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Closing the Loop in the Slovak Republic A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability HIGHLIGHTS

“The Slovak Republic is working to make a strong commitment to transition to a circular, sustainable and low-carbon economy by 2040. The OECD has been supporting these efforts through analytical work and a stakeholder consultation process that have laid the ground for the development of a circular economy roadmap. Our report provides a set of concrete measures that can be incorporated into the roadmap and implemented across a number of priority areas. When adopted, I hope the roadmap to be instrumental in accelerating the transition towards circularity and greater resource efficiency. The OECD stands ready to further support this process in the future.” Alain de Serres, Acting Director of the OECD Environment Directorate

“The endless waste of food and materials is depleting the resources of our planet. A circular economy roadmap will enable the Slovak Republic to give a second chance to secondary raw materials. We consume more natural resources than our Earth can provide. We produce waste excessively and our consumption grows continuously. The Slovak economy is linear - instead of recycling, we mostly use and throw materials away into landfills. Nevertheless, we have also made a number of positive changes in the area of waste management. We sort biodegradable municipal waste, we use deposit-refund schemes and we stopped using single-use plastics. Changing the overall economic model is not an easy task though, but I believe that the OECD recommendations will help us in our transition towards a circular economy.” Ján Budaj, Minister of Environment of the Slovak Republic

“The circular economy is one of the main building blocks of the European Green Deal. DG REFORM has supported the Slovak Republic and other Member States on their transition to a circular economy, sharing best practices and ensuring a European approach. By moving to a circular economy, the Slovak Republic can boost its resource productivity and efficient use of natural resources, generate cost savings and create jobs.” Mario Nava, Director General – Directorate-General for Structural Reform Support (REFORM)

2 · OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022

Key messages • The Slovak Republic made notable progress in decoupling environmental pressures from economic activity in the past decades. This was mainly driven by structural and technological changes in its economy since it joined the EU. • Despite the positive trends, future materials consumption in the Slovak Republic is projected to increase by more than 50% by 2050 compared to 2017 levels if no additional policy measures are introduced. • The increase in materials consumption is likely to have large associated environmental impacts, including significant increases of greenhouse gas emissions. Our estimates show that up to 70% of the Slovak Republic’s greenhouse gas emissions are associated with materials management activities. These trends put the country at risk of missing important environmental and climate goals, including the long-term emission reduction targets under the Paris Agreement. • To restrain materials consumption and its associated negative environmental impacts, the Slovak Republic needs to accelerate its transition towards a circular economy. Achieving this requires policies that more strongly incentivise resource efficiency and circular economy along value chains, and the replacement of linear business models with circular ones. Due to its link to greenhouse gas emissions, the circular economy transition will also play an important role in decarbonising the Slovak economy. • Our report suggests that the Slovak circular economy roadmap needs to target the use of economic instruments to stimulate sustainable consumption and production as well as the construction sector and the food and bio-waste value chain, as priority areas with a particularly large potential for resource efficiency and circularity. • The identified policy measures across these three areas will help to increase the use of secondary raw materials, support eco-design and eco-innovation, stimulate circular consumption patterns as well as improve waste management, reuse and recycling. • They will also contribute to increasing the competitiveness of Slovak firms, creating new jobs and enabling citizens to acquire new knowledge, skills and competences.

OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022 · 3

Increasing materials consumption provides a strong case for a circular economy transition in the Slovak Republic

On current trends, the demand for raw materials of the Slovak economy will continue to increase significantly While the Slovak Republic has made notable progress

by 2050 compared to 2017 levels (from 94 Mega tonnes

in decoupling environmental pressures from economic

to 142 Mega tonnes) if no additional policy measures

activity in the past decades, its economy remains

are implemented. Notably, metals - particularly iron -

energy-, carbon- and resource-intensive due to a large

and non-metallic minerals – such as construction sand,

manufacturing sector. The overall materials consumption

gravel and crushed rock – are projected to grow at a faster

in the country is projected to increase by more than 50%

rate than the EU average growth rate.

Economic growth and increased consumption drive the demand for raw materials The Slovak Republic also has relatively fast

Metals and non-metallic minerals are increasing at a fast rate due to large manufacturing and construction sectors in the Slovak Republic Figure 1.

economic growth, with annual GDP per capita projected to increase by over 2% between 2020 and 2050, as well as an export driven economy. These trends combined with wealth increases and living standards converging towards the EU averages are the main drivers of the country’s increased materials consumption.

