bneGREEN: Cleaning up the Western Balkans’ waste problem

bneGREEN: Cleaning up the Western Balkans’ waste problem
/ Clare Nuttall
By Clare Nuttall in Glasgow August 17, 2022

When Europe’s largest unmanaged landfill at Vinca, near the Serbian capital Belgrade, was shut down a year ago it bought to an end the constant threat to the city’s residents of air pollution from landfill fires as well as to downstream countries on the Danube from toxic liquids that leaked into the river. 

Vinca was just the biggest example of a problem that continues to plague the Western Balkan countries: waste generation has increased sharply in recent decades, but waste management infrastructure has in general failed to keep up. 

There are a lot of good intentions among governments in the region, which have set ambitious recycling targets modelled on those in the EU, which the Western Balkan countries aspire to join. In practice, however, recycling and even waste collection rates remain relatively low compared to most European countries, and there is a widespread need to invest into new waste management capacity. 

The Vinca project which investor the IFC considers to be a flagship project in the Western Balkans was developed at a time when the situation at the old landfill on the bank of the Danube river was already critical. Every year over 500,000 tonnes of rubbish including construction waste as well as household waste from Belgrade’s 1.4mn strong population was dumped into the 80-metre high mountain of trash. Frequent fires at the landfill engulfed parts of the city in toxic fumes, with one of the worst breaking out just weeks before the closure of the site and covering the city with smoke and haze. 

The situation was becoming more urgent, as described by Ary Naim, IFC’s regional manager for Central and Southeast Europe. “The landfill didn’t have any meaningful lifespan left, only a couple of years. It was already a major source of pollution in the river basin of the Danube and the region, but also was a liability for other risks like landslides and fires. It was a very bad situation in a context where there was not much capacity to respond to this kind of very complex challenge in the city of Belgrade.”

That prompted the Belgrade municipality to work with the IFC, the European Bank for Reconstruction and Development (EBRD) and international engineering companies on a multi-phase project to replace the old landfill with a modern, environmentally friendly waste management system. 

The new landfill, which has been operational since August 2021, is only part of the chain that starts with a construction waste recycling station. As Naim explains, this is a "small part of the project but very important”, as it removed the heavy construction waste previously dumped into the landfill alongside household waste. Now construction waste will go to the recycling station, where it will be crushed and then sold for new construction. 

Next is a waste-to-energy plant that is due to be operational in 2023. A waste water treatment plant is already treating the leachings from the old and new landfills, and another plant will use methane from the old and new landfills to generate more energy. The final phase of the project will be remediation and stabilisation of the old landfill, which will take several years, even though it is no longer receiving waste. 

In environmental terms, “the benefits [of the project] are very explicit,” says Murat Karaege, investment officer at IFC. He lists the end of leachings from the old landfill leaking into the groundwater and eventually into the Danube. In addition, “methane landfill gas is the most potent greenhouse gas [GHG], more dangerous than carbon. The landfill gas capture component is going to limit a lot of air pollution and emissions, and so will have a broader impact than the project itself.” 

Problems across the Western Balkans 

The old Vinca landfill is an extreme example, but not an isolated one. The citizens of the Western Balkans continue to be plagued by environmental problems related to waste management. 

There is a similar situation a smaller scale in Montenegro’s second city, Nis, where residents told BIRN they can’t open the windows when there’s a south wind because the fumes from the Budos Hill landfill are so bad. The landfill became notorious when it was on fire for 45 consecutive days in 2020. 

The landfill was supposed to be only temporary but it has been used for almost 20 years and, according to an investigation by BIRN and the Centre for Investigative Journalist Montenegro (CIN-CG), has taken not only household waste from the local area, but animal and chemical waste and waste from other municipalities. This is despite a legal requirement to either shut the landfill or bring it into compliance with environmental standards by 2012. 

This may be about to change, however, as in January, Balkan Green Energy News reported that Dutch investors have proposed reclaiming the landfill site and using methane from the waste to produce power. The Dutch consortium is represented in the Balkans by Belgrade-based firm Fliping. 

Another scandal illustrating the lack of proper facilities to dispose of waste erupted when it was found that municipal waste in the Albanian city of Durres was being dumped in a dogs' home

Aside from poorly managed landfills, other problems that plague the Western Balkans are relatively low collection rates, especially in rural areas. “The share of the population served by public waste collection ranges from 70% (Albania) to 86% (Montenegro and Serbia) and has slightly increased in all countries over the past few years. It is largely rural areas that are not covered by public waste collections,” said the European Environment Agency (EEA). 

Even in major cities, collection may be inadequate or subject to interruptions. This happened in the Kosovan capital Pristina this spring, when waste collection abruptly halted. Social media users posted pictures of overflowing rubbish bins and streets piled high with rubbish. The waste collection company Pastrimi said it had been unable to pick up tubs because the Mirash landfill was closed, while the Landfill Management Company responded that it had banned access to the landfill because of Pastrimi’s debts. 

Cross-border pollution 

The problems with waste management can go beyond the cities and countries where they originate when waste or related chemicals find their way into waterways. Toxic leachings from the old Vinca landfill, for example, polluted the Danube, which is an international waterway.

