United States Agency for International Development · Web viewSOP-1, Template 1: Initial...

DCN: 2019-BOS-005SOP-1, Template 1:

Initial Environmental Examinations (IEE)

US Agency for International Development (USAID)Bosnia and Herzegovina

Initial Environmental Examination (IEE)Program/Project/Activity Data

Activity/Project Name: Energy Policy ActivityAssistance Objective: Economic DevelopmentProgram Area: Economic GrowthCountry(ies) and/or Operating Unit: Bosnia and HerzegovinaOriginating Office: EDO Date: February 13, 2019PAD Level IEE: Yes NoSupplemental IEE: Yes NoRCE/IEE Amendment: Yes No

DCN of Original RCE/IEE:

DCN of Amendment(s):

If Yes, Purpose of Amendment (AMD):

DCN(s) of All Related EA/IEE/RCE/ER(s): PAD-level IEE:DCN 2014-BOS-009,DCN:2018-BOS-003, DCN: 2018-BOS-017

Implementation Start/End: LOP: (September 2019 – September 2024)

Funding Amount: LOP Amount: $8,000,000Contract/Award Number (if known):Recommended Environmental Determination:Categorical Exclusion: Positive Determination: Negative Determination: Deferral:

Additional Elements:Conditions: Local Procurement: Government to Government: Donor Co-Funded: Sustainability Analysis (included): Climate Change Vulnerability Analysis (included):

1. Background and Project Description1.1. Purpose and Scope of IEE: The purpose of this IEE is to provide an evaluation of the proposed

activities, and to recommend a Threshold Decision applicable to activities proposed under USAID Energy Policy Activity.

1.2. Project Overview The overall goal of this Activity is to contribute to socio-economic development in Bosnia and Herzegovina through catalyzing much-needed energy sector investment. To meet its future energy needs, maximize its export potential and make the sector attractive for investors, BiH must invest additional efforts to remove legislative obstacles, shorten development timeframes, modify conflicting regulations, and improve the transparency of development process.

BiH is a signatory to the Energy Community Treaty. The Energy Community (EnC) has adapted the EU energy acquis for the EnC Treaty signatories. The Treaty requires the signing parties to adopt the relevant regulations and thus harmonize their energy market frameworks with that of the EU. The EU, through the EnC Secretariat, regularly monitors and reports on the progress that BiH has made in reforming its energy sector.

BiH / Energy Policy 1EE.BEU Standard Form: IEE.v3

DCN: 2019-BOS-005The most recent EnC 2017 Annual Implementation Report states that BiH has made some progress but remains largely non-compliant with EnC Treaty obligations. The degree of compliance varies by sector. The lack of a Third Energy Package-compliant gas sector legislation is especially significant. The natural gas market should be in compliance with the EnC’s Third Liberalization Package particularly because new pipeline infrastructure will provide additional security of supply. The Oil sector and the renewable energy framework are largely non-compliant and in need of reform assistance as well. Some progress has been made in the electricity market, energy efficiency, and energy statistics, but these areas too require further interventions. The environmental requirements have been implemented to a modest degree, whereas competition policy is largely in compliance with the Treaty obligations.

BiH is now considered lagging behind other EnC participants in the Western Balkans. The BiH political environment has played a major role in slowing down energy sector reform. Political challenges include the need to navigate the state-level and entity-level legal structures, as well as cantonal politics in FBiH. Various deadlocks that occur in the process slow down the pace of reform. Some new legislation, including the State Law on Regulator, Transmission, and Electricity Market and the Law on the Establishment of the Transmission System Operator have been held up, preventing further reforms in support of compliance and electricity market operation.

In addition, energy price deregulation is a politically sensitive issue, inviting the use of political power to influence independent regulatory bodies. No real progress has been made on key issues such as unbundling and price deregulation in the electricity market. Non-market prices, in turn, discourage long-term investment and inhibit the overall development of a competitive energy market. Hence, a host of policy interventions requiring specialized knowledge and technical assistance is needed to pull BiH nearer to its regional peers and bring its energy sector closer to the integrated European markets.

However, BiH governments have successfully passed/adopted legislation and technical recommendations that mark the end of the stalemate. These successes include:

The adoption of the BiH State Framework Energy Strategy by the Council of Ministers The adoption of the National Emission Reduction Plan (NERP), which is fully compliant

with the EU Policy Guidelines and the Directives The approval of the Road Map for Implementation of the West Balkan 6 Initiative (WB6)

in Bosnia and Herzegovina. The FBiH Government adopted USAID EIA recommendations for improving the

permitting regime. The RS Government adopted USAID EIA recommendations for streamlining the

permitting regime, in cooperation with the RS Ministry of Industry, Energy and Mining, and the GiZ PRoRE Project.

EDO aims to build on these successes with the proposed Activity.

