Russia: There Will Be a Change

In 2017 the planned ecology duty will become payable. According to the opinion of Russia’s president Vladimir Putin, the money could help to construct waste recycling plants, the Russian news agency TASS reported some months ago.

According to the provided information, he has ordered the organization called “All-Russia People’s Front”*) to control the situation with recycling, because he is concerned about the quantities of not recycled waste in Russia. In addition, Putin thinks this sphere is “criminalized”.

Enormous market potential

On the one hand, Russia is the largest territorial state on earth (about 177 million square kilometers), but on the other hand it is one of the least populated countries (about 144 million inhabitants). However, the Russian amount of industry and household garbage is gigantic compared to other nations. According to the national Court of Auditors, waste in Russia, respectively in the Russian Federation, amounts to 90 billion tons per year. Household garbage has a share of solely 2.3 percent. A current disposal method is the deposition on landfills. According to Greenpeace Russia, the landfill area should cover 41,000 square kilometers. According to specialist media, there are about 1,000 legal landfills as well as 15,000 authorized waste deposits. Furthermore, there shall be about 30,000 illegal landfills. According to the information, 40 percent of industrial waste and 10 percent of household garbage are disposed of in an environmentally friendly manner. For this purpose over 50 large facilities for waste separation and sorting, about 240 facilities for processing of waste and 40 incineration plants were available in 2013. It was only a matter of time until measures have been taken to overcome the waste problem due to the fact that the Russian amount of waste is said to increase annually by around 5 billion tons.

Legal bases

Heretofore there has been a lack of legal conditions. According to Germany Trade and Invest, the economic development agency of the Federal Republic of Germany (GTAI), the Russian law on the protection of the environment from 2007 and the law on production waste and household garbage from 1998 had to be revised. The revision has already taken place in late 2014. Related to the novella of the environmental law, importers and producers of consumer products should set up a fee in the amount of 1.5 to 4.5 percent calculated from the value of the goods or alternatively establish a return and a waste management system or task an external company to perform this function. The implementation of the law was postponed to the beginning of 2017 due to the poor economic situation; the fight against recession and inflation had priority. According to the online-publication “Russia Beyond the Headlines“ (RBTH), new amendments to the federal law “On Production and Consumption Waste” took effect on September 26th 2016. “Each region will have to decide how to deal with waste – to sort and recycle it, send it to a landfill, or incinerate it”, RBTH reported. “Federal Funding will depend on the implementation of such programs.”

Favorable economic situation

So far investments in environmental technology have barely been made due to the economic crisis and especially due to the fact that regions, cities and municipals had to deal with financing problems. However, the situation seems to be improving. According to the Russian Central Bank’s opinion, the decrease of the economic growth in 2016 is considerably less severe compared to the previous year. Furthermore, the monetary authorities assume that the import of investment goods will rise again, the inflation will decrease and that the Russian Ruble will be less volatile. The Central Bank expects an increase of imports of investment goods, which is likely to continue in 2017 based on the current trends. This development is supported by the rate of the Ruble, which staggers less meanwhile. The contribution of exports to the growth of the gross domestic product will subside up to and including 2018.

Investments

According to experts, the Russian waste management will evolve into a multi-billion dollar business as a few examples show. Therefore, 15 new thermal power plants will be created in the Moscow area, which will use solid waste as fuel. Hereby the deposited volume of waste will shrink by 80 percent. A respective agreement was made among the Moscow area and a joint venture of  the state holding company Rostec as well as the Japanese-Swiss company Hitachi Zosen Inova in 2015. There are plans to develop a system, which is adapted to the local conditions, for the garbage collection and transportation for the provision of the generating plant with fuels. The waste management shall be modernized in the Russian Far East as well. A total of 23 sites for the compressing of communal waste with subsequent land-filling are planned to be set up by 2020. Chabarowsk will be the central location for the extraction of secondary raw materials from communal waste, according to GTAI. According to the development and operating company for environmental projects, OAO UK Eco-System, 24.5 million cubic meter waste accrues annually in the Russian Far East.

Projects for plastics recycling

Eco-System intends to build a facility for plastic waste in Chabarowsk (near the border to China) from 2017 until 2019. The project is worth more than 30 million US-Dollar. The profitability of the facility would be given if at least 100 tons plastic waste (particularly from PET) are processed and worked up to secondary raw materials per year. The reason for selecting the regional “Territory of the accelerated social and economical development“ (TOR) is to save taxes. The ministry for the development of the Russian Far East establishes via its subordinated development company nine territories in total in the Far East of Russia and one free harbor in Wladiwostok, according to GTAI information. After the realization of the project, Eco-Systems plans further facilities for the processing of aluminum and glass waste as well as recovered paper. However, the problem of selling future arising secondary raw materials is still unresolved. At the moment there are no commercial customers in the Russian Far East, but experts are already monitoring possible markets in the People‘s Republic of China.

Financing from public and private sources

According to the provided information, the federal law about “Public-Private Partnerships“ became applicable in Russia in January 2016. Thus, this financing possibility is also an available option. Additionally, the Russian regions have an own PPP-regulation available. Furthermore, the federal legislation permits awarding concessions by the public authorities at all level of administration, including regions and municipal ties. It will be jointly funded by municipal and regional administrations as well as by the fund for the development of the Far East and  the Baikal-region (russ.: FRDW); its sole shareholder is the Vneschekonombank (VEB), a state-owned bank for development and foreign trade. The operating company for environmental projects OAO UK Eco-System and the FRDW are the points of contact regarding projects in this region.

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Sanctions Imposed on Russia

The European Union and the United States of America imposed restrictive sanctions on the Russian Federation in 2014 in reaction to Russia’s annexation of the Crimea and the deliberate destabilization of an independent neighboring country. In July 2016 the EU extended the sanctions until January, 31st 2017. The sanctions are aiming for parts of the Russian economy. In return Russia imposed sanctions on the EU and the USA.

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Sorting Plant to Be Built in Rostov Region

Within the framework of the International Economic Forum in Saint Petersburg, a deal on the construction of a unique environment-friendly unit was signed in June this year. It is intended to build a facility for sorting and processing of solid municipal and industrial wastes in the Volgodonsk district, located in the Rostov region of Russia. The project also includes a landfill site for irreclaimable wastes, optimization of a logistic scheme for wastes collection and transportation, as well as the construction of a waste transfer station, the Russian online journal construction.ru reported in June this year. Investments are estimated at nearly 15 million US-Dollar. Half of the sum will be allocated from the local budget, the rest will be financed by the investor.

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Tula: New Landfill

According to media reports, a new solid waste landfill will be constructed near the Russian city of Tula which will be in compliance with all ecological norms and regulations. The wastes from Tula, the Leningrad district and Schekino will be brought there. It is intended that waste treatment facilities will also be built at the landfill which is designed to bury 360,000 tons of wastes. As reported, its lifespan is 16 years.

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Useful Links:

Integrated Foreign Economic Information Portal http://www.ved.gov.ru/eng/
Russian Investment Agency http://www.investment-in-russia.com/
Invest in Russia http://www.invest-rf.com/

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*) This Front is intended to be a coalition between the ruling party and numerous nongovernmental organizations. In June 2013 Putin was elected as its leader.

Photo: pixabay

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