A law* aimed at developing a recycling system and providing incentives for the use of secondary resources has been published (the “Law”).
The Law introduces the following new terms: “secondary resources”, “secondary raw materials” and “by-products”.
Secondary resources are defined as a type of waste that can be reused to produce goods, perform works, supply services or obtain energy. Secondary resources may result from separate waste collection or be generated during a manufacturing process.
The Law stipulates the obligation of companies that have generated secondary resources as a result of their activities to ensure that they are recycled (by themselves or by transferring them to another entity). For example, it is possible to obtain secondary raw materials from secondary resources, which can then be used to produce other products or even to perform other economic activities.
The main feature of the regulation of secondary resources is the ban on dumping them, which, given the need for adequate infrastructure, will take effect from 1 January 2030 (in contrast to the rest of the Law, which takes effect from 1 March 2023).
The Law also establishes special regulations for by-product management systems.
Thus, if a company generates substances or items which are not directly produced, the company must independently classify them as waste or manufacturing by-products. The latter will now be subject to separate accounting if they are suitable for further use in production as raw materials or for consumption as an independent product.
Unlike secondary resources, manufacturing by-products are generally not recognised as waste unless they:
- are disposed of by the company at landfills or other waste disposal sites;
- are not used in the company’s own production and are not transferred to another entity as raw material or product after three years from the date of their classification as a manufacturing by-product; or
- relate to substances or items that cannot be classified as manufacturing by-products according to the list to be established by the Russian government.
If manufacturing by-products are recognised as waste, the company will have to pay an environmental impact fee. The specifics of calculating such a fee are regulated in the Law. In particular, an additional (multiplying) factor of 52 is to be applied to the calculation.
To implement the requirements of the Law, the Russian government has already published draft lists in respect of:
- substances and items that cannot be classified as manufacturing by-products (e.g. mercury or fluorescent lamps that have lost their useful properties);
- products whose production and use are not allowed because of the difficulty or impossibility of treating or recycling waste from their use (e.g. ozone-depleting substances). The production and use of such products is expected to be prohibited; and
- certain share of secondary raw materials is used (e.g. certain types of concrete and cements). Incentives, which are likely to take the form of tax or other benefits, are envisaged for companies engaged in the relevant types of production or activities.
The Russian government is planning to approve the first list by 1 March 2023 and the other two by 1 March 2024.
The new rules provided for in the Law are aimed at developing a closed-cycle economy, reducing the volume of waste sent to landfill and maximising the involvement of secondary resources in the economy.
However, on the other hand, once enacted, the provisions of the Law are likely to impose additional administrative and financial burdens on businesses, as they will require them to keep records of the secondary resources and by-products generated by their activities, and companies are likely to revise their current waste management schemes.
Companies need to take the new rules into account when planning their activities in 2023 and beyond.
* In Russian