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0• за допомогою дозволу на користування укра-1нською землею.
Проан^зувавши механiзм фiнансування агро-холдинпв в Украíнi за останнi роки можу зробити висновки, що тепершня нестабiльна полiтична та економiчна ситуащя в кра!ш негативно посприяла на залучення прямих iноземних iнвестицiй в Украшу.
Для шдвищення швестицшного клiмату в Украíнi потрiбна перш за все фшансова та полггачна стабiльнiсть та ефективна боротьба з ко-рупцieю.
Важливим фактором для прийняття рiшень ш-весторам вщграе також мiсткiсть та доступнiсть до мюцевого ринку, можливiсть закрiплення на перс-пективних ринках збуту, стабшьне законодавство, наявнiсть пiльг для шоземних iнвесторiв, вiдносний рiвень добробуту та кутвельно! спроможностi населения. Роль фшшсування агрохолдингiв у ви-глядi закордонних iнвестицiй дуже важлива, адже з 1х допомогою Укра!на вщбудовуеться та щось змь нюе в полггащ та дiях, якi псно пов'язанi з еконо-мiкою та майбутшм.
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CIRCULAR ECONOMY FOR MODERN GROWTH: EU AND RUSSIA
Fedotkina O.P.
PhD in Economics, Financial university under the Government of the Russian Federation
Abstract
Governmental organisations as well as business representatives report an increasing pressure on global resources and the climate due to human activity. Green and Circular Economy are currently the key concepts connected to the economy of the future and are viewed as a promising approach to help reduce our global sustainability pressures. Further, the change from a linear economy (take, make, dispose) to a circular economy (renew, remake, share) is expected to support significantly the attainment of the Sustainable Development Goals (SDGs), particularly SDG 12 on responsible consumption and production. In Europe and around the world, attention for the circular economy increases. It is a potential way for society to increase prosperity and to decrease dependency on primary materials and energy sources. Many business leaders have embraced the circular economy as a path to increasing growth and profitability, and the European Commission has presented a "circular economy package" on December 2, 2015.
This article seeks to was to show in what way the concept of the circular economy is introduced and implemented in the European economy and
legislation and is to establish how circular economy can be beneficial for Russian economy and society.
As a literature based thesis the provided information is adapted from official and public documents of the concerned countries from internet sources and published reports.
As a literature based thesis the provided information is adapted from official and public documents of the concerned countries from internet sources and published reports.
Keywords: circular economy, green economy, environment, sustainability, European Union, Russia
Intoduction
The concept of a 'Circular Economy' has gained much traction in the global business community in the last 5 years. According to Ellen MacArthur Foundation, the circular economy is a regenerative economy which aims to keep materials and products at its highest usefulness (Ellen MacArthur Foundation 2017a). In other words, the circular economy concept is almost a waste-free production, that aims to reduce waste and pollution. The circular economy is referred to as being an industrial economy that distinguishes between biological and technical cycles. Biological nutrients are redesigned to enter to biosphere safely, while technical nutrients will not be returned to the biosphere as they are designed to circulate at its highest utility on the production process/system. (Ellen MacArthur Foundation 2017a.)
The roots of the circular economy lead us to the late 1970s and cannot be referred to a single author. The idea of such concept was born with the help of several researchers, businesspersons and innovators. However, a few standout academics played a major role in the circular economy development.
Pearce and Turner, who were the pioneers of environmental economics (Pearce & Turner 1989.) In their numerous books and articles, they have studied and presented the theory of circular economy, its principles, advantages and other important aspects. However, the real boost in promotion of the concept was in 2012 due to the Ellen MacArthur Foundation economic report, which included the circular economy concept (Ellen MacArthur Foundation 2016.).
The move to a more circular economy for Europe is associated with strategies such as: boosting recycling and preventing the loss of valuable materials; creating jobs and economic growth; showing how new business models, eco-design and industrial symbiosis can move us towards zero- waste; and reducing greenhouse emissions and environmental impacts (European Commission, 2014). Talking about the situation in geographical areas, the EU has already set the implementation plan of the circular economy and introduced the circular economy package in 2015 to support the transition of EU states towards more sustainable and effective economy. (European Commission 2017a.) However, in Russia the situation is different. It is still more of an idea, than a come-true or implemented plan. But things are slowly changing. In 2016, Russia held the first conference about the circcular economy (2016). Also, several Russian companies and entrepreneurs are trying to use the circular economy principles in their businesses, but it is a very small contribution for such a large country. Ensuring effective cooperation between the European Union and Russia in the circular economy framework is an important goal, which should be achieved by sound policies based on solid research, multilateral discussions and exchanges.
