994.

Environment

The environmental problems in Finland are mainly air pollution from manufacturing and power plants contributing to acid rain; water pollution from industrial wastes and agricultural chemicals; and habitat loss threatens wildlife.

Finland’s sulphur dioxide emissions in 1995 amounted to 16% of the figure for 1980. Industry accounted for 37% of the emissions (including energy use), electricity and heating energy production account for 28%. Industry accounted for 7% of the nitrogen oxide emissions in 1995 and approximately 8% of the carbon dioxide emissions.

Finland applies a wide range of instruments for the economic regulation of environmental protection: these include taxes on goods, graded taxation based on environmental impacts, economic incentives, certain administrative and municipal fees, financial subsidies and deposit schemes to encourage recycling. The most important economic instruments are tax related.

2.6.4 Germany

Resources

Germany´s population was, in 1995, 81.8 millions of which 80% lived in the old Federal Länder (states) and 20% in the New Federal Länder. The population density varies considerably by region. The total labour force amount to 68 millions (41% in industry and 6% in agriculture). The unemployment rate was 9% in the western part and 15% in the eastern (both regarding 1995).

The whole country has an area of 356,957 km^². The land area is dominated by agriculture and forests, 55% and 29%, respectively. The industrial land use amounts to 0.7%. The natural resources found in Germany are; iron ore, potash, timber, lignite, uranium, copper, natural gas, salt and nickel.

Economy

Germany, the world’s third-most powerful economy, faces its own unique problem of bringing up its eastern part. Despite substantial progress toward economic integration, the eastern states will continue to rely on subsidies from the federal government into the next century. The economic recovery in the east has been led by the construction industries, with growth increasingly supported by the service sectors and light manufacturing industries. Western Germany account for 90% of overall GDP. Due to Germany’s high production costs there is an increasing preference of German companies to locate manufacturing facilities to foreign countries.

Industry

The western part of Germany is among the world’s largest and most technologically advanced producers of iron, steel, coal, cement, chemicals, machinery, vehicles, machine tools, electronics and food and beverages. Industry in the eastern part consists of metal fabrication, chemicals, brown coal, shipbuilding, machine building, food and beverage, textile and petroleum refinery. The largest industrial branches in Germany are manufacturing of vehicles, production of food, manufacturing of machinery, chemical industry, and mineral oil industry. Other large sectors are non-metallic minerals, iron and steel industry, paper printing and textile industry.

Environment

Germany’s primary energy consumption is strongly dependent on fossil fuels. The air pollution problems in Germany arises mainly from emissions from coal-burning utilities and industries and lead emissions from vehicle exhaust. The damaging of forests is the result of acid rain, caused by sulphur dioxide emissions. Furthermore, raw sewage and industrial effluents emitted to rivers in eastern Germany pollute the Baltic Sea.

The combustion related share of CO2 emissions was 97% of which approx. 15% come from industry. The rest, 3%, is non-energy related emissions from industry. Between 1990 to 1995, the total CO2 emissions decreased by almost 12% and the industry CO2 emissions decreased by almost 25%. Also the emissions of NOx and SO2 in Germany for the period between 1990-1994 shows a declining trend. NOx has decreased by 16% for whole Germany and 32% for industrial processes. For SO2 the figures are 44% decrease for the whole of Germany and 62% for industrial processes. Industrial processes contributes 37% of the N2O (greenhouse gas) emissions.

2.6.5 Iceland

Resources

The total area of Iceland is 103,000 km^² with only 1% arable land and 1% of forest and woodland. Out of the 0.3 million (1996) inhabitants, 127,900 accounts to the labour force. Commerce, transportation and services occupy 60%, manufacturing 12%, fishing and fish processing 12%, construction 11% and agriculture 4%. The predominating natural resources found at Iceland are fish, hydropower, geothermal power and diatomite.

Economy

Iceland’s Scandinavian-type economy is basically capitalistic, but with an extensive welfare system, low unemployment (3.9%, 1995) and comparatively even distribution of income. The economy is heavily dependent on the fishing industry, which provides nearly 75% of export earnings. The economy, in recession since 1988, began to recover in 1993, but was still hampered by cutbacks in fish quotas as well as falling world prices for its main exports: fish and fish products, aluminium and ferrosilicon. The governments plan to continue its policies of reducing the budget and current account deficits, limiting foreign borrowing, containing inflation, revising agricultural and fishing policies, diversifying the economy, and privatising state-owned industries.

Industry

Except for the above-mentioned industries, Iceland also has some engineering industry connected to the fishery industry, and some textile, electric and graphic industry.

Environment

Air pollution is not a serious problem at Iceland, given the country’s sparse population, relative lack of heavy industry and distance from industrialised areas in Europe and North America. In addition, Iceland’s major energy sources are hydro-energy for electricity and geothermal energy for heating. Per capita emissions of greenhouse gases are, however, high, due to a heavy domestic transport and a large fishing fleet in a sparsely populated country.

Due to sparse population and strong ocean currents that quickly disperse sewage, treatment of waste water has not drawn the same attention as in most other developed countries. However, Ministry of Environment considers improving waste water treatment to be a priority.

One of the few large wilderness areas in Europe is the Icelandic central highlands with glaciers, volcanoes, hot spring and lava fields. Efforts are made to integrate nature conservation with different activities. Other priorities are stopping and reversing soil erosion and preserving volcanic formations from gravel mining.

2.6.6 Latvia

Resources

The total area of Latvia is 64,100 km^², mainly consisting of low plains. 27% of the land is arable and 39% is covered by forest and woodland. Latvia has nearly 2.5 million inhabitants of which 1.4 million amounts to the labour force. Industry and construction occupy 41% of the total labour force, agriculture and forestry 16%. The unemployment rate was 6.5% in 1995. The country has small assets of natural resources (amber, peat, limestone and dolomite).

Economy

As a result of the banking and budget crises, Latvia’s budget deficit for 1995, doubled that originally planned and the GDP growth came to a halt but was resumed again in 1996 and 1997. Progress in key areas has been significant: prices have been liberalised; the trade regime has opened; and privatisation of small business, agricultural land, and banking institutions is well advanced^,.

Industry

Industry amounted to 28% of GDP or 3.4 billion ECU, in 1994. The industry sector is small-sized and diversified and growth tends to concentrate on low value added, labour intensive sectors, i.e. clothing, forestry, food processing industry and construction. The total number of enterprises is estimated at 44 000, of which 90% are small firms.

The leading sector in Latvia is food processing, in both employment and value added (41% of industrial production, 1994). There is a significant decrease in imports and dairy and fish products are the most growing sectors. Exports go mainly to the CIS countries (Commonwealth of Independent States).

Wood processing is a growing sector and wood products account for 25% of Latvian exports, of which the major part go to the EU. Major products are furniture, matches and plywood. The raw material situation is good. The pulp and paper industry as well as the saw mills are small. A significant part of the timber is, therefore, exported without any further refinement.

New companies have been started in the textiles and clothing sector (11% of industrial production, 1996), which have been successfully restructured. EU is the most important export market. Machinery, devices, transport vehicles and equipment and steel industry is a sector that provides for around 18% of industrial production in Latvia (1994). This sector has declined during this century but it is expected to develop again in the future and significantly contribute to the industrial production. Production of chemicals and pharmaceuticals is a sector with lasting traditions in Latvia. It accounts for about 8% of industrial production (1994). This sector is based on several big enterprises. Other industrial sectors are electrical devices and equipment, communication and office equipment, construction material, structures and production from non-metal material.

Environment

There is a gap between the environmental standards of Latvia and those of the EU. Most environmental problems are located to a number of major point sources of pollution, so-called hot spots. Country-wide there are only a limited number of problems manifested. The quality of surface water, often as a result of urban wastes, is a problem, but since 1990 the situation has improved with new waste water facilities in Riga and other cities. Other problems are the increasing amounts of municipal waste and old hazardous waste dumps that should be cleaned up. The air pollution situation is relatively good, apart from the traffic related pollution in the Riga area.

Progress has been achieved in environmental policy, since 1990: a new framework law as well as national long term plans have been adopted. Other legislation has proceeded more slowly.

2.6.7 Lithuania

Resources

Lithuania has a total area of 65,200 km^² with 49% of the land being arable and 16% consisting of forest and woodlands. The population in the country is 3.6 million people of which 1.8 million amount to the labour force. The occupation is mainly within the industry and construction sector (42% of the labour force) while 18% is occupied in the agriculture and forest sector. The unemployment rate in Lithuania was 6% in 1996.

Economy

Lithuania was declared independent in 1990 and has since then implemented various reforms. With the help of international institutions, the government has adopted a disciplined program to restrain inflation, reduce price controls, lower the budget deficit and privatise the economy. More than two-thirds of the industrial facilities as well as most housing and agricultural enterprises have been privatised, although energy and telecommunication enterprises have been exempted from privatisation. Lithuania has reduced its trade dependence on Russia to about 40% in 1995, but Russia still remains the leading trade partner of Lithuania. If the government can stay the course on economic reform and fiscal discipline Lithuania could be set for a strong economic growth in the near term.

Industry

The industrial output was about 3.2 billion ECU in 1994, equivalent to 28% of GDP. Food processing and textiles/clothing are the main employers and these sectors are growing, while the heavy industries are holding steady or declining.

The leading sector is food processing industry (meat and dairy products) where medium-sized enterprises have been most successful in restructuring. This sector accounts for 32% of industrial production and 20% of employment (1994). The oil processing industry has been developing since 1996. There is a market for low quality oil products in the Baltic countries. The textiles/clothing and furniture sectors compete with the EU. There is a further need for modernisation but new technologies have already been introduced. The production of chemicals has recovered since 1994, notably the production of fertilisers.

Environment

The pollution levels have been reduced, since the industrial and agricultural activities have been declining. Water pollution remains the most acute environmental problem. Other problem areas include management and disposal of waste. Pollution of coastal, river and ground water from urban wastes and agriculture is an important problem but actions are taken. Polluting discharges to water should be radically reduced by the significant investments in sewage treatment plants in all major cities, by the year 2000. From 1991 to 1995, air pollution from industrial sources as well as from mobile sources have been declining. The overall air pollution situation is relatively good.

On the issue of changing consumption patterns eco-labelling has been introduced. By this environmental protection measure the Ministry of Environmental Protection attempts to stimulate design, production, marketing and use of the products with the least impact to the environment during the whole life-cycle with producer interest protection and product usability warranty. The main product groups which can be selected for eco-labelling are: building materials, ceramics, technological machinery, electro-technical equipment, paper, textile, leather, fertilisers, and chemical substances.

Economic instruments are being introduced for environmental protection. A law on charges for air pollution was adopted in 1991. An amendment of the law on air pollution will be adopted in 1998 where taxes for mobile sources of air pollution will be included as well as tax differentials for unleaded petrol.

2.6.8 Norway

Resources

Norway has an area of 324,220 km^². The number of inhabitants are 4.3 million (1993) of which 2.1 million amount to the labour force. The major occupation in Norway is within the service sector (70% of the labour force) while 23% are occupied in industry and 6% in agriculture, forestry and fishing. The unemployment rate in 1995 was 8%.

Norway is rich in natural resources like petroleum, natural gas, pyrites, nickel, iron ore, lead, fish, timber and hydropower. About 21% of the land area is covered by productive forests whereas only 3% is cultivated. In 1992 fishery contributed 6% to the total value of export. Large amounts of oil and natural gas have been discovered. Mining of minerals is not very prominent in Norway.

Economy

Norway has a mixed economy involving a combination of free market activity and government intervention. The government controls key areas, such as the vital petroleum sector, and extensively subsidises agriculture, fishing, and areas with sparse resources. Norway also maintains an extensive welfare system that helps propel public sector expenditures to more than 50% of GDP and results in one of the highest average tax burdens in the world (46%). A small country with a high dependence on international trade, Norway is basically an exporter of raw materials and semi-processed goods, with an abundance of small- and medium-sized firms, and is ranked among the major shipping nations.

Industry

Norway is a highly developed industrial nation. Important branches of industry are food industry, based on fishery, which accounts for 28% of total industry production. The engineering sector is one of the main sectors, contributing 27% to the total production and the electro-metallurgic industry (alloys, aluminium, iron, steel) 13%. Other sectors within the Norwegian industry are: electrochemical industry (fertiliser production), petrochemical industry, offshore and wood industry.

Environment

Binding European co-operation has led to significant reductions in acid discharges in recent years. The precipitation of sulphur over Norway was reduced by 35% from 1988 to 1995. The Norwegian discharges of SO2 were reduced by 75% from 1980 to 1995, for instance as the result of maximum limits imposed on sulphur content of heating oil, and a sulphur tax.

Through the North Sea Co-operation a significant reduction in point-source discharges of chemicals hazardous to health and the environment has taken place. The discharges of priority hazardous substances have fallen by 50-95% between 1985 and 1995 as the result of environmental measures in Norwegian industry. The emissions of lead into the atmosphere have fallen steeply since unleaded petrol and the tax on leaded petrol were introduced. From 1973 to 1995 the emissions of lead to the atmosphere were reduced by about 97%.

Through the work on following up of the North Sea Declarations the addition of phosphorous to the North Sea’s "vulnerable areas" (the coastal regions from the Swedish border to Lindesnes) has been reduced by 36% from 1985 to 1995. The reduction capacity for phosphorus in municipal waste water treatment plants has increased significantly throughout the country.

In the work to further develop the environmental policy the Government will emphasise the development of frameworks that stimulate more sustainable production and consumption patterns and development of the necessary tools with which to control social development in a sustainable direction. The government also plan to take the initiative in working for international agreements and other international co-operation to solve global and regional ecological challenges. The environmental work will also include to refine the tax and duties system.

2.6.9 Poland

Resources

The total area of Poland amount to 312,683 km^²; 48% of the total land area is arable and 29% consists of forest and woodland. Poland has a population of 38.6 million people of which 17.7 million amount to the labour force. The unemployment rate in 1995, was 15%. The main natural resources in Poland are fuels as coal and natural gas and metals such as sulphur, copper, silver and lead.

Economy

In 1995, Poland continued to make good progress in the difficult transition to a market economy that began in 1990. The government then started decontrolling prices, slashing subsidies, and drastically reducing import barriers. Most of the growth since 1991 has come from the booming private sector, which now accounts for about 60% of GDP, due in large part to the creation of new private firms. Large-scale industry, however, remains largely in state hands. Since 1990, inflation has declined. Prospects for 1996 were good, with the government promising to push privatisation and social welfare reform.

Industry

The industrial output was about 42 billion ECU in 1994, equivalent to about one third of GDP. Industry accounts for 25% of total employment. In 1995 to 1997, the growth rates were 5 to 7% and the production is now exceeding the pre-reform levels of the late 1980s. In the agri-food sector, production is rapidly rising and many of Poland’s largest companies are found in the food industry. The chemical industry consists mainly of large state companies, some privatisation is planned in 1997. There are 23steel mills in Poland. The production has dropped since 1986, but has now stabilised. Modernisation programs are planned, but it will take a lot of time to solve the technical, commercial and management deficiencies. The environmental problems connected to the steel industry are large.

Important sectors are mechanical electrical engineering, construction, textiles, footwear and furniture. Sectors like construction, furniture, agro-food, pharmaceuticals and cars have been mostly privatised and are internationally competitive. Other sectors; chemicals, mining and steel, mostly consist of large state companies that need restructuring.

Environment

The environmental situation has improved since 1990 due to decline in heavy industry and increased governmental concern regarding environmental problems. When the economy started to rise, the industrial pollution did not rise at the same rate as the economy, because of a large investment program, an industrial restructuring, and the incentive effect of the economic instruments developed after 1989.

Poland still have severe environmental problems. Especially, air pollution and waste water problems and is one of the countries contributing greatly to the pollution of the European environment. Poland generates great amounts of waste from coal mining and other heavy extractive industry. Particular "hot-spots" are Upper Silesia and the "Black Triangle" bordering the Czech Republic and Germany. Coal is used for heat and power generation which leads to very high sulphur dioxide and particulate emissions.

It is expected that the recent accession to the OECD and negotiations to join the EU will provide a stimulus for improvement in the pollution and specifically the hazardous waste management area. Since 1989, significant resources have been channelled for upgrading of some 300 wastewater treatment plants. Further investments in this sector are, however, required.

An environmental policy was adopted in 1991, and in 1995 a detailed review of policy implementation was published, setting detailed targets to the year 2000. By environmental fees and fines, Poland has been quite successful in obtaining financial resources for investments for reducing industrial and water pollution.

2.6.10 The Russian Federation

Resources

The total area of Russia amounts to 17,075,200 km^² which makes it the largest country in the world. A main part of Russia consists of forest and woodland, 45%, while only 8% of the land is arable. The population was estimated to 148 million in 1996. 85 million account for the labour force (1993) from which 84% are occupied in the sector for production and economic services. The unemployment rate in 1995 was 8% with considerable additional underemployment. The north-western part of the Russian Federation, covering the regional areas of S:t Petersburg, Leningrad Oblast, Kaliningrad Oblast, Archangelsk Oblast, Republic Karelia, Murmansk Oblast, Novgorod Oblast and Pskov Oblast, is closest to the Baltic Sea. The total area of these regions is 1,117,400 km^² or 6.5% of the whole country’s area and the number of people living there is 12.6 million (8.5% of the whole population).

Russia has a wide natural resource base including major deposits of oil, natural gas, coal, many strategic minerals and timber. However, obstacles of climate, terrain and distance hinder the exploitation.

Economy

Russia continues to experience difficulties in the transition to a modern-market economy. The output has dropped by one-third since 1990, depending on the government’s failure to implement a rigorous and consistent reform programme and the destruction of major economic links to the successor states of the USSR. On one hand, the government has made substantial strides in converting to a market economy by freeing nearly all prices, slashing defence spending, eliminating the old centralised distribution system, completing an ambitious voucher privatisation programme in 1994, establishing private financial institutions, and decentralising foreign trade. On the other hand, Russia has made little progress in a number of key areas. For example, in 1995, the new cash privatisation programme went slower than planned and the development of legal framework and encouragement of foreign investments have been slow. Furthermore, Moscow has to develop a social safety net that would allow faster restructuring by relieving enterprises of the burden of providing social benefits for their workers.

Industry

In the above mentioned areas there is a wide range of industries. The dominating industrial branches are mining, basic and fabricated metals; engineering industry; wood and wood products; food industry; chemical industry; and textile industry. The industrial sector contributes with 39% to GDP in Russia when considering the three main sectors, service, industry and agriculture. Among the countries within the BSR this is the largest contribution for an industrial sector. Service sector contributes with 52% and agriculture 9%.

The industrial production has decreased by almost two thirds from 1990 to 1995 but during 1995 the decrease was curbed. The main sectors within the manufacturing industry in Russia are machinery and equipment (23% of output), food, beverages and tobacco (21%) and metal products (19%).

Environment

The environmental problems for the whole of Russia are significant, but compared to more densely populated areas in Western Europe, large areas in the country, especially in the north, have a better environmental situation when it comes to polluted water and air.

Most polluting industries are located to Southern Ural but some large polluters in the north western part are the production units of nickel at the Kola peninsula. The decreasing industrial production has lead to an improvement of the environmental situation, but the pollution rate per produced unit has increased. New, and higher, prices on raw materials and energy are important for a more efficient production and, therefore, less pollution.

In large cities the major part of the air pollution arises from traffic. Only 10 per cent of the sewage water is cleaned to an acceptable level and many large cities have no sewage treatment at all. The volume of domestic waste has increased. Radioactive wastes from military and civil activity have been dumped, e.g. in Barents Sea. Most Russian "hot spots" as defined in the "Baltic Sea Joint Comprehensive Environmental Action Programme" are municipal and industrial sewage in St Petersburg and Kaliningrad.

The environmental administration is complex and the areas of responsibility is sometimes unclear. New environmental laws have passed, but the legal system is incomplete. Economic instruments based on pollution fees is of importance in Russian environmental politics. The authorities, however, have limited means to verify data from the companies.

2.6.11 Sweden

Resources

The total area of Sweden is 449,964 km^². A large part of the land is covered by forest and woodland, 64%, while arable land amounts to 7%. The close to 9 million inhabitants are concentrated to the southern half of the country. Sweden has a very long coastline along the Baltic Sea and about 50% of the inhabitants live within 30 km from the coast. The labour force amounts to 4.5 million, among which the majority is employed within the service sector. Industry’s share of total employment is about 25% and it constitutes about 27% of GNP. Unemployment is about 10%. Important natural resources in Sweden are zinc, iron ore, copper, silver, timber, uranium and hydropower potential.

Economy

Sweden remained neutral during both World Wars. This has resulted in an high standard of living and extensive welfare benefits. During the first five years of the 1990’s, however, this favourable picture has been clouded by budgetary difficulties, inflation, growing unemployment and a gradual loss of competitiveness in international markets. Even though, Sweden has managed to coerce the inflation to a very low level. Today the Government finance are stronger and economic growth seems to be stable. Sweden has also harmonised its economic policies with those of the EU, which it joined at the start of 1995^,.

Industry

The engineering and metal industry, which is dominated by large companies, dominates the industrial sector and accounts for about half of the industrial employment, of the production in the industrial sector, and of the total Swedish export. The dominating branches are production of machinery, transport and electrical equipment. The engineering industry is characterised by a concentration to large companies. The forest, pulp and paper industry accounts for about 14% of employment and about 20% of the industrial production in Sweden and it contributes about 20% to the total export. The production of pulp and paper has developed towards concentration to fewer and larger companies. Other important industries are the graphical industry (7% of employment), the chemical industry (9% of employment) and the food industry (10% of employment).

Environment

In Sweden, the metal, pulp and paper, chemical and mineral industries are the main contributors to industrial pollution. The emissions of sulphur dioxide from industrial processes (1993) was 40% of total emission, combustion contributed with 36% and transports with 24%. The emissions of NOx from industrial processes amounted to 6.5% of total emissions in 1993 (combustion 11% and transport 82%).

The critical load of sulphur has been exceeded almost everywhere in Sweden, the worst conditions are found in the south-western part of the country. For nitrogen the critical load has primarily been exceeded in the southern part of the country. The sulphur emissions in Sweden has decreased considerably in the last 10 years whereas the nitrogen emission decrease has been small. The target of an 80% decrease of sulphur emissions in the year 2000 as compared with 1985 (in accordance with the Geneva Convention on Long-Range Trans-boundary Air Pollution, LRTAP, 1979, and its Protocols) has already been reached whereas a 30% reduction of emissions of nitrogen oxides by 1998 as compared to 1980-1985 will be difficult to reach.

The use of CFCs in Sweden has been largely phased out and should have ceased by the end of 1999. The use of HCFCs in new refrigeration units and the use of methyl bromide should have ceased entirely by the end of 1997 and the use of halons should largely have been phased out.

About 20% of the lakes in Sweden show symptoms of eutrophication as do certain terrestrial biotopes and coastal waters. Phosphorus reduction in waste water treatment plants was introduced in the 1970s and now nitrogen reduction is being built out. In order to reduce the leakage of nitrogen from agricultural land agricultural practices and the storage of manure are being improved. Concentrations of photochemical oxidants (primarily ozone) periodically exceed levels that are tolerable to health and environment. The elevated levels of ground-level ozone are estimated to cause crop damage representing about a 10% decrease in annual production. Emissions of VOC should be reduced by 50% between 1988 and 2000.

In 1988 and 1991, the Swedish Parliament adopted extensive environmental goals in conjunction with the treatment of the Government´s two environmental bills: Environmental Policy for the 1990s and A Sound Living Environment. In 1994, it was stated that a new proposal for an environmental code would be submitted to the Parliament. The proposal is for a modern, co-ordinated, and stricter environmental legislation harmonised with EU law. The work is still on-going.

Industrial Sector Final Report

3 Cross-sectorial issues and inter-linkages between industry and other sectors

The aim of this chapter is to highlight relations between the different sectors involved in the Baltic 21 project (Industry, Energy, Transports, Agriculture, Forestry, Fishery, Tourism) and other sectors of society. This will facilitate further consideration of the significance of these relations in the Action programmes for the sectorial Baltic 21 reports as well as in the overall Action Programme. An awareness of relationships and dependencies between different sectors of society are basically of great importance for development and planning, especially when the goals are long-term and far-reaching such as "sustainable development".

Depending on the complexity of the approach and what aspect of society that is under study, the focus can either be on separate relations between sectors (sector inter-linkages or on more aggregated aspects of society (cross-sectorial issues). Sector inter-linkages represents flows of material, energy and services between sectors, whereas cross-sectorial issues are issues or functions in society such as regional planning, environment and health that are related or relates to (dependent on) the activities of several of the Baltic 21 sectors or other sectors of society. Cross-sectorial issues may be dependent on many sectorial conditions in complex networks and models of dependencies tend to be simplifications of the reality. Even so, a brief outline of these issues will be made here. We, however, want to point out that this overview does not claim to be complete.

3.1 Sector inter-linkages

Inter-linkages between the Baltic 21 sectors on an overall level are represented by flows of materials (raw material, equipment, products, pollution), energy and services in accordance with the matrix below.