Metals Metals Metals Metals

2020 2020 2020 2020 15 Mt 15 Mt 15Mt Mt 15

Metals Fossil fuels 113 Mt Fossil 113 Fossil fuels fuels 113Mt Mt Fossil fuels Fossil fuels 113 Mt Biomass 42 Mt Biomass 42 Mt Biomass Biomass 42Mt Mt Biomass 42 Non-metallic minerals 86 Non-metallic minerals Non-metallic minerals 86 Mt Mt Non-metallic minerals Non-metallic minerals

86Mt Mt 86

2050 2050

2050 20202050 2050 19 Mt 19 Mt 22 Mt 1919MtMt36 Mt 111 Mt 111Mt Mt 30 Mt111 29 Mt 111 Mt 54 Mt Mt 20 Mt54 24 Mt 54Mt Mt 54 32 Mt 53 Mt 156 Mt 156 Mt

156Mt Mt 156

Rate Rate Rate Rate

RATE x1.7 ×1 ×× 1 × 1 1x1 × 1.3 ×× 1.3 x1.2 1.3 × 1.3 × 1.8 x1.7 × 1.8 × 1.3 ×× 1.3 1.3 × 1.3

1.8 ×× 1.8

Increasing consumption of materials generates significant negative environmental impacts The projected increase in materials consumption

of production related emissions were associated with

is likely to have large associated environmental

steel and cement production, which are important

impacts in the Slovak Republic, including climate

inputs to the construction sector. This large share of

change. Around 70% of the country’s greenhouse

materials management related emissions highlights

gas emissions were associated with materials

the importance of the circular economy transition in

management activities in 2019, mainly with the

the Slovak Republic for the achievement of the

production of goods and fuels. The highest share

climate targets.

Materials and non-materials management related greenhouse gas emissions in the Slovak Republic in 2019 Figure 2.

Commercial

Commercial energy use energy 8% use 8% Residential energy use Residential 11% 11% energy use

Passenger Passenger transportation transportation 12% 12%

Disposal of food Disposal of food and 4% 4% andwaste waste Crop and food Crop and food production and production and storage storage Transportation of goods 8% 8% Transportation of11% goods 11%

■ Materials Management ■ Non Materials Management

Production of goods and fuels 46%

ofinfuel UseUse of fuel production 26% in production 26%

Industrial Industrial processes and processes product use and product 20% use 20%

4 · OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022

A national circular economy roadmap is needed to provide the direction of change and to identify where efforts should focus

Given the significant projected growth in materials consumption and the related increases of environmental pressures, policy reforms are urgently needed. A national circular economy roadmap can help to identify how the existing policy framework needs to

Economic instruments for sustainable consumption and production

be complemented, as well as determining where scarce resources need to be focused to maximise impact. The current policy landscape related to the circular economy in the Slovak Republic is fairly well advanced in the area of waste management, but there is an implementation gap that needs to be addressed. In addition, earlier stages in the product life cycle, such as material extraction, product design and production are currently insufficiently addressed by policies. To succeed in fully exploiting the circular potential of the economy, the Slovak Republic will need to support eco-design, eco-innovation and the use of

Construction sector

secondary raw materials in production, enable citizens to acquire more environmentally friendly behaviour, and improve waste prevention and material recovery.

The circular economy policy framework needs to target three priority areas in particular OECD analysis and stakeholder consultations identified three areas where circular economy reforms would be particularly impactful: the use of economic instruments to promote sustainable production and consumption, the construction sector and the food and bio-waste value chain. Our report proposes more than 30 concrete policy

Food and bio-waste value chain

recommendations supported by an implementation plan and a monitoring framework that would need to be introduced across the three priority areas by 2040. Implementing these recommendations can help achieve the circular potential of the Slovak economy as well as climate change mitigation objectives.

OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022 · 5

Strengthening the use of economic instruments to stimulate sustainable production and consumption

Economic instruments offer the prospect of achieving circular economy objectives at a lower economic cost, while also incentivising innovation These policy measures induce firms and individuals

value chain, directed at changing product design

to change their behaviour through price signals, but

and production, but can also be used to stimulate

they also provide a degree of flexibility.

circular consumption patterns or re-use and

They can provide incentives upstream in the

recycling downstream.

