RUSSIA AND THE CIRCULAR ECONOMY: OPPORTUNITIES FOR ECONOMIC GROWTH

15.10.2018

At Lomonosov Moscow State University’s Graduate School of Public Administration a round-table discussion was held on Russia’s transition to the circular economic model.

Representatives of government authorities, the expert community and business discussed issues relating to environmental policy, increasing energy efficiency and implementing the best available technologies in Russia. The event was organized by the TIARCENTER think tank and advisory firm, which specializes in promoting the principles of the circular economy in Russia and the Eurasian Economic Union.

The circular economy, an alternative to the traditional linear economic model, enables economic growth via more effective use of available resources, collaborative and repeat consumption of manufactured goods, waste recycling, and producing goods from recycled resources.
Transition to the principles of a green economy will mean meeting the targets set out in a series of government papers, in particular the presidential decree on national objectives and strategic challenges in the Russian Federation’s development up to 2024, with regard to increasing efficiency in manufacturing and consumer waste management, reducing air pollution, and introducing environmental regulation systems based on the best available technologies (BAT).

During this expert discussion, the view of the state authorities on the transition to the principles of the circular economy was shared by representatives of the Ministry of Natural Resources and Environment, the Ministry of Trade and Industry, and the Eurasian Economic Commission.

The expert community was represented by the Clean Country Association (the largest association of operators in waste management), the Association of European Business, the Center for Environmental Industrial Policy (Research Institute), the Graduate School of Public Administration at MSU, and the Institute of Ecology at the Higher School of Economics.

Business cases where the principles of the circular economy have been introduced into the production chain were presented by representatives of Sibur, Ferrero and UPM.

Olga Filchenkova, Head of Natural Resources Management at the Russian Environment Ministry’s Department of Financial and Economic Support, spoke on the results of introducing extended producer responsibility (EPR) to recycle waste in making finished products. The “Ecology” national priority project sets the target of processing 60% of municipal solid waste (MSW) by 2024. At present, this figure stands between 5-7%. The development of the EPR institute is one of the most important tools for achieving this target.

As Ruslan Gubaidullin, Executive Director of the Clean Country Association pointed out, a great deal has been done in Russia over the last four years to develop waste management systems and to change attitudes towards the industry. Refuse trucks and containers in Russia’s cities with million-plus populations are still younger on average than in Europe. However, the waste management industries still lack qualified staff and industry-specific departments at the country’s leading colleges.

Clean Country associates any further development of the sector to a significant degree with delivery of the “Ecology” national project and the founding of a not-for-profit organization aimed at becoming a federal systems integrator for processing MSW.

Raul Mishiev, Head of the Department of Environmental Policy and BAT at the Russian Trade and Industry Ministry gave an overview of the key steps in state support for businesses implementing best available technologies. Of the three hundred businesses acting as pilot schemes for introducing BAT, which produce up to 60% of environmental pollution in Russia, 139 still do not meet BAT performance figures. The amount these businesses require in terms of investment is around 500 billion rubles. It should be noted that among the state support measures for implementing BAT provided by the Ministry of Trade and Industry are charge concessions on negative environmental impact, investment tax credit, as well as а special depreciation factor for equipment meeting BAT criteria.

Vladimir Maryev, Director of the Research Guidance Center “Waste and Secondary Resources Management” at the Industry and Trade Ministry’s Center for Environmental Industrial Policy (Research Center) spoke on the strategy for developing the waste recycling industry in Russia adopted by the Government of Russia for the period up to 2030. At the heart of the strategy lie the founding 3Rs of the circular economy – Reduce, Reuse, Recycle.

One of the key activities in implementing the strategy is the creation of Eco-Techno Parks, operating a closed waste management system and producing items from recycled materials. The basis for their development in Russia is the international practice of creating eco-industrial clusters as is the case in Sweden, Denmark, Austria and Japan.

Maxim Remchukov, Advisor to the CEO of Sibur, shared the main thrusts of the green strategy from Russia’s largest company in the petrochemical industry. As raw material Sibur uses associated petroleum gas (APG) which was previously simply burned in flares, causing damage to the environment. Today polymers have infiltrated virtually every industry from packaging to medicine and construction. Plastics production worldwide over the last 40 years has grown by eight times. Many polymers lend themselves easily to being recycled and re-used in the manufacture of clothing, furniture and construction materials. It is precisely the recycling of plastics, in the words of M. Remchukov, that is the key to building the circular economy. Sibur’s program for moving over to a circular economy, named “Green Wings”, involves implementing the 3Rs (reduce, reuse, recycle) throughout the chain – from manufacturing of products to recycling of waste.

Marina Tatarskaya, Public Relations Director at Ferrero Russia, spoke about the principles of implementing the circular economy at the company’s factory in Vladimir. In three years, Ferrero has managed to achieve some impressive results: water and energy usage at the works have been reduced by a quarter, gas by 14%, and waste production has been brought down by 18%.

As Nataliya Malashenko, Corporate Affairs Director at UPM, one of the world’s largest producers of magazine paper, pointed out, following the principles of sustainable development is the only basis for creating added value in the long-term. Reducing the amount of waste created, using recycled resources and alternative forms of energy has enabled UPM to achieve significant growth.

Anton Gubnitsyn
CEO of TIARCENTER

«Implementing the principles of the circular economy is a basis for competitiveness of governments and corporations».

«International practice proves that government has the leading role in forming the circular economy. We are talking here of creating a supportive regulatory framework and economic stimuli for companies implementing the green production model. We are witnessing a growth in the attention investors are paying to nonfinancial, and that includes environmental, risks. Capital is moving out of the polluting industries into environmentally neutral sectors. Russia has a whole range of advantages when it comes to the transition to the circular economy. They include a significant proportion of hydropower generation in the energy mix, and the world’s greatest forested area, and achievements in reducing the amount of natural gas that is burned, and the incentives to move over to BAT. Nevertheless, so far, environmental objectives have often been seen as secondary to economic objectives, despite the fact that, in today’s world, it is those green principles that ensure economic growth».