The Activity will address the economic development objective two (DO 2) under the USAID/BiH Country Development Cooperation Strategy (CDCS) FY2012-FY2016: A competitive market-oriented economy providing better economic opportunities for all its citizens; and intermediate result (IR) 2.2.4. Energy sector's sustainable contribution to economy increased. The Activity will contribute to the Project Appraisal Document (PAD) 2.2 Sub IR 2.2.45 (Energy Reform Policies), subject to available funds. Thus this Activity complements USAID's current ongoing efforts to facilitate future investments in the sector in order to replace already obsolete generation equipment built more than 30 years ago and increase production and exports.

1.3. Project Description :


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The proposed Activity will assist BiH energy sector stakeholders in creating an investor-friendly legislative framework in accordance with EnC Treaty obligations (and thus EU Energy Directives) and to continue the integration of its energy sector into the regional and EU energy markets and counter Russian influence. The activity will facilitate future investments in the energy sector; increase BiH’s energy security; maintain the robustness of BiH’s position as an electricity exporter and; help prevent corruption in the sector.

Anticipated / Illustrative activities are broken down into the following four Activity components:

1.3.1. Component 1: Natural Gas Technical Assistance.

The goal is to create the preconditions for the development of a BiH natural gas internal market. Under this component, the Activity will offer technical assistance needed for redrafting and passing the compliant primary and secondary legislation in the natural gas sector at all government levels. The component will address the design and adoption of a number of regulatory and policy reforms, including the unbundling of gas pipelines (separating pipeline networks from supply functions); open access regulation; rules on licensing, tariffs, general conditions of supply, and customer switching; and other preconditions for creating the internal market as required by the EnC Treaty. Our assistance will be targeted toward:

- Developing the proposals for missing legislation, regulations and rules; - Providing training for the regulators (members of regulatory commissions, which

will, upon the adoption of relevant legislation be incorporated into State Electricity Regulatory Commission (SERC), Federation Electricity Regulatory Commission (FERC), and Regulatory Commission for Energy of Republika Srpska (RERS)) and natural gas sector stakeholders to comply with the new legislation and take the lead in establishing the natural gas and balancing markets;

- Creating the preconditions to join the regional natural gas market.

1.3.2. Component 2: Electricity Technical Assistance.

Under this component the Activity will offer technical assistance for legislative and regulatory changes in the electricity sector. The Activity will provide technical assistance to design an online system to streamline the permitting process for investors and encourage investment. It will address transboundary river legal and operational issues to increase the potential for additional hydro generation, and also promote biomass-friendly policies. The Activity will work on enhancing the smart grid features of the electricity network by developing a demand side response mechanism, instituting intra-day and day-ahead markets, assisting newly unbundled electricity utilities, Renewable Energy Source producers, and households and small commercial customers to benefit from a fully operational market. Energy efficiency concerns will be addressed by continuing the development of the Energy Efficiency Obligation (EEO) scheme to make it fully functional. On November 26, 2018 the Energy Community Secretariat issued the Policy Guidelines to help countries in the region design and implement an Energy Efficiency Obligation Scheme (EEO) in line with Article 7 of the EU Energy Efficiency Directive.Article 7 of the Energy Efficiency Directive requires BiH (and other contracting parties) to establish an EEO policy instrument that obliges energy suppliers and/or distributors to deliver a specified amount of energy savings at the customer end. EEOs are market-based instruments that do not prescribe the measures to be deployed; BiH(and other contracting parties) is given the freedom to choose the measures and delivery routes that work best for


DCN: 2019-BOS-005BiH. As a result, this instrument allows the market as a whole to discover the most cost-effective way to achieve energy savings in that particular context. Article 7 of the Energy Efficiency Directive 2012/27/EU (the “EED”) plays a central role in the package of policy measures being delivered by the European Union (EU) to achieve a 20% improvement in energy efficiency (EE) by 2020. The importance of this article, which sets quantified energy savings targets for Member States. Under Article 7 of the Energy Efficiency Directive, EU countries and Energy Community Treaty Contracting Parties must achieve a quantified target of cumulative energy savings either through an Energy Efficiency Obligation (EEO) scheme, ‘Alternative Measures’, or a combination of the two.

1.3.3. Component 3: Cross-cutting Assistance on EU Accession Requirements in the BiH Energy Sector.

Provide communication support and assistance to the Ministry of Foreign Trade and Economic Relations of BiH (MOFTER) and relevant entity ministries on project work that impacts compliance with the requirements of the Energy Community. Assist MOFTER and the relevant entity ministries on improving the energy strategies and action plans within the scope of the above activities. Additionally, this component will raise the issue of cybersecurity in gas and electricity transmission, as part of both the EnC cybersecurity efforts as well as USAID’s regional cybersecurity initiative.

1.3.4. Component 4: Cross-cutting Assistance and Activities in Public Outreach.

The public outreach component of the project will assist the BiH regulatory commissions to promote and support a market-based energy sector, conduct public outreach campaigns, and work to inform energy sector stakeholders and the public about its activities. In addition, the project will assist the transformation of the regulators’ websites to be platforms for customer education and supply a price comparison tool.

2. Baseline Environmental Information2.1. Locations Affected and Environmental Context: Locations Affected and Environmental

Context: The activities under this IEE will be implemented exclusively in the territory of Bosnia and Herzegovina.