Receiver	Industry	Energy	Transport	Agriculture	Forestry	Fishery	Tourism²
Deliverer
Industry	Raw material	Equipment Fuel	Equipment Fuel	Equipment Products¹ Pollution	Equipment Pollution Products¹	Equipment Products¹ Pollution	Equipment Food Products
Energy	Energy	Energy	Energy	Energy Pollution	Energy Pollution	Energy Pollution	Energy Pollution
Transport	Services	Services	Services	Services Pollution	Services Pollution	Services Pollution	Services
Agriculture	Raw material	Raw material				Pollution	Recreation values
Forestry	Raw material	Raw material			Raw material	Pollution	Recreation values
Fishery	Raw material					Pollution	Recreation values
Tourism³

^{1Fodder, fertilisers, herbicides, pesticides, insecticides, vitamins, hormones, medicine. ²See also section 3.1.3. ³Conflicts between tourism and all the other sectors are possible, but not indicated in the matrix.
A complete overview of sector inter-linkages would of course have to include additional sectors such as functions provided by municipalities, health and sick care, etc. Still it can be viewed that these Baltic 21 sectors are tightly inter-linked even in such an elementary matrix. These linkages between industry and the other sectors will be outlined below.
3.1.1 Forestry, Agriculture and Fishery
Several industrial branches are dependent on the forestry, agricultural and fishery sector for obtaining raw material and primary produce. The question of industrial product quality, including environmental aspects, is a question of sector inter-linkages since not only the choices of types of raw material and primary produce are of significance for the qualities of the final product, but also the conditions under which raw materials and primary produce are produced. All the other sectors of the Baltic 21 are indirectly linked to the agricultural and forestry sectors through their energy use since they provide raw material for energy production.
In agricultural production the use of hormones, antibiotics, etc. may be restricted through quality demands on food products by the public. Further, in order for the public to be able to compare different industrial products, eco-labelling systems, including the production methods of primary produce, are being developed. In these systems, the use of commercial fertilisers, pesticides, herbicides as well as the use of hormones and antibiotics, etc. are considered. For wood and wood products similar systems are being developed on international grounds.
Possibly a conflict may arise between the use of wood and agricultural produce for raw material in industrial production or for energy production.
Possible effects of industrial activities (including transport and energy use) on the conditions for production and product quality in agriculture, fishery and forestry, e.g. emissions of SO2, NOx, dust, heavy metals and other toxic compounds, VOC, nutrients, substances causing BOD and COD, greenhouse gases and ozone-depleting substances also may be considered sector inter-linkages. The effects are to the most part negative for the agricultural, forestry and fishery sectors, but they are still largely viewed as external in national as well as companies accounting. Through their use of industrial equipment, the agricultural, forestry and fishery sectors are today dependent on industry, but it also means that they contribute themselves to the possible deterioration by pollution of the basis for their own production.
3.1.2 Transport and energy
The industry sector is highly dependent on and a significant consumer of transports and energy, but it is also a producer of transport and energy equipment, and fuel. It is also the sector in which development of new transport and energy technologies will take place.
3.1.3 Tourism
Adverse effects of industrial activities on biodiversity, water and air quality, coastal zone exploitation, etc. may affect tourism negatively and may result in conflicts between the tourist and industrial sectors. On the other hand tourist activities include also the use of different items of industrial production or are based on experiences of industrial constructions.
3.2 Cross-sectorial issues
3.2.1 Environment
The quality of the environment is a truly cross-sectorial issue. It is not only dependent on activities within the Baltic 21 sectors but on all activities in and aspects of society, e.g. those discussed below (regional planning, social aspects and economy). This dependence is very complex with many interdependent factors involved which makes difficult to completely elucidate clear relationships and the absolute importance of the different factors involved. Attempts to do this is, however, made within the work to develop life cycle analyses and eco-labelling systems and this is of great significance for evaluating different activities, products and materials regarding environmental aspects. Here a qualitative outline of these dependencies will be made without attempting to quantify them.
In a broad sense the effects of industry on the environment include a wide range of activities, from production or extraction of renewable and non-renewable raw material to reuse and recycling and deposition of materials and waste products, i.e. covering the life-cycle of its products (Fig. 3.1). Traditionally several of these activities are not viewed as industrial activities, e.g. agriculture, forestry, fishery, consumers use of industrial products and waste handling. They are, however, closely linked to industrial production and products and may well be viewed as an effect of industry.
Figure 3.1. Primary relations between industrial product life-cycle and environment.}

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One obvious example are emissions from vehicles which, due to increased traffic work, can be expected to rise dramatically in the years to come, especially in cities. The environmental damage caused by an increased usage of vehicles belong in a way to the transport sector, but they will also be a concern for the industrial sector since this sector manufactures the products having these characteristics. Also consumer demand is an important factor for the development of products with less total adverse effect on the environment. The ecological effects of the use of the products outside the industrial process itself should call for a definition of sustainable development for the industrial sector having a holistic approach on the basis of eco–efficiency (see section 4 for the proposed definition of sustainable development).

3.2.2 Regional development

Regional planning and development is a function of many variable factors, e.g. landscape qualities, occurrence of agriculture and forestry, occurrence of non-renewable resources, technological level of infra-structures (e.g. transport facilities), social structure, cultural traditions, etc. However, several of these factors are in turn dependent on regional planning and development such as localisation and spatial distribution of industry and other sources of employment, development and investments in infra-structure, urban development, settlement and social structures, cultural traditions, etc. All of these issues are highly relevant for assessments of environmental impacts.

Expected changes of the industrial structure, e.g. an increased share of light industry and services on the expense of heavy industry in the transition countries, should be paid attention to in regional planning in order to meet changes in social demands (e.g. settlements, infra-structure, etc.) and environmental pressures.

3.2.3 Social conditions

Social conditions, including e.g. health, working conditions, living conditions, medical care, social security, education, urban and rural (regional) development, is an extremely complex area with dependencies on many factors. No attempt will be made here to outline this network. It will merely be concluded that in sustainable development, social aspects are an important area that has to be considered in all development, no matter whether the main focus is on industry, transports or energy.

3.2.4 Economy

National economy is evidently dependent on most other activities in society and thus inter-related to those in an extremely complex network that will not be elucidated here. Only a brief outline of the relevance of international trade for industry and environment will be made below.

International trade is crucial for the economic development of all regions and, therefore, it is also of importance for regional development, social structures as well as for environmental issues. Environmental problems become international when pollution and effects on eco-systems cross national and regional borders or when resources, products and producers cross the same borders. More specifically:

Trade creates dependencies on ecosystems and resources in other countries.
Trade has a direct effect on the environment through transportation and accidents.
Trade can lead to that environmentally damaging production or products are moved to countries or regions with less stringent laws.

International trade may, however, also have positive effects due to increased product selection and development, and encouragement of competition that leads to the development of more efficient production techniques and processes, and increased environmental investments.

Global harmonisation of environmental, health and safety, and trade regulations are thus of great importance for reducing the environmental effects of industrial production. The industrial production in the BSR and related environmental regulations should be developed in the context of several global issues such as the global market demand, preconditions for global trade, international and national environmental legislation and the availability of raw material and energy on the global market.

Industrial Sector Final Report

4. Goals and Indicators

4.1 Definition of sustainable development for the industrial sector

In the introductory remarks in this report , it was recommended that the Baltic 21 work should adopt a fresh and broad approach covering both conventional end-of-pipe solutions and new ideas on, for example, cleaner production and eco-efficiency. Eco-efficiency – having the advantage of embracing cleaner production ideas – was in that context seen as a rather comprehensive operationalisation of sustainable development. This was followed up by presenting a holistic angle of environmental effects of industrial production (Chapter 2), comprising all stages of the production chain; i.e. the resources used, the process and the product of an industrial enterprise give all rise to different kinds of waste, emissions and it is for the management – taking account of legislation – to govern the whole of the production chain in a sustainable way. Considering these remarks, the overall goal for all sectors in Baltic 21 (section 1.5) and the agreement in the Saltsjöbaden declaration that Baltic 21 for the industry sector should focus on cleaner production, it is proposed that sustainable development of the Baltic Sea Region for the industrial sector should be defined as follows:

Sustainable Development for the industrial sector in the Baltic Sea Region is maintaining continuity of economic, social and environmental improvements. This means for the industrial sector in the region:

Delivery of competitively priced goods and services
Satisfaction of human and social needs and bringing quality of life by the products and services produced
Improvement of the working environment and the industrial safety for the workforce
Applying environmental strategies to resources, processes, products and services in order to progressively reduce ecological impacts and resource intensity throughout the life cycle, to a level at least in line with the estimated carrying capacity of the BSR with respect to biodiversity, ecosystem and use of natural resources.

4.2 Subgoals and indicators

As a vehicle to achieve the overall goal, five subgoals on a more concrete level have been worked out. The subgoals are addressing different aspects of the overall goal. For every subgoal, certain indicators are given which can be seen as measures indicating the accomplishment of a subgoal (see figure 4.1); the indicators are in this way an indirect way of measuring goal fulfilment since the subgoals themselves are not expressed in directly measurable terms. The indicators have been selected on the basis of relevance and data availability today. However, some important indicators, for which data at present would be difficult to collect, have been included, since data in the future might be accessible after some further work and elaboration. It should be emphasised that the chosen indicators have shortcomings as measures of achievements of the goals. This may, however, to some extent be remedied in the future by the development of new indicators and by improvements in the production of relevant data. This would bring other indicators to the fore as measures of sustainable development.

Figure 4.1 Illustration of the goal structure for sustainable development

The subgoals can be grouped into three categories.

4.2.1 Framework for business operations

The first category is composed of two subgoals having a bearing on the framework for business operations, for example, in the form of legislation or other kinds of regulatory systems or practices. Having favourable and harmonised conditions in these respects can be seen as a presupposition for an industrial development that will be conducive for sustainable development. Not all of these conditions are covered by the subgoals below, since some of the conditions are addressed in other fora for co-operation in the Baltic Sea Region. It would therefore within the framework of Baltic 21 be inefficient to duplicate this work.

Subgoal 1

Implementation of the conventions/agreements relevant to the BSR, inter alia, those mentioned in the Saltsjöbaden Declaration, the Kalmar Meeting and its Action Programme.

Indicators

Countries in the BSR having signed and ratified existing (see Annex 2 and 3) and new or revised conventions/agreements.
Countries in the BSR having enacted legislation in conformity with signed and ratified conventions/agreements

Subgoal 2

Harmonisation and enhancement of legislation and practices regarding state aid, competition, establishment, trade and environment (incl. working environment and industrial safety) as pertaining to industry

Indicators:

Countries having harmonised their legislation in the fields of competition, state aid, trade, establishment and environment (incl. working environment and industrial safety) with other countries´ legislation in the BSR or complying with EU Directives in the mentioned fields.
Decrease of distortive state aid in different industries
Countries having established a competition authority and an agency for working environment and industrial safety

4.2.2 Strengthening the market forces

In the second group, there is only one subgoal aiming at strengthening the market forces and the institution-building for a sustainable development in industry.

Subgoal 3

Implement a sustainable performance in industry that combines competitive production with reduction of detrimental ecological impacts and resource intensity (eco-efficiency)

Indicators:

Number of firms using "eco-efficiency" in their operations and their share of production.
Number of firms using or being certified according to different kinds of Environmental Management Systems (EMS) and their share of production. EMS stands for ISO 14001, EMAS (Eco Management and Audit Scheme) or other similar kinds of system. The recording should be made separately for large and small (SMEs) firms.
Number of firms certified in accordance with other ISO standards (ISO 9000 and ISO 14000 except for ISO 14001) and their share of production.
Number of companies (and their share of production) requiring environmental performance of their subcontractors with respect to the use of EMAS, ISO 14001 or other environmental management system in the business.
Number of companies (and their share of production) requiring quality performance of their subcontractors with respect to the use ISO 9000.
Countries having set up certification bodies for ISO 14000, EMAS and ISO 9000.
Number of firms publishing environmental statements or reports and their share of production’
Number of firms having introduced Environmental Cost Management
The extent of financial reporting explicitly taking into account and disclosing environmentally related costs and investments, incl. the impact on profit and the R&D-expenses in the field of environment; number of firms and their share of the 700 biggest companies in the BSR (listed companies on stock exchanges).
Number of companies (and their share of production) applying producer responsibility in terms of reuse and recycling of products delivered.
Reduction of the material intensity of goods and services
Reduction of energy intensity of goods and services
Sustainable use of renewable resources
Number of companies (and their share of production) using water processes that are closed and minimised.

4.2.3 Monitoring and effects

In the third category of goals, two subgoals are grouped that catch up the monitoring aspects orthe effects on environment, social conditions and industrial competitiveness in certain respects. The first two categories of subgoals have an impact on the subgoals in the third category; for example, if there is a great progress in harmonisation of legislation and implementation of conventions (subgoal 1 and 2) at the same time as eco-efficiency will have a vast application in industry (subgoal 3) that development would result in less detrimental environmental impact (subgoal 5) and probably in better performance in social and industrial respects (subgoal 4).

Subgoal 4: Improvement of social conditions and of industrial competitiveness

Indicators

The growth of industrial production and change of productivity in companies applying eco-efficiency and Environmental Management Systems (EMS)
The change of productivity in sheltered sectors and in sectors being under pressure of international competition.
Profitability in companies applying eco-efficiency and EMS
The amount of R&D resources spent in the industrial sector with a separate account for the amount of R&D spent in the environment field.
The change of the average length of life for the industrial workforce
Health conditions in the enterprises of the industrial sector in terms of the number (and change) of industrial injuries and occupational diseases
The extent of training/education in the industrial sector in terms of the number of days per employee spent on training/education

Subgoal 5

Industrial environmental impact within the limits of the carrying capacity in the BSR

Indicators:

Releases, charges and losses of hazardous substances (HELCOM)
Recording of the implementation of the commitment of phasing out the use of hazardous substances as set out in the Action Programme (Visby and Kalmar Meeting)
Emissions of substances giving rise to exceedance of the critical loads for acidification, eurotrophication and tropospheric ozone
Air immissions complying with WHO-standards for air quality

Industrial Sector Final Report

5. Scenarios for the industrial sector 2030

5.1 Business as usual scenario

In order to make visions or views of the future meaningful it is important that the problems of today are demonstrated and clarified. This will be illustrated by a business as usual scenario which refers to a situation where the old development pattern continues with small or very small modifications. This situation should not be interpreted as a genuine scenario of the future. It is merely a very simple projection where large-scaled industries continue to demand the same relative volumes of raw materials and energy and also, based on a stable customer demand, continue to supply customers with more or less the same type of products.

From a stable consumption patterns follows that estimates can be made that the amount of paper consumed, cars purchased etc., will be strongly correlated to economic growth, as will the relative amounts of emissions and waste. Every per cent of economic growth will yield a certain demand for additional paper consumption, cars to be produced as well as NOx emitted etc. Thus, the relative amount of waste and emissions will remain approximately the same as in the present situation. The point of departure, i.e. the emission and waste to production ratio or the technology and techniques used for production and emission and waste reduction in different parts of the region, is of course of importance for the end result.

Still, a curve linear prognosis of future emissions and waste in the BSR based on a linear relationship to economic growth (figure 5.1) may be an illustrative presentation of the effects of today’s industrial activities in a broad sense (including production of raw material and energy, production, as well as product use and how it is finally taken care of. The prognosis is of a principal character and presented as an index, where 100 represents today’s situation. There is no need to dig deeper into different types of emissions and waste or more specific figures before an overall analytical conclusion is drawn.

As can be seen from the graph, the increase of emissions and waste will be dramatic even at fairly low growth rates and even in the near future. Already by the year 2010 the emissions and waste will have increased by almost 30% at an annual (low) growth rate of 2%, with almost 90% at an annual (medium high) growth rate of % and with as much as 245% at an annual (very high) growth rate of 10%.

In low growth economies emissions and waste can be estimated to have nearly doubled by the year 2030. In medium high growth economies the stress to the environment will be 5 times as high as today and in the very high growth economies emissions and waste will be more than 23 times as high as today! As this mathematical forecast clearly shows, economic growth under seemingly moderate rates will under - and this is very important - a ceteris paribus premise, already in the near future result in a catastrophic environmental situation in the BSR, and especially in the EBR where the highest growth rates may be assumed and the relative formation of emissions and waste is high.

Figure 5.1 Development of emissions at different growth rates (a linear dependence of emission rates to growth is assumed).

However, this drastic conclusion deserves to be modified to some extent. First of all, today’s emissions and waste in the EBR-countries are most probably overestimated since there have been a radical decline in industrial production since the most recent and accurate emission and waste figures were presented. In spite of this objection, it seems clear that even a 3 to 5 times increase of emissions and waste from industry will go beyond acceptable limits. It is also clear that a 30% increase of industrial emissions and waste in the WBR-countries cannot be accepted.

When appraising future environmental effects of different industrial structures, it is not advisable to use only the yardsticks of today. New industries will emerge resulting in other (hopefully reduced) environmental effects due to new technologies, materials or substances or advantages of scale. The composition of industrial branches will also change causing a possible decrease of some of the "old" effects. It can thus be argued that this scenario and these forecasts are unrealistic.

In other cases, however, there are obvious disadvantages especially for the environment when industrial production is up-scaled and changes in industrial structure may also result in increased emissions. However, there are much better technologies and methods at hand than the ones used in many industries today, especially when it comes to the industry in the EBR. Investments in today’s best available technology (BAT) will substantially reduce generation of emissions and waste. In the very high-growth case it is realistic to assume that the growth itself will result in considerably enlarged markets and thus give rise to increased profits and stimulate investments. This is however a very costly investment process which is far from realistic to fully take place, especially not in the low growth alternative.

Thus, the general conclusion must be made that even if markets expand and profit increases in the whole BSR, it will take many years before any substantial reduction of the impact on the environment due to a shift to BAT, especially in the EBR, will occur. In a business as usual scenario it seems realistic to assume a worsening environmental situation at least during the next 10-15 years.

5.2 Sustainable development scenario/s

5.2.1 Introduction

There are many reasons to believe that a "Business-as-usual" scenario is not very likely to occur, at least not in a longer time perspective. Environmental issues are already today set in focus on the political agenda, by media, by consumers through their choices of environmentally labelled products and by the public commitment to environmental organisations. Within industry, at least in western world, the environmental image is being recognised as of importance for marketing and it has in many cases been demonstrated that reduction of the environmental effects of production and processes pays. Increased efficiency in production and processes results in reduced costs for raw materials, energy, emissions and handling of waste.

An analysis of changes on the industrial arena during the last 25-30 years indicate what kinds of changes may be expected in the following 25-30 years, e.g., establishment of new competitors, closing down of plants and restructuring of companies. For large companies 20-30 years is not a very long time. Problems and crises that may occur can be met by internal restructuring, including strategic allocations within and between countries.

During the last 30 years there has also been a widespread lowering of national and regional barriers to trade and a large increase in world trade as well as intra-regional trade. The structure of world trade is changing with, e.g. Asia widening its role both as a market and competitor. World trade is shifting away from primary commodities towards medium- and high-technology goods and there is a rapid growth of manufacturing industry in south-east Asia. Technological change and financial liberalisation over the last 20 years have also greatly improved the conditions for and thus increased trade in services.

There are different views on the relationship between industry and economic growth, and sustainable development. Generally, environmental deterioration have been connected with industrial and economic growth, but it is also argued that economic growth is a prerequisite for sustainable development. In the context of a 30-year perspective on industrial development of the Baltic Sea Region this is probably a somewhat "academic" question. Considering that the BSR is a since long industrialised region and the expectations of the people in the region it seems likely that economic growth, leading to investments and development of the industry in the region in a sustainable direction, is a means of improving the situation.

Traditionally, the image of a positive development is based on growth of the industrial sector (as measured by the GNP) that leads to a raised standard of living. This is followed by an increased availability of social services and an expansion of the social security systems. However, the GNP does not indicate the distribution of the production between people and groups of people. Welfare and other aspects that are not included in the GNP might lead to that a future increase in GNP results in a higher standard of living for everybody whereas the social and cultural standard for the majority is reduced. It might on the other hand also result in that only a privileged minority obtains a higher standard of living. Further, there is no self-evident connection between an increase in GNP and increased public spending and increased, e.g. social welfare. Increased public spending and social welfare is dependent also on an increased taxation quote, i.e. a relative increase of resources allocated for public spending.

The BSR is today regarded as a dynamic region with a great potential for economic growth. The EBR is now reaching a situation of growth and decreasing inflation although much of the fall in industrial production still has to be recovered, and the WBR economies have since some years shown stable growth and low inflation.

5.2.2 The goal/s

Many different scenarios of the future have been presented and are being developed. Since industry provides the means and products for most activities in society the future development of industry is very closely inter-linked with the development of society in general; with the development of infrastructure and transportation, with the development in the energy sector and with the development in sectors such as agriculture and forestry providing raw-material for industrial production.

Therefore, general scenarios of the development of society is of interest also for the development of industry. Two alternative, extreme futures are often described in terms of the "world trade society" and the "local society". The "world trade society" is characterised by a concentration of living and working areas into cities of varying sizes connected by an efficient infrastructure whereas the "local society" is characterised by a more differentiated/spread pattern of living and working areas. Possible global, more or less extreme, development in economic terms have been presented as "crisis" or "balanced development", and by a concentration of economic growth to Asia and the USA or to Europe.

In these scenarios, the production of energy, goods and food is either centralised and efficiently distributed or produced locally. Transportation is either dominated by collective transportation systems or the development of new technology cars will dominate. Energy is usually obtained from renewable sources and used much more efficiently than today. The alternatives suggested are either centralised large-scale energy systems or local small-scale sources.

The industrial production of goods is, however, in both cases suggested to be more efficient regarding the use of raw material and energy. Everything possible is recycled, especially non-renewable materials. Renewable raw materials are more important. Environmentally damaging chemicals are banned or substituted.

Considering the changes in consumption patterns, trade and industrial production that have taken place during the last 20-30 years, it is not advisable to use an approach implying scenarios that limits the ranges and contents of possible futures. The limitation caused by what can be imagined from the platform of today might prove to be enough of obstacle for these types of work.

The scenario/s presented below should be interpreted as visions of future sustainable situation/s, primarily with respect to the environment, but also with respect to economic and social conditions. The purpose of the scenario/s is mainly to provide a framework for analyses and suggestions of policies and actions of importance for the development of industry. These visions, an analysis of the discrepancies (gaps) between the visions 2030 and today’s situation, the goals (Chapter 4) and an analysis of possible obstacles for arriving at a sustainable situation, presented in Chapter 6, will be the basis for the Action program (Chapter 7). The action program will thus be outlined in a back-casting procedure.

The sustainable development scenario/s or vision/s for the BSR industrial sector are based on the "overall goal" and the sub-goals formulated in this report (see Chapter 4). The sustainable situation regarding industry in the BSR is thus characterised by the following:

The delivery of competitively priced goods and services, i.e. a competitive industrial production combined with reduced ecological impact and resource intensity in comparison with the situation in the 1990s. The countries in the BSR have successively succeeded in adjusting their production to the global market demand in combination and/or thanks to progressive investment programmes directed at the development of new products, technologies and processes. In all programmes improvements of environmental aspects, and social conditions have been in focus besides the economic potential which have resulted in a continuity of economic, social and environmental improvements and a good quality of life in the whole region.
The importance of human resource's management for the development and function of different organisations, e.g. companies, is fully acknowledged and always considered in business management and in society as a whole. A central part of the human resource's concept are the moral and ethical aspects of living and working conditions which are considered in all industrial activities as well as in all other activities in society. Cultural and ethnic qualities are recognised as asset as well as possible sources of conflicts.
Co-operation within the BSR region covers a wide range of subjects. To make the conditions for trans-national co-operation as favourable as possible harmonisation of the legal framework (including international conventions and agreements) as pertaining to industrial performance as well as that of economic incentives has a high priority. Co-operative networks and projects including industry, non-governmental organisations and communities have been established. The networks/projects are fora for exchange and transfer of ideas, knowledge and experiences, co-operation in research and development, establishment of contacts and trade partners, etc.
The network of laws and regulations pertaining to business activities and property rights have been developed harmonised in the BSR to a well functioning framework that support industrial activities and trade. Well functioning banking and infra-structure systems and firm and co-ordinated measures against organised crime provide a good climate for business development.
Regional planning is an important area that provides an overview of different aspects of development and a tool for co-ordination of activities and values in different sectors of society. It is based on the principle of sustainable development and thus includes social, and environmental aspects as well as economic.
Environmental technology, including processes, production technology and techniques, production management, design for environment, end-of-pipe techniques, reuse and recycling methods, as well as after-treatment, reconditioning and waste treatment methods, has been a growing branch since the beginning of the 2000s. Environmental strategies are applied to the use of resources, processes, products and services, i.e. considerations of environmental aspects are made in all activities by industry as well as other parts of society.
The environmental impact and resource intensity of products through the life cycle, i.e. from production of raw materials or primary produce through production and use to the waste phase, have been successively reduced. Part of this progress have been achieved by emission reduction and improved waste handling and treatment, and by increasing the efficiency of production and processes. But a very important part of the progress is the development of new/alternative products and systems for delivering correspondent services, use or performance.
The total environmental impact in the BSR is below estimated carrying capacity concerning bio-diversity, ecosystem functioning and the use of natural resources. Industry, with its central role for the economic development and as a large consumer of resources and transportation has also a very central position for the efforts to reduce the environmental impact. The life-cycle perspective of industrial products is the basis for analyses of ecological impact.

5.2.3 Implications for industry

In general a global growth is expected due to a growing population and development of many countries from traditional economies largely based on agricultural products to more "modern" economies. This implies a growing demand for products and services - something which underlines the importance of adjusting the environmental effects of all human activities in accordance with the estimated carrying capacity. An overview of the implications for industry of a sustainable development, based on the scenario described above will be made here. Scenarios for each branch of industry can be found in Annex 5.

Use of raw materials

Design for reuse and recycling and dematerialisation (or eco-efficiency) will constitute the core in the development of industrial products as well as processes and production.

