EUROPEAN COMMISSION Brussels, 8.9.2022 SWD(2022) 266 final COMMISSION STAFF WORKING DOCUMENT Environmental Implementation Review 2022









Country Report - LITHUANIA



















Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Environmental Implementation Review 2022: Turning the tide through environmental compliance {COM(2022) 438 final} - {SWD(2022) 252 final} - {SWD(2022) 253 final} - {SWD(2022) 254 final} - {SWD(2022) 255 final} - {SWD(2022) 256 final} - {SWD(2022) 257 final} - {SWD(2022) 258 final} - {SWD(2022) 259 final} - {SWD(2022) 260 final} - {SWD(2022) 261 final} - {SWD(2022) 262 final} - {SWD(2022) 263 final} - {SWD(2022) 264 final} - {SWD(2022) 265 final} - {SWD(2022) 267 final} - {SWD(2022) 268 final} - {SWD(2022) 269 final} - {SWD(2022) 270 final} - {SWD(2022) 271 final} - {SWD(2022) 272 final} - {SWD(2022) 273 final} - {SWD(2022) 274 final} - {SWD(2022) 275 final} - {SWD(2022) 276 final} - {SWD(2022) 277 final} - {SWD(2022) 278 final}



This report has been written by the staff of the Directorate-General for Environment, European Commission. Comments are welcome. Please send them to: ENV-EIR@ec.europa.eu More information on the European Union is available at ( http://europa.eu ). Photographs: For reproduction or use of these photos, permission must be sought directly from the copyright holder. ©European Union, 2022 Reproduction is authorised provided the source is acknowledged. Table of Contents Executive summary Part I: Thematic Areas 1. Circular Economy and waste management

Measures towards a circular economy Waste management 2. Biodiversity and natural capital Nature protection and restoration Marine ecosystems Ecosystem assessment and accounting 3. Zero pollution Clean air Industrial emissions Major industrial accidents prevention – SEVESO Noise Water quality and management Chemicals 4. Climate Action Key national climate policies and strategies Effort sharing target Key sectoral developments Use of revenues from the auctioning of EU ETS allowances Part II: Enabling framework: implementation tools 5. Financing

Environmental investment needs in the European Union EU environmental funding 2014-2020 EU environmental funding 2021-2027 National environmental protection expenditure Green budget tools Overall financing compared to the needs 6. Environmental governance Information, public participation and access to justice Compliance assurance Effectiveness of environmental administrations Coordination and integration Reforms through the Commission’s technical support instrument (TSI) TAIEX EIR peer to peer projects Executive summary

In previous Environmental Implementation Reviews (EIRs), the main challenges identified for Lithuania for the implementation of EU environmental policy and law were: ·the risk that growing municipal waste incineration capacities and low landfill tax could undermine progress with recycling; ·low resource productivity; ·incomplete designation of Natura 2000 sites to protect threatened species and habitats. Though Lithuania had already met the 2020 municipal recycling targets in 2018, it slid back for 2 years in a row and missed the target in 2020. Nevertheless, remarkable progress with waste management should be noted over the last decade. However, the circularity of the Lithuanian economy is still almost three times below the EU average. If properly designed and implemented, the national circular economy action plan to be adopted by 2023 could help Lithuania bring about the necessary systemic change and create a fertile business environment for circular economy practices. The protection of biodiversity requires greater efforts and investments since two thirds of the EU protected habitats in Lithuania have an unfavourable conservation status due to pressures from forestry, agriculture, and invasive alien species. Lithuania must still complete the Natura 2000 designation process and put in place clearly defined site specific conservation objectives and necessary conservation measures for all the sites. The Recovery and Resilience Plan (RRP) will contribute by restoring 8000 ha of degraded peatlands which represents a good starting point for wider restoration efforts. On sustainable water management, Lithuania demonstrates very high compliance with the Drinking Water Directive and the Urban Waste Water Treatment Directive except for issues relating to the use of individual and other appropriate systems across the country. Groundwater quality is good but only half of all surface water bodies achieve good ecological status. There are high levels of eutrophication in rivers and a very acute eutrophication problem affecting 97% of the Baltic Sea which is a problem shared with neighbouring countries. An extremely high proportion of waters in the region are assessed as having less than good eutrophication status. EU funding is expected to contribute significantly to implementing EU standards. Lithuania is due to receive over EUR 2.2 billion from its RRP (2021-26) and close to EUR 6 billion from the cohesion policy (2021-27). Part of this funding will be channelled into supporting Lithuania’s annual environmental investment needs, which are estimated to amount to at least 1.68% of the country’ s GDP, signalling a potential financing gap of over 0.5% of GDP. Even with the forthcoming increase in 2023 Lithuania’s landfill tax remains among the lowest in the EU while allocations for fossil fuel subsidies are above the EU average. At the same time, an environmental investment gap of around 0.8% of GDP must be addressed by focusing on the country’s three main environmental implementation priorities: improvement of circularity of Lithuanian economy, protection and restoration of its nature and reduction of pollution.



Part I: Thematic Areas 1. Circular Economy and waste management Measures towards a circular economy The new Circular Economy Action Plan adopted in March 2020 is one of the main building blocks of the European Green Deal. The EU’s transition to a circular economy will reduce pressure on natural resources and will create sustainable growth and jobs. It is also a prerequisite to achieve the EU’s 2050 climate neutrality target and to halt biodiversity loss. The Action Plan announces initiatives along the entire life cycle of products, aiming to reduce the EU's consumption footprint and to double the EU's circular material use rate by 2030. It targets how products are designed, promotes circular economy processes, encourages sustainable consumption, and aims to ensure that waste is prevented and the resources used are kept in the EU economy for as long as possible. While Lithuania has made significant progress in its waste management system, a lot remains to be done for the circularity of its economy. The circular material use rate is a good indicator of an economy’s circularity, as it includes all the materials that are fed back into the economy. Large differences in the circularity rate exist between countries. To help achieve the goal in the EU Circular economy action plan of doubling the EU’s circular material use rate by 2030, ambitious measures targeting the whole product life cycle are needed at Member State level. Such measures range from sustainable product design that makes it possible to increase the durability, reparability, upgradability and recyclability of products, to other measures like: (i) remanufacturing; (ii) increasing circularity in production processes; (iii) recycling; (iv) boosting eco-innovation; and (v) increasing the uptake of green public procurement.

As shown in Figure 1, Lithuania’s circular (secondary) use of material has stayed close to 4% since 2010, but saw a slightly stronger upward trend in 2020 to 4.4%. However, it remains almost three times lower than the EU average of 12.8% in2020 Figure 1: Circular material use rate (%), 2010-2020 Resource productivity expresses how efficiently the economy uses material resources to produce wealth. Improving resource productivity can help to minimise negative impacts on the environment and reduce dependency on volatile raw material markets. As shown in figure 2, with EUR 0.83 generated per kg of material consumed in 2020, resource productivity in Lithuania is well below the EU average of EUR 2.09 per kg. Figure 2: Resource productivity 2010-2020 Circular economy strategies The Commission encourages Member States to adopt and implement national/regional circular economy strategies covering the whole life cycle of products. This is because such strategies are one of the most effective ways to progress towards a more circular economy at Member State level. Since the launch of the European Circular Economy Stakeholder Platform in 2017, national, regional and local authorities have used the platform to share their strategies and roadmaps. As of 2021, there is no national strategy or action plan on the circular economy in Lithuania. At the same time, circular economy related goals and targets can be found in the: National Sustainable Development Strategy, National Environmental Protection Strategy, Strategy for the National Climate Change Management Policy by 2050, and the National Waste Prevention Programme. Moreover, Lithuania is working to improve circularity in textiles, including through meetings with interested parties, awareness raising for society, promotion of re-use, support for re-use and repair networks, provision of containers for textile waste separate collection and binary payments. Textiles waste prevention is also obligatory through the National Waste Prevention Programme. Lithuania has prepared a “Roadmap for Lithuania’s industrial transition to a circular economy” as a European Commission/DG REGIO pilot project. In its Recovery and Resilience Plan, Lithuania has included a reform on the adoption of a national circular economy plan by the first quarter of 2023. The plan will focus on waste prevention, recycling, product design and use of secondary raw materials, digitalisation, the promotion of green innovation as well as legal and fiscal measures promoting long term circular solutions. Eco-innovation A successful transition to a circular economy requires social and technological innovation. This is because full potential of circular economy can only be reached when it is implemented across all value chains. Eco-innovation is an important enabling factor for the circular economy. New approaches to product design and new business models can help to produce circularity innovations, creating new business opportunities. Lithuania ranked 20th on the 2021 Eco-Innovation Index, with a total score of 88, which indicates the country has some ground to make up on eco-innovation. On all five indicators in the 2021 Eco-innovation Index (eco-innovation inputs, activities and outputs, resource efficiency outcomes and socio-economic outputs), Lithuania performed below the EU average. Figure 3: Eco-innovation performance, 2010-2019