B&H has a complex legislative and regulatory framework. Currently the natural gas sector is regulated at the level of three administrative units: the Federation of Bosnia and Herzegovina (FBiH), Republika Srpska (RS) and Brcko District (BD). All three have separate legislation which fails to comply either with the EU’s Second or Third Internal Gas Market Directives. The approval of the new draft gas law in FBiH has been pending since 2013 even though B&H has been a member of the Energy Community since 2006. Therefore, unbundling, third party access and balancing rules do not yet apply in the country. In addition, there is no transmission tariff system in place and natural gas prices are regulated in FBiH and partially regulated in RS.

BiH has a state or national level government, which is administratively subdivided into two entity governments: the FBiH and RS. The FBIH is further subdivided into 10 cantons. Municipal level is the lowest form of government. In addition to the entities, which are divided into municipalities, there is the Brcko District. There are no institutions at the State level that are entirely dedicated to environmental protection. In other words, there is no State level Ministry for the Environment. Neither is there Law on environment at the State level. As per the Constitution, Entity level governments regulate environmental issues through their laws, regulations and standards.


DCN: 2019-BOS-005However, Ministry for Foreign Trade and Economic Relations (MoFTER) has been delegated to manage certain energy and environmental issues at the State level in the absence of dedicated State level Ministries as per the Law on Ministries and other bodies of administration of BiH (Official Gazette of BiH, No. 5/03) enacted in March 2003. MoFTER is responsible to define and coordinate activities between the Entity authorities and institutions at the international level, in the field of environmental protection, agriculture, energy and natural resources and administer enforcement of relevant laws and other regulations.

Bosnia and Herzegovina continues to seriously and persistently breach Energy Community law by its failure to comply with the provisions of the gas acquis from the Second Energy Package. After its first decision in Case ECS-8/11 adopted on 1 October 2013 under Article 91 of the Treaty, the Ministerial Council has adopted three more decisions under Article 92 as from 2014, including imposing measures in 2015. After a brief suspension of the measures by the Ministerial Council on 14 October 2016, the measures were resumed again on 1 April 2017, as the country did not honor its commitment to adopt a State law transposing the acquis in the gas sector. This activity will support energy reforms in BiH and enable progress toward fulfilling Energy Community Treaty obligations. BiH is a signatory to the Energy Community Treaty. The Energy Community (EnC) has adapted the EU energy acquis for the EnC Treaty signatories. The treaty requires the signing parties to adopt the relevant regulations and thus harmonize their energy market frameworks with that of the EU. This activity will assist the BiH energy sector to create an investor-friendly legislative and regulatory framework and to continue the integration of its energy sector into the regional and EU energy markets.

The following Energy Community documents (acquis) related to the gas sector are binding for Bosnia and Herzegovina, according to the Energy Community Treaty, and thus specifically apply to this activity:

DIRECTIVE 2009/73/EC of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC;

Ministerial Council of the Energy Community adopted Decision 2011/02/MC-EnC for the implementation of the Directive 2009/73/EC in the Contracting Parties (including BiH);

REGULATION (EC) 715/2009 of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) 1775/2005;

DIRECTIVE 2004/67/EC of 26 April 2004 concerning measures to safeguard security of natural gas supply;

Ministerial Council of the Energy Community adopted Decision 2007/06/MC-EnC on the implementation of Directive 2004/67/EC.

2.2. Description of Applicable Environmental and Natural Resource Legal Requirements Policies, Laws, and Regulations: BiH has a State level government, which is administratively subdivided into two entity governments: the Federation of Bosnia and Herzegovina (FBiH) and Republic Srpska (RS). The FBIH is further subdivided into 10 cantons. Municipal level is the lowest form of government. In addition to the entities, which are divided into municipalities, there is also the Brcko District. Ministry for Foreign Trade and Economic Relations (MoFTER) has been delegated to manage certain environmental and energy issues at the State level in the absence of dedicated State level Ministries as per the Law on Ministries and other bodies of administration of BiH (Official Gazette of BiH, No. 5/03) enacted in March 2003. MoFTER is responsible to define and coordinate activities between the Entity authorities and institutions at the international level, in the field of environmental protection, energy and natural resources and administer enforcement of relevant laws and other regulations.

In order to improve and standardize environmental legislation, both entities drafted a set of 6 environmental laws that are largely in accordance with EU acquis:


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The Framework Law on Environmental Protection;The Law on Air Protection;The Law on Water Protection;The Law on Waste Management;The Law on Nature Protection, andThe Law on the Fund for Environmental Protection

These laws represent a framework for the legal protection of the environment, setting forth basic principles of the protection, defining basic notions and terms, as well as authorities responsible for policy implementation. They also lay down basic rules for drafting specific measures in the function of environmental protection policy implementation, as well as that of environment conservation and improvement. Since there is no central state environmental impact assessment (EIA) program the FBiH (Art. 36) and RS (Art. 35) are responsible to define the requirements for EIAs. If this project gets approved they will be required to follow this process which also includes public participation in environmental decision making.