The mining industry in the WBR is world-leading in terms of technology, energy efficiency and environmental aspects. Much effort is spent on improving mining techniques in order to minimise adverse effects on the environment. Concentration processes are becoming more and more closed, which decreases the emissions of dust and acid mine drainage (AMD). Biochemical and geochemical control measures in combination with mining methods minimising AMD guarantee that very small amounts are lost to the surroundings.

The development of the quarrying industry towards a sustainable society depends on many factors. In principle, a higher degree of reuse and recycling means that the demand for virgin materials decrease. Quality requirements and most probably a growth of building and infrastructure construction, especially in the Baltic states, Russia and Poland makes a real increase of quarrying in the region likely.

The future use of metals is to a large extent dependent on the demand for metals in engineering industry. Possibly, the use of light materials such as aluminium will increase. The use of toxic heavy metals will probably be strictly regulated (e.g. lead, cadmium and mercury). They will be used in closed systems, either in closed production processes or they can be collected and reused when used in products, or banned. The losses are expected to be very small and they may be banned in certain products or productions if collection and recycling is difficult.

Metal production is very energy-consuming and much effort is directed at developing more energy-efficient production methods. Surplus heat is used for heating of adjacent industries or connected to municipal energy distribution systems.

The use of stable organic compounds is strictly regulated in order to avoid losses and diffusions causing environmental and health problems. Certain compounds with toxic or other severe effects on the environment and health may be banned altogether (e.g. PCB, CFIs and other halogenated hydrocarbons).

Emissions of e.g. dioxins, other halogenated compounds and PAH from different industrial processes (e.g. metal and fertiliser production, chemical industries) will be greatly reduced by process regulation in combination with end-of-pipe solutions. The next step is to develop new processes and production techniques – based on eco-efficiency – that eliminate these substances to minimum.

The use and emissions of organic solvents to the amount of products is reduced in all industries. This is accomplished partly by increasing the efficiency of existing production methods and by exchanges of materials and processes. When organic solvents are used utmost care is taken to reduce the losses to the environment. In most applications, however, alternatives are used, e.g. CO2. Also the need for degreasing will be reduced since parts are not stored but directly delivered in just-in-time systems and alternatives to grease will be developed. Exchanges of metal parts for other materials also reduce the need for degreasing.

In the chemical industry catalyst and membrane technology improves and drastically reduces resource consumption and emissions. Also bio- and enzyme-technology reduces the need for processes involving hazardous chemicals and high energy consumption. These techniques also makes it possible to reduce the use of water and in some cases develop closed circulation systems. Careful control of processes e.g. by computer regulation minimise waste production and resource use. Much research and development will be directed at exchanging fossil raw material for generation of raw material from wood, crops, and by bio-technological methods. The use of catalysts for e.g. polymerisation and other reactions will improve production methods and reduce resource consumption and waste production.

In the textile industry the use of chemicals will first be reduced by increasing the efficiency in the production, i.e. optimisation of dosing, temperature and timing, in combination with recovery of chemicals in wastewater. Thereafter, reduction through alternative production methods and processes will further reduce the amounts of hazardous chemicals. The recovery of chemicals in wastewater will in many cases be developed to closed systems.

The use of flame retardants and other substances used for obtaining special qualities in textiles and leather will either be replaced by other alternatives less harmful to the environment and health or only used in small amounts in restricted applications.

Environmental declarations of food, textile, leather, wood, pulp and paper products will include the production of the raw material, not only the production process of the final product. Environmental declaration of forestry is being developed as are life-cycle assessments including the production of raw material for different product groups. Much research & development efforts are being directed at developing new products and materials based on renewable raw materials.

Use of energy

In most industries the energy consumption per produced unit will be greatly reduced. The first step, to make ongoing production processes energy efficient, may reduce the relative energy consumption considerably. This is obtained by making production more efficient in all respects. Firstly, by minimising the energy need and secondly, by minimising the energy use, by closing systems, recycling of cooling water, by insulating strategic process steps and by installing heat-exchangers, etc. The potential for going further is largely dependent on the development of new processes, production techniques, new materials, etc.

Energy consumption in the mining industry is successively reduced by automation of traditional mining techniques and the development of new, e.g. leaching techniques. In metal works energy consumption will be reduced by the use of new production techniques such as "hot flow" processes and thinner casting of goods which reduces the need for plastic working.

A considerable part of energy consumption in the BSR is used for heating and cooling of buildings. The energy consumption during the use and maintenance phase constitute about 95% of the total energy consumption connected with buildings. The long life-cycle of the products in the construction industry makes measures in old buildings equally important as energy considerations at construction of new houses. Smart "super-windows" through which the heat losses can be regulated that can be used in both old and new houses are developed, buildings with no heating systems, instead using the day-light are constructed, alternative, local energy sources are being developed, etc. Heat exchange systems and flexible heat regulation are also important means of increasing the energy efficiency.

In the food industry for instance a significant energy consumption takes place during transport. Reducing the transport requirements will thus be an important arena for increasing efficiency within this industry. In chemical industry process and product development aims at exchanging fossil raw material with renewable derived from wood and crops, produced by bio-technology, e.g. enzyme-technology.

Emissions

Emissions to air and water from production will be diminished to acceptable levels in accordance with carrying capacity. This means interrupted emissions of certain substances, e.g. some heavy metals and stable toxic organic compounds. Emissions during the use phase of industrial products will also be an important aspect of the environmental impact of industry. However, this is also a question of consumer demand and consumption.

The uncontrolled diffuse "consumption" (or emission) of metals through corrosion and erosion on metal surfaces and due to the use of e.g. heavy metals as additives, e.g. in plastics, will be minimised through product development and reduction of acidifying emissions. Dissipate use, e.g. lead in gasoline and ammunition, wearing goods (e.g. clothes, shoes, etc.), metal pigments and metals as a contamination (e.g. cadmium in fertilisers) will be strictly reduced and the remaining use will be under strict control to guarantee that no losses occur. Metal use in these applications will to a very large extent be replaced with other less harmful alternatives.

In, e.g. the food industry the emissions of eutrophying substances, nutrients and BOD (biological oxygen demand) have been reduced by means of closed (or partly closed) water circulation systems. Remaining polluted water is treated in waste-water treatment plants, sometimes in combination with wetlands or ponds. The same development have taken place in the pulp and paper industry, and similar solutions have strongly reduced emissions of metals, organic compounds, etc. from most industrial plants.

Emissions to air (SO2, NOx and dust) will be reduced in a similar manner, i.e. through a combination of process and production modifications and development, end-of-pipe solutions and choices of input material quality.

Health aspects

New construction materials are free from substances that are dangerous to health (e.g. formaldehyde, radon and asbestos). Much effort is directed at developing paint and interior fittings with very small emissions of substances dangerous to health and environment. A clear trend will be the use of traditional building materials, techniques and paints, although applied with modern technology, comfort and energy knowledge.

The food production industry is under strict control regarding additives and toxic substances in food and deliverers of primary produce declare their production methods by environmental labelling systems. In the textile industry the use of carcinogenic and allergenic chemicals (e.g. azocolours, formaldehyde, pesticides, etc.) will be strongly reduced.

Much effort is directed to improve working conditions and health aspects of production and process design are routinely considered.

Waste

The generation of waste in relation to the amount of products will be reduced in all industries. This is accomplished partly by increasing the efficiency of existing production methods and by exchanges of materials and processes. It is also accomplished by the fact that what is considered waste is changing. What is waste for one industry is raw material for another, or finally in some cases for energy production.

The production of sludge in the engineering industry that has to be deposited, containing e.g. heavy metals, will be reduced in several ways. Separation of different production processes and lines, e.g. in surface treatment industry, will prevent that different metals are mixed and thus that recycling is facilitated. Process development and regulation will also result in higher yields of different processes.

Waste dumps will be strictly controlled and all incoming waste must be well characterised to ensure suitable handling procedures and storage.

Spills and leakages

Preventive measures to reduce chronic or accidental spills and leakages will be implemented. This includes identifying leakages or losses, analytical control of the main possible pollutants in each emitting process and at each stage of water treatment plants, and using flow-meters in any process using water. An analysis of how certain waste streams arise will reduce or eliminate the waste stream, often in an inexpensive way. Different wastes should be segregated and waste mixtures should be sorted. Further examples are: equipping storage tanks with overflow alarms, installing double bottoms with integrated leak detection systems on tanks and installing leak-proof valves.

Product design

In product design the environmental aspects of basically three phases of products life cycles are considered, i.e. production, use and discarding. Some aspects of product design with environmental implications that are considered are e.g. choices of materials, the possibility to disassemble and reuse parts and/or materials, lifetimes of products, the possibility to repair products and environmental aspect during use.

Buildings are constructed for optimal lifetimes and easy disassembly and reuse of materials is planned for. High flexibility in building layout facilitate fulfilment of different customer requirements at different times within a basic framework.

In many applications, especially such where weight reductions lead to energy savings, plastics, ceramics and carbon fibre materials have to a large extent replaces metals. The low heat transfer rate of these materials also reduces energy consumption when used as reinforcement in e.g. buildings. In chemical industry the use of bio-technology for production and design, of e.g. herbicides and pesticides, will lead to that substances will be more specialised, mimicing nature’s own methods, and the distribution will be more controlled and differentiated. Also the qualities of crops grown will be developed by means of bio-technological methods, e.g. genetic engineering.

A recycling industry has developed; a considerable fraction of different types of equipment, e.g. kitchen appliances, machinery, electric and electronic components, etc. are upgraded and re-sold. Also different materials, plastics, ceramics, metals, fibres, etc. are recycled to a very large extent. The "losses" of material and substances, both through diffuse consumption dissipate use will be strongly reduced since these aspects will be considered important during product design. Packaging materials are reused and recycled to a very high degree. Disposable packages are substituted for reusable ones and deposit and transfer systems are developed. Textiles and leather products will be reused several times before the materials are recycled, first for reuse of the fibres and in the final step for energy production. The voluntary systems for collection and transport of discarded products in one area to other areas where they can and will be used are developed.

Waste from slaughterhouses and other food industries is to a very large extent used for production of bio-gas which is used as fuel, e.g. for buses and cars. The remaining sludge is used for soil improvement in agriculture and horticulture. Production of phosphorus fertilisers from non-renewable sources will to some extent be exchanged with sludge from food industries and from wastewater treatment plants.

Localisation

The productive surfaces of nature, e.g. highly productive agricultural areas and forests, will no longer be exploited for construction and localisation. In all exploitation of land, e.g. localisation of residential or industrial areas, green areas are kept in place so that the productivity and diversity of nature is not diminishing.

The choice of localisation of industries and primary production units are a means to reduce environmental impacts in several ways. The total need for transports can be reduced and the use of waste produced in one industry can easier be used as a resource in other businesses. Food industries are e.g. localised in conjunction with primary production units so that waste water from the industries can be used for fertilisation and soil improvement.

5.2.4 How to get there

Driving forces

Important driving forces for improvements of environmental and other aspects of industrial production will be market-driven forces dependent on public awareness and other economic driving forces, e.g. production efficiency. The basic driving force for industry is thus assumed to be economic prosperity.

Through the market-driven forces, e.g. consumer demand, other aspects of industrial production and products and company actions, such as environmental, social, cultural, humanitarian, etc. aspects, have also drawn attention from industry. Since, e.g. the internet has become a powerful tool for consumer organisations to mediate information, these values are considered very important and strong market factors and companies consequently put effort into maintaining a high standard in these respects. Besides the market-driven forces and the potential to increase efficiency in industry, non-negotiable driving forces, national and international regulations and agreements, will also be of utmost importance for the development of industry.

The driving forces will be realised by the application of different principles for action, the overall principle being "Continuous development towards sustainability implying an environmental impact of human activities not exceeding the carrying capacity of the local, regional and global ecosystems":

Continuous improvements of eco-efficiency and environmental conditions.
Continuous improvements of social conditions.
Impact assessments of development including environmental, social, cultural, moral and ethical considerations.

These principles can be further broken down to more detailed ones, e.g. as regards environment:

Use of best available technology and best environmental practice.
Implementation of environmental management systems (EMAS, ISO 14001 or other) within industry.
The substitution principle. Phasing-out of hazardous substances (in accordance with e.g. the Esbjerg Declaration).
Attaining of recycling and reuse, and waste minimisation.
Co-operation: Joint ventures and pilot projects including small and large companies, universities and administrations in different countries to develop and transfer knowledge and new technology.
The polluter pays principle.
The principle of internalising external costs in production costs.
The principle of openness and information.
The principle of cautiousness.

Similar sub-principles can of course be developed also for social and other aspects of development.

These principles may be driven through by regulations or by voluntary actions within industry, motivated by market- or economically driven forces. A likely development is that a combination of both, developed in co-operation between industry, consumers and governments will be required in order to arrive at a desirable situation.

Means and methods

The development of a competitive industry is largely dependent on the legal, competitive, environmental and economic framework that regulates the conditions for industrial activities. Harmonisation of regulations within the BSR and to regulations and agreements within the international community is therefore of utmost importance.

Development of industry is to a large degree a matter of investments and availability of risk capital. It is therefore of importance that all financing institutions take an active part in the work to develop industry in this region and that capital is available for different types of projects. No specific types of projects should be lifted forward as model projects but the basic idea should be that it can not in any detail be predicted what design or content of projects that are successful. Certain aspects may, however, be pointed out as interesting concepts worth testing such as (new) models for co-operation, the establishment of networks for exchanges of ideas, knowledge, etc. Actors in these networks and in other forms of co-operation may be industry in the different countries as well as non-governmental organisations, governmental organisations and communities.

Knowledge and skills, and training and education are central for development of high-technological industry specifically, and for development of industry (processes, products, production) in general. Further education of the existent labour force is as important as stimulating the youth to choose adequate educational programmes so that recruitment of competence to industry will be possible. The demand for a competent and skilled labour force from industry must of course be met by a development of educational programmes. These would preferably be developed in co-operation between educational institutions and industry and will probably gain from co-operation between the BSR countries. Since development towards a sustainable situation in the BSR is not only a matter of technological development and economic growth, technological education programmes should also include environmental and social aspects and these other relevant aspects of society should also be met by investments and promotion of education.

Directed research and development efforts should comprise environmental technology, improvements of production techniques and processes, cleaner production, eco-efficiency (dematerialisation) for different branches and services and substitution of materials and compounds. Industry and research organisations would be the main actors for these areas but also regarding e.g. environmental management (environmental management systems) and environmental reporting as tools for applying environmental strategies in all industrial and related activities. Special attention should be directed at the requirements of small and medium sized enterprises.

Another area with great potential for development and with requirements for research are questions of reuse and recycling, product design (design for environment, DFE), producers responsibility, life-cycle analyses or assessments (LCA), eco-labelling and environmental declarations. Strongly connected to these issues are consumer awareness based on the consumers level of knowledge and commitment to environmental aspects of products and industrial activities.

Both "sustainable development", "carrying capacity" and to some degree "critical load" suffer from lack of concretion, something which is a matter of great importance if industry and other sectors of society are to adjust their activities in accordance with these concepts. Research and development efforts should thus be directed at defining, evaluating and implementing these concepts on local, regional and global scales as well as for different industrial activities and other activities of relevance for industry (i.e. making them operational). In order to evaluate and possibly adjust the above mentioned operationalisations there will be a need for monitoring and information system for resource use, environmental quality and other indicators (e.g. social).

The foundations for human resource’s management and the strive to obtain a good quality of life for everybody in the BSR is the development of social security systems including health and accident insurances, pensions, parental and sick leave conditions, holiday conditions, etc. Another aspect of human resources management is addressed in industrial management and organisation theory and deals with organisation, working conditions, responsibility and participation issues, etc. as concerns the labour force and industrial employees. Since industry is a large employer the way these issues are dealt with and viewed in industry are very important for the build-up of knowledge and institutional framework for handling them.

In short, the following are important areas for action in order to reach sustainable development:

Harmonisation of legal and regulatory framework regarding economic conditions, financing, competition, trade, environment and social issues.
Development of environmental technologies and tools in a broad sense.
Development of operational tools for sustainable development.
Development of human resources management.
Co-operation and transfer and exchange of knowledge and technology.

Industrial Sector Final Report

6. Identification of Obstacles and Gaps

There are of course numerous obstacles and gaps in the present situation as well as when it comes to dominant forces of change, which may make a fast shift to a sustainable growth society unlikely, not only in the BSR but in the whole world. As has been indicated in the previous chapters, the strive for better living conditions, especially in countries in transition, cannot be neglected for the next 10-30 years. A most probable development, sustainable or not, is therefore to assume that economic growth will be a first priority goal in all BSR-countries. This is also the main possibility at hand to put people to work, reduce unemployment, create stable societies and resources for improvements of the environment. Economic growth might, but must not, be accompanied by environmental damage.

On the contrary, the present situation can be seen as a "golden opportunity" to take a great leap forward towards sustainability in the BSR. The strive for increased international integration is manifest not only in a regional perspective but also globally. This will induce increased openness and larger markets which in turn create growth potentials for companies in all countries. Increased business will demand new investments, especially in EBR-countries. There are few evidence that such investments will not come up to BAT-standard since modern equipment in most cases is cheaper than old. There will be exceptions to this rule among less serious and short-sighted business leaders and certainly among several less informed SMEs, but scarcely to any large extent. The cost of dismantling old production facilities in WBR-countries in order to move these to EBR is most often higher than bringing in new equipment.

The other parameter is technological change. The situation in BSR must be looked upon in a global perspective. Technological development will proceed regardless of the development in the BSR. The general direction of technological change at least for the next 10 years will according to most experts be fostering environmental sustainability. This trend will be supported by political decisions but will most obviously continue regardless of political decisions. New, less time consuming, less resource consuming etc. technologies will be more competitive than older ones.

Accordingly, international integration and technological change will give possibilities for a sustainable development. But there are important obstacles and gap that can impede or delay – or even make it impossible – to accomplish the overall goal for the industrial sector in the BSR.

6.1 Political and social obstacles and gaps

Gaps and obstacles are likely to be found in the political and social side of the development process. First of all there is a need to recall the Brundtland-report, which made the observation that a prerequisite for sustainable development is "effective citizen participation in decision making". This goes far beyond holding national elections every few years; it has to do with information, responsibilities of a free and unbound media, current consultations between parties and among citizens and authorities and not least rights to legal redress. It has to do with an active and democratic involvement in the development process.

There might also be obvious obstacles and gaps in the everyday political process. Disagreement between parties or even fractions within parties might eliminate the possibilities to reach necessary agreements, even though one agrees in principle that something has to be done. Even more common is disorder emanating out of the sheer complexity of modern society. The number of laws, agreements etc. do not always harmonise with the speed of change in society. Neither do the content of all legislation.

Even though the democratic process at the time being seems to have been secured and activated in the whole BSR, there are other gaps which might delay a constructive dialogue and a sustainable growth process. On the social side, there is still a need to underline knowledge and education. For those people who on a daily basis work with environmental issues it seems inconceivable that some environmental problems occur. Still, this is the case and the reason why it happens can be ascribed to a lack of knowledge.

Employees do not always know that they are working with hazardous material, citizens do not know that some sort of waste causes damage to environment etc. This ignorance has created much of the problems during the rapid industrialisation process in both EBR and WBR. Since it is not a steady state and new materials are brought into the production process almost every day, much effort must be put into continuous education and information.

The motivation of people for a sustainable development and environmental awareness is hampered if the social conditions are not acceptable. As was pointed out in Chapter 2, it may be difficult to get the necessary mobilisation of the people for a market and growth-oriented industry if – which is now the case in the EBR – there are ill-functioning institutions for social welfare, poverty, miserable working environment and industrial safety. This is often coupled with lacking education in environmental matters in the industrial plants and unaccustomedness to the challenges of a market economy.

6.2 Economic obstacles and gaps

On the economic side, mentally there is a global tendency today and a firm belief that free markets will solve all problems. However, there is no guarantee that this will be in line with neither fair competition nor sustainability. Less responsible and short-sighted acting or even illegal companies might be economically favoured and thus gaining competitiveness compared to other companies. Even free markets have to be governed and rules of the game established to achieve a fair competition.

Thus, today with a fast integration of international markets, there is an imperative need to set global standards on market behaviour, on environmental control etc. in order to reach a harmonious and positive development. No company may benefit from being irresponsible or "cheating". From this follows that there is both a strong need to develop rules of the game together with industry as well as looking after that a good transparency exists between local, regional, national, interregional and international rules of market behaviour.

In the perspective of the Baltic Sea Region, it means that the good growth prospects for the region – which are essential for creating resources for a sustainable development – presuppose a favourable framework or climate in the region for business operations and establishments. Especially in the transition countries, there are, however, barriers to growth owing to incomplete legislation, weak enforcement of law, custom and certification problems (hindering foreign direct investments) and deficiencies in the taxation system. Equally important as obstacles are a burdensome bureaucracy, weak institutions supporting a proper functioning of the markets and insufficient infrastructure in certain aspects. Several of these problems can be said to be a reflection of lacking harmonisation in the region in the economic regulatory framework and in environment policies

6.3 Environmental obstacles and gaps

On the technical side, there is a need to underline that there is always some degree of uncertainty. For instance, the discussions whether or not asbestos is hazardous to health went on for years before a general prohibition was reached. The present very intensive discussions especially in USA about the harmfulness of smoking is another case, even if evidence of the danger of smoking seems convincing to a vast majority. Still another case is the for decades ongoing discussions of benefits and harmfulness of different fuels for cars including the consequences of different speed limits etc. The effects of CO2 emissions on global warming is still questioned by some. The examples on technical uncertainties are manifold.

There is no reason to believe that all questions emanating from technical uncertainties ever will be solved. But despite these unavoidable uncertainties, the development of technologies, methods and ideas in many branches of industry will facilitate the attainment of sustainable development. In addition, institution-building like Environmental Management Systems (EMS) can, especially in combination with eco-efficiency, provide tools having a holistic and process-oriented approach. Such an orientation in the environment work – changing the whole attitude and approach to environmental problems – might be more important than new technologies. These tools can be used in efforts to govern the industrial production in a sustainable way with respect to all kinds of emissions, waste and use of natural resources instead of relying only on end-of-pipe solutions.

The implementation of EMS needs, however, to be improved; as yet there are too few companies using EMS to have any noticeable effect for the whole industry in the BSR. Nor are, for the time being, the market-driven forces or the market awareness of environmental effects sufficiently strong to bring about sustainable policies. There are also great deficiencies in training and education in new sustainable thinking and methodology which is an obstacle, for example, for applying EMS in the enterprises, Furthermore, the financial resources for environmental investments in industry in the transition countries are for the moment too scanty, not least due to the fact that the companies find the business climate not favourable enough (see above) and therefore hesitate to invest. Finally, the deficiencies in environmental monitoring systems constitute an obstacle for sustainable development.

Industrial Sector Final Report

7. Action Programme for the Industrial Sector

7.1. The potential for growth in the BSR

There are good reasons to believe that the Baltic Sea Region will be a region with favourable growth in the next ten to fifteen years. One basic argument for this prophecy is the great potential of exploiting the structural changes in the region. There are few regions in the world that exhibit within their borders such great differences and contrasts as the BSR in terms of living conditions, income levels, industrial structures and environment conditions. This diversity can benefit the BSR over other regions, since the differences will give rise to possibilities of dynamic development. The inherent dynamism in the Baltic Sea Region can be further explored and turned into growth for all actors in the region by identifying and exploiting the comparative advantages in different countries with respect to wage levels, knowledge, natural resources and demand.

In addition, the whole of the BSR will likely rank highly on both "hard" and "soft" attractivity factors, such as the size of the market, political stability, local business climate, access to educated labour, R&D-activities, free trade, contact networks, cultural affinity, etc. Having high marks on these attractivity factors is a prerequisite for becoming a region with good growth in the international competition of the early 2000´s. The BSR is also step by step being developed into a closely connected market. For example, telecommunications are improving, transport flows are increasing rapidly, closer integrated energy networks are considered and the air communication network has ameliorated considerably. The interest of international investors to establish operations in the region is already traceable. Inward foreign direct investments (FDI) have risen appreciably in the last few years in several countries in both the WBR and the EBR.

Another positive factor is the macroeconomic development in the BSR which has reached a turning point. The economic collapse in the transition countries has come to a halt and several of the countries have now a decreasing inflation and a solid growth, although there are – with the exception of Poland – still much of the fall in industrial production to recover. Also the traditional market economies in the BSR seem to be in better shape than before with relatively good growth prospects, low inflation and the imbalances in the government finances successfully tackled.

Putting the development in the BSR into a broader setting, it can be noted that the opening-up of the BSR coincides with a new global wave of structural changes. The established commercial and industrial centres of today will be challenged by new competitors because of globalisation and deregulation of markets in combination with radical changes in technologies. The turbulence around the world during the last decade underlines the fact that all countries and regions nowadays are involved in keen competition concerning consumer preferences and production facilities. Besides, markets are more sensitive than before to political measures and lack of initiatives. Deeply rooted democratic institutions constitute a significant feature of confidence-building in a region. In the BSR, these institutions are now stable and are expected to be further strengthened. Democracy can therefore be a long term asset for the Baltic Sea Region in the international competition between regions; especially now when fundamentals of economic logic and driving forces are rapidly changing.

7.2 A challenge and a golden opportunity

The industrial sector will by its size and effects on other sectors in the society play an important part in the process of turning the structural diversities into a dynamic development. In 1996, the contribution of industry to GDP ranged in the region from 20 to 40 per cent (see Chapter 2). The industrial production of the countries in the EBR was more than halved during the 1990’s. A rather quick recovery of the production is to be expected in most of these countries as the growth process proceeds at the same time as the industrial sector in the WBR will increase in absolute terms.