Key policy recommendations to strengthen the use of economic instruments: Ϙ

Strengthen the incentives provided by existing

Gradually extend the mandatory use of green

landfill taxes and implement new tax measures

public procurement (GPP) criteria as award criteria,

to address additional stages in the product

and apply GPP to additional product groups (e.g.

life cycle (e.g. value added tax reductions

construction, food and canteen services) and

for repair, re-use and refurbishment, materials

entities; and

taxes on virgin aggregates and plastics or incineration taxes); Ϙ

Expand the coverage of well-designed pay-asyou-throw (PAYT) schemes across the Slovak

Improve and re-enforce existing Extended

Republic by making PAYT mandatory or by creating

Producer Responsibility (EPR) schemes by

additional incentives for municipalities to adopt

introducing eco-modulated fees that incentivise

such schemes, and move beyond volume and

circular design, and possibly extend EPR

frequency subscription based schemes, towards

to additional product groups and waste streams,

sack- or weight-based schemes, in particular in

such as construction products;

densely populated areas.

Did you know? The Slovak Republic increased the share of Green Public Procurement (GPP) from 0.31% in 2019 to 14.74% in 2020 in volume of contracts. The national GPP target aims to achieve a GPP share of 70% by 2030 both in volume and value of all public contracts. Source: Ministry of Environment of the Slovak Republic

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Figure 3.

Overview of economic instruments for the circular economy

Encourage the use of recyclable materials

Incentive subsidies

Incentivise recycling by waste operators

Virgin material taxes Recycled content material Tax benefits

Stimulate circular product design & eco-innovation Waste management reuse & recycling

Circular product design & production

Green Public Procurement

Fiscal instruments

Landfill taxes Incineration taxes

Incentivise recycling by waste generators

PAYT household waste charges Deposit-Refund Schemes

Engaging consumers & households in circular economy

Influence behaviour at product’s end-oflife

Extended Producer Responsibility

Voluntary Agreements

Influence behaviour at the point of sale Consumer product taxes Product eco-label

OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022 · 7

Towards a circular construction sector to improve waste management and reduce the use of virgin raw materials

Large untapped opportunities exist in the Slovak construction sector to reduce the use of virgin raw materials and stimulate the use of recycled construction materials The construction sector is not only an important

However, new construction and renovations

economic sector in the Slovak Republic but it

also offer important opportunities to deploy

also accounts for more than half of domestic

circular strategies. In particular, incentives

raw materials use and for a considerable amount

encouraging circular design and the use of

of waste generated in the country. Until recently,

secondary construction materials are lacking,

efforts aimed at increasing circularity in the sector

and would have significant potential to reduce

were very limited, with most of the attention

materials consumption and associated

focused on improving energy efficiency of buildings.

environmental impacts.

Figure 4.

Construction life cycle phases and circular economy

PRODUCTION PHASE TRANSPORTATION TO FACTORY

CONSTRUCTION

DESIGN PHASE ENERGY,WASTE, WATER USE IN FACTORY

DESIGN OF BUILDING

TRANSPORTATION BY LOCATION

REUSE, RECOVER, RECYCLING

NEW LIFETIME

EXTRACTION AND PROCESSING OF RAW MATERIALS

DISPOSAL

WASTE PROCESSING

TRANSPORT

RECONSTRUCTION / DEMOLITION

OPERATIONAL ENERGY CONSUMPTION

END-OF-LIFE

8 · OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022

Key policy recommendations to help the country transition to a circular construction sector: Ϙ

Introduce a quality standard for recycled

Encourage increased use of secondary raw

construction materials to stimulate the marketing

materials (e.g. recycled steel and concrete) and

and use of recycled materials and construction

of renewable materials (e.g. wood) in future

products;

deep renovation projects through fiscal incentives

Consider introducing minimum recycled

(e.g. raw material taxes on aggregates); and

content requirements for certain construction

Introduce mandatory selective demolition,

materials within the context of green public

including a system of inspection / audit before

procurement (GPP);

and after demolitions take place to increase the recovery of high-quality components and material fractions from construction and demolition waste and to encourage high-quality recycling.

Did you know?

USE PHASE

PHASE

USE

TO BUILD INSTAL -LATION

IN NA NC E

In 2018, almost half of the treated mineral waste from construction and demolition was disposed of in landfills in the Slovak Republic. Only 37% of mineral waste was recycled and around 13% was used for backfilling. This is one of the weakest performances in the EU.

RE PA I

Source: Eurostat

RENOVATION

REPLACEMENT

OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022 · 9

A circular food and bio-waste value chain to support waste prevention and management

Implementing circular strategies in the food and bio-waste value chain will help the Slovak Republic achieve EU and national targets as well as decrease food waste The food system is among the most frequently

and bio-waste value chain. While the country’s

targeted priority areas in national circular

short- and medium-term goals should be on

economy strategies given its high consumption

achieving EU waste targets (e.g. recycling and

of land, water and energy, as well as its large

landfill targets), long-term efforts will need to

production of potentially greenhouse gas emitting

focus on preventing food and other bio-waste,

waste. A wide range of potential measures still

including through food redistribution and by-

needs to be implemented within the Slovak food

product valorisation.

