Hazardous Waste Treatment and Recycling Including Oil Sludge
Business Model Description
Construct and operate hazardous waste management facilities that provide safe and responsible treatment of commercial and industrial hazardous waste, including treatment of oil-sludge, oil-contaminated soil and other petroleum based -waste, chemical waste such as pharmaceutical waste, acids or solvents, or asbestos-containing materials, where recovered sludge are provided back to the sludge supplier and treatment's residues are recovered as oils & lubricants or precious metals like gold and silver or disposed in compliance with environmental regulations.
Expected Impact
Minimize the amount of hazardous waste and manage resources efficiently through recycling, while protecting public health and avoiding environmental contamination.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Azerbaijan: Absheron - Khizi
- Azerbaijan: Baku
Sector Classification
Infrastructure
Development need
Even though infrastructure development fares well compared to neighboring countries, expanding and raising the quality of existing assets such as road, water, waste and sanitation services is essential to support economic diversification. Increased efforts are needed to maintain and modernize the existing road and rail network, while water resources are threatened by the heavy oil industry and untreated sewage and industrial waste (1, 2).
Policy priority
Strategic Roadmap for National Economy Perspective 2016 highlights investments in high-quality infrastructure to position Azerbaijan as a regional hub by 2025. Azerbaijan 2030: National Priorities for Socio-Economic Development lists development of international and regional transport corridors and building of modern infrastructure to harness country-wide economic potential among its key goals (3, 4).
Gender inequalities and marginalization issues
Regional differences in the delivery of infrastructure services are significant, with rural areas being neglected in favor of the capital city region, severely hampering their economic prospects (2). Women spend on average three times as much as men on unpaid domestic labor. Due to the deterioration of roads, water and sanitation systems women spend longer hours to finish both paid employment and domestic tasks (2, 5).
Investment opportunities introduction
Azerbaijan’s planned and current transport infrastructure projects reached USD 7.5 billion in 2019, while accounting for 15% of total greenfield FDI, among the highest in the region. In line with government objectives to diversify its economy significant opportunities exist for freight forwarders, logistics/supply chain developers and transport equipment investments (6, 7).
Key bottlenecks introduction
Budgetary constraints due to high capital requirements for infrastructure development and maintenance, despite ambition to diversify the economy, continuing emphasis on hydrocarbon exports and associated groundwork, dominant role of the public sector for providing infrastructure, and uncompetitive tariffs and utility prices are among the key challenges limiting private sector participation in the sector (2).
Waste Management
Development need
Waste generation in Azerbaijan is estimated at 4 million tons per year, likely to double in the next two decades due to population growth and increasing economic activity. Only 56% of the waste was collected country-wide in 2017, majority of which was disposed at unprotected sites. Remaining uncollected waste is burned, buried or dumped in backyards causing environmental pollution and threatening public health (8, 9).
Policy priority
Strategy of Socio-Economic Development of the Republic of Azerbaijan between 2022 – 2026 states that effective waste management systems will be developed for environment-friendly industrialization. The government of Azerbaijan targets to increase the coverage of waste recycling to 20% countrywide and 10% in rural areas by 2026 (10).
Gender inequalities and marginalization issues
Solid waste collection services are limited outside of Baku where 47% of the rural population does not benefit from waste collection services (8). Women are disproportionately engaged in handling household waste and are relatively more vulnerable when scavenging for waste in uncontrolled environments (14).
Investment opportunities introduction
The Greater Baku area generates roughly half of the country's total solid waste. World Bank conducted eight feasibility studies and environmental impact assessments for the installation of new waste transfer plants and landfills facilities in Baku and Gazakh-Tovuz district (8). Balakhani Industrial Park offers tax privileges for recycling companies (11).
Key bottlenecks introduction
Absence of waste collection and transfer facilities, fragmented responsibilities between municipalities and local executive authorities, low level of awareness in using secondary raw materials and household level segregation, lack of strategy on industrial waste or household waste management are listed among the key bottlenecks (8, 9, 12).
Waste Management
Pipeline Opportunity
Hazardous Waste Treatment and Recycling Including Oil Sludge
Construct and operate hazardous waste management facilities that provide safe and responsible treatment of commercial and industrial hazardous waste, including treatment of oil-sludge, oil-contaminated soil and other petroleum based -waste, chemical waste such as pharmaceutical waste, acids or solvents, or asbestos-containing materials, where recovered sludge are provided back to the sludge supplier and treatment's residues are recovered as oils & lubricants or precious metals like gold and silver or disposed in compliance with environmental regulations.
Business Case
Market Size and Environment
20% - 25%
102,500 tons of hazardous waste treated and disposed in 2021. 35,000 tons of drill cutting from off-shore oil exploration and extraction annually (31, 30).
In 2021, 245,200 tons of hazardous wastes were generated in Azerbaijan of which 102,500 tons was treated and disposed (31).