Green public procurement Public procurement accounts for a large proportion of European consumption, with public authorities’ purchasing power representing 14% of EU GDP. Public procurement can help drive the demand for sustainable products that meet repairability and recyclability standards. To date reporting to monitor the uptake of green public procurement (GPP) is voluntary. The Lithuanian national progress plan (adopted on 9 September 2020) stipulated that, as an intermediate target, GPP should account for 50 % by value of all procurements in 2025, with 55 % bu 2030 as the final target. The government programme sets even more ambitious goals for GPP to become the dominant type of public procurement in the public sector as of 2023. Environmental criteria have been laid down for 32 product groups. The definition of GPP now includes not only mandatory minimum GPP criteria, but also refers to eco-labels, environmental management systems or standards, and other environmental criteria. In cases where environmental criteria are not set, the contracting authority can set them independently according to established principles. GPP is monitored and statistical data collected by the Public Procurement Office (PPO). The data are published online on the public procurement scoreboard .All contracting authorities must report on their green procurement procedures to the PPO. In addition, there are annual progress reports on green public procurement. In order to facilitate the development of GPP, the PPO has established a Sustainable Procurement Unit that provides contracting authorities, contracting entities and suppliers with consultations and training on green, socially responsible and innovative procurements. Increasing GPP’s share in total public procurement is one of the measures in the Lithuanian recovery and resilience plan. EU ecolabel and the eco-management and audit scheme (EMAS) The number of EU ecolabel products and EMAS-licensed organisations in a country provides some indication of how actively engaged its private sector and national stakeholders are in the transition to a circular economy. It also shows how committed public authorities are to supporting instruments designed to promote the circular economy. As of September 2021, Lithuania had 474 products out of 83 590, and 10 licenses out of 2 057 registered in the EU ecolabel scheme, showing a rather low take-up of products and licences. Moreover, five organisations, spread over 18 sites in Lithuania are currently registered in EMAS, the European Commission's eco-management and audit scheme. Since 2019, there have been 279 new product registrations for an EU ecolabel, as well as one new organisation registered with EMAS, while the number of EU ecolabel licences has remained the same. Given that the circular material use rate is far below EU average, a priority action on this is proposed. 2022 priority action ·Take measures to improve the circular material use rate. Waste management Turning waste into a resource is supported by: (i) fully implementing EU waste legislation, which includes the waste hierarchy, the need to ensure separate collection of waste, the landfill diversion targets, etc.; (ii) reducing and waste generation per capita in absolute terms; (iii) limiting energy recovery to non-recyclable waste and phasing out the landfilling of recoverable waste. This section focuses on the management of municipal waste for which EU law sets mandatory recycling targets. Preventing products and materials from becoming waste for as long as possible is the most efficient way to improve resource efficiency and to reduce the environmental impact of waste. Waste prevention and re-use are the preferred options and are therefore at the top of the waste hierarchy. The amount of municipal waste generated is a good indicator for the effectiveness of waste prevention measures. Municipal waste generation in Lithuania is growing. It reached 481 kg per year per inhabitant in 2020, although was still below the EU average of 502 kg/year/inhabitant, as Figure 4 shows. Since waste generated has increased by 20% in the last decade, it indicates that Lithuania’s economic growth is not yet decoupled from its generation of waste. Figure 4: Municipal waste by treatment in Lithuania, 2010-2020

Figure 4 also shows municipal waste by treatment, in terms of kilos per capita. Lithuania reduced its landfilling rate threefold in the last decade, down to 22 % in 2019 and now sends less municipal waste to landfill than the EU average (24 %). However, it is some distance away from the target of 10% by 2030. Recycling and composting are the main treatment options. The share of material recycling shows a steady increase and has reached 28% approaching the EU average of 30%. Composting has decreased since 2017 to 22 %, and Lithuania is now only still slightly above the EU average of around 21 %. The reduction in landfill has been achieved in part by increasing incineration with energy recovery capacity (the second least favourable option for waste treatment), now used for close to 15 % (still below the EU average of 24 %). Possibly this will increase in the future as new incineration facilities in Kaunas and Vilnius have started operating. Around half of municipal waste is treated at mechanical-biological treatment plants and afterwards mostly incinerated or sent to landfill as the quality of the waste, even after treatment, is too low for secondary use. As shown in Figure 5, the recycling rate for municipal waste showed a steady increase up to 2018, but fell back to 45 % and in 2020 was again below the EU average of 47.8%. Figure 5: Recycling rate of municipal waste, 2010-2020 The Commission's 2018 early warning report did not list Lithuania as one of the countries at risk of missing the EU 2020 target of recycling 50 % of municipal waste. The Commission is currently finalising its analysis of progress in response to the 2018 early warning report recommendations as a well as an analysis of progress towards achieving the 2025 waste recycling targets. This report will be presented at the end of 2022 and will make recommendations as appropriate. Implementation of the 2018 waste legislative package Member States had until 5th July 2020 to bring their national laws into line with the amended Waste Framework Directive, Packaging and Packaging Waste Directive and Landfill Directive . Lithuania was late in doing thus for the first two Directives, but, in August 2021, it notified the Commission that the 2018 Waste legislative package had been fully implemented in national law. A compliance assessment is ongoing. Waste management plans and waste prevention programmes form part of this implementation. They set out key provisions and investments to ensure compliance with existing and new legal requirements (e.g., waste prevention, separate collection for several specific waste streams, recycling and landfill targets). Revised plans and programmes were due on 5 July 2020. Although Lithuania’s waste management plan for 2021-2027 was drafted and revised after the public consultation, it has not yet been approved by the Lithuanian government and Lithuania has not yet notified the Commission that it is in place. In November 2021, the Lithuanian government approved an increase in landfil tax to EUR 50 per ton as of 2023, up from EUR 15/t, one of the lowest rates in the EU. Lithuania has not ratified the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships. 2022 priority actions ·Introduce new policies, including economic instruments, to promote prevention and make the re-use and recycling more economically attractive. ·Develop and run implementation support programmes for municipalities to help support their efforts to organise separate collection and further improve recycling performance. ·Improve the functioning of extended producer responsibility systems, in line with the general minimum requirements established in the Waste Framework Directive. ·Ensure that a waste management plan in line with the revised Waste Framework Directive is in place.



2. Biodiversity and natural capital

The 2030 EU biodiversity strategy adopted in May 2020 aims to put the EU’s biodiversity on a path to recovery and sets out new targets and governance mechanisms to achieve healthy and resilient ecosystems. In particular, the strategy sets out ambitious targets to: (i) protect a minimum of 30% of the EU’s land area and 30% of its sea area and integrate ecological corridors, as part of a true trans-European nature network; (ii) strictly protect at least a third of the EU’s protected areas, including all remaining EU primary and old-growth forests; (iii) effectively manage all protected areas, defining clear conservation objectives and measures, and monitoring them appropriately. The strategy also sets out an EU nature restoration plan – a series of concrete commitments and actions to restore degraded ecosystems across the EU by 2030, and manage them sustainably, addressing the key drivers of biodiversity loss. The EU’s Habitats and the Birds Directives are key legislative tools to deliver on the targets in the EU’s biodiversity strategy for 2030 and are the cornerstone of European legislation aimed at conserving the EU's wildlife. In April 2015, the Lithuanian Parliament approved the national environmental protection strategy, which aims to identify priority environmental policy areas, long-term objectives up to 2030 and Lithuania’s vision for the environment by 2050. The long-term objective for nature and biodiversity referred to in the strategy relates to the establishment of protected areas: the aim is for national protected areas and Natura 2000 sites to make up 17 % of land area and 10% of the country’s marine area. Nature protection and restoration The EU Habitats and the Birds Directives, which are to be bolstered by the Nature Restoration Law, are the cornerstone of EU legislation aimed at conserving the EU’s wildlife, natural habitats and ecosystems. They are crucial to delivering on the targets in the EU biodiversity strategy for 2030. Natura 2000, the largest coordinated network of protected areas in the world, is the key instrument to achieve the objectives in the Birds and Habitats Directives. These objectives are: (i) ' to ensure the long-term protection, conservation and survival of Europe's most valuable and threatened species and habitats and (ii) to maintain or restore the favourable conservation status of these species and habitats. Key milestones towards meeting the objectives of the Birds and Habitats Directives are: (i) the setting up of a coherent Natura 2000 network; (ii) the designation of sites of Community importance (SCIs) as special areas of conservation (SACs) ; and (iii) the setting of conservation objectives and measures for the Natura 2000 sites. Setting up a coherent network of Natura 2000 sites Lithuania hosts 54 habitat types and 98 species covered by the Habitats Directive. The country also hosts populations of 83 bird taxa listed in the Birds Directive Annex I. As shown in the Figure 7, by 2021, 12.6% of Lithuania’s territory was covered by Natura 2000 (EU average 18.5%), with SPAs classified under the Birds Directive covering 8.5% (EU average 12.8%) and SCIs under the Habitats Directive covering 10% (EU average 14.2%) of Lithuania. The latest assessment of the SCI part of the Natura 2000 network reveals that there are insufficiencies in designation. To address these gaps the Commission took legal action in May 2018 when it sent to Lithuania a letter of formal notice in accordance with Article 258 of the Treaty on the Functioning of the European Union . Since then, Lithuania designated a number of new sites and committed to finalise the designation process by the end of 2022. The Commission closely monitors the progress made towards compliance. Taking account of both Natura 2000 and other nationally designated protected areas, Lithuania legally protects 18,2% of its terrestrial areas (compared with the EU-27 average 26.4%) and 24.1% of marine areas (EU-27 average 10,.7%). Figure 6 shows the 2021 situation at EU level for terrestrial and marine protected area coverage in meeting the biodiversity strategy 2030 target. Figure 6: Marine & terrestrial protected area coverage, 2021







Figure 7: Natura 2000 terrestrial protected area coverage, 2021 Designating special areas of conservation (SACs) and setting conservation objectives and measures The 6-year deadline set by the Habitats Directive to for designating SCIs as SACs, and establishing appropriate conservation objectives and measures, has expired for 406 sites in Lithuania. Nevertheless, 243 SCIs have not yet been designated as SACs. In addition, Lithuania has failed to set sufficiently detailed and quantified site-specific conservation objectives and introduce the necessary conservation measures for all 406 sites. Furthemore, the quality of the objectives and measures in place is insufficient. For this reason, the Commission sent Lithuania a letter of formal notice under Article 258 of the Treaty on the Functioning of the European Union in February 2021. In reply, Lithuania committed to addressing the gaps identified. The Commission is closely monitoring progress towards compliance. Progress in maintaining or restoring favourable conservation status of species and habitats To measure the performance of Member States, Article 17 of the Habitats Directive and Article 12 of the Birds Directive require reportings on the progress made towards maintaining or restoring the favourable conservation status of species and habitats. According to the report submitted by Lithuania on the conservation status of habitats and species covered by Article 17 of the Habitats Directive for 2013-2018, 22% of habitats were in good conservation status in 2018 (19% in 2007-2012) and 37% of protected species assessments rated their conservation status as good (27% in 2007-2012). As far as birds are concerned, 19% of breeding species showed short-term increasing or stable population trends. At the same time, the share of habitats with a bad conservation status has increased to 39% and the share of assessments for species in bad conservation status has also increased to 13%. The main pressures are invasive alien species, forestry and agriculture. Figure 8: Assessments of conservation status for habitats for 2007-2012 and 2013-2018 Figure 9: Assessments of conservation status for species for 2007-2012 and 2013-2018 Lithuania is currently implementing the LIFE integrated project “Optimising the management of Natura 2000 network in Lithuania”. The project, which will invest EUR 17.2 million until 2027, was launched in 2018 . It will encourage the development of the Natura 2000 network in the country, promote environmentally friendly farming and sustainable use of forests in Natura 2000 sites and raise public awareness of ecological issues. Among other initiatives, the LIFE integrated project includes result-based agri-environmental measure to save and protect species rich natural meadows. In its recovery and resilience plan, Lithuania has a measure that addresses: (i) regulatory changes to put in place the national framework for identifying damaged peatlands and manage the restored peatlands (by 30 September 2022); and (ii) investment to restore 8000 ha of damaged peatlands. The 2019 EIR identified a number of priority actions for Lithuania, such as completing the Natura 2000 designation process, setting clear conservation objectives, providing adequate resources for implementation, and improving the incentives for foresters and farmers to better protect forest and grassland habitats. Lithuania made some progress on methodology for site-specific conservation objectives but limited or no progress on the other suggested actions.

