Clare Nuttall in Bucharest -
Recycling levels in Romania are among the lowest in the EU, held back by a lack of economic incentives and education. Green Group has overcome considerable obstacles to introduce new recycling technologies to Romania, becoming a market leader that is now poised to expand at home and internationally.
Back in 2002, when Green Tech, the first company within Green Group, was launched, its co-founders – Constantin Damov, the head of the Romanian Recycling Association, and Taiwanese investor Clement Hung – were faced with a market that barely existed. Packaging use was growing sharply at the time, but there was virtually no collection of recyclable materials. Difficulties in sourcing materials for the company’s PET processing plant in Buzau, southwest Romania, meant that collection and transportation costs exceeded the value of the finished products, resulting in heavy losses in the first two years of operation.
Fortunately, concerns about the explosion of plastic littering encouraged the Ministry of the Environment and Climate Change to step in with incentives for waste collection. Although they only lasted for three years, it was enough to get fledgling collection and sorting businesses off the ground, and to create a sector strong enough to continue functioning without government subsidies.
Since then, Green Group has branched out into manufacturing numerous types of waste. Using technologies developed in Asia, the company started recycling plastic bottles into synthetic fibre for the automotive industry. And since 2009, it has set up plants to treat electrical and electronic waste, and recycle of light bulbs and glass. “We strongly believe in the concept of the circular economy. Maximising utilisation of the resources around us can create another stage of development for industries currently in crisis,” Damov bne IntelliNews. “We have created 2,000 jobs by turning lazy resources that nobody wanted into a new industry.”
Today, Green Group has a substantial share of the Romanian market. In 2014, the group handled around 50,000 tonnes of PET and 10,000 tonnes of glass. However, while its business has grown, Romania’s recycling industry has not developed at a similar pace. European Environment Agency data show that Romania along with Bulgaria had the lowest level of household waste recycling in the EU; Romania recycled just 1% of municipal waste as of 2010.
Despite the emergence of numerous small-scale collection and sorting businesses, low collection rates remain one of the biggest obstacles. Bucharest and other major cities boast recycling bins on many street corners, but a closer look shows that they are used to deposit all types of household rubbish indiscriminately. Formal collection rates are further reduced by the large number of homeless scavengers who rifle through the bins in search of anything they can sell, including plastic bottles and other recyclables.
While working with a large number of small collectors, Green Group recently launched its own intelligent waste disposal stations, SIGUREC. The electronic depositories allow users to choose by touch screen how to be compensated for their deposits, issuing hypermarket discount vouchers or donating funds to charity. “We believe SIGUREC is a 21st century solution to replace the 20th century solution of bins in the street. Like the recycling bins, our system is based on education, but it also places a commercial value on the waste generated by households, and rewards citizens for using it,” says Damov. “There are no subsidies – it’s a self-sustaining system based on the commercial rules of the market.”
By cutting out the middlemen, it also speeds up the process – a bottle deposited in a SIGUREC station can be recycled within 24 hours.
The system has proved to be popular. 25 stations have already been installed, and Green Group expects to have more than 70 in action by the end of this year, increasing to 200 across the country before long.
However, Romania’s recycling sector also suffers from a lack of government action on landfill taxes, which are currently set at between €10 and €15 per tonne. As a result, for businesses looking to minimise costs landfill is a better option than sending waste for recycling.
Damov blames political populism for the lack of progress, saying the debate over recycling is “very superficial”. “Unfortunately it’s like debating football – everybody can understand it, everybody has an opinion, but at the end it depends what the players are doing in the field,” he says.
Lack of raw materials has forced Green Group to look outside Romania for supplies, setting up collection and processing operations in nearby countries such as Macedonia and Serbia where the sector is at a similarly early stage. It also imports from Western European countries like the UK and Germany where domestic recyclers cannot keep up with the high collection rates. Surplus PET waste from the two countries is now shipped to China for recycling and the synthetic fibres are re-imported – 90% of the synthetic fibre used in Europe’s automotive industry is imported from Asia.
Currently, Green Group is present in Germany as a buyer, but the group is considering an investment in Germany and possibly the UK as well to set up its own synthetic fibre production. “We would like to process this material, which is going on a 14,000km round trip to China, in Europe,” Damov tells bne IntelliNews.
“Not many west European companies produce fibre from plastic waste; most have bottle-to-bottle systems. They also have high costs for collection, sorting and recycling because these are labour intensive. However, technologies are advancing and we don’t see why this transformation can’t be done locally in Europe. Romania can play the role of Europe’s China,” he says.
Green Group may also make the transition to investing in local recycling plants in other Balkan countries, if this proves to be economically viable. Currently, it carries out collection, grinding and washing, but when enough raw materials are collected locally, it may invest into recycling plants.
Back in Romania, Damov is confident about the future potential of the market. At just over half the EU average, packaging waste in Romania is steadily rising. Collection rates are also expected to increase. Just catching up with the rest of Europe would require a sixfold expansion of the sector. In addition to rolling out new SIGUREC stations, Damov wants Green Group to double its recycling capacity in Romania, including by building a new plant in Transilvania, which would give it a presence in the northwest of the country. The group also plans to branch out by recycling waste from construction and demolition, and wood waste, as well as setting up a waste-to-energy plant.
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