2.3. Country/Ministry/Municipality Environmental Capacity Analysis : Federation BiH:Environmental management in the Federation BiH is uneconomical and unsustainable. The main reason for this serious lack of coordination, disorientation, and duplication between the different levels of administration responsible for environmental issues lies in the fact that institutionalized mechanisms and channels for exchange of information virtually do not exist. In addition to the relevant ministries involved in the environment and biodiversity, the Federation has quite an impressive number of specialist institutions that provide expert consulting, inspection and monitoring, and/or services that protect citizens, property and the environment/biodiversity from natural disasters. These institutes and agencies work under relevant ministries or report directly to the government. While the structure and number of institutions is rather impressive, the lack of inter-ministry coordination on all levels, as well as weak information exchange, are serious issues that impede and obstruct efficient environment/biodiversity management. Additionally, inadequate experience in environmental management of ministerial staff often results in serious gaps between the legal requirements and actual implementation The environmental protection legal framework in FBiH consists of five laws that were developed and adopted in 2003 at the entity level:

• Law on Environmental Protection;• Law on Nature Protection;• Law on Waste Management;• Law on Air Protection; and• Law on Environmental Protection Fund.

Adoption of these laws was a crucial step towards harmonizing BiH legislation with the EU. Although, FBiH adopted several of the sub-laws that harmonized many aspects of environmental protection with the EU legislation, the process of harmonization is far from finished. The process of harmonization must continue in order for FBiH to meet all EU directives related to regulating the environment. The main impediments to harmonization are the lack of a vision and the lack of a strategy for improving the efficiency of the harmonization processes.

Furthermore, harmonization of legislation is required within the legal structure in the entity and cantonal governments. The environmental laws adopted in 2003 were at the entity level, and some cantons have never adopted cantonal laws. In addition, some cantonal laws were adopted prior to the year 2003; so many provisions in these laws are inconsistent with the 2003 entity environmental laws.


DCN: 2019-BOS-005The Republika Srpska (RS): The institutional framework for environment in the RS is simpler than the one in FBiH. There are only two levels of administration in the RS: entity and local. Similarly to FBiH, there are public enterprises tasked with specific consulting, monitoring or other services related to the environment.

At the entity level, the Ministry for Spatial Planning, Construction, and Ecology is responsible for all issues related to the environment. This Ministry is responsible for drafting and adopting laws, implementing laws relevant to environmental protection, recommending areas to be protected, and monitoring and supervising work of local/municipal administrations. Within this ministry, there is a specialized department that handles environmental issues. Some responsibilities at the entity level related to the environment are also delegated to the Ministry of Agriculture, Forestry and Water Works; the Ministry of Education; and the Ministry of Trade and Tourism. The roles and responsibilities of each of these ministries have been defined by the Law on Ministries (2002). This same law provides for the role of the Public Institute for Protection of Cultural, Historical and Natural Heritage of Republika Srpska. This institution is tasked with all works related to protected areas, including updating the register of protected areas. They also provide expert and consulting services related to protection of the RS. In its work, the institute cooperates with other public institutions in the RS, such as faculties, museums, etc. In addition, and similarly to FBiH, there are public enterprises that manage natural parks. In the RS, there are two such institutions that are responsible for the national nature parks, Sutjeska and Kozara. Also, there is a public enterprise “Srpske Sume” that is responsible for overall management of all forests in the RS.

The most significant legislative reform related to the environment in the RS was the adoption of a set of entity laws on the environment. This set of five laws was drafted and adopted by both entities at the same time and are harmonized with EU legislation regulating the environment. Furthermore, and similarly to FBiH, there are other pieces of legislation that regulate certain aspects of the environment that were adopted in the RS. These include the following:

• Law on Forests (2003);• Law on Hunting (2002);• Law on National Parks (2005);• Law on Waters (2006);• Law on Agricultural Lands (2006);• Law on Fishing (2002);• Law on Communal Police (2003);• Law on Fees for Utilizing Natural Resources for Energy Generation (2003); and• Law on Environmental Fund (2002).

The Republika Srpska is facing some of the same issues as FBiH, including the requirement for full harmonization of its legislation with EU regulations. As previously stated, in order to harmonize its legislation with the EU, the BiH government started revising existing laws in 2006. This project was financed by the EC with the ultimate goal of monitoring the level of harmonization with EU regulations

2.4. Climate Change Vulnerability Analysis :

BiH faces significant institutional, financial and human resource constraints to addressing climate change issues. The BiH EU accession process is a driving force in reform of the environment sector, however, as integration directly implies close cooperation with EU regulations and adoption of robust climate policies. Environmental governance in BiH is devolved across four administrative levels: state, entity, cantonal and municipal. Almost all national environmental legislation operates at entity level, while all international agreements and projects are coordinated through the Ministry of Foreign Trade and Economic Relations. To date, climate change issues


DCN: 2019-BOS-005have been peripheral to most institutions in BiH; however, the Climate Change Adaptation and Low Emission Development Strategy tasks several institutions with adaptation activities. The BiH Institute for Meteorology and the Republic Hydrometeorological Institute track and disseminate weather information. They coordinate BiH’s participation in Meteoalarm; an EU-wide weather emergency alert system. Initial steps have been taken to modernize and develop the meteorological system, such as installing new equipment, educating staff and developing climate scenarios.