Bringing nature back to agricultural land and restoring soil ecosystems Agricultural land The biodiversity strategy works alongside the new farm to fork strategy and the new common agricultural policy (CAP) to support and achieve the transition to fully sustainable agriculture. The biodiversity and farm to fork strategies have set four important targets for 2030: - a 50% reduction in the overall use of – and risk from – chemical pesticides; - a 50% reduction in the use of more hazardous pesticides; - a 50% reduction in losses of nutrients from fertilisers while ensuring there is no deterioration of soil fertility (which will result in a 20% reduction in the use of fertilisers); - bring back at least 10% of agricultural area under high-diversity landscape features and increase areas under organic farming to at least 25%. According to the Commission analysis of Lithuania’s CAP strategic plan ammonia emissions from agriculture in Lithuania are still hampering efforts to reduce air pollution and the downward trend is not strong enough for Lithuania to meet its emission reduction commitments. The low organic-carbon content of soil is of particular concern, affecting both arable soils and grazing land. Lithuanian agricultural areas are affected by a decline in biodiversity. Data on the farmland bird index show a declining trend since 2014 with a slight improvement in 2019. The index for Lithuania stood at 61.69 in 2019, compared with 74.64 for the EU‑27. According to reports for 2013-2018, required under Article 17 of the Habitats Directive, no protected grassland habitats had a favourable conservation status. The prioritised action framework indicates that the main pressures for grasslands are conversion to other land uses (forests, arable land), land use intensification and intensive use of grasslands (frequent mowing, overgrazing), abandonment of meadows and pastures, use of pesticides and drainage. The area of organically farmed land in Lithuania has marginally decreased since 2019. It accounted for 8.0% of all farmed land in 2020 (Figure 10), which is marginally below the EU average (9.07%) and considerably below the EU biodiversity and farm-to-fork strategy target for 2030. The Lithuanian government programme of adopted in December 2020 includes an initiative to double the area of organic farming. Figure 10: Share of total utilised agricultural area occupied by organic farming per Member State Soil ecosystems Soil is a finite and extremely fragile resource. It is increasingly degrading in the EU. The new EU soil strategy, adopted on 17 November 2021, stresses the importance of soil protection, of sustainable soil management and of restoring degraded soils to achieve the Green Deal objectives as well as land-degradation neutrality by 2030.

This entails: (i) preventing further soil degradation; (ii) making sustainable soil management the new normal; (iii) taking action for ecosystem restoration One factor of degradation of soil ecosystems is the area of soil that is sealed or artificialised. The net land taken (land ‘taken’ means land that is sealed or artificialised) per year in 2012-2018 can be seen as a measure of one significant pressure on nature and biodiversity - land use change. At the same time, land use change constitutes an environmental pressure on people living in urbanised areas. Despite a reduction in the last decade, land take in EU‑28 still amounted to 539km2/year in 2012-2018. The concept of ‘net land take’ combines land take with the return of land to non-artificial land categories (re-cultivation). While some land was re-cultivated in the EU‑28 in 2000-2018, 11 times more land was taken than returned. Lithuania ranks below the EU average with net land take of 67.8m2/km2 (EU-27 average: 83.8 m2/km2). Figure 11: Land take and re-cultivation in EU27 (m2/km2), 2012-2018 Lithuania has not yet committed to set land degradation neutrality targets under the United Nations Convention on combating desertification. Forests and timber The EU forest strategy for 2030 adopted in July 2021 is part of the Fit for 55 package. The strategy promotes the many services that forests provide. Its’ key objective is to ensure healthy, diverse and resilient EU forests, that contribute significantly to strengthened biodiversity and climate ambitions. Forests are important carbon sinks and conserving them is vital if the EU is to achieve climate neutrality by 2050. Out of the 27% of EU forest area protected under the Habitats Directive, less than 15% of assessments show a favourable conservation status. Bad conservation status increased from 27% to 31% in the EU compared to 2015. In Lithuania, forests cover 35.6% of the territory and more than 90% of the assessments reveal a bad to poor status . Primary forests cover 27 000 ha in Lithuaniaby . Figure 12: Conservation status of forests protected under the Habitats Directive in EU Member States, 2013-2018 (% assessments) The European Union Timber Regulation (EUTR) prohibits the placing on the EU market of illegally harvested timber. In accordance with the EUTR, EU Member States competent authorities must conduct regular checks on operators and traders and apply penalties for non-compliance. With the amendment of Article 20 of the EUTR, reporting every two years has been changed to annual reporting and covers the calendar year as of 2019. Between March 2017 and February 2019 , Lithuania carried out 6 824 checks on domestic timber operators. It also carried out 63 checks on operators importing timber. It is estimated that Lithuania had 17 000 operators placing domestic and 1 481 operators placing imported timber types onto the internal market over the reporting period.

According to the impact assessment for the Environmental Crime Directive illegal logging is a problem in Lithuania . The new Deforestation Regulation will repeal and replace the EU TR, as it will essentially integrate and improve the existing system to check the legality of timber. Invasive alien species (IAS) IAS are key drivers of biodiversity loss in the EU (alongside changes in land and sea use, overexploitation, climate change and pollution). Besides inflicting major damage on nature and the economy, many invasive alien species also facilitate the outbreak and spread of infectious diseases, posing a threat to humans and wildlife. The implementation of the EU Invasive Alien Species Regulation and other relevant legislation must be stepped up. The biodiversity strategy for 2030 aims to manage recognised invasive alien species and decrease the number of “red list” species they threaten by 50%. The core of Regulation EU) 1143/2014 on IAS (‘IAS Regulation) is the list of IASs of concern. The total number of IAS of Union concern is currently 66, of which: 30 are animal species; 36 are plant species; 41 are primarily terrestrial specie; 23 are primarily freshwater species; 1 is a brackish-water species and 1 is a marine species. According to a 2021 report on the implementation of the IAS Regulation, progress was being made towards certain objectives such as creating a coherent framework for addressing IAS at EU level and increasing awareness of the problem of invasive alien species. The report also identified some challenges and areas for improvement. However, given that implementation deadlines for the IAS Regulation were staggered from July 2016 to July 2019, it is still too early to draw conclusions on several aspects of implementation. A 2021 report on the baseline distribution shows that of the 66 species on the EU list, 14 have been observed in the environment in Lithuania. The spread can be checked in Figure 13. Figure 13: Number of invasive alien species of EU concern, based on available georeferenced information for Lithuania, 2021 An infringement case is ongoing for Lithuania as it failed to draw up and implement action plans by 13 July 2019 and communicate them to the Commission as required by Article 13 of the IAS Regulation. Lithuania plans to adopt these action plans in summer 2022. 2022 priority actions ·Complete the Natura 2000 designation process and put in place clearly defined site-specific conservation objectives and the necessary conservation measures for all the sites; provide adequate resources for their implementation to maintain/restore species and habitats of Community interest with a favourable conservation status. ·Ensure implementation of priority measures identified in the prioritised action framework for 2021-2027. ·Reduce pressure from the agricultural sector on natural resources by cutting ammonia emissions, increasing soil organic carbon content, better nutrient management and increasing nutrient use efficiency. ·Improve the incentives for foresters and farmers to better protect forest and grassland habitats. Ensure sustainable forest management through effective planning with due consideration for the ecosystem services provided by forests.

Take the necessary steps to ensure full compliance with the requirements specified in Article 13 of the IAS Regulation. Marine ecosystems The EU biodiversity strategy 2030 aims to: (i)substantially reduce the negative impacts on sensitive species and habitats in marine ecosystems; (ii) achieve good environmental status as well as eliminate or reduce the incidental catches of protected, endangered, threatened and sensitive species to a level that allows species recovery and conservation . The Marine Strategy Framework Directive (MSFD) requires Member States to achieve good environmental status (GES) for their marine waters. To that end, Member States must draw up marine strategies for their marine waters and cooperate with Member States sharing the same marine region or sub-region. These marine strategies comprise different steps to be developed and implemented over six-year cycles. The MSFD also requires Member States by 15 October 2018 to draw up a set of GES characteristics for each descriptor (Article 9), and to provide an initial assessment of their marine waters (Article 8). The Commission then assesses whether this constitutes an appropriate framework to meet the requirements of the Directive. The Commission assessed Lithuania’s 2018 determinations of GES for each of the MSFD’s 11 descriptors and determined their level of adequacy in relation to the Commission GES Decision. A good or very good score indicates that the national determinations of GES are well aligned with requirements of the Commission GES Decision, providing qualitative and quantitative national environmental objectives for their marine waters. Figure 14: Level of adequacy of GES determination by Lithuania (BAL region) with criteria set under the Commission GES Decision – Article 9 (2018 reporting exercise) Lithuania has one marine sub-region, -Baltic Sea (BAL). In this marine sub-region, 7 out of 11 determinations of GES were assessed as good or very good. The national determination of GES by Lithuania is coherent for 7 out of 11 descriptors. The MSFD also requires that Member States assess the current environmental status of their marine waters in relation to the determination of GES. A good or very good score indicates that Member States are well able to assess their marine environment in accordance with the requirements set out in the Commission GES Decision. Figure 15: Level of adequacy of national assessment of Lithuania’s marine environment (BAL region) with criteria set under the Commission GES Decision – article 8 (2018 reporting exercise) Of the 11 descriptors, 7 were scored as good or very good. Lithuania’s assessment of its marine environment is consistent with the requirements under the Commission GES Decision for 7 out of 11 descriptors. Lithuania is missing data for D11 Energy, including underwater noise and D1 Mammals. In the 2019 EIR, the Commission suggested that Lithuania provide timely report on the different elements under the MSFD. As highlighted in the Commission’s report on implementation of the MSFD , while regional cooperation has improved since the adoption of the MSFD, more cooperation is needed to attain full regional coherence of the marine strategies, as required by the Directive. Furthermore, in March 2022, the European Commission published a Communication with recommendations for Member States. The Commission assessment highlights that Member States need to step up their efforts to determine the good environmental status and the use of the criteria and methodological standards according to the Commission GES Decision. The above considerations form the basis for the 2022 priority actions. 2022 priority actions

