Corporate blog

FINDING TREASURE IN A RUBBISH HEAP

An effective public policy and economic incentives for waste processing are a win-win situation for the country and for business. Ukraine is ranked 83rd for ease of doing business and 162nd in economic freedom, but it makes the top five industrially developed countries in terms of stored waste.

4 May 2016

Landfills already take up 5% of Ukraine’s land and are almost full because they were created dozens of years ago, when today’s industrial giants were only emerging. While the government is thinking about how to handle this problem and drafting the appropriate laws, business continues to burn waste, polluting the air, or moving it to landfills, endangering groundwater, and, of course, paying the environmental tax.

Funds levied from business are added by the government to the general budget. It is impossible to track whether this money is eventually used for environmental programs. Recently, the Verkhovna Rada passed a law requiring 80% of the environmental tax to be credited to local budgets’ special funds, but this is not enough. A recent scandal involving unauthorized use of funds for quotas sold under the Kyoto Protocol is proof enough of this, and it is hard to maintain any belief that the environmental tax will indeed have anything to do with environmental protection.

However, people have learned to resolve the problems associated with industrial waste elsewhere in the world by killing two birds with one stone, by both helping the environment and creating business opportunities.

The European Union has had an industrial waste management program for 50 years. Today, budgeting and financing of waste recycling projects in Europe are regulated on the government level. Companies willing to recycle can obtain interest-free loans for the development of such capabilities.

There are tax benefits for using recycled waste as raw materials which, being usually cheaper than their natural component, reduce the product cost as well. This in turn helps to save natural resources.

The state is also prepared to invest in various forms of public-private partnership, for example, the construction of recycling facilities provided to business owners in return for the obligation to render the corresponding services to industrial enterprises. The state is willing to offer environmentally friendly enterprises simplified authorisation procedures, government guarantees or development of infrastructure.

Finally, Europe encourages the development of innovative technologies designed to decrease the consumption of natural resources.

This path has been taken in Ukraine by UMG, a holding which manages the recycling of SCM Group’s industrial waste through outsourcing.

For example, electricity generation produces a large amount of waste, like ash and slag accumulated near heat and power plants. This slag has always been a headache for companies that produce energy. However, slag can be used to make microspheres, dry and humidified ash and granulated slag. These materials are used for refractory materials, ceramics, construction, cement, and in the chemical, oil and gas sectors.

Before 2015, Ukraine did not export a single tonne of slag. Now, UMG supplies coal combustion materials to 11 countries worldwide.

Our own experience shows that the source of problems — industrial waste — can be turned into a valuable raw material. It is gold under our own feet, literally, treasure in a rubbish heap. With consistent public policy, Ukraine can not only solve its environmental problems, but also create new sectors, improve its export potential and create jobs.

It takes all three elements to start effective collaboration between government and business in solving the problem of waste: legislative regulation, economic incentives and development of a culture of reusing by-products.

In turn, responsible business owners can be the engine driving the process of putting new innovative solutions into practice. They need not be invented; we merely need to borrow and implement best practices in Ukraine.

Source
Novoe Vremya