Figure 5.

ctors, processes and flows of resources for food and other bio-waste value chain A in the Slovak Republic

Food production chain

Non-food production chain

Landscaping chain

Consumption Households

Households

Composting

Households Parks (public green)

Residual resources to re-use / recycle Animal feed

Food services

Food services’ gardens

Anaerobic digestion Residual resources to discard

Bio-energy Co-generation (EfW) Incineration

(Food) wholesale and retail & redistribution

(Non-food) wholesale and retail

Wholesale and (landscape) retail

Biobased materials

Sewer Landﬁll

Manufacturing

Processing

Primary production including plant production, animal (feed) production & aquaculture, and ﬁsheries

Discards

Waste management

10 · OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022

Policy recommendations for a circular food and bio-waste economy: Ϙ

Invest in the development of a quantitative

Develop a supportive regulatory framework for

approach to policy making, as well as data

bio-waste management and support not only

collection to measure food waste and food losses

processing and recycling technologies but also

on a highly granular level, in line with EU

innovation into applications aimed

methodology;

at increasing resource efficiency and valorisation

Develop effective information and communication

techniques.

tools, focused on food waste prevention directed at consumers (e.g. campaigns and interactive events); Ϙ

Strengthen the use of economic instruments (e.g. GPP, value added tax reductions and incentive subsidies) to provide food producers with incentives to reduce by-products at source, to use recycled materials and to provide consumers with incentives

Did you know? Approximately 40% of municipal waste in the Slovak Republic is biodegradable waste, out of which around half is kitchen bio-waste. Source: INCIEN estimates

to improve their sorting of bio-waste (e.g. PAYT based charges); and

OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022 · 11

Circular economy as a means to help decarbonise the economy

The circular economy transition has the potential to significantly reduce greenhouse gas emissions in the Slovak Republic The highest greenhouse gas abatement potential is

The food and agriculture sector also provides

found in the construction sector, notably through

opportunities for decarbonisation, despite there

the application of circular economy measures to

being less evidence on the abatement potential from

steel and cement production. Increasing material

applying circular economy strategies in the sector.

substitution for steel, supporting space-sharing

The Slovak Republic could explore the potential

practices in non-residential buildings, and

of regenerative farming practices, as well

improving recycling, recovery, reuse and upcycling of

as strengthening its focus on food waste prevention

construction and demolition waste are some of the

as these have been found to result in higher amounts

key activities the country could explore to contribute

of avoided emissions than food waste recycling

to the achievement of the climate targets.

strategies.

Reducing the use of concrete, cement and steel in the building sector over a building’s life cycle could diminish emissions from buildings by 61% in the EU in 2050 compared to 2015 levels (Ramboll, Fraunhofer ISI and Ecologic Institute, 2020).

Shifting to more natureenhancing farming systems and making more effective use of the food that is produced could achieve a 49% net reduction in greenhouse gas emissions (emissions minus carbon sequestration) per year globally in 2050 compared to a business-as-usual scenario (Ellen MacArthur Foundation and Material Economics, 2019). 12 · OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022

A monitoring framework to support the implementation of the roadmap

A circular economy monitoring framework will enable

feedback to strategy and planning development for

measuring the progress made towards specific targets

the different actors in the economy.

and goals of the roadmap through a set of indicators. It will help the Slovak policymakers understand the Slovak Republic’s circular economy performance and identify areas for further intervention. The monitoring framework can also form the basis for setting new circular economy long-term priorities and deliver

The proposed monitoring framework has a two-tier structure: a set of headline indicators restating the EU circular economy monitoring framework, and a set of additional, experimental and operational indicators per priority area to monitor the progress made on specific recommendations and actions.

EU circular economy monitoring framework (four categories of indicators): • Production and consumption • Secondary raw materials • Waste management • Competitiveness and innovation for the circular economy Indicators measuring the progress made on increasing the use of economic instruments

Indicators measuring the transition to a circular construction sector

Indicators measuring the application of circular principles in the food and bio-waste value chain

OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022 · 13

The OECD’s contribution

Within the context of the OECD’s collaboration with the DG REFORM of the European Commission on country specific policy reform projects, the OECD has been supporting the Ministry of Environment of the Slovak Republic in developing a circular economy roadmap. The role of the OECD in this project was to provide a set of key elements for the future roadmap, including the development of analytical inputs and stakeholder consultation. For instance, the OECD provided an in-depth analysis of three priority areas: the economic instruments for sustainable production and consumption, the construction sector, and the food and bio-waste value chain. It also developed more than 30 concrete policy measures to help implement the future roadmap, along with a monitoring framework to measure the progress made.