·Ensure regional cooperation with Member States sharing the same marine (sub)region to address predominant pressures. ·Implement the recommendations made by the Commission in the staff working document accompanying the Communication on recommendations per Member State and region on the 2018 updated reports for Articles 8, 9 and 10 of the MSFD. Ecosystem assessment and accounting The EU Biodiversity Strategy for 2030 calls on Member States to better integrate biodiversity considerations into public and business decision-making at all levels and to develop natural capital accounting. The EU needs a better performing biodiversity observation network and more consistent reporting on the condition of ecosystems . Since 2017, Lithuania has seen some major developments in this area - on both the ecosystem assessment process and ecosystem services integration in general. In terms of national policy, most notably, ecosystem assessment was included in the previous Lithuanian government’s work programme for 2016-2020. A national project ‒ LINESAM (Lithuanian national ecosystem services assessment and mapping) 2017-2021 was carried out in Lithuania by an international team based at Mykolas Romeris University, working closely with the Ministry of the Environment. Outputs included a geoportal where the data layers, interactive maps, assessments and various other publications are published. A major update of ecosystem service layers was implemented in September 2021. Newly uploaded services visualize drivers of change scenarios, such as land use change and habitat quality change. Lithuania has provided updated information and significant progress has been recorded since January 2016 (Figure 16). This assessment is based on 27 implementation questions and is updated every 6 months. Figure 16:ch

National progress on ecosystem accounting implementation is assessed based on 13 questions (see Figure 17). Figure 17: Ecosystem accounting Barometer, September 2021



Business and Biodiversity platforms, networks and communities of practice are key tools for promoting and facilitating natural capital assessments (NCAs) among business and financial service providers for instance via the natural capital protocol of the Natural Capital Coalition. NCAs help private business to better understand and value not only their impacts but also their dependencies on nature and thereby contributing to the EU biodiversity strategy. Such platforms have been established at EU level and in some, but not all Member States. Lithuania has not yet established such a platform. Lithuania has not yet signed and ratified the Nagoya Protocol on access to genetic resources and the fair and equitable sharing of benefits arising from their utilization (ABS) to the Convention on biological diversity. 2022 priority action ·Continue supporting the mapping and assessment of ecosystems and their services, and ecosystem accounting development, through appropriate indicators for integrating ecosystem extent, condition and services (including some monetary values) into national accounts; continue supporting the development of national business and biodiversity platforms, including natural capital accounting systems to monitor and evaluate the impact of business on biodiversity. 3. Zero pollution Clean air

EU clean air policies and legislation need to significantly improve air quality in the EU, moving the EU closer to the quality recommended by the WHO and curbing emissions of key air pollutants. Air pollution and its impacts on ecosystems and biodiversity should be further reduced with the long-term aim of not exceeding critical loads and levels. This requires strengthening efforts to reach full compliance with EU clean air legislation and defining strategic targets and actions for 2030 and beyond. The 2030 zero pollution action plan targets are to reduce the health impacts of air pollution by 55% and to reduce the EU ecosystems threatened by air pollution by 25% compared to 2005. The EU has developed a comprehensive suite of clean air legislation, which sets health-based air quality standards and emissions-reduction commitments by Member State for a number of air pollutants. Air quality in Lithuania continues to be generally good with some exceptions. The latest available annual estimates (for 2019) by the European Environment Agency point to about 2 500 premature deaths or 27 900 years of life lost (YLL)) attributable to fine particulate matter concentrations, and 90 premature deaths or 1 100 YLL to ozone concentration. Emissions of key air pollutants have decreased significantly in Lithuania in recent years, as GDP growth continued (see graph). According to the latest projections, as submitted under Article 10(2) of the National Emission Reduction Commitments Directive (NECD), Lithuania expects to meet emission reduction commitments for SO2 and PM2.5 for 2020-2029 and for SO2, NH3 and PM2.5 for 2030 onwards. However, according to projections, it will not meet its 2020-2029 emission reduction commitments for NOX, non-methane volatile organic compounds (NMVOCs) or NH3, or the emission reduction commitments for NOX and NMVOCs for 2030 onwards. The latest inventory data submitted by Lithuania, which have not yet been reviewed by the Commission, indicate that in 2020 Lithuania has complied with its emission reduction commitments for SO2 and PM2.5 but not with its emission reduction commitments for NOX, NMVOC and NH3. Lithuania submitted its national air pollution control programme on 2 June 2019. Figure 18: Emission trends of main pollutants/ GDP 2005-2019 in Lithuania Figure 19: PM2.5 and NOx emissions by sector in Lithuania, 2019 For 2020, no exceedances above the limit values established by the Ambient Air Quality Directive were registered. However, for two air quality zones the target values regarding ozone concentration have not been met . In 2019, Lithuania was called on, as a priority action, to further reduce emissions from the main sources. Although some measures, notably for transport and industry, have been put in place under air quality plans, so far, they have not yielded the expected result. Therefore, this priority action is still valid. 2022 priority actions ·As part of the national air pollution control programme (NAPCP), take steps towards reducing emissions from the main sources mentioned above. ·Ensure full compliance with EU air quality standards and maintain downward emissions trends for air pollutants, to reduce adverse air pollution impacts on health and economy with a view to reaching WHO guideline values in the future. Industrial emissions The main objectives of EU policy on industrial emissions are to:

(i) protect air, water and soil; (ii) prevent and manage waste; (iii) improve energy and resource efficiency; (iv) clean up contaminated sites. To achieve this, the EU takes an integrated approach to the prevention and control of routine and accidental industrial emissions. The cornerstone of the policy is the Industrial Emissions Directive (IED) . The Commission tabled a proposal in April 2022 . The revision seeks to improve the Directive’s contribution to the zero-pollution objective, as well as its consistency with climate, energy and circular economy policies. The below overview of industrial activities regulated by the IED is based on data reported to the EU Registry (2018). In Lithuania, around 230 industrial installations are required to have a permit based on the IED. The distribution of installations is shown in the figure below. The industrial sectors in Lithuania with most installations in 2018 were intensive rearing of poultry and pigs (37%), followed by the waste management sector, including landfills (29%), the energy sector (11%) and the food and drink industries (8%). Figure 20: Number of IED industrial installations per sector in Lithuania, 2018 The industrial sectors identified as contributing the largest burden to the environment for emissions to air were the energy sector for sulphur oxides (SOx), Nitrogen Oxides (NOx) and NMVOCs; the mineral industries for arsenic (As) and mercury (Hg); intensive rearing of poultry and pigs for ammonia (NH3); food and drink industries for NMVOCs; other industrial product use for copper (Cu) and lead (Pb), and the waste management sector for particulate matter (PM2.5) and dioxins. The breakdown is shown in the following graph. Figure 21: Emissions to air from IED sectors and rest of national total air emissions in Lithuania, 2018 In Lithuania, no releases to water have been reported from industrial activities under the European pollutant release and transfer register (E-PRTR). The EU approach to enforcement under the IED creates strong rights for the public to have access to relevant information and to participate in the permitting process for potentially polluting installations. This empowers the public and NGOs to ensure that permits are appropriately granted and that the conditions of these permits are complied with. As part of environmental inspection, competent authorities undertake site visits to IED installations to take samples and to gather necessary information. According to Article 23(4) of the IED, site visits must be carried out between once every year and once every 3 years, depending on the environmental risks posed by the installations. In 2018, Lithuania undertook 228 site visits, mostly to installations for the intensive rearing of poultry or pigs (37%), followed by the waste management sector, including landfills (29%), the energy sector (11%) and the food and drink industries (8%).

Figure 23: Number of inspections in IED installations in Lithuania in 2018 The development of best-available-technique (BAT) reference documents (BREFs) and BAT conclusions ensures good collaboration between stakeholders and enables better implementation of the IED. Since the last EIR report, BAT Conclusions were adopted for: (i) waste incineration; (ii) the food, drink and milk industries; and (iii) surface treatment using organic solvents including the preservation of wood and wood-products with chemicals. . The Commission relies on the efforts of national competent authorities to implement the legally binding BAT conclusions and associated BAT emission levels in environmental permits. This should result in considerable and continuous reduction in pollution. In 2019, Lithuania received the priority action to review permits and to strengthen control and enforcement to ensure compliance with newly adopted BAT conclusions. The Commission has been monitoring progress, as reported by Lithuania to the EU registry. No non-compliant permits have been reported in the most recent reports. In 2022, Lithuania’s reporting to the E-PRTR is still experiencing delays and should be improved. 2022 priority action ·Improve reporting to the E-PRTR. Major industrial accidents prevention – SEVESO The main objectives of EU policy on the prevention of major industrial accidents are to: (i) control major accident hazards involving dangerous substances, especially chemicals; (ii) limit the consequences of such accidents for human health and the environment; (iii) continuously improve prevention, preparedness and response to major accidents. The cornerstone of the policy is Directive 2012/18/EU (the Seveso-iii directive) . The below overview of industrial plants regulated by the Seveso-III Directive (‘Seveso establishments’), is based on data reported to the eSPIRS database (2018) and the Lithuania report on the implementation of the Seveso-III Directive for the period 2015-2018 . Of the 44 Seveso establishments in Lithuania, 25 are categorised as lower-tier establishments (LTE) and 19 as upper-tier establishments (UTE) – based on the quantity of hazardous substances likely to be present. The UTEs are subject to more stringent requirements. The growth in the number of Seveso establishments is presented in Figure 24.

