Expert views (part four): What would the ideal allocation from the Green Fund look like?

In the fourth and last in a series of interviews on waste management with representatives of state institutions, the business community, academia, and civil society in Serbia, we asked what the ideal allocation under the Green Fund, which has yet to be formed, would look like.

The answers were provided by all six respondents featured in the interviews: Ivan Karić, a state secretary at the Ministry of Environmental Protection, Igor Jezdimirović, president of the Environment Engineering Group, Aleksandar Jovović, a professor at the Faculty of Mechanical Engineering of the Belgrade University, Dejana Milinković, director of the Association of the Cement Industry of Serbia (CIS), Slobodan Minić, a special advisor to the Fiscal Council, and Suzana Obradović, secretary general of the Recyclers Association of Serbia.

The series of interviews was preceded by the introductory article about the problems, challenges, and possible solutions concerning waste management in Serbia. In the first interview, we asked what needs to be done in the period until Serbia’s accession to the EU, or until 2025; whether the proposed 11-year transitional period from the moment of accession would be sufficient to achieve goals; and how important the establishment of waste separation at source is. In the second interview, we discussed challenges in municipal waste management in Serbia, and in the third, we asked what the future of the recycling industry in Serbia, while we also sought positions on the use of waste-derived alternative fuels and the implications for the environment and public health.

BGEN: Let’s imagine it’s 2020, for example, and all environmental protection fees are automatically flowing into the Green Fund. What would be the ideal allocation under the fund in your opinion?

Ivan Karić, State Secretary, the Ministry of Environmental Protection

The establishment of a sustainable financing system through the improvement of the institutional and legislative framework, which would ensure all environmental protection levies flow into a separate Green Fund, is a key prerequisite for implementing measures in a timely manner, improving the environmental and utility infrastructure, and achieving the standards of developed EU nations. Putting in place a solid institutional infrastructure and clear financing mechanisms would secure predictable and stable financial flows, as well as conditions for attracting investments in the sector.

If we managed to establish the Green Fund as early as 2020, this would represent huge progress and send a clear signal to the EU that Serbia has a defined national environmental policy in terms of planning, financing, and timeframes. I am of the opinion that the Green Fund needs to be a development and investment fund. Funds raised from environmental protection fees would primarily be directed towards the development and implementation of priority projects and the preparation of project documentation. This should all be in line with the Multiannual Investment and Financing Plan (MIFP), the Directive Specific Implementation Plans (DSIP), and other strategic documents. In this context, I wish to stress that efforts to establish a sustainable financing system through the establishment of the Green Fund will certainly remain one of the Ministry of Environmental Protection’s key priorities in the period ahead.

I believe that, ideally, around EUR 100 million – the amount raised annually from environmental protection fees – should go toward tackling historical waste, facilities to support large state environmental infrastructure and other projects, such as those concerning the green economy, recycling, waste disposal, and measures to improve energy efficiency.

Slobodan Minić, Special Advisor to the Fiscal Council

Resolving piled up problems in almost all segments of environmental protection requires huge funds, which is why it is very important to set priorities and carefully allocate limited funds flowing into the Green Fund. With that in mind, it would probably be a good solution for Serbia to adopt a dual allocation principle. Under this system, part of the funds would be allocated to local governments according to certain criteria – for example, the size of the population, total surface area, size of protected areas, etc. – and local governments would independently use these funds to resolve what they deem to be priority environmental problems.

However, the remaining funds would be managed by the Ministry of Environmental Protection, and the further allocation to local governments would be conducted as part of public call procedures for common good projects. This would help keep the focus on resolving priority environmental protection problems in Serbia. The fact that only those local governments that have prepared project documentation would get funding would help avert the situation we frequently had in the past, with municipalities having funds for various purposes but not spending the funds due to the lack of environmental project documentation.

Suzana Obradović, Secretary General, the Recyclers Association of Serbia

These fees should serve as a minimum amount of environmental funding, a guaranteed amount to flow into the Green Fund. In 2018, a total of RSD 11 billion in environmental protection fees were paid to the state budget under the “polluter pays” principle, while less than RSD 3 billion in green funding was set aside for 2019, or RSD 8.6 billion less than in the previous year.

This year, we can expect around EUR 100 million in environmental protection fees to be collected, and this should serve as a mere foundation for environmental funding and the Green Fund. Given that huge investments are needed in environmental protection, additional budget funding should be set aside for the Green Fund to become fully operational. The fund would be managed by the Ministry of Environmental Protection in line with realistically set priorities, projects that have been prepared and are awaiting implementation, etc. The EU is approving funds for Serbia’s environmental protection, but only if the country sets aside its own funds for the purpose as well, and this is very important for the country’s capability to finance all projects.

The Fiscal Council has recommended making it a state budget priority in 2019 and the years to come to boost investments in environmental protection. The council estimated that about 1.2%-1.4% of GDP, or around EUR 500 million, more should be set aside annually from the state budget for environmental protection. It is significant that such an increase in environmental protection funding would have a positive impact on economic growth in the short term. However, even though the Fiscal Council warned not to waste away 2019 when it comes to environmental investments, the state has unfortunately not taken measures recommended by the Fiscal Council and Serbia cannot make the necessary progress in 2019 unless the state sets aside additional funding later in the year.

Aleksandar Jovović, Professor, the University of Belgrade Faculty of Mechanical Engineering

First and foremost, the Republic of Serbia needs to produce its economic development strategy. Based on that, it will determine which priority sectors will be the country’s sectors of the future. And then based on that, it will be possible to determine how much energy the country needs, what kind of infrastructure, etc. This will make it possible to project the amounts and types of waste to be generated in the future.

Based on this data, as well as a clear commitment to a more efficient environmental protection, as well as to the fight against, and adaptation to climate change, it would be possible to determine how to allocate investments from the Green Fund – be it renewable energy sources, energy efficiency in industry or buildings, industry 4.0 in the recycling and circular economy sector, or something completely new.

Dejana Milinković, Director, the Association of the Cement Industry of Serbia (CIS)

If by the ‘green dinar’ we mean revenues from various environmental protection fees (for specific waste streams, pollution, environmental protection and improvements, etc.) and by the ‘green fund’ the funding available for environmental protection and improvement measures, the ideal allocation would be based on transparent rules and measurable criteria, equal for all market players and obligating users to publicly report on the achieved results in environmental protection and improvements brought about by the approved funds, directly or indirectly.

Igor Jezdimirović, President, the Environment Engineering Group

Environmental protection would be soaking long-term investments, while a healthy environment would be providing long-term benefits. Funds would be invested based on priorities, by first tackling the problems that are the most serious/the most hazardous, jeopardizing the largest number of people, and so on.

Investments would be made according to clear criteria, with no political or personal influence, in order to ensure the protection and preservation of Serbia and all its citizens. The priority would given to domestic multidisciplinary teams and solutions that are sustainable in the long run and based on the best available techniques.