This work was carried out with funding by the European Union via the Structural Reform Support Programme and in cooperation with the European Commission’s Directorate-General for Structural Reform Support (REFORM).

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Further reading Ellen MacArthur Foundation and Material Economics (2019), Completing the picture: How the circular economy tackles climate change, https://ellenmacarthurfoundation.org/completing-the-picture European Commission (2020), A new Circular Economy Action Plan: For a cleaner and more competitive Europe, https://eur-lex.europa.eu/resource.html?uri=cellar:9903b325-6388-11ea-b73501aa75ed71a1.0017.02/DOC_1&format=PDF European Commission (2019), The Environmental Implementation Review 2019 - Country Report Slovakia, https://ec.europa.eu/environment/eir/pdf/report_sk_en.pdf European Commission (2019), The European Green Deal, European Commission, Brussels, https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1576150542719&uri=COM%3A2019%3A640%3AFIN Ministry of Environment of the Slovak Republic (2021), Program odpadového hospodárstva SR na roky 2021– 2025 [Waste Management Plan of the Slovak Republic 2021-2025], Ministry of Environment of the Slovak Republic, https://www.minzp.sk/odpady/poh/poh-sr-2021-2025/ Ministry of Environment of the Slovak Republic (2019), Greener Slovakia: Strategy of the Environmental Policy of the Slovak Republic until 2030 (Envirostrategy 2030), Ministry of Environment of the Slovak Republic, Institute of Environmental Policy, https://www.minzp.sk/iep/strategicke-materialy/ envirostrategia-2030/ Ministry of Finance of the Slovak Republic (2021), Recovery and Resilience Plan of the Slovak Republic, Ministry of Finance of the Slovak Republic, Bratislava, https://www.planobnovy.sk/kompletny-planobnovy/zelena-ekonomika/

Images from Shutterstock.com Design: OECD and Chantal Riviere (grafiklab.fr).

OECD (2022), Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability, OECD Environment Policy Papers, No. 30, OECD Publishing, Paris, https://www.oecd.org/environment/waste/circular-economy-country-studies.htm OECD (2021), Towards a national strategic framework for the circular economy in the Czech Republic: Analysis and a proposed set of key elements, OECD Environment Policy Papers, No. 27, OECD Publishing, Paris, http://oe.cd/il/circularczechia OECD (2019), Global Material Resources Outlook to 2060: Economic Drivers and Environmental Consequences, OECD Publishing, Paris, https://doi.org/10.1787/9789264307452-en OECD (2017), “Making the Slovak Republic a more resource efficient economy: Country Study”, OECD Environment Policy Papers, No. 7, https://dx.doi.org/10.1787/2d5c00e7-en Ramboll, Fraunhofer ISI and Ecologic Institute (2020), The decarbonisation benefits of sectoral circular economy actions, European Environment Agency, https://ramboll.com/media/environ/decarbonisationbenefits-of-sectoral-circular-economy-actions

OECD HIGHLIGHTS Closing the Loop in the Slovak Republic: A Roadmap Towards Circularity for Competitiveness, Eco-innovation and Sustainability | © OECD 2022 · 15

These Highlights are based on the OECD publication Closing the Loop in the Slovak Republic: A Roadmap towards Circularity for Competitiveness, Eco-innovation and Sustainability. This publication lays out some of the key elements for the future Slovak circular economy roadmap. It presents the rationale for transitioning to a circular economy in the Slovak Republic, outlines the vision and objectives for the transition, providing examples of key policy measures and listing some of the indicators to monitor the progress made. © OECD 2022 Visit our website: https://www.oecd.org/environment/waste/circular-economy-countrystudies.htm https://www.minzp.sk/obehove-hospodarstvo/cestovna-mapa/

CONTACTS Shardul Agrawala: Shardul.Agrawala@oecd.org (Head of the Environment and Economy Integration Division, OECD Environment Directorate) Viktória Pokorná: Viktoria.Pokorna@enviro.gov.sk (Policy officer, Department for Environmental Policy Coordination of the Ministry of Environment of the Slovak Republic)

May 2022