Figure 24: Number of Seveso establishments in Lithuania, 2011, 2014 and 2018 Many Seveso establishments are required to draw up external emergency plans (EEPs). These EEPs are essential to allow proper preparation and effective implementation of the necessary actions to protect the environment and the population should a major industrial accident occur at them. According to Lithuania, EEPs are required for 19 UTEs. In 2018, 19 UTEs had an EEP and 11 of these EEP had been tested over the last 3 years. The summary is shown in Figure 25.. Figure 25: Situation regarding EEP in Lithuania (2018) The public information referred to in Annex V to the Seveso-III Directive – especially about how the public affected will be warned in case of a major accident; the appropriate behaviour in the event of a major accident; and the date of the last site visit – is permanently available for 100% of the Seveso establishments in Lithuania. The share of UTE for which information on safety measures and requisite behaviours were actively made available to the public in recent years is presented in Figure 26. This is an important provision of the Seveso-III Directive as public knowledge of this information public could reduce the consequences of a major industrial accident. Figure 26: Share of UTE for which information on safety measures and requisite behaviours was actively made available to the public in Lithuania, 2011, 2014 and 2018 2022 priority actions ·Strengthen monitoring and enforcement to ensure compliance with the Seveso-III Directive, especially its provisions on information for the public and the external emergency plan. Noise The Environmental Noise Directive provides for a common approach to avoid, prevent and reduce the harmful effects of exposure to environmental noise although it does not set noise limits as such. Its main instruments in this respect are strategic noise mapping and planning. A key target under the 2030 zero pollution action plan is to reduce by 30% the share of people chronically disturbed by transport noise compared to 2017. Excessive noise from aircraft, railways and roads is one of the main causes of environmental health‐related issues in the EU. It can cause ischeamic heart disease, stroke, interrupted sleep, cognitive impairment and stress. In Lithuania, based on a limited set of data , environmental noise is estimated to cause at least around 200 premature deaths and 500 cases of ischaemic heart disease annually . Moreover, some 30 000 people suffer from disturbed sleep. In Lithuania, the number of people exposed to noise pollution fell by 15% between 2012 and 2017. Based on the latest full set of information that has been analysed, noise mapping and planning of agglomerations, roads and railways is complete. Water quality and management

EU legislation and policy requires that the impact of pressures on transitional, coastal and fresh waters (including surface and ground waters) be significantly reduced. Achieving, maintaining or enhancing good status of water bodies as defined by the Water Framework Directive will ensure that EU citizens benefit from good quality and safe drinking and bathing water,. It will further ensure that the nutrient cycle (nitrogen and phosphorus) is managed in a more sustainable and resource-efficient way. Water Framework Directive The Water Framework Directive (WFD) is the cornerstone of EU water policy in the 21st century. The WFD and other water-related legislation set the framework for sustainable and integrated water management, which aims at a high level of protection of water resources, prevention of further deterioration and restoration to good status. By March 2022, Member States had to report the third set of river basin management plans (RBMPs) under the WFD. Lithuania has not yet reported it. The Commission will assess the reported status and progress, checking what measures have been taken in response to findings identified when the second RBMPs were assessed. In December 2021, the Commission published the sixth implementation report, which assesses implementation of the WFD and the Floods Directive. This report includes an interim assessment of progress on: (i) implementation of the programmes of measures; and (ii) the new priority substances. The assessment report for Lithuania found that progress on implementation of the second management cycle measures was difficult to evaluate. There were no mechanisms for ongoing monitoring of progress on implementation and no country reports on WFD implementation had been produced since. Nevertheless, Lithuania reported that implementation of measures had started, along with some pilot projects investigating the effectiveness of the measures to restore river hydromorphology. The second set of RBMP reports and data published in 2020 reveal that in Lithuania 51.9% of all surface water bodies have good ecological status and 99.0% have good chemical status (with 0.1% unknown). For groundwaters, 100% achieve both good chemical and quantitative status. The figure below illustrates the proportion of surface water bodies in Lithuania and other European countries that failed to achieve good ecological status. Figure 27. Proportion of surface water bodies (rivers, lakes, transitional and coastal waters) in less than good ecological status per River Basin District The following figure shows the percentage of surface water bodies in Lithuania and other European countries failing to achieve good chemical status. For Lithuania the percentage is 0.9%, irrespective of whether or not the figures include water bodies failing due to ubiquitous PBTs (persistent, bio-accumulative, toxic substances). Figure 28. Percentage of surface water bodies not achieving good chemical status Over the last decade, Lithuania has achieved a 72.4% reduction in releases of heavy metals like cadmium, mercury, nickel and lead into water and an 86.4% reduction in total organic carbon releases. A total of 267.44 hm3 of water is abstracted annually from surface and groundwater sources in Lithuania (corresponding to the 2019 baseline) (European Environment Agency (EEA), 2022; the figure quoted is the 2019 baseline). The percentage for water abstraction per sector is 21.58% for agriculture, 51.11% for public water supply, 4.69% for electricity cooling, 11.55% for manufacturing, 6,36% for manufacturing cooling and 4.71% for mining and quarrying, as illustrated in the following Figure. Lithuania uses a register to record water abstractions. The water register is updated regularly, although not all information is registered. Exemptions are not recorded. Figure 29. Water abstraction per sector in Lithuania In Lithuania, the water exploitation index plus (WEI+) is 0.38%, far below the 20% generally considered as an indication of water scarcity. The bar below presents the WEI+ index in Lithuania and other European countries. Lithuania is ranked 24th (from high to low index) in EU level in terms of water exploitation.

Figure 30: Water exploitation index plus (WEI+) inside EU, 2017 One positive development is the LIFE MarshMeadows project (start date: Oct. 2021) that aims to restore the hydrological regime on 630 ha in Lithuania which would facilitate the conservation and management of habitats and species. Floods Directive As mentioned above, in December 2021, the Commission published the sixth implementation report. It includes a review and update of the preliminary flood risk assessments during the second cycle (2016-2021). The assessment report showed that Lithuania should establish clearer criteria for the significance of potential flood impact and consequences. Long term developments should be taken into consideration in the assessment of adverse consequences of future flood events and the effectiveness of existing man made flood defence infrastructures should be considered. Lithuania has carried out a detailed assessment of potential climate change impacts. Since it was done some time ago, an update is recommended. Lithuania has not yet reported the second generation of flood risk management plans (FRMPs) under the Floods Directive. The European Commission will assess progress since the adoption of the first FRMPs and publish a new report, as done in 2019. Drinking Water Directive On the Drinking Water Directive , no new assessment of the quality of drinking water is available since the 2019EIR. The quality of drinking water in Lithuania has not been indicated as an area of concern. The recast Directive entered into force on 12 January 2021, and Member States have until 12 January 2023 to implement it in national law. Lithuania will have to comply with these reviewed quality standards. Bathing Water Directive On the Bathing Water Directive, Figure 32 shows that in 2020, out of the 120 Lithuanian bathing waters, 85.8% were of excellent quality . Detailed information on the Lithuanian bathing waters is available from a national website and via an interactive map viewer produced by the European Environment Agency . Figure 31: Bathing water quality in Europe in the 2020 season Figure 32: Lithuania, Bathing water quality 2017-2020 Nitrates Directive The latest Commission Report on the implementation of the Nitrates Directive , for 2016-2019 , warns that nitrates are still causing harmful pollution to water in the EU. Excessive nitrates in water are harmful to both human health and ecosystems, causing oxygen depletion and eutrophication. Where national authorities and farmers have cleaned up waters, it has had a positive impact on drinking water supply and biodiversity, and on the sectors that depend on them such as fisheries and tourism. Nevertheless, excessive fertilisation remains a problem in many parts of the EU. Compliance with the Nitrates Directive is a prerequisite for reducing nutrient losses by at least 50% by 2030, the target set by the EU’ s biodiversity and farm to fork strategies. Rapid action is required, starting with the enforcement of the related legislation. Regrettably, Lithuania has not provided information about nitrogen discharges from agriculture into in the aquatic environment for the 2016-2019 reporting period. Lithuania has a well-developed network of monitoring stations. Groundwater quality is good, however a large number of groundwater monitoring stations are detecting an increasing trend. A high number of the surface waters are found to be eutrophic. Eutrophication is affecting both inland and marine (Baltic Sea) waters. The Ministers of Agriculture, Fisheries and Environment from the Baltic Sea Member States responded to the very acute eutrophication problem which affects 97% of the Baltic Seawhen they met at the ‘Our Baltic Conference’ on 28 September 2020. In a common political declaration, they committed to boosting efforts to ensure a good environmental status for the Baltic Sea by reducing key pressures, especially from nutrients.