The forecasted expansion of industrial activities will facilitate the accomplishment of economic growth in the whole region, but social conditions and environmental factor should also be taken into account to achieve sustainable development. The people in the transition economies will, for example, strongly desire a fast improvement of social and living conditions. As regards the environment, a steep increase of the industrial production might – if business is carried out as usual – lead to considerable stress on the environment in form of emissions, waste and use of natural resources. The main challenge but also a goldenopportunity for the region is to design policies that combine progress in economic (industrial), social and environmental factors in a sustainable way (see figure 7.1).

Figure 7.1 The relation between production and sustainable development during a transition period.

The overriding aim of the Baltic 21 process is to succeed in harmonising economic and industrial growth with improvements in social conditions and less stress on the environment. There is a common interest of enterprises, governments and other actors in both the transition countries and the traditional market economies in the BSR in bringing this task to a successful completion since this would be the only feasible way to reap the benefits of the expected favourable growth conditions in the region. The action programme for a sustainable development in the industrial sector – that will be presented below – should be seen in this perspective.

7.3 The framework for the action programme

Considering the overall goal and the subgoals for the industrial sector as well as the scenarios and the obstacles, the following areas have been assessed as being the most important ones for actions:

Framework for business operations
Development of market-driven tools within the enterprises for sustainable development and increasing market awareness of sustainability factors
Co-operation on R&D and training /educational programmes in the BSR
Development of measures for monitoring the effects on environment, industry and social conditions and for promoting investments (BAT, etc.) having favourable effects on sustainable development

Before presenting the different actions – which are addressing these areas – it is suitable to give some general remarks on the action programme.

The action programme is not comprehensive in the sense that all possible actions for a sustainable development are included. Other fora for co-operation in the BSR are dealing with some of the issues. HELCOM, for example, is on the basis of the Helsinki Convention responsible for certain decisions, recommendations and measures in relation to pollution of the Baltic Sea Area. A special body, PITF, implements the Joint Comprehensive Environmental Action Programme (JCP), inter alia, concerning actions on major point sources of pollution. As regards the business framework, there is co-operation already established to tackle several problems, mostly related to the transition countries, and work is under way to improve the situation. It would within the scope of Baltic 21 be inefficient to duplicate this work in other fora.

Another characteristic of the action programme is the emphasis put on institution-building in a broad sense rather than on investment projects; an improvement of institutions in the whole of the BSR has in the context of Baltic 21 been seen as decisive and a prerequisite for attaining sustainable development and a necessary framework for successfully carrying out, for example, investments having a favourable impact on environment. In line with the re-orientation of EU´s policy on sustainable development, the action programme embraces a rather broad spectrum of measures that includes the legal framework as well as economic incentives, strengthening of market forces, information, R&D and education.

There are several actors involved in executing an action, although one actor – usually the governments or industry – often is the most prominent. The existence of several actors for an action makes it indispensable to create networks between the actors. There is also a belief that such networks – trough exchange of information – will be conducive for accomplishing sustainable development. The actions are founded on the principle of voluntariness; no one has the power to command any actor to perform the actions. This might seem to be a weakness but it can also be regarded as a strength and a necessity since the programme of sustainability in the industrial sector presupposes a change in thinking – in the minds of people, in enterprises and in the market – and such a change does not come about on command. Although the actors on a voluntary basis should – in their own self-interest – take on the responsibility for creating the networks and organisation that are vital to carry out the actions, it can be considered to somehow monitor the starting up and progress of the actions, for example, by reporting to a body within certain time frames. This is an issue for the overall Baltic 21 project which is not within the scope of this report.

The five actions are primarily related to certain subgoals and perhaps indirectly linked to others. Although all actions are important, action II has been considered as having the first priority in the industrial sector, since this action has the greatest potential of making progress in sustainable development. In table 7.1, it is given a matrix showing the relations between the actions and the subgoals. According to the table, action I has an impact on all the subgoals which is not astonishing considering the broad range of measures that are included in this action. It is also interesting to note that all five actions are linked to the subgoal concerning eco-efficiency; four out of five of these actions are directly related to the eco-efficiency subgoal. All actions are also linked to subgoal 5, but this is preferably an indirect linkage; for example, if the eco-efficiency action is successful that would have a strong direct impact on subgoal 3, which in its turn can appreciably influence subgoal 5.

The action programme does not necessarily require new financial means for countries beyond the financial resources that are available in existing budgets and programmes, nationally and internationally. The financial means that are required for the actions are to be borne by the actors and/or by changing the priorities in existing programmes.

Table 7.1 The relation between actions and subgoals in the industrial sector. A direct link is denoted with X and an indirect link with (X)

SUBGOALS ACTIONS	Subgoal 1: Implementation of the conven–tions/agreements relevant to the BSR, i.a., those mentioned in the Saltsjöbaden Declaration, the Kalmar Meeting and its Action Programme	Subgoal 2: Harmonisation and enhancement of legislation and practices re- garding state aid, competition, establishment, trade and en- vironment (incl. working environ- ment and industrial safety) as pertainng to industry	Subgoal 3: Implement a sustainable performance in industry that combines competitive production combined with reduction of detrimental ecological impacts and resource intensity (eco-efficiency)	Subgoal 4: Improvement of social conditions and of industrial competitiveness	Subgoal 5: Industrial environmental impact within the limits of the carrying capacity in the BSR
Action I: Improvement of the framework for business operations	X	X	X	X	X
Action II: Implement eco-efficiency in industry in certain respects			X	X	(X)
Action III: Increasing con–sumers´aware–ness of sus–tainable deve–lopment		X	X	X	(X)
Action IV: Extended and improved co-operation on R&D, know–ledge and technology transfer in the BSR			(X)	X	(X)
Action V: Reduction of pollution according to thecarrying capacity of nature	X		X		X

7.4 The action programme

Action I: Improvement of the framework for business operations:

A. Development of economic incentives improving the management of environment in industry.

B. Harmonisation of legislation pertaining to industry as regards, state aid, competition, trade and environmental policy (including working environment and industrial safety).

C. Implementation of international conventions and agreements relevant to sustainable development in the BSR.

This action is linked to all subgoals. Action I should result in a harmonised framework of relevant legislations and practices that will both improve sustainability and create a level playing-field for the companies in the BSR. This will hopefully remove several of the hindrances that have been identified for business operations in the BSR. The development of economic incentives (i.a. fees and taxes) and harmonisation of legislation in the BSR can and probably will go hand in hand with an international or a wider regional (EU) harmonisation. Today all countries in the BSR, except for the Russian Federation, are members of EU or having agreements with EU (EEA, European Economic Area-agreement) or are in a process of accession to EU. It can also be noted that the Russian Federation and EU recently have concluded an agreement on partnership and co-operation. Consequently, the EU Directives and rules will be very important for sustainable development in the BSR. This action has also as a aim to increase the number of countries having signed and ratified existing (see annex 2) and new or revised international conventions/agreements.

Actors:

1. Governments in the BSR: The governments in the BSR are the most significant actor in this action. The Council of the Baltic Sea States (CBSS) should decide on the importance of harmonisation in the BSR and in regulary putting up the topics covered by Action I on the agendas of all ministerial meetings within the scope of CBSS. A decision should also be taken to set up an intergovernmental working group (incl. the EU Commission) with the following tasks:

Identifying needs and assisting in training and education of government officials (incl. state agencies) in designing and enforcing legislation relevant to sustainable development.
Encouraging and supporting theapproximation process so that harmonisation will be achieved before the actual EU-accession, incl. finding ways to harmonise the Russian legislative framework.
Assisting in building upenforcement institutions.
Development of economic incentives instruments. Initiate research on the economic, social and environmental effects of different economic incentives and regulations.
Encouraging signing and ratification of conventions/agreements and recording the actual progress in harmonisation and ratifications of international agreements.

2. Industry and trade organisations: Participate as observers in the working group and take part in education and training activities. This actor should also, in co-operation with authorities, assist in analysing the effects of different economic instruments. Inform the companies about the results from the working group.

3. Non Governmental Organisations (NGOs): Participate as observers in the working group and inform their members of the importance.

4. International Financial Institutions (IFIs): Participate as observers in working group. The IFIs should participate and actively support the education and training activities in order to ensure efficient participation of all countries in the BSR.

Financing:

The technical co-operation programmes of the EBRD and the advisory services and learning programmes of the World Bank should in collaboration with the aid agencies in the WBR finance and organise the training/education of government officials (including officials from state agencies) in the EBR. Such an assistance may also also be sponsored by other IFIs and the Phare and Tacis- programmes, inter alia, as a part of the enlargement process.

Time frame:

The working group should conclude its work within 5 years; i.e. the results from the group should be reported every year to the CBSS and relevant minister meetings within the scope of CBSS. Plans for continuation of the work should also be presented.

Monitoring methods:

The countries should every third year starting from 1 January 2002 report to the "relevant body" about their harmonising activities in line with the indicators in subgoal 2.
The countries should every third year starting from 1 January 2002 report to the "relevant body" about their implementaion of conventions/agreements in accordance with the indicators for subgoal 1.

Action II: Implement eco-efficiency in industry in the following respects:

A. Development of eco-efficiency tools for different industries.

B. Implementation of Environmental Management Systems (EMS) with consideration of the special circumstances for SMEs.

C. Consideration of environmental factors in all activities and reporting, especially with regard to financial reporting of enterprises.

D. Promotion of pilot projects aiming at sustainable development

Actions I will result in a harmonised and enhanced framework for business operations and will create a level playing-field for the companies in the BSR. By such a harmonisation, it will not be possible to grant considerable state aid or apply environmental legislations with low standards in a country – for example, permitting the use of toxic substances banned in other countries in the BSR – to give companies an unfair competitive edge in relation to companies producing in other countries. It is, however, equally important to promote the market-driven forces in industry for sustainable development environment, thereby complementing and going beyond requirements, for example, in environment legislation. Relying on market forces and self-regulation will mean that industry and other actors in their self-interest will take on the shared responsibility to tackle environmental, social and industrial problems and transform these problems instead to possibilities. This in turn would imply a decentralisation to the company level where governance structures for sustainable matters should be developed.

Action II – which is linked to subgoal 3, 4 and 5 – has as a aim to develop and implement such governance structures that are beneficial for both the environment in different respects and the efficiency in the company as well as social conditions regarding health and working conditions in the companies. The concept of eco-efficiency is now rather well established in industry as a way to accomplish pollution reduction through process change as opposed to the earlier end-of-pipe approaches. The concept needs however to be elaborated further and operationalised for different industries in terms of methods to achieve efficient use of raw material and energy, waste minimisation, internal recycling and reuse, etc.. One aspect of waste handling is producer responsibility in terms of reuse and recycling of components and material in products delivered. This is existence in certain industries today but needs to further developed and implemented.

Environmental management systems – for example EMAS and ISO 14001 – can be seen as tools to organise and govern the activities in a company with consideration of environmental effects. EMS is a framework for controlling, monitoring and assessing the environmental protection work and describes the way of operating, the organisational structure, routines, dissemination of information. etc. EMS can be used as an organisational tool to implement eco-efficiency in a company. Increasing the implementation of eco–efficiency and EMS is, accordingly, a very important objective for Action II. Regarding the working environment and industrial safety, companies in some countries have already existing and appropriate systems and procedures that should be disseminated and implemented in all countries in the BSR.

Another aim for Action II is to develop and implement measures that will make the environmental record of a company known for the public at large and for the capital market. This can be accomplished by publishing environmental reports, as they are called, or by incorporating costs and investments related to the environment in the financial reports.

As regards financial reporting, there are no accounting standards that explicitly take account of environmental items in the balance sheet/profit and loss statement or in footnotes in the annual report. All the same, some companies give in their annual reports some information on environment in financial terms but this information is scanty and not reported in a systematic way. Developing standards for environment factors in financial reporting can be motivated solely by the principles of "prudence" and "true and fair view" in traditional accounting but will have as an important side-effect to make the costs, debts and investment related to environment more transparent for the shareholders and for the general public.

Turning to environmental reports, several companies publish separately this kind of reports – which are not part of the annual report (financial reporting) –containing information, inter alia, on emissions into water and air, waste, raw material consumption, energy consumption and production volumes. Some information on environment investments and costs can also be disclosed but this information is not in the format of financial reporting. On a voluntary basis, there has in a few industries evolved some degree of standardisation for information in environmental reports; this is, for example, the case for the pulp and paper industry in Sweden. But far more remains to be done both as regards standardisation (information items covered and a systematic reporting format) and coverage of industries and companies.

Actors

1. Industry and trade organisations: For action II, industry and trade organisations are the most important actors. Their interest and commitment to carry out action II is therefore decisive for a successful result. This work should be done in an informal and flexible manner and the following list can be seen as a suggestion of measures to execute that later on can be adapted to specific circumstances.

One overriding task – which is fundamental for all of the other activities – is to create networks between companies in the BSR, especially between companies in the same industry. These networks should be used, i.a., for exchange of information, for educational purposes and for developing certain standards on a consensus basis. The industry should organise itself so that companies in both the WBR and the EBR will become members of federations or trade organisations, thereby giving "legitimacy" to the views of industry or business spokesmen for the whole of the Baltic Sea Region and also giving a possibility to implement voluntary and self-regulatory standards in the region.
The industry in the BSR should elaborate – in collaboration with the World Business Council for Sustainable Development (WBCSD) and taking into the ongoing work in OECD and UN – the general principles of eco-efficiency in order to arrive at more precise definitions of the different elements constituting the concept of eco-efficiency. This elaboration should serve as a basis and help for the activities within the trade organisations or other kinds of network to work out concrete and targeted eco-efficiency measures and methods, for example, with regard to reducing material intensity, energy intensity, toxic dispersion and increasing the material recyclability. This work could lead to handbooks or guidelines for eco-efficiency in the different industries. The industry and the trade organisations should disseminate the knowledge (handbook/guidelines) about eco-efficiency among the companies.
They should foster the implementaion of eco-efficiency and EMS (EMAS, ISO 14001 and other similar systems), preferably through the work in the networks. Voluntary agreements – between the companies in trade organisations and networks – on implementation of eco-efficiency and EMS can be used to fulfil this task.
The staff in companies are key players in putting the sustainable policy into practice. Accordingly, the education and training of the staff, not least in the environmental department in the companies, is essential for several of the other activities. The industry, the trade organisations and the companies have therefore a responsibility to participate in setting up and running training/education programmes on eco-efficiency and EMS for the staff. This work should also include education and training of environmental auditors according to the requirements in EMAS an in the ISO 14000 series.
The industry should in collaboration with governments work for the establishment of certification bodies (for EMAS, ISO 9000 and 14000).
The industry and trade organisations should develop an environmentally-oriented cost accounting system, "environmental cost management", that helps to identify not only the environmental costs of different operations but also cost-reducing opportunities. Such a tool can be used by the management to identify alternatives for environmental protection measures that would result in substantially reduced costs.
Industry in the BSR should co-operate with other actors (governments, accounting standard setters, banks, science etc.) in developing standards for environment factors in external financial reports of enterprises It is important to consider relevant EU-directives (although the accounting standards in the directives do not deal explicitly with environment) and ongoing work in other international fora. Accounting is an area in which there are strong endeavours to internationally harmonise standards, for one thing because differing standards cause problems and costs for companies when the shares are going to be listed on the stock exchanges in different countries. Influencing the industry in other regions or globally about the need to have harmonised standards for environment in financial reporting is therefore a complementary task for the industry in the BSR in the efforts to develop a standard – on a voluntary basis – for the region.
The industry and especially the trade organisations should, in collaboration with government agencies, NGOs, science, etc., develop standards and work for the publication of environmental reports – not being part of the financial reporting – giving information on emissions, waste, use of raw material, energy consumption, etc. This work should consider developments in other fora, for example ISO´s endeavours to arrive at a standard for Environmental Performance Evaluation. One ambition for the environmental reports can be to use these for monitoring the development of sustainability in different respects, especially regarding some of the indicators to subgoal 2, i.e. reduction of material and energy intensity and the sustainable use of renewable resources. This work is preferably carried out in networks or in trade organisations in order to make the requirements adapted to the specific circumstances in an industry.
Companies in the industrial sector should in their purchasing policy require of their subcontractors to use EMAS, ISO or other similar EMS. Requirements to publish financial reports with environmental elements and environmental reports (when the latter two instruments are ready for implementation) can also be included as an element in a "green" purchasing policy. The development of such purchasing policies can be a task for the trade organisations and the enterprises. In this work, it should be taken consideration of the specific circumstances and problems for the small companies in formally adhering to all the items in the different standards, although the companies in practice apply an environmental management system in their operations.
The industry and trade organisations should in the whole BSR take the responsibility of disseminating to the companies and implementing in these the best existing systems and practises for managing the working environment and industrial safety.

2. Stock Exchanges: These actors should consider to include in their registration agreements with listed companies a provision that requires companies to use EMS and to publish annual financial reports with consideration of environment elements (the publication of a standardised environmental report can also be considered to be a requirement for listing). It can as an alternative be reflected upon – beside the regular list of companies – to have a "green" listing of companies complying with the mentioned requirements.

3. Banks: The banks should consider to include a provision in their lending policy to companies take account of the environmental policies in terms of eco-efficiency, EMS, environmental reports and financial reporting; companies implementing such policies might, for example, be accorded favourable conditions for a loan.

4. IFIs: The Ifs have in general developed and published environmental policies for their lending operations. These policies have mainly been applied in loans for infrastructure but also industrial operations are covered. "Environ–mental Impact Assessments" are carried out and "Environmental Action Plans" are designed for the specific operations. Commitments to apply some kind of EMS are sometimes made by the investors in connection with the process of getting a loan from the IFIs. It seems, however, that there are no systematic requirements to apply eco-efficiency systems and EMS in the operations. IFIs should therefore develop a lending policy that includes an explicit requirement of implementing eco-efficiency and EMS for lending to companies ; later on this requirement should also cover financial reporting (with environment elements) and environmental reports.

5. Accounting Standard Setting Bodies: There are government, private, national and international standard setting bodies. The most important one on the international level is the International Accounting Standards Committee (IASC) and on the regional level the European Union. The national standard setters – government as well as private sponsored bodies –should in collaboration with international and regional bodies develop standards for financial reporting taking account of environmental factors. The best solution would, of course, be that new standards were applied world wide, but if this is not possible the accounting setters in the BSR should consider take to the lead and move for a voluntary and provisional standard in order to set a good example for the rest of the world.

6. Governments: The governments have in Action II more a supportive than a leading role, i.a., by strengthening certain institutions and supporting or participating in different activities.

The governments already having an institutional machinery for certification should support other governments in their efforts to set up certification bodies.
The governments should – in co-operation with industry and trade organisations – design training programmes for SMEs to increase theirknowledge and capacity of applying EMAS, ISO or other similar standards. For the EU-members in the BSR this might be carried out within the framework of the Structural Fund Programmes (for example, the different Objective Programmes) and for the other countries through support from the Phare-and Tacis-programmes.
Appropriate government bodies, for example the Environment Protection Agencies together with other agencies related to industry, should offer the companies to contribute to the efforts of industry to develop guidelines for eco-efficiency and to disseminate information and knowledge being of interest in relation to eco-efficiency. The relevant agencies should bring about a co-operation and a dialogue with industry on ways to achieve eco-efficiency in the operations of the companies.
Standards or guidelines for environmental reports should – should in collaboration with industry, trade organisations, NGOs and research institutes – be issued by appropriate government bodies (see above).
The governments should in close collaboration with industry and trade organisations support a limited number of pilot projects in companies situated in a certain region or belonging to a specific industry aiming at developing the competence in eco-efficiency, implementing EMS and developing and implementing producer responsibility in terms of reuse and recycle of components and material in products delivered.These projects should serve as a catalyst for other companies and industries.

7. NGOs: The NGOs should engage in a constructive dialogue with industry and trade organisations in issues relating to eco-efficiency and put forward suggestions that can be an input for these organisations in formulating guidelines for eco-efficiency. NGOs have a special responsibility to promote the eco-efficiency concept concept through information, discussions, conferences and publications;

the NGOs should through their activities contribute to put "eco-efficiency" on the top of the agenda for sustainable development in the BSR. A co-operation between industry and NGOs is desirabl, for example in pilot projects and training/education.

Financing

In principle, the activities in action II should be financed by the respective actors. For some networking, training for standards, establishing of certification bodies, pilot projects and training programmes for SMEs some outside finance might be needed. This might be available through the Structural Funds in EU and the Phare and Tacis programmes which, i.a., can be used for institution-building and training.

Time frame

Action II in its entirety should be completed not later than 31 December 2005.

Monitoring methods

The industry and trade organisations, governments and other actors should within a year of the start of action II report to the "relevant body" (which will be decided upon later in the follow up of Baltic 21) about their respective organisation of the work to carry out action II. These reports should also include information about the network that will be established between the actors in co-ordinating the work.
The actors should every third year report to the "relevant body" about the progress for each of the activities included in the action program. Whenever relevant, some of the information can be given in the format of the indicators to subgoals 3 and 4.

Action III: Increasing consumers awareness of sustainable development.

Local Agenda 21 projects to increase public awareness of sustainable development regarding industrial activities and products.

Strengthening of public education and increasing knowledge of sustainable development.

Implementing eco-labelling systems.

Action III relates to subgoals 2, 3, 4 and 5.

Since one of the main driving forces for industry is market development, the view of the public on the industrial and product impact on environment as well as cultural and social issues connected with industrial production and products, is of great importance to companies. Increased public knowledge and awareness of these issues will thus have a strong influence on market development and on these subjects per se.

In order for the public to be able to make decisions and evaluate consequences of industrial activities, several information systems will have to be developed further. Possible information channels are environmental reporting from companies, eco-labelling systems, environmental impact assessments produced in conjunction with development projects and compilation of environmental information through monitoring systems. Media, consumer and environmental organisations, and industry play important parts in providing the public with information about relevant social, cultural and environmental issues. Eco-labelling systems may be developed to e.g. product labelling systems including also social and cultural aspects of industrial activities.

In order to increase the awareness among the public of environmental, social and cultural values, local Agenda 21 projects may be initiated by different actors. The possibility for the public to more directly influence and participate in the local community development will increase both the commitment to issues of relevance for development and the interest in information, knowledge and education. The reference to successful pilot projects and co-operation between communities in different countries are important means to transfer knowledge and experiences.

Education and knowledge is the basis for public awareness and decision-making. All pupils and students should be provided with basic environmental, social and cultural knowledge, no matter what their main subject of study is. As regards adult education this may be addressed in courses provided by educational associations, environmental and consumer organisations, in local Agenda 21 projects, as mentioned above, and by reporting by media. In a somewhat longer time perspective, the internet will also provide a means to seek information. In addition, using the internet sets the focus on the global community as a complement to the local and regional communities.

Actors:

For Action III no single actor will be pointed out as the most important. Instead, contributions from different actors are supplementary.

1. Industry and trade organisations:

Providing consumers with information by development and use of systems for eco-labelling, in conjunction with social and cultural labelling and making companies´ environmental reporting and environmental impact assessments easily accessible to the public.
Active participation in local Agenda 21 projects.
Providing employees with suitable education within the framework of environmental management systems.

2. Governments in the BSR:

Promotion of eco-labelling systems and development of labelling systems regarding social and cultural aspects and promotion and development of public information channels in co-operation with consumer organisations. Co-operation with other governments for support of efforts to build up institutions (private or public) for consumer information and harmonising of labelling systems.
Initiation and support of different Agenda 21 projects by local authorities and municipalities.
Promotion of extended environmental, social and cultural education of young people and adults.

3. NGOs:

Development of co-operation between different NGOs traditionally addressing one issue and creating new routines for reporting environmental aspects in conjunction with social and cultural aspects. Also, participating actively in developing (e.g. to include social and cultural aspects) different kinds of eco-labels in close contacts with relevant organisations, enterprises, industry and trade organisations, the public at large and research organisations.
Active participation in local Agenda 21 projects.
Development of courses and possibilities for the public to seek information.

4. Universities and other research institutes:

Participating in evaluating and developing eco- and other labelling systems.
Active participation in local Agenda 21 projects.
Development of training courses and education programs to include environmental, social and cultural aspects in all activities.

5. Media:

Development of plans and programs for increasing the reporting of social, cultural and environmental issues connected with industry and consumption.

Financing

Financing of the above suggested measures should primarily be achieved, possibly by slight shifts of priorities, within existing budgets for the suggested actors. No specific actor can be pointed out as main provider of funding for the realisation of Action III.

Time frame

Work with suggested actions are for the most part already under way and further work can be initiated immediately in connection with ongoing projects.

Monitoring methods

Regular evaluation by national and international statistics agencies of consumption patterns (quantities, choices/demands, trends), the value of labelling systems, the publication of environmental impact assessments and other environmental reporting by industry, the participation in relevant courses and education by the public and reporting in media of relevant issues.
Regular evaluation by authorities and in the form of research projects of local Agenda 21 projects.

Action IV: Extended and improved co-operation on research and development, knowledge and technology transfer in the BSR.

Initiation and development of joint projects aiming at transfer of knowledge, technology and environmental techniques.

Improved and increased co-ordination of research and development activities, i.a. through the establishment of a research institute for support of sustainable development in the BSR.

Training and education programmes.

Action IV relates to subgoal 3, 4 and 5 which all require research and development and increased transfer and build-up of knowledge to be reached.

In many western societies (including those in the WBR) an environmental protection culture has gradually emerged and increased in importance for the individual as well as for industries and companies. In the EBR, on the other hand, the environmental issue has had lower priority on the political agenda during the 1990s. Geographical closeness and historical links, however, make the new democratic states in the EBR and the WBR natural trade partners which makes possible a successive diffusion of knowledge regarding economy, management, technology, environment, social and cultural issues and values.

