Non-Hazardous Waste Disposal and Recycling

Non-Hazardous Waste Disposal and Recycling

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Non-Hazardous Waste Disposal and Recycling

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Waste Management
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
15% - 20% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
Approximately 1.48 million tonnes of waste collected was treated properly in 2021 (21, 8).
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 1 million - USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Sustainable Cities and Communities (SDG 11) Responsible Consumption and Production (SDG 12)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Industry, Innovation and Infrastructure (SDG 9) Life on Land (SDG 15)

Business Model Description

Build and operate waste disposal and recycling facilities, treating non-hazardous household and industrial waste including; plastic waste - PET bottles or HDPE containers and other packaging material; metal waste covering aluminum cans, steel containers; paper and cardboards; or e-waste and electronic equipment; and selling the reused material back to the market in the form of recovered material such as glass products, fibers and new paper products, recovered electronic components including gold and silver, or new plastic products from recycled plastic remains.

Expected Impact

Enhance public health and reduce environmental pollution through expanded waste services, encourage circular economy while optimizing resource use and producing financial benefits from recycling and reuse activities.

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

Explore the country and target locations of the investment opportunity.
Country
Region
  • Azerbaijan: Baku
  • Azerbaijan: Ganja - Dashkasan
  • Azerbaijan: Absheron - Khizi
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

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. 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).

Sub Sector

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. Women are disproportionately engaged in handling household waste and are relatively more vulnerable when scavenging for waste in uncontrolled environments (8, 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).

Industry

Waste Management

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Non-Hazardous Waste Disposal and Recycling

Business Model

Build and operate waste disposal and recycling facilities, treating non-hazardous household and industrial waste including; plastic waste - PET bottles or HDPE containers and other packaging material; metal waste covering aluminum cans, steel containers; paper and cardboards; or e-waste and electronic equipment; and selling the reused material back to the market in the form of recovered material such as glass products, fibers and new paper products, recovered electronic components including gold and silver, or new plastic products from recycled plastic remains.

Business Case

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Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Approximately 1.48 million tonnes of waste collected was treated properly in 2021 (21, 8).

Total quantity of generated production and consumption of waste country-wide reached 3.8 million tonnes in 2021, of which 2.6 million was hard domestic wastes. Approximately 39% of the collected waste is properly treated with the remaining 61% being dumped in open dump sites legally and illegally (21, 8).

Waste generation in Azerbaijan, particularly in the Greater Baku area, is expected to double in the next 20 years due to the demographic growth and higher income (59).

The global waste recycling services market size is projected to reach USD 509 billion by 2028, at a compound annual growth rate of 3.3% during 2022-2028 (27).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

15% - 20%

ROI
Describes an expected return from the IOA investment over its lifetime.

< 5%

Az-Ekol which is a recycling company of plastic (PET) bottles with a production capacity of 2,400 tons has recorded an annual turnover of AZN 2.9 million (USD 1.7 million) against an initial investment of AZN 1.5 million (USD 882,000) (60).

Assuming a positive annual turnover indicating profit, the accounting rate of return for Az-Ekol indicating the percentage rate of return expected on its initial investment can be calculated as 1.7% (60).

An example case study from the United Kingdom of an integrated plastics recovery and reprocessing facility with a capacity of 80,000 tonnes per year was proved to be profitable, generating an estimated internal rate of return of 19% at the base case scenario (38).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

Global examples indicate that payback periods for recycling companies can range from one to five years depending on specific business models and market conditions; a project in the United States has recorded 5 years to break even on sales of recyclables, and 2-4 years with landfill cost saving and environmental credits (41).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

USD 1 million - USD 10 million

Market Risks & Scale Obstacles

Business - Supply Chain Constraints

Waste treatment facilities may operate below capacity due to the absence of a systemized waste collection and sorting system in the country; significant informal dumping and lack of household level waste segregation can raise operating costs (8, 12).

Capital - Limited Investor Interest

Although waste collection could be a potentially attractive market for private operators, low revenue collection rates, unclear budget allocation and high institutional fragmentation results in low private sector interest (8).

Market - Highly Regulated

Responsibility for the provision of waste collection services remains fragmented with numerous operators including local executive authorities, state owned companies, municipalities and private companies. The institutional responsibilities are determined by housing type and not geographic areas further complicating the division of labor (8).

Market - Highly Regulated

Unavailability of waste transfer facilities, lack of financial incentives for operators to deliver waste to treatment facilities and limited control mechanisms and enforcement to prevent illegal dumping are related to the continuation of illegal dumping practices (8).

Impact Case

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Sustainable Development Need

Informal waste dumping is widespread in Azerbaijan with 61% of the total collected waste being dumped, either officially or illegally. In the Greater Baku area, 50% of the generated waste is illegally dumped and only 18% of the overall collected waste is formally or informally recycled (8).