The objective of proposed Activity is to assist BiH energy sector stakeholders in creating an investor-friendly legislative framework in accordance with EnC Treaty obligations (and thus EU Energy Directives) and to continue the integration of its energy sector into the regional and EU energy markets and counter Russian influence. The activity will facilitate future investments in the energy sector; increase BiH’s energy security; maintain the robustness of BiH’s position as an electricity exporter and; help prevent corruption in the sector. This Activity will contribute directly to encouraging the sustainability of Bosnia and Herzegovina’s energy sector and improving its environmental aspects, as will enhance the energy sector’s contribution to sustainable aspect of environment.

3. Analysis of Potential Environmental Impact:

Activity may contribute indirectly to environmental and biodiversity conservation since economic growth, if done in a sustainable manner, in general stimulates environmental management. The successful management and protection of natural resources is predicated on a stable government, sound policy frameworks and functioning fiscal system, transparency, accountability and vibrant private sector.

This Activity, Energy Policy Activity could have positive environmental effects if this support is directed at respecting all energy -related policies, as prescribes by EU Energy Directives (which will be done in this case). This could also help mitigate climate change impacts and address potential effects of climate change by reducing carbon emissions associated with heating and power generation, specifically replacing the burning of coal with natural gas, which has been identified as a transition fuel. Furthermore, economic development that excludes sustainable development planning can have adverse effects on the environment. A common misperception is that the activities that are not directly addressing the environment, such as feasibility studies, could not be harmful to the environment. Therefore, additional precaution is advised during the planning and administration phases of this project by following the appropriate environmental policies, directives, treaties and regulations.

The climate risk assessment was performed by the mission using the Climate Risk Screening done for the CDCS.


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3.1. Component 1: Natural Gas Technical Assistance

Defined/Illustrative Activities Potential Impacts Potential Climate Risk Climate Risk Rating

Opportunities for Climate Resiliency

1.1.Natural Gas Security of Supply and Missing Primary and Secondary Legislation: to track and report on the progress of transmission pipelines that will transport gas from sources other than Russia, along with other pipelines bringing Russian gas to Europe, LNG terminals and their development progress that would be accessible for BiH. Where necessary, work with legislators and agencies to ensure that the BiH natural gas infrastructure permitting regime is consistent, transparent, and investor friendly.

Air, water, soil, waste, human health;

N/A Low The implementer must review existing studies, including all EU treaties, directives, and environmental regulations pertaining to climate change, water, air quality, waste management, nature protection, industrial pollution control, and trans border water management. As a signatory of Energy Treaty, BiH is required to fully integrate such environmental protection. This is required for all activities listed in this IEE.

1. 2.Regional Natural Gas Sector: satisfy the preconditions to join the regional natural gas market and obtain access to natural gas storage facilities; an assess the gas network development regarding the BiH Energy Strategy development plan.


N/A Low The implementer must review existing studies, including all EU treaties, directives, and environmental regulations pertaining to climate change, water, air quality, waste management, nature protection, industrial pollution control, and trans border water management. As a signatory of Energy Treaty, BiH is required to fully integrate such environmental protection. This is required for all activities listed in this IEE.

1. 3. Training for the Regulators and Natural Gas Sector Stakeholders: the introduction of natural gas regulation presents an excellent opportunity to provide trainings for regulators. All regulators and, if possible and where


N/A Low The implementer must review existing studies, including all EU treaties, directives, and environmental regulations pertaining to climate change, water, air quality, waste management, nature protection, industrial pollution


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Defined/Illustrative Activities Potential Impacts Potential Climate Risk Climate Risk Rating


appropriate, government representatives would be invited to attend this refresher on the independence of the regulators and internal natural gas market in compliance with the EnC Treaty requirements.

control, and trans border water management. As a signatory of Energy Treaty, BiH is required to fully integrate such environmental protection. This is required for all activities listed in this IEE.

3.2. Component 2: Electricity Technical Assistance.

Defined/Illustrative Activities Potential ImpactsPotential Climate Risk

Climate Risk Rating


2.1. Investment: Where necessary, work with legislatures and other authorities to ensure that the BiH electricity generation permitting regime is consistent, transparent and investor friendly.Develop a software tool (online permitting wizard) that can generate a customized permitting guide for an investor based on inputs provided on the proposed project. The guide would outline a roadmap of potentially required permits, typical timeframes and issuing authorities. Develop a proposal for an electronic-permitting process (e-permitting)

None N/A Low The implementer must perform risk assessment fully respecting all EU treaties, directives, and environmental regulations pertaining to climate change, water, air quality, waste management, nature protection, industrial pollution control, and trans border water management. As a signatory of Energy Treaty, BiH is required to fully integrate such environmental protection. This is required for all activities listed in this IEE.


