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  • Thor Lindskog

Envisioning Ukraine’s Green Recovery through the Circular Economy



Envisioning a strategy to rebuild a country actively involved in military action is a challenging endeavour. Western powers will need to cooperate on an unprecedented level to support Ukraine’s restoration. To accomplish this, on March 29th 2023 the European Commission and European Investment Bank (EIB) approved the “EU for Ukraine Initiative” to funnel finances for Ukraine’s post-war recovery. A green recovery strategy is considered by many as an opportunity for Ukraine to build back better. Restoring Ukraine could bring with it the opportunity to modernize its major sectors, industries, and enterprises. In fact, some believe that Ukraine could modernize quicker than any other European country – provided the right conditions.


In July 2022, however, Oleksiy Chernyshov, Ukraine’s Minister for Communities and Territories Development, said that since the start of the Ukraine-Russia conflict approximately 140,000 buildings have been destroyed or damaged. The total damage to physical infrastructure alone is estimated between £80 - £128 billion and is likely to increase as Russia’s strategy seems to target infrastructure as much as possible. According to estimates, to become “green” Ukraine needs at least £200 billion of investment.


A green recovery could reconstruct Ukraine to meet modern requirements, allowing it to become more competitive in foreign markets while contributing to establishing a re-industrialized and EU-harmonized country, characterized by sustainable and productive growth. Due to the threat of war and economic uncertainty, a circular economy (CE) has been recommended as an alternative to Ukraine’s traditional economic model. CE can be used to recover and stabilize the economy while ensuring compliance with European regulations for sustainable development, increasing economic resilience.


The aim of the CE is to reduce waste, minimise costs, and decouple the current economic system from the take-make-waste model while facilitating positive benefits for the environment and economy. CE is built upon a regenerative production system, in other words, a closed-loop, non-waste, or green economy, which aims to keep products, materials, and their components at peak utility where they retain their highest value. It can be understood as a continuous development cycle that preserves natural capital (for e.g., critical and raw materials), reduces system risks by organizing renewable flows, and optimizes supply yields.


So, what economic and environmental benefits of CE are relevant in post-war Ukraine? This article explores the economic and environmental opportunity of a CE in driving Ukraine’s green recovery.


Economic benefits

According to the Ellen MacArthur Foundation (EMF) - if we define economic growth according to Gross Domestic Product (GDP) - CE can achieve economic growth through increased revenue streams from circular activities and decrease the overall cost of production by making more efficient use of existing product inputs. The aim is that the amalgamation of circular activities will affect entire supply chains, creating a series of activities which proliferates every sector.


Cost savings

A central pillar in CE is the reduction of the production cost of materials and technologies in selected market segments. In Ukraine, these market segments could include waste management and recycling, renewable energy, agriculture and food systems, construction and building materials, and industrial processes. Circular biomethane production, for example, could be cost-saving since Ukraine’s natural gas supply networks are a well-established infrastructure which wouldn’t require substantial upgrades.


A functioning CE entails streamlining product longevity, upgrades in repair, and sustainable product designs. Products and material streams designed with multiple connections are more resilient to disasters or disruptions. In other words, one sector’s waste becomes another sector’s treasure.


The estimated material savings across the European Union through circular approaches is estimated between £245 – 600 billion every year. Notwithstanding, attaining these benefits requires training and education in the basics of implementation and development of CE. Moreover, if efficiently introduced, the prolonged productive use of materials can increase overall business competitiveness and create more responsible consumers.


Green job creation

A transition to CE presents opportunities for job creation and economic growth. New investments into various waste management facilities, remanufacturing plants, and recycling infrastructure develops end-of-life management sectors, therefore, creating green jobs across various industries. Green jobs are employment opportunities which aim to preserve or restore environmental quality, in industries such as manufacturing, agriculture research and development, administration, or any service aimed at improving environmental quality.


