Reform of Legal Framework and Enhancing Institutional Capacity for Environmental Permitting in Ukraine Environmental policy instruments in Ukraine were designed in soviet times mainly to penalize existing obsolete enterprises (often just to extract rents) instead of preventing and controlling pollution from new and deeply modernized industrial installations without constraining their development. The current environmental permitting system in Ukraine is based on a medium-specific approach, with separate regulations related to air and water protection and waste management. The focus is still on "end-of-pipe" emission/effluent treatment measures rather than on pollution prevention through improvements of production techniques. The permitting system is institutionally complex: operators need a minimum of seven environmental or health-related permits or approvals from six different authorities. Some permits/approvals (e.g., waste generation and disposal limits) require endorsement of up to three different government bodies. Thus, Ukraine's regulatory framework requires considerable reform in order to introduce integrated pollution prevention and control. Essential legal and institutional reforms are necessary in order to streamline and modernize the system of environmental permitting, aiming at EU compatibility, greater transparency, predictability, environmental effectiveness, and investment friendliness.  The IDF-financed activities will support the MEP in facilitating the establishment of the legal and institutional basis for integrated environmental permitting for the large enterprises and simplified permitting regime for small and medium size enterprises. The new permitting system will effectively protect the environment improve investment climate by reducing bureaucratic red tape, corruption and transaction costs to industry. The introduction of European style integrated permitting in Ukraine will fulfill one of the country's commitments under the Ukraine-EU Action Plan. New environmental permitting which will incorporate provisions for emissions of greenhouse gasses and energy efficiency will also be an essential element of domestic policy framework to implement commitments of the Kyoto Protocol to UN Framework Convention on Climate Change. The main activities financed by this IDF grant include "   Drafting the program document of the Government on Pollution Prevention and Control in Ukraine "   Conducting an inventory and building electronic data base of installations that fall under the scope of integrated permitting "   Proposing key legal and regulatory changes enabling EU-type environmental permitting "   Drafting procedural guidelines for issuing and monitoring permits "   Training in integrated environmental permitting for the MEP central office staff, regional (oblast) permitting officials and enterprise environmental managers "   Developing and publishing pilot technical guidance notes for two priority industrial sectors "   Conducting stakeholders consultations, information and dissemination campaign The expected outcomes of this IDF grant also include improvement of overall capacity for public service delivery and business climate due to streamlined, more transparent, predictable and fair business licensing and inspections. It will facilitate transition from confrontational to more co-operative relations between environmental authorities and the regulated community. In this respect this IDF grant is designed to be an instrument to mobilize support for effective implementation of the new environmental permitting regime by the rest of the Government (including Ministry of Finance, Ministry of Economy, Ministry of Industrial Policy, Ministry of Fuel and Energy), oblast governments, industry and NGOs. In this regard, the ultimate outcome of the IDF intervention in Ukraine will be a breakthrough in the Government's environmental policy, which may lead to more effective protection of the environment and improved conditions for doing socially responsible business, in particular by foreign investors. The IDF grant will be implemented by a Working Group at the MEP which will be gradually converted into the new Environmental Permitting Department/Division within the structure of the Ministry and its regional departments. BAT Technical Centre (Technical Centre for Environmental Technologies and Practices) - an independent agency that the MoE plans to establish will assist in grant implementation. The Working Group will be operating under the guidance of the existing Interagency Task Force on Integrated Environmental Permitting consisting of the Ministry of Industrial Policy, Ministry of Economy and other concerned line ministries. The Task Force will be extended in future to include other stakeholders, such as industrial associations and environmental NGOs. TF055860 To assist the Recipient in establishing the Government's environmental policy which may lead to more effective protection of the environment and improved conditions for doing socially responsible business, in particular, by foreign investors.