Circular Economy in Europe
A first draft of the Circular Economy Package was published in July 2014. This first package received a mixed response: it was mainly criticised for having overly ambitious objectives and for lacking proposals
to stimulate demand for products created by the circular economy, and in particular secondary raw materials.
As a result, a new draft was presented on 2 December 2015. It includes an action plan made up of a series of measures to be deliberated and specified with the aim of being implemented by 2019, as well as legislative proposals for waste and recycling that could be adopted more quickly. Notably, measures to stimulate demand for recycled raw materials have not been examined at this stage and are yet to be deliberated upon. Overall, the architecture of this action plan is relatively ambitious, since many activity sectors are tackled individually, but the details of these measures are not yet known.
The foundation for the European Union's Circular Economy Action Plan was laid within the Europe 2020 strategy and the Eco-Innovation Action Plan (EcoAP). Europe 2020 was launched in 2010 to provide 10-year jobs and growth strategy for the EU, to create favourable conditions for 'smart, sustainable and inclusive growth'. Implementing the Europe 2020 strategy, the European Commission adopted the Roadmap to a Resource Efficient Europe, which outlined ways to increase resource productivity and decouple economic growth from resource use and its environmental impact.
The foundation for the European Union's Circular Economy Action Plan was laid within the Europe 2020 strategy and the Eco-Innovation Action Plan (EcoAP). Europe 2020 was launched in 2010 to provide 10-year jobs and growth strategy for the EU, to create favourable conditions for 'smart, sustainable and inclusive growth'. Implementing the Europe 2020 strategy, the European Commission adopted the Roadmap to a Resource Efficient Europe, which outlined ways to increase resource productivity and decouple economic growth from resource use and its environmental impact.
Moreover, the circular transition was already taking place in Europe at that time with several member states, local authorities and businesses introducing circular solutions across many sectors and value chains. The European Commission took the lead in 2015 by taking actions to push circularity even forward. The Circular Economy Action Plan, adopted in December 2015, establishes a concrete and ambitious programme with measures covering the whole cycle - from production and consumption to waste management and the market for secondary raw materials.
The Action Plan was adopted together with legislative proposals on waste. The proposed actions are contributing to 'closing the loop' of product lifecycles through greater recycling and re-use, bringing benefits for both the environment and the economy.
The Action Plan involves member states, regions and municipalities, business communities and citizens. Composed of legislative and non-legislative initiatives, the Action Plan also puts a strong emphasis on ground-level progress, engaging the circular economy stakeholders and creating the right framework for investments and innovation to thrive. The Action Plan, among others, promotes eco-design principles for making products more durable and easier to repair, upgrade or remanufacture.
As part of the holistic approach introduced in the Action Plan, the European Commission presented the revision of the legislative framework on waste, in order to align it with the needs of a circular economy.
In April, the European Parliament voted in favour of the proposed new waste legislation - scheduled to be discussed by the Council in May-June [2018]. The new legislation sets out clear long term targets for waste management, reuse and recycling, aiming at making the EU a global leader in waste management and recycling. For municipal waste, the recycling targets are set at 55 per cent in 2025, 60 per cent in 2030 and 65 per cent in 2035 and the landfill reduction target is 10 per cent by 2035. For packaging waste, the overall recycling targets are set at 65 per cent in 2025 and 70 per cent in 2030.
Taking the lead means also creating new Europe-wide initiatives where there were none - the first ever European Strategy for Plastics. It was adopted in January [2018] in the context of the 2018 Circular Economy Package and presents a vision for a smart, innovative and sustainable plastics industry, with reuse and recycling fully integrated into production, to bring growth, jobs and added value in Europe.
The five priority areas identified in the Circular Economy Action Plan are: plastics, critical raw materials, food waste, biomass and bio-based products, and construction as well as demolition waste. Such priorities imply, of course, that the European Commission considers them instrumental and strategic to achieving more circularity in Europe.
The EU faces increasing demands of natural resources. Getting maximum value from resources requires action at all stages of the lifecycle of products, from the extraction of raw materials to product design, production and distribution of goods and through increased use of secondary raw materials.
Other challenges include:
- Controlling life cycles efficiently: this requires integrating the entire product lifecycle from raw material extraction to disposal (with multiple reuse and recycling)
- Making linked industries resilient: many industries will see their waste being used as a resource by other industries
- Keeping the environment and social considerations at the heart of the circular economy agenda
Funding and financing the circular economy transition is crucial to reinforce the circular trends. The EU supports the transition towards a more circular economy via several EU funding programmes, for example, the Horizon 2020 initiative on 'Industry 2020 in the Circular Economy' (with a budget of EUR650 million).