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Climate Risk Rating


and the legal framework to implement it. As a part of the e-permitting process, develop a design for a central permitting database, which would allow each investor and authority to file documents for a particular project online, available to all permitting authoritiesAssist BiH authorities to develop and implement Regulation 347 as part of the BiH permitting system for Projects of EnC Interest (PECI), Projects of Common Interest (PCI), and Central and South Eastern Europe Gas Connectivity (CESEC) projects. Regulation 347 provides for new, more transparent and accelerated procedures to grant permits for such projects. Examine the transboundary river issues between neighboring countries and the two entities and make recommendations to resolve these issues through international agreements, primary legislation, or secondary legislation

2.2. The Electricity Market:Unbundled Power Utilities. Assist regulators and companies to develop and implement rules for unbundled power utilities so they can operate in a fully-opened electricity market. RES

Air, water, soil, waste, human health; N/A Low The implementer, in identifying an optimal gas pipeline route corridor must incorporate numerous EU and local directives and environmental regulations


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Climate Risk Rating


Producer Participation in the Market. Develop rules so that RES power plants can participate in the balancing and wholesale market.Development of a Demand Side Response System. The implementer will determine the obstacles to creating such a system and offer recommendations to removing these obstacles. Also, technical assistance will be provided to accommodate the market commercial processes for intra-day and day-ahead markets implemented through a power exchange. Assist the regulators and Independent System Operator (TSO/Market Operator) to develop a methodology and rules for balancing households and small businesses to enable suppliers to compete for their energy supply. Develop systematic energy efficiency approaches through further development of Energy Efficiency Obligation (EEO) scheme and other financing mechanisms for the benefit of citizens.

pertaining to climate change, water, air quality, waste management, nature protection, industrial pollution control, and trans border water management.


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3.3. Component 3: Cross-cutting Assistance on EU Accession Requirements in the BiH Energy Sector

Defined/Illustrative Activities

Potential Impacts Potential Climate Risk Climate Risk Rating Opportunities for Climate Resiliency

3.1. Provide assistance to MOFTER and relevant entity ministries on project work that impacts compliance with the requirements of the EnC. Assist MOFTER and the relevant entity ministries on improving the energy strategies and action plans.


N/A Low The implementer must incorporate numerous EU and local directives and environmental regulations pertaining to climate change, water, air quality, waste management, nature protection, industrial pollution control, and trans border water management. Opportunity to include all legislation and regulations in accordance with EU energy and environment Acquis, per Energy Treaty requirements.

All tasks of this Activity must fully respect relevant and obligatory EU energy and environment Acquis, per Energy Treaty requirements to BiH.

3.2. National Energy and Climate Plans. Develop Recommendations for MOFTER on the preparation of integrated national energy and climate plans (NECP). The national plan should define objectives for each dimension of the EnC with regard to the 2030 targets for energy. USAID will work

Air, water, soil, waste, human health; N/A Low The implementer must

incorporate numerous EU and local directives and environmental regulations pertaining to climate change, water, air quality, waste management, nature protection, industrial pollution control, and trans border water management. Opportunity to include all


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on the energy targets only. legislation and regulations in accordance with EU energy and environment Acquis, per Energy Treaty requirements.


3.3.Cooperate/coordinate with all USAID regional activities (National Association of Regulatory Utility Commissioners (NARUC), USEA, etc.) and other donors in the energy sector.

None

N/A Low The implementer must incorporate numerous EU and local directives and environmental regulations pertaining to climate change, water, air quality, waste management, nature protection, industrial pollution control, and trans border water management. Opportunity to include all legislation and regulations in accordance with EU energy and environment Acquis, per Energy Treaty requirements.


3.4. Cyber Security. Using the inputs from the Energy Community and USEA/NARUC documents, and based on its own research, develop a Road

None N/A Low The implementer must incorporate numerous EU and local directives and environmental regulations pertaining to climate change, water, air quality, waste


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Map and provide assistance to MOFTER for the implementation of Directive on security of (energy) network and information systems (NIS Directive) in the energy sector of BiH

management, nature protection, industrial pollution control, and trans border water management. Opportunity to include all legislation and regulations in accordance with EU energy and environment Acquis, per Energy Treaty requirements.


3.4. Component 4: Cross-Cutting Assistance and Activities in Public Outreach

Defined/Illustrative Activities

Potential Impacts Potential Climate Risk Climate Risk Rating Opportunities for Climate Resiliency

4. 1 Assist the BiH regulatory commissions to promote and support a Europe-oriented, market-based energy sector by working with NARUC to develop an online platform to improve each commission’s capacity, strategy, and tools to conduct public outreach campaigns and educate customers on the benefits of increased competition. Assist the regulatory commissions to create websites that are easy

None N/A Low The implementer must incorporate numerous EU and local directives and environmental regulations pertaining to climate change, water, air quality, waste management, nature protection, industrial pollution control, and trans border water management.