Plastic waste in water is another problem across the region, which was dramatically illustrated in early 2021 when huge islands of floating waste borne by several rivers in Southeast Europe started to threaten hydropower plants (HPPs). The immediate cause was heavy precipitation, but the problem is a recurring one and can only be solved by better waste collection and management in the region. 

This again is a problem in Albania and thus for its near-neighbours such as Croatia, which have repeatedly complained about Albanian litter washing up on their beaches. As late as 2016, the country did not have a single landfill site; waste was left in the streets, piled up and burnt or dumped in rivers, mountains or the sea. While things have improved, pollution of the sea remains a problem in Albania. According to the 2020 International Union for Conservation of Nature (IUCN) report “The Mediterranean: Mare plasticum”, Tirana and Podgorica are among the four top cities for leaking waste and plastics into the Mediterranean Sea. Overall, Albania is responsible for almost 10,000 tonnes of plastic waste that enters the Mediterranean. The only countries that deposit more waste Algeria, Turkey, Italy and Egypt all have populations many times larger. 

Efforts have been made to improve the situation, but the process has been patchy. In 2016 there was a public outcry when MPs in Albania voted to allow waste imports, raising fears that the country could become a dumping ground for toxic waste from richer countries. In April 2018 a huge fire broke out at the sole urban waste recycling plant in the country. More recently, investigations have been launched into suspected large-scale corruption concerning the country’s three waste-to-energy incinerators. Hundreds of millions of euros of state funds were paid out for the three incinerators, two of which have never been put into operation. 

Ambitious targets 

Currently, according to the EEA, “All Western Balkan countries still rely heavily on landfilling: considerable amounts of waste end up at illegal dumpsites and recycling is mostly still negligible, with little progress being made over the years.” 

The Western Balkan states aspire to join the EU, and four are already candidate countries. Now, Naim says the "EU is driving a lot of the switch towards recycling and ultimately the circular economy”. 

For example, there are plans in Serbia that there will be separation of household waste by 2025 in at least 13 regions and across the entire country by 2025. “That’s very much driven by the EU,” says Naim, though he acknowledges that it will require time to change behavioural practices and get to that point. 

The EEA also says that as the Western Balkan countries try to align with the EU, some of the targets "appear ambitious compared with the current situation and the capacity for change”, while data on progress may be insufficient.

Making the numbers work

IFC and MIGA, members of the World Bank Group, announced a €259.57mn financing and guarantees package to Beo Čista Energija d.o.o. for the Belgrade waste-to-energy project back in 2009, investing alongside the EBRD and Austrian development bank Oesterreichische Entwicklungsbank (OeEB). Beo Čista Energija is a special-purpose vehicle formed by utility company SUEZ, Japan's ITOCHU and private equity investor Marguerite Fund II. 

“When we were structuring the financing, the important element on the revenues side was making sure the project was sufficiently sustainable and bankable. It was important to have tipping fees from the city, an element of electricity sales to national electricity utility, and heat sales to the heating utility,” explains Karaege. 

“The important thing is to generate bankable projects,” he says. “At the end of the day the needs are huge but we need to find the right structures, so there is a long-term sustainability. Now new climate tools such as carbon offtakes will help to generate more bankable projects in the solid waste space.”

In addition, he says, “the fact that waste converted into electricity and heat eventually reduces the carbon intensity of the Serbian grid was a huge development element in the deal.”

Its investors are hopeful that the example of the Vinca project may be replicated elsewhere in the region. “This project set a precedent for other deals,” says Karaege, noting that the IFC is already in talks on potential projects in the Balkans. 

Structured for the future

The project set a precedent in the region as the first large PPP (private-public partnership) project in this sector; typically in emerging markets solid waste management projects are structured using corporate finance. There has been some controversy surrounding the use of PPP projects in Albania, where numerous unsolicited projects were given the go-ahead by the government despite criticism from international financial institutions. In general, however, Naim argues in favour of PPP, saying the IFC believes it is "important for governments to at least consider PPP for large, very complex projects”. This includes not only waste management and waste water treatment where there is an “extreme gap” in the region, but are also other projects such as port and airport concessions.

Naim lists several reasons why governments may choose PPP. First, they allow governments to preserve fiscal space and not to make an upfront investment. “This is critically important right now, as after two years of COVID governments have very limited fiscal space,” he argues. Second, they bring in expertise that may not exist in the country. 

The third issue is that types and volumes of waste produced are changing, as are the technologies used to handle it. This adds to the complexity of designing projects such as that at Vinca which are intended to meet the needs of a city for decades. 

“We are in a time of tech disruption … we have different technologies coming online and you have to take them into account,” Naim points out. By opting for PPP, “if you are a government you can pay for services delivered rather than taking this kind of risk for 30 years.”

Commenting on future waste streams and trends, Karaege singles out e-waste, which is “rising very significantly”. “We need to bring in private parties on that front because municipalities do not necessarily have the capacity. It requires very particular expertise. You need to understand the supply element, the metals market, the output,” Karaege says. 

There have already been major changes in the waste produced in the Western Balkans during more than 30 years of transition. Volumes may still lag behind Western Europe but they have nonetheless increased, while much of the existing infrastructure is ageing. This leaves municipalities across the region looking for ways to finance and construct new waste management facilities able to meet the needs of their populations over the next few decades.

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