Transfer and diffusion of "know-how" through co-operation projects between countries is assumed to be an efficient way of implementing new ideas and new techniques and is probably one of the most important issues to reach a sustainable development within the BSR. One way of transferring information and knowledge is the establishment of pilot projects and establishment of networks and partnerships between companies, trade organisations, universities and so forth. These are important means to introduce new technologies; for example, by creation of forums (e.g. technology transfer centres) where different actors can exchange ideas and experiences about problems and solutions in specific industrial branches.

Generally, there is a vast need for research and development of methods, materials and processes that can provide environmentally sounder alternatives for what is used today. Other areas that should be addressed are product life time improvements, reparability, etc. Biotechnology as a means for improving industrial processes, for production of substances and detoxification of hazardous waste and contaminated soils, etc. also has a great potential. Further, there is a need for development of reporting, information and evaluation tools as pertaining to social, cultural and environmental aspects of industrial activities, such as labelling systems, environmental impact assessments, etc. (see also Action III). There is also a need to better understand the importance of regional planning for environmental and social effects of industrial establishment and localisation.

Cross-functional and inter-disciplinary research programmes addressing the whole concept of sustainable development and aiming at providing a better understanding of the interlinkages between industrial, environmental and social measures and policies, should be developed in co-operation between industry, universities and other research institutes. Such programmes could for instance be co-ordinated and promoted through a "Baltic Research Institute" for sustainable development. If such an institute is appraised to be desirable, it should be co-financed by governments and industry in order to give it "legitimacy" and credibility among all actors and the public at large.

Actors

1. Governments in the BSR: Governments are important actors when it comes to financing of education and R&D, and thus have a large influence on the promotion of different areas. The following actions are suggested:

The governments should e.g. set up a working group, in which industry, research institutes and other interested parties can participate, to investigate on a preliminary basis the possibilities and modalities for a "Baltic Research Institute" for sustainable development as suggested above, incl the alternative of improving the networks between existing institutes and organisations.
The governments should also promote joint R&D programmes directed at stimulating the development of new technologies, products and processes, industrial management and the study of the social and environmental dimensions of industrial development as well as the interlinkages between industrial, environmental and social measures and policy. Further, R&D programs regarding the use of regional planning instruments for consideration of environmental and social aspects of industrial establishment and localisation should be developed.
The establishment of networks and projects, for industrial co-operation and exchange of information, knowledge and technology, by e.g. Chambers of Commerce, national federations of industry and trade organisations should be encouraged. Special consideration should be given to small and medium-sized companies (SMEs).
The governments should support the development of education and training programmes and co-operation between educational institutions in the BSR. The development of rules making educational certificates and academic degrees in a country valid in all other countries in the BSR should be enforced. Further, support should be given to the development and co-ordination of educational exchange programmes and programmes for professional and vocational training for the staff in all levels in enterprises (NORLET). Such programmes should be developed and implemented in co-operation between governments and industry.

2. Industry and trade organisations: Industry has of course a very central position when it comes to developing action IV and is expected to take a profound part in the activities suggested.

Development of and participation in research programmes that includes co-operation between industry and universities in the BSR states. Industry should also support the co-ordination of interdisciplinary research and participate in the preliminary work to investigate the possibilities of establishing a Baltic Research Institute (see above).
Development of industrial co-operation by national and international industry and trade organisations and Chambers of Commerce. The establishment of networks and other institutional framework (e.g. projects) for technology and knowledge transfer and R&D co-operation between industry in countries in the BSR and specifically development of programs for technology and knowledge transfer from large companies to SMEs within similar fields of production is suggested.
Participate , in collaboration with governments, in the development and implementation of educational and training exchange programmes based on evaluations of the special requirements in the BSR region (such as e.g. the NORLET programme). Development of institutional framework for evaluating educational and training requirement for a successful development of industry in the BSR.

3. IFIs

IFIs should support and participate in the possible establishment of a Baltic Research Institute and develop strategies for financing of joint projects, including industry and research institutions in the BSR, as well as for financing of educational programmes.

4. Universities and other research institutes:

Participate in the planning and establishment of the suggested "Baltic Research Institute".
Develop of and participate in research programmes in co-operation with industry in the BSR countries.
Promote knowledge and technology transfer in the BSR and especially in the EBR by introduction of special university course modules, organisation of conferences and workshops, and by taking part in educational exchange programmes.

Financing

Financing of the above measures should primarily be obtained within existing budgets for R&D (governments, industry, IFIs and e.g. EU programmes) and education (governments). Special training education programmes can also be financed from certain EU funds. Small and medium sized enterprises would need support from trade organisations or other authorities promoting development of SMEs.

Time frame

The development of networks and joint programmes of different objectives that may apply for funding through existing R&D and educational and training programmes should be encouraged without delay. A possible establishment of a Baltic Research Institute will of course require a period of some years for planning and support.

Monitoring methods

At regular intervals the actors should report about the progress of this action to a "relevant body". The progress report should be based on an evaluation of the outcome of the different actions taken (joint projects, networks, education programmes, institution-building, etc.), and measures to deepen the co-operation should be proposed.

Action V: Reduction of pollution according to the carrying capacity of nature.

A. Development of critical loads corresponding to carrying capacity.

B. Promotion of investments in "Best Available Technology" (BAT).

C. Development and implementation of environmental monitoring, and development of indicators for sustainable development.

Action V relates to subgoals 1, 3 and 5.

To make it possible to evaluate the effects of different actions directed at reducing the load on the environment in the Baltic Sea Region monitoring systems in the different countries have to be co-ordinated and the quality of data (both emission and imission data) collected must be guaranteed. Primarily, existing monitoring systems should be co-ordinated and further on an agreement between the BSR countries on a homogenous and extended monitoring system should be worked out. The co-ordination efforts should be based on a set of "sustainable development" indicators that relates to the carrying capacity, and corresponding critical loads, of different ecosystems. To be able to guarantee the quality of data, analysing methods at the laboratories have to be standardised and the laboratories should be encouraged to apply for accreditation. Thus it is also of importance that institutions for accreditation are built up and based on co-ordinated regulations within the common framework of the monitoring system.

The development of "carrying capacity" indicators is in turn dependent on the development of the critical loads concepts on a detailed and concrete level. In order to operationalise these concepts, they have to be determined regarding different substances in relation to different ecosystems as well as the exploitation pressure on ecosystems. The relation to industry and the use of "best available techniques" (BAT) in industry should be evaluated and related to carrying capacity and sustainable development. Also the inter-relations between industry, environment and other sectors of society, e.g. energy, transports, etc. also have to be elucidated in the development of these indicators. Further, the geographical dimension also have to be considered.

A Baltic Research Institute with an inter-disciplinary approach and with an objective to promote development of the "sustainable development" concept might be a effective means to focus on the issues suggested in this Action programme as a whole (see also Action IV). A co-financed (e.g. between governments and industry) Research Institute would simplify co-ordination and co-operation and promote the development of all aspects of "sustainable development" (economic, social and ecological).

Actors

1. Governments in the BSR: Governmental agencies are the main actors for co-ordination and development of monitoring and promotion of research. Governmental actions include the following:

Co-ordination and development of environmental monitoring systems in the BSR and calling upon relevant bodies (for example EEA or HELCOM) for assistance and experience. Relevant authorities in all BSR countries should participate in work to harmonise the regulations for accredited laboratories as well as the build-up and harmonising of regulations for institutions for accreditation and control of laboratories.
Support of cross-sectorial research on carrying capacity and critical loads in the BSR and support of research and development of BAT.

2. Universities and other research institutes:

Development of "sustainable development" indicators in order to operationalise the carrying capacity and critical loads concept on different geographical (spatial) scales. This work should be related to the development of monitoring programmes, the implementation of BAT in industry, other sectors of society, and it should include social and economic aspects of sustainable development.

3. NGOs:

Participate in developing a harmonised monitoring system for BSR and offering their help to build up institutions for enforcement of environmental legislation and monitoring.

Assistance and participation in development of carrying capacity indicators.

4. Industry and trade organisations: The main focus of industry would be the relations between industrial activities, BAT and carrying capacity, including critical loads, as notions of sustainable development. Suggested actions for industry are the following.

Industry should take part in knowledge and technology transfer projects in co-operation with authorities and universities to develop systems for sampling and analysing environmental (emission and imission) data. Industry should also participate in developing environmental reporting to include monitoring information in relation to carrying capacity and critical loads.
Industry should initiate and promote projects aiming at developing products, processes and production (implementing and improving BAT).

5. International Financing Institutions (IFIs):

Promotion of projects aiming at implementing BAT in industry. Special consideration of the requirements of small and medium sized enterprises should be taken.

Financing

Financing of Action V will be largely be governmental and intergovernmental regarding e.g. development of monitoring systems and R&D. But also industry will be expected to contribute in R&D projects and especially for the EBR. IFIs may be an important source of financing.

Time frame

Co-ordinated monitoring systems for the whole BSR should be established within five years and compilation of data should thereafter be done at regular intervals. Research aiming at giving a concrete form to carrying capacity and critical loads should be initiated immediately.

Monitoring methods

Regular revision, evaluation and control of sampling and analyses routines.
Collection, compilation and publication of data according to existing practices and in co-ordination with current systems, e.g. HELCOM.
Regular reviews of the efficiency of the enforcement bodies and other institutions in the BSR.
Industrial compilations and evaluations of the use of BAT and analyses of the fulfilment of the sustainable development goals.

Industrial Sector Final Report

ANNEX 1- ECONOMIC ACTIVITIES COVERED BY THE INDUSTRIAL SECTOR REPORT

MANUFACTURING

MANUFACTURE OF FOOD PRODUCTS; BEVERAGES AND TOBACCO

Manufacture of food products and beverages
Manufacture of tobacco products

MANUFACTURE OF TEXTILES AND TEXTILE PRODUCTST ^*

Manufacture of textiles
Manufacture of wearing apparel; dressing and dyeing of fur

MANUFACTURE OF LEATHER AND LEATHER PRODUCTST

Tanning and dressing of leather; manufacture of luggage, handbags, saddlery, harness and footwear

MANUFACTURE OF WOOD AND WOOD PRODUCTST

Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials

MANUFACTURE OF PULP, PAPER AND PAPER PRODUCTS; PUBLISHING AND PRINTING

Manufacture of pulp, paper and paper products
Publishing, printing and reproduction of recorded media

MANUFACTURE OF COKE, REFINED PETROLEUM PRODUCTS AND NUCLEAR FUEL

Manufacture, refined petroleum products and nuclear fuel

MANUFACTURE OF CHEMICALS, CHEMICAL PRODUCTS AND MAN-MADE FIBRES

Manufacture of chemicals and chemical products

MANUFACTURE OF RUBBER AND PLASTIC PRODUCTS

Manufacture of rubber and plastic products

MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS

Manufacture of other non-metallic mineral products

MANUFACTURE OF BASIC METALS AND FABRICATED METAL PRODUCTS

Manufacture of basic metals
Manufacture of fabricated metal products, except machinery and equipment

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C.

Manufacture of machinery and equipment

MANUFACTURE OF ELECTRICAL AND OPTICAL EQUIPMENT

Manufacture of office machinery and computers
Manufacture of electrical machinery and apparatus n.e.c.
Manufacture of radio, television, and communication equipment and apparatus
Manufacture of medical, precision and optical instruments, watches and clocks

MANUFACTURE OF TRANSPORT EQUIPMENT

Manufacture of motor vehicles, trailers and semi trailers
Manufacture of other transport equipment

MANUFACTURING N.E.C.

Manufacture of furniture; manufacturing n.e.c.
Recycling

MiNING AND QUARRYING AND OTHER SECTIONS BEING RELATED TO INDUSTRY

MINING AND QUARRYING

MINING AND QUARRYING OF ENERGY PRODUCING MATERIALS

Mining of coal and lignite; extraction of peat
Extraction of crude petroleum and natural gas; service activities incidental to oil and gas extraction excluding surveying
Mining of uranium and thorium ores

MINING AND QUARRYING EXCEPT ENERGY PRODUCING MATERIALS

Mining of metal ores
Other mining and quarrying

CONSTRUCTION

Construction

"NUCLEAR INDUSTRY"

Mining of uranium and thorium ores
Production of nuclear fuel

ANNEX 2 - INTERNATIONAL AND REGIONAL CONVENTIONS AND AGREEMENTS HAVING RELEVANS IN THE BALTIC 21 PROCESS

Helsinki Convention and Recommendations, including the Baltic Sea Joint Comprehensive Working Environmental Action Programme

UNITED NATIONS

Convention on the Protection and Use of Transboundary Watercourses and International Lakes(Helsinki, 17 March 1992)
Montreal Protocol on Substances that Deplete the Ozone Layer, 23-25 November 1992.
Convention on Environmental Impact Assessment in a Transboundary Context(Espoo, 25 February 1991)
Framework Convention on Climate Change(New York, 9 May 1992); Kyoto protocol 10 December 1997
Convention on the Biological Diversity( Rio de Janeiro, 5 June 1992)
Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal(Basel, 22 March 1989) and Decisions (December 1992 and March 1994)
Convention on Long Range Transboundary Air Pollution (Geneva -79, Oslo-94)
International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage ( Brussels 18 DEC -71)
Fourth ACP-EEC Convention 15 DEC -89

RELATED EU DIRECTIVES AND PROGRAMMES

The Fifth Environmental Action Programme: Towards sustainability, A European Community programme of policy and action in relation to the environment and sustainable development.
76/464/EEC Council Directive of 4 May 1976 on pollution caused by certain dangerous substances discharged into the aquatic environment of the Community
80/778/EEC Council Directive of 15 Julia 1980 relating to the quality of water intended for human consumption
80/68/EEC, Council Directive of 17 December 1979 on the protection of groundwater against pollution caused by certain dangerous substances.
96/62/EC, Council Directive of September 1996 on ambient air quality assessment and management.
91/271/EEC, Council Directive of 21 May 1991 concerning urban waste-water treatment.
Convention Civil Liability for Damage Resulting from Activities Dangerous to the Environment (Lugano 21 June -93)
96/61/EC of 24 September 1996 concerning integrated pollution prevention and control (IPPC)
96/82/EC of 9 December 1996 on control of major-accident hazards involving dangerous substances (SEWESO II)
1836/93 EEC of 29 June 1993 allowing voluntary participation by companies in the industrial sector in a Community Eco- Management and Audit Scheme(EMAS)
85/337/EEG Environmental Impact Assessment (EIA)

Annex 3 - An Overview (31.12.1996) of signed and ratified conventions by the countries in the Baltic Sea Region

CONVENTIONS

Denmark

Estonia

Finland

Germany

Iceland

Latvia

Lithuania

Norway

Poland

Russian Federation

Sweden

European Union

Environm Impact Assessem

Aircraft Engine Emissions

(ICAO)

Transb Air Pollution (LRTAP)

*1994 Sulphue Protocol

*NOx Protocol

*VOC Protocol

Climate Change (FCCC)

Ozone Layer Convention

*Montreal Protocol

*London Amendment

*Copenhagen Amendment

Basel Convention

Waigani convention

Dangerous Goods by Road (ADR)

Distribution and Use of Pesticides

London Convention 1972

MARPOL 73/78

1969 CLC

1971 Fund Convention*

HNS Convention

OPRC

Intervention Convention

UNCLOS

Oslo Convention

Paris Convention

OSPAR Convention

1974 Helsinki Convention

1992 Helsinki Convention

Antarct Marine Living Res (CCAMLR)

Atlantic Tunas (ICCAT)

Regulation of Whaling (ICRW)

World Heritage Convention

Biological Diversity (CBD)

Migr Species of Wild Animals (CMS)

CITES

Ramsar Convention

Disertification (CCD)

Plant Genetic Resources

Tropical Timber (ITTA, 1994)

Assistance Convention

Notification Convention

Nuclear Safety

Civil Liability for Nuclear Damage

Transb Waterc and International Lakes

Status (31.12.1996)

s = signed or equivalent
r = ratified or equivalent
- = not s or r

Annex 4 - Share (in per cent) of the unofficial economy in GDP, 1989-1995, in selected transition economies

	1989	1990	1991	1992	1993	1994	1995
Azerbaijan	12	22	23	39	51	58	61
Belarus	12	15	17	13	11	19	19
Bulgaria	23	25	24	25	30	29	36
Czech Republic	6	7	13	17	17	18	11
Estonia	12	20	26	25	24	25	12
Georgia	12	25	36	52	61	64	63
Hungary	27	28	33	31	29	28	29
Kazakstan	12	17	20	25	27	34	34
Latvia	12	13	19	34	31	34	35
Lithuania	12	11	22	39	32	29	22
Moldova	12	18	27	37	34	40	36
Poland	16	196	24	20	19	15	13
Romania	22	14	16	18	16	17	19
Russia	12	15	24	33	37	40	42
Slovak Republic	6	8	15	18	16	15	6
Ukraine	12	16	26	34	38	46	49
Uzbekistan	12	11	8	12	10	10	6

Notes: The share of the unofficial economy is defined over total GDP; i.e., correcting official GDP for estimates of the change in the unofficial economy derived from data on electricity consumption. The 1989 data comes from two survey studies conducted in the late 1989´s.

Source: Johnson,S., Kaufman, D, and Shleifer, A, 1997, Politics and entrepreneurship in transition economies, Working Paper Series, No.57, The William Davidson Institute, University of Michigan, referred to in Transition Report 1997, 1997, EBRD., p. 74.

Annex 5
Main branches of industry in the BSR

This section includes an overview of input (resources, raw material, products) to different branches of industry, processes, output (products, emissions, waste), and environmental aspects of the industrial activities. It also includes an overview of the potential for development, i.e., introduction of new technologies and production techniques that may contribute to a relative reduction of the exploitation of natural resources, emission of pollutants and production of waste.

"Best available technology" scenarios, based on qualitative assumptions of the environmental effects of the introduction of new technologies and production techniques, are suggested. The prognoses are based on existing technologies of today, ongoing research and development and plausible future development for the different branches, and they are generally optimistic. We, however, want to point out that this is an overview and it does not claim to be comprehensive.

Mining and quarrying

Branch overview

This industry involves mining and concentration of metallic ores as well as mining of non-metallic mineral products such as limestone, sand and gravel as well as energetic materials. The most important states in the region mining metallic ores, are Finland, Poland, Russia and Sweden. Sweden is Europe's largest producer of iron ore (20 Mton 1996), but also a large producer of copper (269 kton 1996), zinc (292 kton 1996) and lead (136 kton 1996). In Finland the dominant product is chromium ore (580 kton 1996), where Finland is the largest producer in Europe. Also nickel (39 kton 1996), zinc (50 kton 1996) and copper (36 kton 1996) is produced in Finland. In Poland, the metal mining industry has been built up strongly during the last twenty years, and today Poland is Europe's largest producer of copper ore (27 Mton 1996). Also significant amounts of lead (66 kton 1996) and zinc (165 kton 1996) are produced in Poland. In Russia, the mining industry is concentrated to Siberia. The dominant product is nickel ore (230 Mton 1996), which is processed mainly on the Kola Peninsula. The iron ore production was 72 Mton 1996.

Concerning non-metallic mining, the main products are limestone, cement, apatite and potash. Limestone is produced in large amounts in Poland (23 Mton 1996), Germany (21 Mton 1996) and Sweden (8,5 Mton 1996). Cement is produced mainly by Poland (13,9 Mton 1996) and Sweden (2,4 Mton 1996). Apatite, a raw material for fertiliser production is produced by Russia and Finland (7,8 Mton 1996). Potash is mined in Germany (34,6 Mton 1996).

For quarrying, the main products are sand and gravel. In Germany nearly 430 Mtons were produced in 1996, and in Poland about 50 Mtons.

Also energetic material is mined in very large quantities. In Germany 48 Mtons of hard coal as well as 187 Mtons of lignite were mined in 1996. Also Poland produces large quantities of coal, in 1996 137 Mtons of hard coal and 64 Mtons of lignite. In Estonia, about 15 Mton/year of oil shale is mined, corresponding to about 60% of Estonia's total energy demand.

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
energy, landscape, ores	metallic and non-metallic mineral rock, limestone sand, gravel, energetic materials	dust, heavy metals	acid mine drainage (AMD)	landscape impact, waste rock, waste products

The environmental aspects of mining and quarrying are partly process related and partly related to waste production. They can be classified into: landscape impact, emissions to air, and emissions to water. The landscape impact is strongly depending on the mining methods used. Open cut mining leads, due to the large areas of mining and very large quantities of waste rock, to very severe impact on the landscape if no measures are taken. Methods to adapt waste rock dumps to the landscape as well as methods to restore open cut mines have, however, been developed.

Emissions to air from the mining industry is mainly made up of dust from pan sintering plants (iron ore) and from thermal drying of sulphide concentrates (copper, zinc and lead ores). Also certain amounts of heavy metals are accompanying the diffuse dust emissions. Pelletising instead of pan sintering reduces the dust emissions strongly, and the trend is to increase pelletising. Concerning sulphide concentrates, the trend is to replace thermal drying processes with compressed air filters.

Concerning emissions to water, acid mine drainage (AMD) is the main problem. AMD means that sulphide-containing waste rock and tailings (sand waste) from concentration of sulphide ores decomposes and sulphuric acid is formed which then leach out heavy metals from the waste. The process requires both oxygen and water, and methods are being developed to isolate the tailings from these agents, in order to minimise the problem. AMD is most apparent in closed-down mines, where re-circulation of process water has ceased and the sand comes into contact with air. The process is self-accelerating, and in Sweden therefore measures are planned for all deposits. If no measures are taken, the metal-leaching from tailings dumps have been estimated to increase tenfold in Sweden until 2100.

The amounts of mining waste produced is very large; in Sweden it constitutes more than 50 % of the total waste produced (40-50 Mtons/year). The amounts are increasing due to exploitation of low grade ores and an increased open cut mining.

Trends for the future

The future development for the mining industry is closely related to the global demand for thedifferent products. Metals are today very international trade goods, where the production is concentrated to areas with large ore deposits and the use is distributed according to traditional economic standard of living. Globally, the use of metals is increasing steadily, but in the western world, the rate of increase has gone down during the last years. For certain metals, e.g. lead the use is decreasing. For the future, a continued increase in metal use is expected globally due to the development of infrastructure in the third world. For the western world, the use of metals is expected to stabilise or decrease for certain metals. Basic metals and fabricated metals products are presented in chapter 8.

Metals are today recycled to a rather large extent. However, recycling is expected to increase and recycled material may in the long run cover the domestic demand for certain metals in some of the BSR states. The distribution between different metal ores may change significantly, due to less or minimised use of certain metals, e.g. lead, this may be caused by environmental reasons as well as energy conservation reasons (aluminium).

The general trend in mining industry today is automation of drilling, transportation and other basic mining operations. The energy consumption in the mining process has decreased significantly, but there is still possibilities to go further. One way is to develop and introduce leaching processes for the concentration of ores. This also leads to cleaner concentrates and possibilities for introducing new systems for handling of mining waste. The concentration processes become more and more closed, which decreases the emissions of dust and acidic water.

The acid mine drainage problem will be further focused in the near future, e.g. by the Swedish research programme MiMi (Mitigation of the Environmental Impact from Mining Waste). Processes based on dry covering and flooding exist, and processes based on biochemical activity as well as geo-chemical control measures are under way. Also mining methods which from the beginning are adapted to minimising AMD are being developed.

In general, there is today within the mining industry an awareness about environmental aspects, and international mining companies claim that best available technology will be used at any new mine, irrespective of where it is located. It may also be stated that the foremost mining states in the BSR play the leading role in the development of efficient and environmentally "friendly" mining methods.

Scenario

The development of the mining and quarrying industry towards a sustainable society depends on many factors. In principle, a higher degree of reuse and recycling means that the demand for virgin metals and other materials decrease. There are, however, complicating factors such as quality requirements for metals produced from scrap etc. The mining industry in the BSR is world-leading in terms of technology, energy efficiency and environmental aspects. Therefore, it may also be that the demand from other parts of the world, in 2030 not yet fully following a path towards sustainability, will best be met by mining industry in BSR.

A plausible vision for the year 2030 is that the supply of most virgin metals to society in the BSR has decreased by 40% (this is the vision for 2021 in Sweden).For certain metals with heavy environmental impact, such as lead, cadmium and mercury the goal must be zero supply. The vision of 40% reduction is realistic, since the consumption of e.g. steel has stabilised and in certain cases decreased already during the 1990s in the industrialised world. In addition, the recycling can be increased through economical and other instruments.

For metals such as copper and stainless steel the degree of recycling today is very high in the industrialised world. For these metals the margins are smaller, and a decrease of supply with 40% prerequisite a decrease in use by 20-30%.

A special feature is the diffuse "consumption" of metals. Unintentionally this is the case via corrosion and erosion on metal surfaces. This means that large amounts of metals are introduced in the biosphere in an uncontrolled manner. In a society moving towards sustainability these effects must be minimised through e.g. product development and reduction of acidifying emissions.

Certain products are used "dissipatively", i.e. they are dispersed when used. Examples are lead in gasoline and ammunition,metal pigments and metals as a contamination (e.g. cadmium in fertilisers). This kind of metal use must be strictly reduced in a sustainable society.

Zinc, which is the fourth most used metal in the world, is also used dissipatively as a corrosion protection. A study of zinc flows in and between the society and the environment in Sweden today shows that an increased recycling, a plausible de-materialisation and decreased dissipation through product development may lead to much lower demand for virgin zinc.