Opportunity to include all legislation and regulations in accordance with EU energy and environment Acquis, per Energy Treaty requirements.


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to understand and navigate, user friendly, and serve as the central platform for customer education and a supply Price Comparison Tool (PCT). The project’s public outreach effort will also work to inform energy sector stakeholders and the public about its activities.


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4. Recommended Environmental Actions4.1. Recommended Mitigation Measures : Pursuant to 22 CFR 216.3(a)(2)(iii), the Mission has reviewed the potential environmental impacts of this activity, and determined that the project will most probably not have a significant impact or effect on the environment. To ensure activities do not have a negative impact on the environment site specific environmental review will be conducted to ensure full compliance with USAID regulations. The implementer will be required to evaluate potential environmental concerns and impacts and ensure that activity have appropriate mitigation and monitoring of the identified adverse environmental impacts. The implementer will ensure that all supported project activities are in compliance with, and follow local environmental laws and regulations.


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Component 1 – Natural Gas Technical Assistance


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Defined/Illustrative Activities Potential Impacts Mitigation MeasuresRecommended Threshold Determination

1.1. Natural Gas Security of Supply and Missing Primary and Secondary Legislation: to track and report on the progress of transmission pipelines that will transport gas from sources other than Russia, along with other pipelines bringing Russian gas to Europe, LNG terminals and their development progress that would be accessible for BiH. Where necessary, work with legislators and agencies to ensure that the BiH natural gas infrastructure permitting regime is consistent, transparent, and investor friendly.

Air, water, soil, waste, human health

Identification and analysis of applicable EU Acquis and BiH requirements and other relevant environmental policies, regulations, requirements, international agreements and best practices. The implementer will prepare such analysis as part of the intervention and the analysis will be subject to approval by the COR and MEO in consultation with the BEO.

Negative Determination

1. 2.Regional Natural Gas Sector: satisfy the preconditions to join the regional natural gas market and obtain access to natural gas storage facilities; an assess the gas network development regarding the BiH Energy Strategy development plan.




1. 3. Training for the Regulators and Natural Gas Sector Stakeholders: the introduction of natural gas regulation presents an excellent opportunity to provide trainings for regulators. All regulators and, if possible and where appropriate, government representatives would be invited to attend this refresher on the independence of the regulators and internal natural gas market in compliance with the EnC Treaty





DCN: 2019-BOS-005

Component 2 – Electricity Technical Assistance


DCN: 2019-BOS-005

Defined/Illustrative Activities Potential Impacts Mitigation MeasuresRecommended Threshold Determination

2.1. Investment: Where necessary, work with legislatures and other authorities to ensure that the BiH electricity generation permitting regime is consistent, transparent and investor friendly.Develop a software tool (online permitting wizard) that can generate a customized permitting guide for an investor based on inputs provided on the proposed project. The guide would outline a roadmap of potentially required permits, typical timeframes and issuing authorities. Develop a proposal for an electronic-permitting process (e-permitting) and the legal framework to implement it. As a part of the e-permitting process, develop a design for a central permitting database, which would allow each investor and authority to file documents for a particular project online, available to all permitting authorities. Assist BiH authorities to develop and implement Regulation 347 as part of the BiH permitting system for Projects of EnC Interest (PECI), Projects of Common Interest (PCI), and Central and South Eastern Europe Gas Connectivity (CESEC) projects. Regulation 347 provides for new, more transparent and accelerated procedures to grant





DCN: 2019-BOS-005

Component 3- Cross-cutting Assistance on EU Accession Requirements in the BiH Energy Sector

Defined/Illustrative Activities Potential Impacts Mitigation Measures Recommended Threshold Determination

3.1. Provide assistance to MOFTER and relevant entity ministries on project work that impacts compliance with the requirements of the EnC. Assist MOFTER and the relevant entity ministries on improving the energy strategies and action plans within the scope of the above activities.

Air, water, soil, waste, human health Identification and analysis of applicable EU Acquis and BiH requirements and other relevant environmental policies, regulations, requirements, international agreements and best practices. The implementer will prepare such analysis as part of the intervention and the analysis will be subject to approval by the COR and MEO in consultation with the BEO.


3.2. National Energy and Climate Plans. Develop Recommendations for MOFTER on the preparation of integrated national energy and climate plans (NECP). The national plan should define objectives for each dimension of the EnC with regard to the 2030 targets for energy. USAID will work on the energy targets only.

Air, water, soil, waste, human health Identification and analysis of applicable EU Acquis and BiH requirements and other relevant environmental policies, regulations, requirements, international agreements and best practices. The implementer will prepare such analysis as part of the intervention and the analysis will be subject to approval by the COR and MEO in consultation with the BEO.

Negative determination

3.3.Cooperate/coordinate with all USAID regional activities (National Association of Regulatory Utility Commissioners (NARUC), USEA, etc.) and other donors in the energy sector.

