Circular Economy in Ukraine - by Roman Puchko
The concept of Circular Economy confidently gains popularity over last years. However, whereas in the EU countries or cities national/municipal programs are being developed and real actions taken, in Ukraine it’s all about ‘what to do with waste?’ so far.
Current situation
Facts are shocking. 93% of household waste in Ukraine is being buried into the ground, only 5.6% recycled (well, mostly downcycled) and neglectable 1.4% incinerated.
Why is it going this way? Several the most important reasons are:
1) Low consciousness of people towards consumption and waste handling.
Ukrainians aren’t used to think in systems (circles) and care of what happens next to things they throw away. When ReThink NGO asked Kyiv citizens where their waste ends up, 48% replied ‘at landfill’ and 35% said ‘in the bin next to the house’. With this kind of thinking, when people are fine with simply moving trash from one place to another, there is not enough pressure on business and authorities in the society to launch national waste processing and utilization system.
2) The industry is not yet attractive for investment
Waste = resource, according to circular economy principles. However, processing of all types of waste is rather expensive. Any decent company could borrow money from international donors or financial institutions and build modern facility with automatic sorting, processing and incineration. However, there should be a sufficient ongoing cash flow to keep operation profitable. This means Ukrainians have to pay market price for waste disposal and processing (which is not the case now), regardless if directly (in utilities bill) or indirectly (through a packaging tax).
Launching of this new market is also hampered by ridiculously low burial tax, which is less than 0.15 EUR now (in the Netherlands – up to 107 EUR). Why to bother if it is so cheap to roll trash down into the ground?
3) Legal base is not in place
Although, many talks about the problem are going on, no legal regulations have been adopted yet, only draft laws registered. There are two different approaches being discussed. One of them offers packaging tax, so that the more you consume – the more you pay for waste utilization. Looks fair, but transnationals are working hard against this idea, not willing to transfer packaging tax to local authorities’ budgets. Their ‘alternative’ idea is based on ERP (extended responsibility of producer), but it’s proposed that only 50% of packaging will be recycled within 5 years after the law adoption. According to them, citizens have to finance the system via utilities bill, regardless consumption volumes. One of the approaches is expected to be adopted within 1-2 years.
Agricultural aspect
Whereas in recent past a random Ukrainian agriholding could impress an investor with high profits per hectare and land expansion plans, today it mostly doesn’t work. Therefore, the focus has moved towards improving efficiency and implementing innovations. New departments are being created and CiNOs hired. Some companies are even adding word ‘innovation’ to their name (having record winter wheat yield of 5.7 t/ha last year).
The pro-innovations trend is a very good thing for Ukrainian agriculture. However, those innovations are rarely about Circular Economy. Most of the companies/farmers take such projects as very complicated. Why to learn, train people, invest in equipment and new processes if you can just do farming and have 20-30% profitability?
Anyway, some advanced companies like Astarta or MHP have already learned how to win back organic waste for energy. Their biogas plants are very good examples of circular approach in Ukrainian agri sector. One of such MHP’s facilities is planned to become the most powerful in the world after all stages of the project completed, generating 20MW. However, at this moment total biogas power from agricultural waste in Ukraine is equal to 25 MW only.
Opportunities
Ukraine’s road towards European values and practices will not leave aside the circular economy part. One way or another, the draft laws, creating market for waste processing, will be adopted. This will establish a completely new industry in which Ukrainians don’t have any knowledge, experience, technologies etc.
On the agricultural side, saving inputs is extremely relevant, but most of the time farmers either do not have enough knowledge or are eager to save a bit on genetics and pesticides. They also hardly think of winning the plant residues back into the food chain. In Ukraine there is still a widespread practice to simply burn residues on the field.
On the other hand, organizations like ReThink already do a lot on the educational side, promoting circular economy principles and mindful consumption among Ukrainians. They explain which materials or packaging can be recycled and which not; gather upcycling projects from all over the country and let them present goods in Kyiv at one of the biggest festival; try to link innovators in this area to potential off-takers and tell about successful international cases.
Unlike most of eco-oriented organizations in Ukraine, ReThink doesn’t just complain on authorities or companies, but tries to help the sector. Therefore, they organize first country’s Circular Economy Hackathon on October 5-7, 2018. It is expected to be a strong step in creating a Circular Economy community in Ukraine and facilitate innovations in this area.
Dutch experts, companies and start-ups are more than welcome to participate in the hackathon and/or support it.
Author
This article is written by Roman Puchko, co-founder of the organization ReThink. This NGO facilitates developments in the circular economy in Ukraine. Before starting ReThink, Roman was amongst other projectleader in Ukraine for the Dutch Ukrainian Dairy Centre. He did his master in Food & Agribusiness at Wageningen University & Research in the Netherlands.
More information about ReThink on their website www.rethink.com.ua
Waste management study
The embassy of the Netherlands in Ukraine is supporting a waste management study. It is expected to be published at the end of June 2018. When its public we will add the link to this page.