Urban Waste Water Treatment Directive Lithuania has, over the years, encountered a few difficulties in meeting its obligations under the Urban Waste Water Treatment Directive (UWWTD). According to the last available data, the overall compliance rate in Lithuania is 99%, which is considerably higher than the EU average of 76% in 2018 (see figure 33). Lithuania has met its target for collection, biological treatment and biological treatment with nitrogen of urban waste water and phosphorus removal. Lithuania reuses 36% of waste water sludge in agriculture and 39.6% for other purposes. Figure 33: Proportion of urban waste water that meets all requirements of the UWWTD (collection, biological treatment, biological treatment with nitrogen and/or phosphorus removal) in compliant urban areas of the UWWTD (‘compliance rate’) Despite the steady improvement in compliance over the years, for which EU funding has been fundamental, the implementation of the UWWTD is still incomplete. Lithuania is taking steps to address issues related to the use of individual and other appropriate systems across the country and needs to verify the compliance of a now-reconstructed urban waste water treatment plant in one agglomeration (Kėdainiai). 2022 priority actions ·Assess new physical modifications to water bodies in line with Article 4(7) of the WFD. In these assessments alternative options and appropriate mitigation measures must be considered. ·Facilitate implementation of measures (in particular ·on restoring river hydromorphology) aimed at achieving the WFD objectives. ·Improve coordination of measures to implement policies on water, marine and nature. ·Complete implementation of the Urban Waste Water Treatment Directive for all agglomerations, by building up the necessary infrastructure. ·Reinforce action programme under the Nitrates Directive to better address eutrophication of surface waters where agriculture pressure is significant. Chemicals The EU seeks to ensure that chemicals are produced and used in a way that minimises any significant adverse effects on human health and the environment. In October 2020, the Commission published its chemicals strategy for sustainability – ‘Towards a Toxic-Free Environment’ which led to some systemic changes in EU chemicals legislation. The strategy is part of the EU zero pollution ambition – a key commitment of the European Green Deal. The EU’s chemicals legislation provides baseline protection for human health and the environment. It also ensures stability and predictability for businesses operating within the internal market. Since 2007, the Commission has gathered information on enforcement of the Regulation on the registration, evaluation, authorisation and restriction of chemicals (‘the REACH Regulation’) and the Regulation on classification, labelling and packaging (‘the CLP Regulation’). In December 2020, the Commission assessed the Member States’ reports on the implementation and enforcement of these Regulations, in line with Article 117(1) of the REACH Regulation and Article 46(2) of the CLP Regulation. According to the latest available data, national enforcement structures have not changed much in recent years. However, it is apparent from this report that there are still many disparities in the implementation of the REACH and CLP Regulations, and notably on enforcement. Recorded compliance levels in Member States seem to be quite stable over time, but with a slight worsening trend, which is likely due to: (i) enforcement authorities being more effective in detecting non-compliant products/companies; and (ii) more non-compliant products being put on the EU market. In August 2021, the Commission published a quantitative assessment of the enforcement of the two main EU Regulations on chemicals (the REACH Regulation and the CLP Regulation) using a set of indicators on different aspects of enforcement. Responsibility for checking compliance with REACH in Lithuania lies with the following authorities : ·Environmental Protection Department under the Ministry of the Environment.

·State Consumer Rights Protection Authority under the Ministry of Justice. ·Customs Department under the Ministry of Finance. ·State Labour Inspectorate under the Ministry of Labour and Social Security. The State Consumers Rights Protection Authority under the Ministry of Justice has carried out market surveillance of non-food products (including chemicals) since January 2016 after the reorganisation of the State Non-Food Products Inspectorate. The draft Law on Amendment of the Law on Chemicals (submitted in November 2019) aims to strengthen the national enforcement system on the chemicals management. Once the amendment is adopted, implementing acts will clearly lay down the responsibilities and powers of all national enforcement authorities (NEAs) involved in enforcing chemicals legislation (including the REACH Regulation). In June 2019, the Ministry of the Environment submitted proposals for strengthening the capacities of the NEAs involved in enforcing chemicals legislation (including proposals for staff increases, strengthening human and technical resources). Lithuania has devised and implemented both the REACH and the CLP enforcement strategies that consist of: ·an annual enforcement plan drawn up by each NEA; ·identification of priorities based on risk assessment of companies (analysis of non-compliance, effects of non-compliance, target group, legal obligations and tasks, Customs information on import, information from national database on chemicals) and risk assessment of chemicals (annual tonnage, possible adverse effects, hazardous, exposure, etc.); and ·an annual report on enforcement activities. As a rule, all infringements of REACH are classed as serious or very serious environmental administrative offences. If the infringement is sufficiently serious, the relevant authority may decide to impose further penalties in addition to a fine. That authority may also, where necessary, order the provisional seizure of assets and documents. In Lithuania, 74 staff members (coordinators and territorial or regional inspectors) are allocated to REACH and CLP enforcement . Almost 1 000 REACH and CLP controls were carried out. Most REACH controls are proactive (inspections), compared with reactive/non-routine controls (i.e. investigations in response to complaints, accidents and referrals). The percentage of non-compliance cases out of the total number controls almost equals the EU average. Figure 34: % of non-compliance cases out of the total number of REACH and CLP controls during 2019 per Member State and compared to the EU average 2022 priority actions ·Upgrade the implementation and enforcement administrative capacities towards a zero tolerance to non-compliances. 4. Climate Action In line with the Paris Agreement and as part of the European Green Deal, the European Climate Law sets the EU target of reaching climate neutrality by 2050 and reducing its greenhouse gas (GHG) emissions by 55% by 2030 compared to 1990. The law also limits the contribution that carbon removals can make towards emission reductions in 2030 to ensure that there is sufficient mitigation effort. The EU and its Member States submitted updated Nationally determined Contribution (NDC) to the UNFCCC in December 2020. The EU is working across all sectors and policies to cut GHG emissions and make the transition to a climate-neutral and sustainable economy, as well as addressing unavoidable consequences of climate change. EU Climate legislation has been adopted to incentivize emissions reductions from power generation, industry, transport, the maritime sector and fluorinated gases (F-gases) used in products. For road transport, EU legislation requires the GHG intensity of vehicle fuels to be cut by 6% by 2020 compared to 2010 and sets binding GHG emission standards for different vehicle categories.

Under the F-gas Regulation, the EU’s F-gas emissions will be cut by two thirds by 2030 compared with 2014 levels. From 2021, emissions and removals of GHGs from land use, land use change and forestry (LULUCF) have been included in the EU emission reduction efforts. The EU adaptation policy is an integral part of the European Green Deal. From 2021, Member States are required to report on their national adaptation policies, as the European Climate Law recognises adaptation as a key component of the long-term global response to climate change. Member States will be required to adopt national strategies and the EU will regularly assess progress as part of its overall governance on climate action. The updated EU adaptation strategy, published in February 2021, sets out how the EU can adapt to the unavoidable impacts of climate change and become climate resilient by 2050. Key national climate policies and strategies Lithuania has an integrated national energy and climate plan for 2021-2030. The work is consistent with the long-term strategy. Lithuania is bound to reaching climate neutrality in line with the EU general target. The national objective is to become climate neutral by 2050. Lithuania adopted a strategy for national climate management policy 2013-2050 in 2012. This is an integrated strategy, which covers both adaptation and mitigation. To update climate change policy for the period from 2020, in 2021 national climate change management agenda was approved which replaces the former strategy (2012). The Agenda sets targets and objectives for climate change mitigation and adaptation for the short term (up to 2030), medium term (up to 2040) and long term (up to 2050). The goals of the agenda are: (i) to form a long-term vision for Lithuania’s climate change management policy to achieve climate neutrality by 2050; (ii) to ensure that Lithuania’s economy and ecosystems are resilient to the changes caused by climate change and, through sustainable financing and investment, to develop a competitive, low-carbon economy and create new green jobs; (iii) to implement eco-innovative technologies, increase the efficiency of energy production and consumption and the use of renewable energy resources in all sectors of the country's economy (energy, industry, transport, agriculture, etc.). In its RRP, Lithuania allocates 37,8% of the plan to climate objectives and outlines crucial reforms and investments to further the transition to a more sustainable, low-carbon and climate-resilient economy, including renewable energy, sustainable transport and building renovation. Lithuania has reduced its GHG emissions by 58% between 1990 and 2020, significantly more than the EU average. Figure 35: Total GHG emissions (incl. international aviation) in Lithuania 1990-2020 Effort sharing target For emissions not covered by the EU ETS, Member States have binding national targets under the Effort Sharing legislation. Under EU legislation. Lithuania has a target not to increase GHG in the non-ETS sectors (buildings, road and domestic maritime transport, agriculture, waste and small industries) by more than 15% by 2020. The target now is to reduce emissions by 9% by 2030 compared to 2005 levels. Lithuania is estimated to have overachieved its 2020 target. The country’s effort eharing emissions in 2019 were lower than its 2020 target. In its national energy and climate plan, Lithuania intends to exceed its current effort sharing target for 2030 of -9%. Figure 36: Emissions and targets under the Effort Sharing Decision/ Effort Sharing Regulation in Lithuania, 2020 and 2030 as % change from 2005 Figure 37: Emissions, annual emission allocations (AEAs) and accumulated surplus/ deficit of AEAs under the Effort Sharing Decision in Lithuania, 2013-2020 Key sectoral developments In 2019, road transport emissions in Lithuania accounted for 29% of total GHG emissions. Emissions increased by 56% compared to 2005. In road transport, the GHG intensity of vehicle fuels in Lithuania fell by 2,2% between 2010 and 2019. The country needs to act swiftly to meet this target. There are several types of action that Member States can take in this regard, for example: (i) further expanding the use of electricity in road transport; (ii) supporting the use of biofuels, and advanced biofuels in particular; (iii) incentivising the development and deployment of renewable fuels of non-biological origin; and (iv) reducing upstream emissions before refining processes.

Figure 38: GHG emissions by sector – historical emissions in Lithuania, historical data 1990-2020, projections 2021-2030 To further reduce building emissions, energy renovations are needed. Lithuania’s RRP focuses on the renovation multi-apartments buildings, which is in line with Lithuania’s long term renovation strategy. On agriculture, the share of agriculture in total GHG emissions is the third highest in the EU, with more limited mitigation opportunities available. In the Land Use, Land Use Change and Forestry (LULUCF) sector, Lithuania’s projects a similar level of net removals by 2030. Reported quantities under the Kyoto Protocol for the LULUCF sector in Lithuania show net removals of, on average, -6.7 Mt CO2-eq for 2013 to 2019. With this, Lithuania accounts for 1.9% to the annual average sink of -344.9 Mt CO2-eq of the EU-27. Accounting for the same period depicts average annual net credits of -1.2 Mt CO2-eq, which represents 1.1% of the EU-27 accounted sink of -115.0 Mt CO2-eq. Reported net removals show a sharply decreasing trend. The same trend is shown for accounted net credits between 2013 and 2017 becoming net debits in 2018 and 2019. Lithuania is one of 14 EU Member States that show net debits for at least one year in this preliminary accounting exercise. Figure 39: Reported and accounted emissions and removals from LULUCF in Lithuania Use of revenues from the auctioning of EU ETS allowances The total revenues from the auctioning of emission allowances under the EU ETS over the years 2012-2021 were EUR 458,6 millionIn Lithuania, revenues are put in a Climate Change fund that is only for climate action and only funded by auctioning revenues, and spent on climate and energy projects. 2022 priority actions ·Seize renewable energy potential. Lithuania would further benefit from ambitious offshore wind developments. ·Enhance sustainable transport and increase the number of electric vehicles ·Improve measures addressing energy efficiency and renewable energy in buildings, in particular through the modernisation of heating systems. ·Maximise the role of waste heat and remain vigilant regarding the sustainability of biomass ·Increasing environmental taxes and scrapping exemptions would help to green the Lithuanian economy. Environmental taxes in Lithuania are mostly collected from taxes on energy and are significantly below the EU average, although recently the government has taken action to increase pollution taxes.