None None Categorical Exclusion

3.4. Cyber Security. Using the inputs from the Energy Community and USEA/NARUC documents, and based on its own research, develop a



DCN: 2019-BOS-005Road Map and provide assistance to MOFTER for the implementation of Directive on security of (energy) network and information systems (NIS Directive) in the energy sector of BiH

Component 4- Cross-Cutting Assistance and Activities in Public Outreach

Defined/Illustrative Activities Potential Impacts Mitigation Measures Recommended Threshold Determination

4. 1 Assist the BiH regulatory commissions to promote and support a Europe-oriented, market-based energy sector by working with NARUC to develop an online platform to improve each commission’s capacity, strategy, and tools to conduct public outreach campaigns and educate customers on the benefits of increased competition. Assist the regulatory commissions to create websites that are easy to understand and navigate, user friendly, and serve as the central platform for customer education and a supply Price Comparison Tool (PCT). The project’s public outreach effort will also work to inform energy sector stakeholders and the public about its activities



DCN: 2019-BOS-005

4. 2. Recommended Environmental Determination:

Categorical Exclusions: A categorical exclusion is recommended for the following identified components under 22 CFR 216.2(c)(2): Component 2.2.,3.3., 3.4., and 4.1 under §216.2(c)(2)(i) Education, technical assistance, or training programs except to the extent such programs include activities directly affecting the environment (such as construction of facilities, etc.).

Negative Determination with Conditions: Under §216.3(a)(2)(iii), a negative determination with conditions is recommended for activities: 1.1, 1.2., 1.3., 2.1., 3.1, and 3.2. Specific terms and conditions are presented below in Section 4.3.

4.3 Terms and Conditions:For activities 1.1, 1.2, 1.3. 2.1, 3.1, and 3.2 Identification and analysis of applicable EU Acquis requirements and other relevant environmental considerations. Revised legislation and regulation will be in accordance with EU requirements and must meet all applicable EU environmental standards. The implementer will prepare such analysis as part of the intervention and the analysis will be subject to approval by the COR and MEO in consultation with the BEO.

5. Mandatory Inclusion of Requirements in Solicitations, Awards, Budgets and Workplans5.1. Appropriate environmental compliance language, including limitations defined in Section 6, shall be

incorporated into solicitations and awards for this activity and projects budgets shall provide for adequate funding and human resources to comply with requirements of this IEE.

5.2. Solicitations shall include Statements of Work with task(s) for meeting environmental compliance requirements and appropriate evaluation criteria.

5.3. Environmental mitigation and monitoring requirements as referred to in Task 3.1, when available, shall also be included in solicitations and awards.

5.4. The IP and their subcontractors shall incorporate conditions set forth in this IEE into their annual work plan. The IP shall ensure annual work plans do not prescribe activities that are defined as limitations, as defined in Section 6.

5.5. The USAID Mission will include an indicator for environmental compliance as part of the project’s performance monitoring plan.

6. Limitations of the IEE: This IEE does not cover activities (and therefore should changes in scope implicate any of the issues/activities listed below, a BEO-approved amendment shall be required), that:

6.1. Normally have a significant effect on the environment under §216.2(d)(1) [See http://www.usaid.gov/our_work/environment/compliance/regulations.html]

6.2. Support project preparation, project feasibility studies, engineering design for activities listed in §216.2(d)(1);

6.3. Affect endangered species;6.4. Result in wetland or biodiversity degradation or loss;


DCN: 2019-BOS-005

6.5. Support extractive industries (e.g. mining and quarrying);6.6. Promote timber harvesting;6.7. Provide support for regulatory permitting;6.8. Result in privatization of industrial or infrastructure facilities;6.8. Lead to new construction of buildings or other structures; 6.9. Assist the procurement (including payment in kind, donations, guarantees of credit) or use ( including handling, transport, fuel for transport, storage, mixing, loading, application, cleanup of spray equipment, and disposal) of pesticides or activities involving procurement, transport, use, storage, or disposal of toxic materials and /or pesticides (cover all insecticides, fungicides, rodenticides, etc. covered under the Federal Insecticide, Fungicide, and Rodenticide Act); and

6.10 Procure or use genetically modified organisms.

4. Revisions4.1. Under §216.3(a)(9), if new information becomes available that indicates that activities covered by

the IEE might be considered major and their effect significant, or if additional activities are proposed that might be considered major and their adverse effect significant, this environmental threshold decision will be reviewed and, if necessary, revised by the Mission with concurrence by the BEO. It is the responsibility of the USAID COR/AOR to keep the MEO and BEO informed of any new information or changes in the activity that might require revision of this IEE.


DCN: 2019-BOS-005

5. Recommended Environmental Threshold Decision Clearances:

Approval : _______________________________________Peter Duffy, Mission Director

_____________________Date

Clearance: ___________________________________________Samir Dizdar, Mission Environmental Officer

_____________________Date

Clearance :___________________________________________Ankica Gavrilovic, Activity Manager/COR/AOR

(required)

_____________________Date

Concurrence: ___________________________________________Mark KamiyaE&E Bureau Environmental Officer

____________________Date

Distribution:IEE FileMEO (to also provide a copy to AOR/COR)


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