Other EU funds involved in supporting and shaping the European transition are the European Structural and Investment Funds which implement the Cohesion Policy; the European Fund for Strategic Investments (EFSI) which was extended until 2020, focusing more on investments to meet the Paris Agreement targets and help the transition to a circular and zero carbon economy; and the LIFE programme.
The circular economy is supposed to create a net economic benefit of EUR 1.8 trillion until 2030 in the
EU, according to one estimate (Ellen MacArthur Foundation. 2015). This would entail an average increase in household income by EUR 3,000 as well as a halving of carbon dioxide emissions, compared to current lev-els6. The circular economy is also supposed to massively boost the profit margins of those companies adopting it (Zils, M. 2015;.
Circular Economy in Russia
Russia is only starting the path towards a circular economy. Today, unfortunately, Russia is considered as one of the most polluted countries in the world. The utilization of waste is successful only on 30%, 10% of garbage is recycled, which is a very low rate. However, in megapolises, such as Saint-Petersburg, Moscow, Kazan, there exist mechanisms for waste paper and glass collecting and processing, which makes the waste issue less urgent. (Greenologia 2017.)
Besides waste issue in Russia, uncontrolled and illegal logging of forests is carried out causing the global environmental problems of entire regions of Russia. Most of these are observed in the Far East and the north-west of the country. Deforestation is held not only for forest industry but also for clearing the land for future mining. (Greenologia 2017.)
Even though the circular economy can be a solution to current ecological, social and economical issues, the Russian economic model and plan contradict with the closed-cycle concept. The Russian economy is based on the extractive and manufacturing industries, which causes large volumes of production and consumption of raw materials. The reduction of resources consumption may put Russian economy into degradation phase, which can cause crisis and inflations.
Today, the circular economy in Russia is not used as a method of creating economic models, forecasts, and plans, but there are separate initiatives that can be attributed to the concept of a new, circular direction.
The concept of the circular economy is essentially new for Russia and is hardly ever used in official documents. However, national targets, which have been set for the next 10-20 years, largely correspond of resources and protection of the environment in the future, and in legal and economic instruments, which are available.
At the moment, the circular economy in Russia has two strong drivers: governments and corporations.
From 2012 Russian government started preparing the plan for improving environmental conditions on the territory of Russian Federation. This plan includes laws and arrangements, that are supposed to clean most of the water resources, to control the deforestation, to introduce cleaning mechanisms for all manufacturing plants across the country, to improve the environmental awareness among citizens, to manage permissible amounts of waste and its utilization till 2030. Some of the laws are valid already today, however, not all of them are accomplished according to the set regulations. (Ministry of Natural Resources and Ecology 2015a.) Most of the waste is still going to landfill including non-organic waste.
However, since 2014 municipal nature-use committees of different cities in Russian Federation has established "Ecomobiles" for gathering the hazardous waste from citizens. Ecomobiles collect such waste products as mercury lamps, expired batteries and accumulators, computer and office equipment, household chemical waste and chemical substances, waste oil, expired drugs, automobile accumulators, tires and much more. Such examples are more common for larger cities, it is still uncommon for a major part of Russia. Besides this, gathered waste is still less than the overall amount of waste which is produced in the country.
The issue of waste production is very important for Russia, as the vast majority of domestic and industrial waste is just transported to the waste storage and is not recycled. This situation requires special programs that promote the separation, collection and recycling of waste, as well as investments in the construction of waste treatment plants. A few reasons can be pointed out for the poor results in the field of waste management:
- there is no effective waste management strategy encompassing the different levels of public administration and the local government in the Russian Federation;
- the Federal Law "On Environmental Protection" (Jan. 10, 2002, № 7-FZ, eds. Dec. 7, 2011) and "On Production and Consumption" (June 24, 1998, № 89-FZ, eds. Nov. 21, 2011) do not provide the necessary incentive mechanisms that could contribute to greater involvement of the private sector in the collection and recycling of waste;
- the requirements for using the best available technologies and the best practice approaches are not integrated into the current Russian legislation, and the incentives for their implementation are not available;
- draft legislation establishing the requirements and incentives for management of packaging waste has been discussed within the last years, but they have not been implemented yet;
- lack of coherent and effective public awareness programs prevents public involvement in the collection of household waste and its trade as a secondary raw material (e.g. Russia - EU: Partnership for modernization in waste management: International Conference, Moscow, 24-25 May 2012).