Concerning iron and steel a certain de-materialisation is plausible at least in western BSR. Together with increased recycling this means less mining and, accordingly, less supply of metals to the society and less environmental impact. Electricity based processes for steel production from scrap will to a large extent replace today's processes based on ore. Stringent requirements will, however, be put on sorting and handling of scrap so that the quality requirements for steel can be fulfilled in a production more and more based on scrap.

Food, beverages and tobacco industry

Branch overview

The food, beverages and tobacco branch includes e.g. slaughterhouses, dairies, fisheries, bakeries, production of fruit and vegetables, oil and fats, sugar, candies, fodder, alcoholic beverages, mineral waters and soft drinks.

The food industry is the dominating sector in Estonian, Latvian, Lithuanian, Polish, Danish and Icelandic industry, but is also important in Norway and the Russian Federation. A decrease in production occurred in the countries of transition during the beginning of the 1990s. The decrease in production is continuing due to a decline in agricultural production, low purchasing power of the local market and poor access to foreign markets. These countries have difficulties in competing on the international market because of out-of-date technology and working practices that do not result in compliance with western food quality and health requirements. From being designed to meet the demands of the domestic market and many parts of former Soviet Union, steps are now taken by the Baltic food industry towards the EU market. This includes improvement of technological level, improvement of quality and adjustments to meet EU requirements. The long-term outlook for especially fish products, beverages and dairy products is relatively good. In Latvia dairy and fish products are the most growing sectors, and exports go mainly to the Commonwealth of Independent State (CIS) countries. In Lithuania the leading sector is food processing industry (meat and dairy products) where medium-sized enterprises have been most successful in restructuring.

In Poland production is rapidly rising and many of Poland's largest companies are found in the food industry.

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
primary produce, process- and cooling water, fuel, fertiliser, land, raw water	meat and meat products, fish and fish products, bread, fruit and fruit products, vegetables, oil and fat, sugar, candies, fodder, alcoholic beverages, mineral waters and soft drinks	energy-related, odour	process- and cooling water, nitrogen, phosphorous, COD, BOD	organic waste, waste (packages)

The food industry produces large amounts of waste. Many of the different sub-branches also produce large amounts of effluent water, containing oxygen demanding substances, that either is treated by the municipal water treatment, own water treatment plants or let out without treatment. For many food industries the odour around the plants is considered a problem for the neighbouring people. It is a large consumer of energy, renewable resources and is highly dependent on machinery and equipment. The transportation of food within countries and between countries to either consumers or retail dealer constitute a large part of the energy consumption.

About 40 years ago irradiation of food started. This to prolong the durability of the food. The use of irradiation is not allowed in many countries but in other countries permits are given for specific products e.g. potatoes, onions, shrimps, spices.

Production of food polluted with toxic compounds is another environmental problem connected to human health. The problem arises from the use of chemicals e.g. pesticides or antibiotics or from bio-accumulation and bio-magnification of substances in the food chain.

Trends for the future

Since a well functioning food industry is an important step towards a stable and established market economy it is assumed that the food industry will further expand in all transition countries around the Baltic Sea. This in turn means that the agricultural sector must develop and expand. It is assumed that the food industry can fully be based on local renewable resources. This sector also provides opportunities for small and medium sized enterprises, decentralised all over the countries. There is, however, a trend towards larger and larger production units.

Within many of the branches development is taking part, especially, towards more and more automatic processes. More and more food will be sold as ready made food. Other trends within the food industry is competition around the world. For example, the beet sugar industry is expecting an increased competition from the cane sugar industry in the future as this manufacturing process is assumed to be more environmentally sound with the use of bagasse as the fuel (renewable energy source).

Improvement of land use and soil fertility preservation functions as a step towards an expanding food industry. This is done by the combination of intensive and extensive agriculture, promotion of environmentally sound agricultural production and introduction of a sustainable and bio-organic agriculture. Revision of acceptability of the further use of some agricultural objects located in environmentally sensitive areas will have to be done. This revision will ensure safe use of plant protection measures, fertilisers and other chemicals.

Introduction of membrane technology will considerably decrease the energy consumption. This is especially significant for the sugar industry where the membrane technology is well developed. Cooling crystallisation is another new technology being developed to reduce the energy consumption in the sugar crystallisation process.

Enzyme technology is assumed to become more and more utilised in the future and it will gradually replace many chemical industrial processes. The trend is already clear. In starch processing, for example, enzymes have largely replaced the use of strong acids and high temperatures once used to break down starch. In the future enzymes will be used for extraction of vegetable oil from seeds. The process is still under development but is intended to replace the traditional technology using hexane. Apart from being dangerous to inhale, hexane is highly explosive. It is used to dissolve the oil from the crushed seeds. The enzymatic process will allow extraction to be performed in water.

Wastewater generated by the food industry is often seriously polluted. Technologies to increase the use of water circulation systems is being developed as are methods for pre-treatment.

Production of bio-gas from industrial organic waste is common in Denmark and is assumed to increase in all countries within the BSR in the future. Research about further development of the production process (stirring, gas-cleaning, odour, transport and gas storage) is being in process.

Major progress has been made in the Baltic states in restructuring and reorganising its agro-food industry. Priority areas for further attention include land reform (the slow pace of land restitution has hampered land privatisation and investment) and training in business management and marketing skills for managers of agricultural enterprises. Policy makers should also focus attention on removing inefficiencies in the food chain, which, by preventing producers from taking advantage of higher border prices, are leading to increased pressure for price support and other subsidies to the detriment of consumers. Improvements are needed in product quality and sanitary standards in order to enable Estonia to expand exports to western partners.

A number of challenges remain: rural development programmes, for example, are needed to generate off-farm employment.

The Baltic Sea Region has a unique opportunity to make constructive changes in the practice and development of agriculture. Now is the time to review critically all policies and strategies related to agriculture, and review the options for finding new and co-ordinated paths towards a sustainable agriculture, i.e., the one where present performance does not destroy its natural resource and social bases. A sustainable agriculture does not yet exist anywhere in the region, fundamental changes will be needed in all countries.

Scenario

The tobacco industry will decline to almost zero. For food and beverages, the environmental problems will not be very severe, technically speaking. It will mainly be a matter of recycling and purification of water, and proper waste water treatment to take care of the nutrients, nitrogen and phosphorus, so they could be taken back into the production again.

Many of the artificial ingredients will be replaced by natural ones. The costs for production increased somewhat initially, but the consumers will be satisfied. As a result of consumer influence, reformed pricing and subsidising to producers. The administration of artificial agents such as hormones, antibiotics etc. in industry-type raising of animals for food production will be reduced. The quality will improve, human health will improve and overproduction of meat will be reduced.

One trend may be re-localising smaller-scale production units in order to reduce the need for transports. Most of the tropical fruits and vegetables we have got used to will be possible to produce locally, once the energy problems have been more or less solved. The rest will still be imported, although they will become quite expensive.

In the transition states, the food production is expected to increase rapidly again after the decline following the Soviet Union break-up. The smaller-scale structure of the agricultural sector, the concentrated food industry and the low salaries will make for good possibilities to export to both the EU and to the huge markets in the rest of the former Soviet states. By co-operation, part ownership and mentorship from customer companies in the EU the companies will adjust to the new situation fast and to its demands. The development of the food industry in the transition countries can be (with long-term cost effectiveness) transformed in a more advanced way if sufficient efforts will be made in the transfer of know-how and up-to-date sustainable technologies.

Replacements of CFCs has become an important question not only to the production industry, but to the food industry. The uninterrupted operation of refrigeration systems is essential for profitable operation of many companies in the food business. Therefore, rational plans to avoid potential disruptions to the required freezing, cooling or conditioning processes must exist. As the food industry is a major refrigerant user, it has an important role to play in preventing further deterioration of the protective ozone layer. However, the food industry is also aware of the importance of refrigeration in maintaining the quality and safety of the food supply.

Textile and leather industry

Branch overview

The textile industry produce fibres and yarn from which knitwear and woven material is produced. For the raw material a distinction between two types are made, natural fibres and man-made fibres. Natural fibres are plant fibres such as cotton, flax and hemp etc., or animal fibres such as wool and silk. Man-made fibres are regenerated fibres based on cellulose such as viscose, or synthetic fibres based on polymers of petrochemical origin such as polyester etc. Clothing and carpet production are more refined branches in the textile industry.

The leather industry is based on the process of converting animal raw material (hides) to stable leather goods. The leather production begins with a beamhouse process for removal of dirt, hair and other unwanted constituents of the hides. Tanning is the process where hide substance (collagen) is treated with chemicals to form stable material (leather). Tanning is followed by wet after-treatments to adjust the leather properties. Finishing (coating) processes give the leather surface its suitable qualities.

The industries are water-intensive since wet treatment are included in several production steps. Wet treatment plays a major role in textile production, and is included in the processes of pre-treatment, dyeing, printing and finishing of textile goods. Resources frequently used in the production processes in the textile industry are water, chemicals and dyestuff. The corresponding resources used in the leather industry are similar e.g. water and various types of chemicals, solvents and agents used in the tanning process (containing chromium).

In general, the textile and leather industries have decreased in the BSR in the last 20 years. Due to the economic development in Eastern Europe and in the Baltic States, a new period of growing production and increased trade within the BSR is expected.

The textile and leather industries in Estonia, Latvia and Lithuania have, during recent decades, had great importance nationally. The two industries contribute to between 10 and 15% of the total industrial production in these countries. In Poland, the textile and leather industry have increased considerably since 1990 and the prospects for the near future are bright (exact figures are not available at this time).

In the WBR, the textile and leather industries have gradually decreased over the past decades and production is now transferred to countries where production is cheaper.

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
plant material, cellulose, polymers, hides, fuel, chemicals, water	fibres, yarn, knitwear, woven material, carpets and clothes and leather goods	emissions from energy production, VOC	chemicals, H2S, chromium, heavy metals, fibres, BOD, COD	raw material, water-insoluble dyes and pigments

Environmental aspects related to textile and leather industries are mainly connected to wet treatments during preparation. The waste water contains different types of chemicals and metals. The processes performed for all fibre types production and leather production generate environmental impacts such as heavy metal mobilisation (due to complex-builders in wash-water) and eutrophication due to certain substances let out in the washing water. Other impacts are emission of stable toxic compounds.

Trends for the future

Substitution of toxic and persistent chemicals is to some extent possible today, but has to be addressed in research and development projects. There are approximately 1000 substances (excluding dyestuff) used in the textile industry. For many of them the knowledge about their contents and if they contain environmentally harmful substances is lacking.

Optimal dosing, temperature and timing in processes is possible today through careful process regulation. The next step is a complete recovery of chemicals in waste water. Today there are no such technology commercially developed. Techniques for reducing salt, sulphide, ammonia and chromium in solid wastes and VOC emission to air effluents from leather industries are available today.

New textile manufacturing methods based on biotechnology are being developed, which leads to less chemical use. Enzymes are used to remove substances used to facilitate spinning and spooling. New organisms that produces better fibres are being bread with the aid of genetic engineering, e.g. insect tolerant cotton can lead to less use of pesticides, which in turn reduces the amount of pesticides residues in the raw material. Fibres may be manufactured directly by micro-organisms.

The Baltic States have a long tradition of recovery of textiles, for example of linen to produce carpets for isolation.

The amount of solid waste produced in the leather industry can be reduced through separating the waste before tanning and upgrading it to be used in other applications, for example animal food, gel, ointment and gelatine. For tanned waste, incineration is an alternative to dumping in landfills.

A lot of work has already been done in the industry to reduce the need for water. By replacing old machines with new a reduction of 50 - 60% can be achieved, additionally to the water saving benefits, this reduces the energy consumption and the amount of chemicals used, as those normally are a function of the amount of water used. It is also often possible through different ways of heat recovery and simple good housekeeping measures to further reduce the energy consumption.

Technologies for reuse of water also holds possibilities for the industry to reduce the amount of water used. An example is the reuse of the water from the last step of washing in earlier washing steps. This is, however, only possible in continuous processes, which is not so common in this area due to small series. Rinsing batch-wise instead of with overflow is a way to reduce the water demand when processing small series in discontinuous processes. In some cases the reduction has been as large as 50%.

If a technique to spray the water on to the textile could be developed into a commercial large-scale technology, it would probably dramatically reduce the water demand. Some of the technologies for water management used in the textile industry could probably also be valuable to apply in the leather industry.

Scenario

Environmentally harmful chemicals, gases and persistent substances will be used in closed systems where the losses are negligible. Use of biotechnology will reduce the need for hazardous chemicals. Emissions to air, land and water will be very small.

The amount of textiles, both production waste as well as used textiles, put into landfills will be very small. Textile fibres will to a large extent be recycled through reuse or material recovery or incinerated for energy production. The quality of textile products will enhance and prolong their life span.

The industries will use sustainable energy sources, i.e. renewable energy instead of oil which is the main source today. The energy and water consumption will each be reduced considerably.

Wood and wood industries

Branch overview

The main raw materials within the wood industry are wood and different chemicals depending on the further refinement process. The main products are sawed wood in different shapes and by-products such as sawdust, wood chips and bark. The by-products are either used as fuel or further refined (fibreboard) or sold to the pulp and paper mills (wood-chips). Wood products are also lacquered before it is used for wainscot, doors, windows, floors etc. The fibre board industry and the lacquering industry use mainly glues, impregnation chemicals, lacquers, solvents and paint. The raw material situation is good for most of the countries around the Baltic Sea even though acidification is a threat in some areas.

Finland, Sweden, The Russian Federation and Germany dominates within the wood industry. In Sweden, about 1 mill m³ of sawed wood is used as packaging material and most of it is recycled.

Generally for the Baltic States is that the saw mills are small and aged and the drying capacity is more or less non-existing. In the last years several Swedish and Finnish companies have started enterprises in the Baltic States and in many cases they move existing equipment (incl. dryers) from Sweden or Finland to the Baltic States. Poland has a successful wood industry and is known for its refined products e.g. laminar wood. The quality is good and the costs are relatively low.

In the Baltic states furniture accounts for more than half of total output in the forest sector, and has competitive advantages due to low wood costs, a very skilled low-cost labour force and low capital investment need. The furniture industry has strong trade links with the EU, and should develop well in the future.

Wood processing is a growing sector and wood products account for one fourth of Latvian exports, of which the major part go to the EU. Major products are furniture, matches and plywood. A significant part of the timber is exported without any further refinement. (The main markets for Swedish sawn softwood are United Kingdom, Germany, Holland, Denmark and other European countries. Competition from Russia is continuously low but the gap has to a large extent been filled by increases from Baltic states).

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
lumber, glues, impregnation chemicals, paint, lacquer	wood, fibre board, furniture, sawn softwood	from energy production, formaldehyde, dust, volatile organic compounds (VOC), noise	chemical substances from impregnation and surface treatment, glues, dust, oil	bark, sawdust, soot, oil, rejects, glue, chemicals, sludge

To be able to use the wood it must be dried. This was from the beginning done as lumberyard drying but as it took to long time, sometimes up to a year, the drying process was developed and now the drying takes part in drying chambers where hot air is blown around the wood. Today drying of wood is the most energy consuming part of the wood production. The drying demands about 3 MJ/kg wood. This energy is produced in solid fuel combustion units and the flue gases are heat exchanged with water and then the water is heat exchanged with air that is used for the drying.

The fibreboard industry and the lacquering and impregnation industry are the wood branches that consume most of the used chemicals. The most serious air pollution from the wood industry (excluding the combustion emissions) is the emissions of volatile organic compounds (VOC). These cause health risks (some of them are assumed to be toxic) and odour problems. Emissions to water arise from sea water storage or watering of lumber, sewage water from dryers, boilers etc., lacquering and gluing as wash water from spray boxes, and from the impregnation industry. The produced waste contains mainly bark that is to contaminated (stones etc.) to be able to burn and, therefore, deposited but also ashes from the boiler central, residual chemicals, glues, oil spillage and sludge.

Trends for the future

World production of round wood has continued to increase and rising demands for wood and wood products are expected. The Baltic States and Russia are also expecting increasing demands as a result of economic growth in the BSR.

The tendency within the wood products industry has been towards fewer and larger industries. As the market for building of new houses probably will stagnate the market for renovation and "do it your self" will expand. This means that smaller industries with high flexibility will be the possible structure for the branch in the future. A better use of resources and larger production of semi-manufactured products might also follow (more refinement).

New products, so called engineered wood products, are being developed. They are produced by means of total breaking up of the wood followed by preparation of sheets together with some kind of adhesive under pressure. Different products to mention are Oriented Strand Board (OSB), Parallel Strand Lumber (PSL), Long Strand Lumber (LSL) and Laminated Veneer Lumber (LVL). The engineered wood products are mainly used within the construction industry but is also used within the furniture, packages and pallet industries.

More advanced technology for processing of timber (sawing) giving a higher product quote (less amount of by-products) is being developed. The sawmills will also be even more automated with more detailed process control. This will lead to better result for follow-up, lesser resource use, and also fewer employees.

Drying of wood is a well established part of the process and it will also be more and more diversified. Nowadays there are some different final moisture contents. In the future the buyer will be able to chose the final moisture content himself. The energy consumption for the drying process is assumed to be decreased as more efficient dryers with better air distribution systems are being developed.

More refinement of the by-products, such as bark and sawdust, in the future will also strengthen the position of the wood manufacturing industries as a producer of a "environmental friendly" fuel. In the future it will probably be much easier for the saw mills to find buyers for their by-products and this market is assumed to increase considerably.

The use of different chemicals within the fibreboard industry and the lacquering industry will improve by development of better water soluble lacquers. Powder lacquers for wood are also being developed. The reuse and cleaning of washing water will be improved by introduction of new techniques such as re-circulation, evaporation and chemical precipitation.

As wood is used as packing this material must be able to recycle and therefore the development of products possible to recycle will expand.

The supply and demand conditions, determining the actual round-wood removals, have undergone deep changes in the region. On the supply side, the allowable cut is increasing in almost all the countries studied. The emergence of a large number of small forest owners will create complications in the wood market in the form of unpredictable pricing and selling behaviour. Unclear ownership relations and a prolonged restitution process may also freeze wood sales for some time. On the demand side the domestic use of industrial wood is diminishing following the decline of the forest industries. There are also long-term structural changes due to significant obsolete forest industry capacity which will vanish as non-competitive.

Low profitability and foreign competition will be constant threats to the forest industries of the region also in the long run. Further decline can be reversed by adroit industry and company level strategies. Fuel-wood consumption will not change much. As the annual allowable cut is constantly increasing growing amounts of wood will be available for exports in the short and medium run.

Scenario

Increased use of wood and wood composites in construction. Recycling of wood products take place at increasing rate, back into construction wood or to paper mills. The production of wood changes towards more complex products. The wood is refined into more valuable products such as construction grade environment friendly wood composites and refined bio-fuels.

The production of wood is often co-ordinated with that of paper mills. The wood industry, and the paper mills, are using the by-products and waste for producing large amounts of bio-fuels, or electricity and heat directly in co-generation plants.

Production and drying are to a large extent tailor made for the end user, and electronically controlled so that unnecessary waste and over-drying of products is avoided.

Forestry will have a certificate showing that it is environmentally friendly. It will be important to preserve the biociversity.

Studies show that there will probably be a rather substantial shortage of industrial round-wood already by 2010. Currently, all signs indicate that there will be a crucial shortage of fuel-wood and charcoal. This shortage will limit socio-economic development in the developing world. However, there are great uncertainties in current estimates on demand for and supply of fuel-wood and charcoal.

Only rough estimates exist on what the global exploitable forest can and will produce in the form of round-wood in the future. The estimates for major supply regions vary as much as 100% according to reliable analysts.

The usage of recovered paper and non-wood fibres will continue to increase. But this increased usage will probably not improve the global shortages of fibres identified in the foreseeable future.

"New" demands, such as life-cycle approaches, bio-diversity, environmental protection, water, hunting, eco-tourism, and recreation, will continue to grow. A serious problem with these demands is that few attempts have been made to analyse their impacts on other forest functions and socio-economic developments. Studies on these aspects are urgently needed.

Global balances can be estimated from projections of future supply and demand. There may be a total shortage of as much as 300 million m³ of industrial wood already in the year 2010. The shortage is for both coniferous and non-coniferous species. In 2020 the possible total shortage of industrial round-wood may increase to 800-900 million m³; this shortage is also for both coniferous and non-coniferous species.

As stated earlier the demand for fuel-wood and charcoal is difficult to determine. Therefore, it is difficult to determine if there is a gap in the fuel-wood supply. A comparison between the FAO (1995) and Apsey and Reed (1995) production trends and the Zuidema et al. (1994) consumption estimate shows a deficit of 95-255 million m³ in year 2010 and a deficit of some 315 million m³ in year 2020. A comparison of the Zuidema et al. (1994) consumption estimate with their supply scenario based on forecasted land-use changes shows shortfalls of 1020 million m³ in year 2010 and 1470 million m³ in year 2020. The shortfalls identified through the bottom-up approach developed by FAO (1981) on basic fuel-wood and charcoal requirements are 960 million m³ in 2000, 1425 million m³ in 2010, and 1650 million m³ in 2020. Thus, the estimates indicate a serious fuel-wood and charcoal shortage which will seriously limit future socio-economic development possibilities in the developing countries.

Wood shortages have been projected many times, but they have never actually occurred. The difference between past projections and the current situation is that, currently, there is broad consensus on this issue.

Pulp and paper industry

Branch overview

The production in the pulp and paper industry is mainly concentrated on newsprint, printing paper, packaging paper, corrugated cardboard, packaging cardboard and other cardboard material, but also on market-pulp, mainly bleached craft pulp based on soft wood. The production of market-pulp is mainly concentrated to the Nordic countries and Russia.

From Fig. 1 it is seen that Finland and Sweden are very dependent on the pulp and paper industry. Norway and Denmark are also to some extent depending on this industry, whereas in the Baltic States, Poland, Russia and Iceland, the pulp and paper branch contribute less to industrial production.

Figure 1. The industrial production of pulp and paper 1994 expressed as percentage of GNP. Source: Statistical Yearbook of Sweden.

Finland, Sweden, Norway and Russia are net exporters of pulp and paper. Calculated on a percentage basis of GNP Finland but also Sweden and to some extent Norway and Russia obtain export incomes from the pulp and paper industry.

The pulp and paper industry is a high-tech-branch and it is very dependent on the transportation sector, on rail, vessels and on lorries. This industry is not labour intensive, at least not in the Nordic countries and Germany where the large production volume take place. For these countries the labour intense at production of pulp and paper expressed as employee per production in MECU is lower than about 3 employees per MECU. In the Baltic states, Poland and Russia the labour intense is higher than 8 employees per MECU.

Although a large consumer of purchased electricity and fossil fuels, the pulp and paper industry generates a large proportion of its own energy requirements by burning waste wood, bark, waste paper and the spent digesting liquor from chemical pulping. Energy consumption is largely determined by the type of pulp and/or paper being produced. Newsprint, for example, is usually made from thermo-mechanical pulp, which requires a significant amount of energy as electricity, most of it purchased. In contrast, unbleached craft linerboard has relatively low energy requirements, about more than half of which comes from burning the spent cooking liquor. Modern non-integrated chemical pulp mills generate excess energy through the chemical process, which can be directed to off-site uses.

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
wood, paper products, chemicals, clay, water	newsprint, printing paper packaging paper, corrugated cardboard, packaging cardboard, market pulp	Emissions from energy production, SO2, H2S, NOx, dioxin, chlorine, mercaptanes, odour, dust from lime kiln and recovery boiler	COD, BOD (N and P), chemicals, organic halogens, Pb, Cd, Cu, Zn	ash, green liquor, clarification mud, lime mud, excess bark

The chemicals used within the pulp and paper and board industry are several such as; potassium hydroxide, sulphuric acid, sulphur dioxide, magnesium sulphate, calcium oxide, oxygen, potassium chlorite and hydrogen peroxide. Many of them are harmful to the environment.

The raw material (wood) is renewable and the products can be recycled. In Sweden and Germany the recovery rate in 1994 was 60-70% of the paper and board consumption. In the Baltic States, Poland, Russia, Norway and Finland the average figure was 32%. Obviously there is a good potential to increase the recovery of wastepaper. Wastepaper can also be recovered as energy by combustion.

Bleaching of pulp is a part of the pulp process that has been thoroughly discussed for its environmental impact but bleaching of pulp is probably that branch in the pulping where the greatest progress has taken place during the last years. Generally speaking all bleach plants consist in a number of bleaching stages, separated by a more or less good washing of the pulp. The trends in recent years have been changes in bleaching methods, use of oxygen, ozone, peroxide and chlorine dioxide instead of chlorine gas, closure of the processes and better effluent treatment. In this way, e.g. Finland has reduced organic chlorine in effluents by 90% from 1990 to 1996, and phosphorus and COD by 50-60%.

Trends for the future

The energy efficiency in the pulp and paper processes can be increased in several ways, e.g. using pressurised black liquor gasification. If successful the process can be commercially available at the earliest some years into the forthcoming century. The gasification technique can also be used to produce methanol (for fuel use) and other more refined hydrocarbons.

Further, the impulse drying technique gives a very fast and energy efficient drying of the paper web. There are chances that the impulse drying technique can combine the development of saving capital, energy and costs.

A pulp mill of which the main product is market pulp has in the long run good possibilities to become a large deliverer of bio-based surplus energy as a by-product. The surplus energy can also be used for the generation of power for the external grid. However, it is most likely that chemical and mechanical pulp will be produced in parallel and is integrated with a paper mill and thus a large part of the energy surplus will be consumed in these processes.

Most integrated pulp and paper mills can reduce their purchased energy requirements by co-generation of electric power and low pressure steam, i.e. generation of electrical power on-site in turbines, which produce exhaust steam at pressures suitable for process use. Increasing electricity-to-heat ratios provide further motivation for alternative co-generation techniques.

