Accelerating Georgia's Transition to a Circular Economy. Part I
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The article discusses the key principles and conditions required for an accelerated transition to the circular economy, a new economic model that represents sustainable progress towards efficient green growth and provides the framework to develop new business models aimed at increasing the value, use and life of materials, products and assets. Embracing the circularity principles can also accelerate the recovery from the economic downturn caused by COVID-19.
The transition to a circular economy requires a radical change in the way we produce and consume. Products are designed for durability, upgradeability, reparability and reusability. Companies develop new business models generating revenue streams from services rather than products, while making more efficient use of resources and materials, and consumers use products efficiently and discard them in such a way that they can be turned into secondary materials that can enter a new production-consumption cycle.
Georgia has recently embarked on an accelerated path towards a transition to a circular economy. With the concerted efforts of the government, civil society organizations, and international partners, Georgia initiated the development of the circular economy strategy and took some important steps to include, for example, the introduction of the Extended Producer Responsibility (EPR) in the national Waste Management Code. In its road to circularity, Georgia should benefit from the experiences of more advanced economies and form strong partnerships, such as the ongoing program supported by the Government of Sweden in order to choose the most optimal path for its transition to a circular economy.
Why do we need to become circular?
The circular economy concept is gaining attention in light of increasing consumption and resource use by a fast-growing population with rising standards of living. Circularity refers to the circular flow and efficient use and reuse of resources, materials and products. This is a new economic model that represents sustainable progress towards efficient green growth, moving from a consumption and disposal-based linear model to extending the life and use of products and materials and minimizing wastage. Due to its expected environmental, climate, social and economic benefits, the circular economy is not only being strongly promoted by the European Commission and other EU institutions, as well as a growing number of EU Member States and cities, but it is also attracting increasing attention from the business community and from public and private financiers. The circular economy clearly goes beyond resource efficiency and recycling and provides the framework to develop new business models aimed at increasing the value, use and life of materials, products and assets and designing out waste from production and consumption.
Circular economy strategies have been under development in European cities, regions, and countries in the last few years. 33 strategies have been adopted since 2014, and at least 29 more are under development. The Ellen MacArthur Foundation, OECD, European Commission and other notable organizations have estimated that economies could greatly benefit from circular economy strategies on economic, social and environmental dimensions.
Adopting a circular economy policy has the potential to put economies on the road to transformation to an economic system that uses natural resources in the most efficient way, preserves the value of materials and products by using them circularly, and reduces the negative impact of economic activities on the environment and health. Applying circular economy approaches can cut industrial emissions, reduce the production of and exposure to hazardous substances, and contribute to climate change mitigation. With its truly symbiotic effects on the economy and the environment, the circular economy is a way of achieving certain UN sustainable development goals (SDGs).
How do we go circular?
The transition to the circular economy requires a radical change in the way we produce and consume. In a circular economy, products are designed for durability, upgradeability, reparability and reusability, with a view to reusing materials from which they are made after they reach the end of their life. In the use phase, products are managed with a view to maximizing their utilization capacity and extending their useful life, thus maintaining their value for as long as possible. This is made possible by companies that develop new business models generating revenue streams from services rather than products, while making a more efficient use of resources and/or giving new value to end-of-life products and materials.
Consumers use products efficiently and discard them in such a way that they can be reused or, if this is technically or economically unfeasible, recycling operators turn them into secondary materials that can enter a new production-consumption cycle. This needs to be supported by the whole system, from enabling technologies and infrastructures to a form of market organization that facilitates collaboration along and across value chains and a form of governance and regulation that encourages companies to adopt circular approaches to social norms that make circular production-consumption patterns socially preferable. This paradigm is in contrast to the linear economy which is based on the ‘take-make-use-discard’ model. This is a model which maximizes the amount of products produced and sold but does not focus on preserving materials. Such an approach prevents effective collaboration along value chains and stimulates the ‘throw-away’ consumer culture with its noxious environmental consequences.
Like with any systemic change, the transition to the circular economy requires several elements of the system to change simultaneously. The inertia and resistance of the current linear economic systems prevent the transition from occurring. Concerted actions by a host of stakeholders are needed. Government at all levels, businesses, innovators, academia, investors and consumers all have to play their distinct roles and contribute to the process.