The unsustainable practices of waste management in Azerbaijan pose significant risks to public health, while also contaminating water, soil, and air resources. Household waste is not collected in a source-separated manner and the interest in re-utilizing recycled materials remains low (8, 12).

Average waste generation rate in the country is estimated between 0.5 kg and 0.6 kg per capita on a daily basis (0.3 kg for rural regions), majority of which is disposed at unplanned and non-engineered dumpsites. Waste management services outside of Baku are under the responsibility of Executive Powers and municipalities who exhibit limited capacity to provide solid waste management services (9).

Gender & Marginalisation

Despite Azerbaijan's significant rural population, forming 47% of the total population, waste collection services in remote areas are only partially covered with merely 36% of the generated waste outside of the Greater Baku area being collected (8, 33, 12).

Although women form 30% of employment in the water and waste treatment sectors they earn less than their male counterparts, with an average nominal monthly wage of AZN 433 (USD 255) compared to AZN 616 (USD 362) for males (5, 25).

Expected Development Outcome

Transitioning towards a circular and green economy will be facilitated with effective waste management and recycling. Enhanced reuse and recycling initiatives will reduce GHG emissions and decrease environmental pollution, contributing to the sustainability of the country's resources (35).

With increased recycling activities, less waste will end up in landfills, preventing environmental contamination while producing economic gains and savings through recycling and reuse activities.

Expansion of proper waste management will decrease illegal dumping of waste country-wide improving overall health and safety of communities.

Gender & Marginalisation

Rural areas will benefit from effective waste management services as much as urban areas do.

Increased involvement of women in the sector will enhance community engagement and education around waste management practices including household-level segregation of solid waste.

Primary SDGs addressed

Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities

11.6.1 Proportion of municipal solid waste collected and managed in controlled facilities out of total municipal waste generated, by cities

Current Value

Quantity of domestic waste collected by public utilities reached 10 million m3 in 2021 (21).

Target Value

The 2022-2026 Social and Economic Development Strategy sets the target to increase share of recycled waste to 20% country-wide and 10% in rural regions by 2026 (10).

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

12.5.1 National recycling rate, tons of material recycled

Current Value

Balakhany landfill is the only sanitary landfill of Azerbaijan with an annual capacity of 200,000 tonnes, they recycle 25% of the received waste (12, 36).

Target Value

N/A

Secondary SDGs addressed

Good health and well-being (SDG 3)
3 - Good Health and Well-Being
Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure
Life on Land (SDG 15)
15 - Life on Land

Directly impacted stakeholders

People

The overall population will enjoy health benefits from a cleaner environment and improved waste services.

Gender inequality and/or marginalization

Rural areas will benefit from waste services just as much as urban areas, reducing rural/urban inequities in this regard. Informal waste workers can gain access to formal employment opportunities.

Planet

Air, soil and water pollution will decrease with efficient waste management services.

Corporates

Waste collection and disposal companies will benefit from the increased revenues and business opportunities. Informal waste pickers will be integrated into the formal economy.

Public sector

The government will be able to advance its goal of reaching the 20% recycling rate by 2026 (10).

Indirectly impacted stakeholders

People

Individuals in the active workforce can find new employment opportunities stemming from new recycling and waste segregation plants.

Planet

GHG emission will be reduced with recycling activities. Reuse opportunities will enhance sustainability.

Corporates

Transitioning into a green and circular economy can increase competitiveness of companies, enterprises can benefit from reduced costs associated with waste disposal.

Outcome Risks

Unless properly managed the produced landfill gas (LFG) from new solid waste management facilities can worsen air pollution due to increased flaring (45).

Construction of new solid waste management facilities including landfills and waste transfer stations may cause significant environmental risks on soil, air, surface and ground water resources air due to the impact caused by noise and vibration and alterations with the existing landscape (14).

Unless integrated into the new economy of waste management, informal waste pickers can lose an important source of income.

Impact Risks

The low level of public awareness regarding waste separation or reuse of recovered products as well as limited environmental awareness in society may limit the intended impact (12, 35). 

Since there are no official statistics on plastic consumption in Azerbaijan, the intended impact of plastic recycling may not be identified (34).

Poor state of existing solid waste management infrastructure and limited supply of skilled labor on advanced waste treatment technologies can lead to risk of equipment malfunctioning and disrepair (45).

Impact Classification

C—Contribute to Solutions

What

Expansion of formalized solid waste management and recycling can reduce illegal waste dumping, optimize resource utilization and advance a more sustainable waste management system.

Who

The overall population of Azerbaijan will benefit from a cleaner environment and enhanced public health.

Risk

Informal workers in waste management services can risk losing employment, poor state of existing infrastructure, limited public awareness and data availability can limit expected impact.