The total amount of generated hazardous waste increased by 21% from 262,600 tons to 317,4000 tons during 2015-2019. This increase was 16.5% in terms of per capita, from 27.2 kg to 31.7 kg (54).
Specialized oil industry hazardous waste facilities process more than 35,000 tonnes of potentially toxic drill cuttings from offshore oil exploration and extraction annually (30).
Indicative Return
10% - 15%
The Urgent Environmental Investment Project of World Bank which targeted the clean-up of the Caspian Sea to enhance Sturgeon Fish Hatchery operations calculated an internal rate of return of 15.8% for the mercury clean-up component, where 275 tons of mercury would be recovered and sold at the market price of USD 1,200 per ton (55).
The same project included an oil clean-up component where 500,000 cubic meters of oil-polluted soil with a mean recoverable content of 20% would be cleaned, and 100,000 tones of oil was planned to be recovered and sold at a market price of USD 25 per ton, producing an internal rate of return of 17.7%. As a DFI supported project, the benchmark return can appear higher than market standards (55).
Exol Azerbaijan CJSC, involved in the processing of used oils has recorded an annual turnover of AZN 0.90 million (USD 529,400), against an initial investment of AZN 0.2 million (USD 117,600) (59).
Investment Timeframe
Medium Term (5–10 years)
The loan under the World Bank's Urgent Environmental Investment Project in Azerbaijan, which included two components of mercury cleanup and onshore oil field cleanup, produced economic returns at the closing of the project, which lasted over a period of six years (55).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Market - Volatile
Impact Case
Sustainable Development Need
Azerbaijan has inadequate hazardous waste disposal infrastructure, with few available regional landfills outside of Baku and the Absheron Peninsula. As a result, hazardous waste is often mixed with municipal waste and discharged improperly. In 2021, only about half of the collected hazardous waste was treated properly (49, 31).
Approximately one-third of the pesticides authorized for use in Azerbaijan's agriculture sector are highly hazardous, posing significant risks to the environment and human health. However, there are no safe disposal or recovery facilities for pesticides in the country, resulting in the improper discharge of pesticide waste and absorption into soil (45, 34, 30).
Azerbaijan experiences high levels of environmental degradation, including mercury contamination in soil and water. Hazardous substances from polluted areas enter the human body through air, water, and the food chain, posing significant risks to human health including skin and respiratory diseases. (53, 37, 38).
Gender & Marginalisation
Women and children are deemed particularly vulnerable to the side effects of contamination from hazardous waste, mainly mercury poisoning which disproportionately affects the reproductive health of women and the sensory development of infants (35).
The urban population living in the former industrial lands of the Soviet Union in the Absheron peninsula, characterized as the urban poor, are impacted by hazardous waste where 2000 hectares of land was polluted because of on-shore oil production during the Soviet-era (30).
Expected Development Outcome
Efforts to dispose of and recycle hazardous waste will reduce environmental contamination, leading to reduced pollution in the air, water, and soil, contributing to the conservation of Azerbaijan's biodiversity.
Proper management and disposal of hazardous waste will prevent harmful chemicals from entering food systems, reducing the risk of exposure to hazardous substances and improving public health.
Implementing effective hazardous waste management practices will help Azerbaijan abide to its international commitments as set out by the Basel convention, improving the country's commitment to environmental protection and international reputation.
Gender & Marginalisation
The impact of contamination from hazardous waste will be minimized, positively influencing women's reproductive health and sensory development of children.
The population living near industrial sites, particularly in the Absheron peninsula impacted by legacy waste will benefit from enhanced investments in oil and industrial waste clean-up.
Primary SDGs addressed
11.6.1 Proportion of municipal solid waste collected and managed in controlled facilities out of total municipal waste generated, by cities
Quantity of domestic waste collected by public utilities reached 10 million m3 in 2021 (31).
20% of waste will be recycled, including 10% in rural regions in Azerbaijan by 2026 as set out by the 2022-2026 Social and Economic Development Strategy (27).
12.4.2 (a) Hazardous waste generated per capita; and (b) proportion of hazardous waste treated, by type of treatment
12.2.1 Material footprint, material footprint per capita, and material footprint per GDP
Indicator 12.4.1: Number of parties to international multilateral environmental agreements on hazardous waste, and other chemicals that meet their commitments and obligations in transmitting information as required by each relevant agreement
Hazardous waste generated per capita reached 23.77 kg in 2021, 299,000 tones of hazardous waste was treated or disposed (26).
Azerbaijan's material footprint per capita was measured as 10.6 metric tons in 2019 (58)
The Republic of Azerbaijan acceded to the UN Basel Convention on the Control of Transboundary Movements of Hazardous Wastes in 2001, The Stockholm Convention on Persistent Organic Pollutants was ratified in 2003, the Montreal Protocol on Substances that Deplete the Ozone Layer and the relevant amendments to the Protocol was signed in 1996 (54).
N/A
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Outcome Risks
A designated hazardous waste landfill reduces the likelihood of hazardous contamination overall, however, the area around the landfill remains at risk (52).