On 28 June 2017 the Ministry of Natural Resources and Environment of the Russian Federation organized the international seminar "Russian legal framework and best European practice on waste management: possible combination of approaches to environmental protection". Together with its partner countries Germany, France and the Netherlands and EU representation, Russia's ministry invited representatives of federal and regional waste management authorities and companies to this meeting of experts to discuss current European developments and experience as well as future collaboration in the waste management sector.
Such expert meetings, expert workshops and the concomitant bilateral talks promote more intensive cooperation between experts in the partner countries of the Advisory Assistance Programme and the exchange of knowledge and experience.
Realizing government's efforts towards transition to more circular economy in Russia brings greater opportunities for national economics, in economies' transformation from linear to more sustainable direction. This transition enables: a) businesses to make substantial economic gains and become more competitive; b) economcs to deliver important energy savings and environmental benefits; c) regionally, creating local jobs and opportunities for social integration.
Barriers to the Circular Economy
There are four categories of barriers: cultural, technological, market and regulatory (Figure 1) (van Eijk, F. 2015, de Jesus, A. & Mendonga, S. 2018). These barriers are interrelated. This means that cultural barriers can induce technological barriers which induce further cultural barriers.
Figure 1. Categories of Circular Economy Barriers
The interrelatedness of the four categories of the circle economy barriers can result in a chain reaction towards the circle economy failure, with the economy then remaining in its current business-as-usual. However, examining the four categories of the circle economy barriers and their different sub-categories in detail can reveal insights regarding the root causes of failure regarding a transition towards a circle economy. Once these root causes are identified, targeted interventions can be undertaken to break the chain reaction towards
Cultural Technological
the circle economy failure and replace it with one that is geared towards the circle economy transition.
According to Utrecht University's researchers, the technological barriers are not the main barriers to the circle economy (Julian Kirchherr, Marko Hekkert, Ruben Bour, Anne Huijbrechtse-Truijens, Erica Kostense-Smit, Jennifer Muller (2017). Indeed, none of these rank among the five most frequently mentioned barriers, as indicated by Figure 2.
Market Regulatory
| Most pressing barriers | Intermediate pressing barriers ■ Least pressing barriers
Figure 2. Heatmap of Circular Economy Barriersin
This is a promising finding for those keen on a transition towards CE. If technological barriers dominated, much time would be needed for the CE transition since technological development is slow. Meanwhile, the limited prominence of this barrier suggests that intervention strategies may be able to achieve results in the short- and medium-term.
Conclusion
The circular economy transition is underway, both in Europe and elsewhere. Accelerating this process means providing a better response to global environmental challenges and, for both businesses and countries, reaping its economic benefits and competitive advantages.
Europe and Russia are bound to the rest of the world through multiple systems that enable two-way flows of materials, financial resources, ideas and innovation. As a result, economic, ecological and societal resilience is and will continue to be significantly affected by a variety of global and interdependent social, economic, political, environmental and technological trends.
The transition to a circular economy requires fundamental changes in many different areas of the current socio-economic system. Although it is a complex process that is difficult to predict, several crucial areas of change can be identified in technical, economic and social domains, with a focus on the enabling factors that guide and accelerate the transition process.
These factors need to act simultaneously in order to create reinforcing effects, and, critically, they all require the support of adequate policy frameworks and interventions.
Circular economy strategies can help countries to find ways to reduce emissions beyond what they currently committed. Strategies that are the cornerstone of circular economy, but which are limited in current emission reduction commitments, use concepts like car-sharing, modular building, refurbishment of equipment and optimised cascading of biological waste materials. These strategies enable to do more with less resources.
References
1. Ellen MacArthur Foundation. Growth Within: A Circular Economy Vision for a Competitive Europe. (2015).
2. Zils, M. Towards a Circular Economy: Rethinking value chains to boost resource productivity. (2015). Available at:
3. http://www.environnement.brussels/sites/de-fault/files/user files/2. zils v03.pdf.
4. Van Eijk, F. Barriers & Drivers towards a Circular Economy. (2015).
5. de Jesus, A. & Mendonga, S. Lost in Transition? Drivers and Barriers in the Eco-innovation Road to the Circular Economy. Ecol. Econ. 145, 75-89 (2018).
6. Julian Kirchherr, Marko Hekkert, Ruben Bour, Anne Huijbrechtse-Truijens, Erica Kostense-Smit, Jennifer Muller Breaking the Barriers to the Circular Economy (October 2017).