There is also a possibility for the pulp mill to generate process chemicals such as sulphuric acid, caustic soda, oxygen gas, hydrogen peroxide. The need for transportation of these goods will vanish and thereby decrease the load on the environment. The sulphate pulp mill has inherently fine prerequisites to extract nutritious substances and metals which come with the wood and return the former to the forest.

Inorganic fillers and coatings are in most cases today not renewable or possible to recycle. In the short-term perspective it is interesting to use such material after de-watering and drying in building material, road bank etc. in stead of using natural resources like sand, gravel and rocks. There are two developments which are to be considered in the long run. Either fillers and coatings will be possible to recover or bio-based products, which will eliminate the production of sludge, will be developed. Bio-based fillers and coatings are being developed but so far it is only at the stage of "test-tubes".

Recycled fibres can possibly be developed to be more recyclable and stand several return cycles e.g. by a developed fractionating technique. In this case a development is possible, but the costs must be compared to the value of the energy, which can be gained from the fibres by combustion. Improved fibre handling includes improved screening and cleaning operations, modified cooking and extended de-lignification, improved pulp washing and improved spill and process control.

The concept of process closure is particularly being applied to pulp production, and is not new to the industry, although the pace of development has increased significantly in recent years. The reduction of process water is of primary importance in achieving closure, and considerable progress has been achieved with new or modified mills. In the long-term, the vision of a fully closed pulp and paper industry has a clear attraction in terms of the industry's position vis-à-vis competing products. For paper mills the main internal process control measures for effluents includes reduction of fresh water consumption and the recycling of process water, reduction of fibre and filler discharges to effluent and separation of uncontaminated from contaminated waters.

Scenario

The consumption of paper and paperboard has increased with the GNP for a long time, and since a large part of the world population has not started consuming paper products in a large extent yet, it seems likely that global consumption will increase.

A breakthrough may be new "paper" types that are virtually indestructible, water and tear proof, and that may be erased but with a special eraser. It could be stored for decades with no loss of quality, but would then easily be totally erased without a trace for reuse.

A significant increase in paper consumption is expected in packaging, since modified paper packages will take over large portions of the market from metal and plastic containers. In this way weight and resource consumption will be reduced while storability is maintained.

In the near future the trend will be towards fewer, larger and totally integrated environmentally friendly ("closed") plants for pulp, paper, energy and biotechnological products. However, the renaissance of wood technology will sharpen the competition on forest resources. New, very efficient enzyme-based methods, with effectively no losses of fibre of cooking and bleaching, will be developed. Furthermore, the waste sludge from these processes will be de-watered and used for energy production, or as fertiliser.

The production systems of wood products and paper has been integrated so that the quality of the wood is used maximally and thereby resource consumption is decreased. The recycling systems of wood fibre has the outspoken objective of using the fibre maximally on every quality (entropy) level, a strong integration of the use of fibre in the society and maximally use of the fibre as fuel in the end.

Chemicals and chemical industry

Branch overview

The chemical industry is very diversified and heterogeneous. Plastic and rubber industries differ from most of the other chemical products in the way that, while plastics and rubber go into products more or less unchanged and can be recovered, the other chemicals are often consumed in subsequent processes, e.g. sulphuric acid, or are dispersed and consumed as a part of their use, e.g. fertilisers, paint or medical products.

The basic petrochemical industry is based on some of the products from refineries, which are further processed and purified into special chemicals (e.g. ethylene, propylene, acetylene, C4 fraction, pyrolysis gasoline, butadiene, benzene, toluene, xylenes, ammonia, methanol, raffinate). It is defined as including the following processes: steam cracking for production of olefins, butadiene, toluene and xylene, separation of products by distillation, extraction etc., co-product processing including catalytic de-alkylation of toluene and isomerisation of xylenes and steam reforming to produce syngas for ammonia and methanol production.

The products from the basic petrochemical industry are further processed in other industries into e.g. plastics, rubber, fertiliser, pharmaceuticals, solvents and pesticides.

In the fertiliser industry the main products are ammonia, nitric acid and phosphorous. The medical industry is traditionally based on organic chemistry, involving numerous process stages, complex chemicals, toxic waste and a high energy consumption. The present trend is towards biochemistry which means low energy consumption and less harmful chemicals.

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
Petrochemical industry
natural gas, LPG, light naphtha, heavy naphtha, gas oil, fuel oil, vacuum gas oil, vacuum bottoms, metals, salts, process water	ethylene, propylene, butadiene, benzene, toluene, xylene, ammonia, methanol, lubricants, herbicides, pesticides, solvents, fungicides, refrigerants, CFCs, plasticisers, dyes, pharmaceuticals, explosives, MTBE, etc.	flue gases (NOx, SO2, VOC, CO), vents, process off-gases, fugitive emissions, gases from aqueous water treatment, aromates, ammonia, catalyst, dust, H2S	cooling water and condensate containing phenol, hydrocarbons, coke, tar oil, Zn, Cr, Cu, P, hypo-chlorite, sulphuric acid, amines surface run-off, purges	butadiene polymers, ash, heavy hydrocarbons, spent catalyst, solid residues, adsorbents and molecular sieves
Plastics industry
oil and gas for production, solvents, filler, pigments, chemicals for e.g. softening, metals and salts for stabiliser, hydrocarbons incl. chlorinated and fluorinated natural and synthetic rubber, carbon black (soot), sulphur	polyolefins, PVC, PET, rubber, elastomers, EPDM, EVA, acrylates, polyurethane, nylon, melamine, plasticisers, pigments, etc.	SO2, NOx, CO, CFC, VOC, dust	Chemicals, particles, solvents, by-products (complex mixtures of organic hydrocarbons), monomers, metals, salts, oils	stabilisers (heavy metal compounds), flame protection agents, (halogenised hydrocarbons)
Fertiliser industry
oil and gas for production, air, water, ammonia, water, phosphate, nitric acid, ammonia, potassium, oil, water	ammonia, nitric acid, urea, NPK, CAN, MAP, DAP, etc.	ammonia, NOx, CO2, hydrocarbons	nitrates, amines, phosphates, fluorides, ammonia, particles, nutrients, (cadmium)	limestone
Inorganic chemical industry
sulphur, air, water, salt	sulphuric acid, calcium chloride, sodium hydroxide, hydrogen peroxide, aluminium fluoride, hydrochloric acid, etc.	SO2, NOx, fluorides, CO2, CO	chlorine, mercury, chlorinated hydrocarbons

Environmental aspects of chemical industry covers a wide variety of substances and effects. Emissions of volatile organic carbon compounds (VOC) and stable, more or less toxic organic compounds to air and water, and acidifying substances are considered the most harmful. The use of CFCs in chemical industry is being reduced or phased out. This goes also for organic (chlorinated) solvents, but in certain applications no alternatives are known. In certain branches heavy metals are used, e.g. as additives. There are also safety and health aspects connected to certain products.

In some branches significant amounts of waste is generated, e.g. sludge of varying composition that has to be deposited under controlled conditions.

Trends for the future

The development of plastics has so far been towards more specialised materials. The reactions and the resource consumption have been optimised with milder and more efficient catalysts, raw materials are recovered and purified from process waste streams. In the near future, stabilisers containing heavy metals are foreseen to be phased out. Recycling of material has also been initiated.

In ammonia production, the ammonia is produced from fuel, normally gas but also oil or coal occur, which is combined with water and air nitrogen. The energy and raw material is indistinguishable. The normal energy/raw material consumption in a Western European plant is approximately 9,5 GJ/tonne ammonia. For Eastern European plants, the figure is estimated at 11 GJ/tonne. BAT is presently 8 GJ/tonne, whereas the theoretical minimum, with today's concepts is 6 GJ/tonne. A trend is that ammonia production is moved to developing countries. Technology to extract cadmium from fertiliser exist, but is little used. In Western countries, low-cadmium phosphorus ore is used, which gives very low contents. This leaves the developing countries with a less pure source of phosphorus, resulting in high cadmium levels up to 100 mg Cd/kg P.

BAT for reduction of different emissions within the petrochemical industry include:

Emissions to air	Emissions to water
recycling and reuse of gas streams, e.g. as fuel	recycling and reuse of streams
use of low-NOx burners and catalytic de-NOx equipment	end-of pipe treatment
optimisation of fuel mix	Waste
sulphur recovery units	recycling
vapour recovery systems	regeneration
improved storage and handling, monitoring
sale of waste components

As an example of the possibilities, the Perstorp Group (international chemical industry) in its environmental goals state that they, between the years 1994 - 2000, will: reduce air emissions by at least 50%, reduce hazardous waste by 40%, reduce other waste by 25%.

Catalysts for polymerisation and other reactions will improve to be more effective and less harmful to environment and product. This leads to decreased resource consumption and waste from the production. Biotechnology will play a large part in improving processes. By e.g. enzyme technology, several chemical processes can be tailored to increased efficiency, reduced energy consumption, reduced by-product production (leading to less effluents and waste), and possibly use of other, partly renewable raw materials. This is already a trend in pharmaceuticals, and may soon be followed by e.g. the plastic industry.

With respect to resource consumption in fertiliser industry, no revolutionary developments are foreseen, but it should be possible to decrease the energy/raw material consumption by a third in the Western European countries and by almost half in older plants in Poland and the former Soviet states.

For complex fertilisers, phosphorus sources are limited. It is possible to imagine a future where the phosphorus source is sludge from municipal waste water treatment plants, unless it is possible to find systems that allow the safe usage of sludge directly on the crops.

On the emission side, major reductions of nitrogen and phosphorus emissions have been implemented in the last years. As an example, Norsk Hydro's European plants lowered the emissions of nitrogen to water and fluorides to air by 50% from 1990 to 1996, PAHs by 80% and phosphorus and dioxins by 90% in the same period. The greenhouse gas N2O is also being catalytically reduced since 1991. In this perspective a factor-10 or even -20 improvement in the transition countries should be quite possible, while the rest will probably still be able to achieve a factor 4 reduction.

As an example of improvement in the inorganic chemical industry, with production of sulphuric acid, hydrochloric acid, calcium chloride, aluminium hexafluoride, components for detergents etc., a chemical plant reduced the emissions by 10 - 96% in the period 1990-1995. The largest reduction was done with the following substances: fluorine to air (reduced by 90%), sulphur dioxide to air (reduced by 93%), phosphorous to water (reduced by 93%) and fluorine to water (reduced by 96%).

CFCs for cleaning, foaming and heat pumps are already being replaced in many applications. For the cleaning and foaming, largely by carbon dioxide which, even though it should also be reduced, is comparatively harmless.

Herbicides and pesticides are reduced and replaced to a large extent. It may be by a more controlled distribution of the chemicals, better products mimicking nature's own methods, better crops and bio-technically produced "softer" biocides.

Catalyst and membrane technology has potential to improve and drastically reduce resource consumption and emissions from chemical industry in general.

Scenario

Plastics, carbon fibre materials and ceramics are widely used in many applications, where low weight gives energy savings. The low heat transfer rate is important in order to reduce energy consumption when used for reinforcement in e.g. buildings. They can also be tailor made for e.g. strength in one direction and flexibility in another which has many advantages.

Catalyst and membrane technology improves and drastically reduces resource consumption and emissions from chemical industry. Also bio- and enzyme technology reduces need for many processes involving hazardous chemicals and high energy consumption.

Herbicides and pesticides have been reduced and replaced to a large extent. It may be by a more controlled distribution of the chemicals, better products mimicking nature's own methods, better crops, new growing patterns and bio-technically produced and tailored "softer" biocides.

Development of membrane technology, in combination with extraction, distillation and evaporation makes it possible to reuse waste water and virtually close water circuits of several process industry branches. Computer optimisation and control, together with quality systems minimise waste and resource consumption in production.

The fossil raw materials have to a large extent been replaced with regenerable ones, derived from wood and crops by e.g. enzyme technology. Also recycling of pure materials has come far, through product development facilitating separation of materials into pure sub-parts. New marking technology and sensors have made automatic separation of the materials possible to a large extent and recycling is controlled so that not only the type, but also the quality of the material is considered. This means that products can be manufactured from recycled material with negligible effect on quality.

However, virgin materials must still be used in many applications for the food and medical industry for hygienic reasons. Also repeated recycling processing has a negative effect on the materials. Therefore, a fraction of the materials recycled will probably still have to be taken out and regenerated or burnt.

The chemical industry in the Nordic countries and Germany has decreased its relative emissions by a factor 4 between 1995 and 2030 in most areas, and for the most prioritised substances by a factor 10. Heavy metals and some chlorinated organic substances have been phased out altogether since the substitution principle has been enforced. Resource consumption has been reduced by half, mainly by loss reductions, oil production from recycled plastic and, for some products, bio-technically manufactured raw materials made from agricultural products.

In the transition states the relative emissions of the chemical industry has been decreased even further, as compared to their status in 1995. The production has increased, but the emissions per unit produced has been reduced by factors 10 to 20.

Non-metallic mineral industry

Branch overview

The non-metallic mineral products consist mainly of the sub-branches glass, mineral-wool, porcelain, clay, cement, lime and bricks. The materials are mainly used within the building of the infrastructure (roads and houses) and supporting systems. The international trade within the different sub-branches is relatively limited due to very high transportation costs compared to the prices. Even though, both export and import for several countries increases.

Several dramatic changes have occurred within the construction sector. The severe decline of the economy in the countries of transition in the BSR has negatively influenced the market there and also the economic decline, in the BSR, has meant a large reduction within the building material production. Even though, in the future a huge need for new houses and development of infrastructure in the new democratic states is expected.

The production and sales is also affected by competition from other materials both within the non-metallic mineral branch itself but also from wood-based and plastic products. Cement is one of the base products that is further used for production of concrete. The production of cement is very energy consuming as is the production of bricks. The cost for the mineral products is very dependent on, either, costs for salaries e.g. stone and bricks or energy costs e.g. cement. Therefore, technical development will largely influence the total costs.

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
ore, minerals, limestone, fuel, granite, marble, diabase, sand, soda	cement, lime, concrete, construction stones, bricks, mineral wool, ceramics, glass	From energy production: CO2, SO2, NOx, CO, VOC, dust	salts, heavy metals, acids	residual ore and mineral

In Latvia the mineral (mainly cement) industry is one of the tenth most polluting industries and in Lithuania the cement industry is the second biggest polluter. Also in Russia the mineral industries are severe polluters.

In Sweden the cement industries are big emitters of green house gases and they are especially one of the bigger spots for NOx emissions but also the emissions of SO2 and CO2 are considerable. The emissions to water are small and is usually not controlled. The waste produced is mainly the same as the raw material and is deposited in the quarry.

Most of the non-metallic minerals are possible to recycle and, to a certain extent, they are today, especially glass.

Trends for the future

The trend for the different materials is towards more specialised fields of applications. For example, the concrete becomes more and more functional directed. It means that every delivery is meant for a special application. Also the use and amount of different fillings to change the properties are developed. The use of computerised automation systems are assumed to increase. This will improve e.g. dosing of raw materials.

As meant earlier, production of cement is very energy consuming. Sweden has a leading position in the world cement industry when it comes to application of BAT. Within a few years the goal for the Swedish cement industry is to reduce: SO2 by 90%, NOx by 80%, and dust by 50% (fossil fuel by 50%). NOx can be reduced by installing a SCNR, to reach the SO2 reduction a conventional wet scrubber is probably installed. The dust reduction will probably be obtained with an electrostatic precipitator.

Implementation of ISO 14001 at cement industries is in progress and LCAs for the production of cement and concrete have been carried through. Within in the field of construction stones such as granite and marble, mainly used for floors, stairs and cladding, the production methods are being developed. The working used to be more of a handicraft but becomes more and more automated with introduction of new machines.

Several efficiency measures within the brick industry is to be expected. For example the handling of bricks will be facilitated by the use of automatic sizing and packaging machines.

Within the glass industry the development is mainly directed towards production of lighter glass-packages and with better strength. This can be done by using more refined production methods in combination with new techniques for surface treatment. It can also be worked out as an elegant decor. Within the production process more efficient kilns that will decrease the energy consumption are being developed.

Since the seventies there has been several progress within the material branch. Research work is done to find both new materials and new applications for existing materials and ceramic material and alloys are assumed to contribute to an improvement and especially ceramic materials will substitute polymeric materials.

Scenario

Glass will, in the end of this millennium, be recovered to a large extent, although the recycled material will not be recycled back into new products. This will finally be overcome by a combination of several measures:

Increased use of standardised glass bottles and cans in the whole BSR for direct reuse.
Improved fractionating and automatic sorting of glass qualities to meet the industrial quality demands for recycling
Increased use of glass materials for insulation, construction, road beds etc.
New applications for glass products

Also other non-metallic mineral products such as cement, bricks etc. will be recycled to a much larger extent, see further on construction.

For the cement industry, improved combustion and flue gas cleaning will be the major improvement. To a large extent, the waste oils that have not yet been possible to recover will still be used as fuel in the cement kilns due to the natural cleaning and neutralising capacity of the cement product. It means that even higher demands are set for control, monitoring and cleaning.

Basic metals and fabricated metal pro- ducts

Branch overview

Steel and metal works produce merchant steel, special steel, hard metals, ferro-alloys, lead, zinc, copper, noble metals, tin and rare kinds of earth metals and light metals, principally aluminium.

This branch is energy-intensive. Much more energy must be used when metals are fabricated from new raw materials then when the metals are fabricated from recycled materials. The energy consumption can be reduced to 5-20% if recycled materials are used instead of new raw materials at fabrication.

The western steel and metal industries have experienced a vast structural rationalisation and today they use modern manufacturing methods. Metals often have an international market and a diminished demand on the domestic market can be compensated by an increased export. For example, ore and metals are exported to China, South East Asia and India. At the same time, these countries build up a production capacity of their own.

IISI (International Iron and Steel Institute) estimates the world production of steel for 1997 to 695 million tons. China became the world's largest producer of steel in 1996 (100 million tons) and Russia was the forth largest producer (49 million tons, based on 11 months). Except for Russia; Germany is Europe's largest steel producer with output on target for 45 million tons in 1997. Estimated steel production for 1997 will be 12 million tons in Poland and 3.7 million tons in Finland. The production of steel in Sweden was 4.9 million tons 1996. The consumption of steel in the developed industrial countries has levelled out and in some cases diminished during the 1990s.

The world production of primary aluminium amounts to 20 million tons/year and the re-melting amounts to approximately 6 million tons per year. USA is the world's largest producer of primary aluminium (3.4 million tons 1995) and Russia is the second largest producer (2.7 million tons 1995). The production of primary aluminium in Norway was 0.9 million tons 1995.

The world production of refined zinc was 7.2 million tons 1995. China is the world's largest producer of refined zinc (1.1 million tons 1995) and Germany is the largest producer in the BSR (0.3 million tons 1995). Finland, Poland, Russia and Norway also have some zinc production.

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
ore, steel, oilproducts, metals (Zn, Cu, Sn, Pb, Al, Fe etc.), scrap	steel and metal works, merchant steel, special steel, hard metals, ferro-alloys, lead, zinc, copper, noble metals, tin and rare kinds of earth metals, light metals, e.g. aluminium	emissions from energy production: CO2, SO2, NOx, CO, VOC, PCB, PCDD, dioxin, PAH, dust, flourides, metals, oil mist, alcohols, dimethylethylamine	oils, fats, suspended solids, COD, metals ammonium	residual products, metals, heavy metals

Since this type of industry is energy-intensive, there are primarily energy-related emissions to air e.g. SO2, NOx, CO2 and VOC.

Emissions to air from primary metal works also contain a large amounts of metals, and fluorides. When scrap metal is used as a raw metal the emissions to air also contains dioxins and PAHs (polyaromatic hydrocarbons).

Great amounts of waste in the form of steel and metal works are generated. In Sweden at a total yearly steel production of 4.5 millions ton more than 1.7 millions ton of waste is generated, of which approximately half is deposited. 300 000 ton must be consider as toxic waste products. Besides mining, this branch produces larger amounts of waste than any other industrial branch or sector. Heavy metals may be spread by water (leaching) and the wind, since the waste is often uncovered. The largest amount of chrome (approximately 90%) is used in stainless steel. In this case chrome has a smaller tendency towards dispersing.

Trends for the future

The future production of metals is to a large extent directed by the demand from the goods manufacturing industry. A likely development will be that the use of light materials, especially aluminium (Al), will increase. For example, European cars consist of approximately 50 kg Al, whereas American cars consist of approx. 100 kg Al.

The recycled part of all metals increase. The global production of raw steel has been on a comparatively constant level during the last 20 years. An increased demand for steel will probably to a large extent be met by an increased recovery and recycling of steel. However, also at an increased recycling where the scrap increases in favour of the production of steel there will in the foreseeable future be a demand for steel produced from ore.

As concerns aluminium the situation is somewhat different. An increased demand means that there will be a need for adding primary aluminium. The amount of aluminium that is scrapped and can be re-melted is comparatively low in comparison to today's consumption as a consequence of aluminium having been used at a small extent in constructions which were built 30-40 years ago. Not until the growth of the consumption levels out, the share of the use of the primary aluminium can diminish and the re-melted part increase. The aluminium will be produced close to the deposits.

In Sweden approximately 70% of the use of zinc is used to zinc steel. Estimations point at a decrease of 30-40% up to the year 2000. Recovery of zinc from zinced steel scrap should be increased from today's level of 30% to 60-80%. For a long period there has been a phasing out of lead in a lot of products and that will be going on. After the final use, lead should be successively taken care of for a final safe deposit.

Several process changes would lead to considerable reductions of emissions. By using BAT, the emissions of e.g. SO2, NOx, dust and metals could be reduced dramatically. It is also possible to recover great deals of the waste by new processes and waste that is not recovered can be deposited in a controlled way that reduces emissions. When scrap-metal is re-melted, emissions of toxic organic substances is a result of plastics and paintings that are found in or on the metal-scrap. These emissions would be reduced if the metal-scrap was "clean".

By using a process where "hot flow" is adopted at the production of steel material the use of energy can decrease. By "hot flow" means that the steel is not cooled down and reheated between the different steps of the process and thereby the use of energy as concerns the heating is decreased. Blast-furnace processes have a very high energy efficiency, as both surplus heat and blast-furnace gas are used for energy purposes.

Increased efficiency of both ore and scrap based processes are limited by physical laws. A slight improvement of 10% of the energy efficiency processes might, however, be possible. As regards larger efficiency improvements technical steps which are difficult to anticipate are required.

In the same way as for steel a slight, e.g. 10% efficiency of today's aluminium processes is a possible short- or medium-term goal.

Another development is that today the goods is thinner and then the need of plastic working in the rolling mill diminishes. Energy use will then be considerably lower in this production step. By developing the products the demand for material can be diminished, e.g. light steel constructions decrease the demand for material. Constructions of different kinds will be lighter which will diminish the transportation and handling costs. For example in vehicles, aeroplanes and ships lighter constructions mean that the consumption of fuel will decrease. LCA show that light constructions give low life cycle costs (LCC) of vehicles. Even though the energy input is larger at the production phase, the total energy consumption in a products life-cycle may be lowered.

Scenario

Production and use of heavy metals will be strictly controlled. Today many metals are used in a dissipate way, spread when used. Examples are lead in petrol, lead shots, wear metals, metal pigment and metals as pollution. This kind of dissipate use will most likely be strongly limited. Dispersed-use of metals, such as zinc, titanium etc. have been significantly reduced by more efficient methods of application e.g. corrosion protection. The usage of chrome and cadmium which results in an uncontrolled dispersal will be diminished.

Almost all of the construction metal, copper, steel and aluminium is now recycled. This has reduced the waste load and the average energy consumption for metal production significantly. A more efficient use of metals have been achieved by for example: development of products, extended life cycle, increased recycling and changes of consumption patterns. In the future also the flow of varying contents of alloys will be separated form each other and the deposition of metallic materials will be heavily diminished in the region. The production of metals such as titanium and magnesium has been developed so that no emissions of dioxin or similar occur.

Engineering industry

Branch overview

Engineering industry includes fabrication of metal goods, machinery, computers, electronic goods, telecommunication products, instruments, transport and aerospace equipment, capital goods for households and investment goods.

This is a dominating industry in the BSR region. It constitutes almost half of the Swedish industry measured by the number of people employed. The largest branch of German industry is machinery. In Finland the metal and engineering industry has long been the leading branch of manufacturing both in terms of value added and as employer. Relatively to the other countries in the region the engineering industry is quite limited in Estonia, Latvia, Lithuania and Iceland.

Many different sorts of industries are included in this branch, but there are a number of processes which are common to them: degreasing, surface treatment, lacquering and use of organic solvents. The branch is knowledge-intensive and chemical-intensive but not very energy-intensive.

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
metals, oil, water, fuel, chemicals, paint, plastics, glass	metal goods, machinery, computers, electronic goods, telecommunication products, instruments, transport and aerospace equipment, capital goods for households and investment goods	emissions from energy production: CO2, SO2, NOx, dust, CO, VOC, metals, solvents, CFC, halone, plasticizer, dioxin	metals, oils, fats, dioxin, solvents, chemicals	metals, heavy metals, oil, acidic or alkaline liquids, sludge, organic solvents, PCB

The production of waste in manufacturing industry is dominated by: oil in e.g. waste oil, sludge, emulsions and absorbents, heavy metals in e.g. scrap, sludge and solvents, acidic or alkaline liquids, often contaminated with heavy metals, sludge from painting and spraying that contains pigments, organic solvents and binding agents, fillers and water (pigments may also contain toxic heavy metals) and organic solvents (non-halogenated and halogenated). Small amounts of substances, e.g. containing glue, cyanide, PCB, etc. also occur.