Contribution

In addition to municipal waste collection services, private investments in non-hazardous waste management facilities will ensure a more sustainable waste management system, while also benefiting ancillary sectors such as textile and renewabl

How Much

Following 10 years of operation the Balakhani Landfill with an annual capacity of 500,000 tons has helped save roughly 660,000 tons of CO2 in 2018 (50).

Impact Thesis

Enhance public health and reduce environmental pollution through expanded waste services, encourage circular economy while optimizing resource use and producing financial benefits from recycling and reuse activities.

Enabling Environment

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Policy Environment

Azerbaijan 2030: National Priorities for Social Economic Development, 2021: Delivers five national priorities for socio-economic growth including a clean environment and country of green growth, under which expansion of green spaces and revitalization of existing resources are highlighted (28).

Social and Economic Development Strategy, 2022-2026: Sets out the strategic framework for clean environment and green growth including effective waste management and green industrialization. Expansion of regional solid and hazardous waste management are among the key targets including achieving a 20% recycling rate country-wide (26).

National Strategy for the Improvement of Solid Waste Management in the Republic of Azerbaijan for 2018-2022: Includes technical and financial analyses of the country's solid waste management system, as well as proposals for expanding the extent of solid waste collection (26).

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 5.88 million) for up to 10 years for entrepreneurship activities with the innovation tendency including recycling (51).

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 (52).

Regulatory Environment

On Industrial and Household Waste No. 514, 1998: Regulates the use of waste as secondary raw material and claims the legal relationships involved in preventing the harmful effects of domestic waste on human health and the environment (30).

On Environment Protection, 1998, modified 2021: Prohibits the import, manufacturing, and trade of plastic bags (thickness up to 15 microns) and single use plastic such as forks, spoons, knives, plates, and cups (31).

On Licenses and Permits, 2017: establishes the legal, economic and organizational basis for regulation of licenses and permits system in connection with the entrepreneurial activity in the Republic of Azerbaijan; activities involving toxic industrial waste, recycling, and disposal are prone to licensing (32).

Resolution No. 185 of the Cabinet of Ministers on the Approval of the Rules for the Determination of Fees for Collection, Placement, Use and Disposal of Wastes, 2008: establishes basic principles for setting fees in relation to waste, stating that recycled waste is exempted from the payment of fees (37).

Presidential Decree No. 1697, 2006: Issued the Environment State Program (ESP) setting up a comprehensive plan for hazardous and non-hazardous waste management, and remediation of oil contaminated lands in Azerbaijan (59).

Law on Industrial and Household Waste, 2012: introduces fines for illegal dumping set at AZN 20 (USD 12) for individuals, AZN 100 (USD 60) for organizations, and AZN 500 (USD 300) for officials (39).

Marketplace Participants

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Private Sector

BP, Ecotech Recycling Technologies and Solutions, AzEkol, Lancer, Veyst Management Company, EcoHub Azerbaijan, RT Services Ltd., Az-Lead Services, Adelmann Umwelt GmbH, RENCO, CNIM.

Government

Ministry of Ecology and Natural Resources, Ministry of Health, Ministry of Economy, Baku City Executive Power, Tamiz Shahar (Clean City), SOCAR.

Multilaterals

EU4Environment, Asian Development Bank (ADB), European Bank of Reconstruction and Development (EBRD), International Finance Corporation (IFC), United Nations Development Programme (UNDP), United Nations Environmental Programme (UNEP), World Bank

Non-Profit

American Chamber of Commerce (AmCham), Regional Environmental Center for the Caucasus (REC), National Alliance for Sustainable Azerbaijan, Azerbaijan Entrepreneurs Confederation (ASK).

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
urban

Azerbaijan: Baku

In Azerbaijan, there are 70 landfills in total, 4 of which are located in Baku receiving 70% of overall household waste in Azerbaijan. Balakhani Sanitary Landfill located in Baku and is the only sanitary landfill of Azerbaijan, which is located in the Balakhani Industrial Park hosting 17 residents involved in waste processing and recycling (44, 8). The Greater Baku area which includes the capital Baku generates the largest amount of waste, where an estimated 50% of the generated waste is dumped illegally and does not reach the sanitary landfill. Baku produced 6.86 million m3 of domestic waste, which was collected by public utilities in 2021 (8, 21).
rural

Azerbaijan: Ganja - Dashkasan

As part of the Green Cities project, EBRD approved EUR 10 million loan to the municipal services company of Ganja city for upgrading waste management services including introduction of smart waste collection and route optimization systems in Ganja. Following Baku, Ganja-Dashkasan economic region produced the second largest quantity of domestic waste, reaching 732,300 m3 in 2021 (42, 43, 21).
semi-urban

Azerbaijan: Absheron - Khizi

Following Baku and Ganja-Dashkasan, Absheron-Khizi economic region was the third largest region to produce domestic waste collected by public utilities, at 718,900 m3 (21).

References

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