Part II: Enabling framework: implementation tools 5. Financing

Environmental investment needs in the European Union Financing environmental measures is essential for their success. Although most financing comes from national sources, various EU funds contribute significantly, helping to close the financing gaps between countries. Post-2020, environmental measures will also be supported by the EU’s COVID-19 Recovery Fund (via the Recovery and Resilience Facility) and the ‘do no significant harm’ principle, which runs across the EU budget. The renewed commitments made at COP26 (Glasgow, October-November 2021) and the Biodiversity Convention (April-May 2022) will also be reflected in the EU budget. Overall environmental investment gaps (EU27) The EU’s investment needs for the green transition cover a range of interlinked areas. The additional investment needs over the baselines (i.e., the gap between what is needed and what is forecast to be invested if no additional action is taken) for climate, energy and transport were estimated in 2021 at EUR 390 billion a year (EU‑27), with a further EUR 130 billion a year to deliver the EU’s core environmental objectives. The costs of climate change adaptation can also be significant and are estimated to reach a total of EUR 35-62 billion (narrower scope) or EUR 158-518 billion (wider scope) per year. Those investment needs reflect the implementation objectives to 2020 and to 2030 (except for climate change adaptation, the costs of which are expected to last over a longer time horizon). A preliminary update of the EU’s core environmental investment gap is provided in the Table 1 . Almost 40% of the environmental investment needs relate to dealing with pollution, which accounts for nearly two-thirds of the total investment gap if combined with water management. The investment gap in circular economy and waste is estimated between EUR 13-28 billion a year, depending on levels of circularity implemented. The annual biodiversity financing gap is estimated at around EUR 20 billion. Table 1: Estimated breakdown of the EU27’s environmental investment gaps, by environmental objective, 2021-2030 (per year) Environmental objective Estimated investment gap (EU-27, p.a.) EUR million % Pollution prevention & control 42.8 39% Water management & industries 26.6 24% Circular economy & waste 13.0 12% Biodiversity & ecosystems 21.5 20% R & D & I and other 6.2 6% Total 110.1 100% Environmental investment needs in Lithuania Investments in the circular economy are a priority in Lithuania, followed by protection of nature and biodiversity as well as sustainable water services. Investments to reduce air pollution should also be considered. The following environmental investment needs have been identified by sector. Pollution prevention & control The EU’s First Clean Air Outlook under the Clean Air Programme estimated that the total air pollution control costs for Lithuania to reach the NECD emission reduction requirements by 2030 amount to EUR 401 million per year, including, EUR 286 million for capital investment (assuming the 2030 climate and energy targets are met). The second Clean Air Outlook suggests that the EU would largely achieve the reductions of air pollutant emissions that correspond to the obligations under the NEC Directive for 2030 if: (i) all relevant legislation adopted up to 2018 is implemented (including all air pollution legislation and the 2030 climate and energy targets set in 2018); and (ii) Member States also implemented the measures announced in their national air pollution control programmes. The only exception is for ammonia (NH3) for 15 Member States, including Lithuania. Water management According to the OECD study ‘Financing a Water Secure Future’ (2022) , an estimated 6% of the population lacks access to improved sanitation and 4% to improved drinking water, mainly in rural areas. The frequency of heavy rainfall, storm surges and strong winds are projected to increase. EU funding has provided a significant share of past public funding over the past decade . Up to 2030, the cumulative additional investment need for Lithuania was estimated at EUR 861 million euro (around EUR 86 million per year) over baseline levels, with around 90% of that relating to wastewater . Whilst Lithuania reported some planned measures as part of the river basin management plan under the Water Framework Directive completed for all river basin districts , the first programme of measures has not been fully implemented. A lack of adequate finance is also likely to continue to present an obstacle also to implementing the second (2015-2021) and the third (2021-2027) programme of measures. In its water sector development programme, Lithuania reports financing needs by 2023 of EUR 72 million, of which EUR 18 million are high priority, EUR 32 million low priority and EUR 22 million earmarked for additional road protection measures. Moreover, the recent 6th Water Framework Directive and Floods Directive Implementation Report and the financial - economic study accompanying it, are also a relevant source of information in this domain. Waste & circular economy

According to a Commission’s study to meet the recycling targets for municipal waste and packaging waste, Lithuania still needs to invest an additional EUR 127 million (around 18.1 million per year) between 2021 and 2027 over baselines in collection, recycling reprocessors, biowaste treatment, waste sorting facilities and waste registry digitalisation. The costs of replacing biowaste treatment facilities (EUR 3.9 million in 2021-2027) are included in this amount, though it excludes the investment necessary for other key waste streams (plastics, textiles, furniture) and to increase circularity and waste prevention across the economy. Biodiversity & ecosystems Lithuania officially submitted the prioritised action framework (PAF) of Natura 2000 funding needs for 2021-2027 on 21 March 2022. According to the final version of the document the annual funding needs of the Natura 2000 network in Lithuania, together with its green infrastructure and funding needs for species amount to EUR 122 million a year. This excludes additional costs to implement the biodiversity strategy to 2030, including spending on increased protection and restoration. The biggest financial needs relate to the management of grasslands, cross-cutting measures including site designation and management and prevention, mitigation or compensation of damage caused by protected species. EU environmental funding 2014-2020 The MFF for 2014-2020 allocated almost EUR 960 billion (in commitments, 2011 prices) for the EU to spend over this period. The commitment in this 2014-2020 MMF to the green transition included a 20% climate spending target. It also included funding opportunities for the environment, in particular under the European Structural and Investment (ESI) Funds. The 2014-2020 MFF budget was subsequently topped up with over EUR 50 billion (in current prices) from the REACT-EU programme. for cohesion policy action against COVID-19 . Lithuania received EUR 9.3 billion from the ESI Funds over 2014-2020 to invest in job creation and a sustainable and healthy European economy and environment. The planned direct environmental investment amounted to EUR 830.8 million with further EUR 611.5 million identified as indirect environmental investment value, totalling to EUR 1.4 billion. Figure 41 shows an overview of (planned) individual ESI Funds earmarked for Lithuania (EU amounts, without national amounts). Figure 40: ESI Funds allocated to Lithuania, including environmental investments, 2014-2020 Table 2: Direct and indirect environmental investments under the ESI Funds in Lithuania, 2014-2020 Instrument Allocations for the environment (EUR million) Under Cohesion policy (ERDF + CF) Direct environmental investments water waste air quality biodiversity and nature land rehabilitation climate and risk management Indirect environmental investments renewable energy energy efficiency other energy sustainable transport sustainable tourism business development, R&I 1 338.2 731.0 350.9 155.7 14.3 55.7 18.0 136.4 607.2 80.1 185.7 53.6 188.2 32.3 67.2 Under EAFRD/rural development Direct environmental investments climate and risk management Indirect environmental investments renewable energy 86.8 82.6 82.6 4.1 4.1 Under EMFF Direct environmental investments environment protection & resource efficiency Indirect environmental investments business development, R&I 17.3 17.2 17.2 0.1 0.1 Under ESI Funds total Direct environmental investments Indirect environmental investments 1 442.3 830.8 611.5 Funding for the environment from the ESI Funds has also been supplemented by other EU funding programmes available to all Member States such as the LIFE programme, Horizon 2020, and some European Investment Bank (EIB) loans that add up to an estimated total of EUR 1.6 billion of EU environmental financing for Lithuania in 2014-2020. The LIFE programme is entirely dedicated to environmental and climate objectives. It finances demonstration and best practice actions for green solutions to be deployed. In the 2014-2020 period, Lithuania received EU support for seven LIFE projects (for nature and environment) for an amount of EUR 24.6 million (out of 1 028 EU27 LIFE projects with a total EU contribution of EUR 1.74 billion) . In 2014-2020, Horizon 2020 allocated about EUR 3.6 million to Lithuania (in particular, for circular economy) which is about 3.8% of Lithuania’s total allocation. From the European Fund for Strategic Investments (EFSI), Lithuania received EUR 56 million for indirect environmental investments out of its total allocation (EUR 232.6 million) . Lithuania received EUR 85.5 from the EIB for direct environmental investments, specifically, for waste) out of the total EIB loans for Lithuania (EUR 2.3 billion) . The country ranks 20th in the EU in terms of total EIB lending. In 2020, the EIB provided EUR 24.2 billion in funding across Europe to fight climate change at EU level, 37% of its total financing. It also provided EUR 1.8 billion (3% of its financing) for broader environmental lending and EUR 1.8 billion (3% of its financing) for the environment . EU environmental funding 2021-2027 The 2020 European Green Deal investment plan calls for EUR 1 trillion in green investments (public and private) to be made across the EU by 2030. The 2021-2027 MFF and the NextGenerationEU spending programme will mobilise EUR 2.018 trillion (in current prices) to support the recovery from COVID-19 and the EU’s long-term priorities, including environmental protection. Following the EU Green Deal’s pledge to ‘do no harm’ and the Interinstitutional Agreement on the 2021-2027 MFF, 30% of the EU budget in 2021-2027 will support climate efforts, while biodiversity will receive 7.5% of the EU budget as of 2024 and 10% as of 2026. To reach these targets, more financial resources will need to be allocated to biodiversity, specifically under the 2021-2027 cohesion policy and the 2023-2027 CAP to reach those targets. Sustainable finance significantly increases transparency on environmental sustainability (a goal promoted by the EU Taxonomy) . It also strengthens non-financial reporting requirements and facilitates the issuance of green bonds (by developing the EU green-bond standard). Reinforced by the renewed sustainable finance strategy (2020) sustainable finance will increase investment flows to climate and the environment. The new strategy on adaptation to climate change can help to close the insurance-protection gap, which currently leaves many risks from climate-related events uninsured. The EIB will align 50% of its lending for climate and environment projects by 2025 with an EUR 250 billion contribution to the Green Deal Investment plan by 2027. Table 3 gives an overview of the EU funds earmarked specifically for Lithuania for 2021-2027. These funds are also supplemented by other EU funding programmes available to all Member States.