Many substances in the products manufactured have significant environmental effects which must in the long run be reduced, some examples are: heavy metals in electronic circuit boards, cadmium in rechargeable batteries, mercury in batteries and fluorescent lamps, lead in television sets (1 kg per set), CFC / HCFC in refrigerators, heat pumps, air conditioners and foams, bromine organic substances (flame retardants) in plastic casings for computers etc and plasticisers, stabilisers, dyes etc. in plastic parts.

Trends for the future

Since supply of many raw materials to the engineering industry is limited, production and processes are developed and altered to increase efficiency. Following approaches are applied:

Use of less material: making equipment smaller, making equipment serve several purposes.
Make the material last longer: improved quality, protection of the material in the equipment from wear or corrosion, better maintenance, making the equipment more easy to repair.
Reuse of material: reuse the goods itself, recycle materials in production processes and in consumer goods, cascading or down-cycling of material.
Use of different materials: substitution of materials for less harmful ones, substitution of scarce materials for less scarce ones, substitution of non-renewable materials for renewable ones.

Scenario

Recycling strategies and common standards lead to new series of consumer appliances. Cars, household machines, computers etc. may be built in semi-standardised modules that are durable and simple to upgrade or replace partly. This will lead to recycling of whole components instead of raw materials. Furthermore, more functions are built into each product or replaced by centralised systems. For instance, the home computer is integrated with television, video, telephone, answering machine, fax, etc. and often most functions are placed in central systems and sent electronically to the subscriber. The energy and resource consumption for a product, or function will thereby be strongly reduced.

Product design will be based on life-cycle analyses including raw materials production processes, use, reuse and recycling of products and parts.

The substitution principle will be enforced in the BSR which lead to a rapid decline of many harmful products e.g. nickel-cadmium in batteries, mercury in fluorescent lamps and batteries, CFC/HCFC in cooling appliances and heat pumps, lead in gun shells, fishing gear, car batteries and paint.

The need for cleaning of parts will mostly be obtained by alternatives to solvents, possibly e.g. supercritical carbon dioxide. The need for cleaning will also be strongly reduced since parts will not be greased and oiled as a routine operation in the first place.

Coke and petroleum industry

Branch overview

Oil refineries produce marketable end-products including fuels, petrochemical feed stocks, lubricants and asphalts. The basic feed stock is crude oil but oil extracted from oil shale or oil sands is also used. Crude oil is a mixture of a large number of different hydrocarbons, some of which contain nitrogen, sulphur and often traces of metals e.g. vanadium and nickel. To produce end-products, different refinery processes are carried out.

Coke is a carbon rich product that, besides some sulphur and ashes, remains after dry distillation of black coal. It is manufactured in coking plants and coal gas plants. In both cases, besides coke and gas, other useful products such as coal tar, ammonium and benzene, are retained. Coke from coal gas plants is mainly used as fuel in stoves and heaters, but has almost completely been exchanged for oil and electricity. So the main product in this branch is coke from coking plants which is mainly used for manufacturing of steel.

The main production of coke in the BSR are done in Russia, Poland and Germany. Among these it is Poland that is most dependent from this production, but coke does only contribute for about 1% to the industrial production in Poland. The coke branch is very small compared to petroleum. Oil refineries in the BSR are located to Sweden, Denmark, Norway, Germany, Poland, Russia, Lithuania and Finland.

Totally, Germany is the dominating producer of coke and petroleum products, with a production that is more than twice the production of the rest of the BSR states together. In Lithuania the coke and petroleum industry contributes 20% of the total industrial production, which makes Lithuania very dependent on this industry. For Russia the corresponding figure is about 10% and for Germany and Poland about 5%. Latvia has with a figure of 0.3% the lowest dependence on the coke and petroleum industry in the BSR.

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
crude oil, oil shale, oil sand, coke, CHP*, chemicals	LPG, gasolines, aircraft fuels, gas oil, diesel fuel oils, marine fuels, chemical feedstocks: light olefins, naphtha, sulphur, lubricating oils	energy related emissions: SO2, NOx, CO2, hydrocarbons, benzene, PAH, hydrogen sulphide, odours, organic compounds, particles	cooling water, phenol, BOD, COD mercaptans, hydrocarbons, organic acids, chromium, suspended materials	wastes from water treatment, spent catalysts, tank bottom sludges, spent chemicals, sludge from effluent treatment

* Combined heat and power production (CHP) is common at refineries when some of the products or by-products are burned.

At a refinery there are a number of general facilities, such as steam and power supply, flare system for disposal of unexpected vapour releases, fresh water supply, cooling water system, wastewater and hydrocarbon slops treatment. All these processes may affect the environment in different ways. Some environmental concerns are emissions to air of acidifying substances, volatile organic carbon (VOC) and dust, and emissions, primarily to water, of stable, toxic organic compounds. Also the generation of oil-containing waste is considerable.

Trends for the future

The number and the total capacity of refineries installed in Europe decreases, but the complexity is increasing. That means the share of heavy products (fuel oil) decreases and that a noticeable part of the residual products from distillation are cracked in order to produce large quantities of light products, i.e. gas-oil, naphtha, motor gasoline and light olefins to the chemical industry.

The use of BAT to reduce pollution arising from the refining industry is summarised below:

Preventive measures to reduce chronic or accidental spills and leakages. This means identifying any leakages or losses, analytical control of the main possible pollutants in each emitting process and at each stage of the water treatment plant, and using flow-meters in any process using water. An analysis of how certain waste streams arise will reduce or eliminate the waste stream, often in an inexpensive way. Different wastes should be segregated and waste mixtures should be sorted. Further examples are: equipping storage tanks with overflow alarms, installing double bottoms with integrated leak detection systems on tanks and installing leak-proof valves.
Recycling / reuse of water, material, reagents and catalysts. The main potential of water effluents reduction is re-circulation of cooling water. There are two alternatives, either circulating cooling water cooled by heat exchanging with e.g. sea water or semi-circulating cooling water with an evaporation tower. The latter implies that water is VOC free. Process water and chemicals could often be reused. Recovered oil could be reused as feed stock, waste lubricants as fuel and catalysts for metal recovery.
Modification or adjustment of processes to reduce sludge and waste production. Most modifications to reduce waste production also have economic benefits.
Separation of non-contaminated waters (cooling and rain water) from process contaminated water flows. For example, waste water with a low salt content is often recyclable in different processes and should be separated from water with a high salt content. Oil free waters should not enter the oil separation systems. Accidentally contaminated waters and contaminated rain waters should temporary be contained in intermediate storage facilities not to overload the water treatment systems.
Choice for more environmentally friendly chemicals when possible.
Use the best available "end of pipe" abatement devices to reduce water pollution. In most cases that means a waste water treatment plant including three stages: physico-chemical, biological and tertiary treatment. The discharged water must be controlled to make sure it does not contain too much pollutants.

The above description is about production of wastes and emissions to water, but parts of the measures could be applied to emissions to air as well. To avoid SO2 and NOx emissions, existing methods concerning flue gas treatment could be installed. Emissions of hydrocarbons to air could be reduced by leak-proof valves and by establishing a leak detection and repair program.

Scenario

Due to the above situation, and the fact that heating and transportation will be done with newly developed fuels and energy sources the industry based on refining fossil fuels will be strongly concentrated on production of exclusive chemicals. The petroleum product industry will also to a large extent be converted to using renewable resources for production, as a result of a shift in demand.

The fossil oil still needed will be catalytically cracked, de-sulphurised and reformed so that only minute fractions of the raw oil has to be deposited and emissions are greatly reduced. Metal catalysts are more or less obsolete.

Construction

Branch overview

The construction industry is one of the major industries in the whole Baltic region both in economic terms and as regards the number of people employed by the industry.

The estimated total construction output (1996 - 1998) of the construction industry for some countries in the Baltic region:

	ECU (billions) 1996	ECU (billions) 1997	ECU (billions) 1998	ECU/capita (for 1997)
Germany	215.6	211.6	210.0	2590
Sweden	21.3	21.0	21.6	2330
Denmark	15.3	16.0	16.6	3080
Finland	10.0	11.3	12.4	2220
Norway	13.8	13.7	13.1	3190
Poland	12.8	13.7	14.5	350

A comparison of the Euroconstruct forecast from the last four reports shows that, even only a year ago, it was not possible to foresee the current, more optimistic outlook both for the European economy as a whole and the construction industry in particular.

As analysis of the shares of total construction output of the major sectors shows that between 1987 and 1992 the non-residential building and civil engineering sectors increased their shares at the expense of residential and renovation and modernisation (R&M) work. This trend is expected to be reversed between 1992 and 1998, leaving the civil engineering and the R&M sectors with the same market share as in 1987, the non-residential sector slightly down and the residential sector 2% up.

As an example, the total turnover of the construction industry in Sweden (1994) was SEK 184 billion. Of this 58% were investments and 42% were repairs and maintenance. In total, 435.000 employees worked within the construction industry which is about 11.3% of the total Swedish labour market. More than twelve thousand companies were active on the force.

The construction industry can be divided into many sub-branches and includes all actors involved with some kind of infrastructure building activity such as the construction of houses, industrial plants, facilities, roads, building equipment and materials.

The construction industry consumes world-wide approx. 16% of all fresh water, approx. 25% of all wood products and almost 40% of the total consumption of energy and material. Material flows and energy consumption are the two major environmental issues for the construction industry.

A great deal (in Sweden 40%) of the energy consumption in the Baltic Sea Region is consumed in buildings. As much as 95% of the energy in a building is probably consumed during the use and maintenance phase. Energy savings, energy efficiency and consumption of renewable energy are issues that can be strongly influenced by actions taken within the construction industry.

The need for constructions efforts in the three Baltic States, Poland and former Eastern Germany, is practically impossible to measure. The majority of buildings are in a considerably poor condition as well as infrastructure - roads, rail-roads, and pipe-systems. A rehabilitation of the former Eastern Germany is under progress by the support from the western part of the country, both financially and technically.

Within the European Community new subject fields, of interest for the construction sector, have been introduced, e.g. structural transformations, development of small-scale industries and addition of infrastructure. Furthermore, the environmental aspects shall be considered in all decisions. Education, research and technical development will be focused on in order to strengthen competence and increase competitiveness. The SLIM-group (Simplification of Legislation for the International Market) has recently presented a proposal for a simplification of the construction directive of EU. The group claim that the procedures ought to be simplified to facilitate export and import of products without the CE-label.

Environmental aspects

Input	Products	Emissions to air	Emissions to water	Waste
rock, sand, concrete, brick, wood, metals, asphalt, water, oil, mineral products, plastics	houses, roads, plants, facilities, building equipment and materials	emissions from energy production: CO2, SO2, NOx, CO, VOC, dust, emissions from materials: radon, formaldehyde, metals	metals, oils, fats, dioxin, solvents, chemicals	residual products from most input materials, construction waste containing substances such as PCB, Cd, Hg, bromine flame resistants, external plasticisers

As can be seen from the table above, a great number of materials are being used in the construction sector which then are converted into various products. The wide range of materials consequently give rise to a wide spectrum of emissions and thereby several different environmental impacts arising from the construction sector. Emissions to air, originating from materials like radon, formaldehyde and metals, result in indoor environmental problems and a direct threat to human health.

Trends for the future

Characteristic of the construction industry is the very long life cycle (often more than 100 years) during which the products will be used. This means that investments of today will restrict our action possibilities for a very long time. It also means that all actions must be considered in a life cycle perspective. It is much harder to correct mistakes when they are a fact, than it is to do right first time.

The market development varies between the different countries. In general the need of new construction as well as reconstruction is much higher in Russia, Poland, parts of Germany and the East Baltic countries than in the other countries around the Baltic sea.

Front-line technologies to mention; family house without heating system (Sweden and Germany), office building without heating system (USA) and local production of electricity, rebuilding of apartment block (Sweden) using solar energy to save 40% of the annual energy consumption, integration of solar cell systems into buildings as replacement for other roof materials, combination of different renewable energy sources for heating systems in apartment blocks, "Super-windows" - windows who have super isolation which reduces heat losses in such an extent that the windows have no more heat losses than the building walls, cement and concrete from old buildings can be used again as road construction material, increased use of wood as building material, new types of sewage systems where the nutrition is recycled back into agriculture or forestry, water saving techniques - use of rainwater and water from washing machines in toilet systems and use of more water efficient equipment in bathrooms, kitchens etc., district heating and district cooling in cities, so-called ecological villages (Sweden) - integrates some of the techniques described above.

The size of the renovation and modernisation market indicates the "maturity" of most European economies. This is because most countries have reached the stage where a high level of good housing stock, coupled with a fairly stagnant demographic picture, does not require a massive production of new units; the number and quality of non-residential buildings are generally sufficient for the needs of most industrial and commercial firms, and the level of infrastructure is high. This degree of maturity also explains the rising demand for environmental construction, for high technology buildings, leisure facilities etc.

Scenario

Recycling of building materials will develop into a major industry. At demolition sites, called de-assembly sites, the building materials will be sorted, marked and carefully handled to avoid damages. The materials will then be taken to the recycling store. The materials will become somewhat more expensive, but the old look will become very fashionable and high quality, century-old doors, beams and windows will be collector items like any antiquities inside the house.

There will, however, be some problems to find use for some of the most used materials in the buildings from the 1960-1970s which often are of too low quality to be of any value. Much will be used, but some of the materials will have to be used for landfills, where it at least will decrease the use of natural gravel.

A clear trend will be the use of old building materials, techniques and paints, although applied with future technology, comfort and energy knowledge.

One example of this will be the increased use of clay as a replacement for cement. Clay is abundant in large areas in the BSR and it has traditionally been used for centuries in building construction. The major environmental advantages are, however, that the energy consumption for clay production compared to cement production is negligible and when a house is reconstructed, a wall can be torn down and the same clay can be reused for putting it back together again in the new place.

The quality of work is a very strong market factor and, in the information society that will develop from the end of the twentieth century, it will become evident that the companies delivering sub-standard products will quickly loose business since the world wide web (www) will be a powerful tool for announcing dissatisfaction with a certain contractor or supplier. The consumer organisations will adopt this and managed to structure it in a way that could give effective guidance to would-be customers. This will led to a new thinking in house construction.

Buildings will be constructed for optimal lifetime depending on customer demands. Many houses, though not all, will be constructed to last "forever", which does not really mean that any new inventions will be made, just that materials and methods of construction will be chosen more carefully. In some cases it will be more important to plan for an easy, economic and ecological disassembly. High flexibility in the building layout will be a goal so that different customer needs at different times can be satisfied within the same basic framework. All materials used will be parts in a recycling process, whether they be reused in new applications, material recycled or used for energy recovery. The goal will be that no material used in the building process should end up as waste in a landfill.

Materials and products used in the building process will get less complex to enable easier maintenance, repair, replacement and recycling. Substances that are persistent and unnatural (for example PCB, Cd, Hg, bromine flame resistants and external plastisisers) will be phased out. Also, materials that can cause allergic reactions or in some other way be a danger to human health will be phased out.

The use of fossil based energy will be phased out in all steps in the life cycle of a building. Energy efficiency over the whole life cycle will be in focus. The total energy consumption will decrease by 50-90%.

The productive surfaces of nature will no longer be exploited. In all new constructing, green areas will be kept in place so that the productivity and diversity of nature is not diminishing.

In many parts of the building process, the consumption of virgin material will decrease by a factor of four to ten. This will be done by reduction of waste and higher efficiency in the process and recycling of materials.

References

Mining and quarrying

Lars-Åke Lindahl, Boliden AB, Sweden.
Mining Annual Review, 1997.

Food, beverages and tobacco industry

Arnolds Ubelis, Pronosis of development of the industrial sector of the Latvian economy and key elements from a perspective of the sustainable development concept and agenda 21, University of Latvia.
Karin Forsberg, Vattenfall.
Internet: www.novo.dk , February 1998.
National Environmental Strategy, Estonian Environment Information Centre, Estonia, 1997.

Textile and leather industry

Stefan Posner, Institutet för fiber och polymerteknologi, Mölndal, Sweden.
Sven Cele, TEKOindustrierna, Stockholm, Sweden.
Siv Hansson, Länsstyrelsen i Älvsborgs län, Vänersborg, Sweden.
Maris Graudins, SIA Consensus Ltd. Public Relations & Government Affairs, Riga, Latvia.
Piotr Nowak, Zespol Elektrocieplowni Poznanskich SA, Poznan, Poland.
Wolfgang Thielen, Commercial Department, German Embassy, Stockholm, Sweden.
BAT for Textile industry, TemaNord 1996:558.
Textil och Miljö, Naturvårdsverket rapport 4668 (Swedish Environmental Protection Agency Report), 1996. In Swedish.
Technical and economical study on the reduction of industrial emissions from tanneries, The European Commission DGXI/A/3.
Möjligheter att minska miljöbelastningen från garverier, Nordiska Ministerrådet 1993:517. In Swedish.
Chemicals in textiles, Report No 5, The Swedish National Chemicals Inspectorate, 1997.

Wood and wood industry

Sten Nilsson, IUFRO, International Union of Forestry Research Organisations, February 1996.
STEF, Svenska Trävaruexportföreningen. In Swedish.
TAPPI, Advancing Technology and Professional Achievement in the Paper and Related Industries, 1995.
Produktutveckling. Temabok med verksamhetsberättelse, 1992-1993, Trätek. In Swedish.
UN-ECE/FAO, Country Fact Sheets.
FoU för träsektorn. Dokumentation vid uppvaktning hos Näringsdepartementet den 12/10 1995. In Swedish.
Naturvårdsverket informerar, Branschfakta: Spånskiveindustrin (Swedish Environmental Protection Agency). In Swedish.
Naturvårdsverket informerar, Branschfakta: Träindustrin, Lackering av trä (Swedish Environmental Protection Agency). In Swedish.
Naturvårdsverket informerar, Branschfakta: Sågverk, Doppning och Lagring (Swedish Environmental Protection Agency). In Swedish.
Verksamhetsberättelse för Svenska Trävaruexportföreningen, Trävaruåret 1996. In Swedish.

Pulp and paper industry

Frostell and Laestadius, Paths towards a sustainable forest industry in 2021, KTH 1997, Sweden. In Swedish.
IIED report on pulp and paper, 1996.
1994 Energy Statistics Year Book, UN, New York, 1996.
International Year Book of Industrial Statistics 1997, Vienna, 1997.

Chemicals and chemical industry

Environmental Reports: Norsk Hydro 1996, Perstorp 1995, AdeKema 1995, HP Flügger 1995. In Swedish.
Environmental Information, Kemira Helsingborg plant, 1995.
Utsläpp till luft och vatten från kemisk industri, Naturvårdsverket rapport 4462 (Swedish Environmental Protection Agency Report), Sweden, 1993. In Swedish.
Karakterisering av utsläpp från kemiindustrin, Naturvårdsverket rapport 4621 (Swedish Environmental Protection Agency Report), Sweden, 1994. In Swedish.

Non-metal minerals industry

Cementindustrin under 1996, Naturvårdsverket (Swedish Environmental Protection Agency), Sweden. In Swedish.
Naturvårdsverket informerar, Branschfakta: Betongindustri, Anläggningar för framställning av betong, lättbeong och betongprodukter (Swedish Environmental Protection Agency). In Swedish.
Naturvårdsverket informerar, Branschfakta: Manuella glasbruk (Swedish Environmental Protection Agency). In Swedish.
Per Gunnerholm, Mineralvaruindustrin, Federation of Swedish Industries, 1992. In Swedish.
Miljöredovisning 96, Cementa AB, Slite, Sweden. In Swedish.

Basic metals and fabricated metal industry

Bedömning av kemikalieanvändning i vissa brancher, Naturvårdsverket rapport 4699 (Swedish Environmental Protection Agency Report), 1994. In Swedish.
Steel Times, December 1997.
Unpublished material from: IISI (International Iron and Steel Institute), IPAI (International Primary Aluminium Institute), ILZRO (International Lead Zinc Research Organization).
AMM Online (American Metal Market), internet: www.amm.com , 1998-01-26.

Engineering industry

Industri och miljö, Naturvårdsverket rapport 4206 (Swedish Environmental Protection Agency Report), Sweden, 1993. In Swedish.
Verkstadsindustrin och miljön år 2020, Naturvårdsverket rapport 4255 (Swedish Environmental Protection Agency Report), Sweden, 1993. In Swedish.
"Miljöfrågor i verkstadsindustrin", Naturvårdsverket (Swedish Environmental Protection Agency), 1997. In Swedish.
"Verkstadsindustrins avfall", Naturvårdsverket rapport 4338 (Swedish Environmental Protection Agency Report), In Swedish.
Sten Karlsson, Man and Materials Flows, Towards sustainable materials management Chalmers University of Technology, Göteborg University, The Baltic University Report, 1997.
Branches of industry/internet: www.bundesregierung.de/ausland/sectors/sect0102.html 1998-01-23.
Factsheet Finland/internet: www.vn.fi/um/finfo/english/fact96.html 1998-01-22.

Coke and petroleum industry

Techno-economic study on the reduction measures, based on best available technology, of industrial emissions (air, water, wastes) from the basic petrochemical industry, European Commission CO 3481, 1996.
1994 Energy Statistics Year Book, UN, New York, 1996.
International Year Book of Industrial Statistics 1997, Vienna, 1997.
Industri och miljö, Naturvårdsverket rapport 4206 (Swedish Environmental Protection Agency Report), Sweden, 1993. In Swedish.

Construction

Kai Ödeen, Professor, Building Materials, Royal Institute of technology (KTH), Sweden.
Robert af Wetterstedt, HSB, Sweden.
Lars Stolt, Uppsala University, Sweden.
Ivar Franzén, chairman of the board in Eksta Bostadsstiftelse and former member of the Swedish parlament.
Kerstin Blix, environmental manager for the project "Hammarby sjöstad", Sweden.
Gunilla Hagberg, White architects, member of the Swedish "Construction industry recycle committee".
Anne Marie Wilhelmsen, Professor, Building design and construction, Chalmers (CTH) and program director for the MISTRA Program "Sustainable building", Sweden.
Hans Eek, EFEM Arkitektkontor.
Strategy for recycling of material and goods, Eco-cycle Commission, paper 1997:14.
Lovins A. B and L. H, von Weizäcker E. U, Faktor vier, Doppleter Wohlstand - halbierter Naturverbrauch, 1995.
Nordström C, Solsverige, 1991. In Swedish.
Roche L, Smart glass, Building service journal 8, 1997.
Producer Responsibility in the Construction Industry, Eco cycle commission, paper 1996:11.
AMA-nytt Mark Hus. 2/1995. In Swedish.
AMA-nytt Mark Hus. 2/1996. In Swedish.
Euroconstruct, December 1997.

Baltic 21 Series No 6/98

Sustainable Development of the Industrial Sector in the Baltic Sea Region

Table of contents

Foreword

Industrial Sector Final Report

PREFACE

Executive Summary

1. The potential for growth in the Baltic Sea Region

2. A golden opportunity for sustainable policies

3. The overall goal for the industrial sector

4. Subgoals and indicators

5. Problems and obstacles for sustainable development

6. The action programme

Industrial Sector Final Report

1. Introduction

1.1 General background

1.2 Aim of the report

1.3 Points of departure for the report

1.4 The coverage of the industrial sector

1.5 The concept of sustainable development and the overall goal for all sectors in Baltic 21

1.5.1 Eco-efficiency

1.6 International and regional conventions/agreements

1.6.1 From Stockholm to Helsinki

1.6.2 The Brundtland Report

1.6.3 The Baltic Sea Declaration and the Action Programme (JCP)

1.6.4 The UN Conference on Environment and Development

1.6.5 The environment policy of EU

1.7 Disposition of the report

Industrial Sector Final Report

2. Industry and Environment in the BSR

2.1 Economic development in the Baltic Sea Region

2.1.1 Growth in the Baltic Sea Region

2.1.2 Trade in the BSR

2.2 Industrial structure in the Baltic Sea Region

2.2.1 Foreign Direct Investments in the Baltic Sea Region

2.3 Economic and social welfare in the Baltic Sea Region

2.4 State of the environment in the Baltic Sea Region

2.4.1 The Baltic Sea Region

2.4.2 The Baltic Sea

2.4.3 Environmental policy

2.5 Environmental Impact of Industry in the Baltic Sea Region

2.5.1 Use of resources

2.5.2 Emissions of pollutants

2.5.3 Generation of waste

2.6 Country overview

2.6.1 Denmark

2.6.2 Estonia

2.6.3 Finland

2.6.4 Germany

2.6.5 Iceland

2.6.6 Latvia

2.6.7 Lithuania

2.6.8 Norway

2.6.9 Poland

2.6.10 The Russian Federation

2.6.11 Sweden

Industrial Sector Final Report

3 Cross-sectorial issues and inter-linkages between industry and other sectors

3.1 Sector inter-linkages

3.1.1 Forestry, Agriculture and Fishery

3.1.2 Transport and energy

3.1.3 Tourism

3.2 Cross-sectorial issues

3.2.1 Environment

3.2.2 Regional development

3.2.3 Social conditions

3.2.4 Economy

Industrial Sector Final Report

4. Goals and Indicators

4.1 Definition of sustainable development for the industrial sector

4.2 Subgoals and indicators

4.2.1 Framework for business operations

4.2.2 Strengthening the market forces

4.2.3 Monitoring and effects

Industrial Sector Final Report

5. Scenarios for the industrial sector 2030

5.1 Business as usual scenario

5.2 Sustainable development scenario/s

5.2.1 Introduction

5.2.2 The goal/s

Annex 5
Main branches of industry in the BSR