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Waste management in Russia: New obligations for packaging manufacturers, recycling obligations an environmental charge

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published on 11 November 2020 | Reading time approx. 5 minutes
 

Efforts are taken by Russian legislators to reform many aspects of the existing waste management system in Russia: The packaging manufactured in Russia and imported into Russia must be disposed of by the manufacturers and importers of those packaged goods. The reform is intended to shift the responsibility to manufacturers and importers of the packaging itself.


 

Extensive changes at state level

Handling production and consumption waste is a pressing problem for the Russian authorities. The annual increase in the amount of waste produced in Russia has been the trigger for a number of measures taken to improve this situation. One of the most important events in this area was the implementation of the National Project “Ecology” at the end of 2018. The objective of this project is, among others, to improve efficiency in the processing and disposal of waste. The implementation of the project requires numerous and extensive changes, which are currently being introduced and this process will be continued. One of the proposed measures was the reform of the regulations on waste disposal, which is intended to ensure that manufacturers and importers of packaging are generally obligated to dispose of the packaging they manufactured or imported. The responsibility should therefore be shifted from the level of manufacturers of goods to the level of manufacturers of packaging. These changes particularly affect companies from the life sciences industry, namely manufacturers and importers of consumer goods such as foodstuffs, medicinal products, medical devices, cosmetics, as well as the manufacturers of the respective packaging.
 

Reason for changes: Inefficiency of the current system

Currently, the principle of the so-called “Extended Producer Responsibility” (EPR or in Russian “Rasširennoj Otvetstvennosti Proizvoditelja” – ROP) applies in Russia, according to which manufacturers and importers of the respective goods (e.g. consumer goods) are also responsible for the disposal of their packaging. If manufacturers or importers do not comply with these standards, they are obliged to pay the so-called “environmental charge” or “environmental fee” (“Ekologitscheskij Sbor”) to the state. This principle of producer responsibility was introduced in 2015 and has since then proven to be less efficient than other European solutions. The disadvantages of this system include the difficulty or even impossibility of determining the legally obliged parties, extensive falsification of reports on compliance with the standards and, as a result, inadequate disposal of packaging waste.

 

Proposed changes

The reform of the existing ROP mechanism has long been on the agenda; in 2020, its implementation was finally addressed. The proposals to change the ROP system were set out in several documents, including the “Concept of reforming the mechanism of extended responsibility of producers and importers of consumer goods and packaging”. This concept was proposed by the Ministry of Natural Resources and Ecology and is currently being reviewed by the Russian government. The said document provides for the following measures:

  • Shifting of responsibility for disposal of packaging manufactured in Russia and imported into Russia to packaging manufacturers or importers. The ministry expects that this change will help to improve control over waste disposal, as there are far fewer packaging manufacturers (currently fewer than 4,200) than goods manufacturers operating in Russia. It should also make it easier to identify the legally obliged parties.
  • However, important information for foreign manufacturers and/or importers of e.g. foodstuffs or medicinal products is that importers of pre-packed goods are still bound by the disposal obligation. Since the actual manufacturer of the packaging is usually based abroad and thus can neither legally nor actually be held responsible on this account, it is the importer of the goods that is and/or remains the quasi legally obliged “packaging manufacturer”, alternatively the responsibility remains at the level of the manufacturer of the goods.
  • Nevertheless, companies based abroad, but manufacturing packaging materials in Russia or importing them into Russia, should prepare themselves for reforms in this respect.
  • Repealing of the currently applicable packaging disposal standards and obligation of packaging manu­facturers or importers to dispose of 100 per cent of the manufactured packaging. Failure to meet this requirement will be subject to an environmental charge, which is expected to finance the further develop­ment of a functioning waste management system. However, if recycled material is used in the manufacture of the packaging, the environmental charge will be reduced. In principle, the environmental charge will be due if obliged companies do not fulfil their waste management or recycling obligations.
  • Other changes concern the calculation and payment of the environmental charge on the import of packaging and packaged goods. A major change proposed is that the estimated weight of the packaging and the estimated amount of the environmental charge should be indicated in the goods nomenclature, which could simplify the procedure for calculating the environmental charge on packaging.
  • Changes introduced to the packaging disposal process control system. In particular, the legislator proposes creating a function of the so-called “single operator” who will carry out ongoing controls in this area, check the correctness of the ROP report and plan how to use the environmental charge. The ministry proposes that the public-law organisation “Russian Ecological Operator”, newly founded in 2019 (Rossijskij Èkologičeskij Operator, REO), should act as such an operator. It is also planned to establish regional operators. The environmental charge on general level is expected to be administered by the Federal Tax Service of Russia.