What is Georgia doing about the circularity?
With the general objective of replacing the ‘end-of-life’ concept with an economic system that closes material loops, Georgia has recently embarked on an accelerated path to transition to a circular economy. With the concerted efforts of the government, civil society organizations, academia and international partners, Georgia initiated the development of a circular economy strategy and roadmap aimed at a comprehensive approach from multiple points of view, including production, consumption, waste management, secondary raw materials, innovation, investments as well as ongoing initiatives, in different sectors, by different players, and at different stages of the value chain or different stages of development. Several necessary steps to promote circularity have already been undertaken. These include, for example the introduction of Extended Producer Responsibility (EPR) in the national Waste Management Code. EPR is considered a key financial and operational instrument which promotes the implementation of waste management schemes in line with the waste hierarchy, as laid down by the Code, and the development of a resource-efficient economy. By introducing EPR, producers will take over the responsibility for collecting or taking back used goods and for sorting and treating for their eventual recycling. The Ministry of Environmental Protection and Agriculture of Georgia, with the support from the European Union, UNDP and the Government of Sweden, has been working in this area since 2015.
Why is EPR such an important step and what are its key elements?
EPR is an approach of the environmental policy, where the producers and importers of certain products are responsible for managing the waste generated after the use of their products, including bearing the related costs. The purpose of EPR is to improve environmental performance of the waste management system and to mobilize the financial resources needed to ensure the reuse, separate collection, recycling, recovery and/or other treatment of waste. It is based on the “polluter pays” principle, which is the cornerstone of the environmental policy. EPR facilitates the attraction of private investments in the waste management infrastructure and the creation of different jobs in the country. EPR is directly linked to green and circular economy development.
At this stage, EPR applies to the following waste products: waste from electric and electronic equipment, used oils, end-of-life tyres and vehicles, as well as waste batteries and accumulators.
EPR will be gradually expanded to cover other waste products. However, the introduction of this principle is crucial for starting the practical implementation of the circularity as it promotes the idea of treating waste as a resource, and stimulates the establishment of value chains required for the reuse, recycling and recovery of waste.
The implementation of EPR has been supported by regulations and guidelines covering such topics as: (i) liabilities and requirements for the setting up and authorization of individual and collective compliance schemes and EPR organizations by producers (including importers); (ii) rules for the establishment of EPR register and producers’ registration; (iii) scope of decision authority and liabilities of involved parties; (iv) technical regulations on the collection and treatment for each category of specific waste; (v) targets to be achieved for the gradual adoption of EPR; and (vi) control mechanisms. These technical regulations were developed through the support of the EU, USAID, SIDA and UNDP, and with the involvement of international and local experts. The experience of Sweden, Germany, Austria, Greece, Bulgaria and other countries was also shared. All stakeholders, and especially companies directly subject to EPR, were actively engaged in this process. Large scale public hearings, sectoral meetings, workshops, discussions with individual companies and media-campaigns were conducted, contributing to the process.
The Ministry of Environmental Protection and Agriculture also prepared several technical regulations for handling, under EPR, such materials and products as waste electric and electronic equipment, waste oils, end-of-life tyres, and waste batteries. These regulations are currently going through the formal approval process and are expected to enter into force this year, with the deadline for registration of producers set for mid-2021. The regulations stipulate the targets for the 2022-2023 period. The delay in the legislative process was caused by the COVID-19 pandemic situation. However, the government extended the deadline to give producers ample time for registration, and for the establishment of EPR organizations and other preparatory works. There are other technical regulations that are currently under the preparatory and review processes. These include on packaging wastes and on end-of-life vehicles. These draft regulations will be additionally submitted to the GoG in the nearest future.
By Dariusz Edward Prasek* and Solomon Pavliashvili**
Continued in next week’s GT with ‘Can Georgia go circular on its own?’
Dariusz Edward Prasek is a Doctor in Environmental Engineering, Member of the United Nations Advisory Board on Circular Economy, International Expert in Environmental, Social and Governance Areas.
Solomon Pavliashvili is a Doctor of Economic Sciences, Professor, Deputy Minister of Environment Protection and Agriculture
Related story: Accelerating Georgia’s Transition to a Circular Economy. Part II