Experts: Russian environmental operator will be the guarantor of the completion of garbage reform

On January 14, 2019, Russian President Vladimir Putin signed a decree establishing a company to form an integrated system for handling municipal solid waste - the Russian Environmental Operator (REO). The state-owned company will have a wide range of tools: it will be able to formulate proposals for changing the legislation of the Russian Federation, will conduct an examination of regional territorial schemes for handling waste and merge them all into a single country scheme, develop draft federal state programs to support investments, issue bonds, buy land, enterprises, equipment and acquire shares of the authorized capital of other companies. Also REO will form the library of the best model projects for the industry, develop and promote new technologies. Industry participants have high hopes for the state-owned company.

"The creation of the Russian environmental operator is a clear signal to regional leaders, investors, market participants, entrepreneurs that the government intends to bring the matter of creating a waste management industry to its logical conclusion," Advisor to the Governor of the Moscow Region with the rank of Minister, said the ex-Minister of Environment. region Alexander Kogan.

Ruslan Gubaidullin, executive director of the Association of regional operators "Clean Country", said the same aspect in a conversation with TASS. "The REO will be a serious support for regional operators and potential investors. This is a signal to business that the state acts as a guarantor of the ongoing reform," he said.

Industry support in the regions
Most experts interviewed by TASS put the investment opportunities of REO over the authority to reform the rules of the game in the market. Thus, according to Gubaidullin, the possibility of state-owned companies to co-finance regional projects in the garbage industry, including from environmental collection funds, the development of economic incentives and investment programs are the most important tools of a single operator. "Such support is very important for the development of a full-fledged infrastructure in the regions. Not every company with the status of a regooperator is able to finance the construction of the necessary facilities," he explained.

According to Mikhail Katsevman, chairman of the Union of Plastics Processors, it is important to attract investments specifically in small regional enterprises in order to push the development of the infrastructure for waste collection and recycling. According to the Minister of Housing and Communal Services of the Moscow Region, Yevgeny Khromushin, a large investor with free funds is also required by the regional operators who are now on their feet.

"Regoperators are building factories now, and they will pay off over the course of many years. They must attract some kind of consolidated financial assets for construction in the area [of waste management]," said the head of the Ministry of Housing and Communal Services of the Moscow Region.

Investments on the example of the Moscow region
The Moscow region is the most loaded with municipal waste region of Russia. The Moscow region occupies 0.25% of the area of ​​Russia. At the same time, according to the results of 2018, about 11.4% of all domestic garbage was buried on its territory - about 8 million tons (Kogan data). Having survived several scandals in 2017-2018 due to the exploitation of outdated landfills and the lack of storage space for waste, the region began to create a modern industry from scratch. It will consist of four waste incineration plants and 12 waste treatment complexes, the total cost of all these enterprises is about 150 billion rubles.

With this in mind, Kogan estimated the need for investment in the development of the waste management industry and the recycling of household waste in the Moscow Region at RUB 160-170 billion.

Bonds and eco-collections
According to experts, the largest instrument for attracting external funds through the REO to invest in the industry can be "green" bonds. Funds from the issuance of these debt securities can only be directed to environmental projects. The first in Russia placement of green bonds was made by Resource Saving of the Khanty-Mansi Autonomous Area on December 19, 2018 at the Moscow Stock Exchange, their nominal value was 1.1 billion rubles. According to Kogan, this category of debt securities will attract at least 40 billion rubles in the future to the waste management industry.

Another, but the most important tool for raising funds in reforming the waste management industry in Russia is the Institute of Extended Producer Responsibility (ROP). According to this principle, producers of goods circulating in the territory of the Russian Federation must pay an environmental fee for their disposal or enter into contracts for the recycling of waste from their products (mainly packaging). The Ministry of Natural Resources of the Russian Federation expects that until 2024, enterprises will donate to the budget about 15 billion rubles of ecological collections, noting that the payment in this system is not an end in itself, but only an incentive for companies to organize the disposal of their packaging.

According to Denis Kondratyev, deputy general director of the League of Waste Paper Processors, Russia now has a share of goods for which the producer is responsible for EPR, and the eco-selection rate is too small for the institute as a whole to work efficiently. According to him, the recycling rate for paper in the Russian Federation is 18%, plastic is 10%, metal is 15% and glass is 15%, while in the European Union all 100% of secondary material resources are recyclable.

"Extended producer responsibility is the circulatory system of the industry, it is the basis on which the system of successful practices of the European Union is based, but it does not work with us. Fundamental mistakes are made, most of them are concentrated in secondary legislation. REO must start this mechanism for the PPA to work" - added Kondratyev.

In the Association of Glass Packaging Manufacturers of the Russian Federation, they also expressed the hope that the work of REO in the future will improve the collection of recycled materials. "Today, a significant part of glass waste passes by waste sorting complexes or is not sorted at all. Practice shows that without a strong hand of the state, which will take the first step in reforming the waste management system, full implementation cannot be achieved. In this regard, we would like to expect from the REO consolidation of resources (in our case, cullet from waste sorting stations) in order to increase the supply of glass available for recycling, "member of the association presidium Vatan A told TASS durahmanov.

At the same time, he expressed concern that the emergence of a large state player in the waste management market may restrain the growth of competition.

Unification of approaches
According to Konstantin Rzayev, Chairman of the Board of Directors of Ecotechnology, REO will also act as a body for unifying the rules of the game in the sensitive industry, which is in direct contact with people. “We like the emergence of a single body that will be legal for the industry. Each region has its own rules and regulations, each accepts the standards and goals set by the president differently,” he explained.

"The first step of the operator should be the creation of uniform for all environmental standards for the construction of modern infrastructure. They should contain requirements for equipment, processing volume, disposal of" tails "(unsuitable for processing materials remaining at the end of the production chain - TASS note) to the processing of organic matter, to the technology of gas purification, to the temperature of heat treatment and technologies of neutralization. The infrastructure must be environmentally friendly, completely harmless and to bring benefits, we can share the turned "- said Kogan.

Experts noted the importance of information support for garbage reform in the country, which will deal with REA. According to Gubaidullin, the success of the new waste management system depends on it.

State Control
According to Abdurakhmanov, with proper use of the controlling functions of REO, it will be possible to achieve the predicted behavior of all market participants, including suppliers of secondary resources, which is not the case now. "The participation of the state as a partner will ensure the legality of the processing scheme, reducing the share of the shadow business," he added.

Gubaidullin, in turn, pointed out the importance of centralized examination of territorial schemes for handling regional waste, which a single operator will also be engaged in. "On the basis of how well they are made, by and large, depends on the possibility of implementing the reform. Any incorrect data entered in this document can lead to big problems in the work of regoperators," the expert said.

In general, all experts noted that the REA received a very wide toolkit in order to successfully implement their tasks. Now the industry is wary waiting for who will lead the single operator, and what will be its structure. “The idea itself is good, it’s important that the team will work there. If the professionals are great,” Kondratiev summarized.

According to the presidential decree, the charter of the REO and the provision on the supervisory board must be approved by February 14, 2019. The company must be registered and located in Moscow until April 14, 2019.

Source: https://tass.ru