Hazardous waste treatment processes may release air and water pollutants which can damage environmental and public health, particularly impacting nearby communities and settlements (50).
High exposure to toxic materials can produce negative health outcomes for plant workers (55).
Impact Risks
Lack of data on the generation of hazardous waste and chemical pollutants, including polychlorinated biphenyls (PCBs), may hinder the evaluation of the intended impact (44).
Positive impact of hazardous waste management facilities may be limited unless proper inspection and monitoring mechanisms are ensured, and adequate skills and training for waste management technologies are provided.
Impact Classification
What
Hazardous waste management and recycling can decrease the generation hazardous waste and environmental pollution, minimizing the adverse effects on public health and the environment.
Who
The overall population will benefit from improved air, soil, and water quality and enhanced well-being from improved environmental conditions.
Risk
Lack of data and reporting on hazardous waste management, and limited skills in the labor market can limit intended impact.
Contribution
In addition to existing regulatory and licensing measures for in-house hazardous waste management, investments in treatment of hazardous waste can reduce the amount of environmental contamination in Azerbaijan and reduce the country's materi
How Much
142,700 tons of generated hazardous waste was left undisposed or untreated in 2021 which stand to benefit from investments in hazardous waste management (31).
Impact Thesis
Minimize the amount of hazardous waste and manage resources efficiently through recycling, while protecting public health and avoiding environmental contamination.
Enabling Environment
Policy Environment
Azerbaijan 2030: National Priorities for Social Economic Development, 2021: States "a clean environment and a country of green growth" as one of the five national development priorities. In that regard, the recycling activities and remediation of contaminated areas are emphasized (4).
Social and Economic Development Strategy, 2022-2026: Sets up a strategic framework for socio-economic growth, including a clean environment and green growth. The strategy promotes effective waste management and expansion of waste recycling activities, setting the 20% recycling rate target (10).
National Strategy for the Improvement of Solid Waste Management in the Republic of Azerbaijan for 2018-2022: Emphasizes the improvement of hazardous waste management systems and construction of new infrastructure facilities for effective waste management (32).
National strategy on Hazardous waste management in Azerbaijan, 2004 - 2010: Establishes the necessary framework for hazardous waste management, including the definition and classification of hazardous waste in accordance with the Basel Convention (33).
Financial Environment
Financial incentives: National Entrepreneurship Support Fund provides preferential loans with an annual interest rate of 6% and credit limits of up to AZN 10 million (USD 5.9 million) for up to 10 years for entrepreneurship activities with the innovation tendency including recycling (60).
Fiscal incentives: According to the Tax Code of the Republic of Azerbaijan, residents of industrial parks including Balakhani specializing in waste management, are exempt form corporate income tax, property tax, land tax, and VAT for imported machinery, and technological equipment for 10 years (61).
Regulatory Environment
On Industrial and Household Waste No. 514, 1998: Was modified with several amendments in 2007. Requirements for hazardous waste management and transportation are included. The certificate should be granted for hazardous wastes transportation in accordance with the law (53).
Rules of Passportisation of Hazardous Waste, No. 41, 2003: Provides requirements for a hazardous waste permit for the treatment, storage, and disposal of hazardous wastes. The permit includes the type, classification, and components of the hazardous waste in accordance with Basel Convention (29).
On Environmental Safety, 1999: Prohibits the importation and manufacture of commodities and other hazardous products that are handled, treated, or recycled in an environmentally destructive manner (28).
UN Basel Convention on the Control of Transboundary Movements of Hazardous Wastes: and their Disposal (1989): Ratified in 2001, in Azerbaijan. The Convention targets to reduce hazardous wastes generation and restricts the import and export of hazardous waste for final disposal and recovery (30).
Stockholm Convention on Persistent Organic Pollutants, 2001: Ratified in 2004 in Azerbaijan. The global treaty aims to reduce the consumption, production, and disposal of 22 chemicals. Cengi pesticide landfill upgraded as part of the National Implementation Plan compiled with the convention (30).
Marketplace Participants
Private Sector
BP, Ecosol, Veyst Management Company, RT Services Ltd. Xim Polimer, Az-lead, Exol Azerbaijan CJSC, CNIM, SOCAR.
Government
Ministry of Ecology and Natural Resources, Ministry of Health, Ministry of Agriculture, Ministry of Emergency Situations, National Centre for Hazardous Waste Management, Azerkimya.
Multilaterals
World Bank, European Union, EU4Environment, Untied Nations Environment Programme (UNEP), United Nations Development Programme (UNDP), Global Environment Fund (GEF), Food and Agricultural Organization of the UN (FAO), Asian Development Bank (ADB).
Non-Profit
Ruzgar NGO, Regional Environmental Centre for the Caucasus (REC Caucasus), Azerbaijan Entrepreneurs Confederation (ASK).
Target Locations
Azerbaijan: Absheron - Khizi
Azerbaijan: Baku
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