Growth in Ukraine’s sectors could, in turn, stimulate economic growth by attracting investments and enhancing Ukraine’s competitiveness in the global market. Moreover, if efficiently introduced, new employment opportunities could appear across multiple sectors such as waste management and agriculture. Small and medium enterprises could also increase employment opportunities since entrepreneurship and innovation may well increase. A Ukrainian building company and other platforms are already looking into the application of construction waste and concrete recycling following the large quantities of debris resulting from airstrikes.


Innovation

Another benefit of implementing CE is the aspiration it brings to create new production systems which facilitate economic innovations. These opportunities are, for example, improved source materials and recycling processes, eco-design recycling technologies, labour shifts, energy efficiency, resource tracking systems, and essentially new profit opportunities for companies. Ukraine could utilize its innovation potential by facilitating collaborations with businesses and academia, in the long term, making Ukraine a hub for sustainable innovation.


Enhanced resilience

A circular economy can contribute to a green recovery through its inherent diversification of supply chains. By doing so and ultimately relying less on scarce or volatile resources, Ukraine can become less vulnerable to disruption in the supply chain caused by natural disasters, geopolitical hostilities, or resource availability. In the long term, local circular production or business models can strengthen Ukraine’s domestic economy by reducing their reliance on imports and enhancing their self-sufficiency. Concerning Ukraine’s current energy crisis, CE encourages renewable energy sources, capable of reducing their reliance on fossil fuels, ultimately enhancing their energy security. Moreover, Ukraine has Europe’s largest area of agricultural land and therefore one of the world's foremost potentials using agricultural raw material in circular biomethane production. A process wherein agricultural by-products and household waste is converted into energy and recycled for agricultural purposes.



Current outlook

The current hostilities, however, present a unique challenge when taking steps to build back better. Certain considerations must therefore be made. It may be beneficial for Ukraine to begin adopting local CE initiatives since communities have a better sense of what they need. Furthermore, skills and competence building amongst Ukraine’s workforce will be essential in the development of CE due to mass migration. Steps are being taken towards developing the necessary skills and knowledge through educational programs, start-ups, international organizations, and awareness initiatives.


Environmental benefits

A CE transition enables economic players and consumers to pursue value creation by minimizing negative externalities and the extraction of virgin materials. The CE concept marries the two ideas of economic growth and sustainable development. To achieve sustainable growth or a true green recovery, Ukraine’s economic actors (and the rest of the EU) must decouple the extraction of natural resources and environmental impact from economic growth. Through this, while the economy prospers, natural resources are not depleted and there is reduced environmental impact. This is one of the main goals of a CE.


These benefits of a CE are what interests both businesses and policymakers and these aspects of CE (waste, recycling, limitation of resources) have been studied for a long time. Many characteristics, however, remain to be studied, such as sharing models between sectors. While there is some empirical evidence demonstrating the ability of CE to create growth, it is not an automatic result of circular activities like material recycling since it initially transfers production activities.


Environmental case in Ukraine

Armed conflicts often cause significant environmental damage, including land degradation, deforestation, and pollution. A persisting issue in meeting sustainable development goals and in implementing circular action plans in Ukraine has been their waste management system, which has been a formerly unregulated and mismanaged infrastructure. The fallout from the armed conflict has largely impacted Ukraine’s physical infrastructure and exacerbated the environmental issues associated with building and construction waste as well as their landfill dilemma.


Yet, it presents a particular area of investment whereupon Ukraine can facilitate the environmental benefits of a CE. These are namely the practice of conservation of resources, minimization of waste, and maximization of value derived from any product or material. An efficient waste management system forged from the green recovery packages could decrease the environmental impact in post-war Ukraine and drastically reduce their environmental footprint moving forward. A promising area for collaboration and experimentation is concrete recycling and circular housing.


Conclusion

While transitioning to a CE could be vital to Ukraine’s green recovery, it is important to note that such a shift requires a holistic approach. Policies, financial incentives, and public participation must adapt accordingly. Targets need to be clear, and regulation must facilitate the realization of those targets through, for example, education programs. Nonetheless, fostering CE principles can enhance the green recovery process in Ukraine while encouraging long-term economic and environmental benefits. There is a clear case for a CE in Ukraine, but its implementation and success rely on how post-war Ukraine deals with the immediate fallout of the war.

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