    

According to the presented concept, these and other changes are intended to significantly improve the existing ROP mechanism. If the government approves the concept, it will be possible to implement the new ROP approach from 1 July 2021.

 

Similar measures are also proposed in the draft Federal Law No. 869136-7, which is currently being examined by the State Duma. It provides for a number of amendments to the underlying Federal Law No. 89-FZ “On Production and Consumption Waste” of 24 June 1998. The provisions of the draft law are in line with the direction taken in the ministerial concept and also shift the responsibility for disposal of packaging to their manufacturers or importers, whereas they become obligated to dispose of 100 per cent of the manufactured packaging. In contrast to the concept, the draft law does not provide for any specific implementation deadlines. 

 

Notwithstanding the fact that the drafts of these legal acts have not yet been adopted, the fact that they have been developed and examined confirms the general trend towards reforming the Russian waste management system, which was set by the National Project “Ecology”. 

 

Opportunities for and obligations of exporters and foreign companies

The new “Russian Ecological Operator” can directly participate in investments aimed at developing waste management. To this end, it can issue bonds, assume guarantees for strategically important projects or grant loans, thus becoming an important point of contact also for foreign investors. By the end of 2019, REO had already examined 285 investment projects involving state aid in over 70 Russian regions.

 

As part of the German “Export Initiative for Environmental Technologies”, the German-Russian Chamber of Commerce (AHK Russia) and REO have been working more closely together and have founded “Germantech”, a platform for networking German and Russian companies from the waste management industry. One of the aspects here is the transfer of German environmental technology in the waste management sector and the creation of investment opportunities for German waste management companies.

 

Moreover, it should also be noted that further changes will follow the waste reform, which will inevitably also affect companies from the life sciences industry. For example, a gradual rise in the environmental charge is planned, which will affect, among other things, the cost structures for products involving higher (individual) packaging costs or volume, as in the case of foodstuffs, medicinal products and cosmetics. Furthermore, the environmental charge is expected to apply not only to packaging waste, but also to certain categories of household goods, including recycling quotas. Moreover, companies will have to deal with new municipal or regional waste management systems.
 

Germany as the guidepost

When discussing different scenarios of the reform of the ROP system, the Russian authorities and experts are primarily guided by the German experience. A similar system was implemented in Germany in 1991 and has proven to be one of the most effective systems worldwide, giving Germany the leading position in recycling. Nevertheless, German legislation in this area is far from being at a standstill: In recent years, the German ERP mechanism has been changed several times. Since 2019 the new Packaging Act has been in force, which has increased liability for non-compliance with the extended producer responsibility requirements. The “Zentrale Stelle Verpackungsregister” (Central Agency Packaging Register, ZSVR) was established in Germany; the registration with ZSVR is mandatory for all manufacturers. In addition, the ERP mechanism, which currently only applies in Germany to commercial packaging, must extend to all other types of packaging until 31 December 2024 in accordance with EU regulations (Directive 94/62/EC on packaging and packaging waste). 
 

Conclusion

Russia is currently making efforts to establish an effective waste management system, drawing on experience of the EU Member States, in particular Germany. To this end, a number of legal acts are being drafted to thoroughly reform this area. The most important measures, expected to be implemented soon, include shifting the responsibility for the disposal of product packaging manufactured in or imported into Russia to manufacturers and importers of packaging. As regards importers of foreign packaged goods imported into Russia, however, responsibility remains at the level of the manufacturer of the goods. In addition to other trade barriers (e.g. food embargo on certain foodstuffs from the EU) or regulatory requirements (e.g. registration/­ licensing of medical devices), companies in the life sciences industry will therefore have to deal more intensively with the new or amended regulations and requirements in the Russian waste sector in future.

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