Table 3: Key 2021-2027 EU funds allocated to Lithuania (current prices), 2021-2027 Instrument Country funding allocation (million EUR) Cohesion policy ERDF CF ESF+ ETC (ERDF) Total: 6 102.4 3 464.3 1 418.7 1 136.4 83 Just Transition Fund 273.2 EAFRD/rural development under CAP Strategic Plans 2023-2027 977.5 European Maritime, Fisheries and Aquaculture Fund (EMFAF) 61.2 Recovery and Resilience Facility (RRF) 2021 – 2026 2 224.2 (grants) In Lithuania, programming for most of EU funds (cohesion policy funds, EAFRD and EMFAF) is ongoing. However, the negotiations have been concluded under the RRF. The RRP consists of 30 measures, covering investments and reforms supported by EUR 2.22 billion in grants. 37.8% of the plan will support climate objectives. Of the plan’s fund allocation, 37.8% will go to support climate objectives. In terms of green transition, the plan includes EUR 218 million’s worth of reforms and investments in energy efficiency renovations for a sustainable urban environment and EUR 242 million for the generation and storage of renewable energy. Furthermore, EUR 347 million will be invested in sustainable mobility, supporting the replacement of polluting road transport vehicles, improving public transport services, installing charging/refilling infrastructure for vehicles using alternative fuels, and developing alternative fuels sectors (biomethane, second generation liquid biofuels, hydrogen). The plan also supports the restoration of degraded peatlands (EUR 16 million) and increased resource efficiency through the adoption of the circular economy action plan . Figure 41: Climate tagging in the RRPs Under the NextGenerationEU, the Commission will issue up to EUR 250 billion of EU green bonds (one third of all bonds issued under NextGenerationEU) until 2026 that will comply with the general spirit of the ‘do no significant harm’ principle. However, this EUR 250 billion in green bonds will not be subject to the currently developed delegated acts related to the EU Taxonomy and will not fully align with the proposed EU standard for green bonds. The EIB Group adopted the climate bank roadmap outlining the role of the institution in climate action and environmental sustainability for the next decade, and setting out to align 50% of its lending activity with that role by 2025. The EIB's contribution to the European Green Deal Investment Plan is expected to amount to around to EUR 250 billion up to 2027 in terms of investments in EU mandates (i.e. under EU instruments and through the EU budget). National environmental protection expenditure Total expenditure on environmental protection (including all relevant current and capital expenditure) in the EU‑27 was EUR 272.6 billion in 2020, representing 2% of EU‑27 GDP. This percentage has remained quite stable over time. Although the largest absolute amounts of expenditure are concentrated in a few countries, most countries spend 1-2% of their GDP on environmental protection, as is the case in Lithuania (1.4%). Of this spending, the EU‑27’s capital expenditure on environmental protection (i.e., investment) amounted to EUR 56.3 billion in 2018, falling to EUR 54.5 billion in 2020, representing around 0.4% of EU‑27 GDP. Most Member States invested 0.2-0.5% of their GDP in environmental protection, including Lithuania (0.3%). During 2014-2020, this amounted to around EUR 376 billion of environmental-investment in the EU‑27, and to EUR 118.5 million for Lithuania. Figure 42: Direct and indirect environmental protection investments in the EU-27 (EUR million and % of GDP), 2018



By institutional sector, around 27% of Lithuania’s environmental protection investments (capital expenditure) came from the general government, a further 39% from specialist producers (of environmental protection services, e.g. waste and water companies) and 34% from the classical industry (or business) sector that normally pursues environmental activities as ancillary to their main activities. At EU level, 37% comes from governments, 33% from specialist producers and 30% from industry (business). Figure 43: EU-27 Member States' environmental protection investments (Capex) by institutional sectors (Total economy = 100%), 2018

A breakdown of investment by environmental topic is partially available, at the level of institutional sectors only (rather than at economy level), due to different reporting patterns . At Lithuania’s general government level, a significant proportion of Lithuania’s general government investment in environmental protection, 42%, went to biodiversity protection, followed by waste management (17%) and air protection (15%). Of investment from the country’s specialist producers, 58% went on wastewater, 30% on waste management and 12% on air protection. For Lithuania’s industry (businesses), the two main priorities were wastewater (45%) and air protection (43%) to name the most significant areas. In 2020, the total annual issuance of European green bonds (including some non-EU countries) was USD 156 billion (EUR 137 billion), up from USD 117 billion (EUR 105 billion) in 2019. Looking only at EU‑27 Member States, green-bond issuance in 2020 was EUR 124 billion. In 2014-2020, 83% of the green bonds issued by European countries served objectives in energy, buildings or transport, while 8% supported water and waste, with a further 6% supporting sustainable land use, with links to ecosystem conservation and restoration. These data are based on the climate-bonds taxonomy, which is broadly similar to the EU Taxonomy. Of the 2020 EU green-bond issuance, Lithuania accounted for EUR 46.3 million.

Figure 44: Annual EU green bond issuance in 2020 (EUR billion) Green budget tools Green taxation and tax reform Lithuania revenue from environmentally-related taxes was still among the lowest in the EU in 2020 at around EUR 954.4 million, as shown in Figure 46. It accounted for just 1.93% of GDP (compared to the EU average of 2.24%). Within this, energy taxation represents the highest share with 90% in 2020, while transport tax accounts for 5.3% and pollution/resources tax for 4.6%. Figure 45: Environmental taxes in the EU-27, 2020 The 2019 European Green Deal underlines that well-designed tax reforms can boost economic growth and resilience, foster a fairer society and promote a just transition. Tax reforms can contribute to this by sending the right price signals and incentives to economic actors. The Green Deal creates the context for broad-based tax reforms, the removal of fossil fuel subsidies, and a shift in the tax burden from labour to pollution. It achieves this while simultaneously taking account of social considerations. The Green Deal promotes the ‘polluter-pays principle’, which stipulates that polluter should bear the cost of measures to prevent, control and remedy pollution. The polluter-pays principle is facilitated by the European Commission’s Technical Support Instrument (TSI) flagship project on greening taxes . According to a Commission’s study on green taxation and other economic instruments (2021) Lithuania could increase the landfill tax to further address particular areas of environmental concern . Lithuania could also consider introducing a scheme for biodiversity offsetting to improve the situation. To be economically efficient such a scheme must require offsetting payments at least equal in value to any ecosystem services which are lost . Environmentally-harmful subsidies Addressing and removing environmentally-harmful subsidies is a further step towards wider fiscal reforms. Fossil fuel subsidies are costly for public budgets and make it difficult to achieve the Green Deal objectives. In many cases, these subsidies also counteract incentives for green investments. Annual fossil fuel subsidies have been around EUR 55 billion in the EU since 2015. They rose by 4% between 2015 and 2019, although some countries (such as Latvia, Lithuania, Sweden, Greece and Ireland) managed to decrease them in this period. In the EU, subsidies for petroleum products in sectors such as transport and agriculture continued to increase in 2015-2019. However, subsidies for coal and lignite decreased, due to the diminishing role of solid fuels in electricity generation. As a share of GDP, fossil fuel subsidies ranged from 1.2% in Hungary to less than 0.1% in Malta in 2019 (with an EU average of 0.4%). In 2019, total fossil fuel subsidies in Lithuania amounted to EUR 0.2 billion, or 0.37% of GDP. In 2020, the EU-27’s total amount of fossil fuel subsidies decreased to EUR 52 billion (due to falling consumption trends amid the COVID-19-related restrictions). Without Member State actions, these subsidies are likely to rebound as economic activity picks up from 2020. However, Lithuania allocates more than the EU average to fossil fuel subsidies – and more than it does to renewable-energy subsidies. Lithuania is planning to phase out environmentally-harmful subsidies for coal, gasoil and natural gas, as well as pollution tax reduction. Figure 46: Trends in natural gas, petroleum products, electricity and coal subsidies in Lithuania % GDP 2013 2014 2015 2016 2017 2018 2019 2020 Electricity 0,00 0,00 0,01 0,00 0,00 0,00 0,00 0,00 Natural gas 0,18 0,18 0,18 0,17 0,13 0,14 0,20 0,13 Petroleum 0,36 0,40 0,29 0,41 0,41 0,39 0,37 0,32 Coal 0,01 0,01 0,01 0,01 0,01 0,00 0,00 0,00

Current green budgeting practices Green budgeting encompasses various climate and environmental tagging and tracking practices in budgets. Some EU Member states already use certain green-budgeting practices. Green budgeting helps identify and track green expenditure and green revenues to increase transparency on the environmental implications of budgetary policies. This is aimed at improving policy coherence and supporting green policies (including climate and environmental objectives). The Commission has also drawn up climate-proofing and sustainability-proofing guidance as tools to assess project eligibility and a project’s compliance with environmental legislation and criteria. The Commission developeda green budgeting reference framework and launched a TSI project on green budgeting in 2021 to help Member States develop national green budgeting frameworks to improve policy coherence and the green transition. Lithuania participates in the Commission’s green budgeting TSI project, which started in 2021. Overall financing compared to the needs The overall financing for environmental investments is estimated to have reached 0.6-0.7% of GDP in 2014-2020 comprising b