Andreea Nicolae (PIVOT-C): Reflections on Romania’s Circular Odyssey - Part 1

In late November 2023, as we dove into planning the Circularity in Action workshop, Cristian Nacu, the International Finance Corporation’s Senior Country Officer for Romania, set the tone for an ambitious endeavor: “Let’s make sure attendees feel enriched.” This vision gave us purpose: to facilitate a transformative dialogue between public and private sectors, on the hot topic of circular economy. Despite being over-ambitious with a heavy agenda, we went even further: let’s help uncover realities, the circularity potential, the variety of perspectives for implementing circular economy practices in Romania.

By Andreea Nicolae, Co-Founder & Managing Partner at PIVOT-C

On January 31, 2024, the historic InterContinental Athénée Palace in Bucharest became the setting for this transformative dialogue, uniting a spectrum of stakeholders from government, finance and industrial sectors with a major impact in sustainability.

As the day unfolded, it became obvious that we were part of a marathon of ideas. The discussions were rich and passionate, an insight on the depths of circular economy’s current state, its potential and the tangible opportunities for advancement in Romania. We saw palpable engagement, hope and enthusiasm, a surge of optimism.

Join me in this material that takes a glimpse into the interventions, insights and revelations that emerged.

Takeaway 1: Circular Economy Goes Beyond Waste Management

Carmen Petcu, General Director of DeLonghi Group Romania, was among the initial voices to state this, back in 2023, as we engaged in a first private stakeholder workshop. She cautioned against a common misconception, advising, “Do not fall into the trap of equating the circular economy solely with waste management!”

This perspective was further confirmed by Constantin Damov, President of Green Group. While acknowledging Romania’s achievements in the area of waste management, he highlighted the need to shift our focus towards preventing waste generation in the first place: „When we have reached the point of talking about waste, we have actually failed,” he said.

Building on this, Cristian Erbasu, President of the Federation of Construction Societies pointed out: “40% of waste in Romania comes from construction. Despite recent progress in construction materials, our industry lags in automation, ranking just above fishing in terms of digitalization. This poses a significant challenge for integrating into the circular economy.”

With a wealth of participants from the banking sector, we had a critical financial perspective to the forefront, with finance specialists challenging the conventional association of circularity with the recycling alone. “Often, circularity is equated with recycling, but we understand that prevention is better. In the finance area, we seek out business models that intervene at the beginning of the production cycle, in the design of products,” Petronela Despoiu, Sustainable Finance Coordinator in Banca Transilvania.

Surprisingly, the business talk gave us a measure of our own, individual incapacities to limit consumption. “Shockingly, a third of globally produced food is wasted. It’s been a decade since the Ministry of Agriculture initiated an action plan to prevent and combat food waste, making us one of the first countries to legislate against this issue. Today, we have about 40 entities actively participating in a donation mechanism we established, but we still need to educate, we need partners, there is still a lot to be done,” Viorica Boboc, Counsellor of the Ministry of Agriculture, stated.

The consensus that achieving zero waste requires a fundamental change in how we utilize resources, was articulated by Mihaela Frasineanu, State Counsellor, Coordinator of the Circular Economy Coordination Committee in the Romanian Government pointing towards a life model change: “Let’s remember that history repeats itself, especially when we haven’t learned our lessons. We need only to look back to our grandparents and great-grandparents who lived in a circular manner, with products designed and built to last, reusing everything until it could no longer be used, generating waste only as a last resort, perhaps even with a sense of shame.”

Takeaway 2: Opportunity Knocks for Romania to Set Clear National Priorities and Sectoral Directions

Driven by European Union directives and a growing global commitment to sustainability,circular economy has become a central focus for Romania. In 2023, the Romanian Government introduced the national Circular Economy Action Plan (CEAP). It comprises 52 priority actions spanning various sectors such as food and beverages, agriculture and forestry, the automotive industry, packaging, electrical and electronic equipment, construction, textiles and more. It also includes cross-sector actions aimed at education, professional training, awareness, research, development, innovation, digitalization of circular economy domains and green procurement.

The current focus of the governmental team is to start the implementation of CEAP. This task falls under the responsibility of the Circular Economy Coordination Committee (CECC), as highlighted by Ileana Luminița Bălălău, Director in the Department for Sustainable Development in the Romanian Government, Project Coordinator of the CEAP: “We have to start implementing this plan that is crucial for our society, aiming to reduce carbon emissions by 39%, to create approximately 70 new jobs per 1,000 tons of waste and to enhance GDP growth, while reducing the consumption of virgin resources and decreasing food waste through the development of composting infrastructure, biogas production and more. We need to identify both partners and funding sources.”

To build on that, more participants made a strong point that the circular economy, in its entirety, demands a nuanced approach. The eco-system functions if distinct needs and challenges of various sectors are addressed. Locally, each sector is expected to develop its strategy, grounded in the CEAP’s national framework, yet customized to its unique context, ensuring that the principles of circularity are embedded from the outset in a system of interconnected actions.

Takeaway 3: Building on Capacities Will Unlock our Circular Economy Potential

The question of who, how and with what resources would the national plan be implemented was on everybody’s lips. Building capacities across all sectors is vital at this stage of the process.

“We have launched an aid scheme dedicated to the circular economy. With a budget of 8 million euros, it offers up to 85% of eligible expenses with a 15% co-financing from the beneficiary. Key criteria include eco-design and technology transfer, supporting the establishment of repair centers, certification labs for secondary raw materials and the production of non-plastic packaging. This 16-month implementation scheme has already received positive feedback from the business community in areas like textile recycling and reuse. We hope this becomes a multi-annual state aid scheme,” shared Dragos Neamtu, Counsellor from the Ministry of Economy, Entrepreneurship and Tourism.

On and on, initiatives started to be showcased, showing their potential: “As we embarked in understanding circular economy needs, we took responsibility of Commission No. 5 on Constructions in the CECC. We start now to understand how the Ministry of Development can influence the advancement of circular economy through the implementation of projects in roads, bridges and gas infrastructure,” @Daniel Surdu, State Counsellor from the Ministry of Development explained.

While national initiatives lay the groundwork, the real test of their effectiveness lies in the execution at local level. Transitioning from linear to circular practices requires a a deep-rooted understanding of local needs and the ability to adapt strategies accordingly. “Regardless of our intentions at the government level or within the CECC, the implementation remains a challenge. Local authorities, mayors and their deep understanding of community needs and realities are indispensable for driving change at the grassroots level,” Mihaela Frasineanu stated to emphasize the indispensable role of local governance in bringing about tangible change.

In direct connection to this, László Borbély, State Counsellor and Coordinator of the Department for Sustainable Development in the Government announced a significant development: “By 2025, we will establish a Centre of Excellence for Sustainable Development, serving the public administration. This initiative is essential for ensuring that the principles of circularity are not just theoretical concepts but are integrated into professional practices across all levels of government. Without such partnerships and professional frameworks, our strategy and action plans risk remaining non-executed.”

On the private sector side, organizations shared their achievements in education, while acknowledging the process needs leadership, continuous improvement, patience and consistency.

“In addressing the systemic challenges faced by agriculture, for example, we have to embrace circular economy models as native to our sector. Through actions of training and supporting the adoption of new technologies, we’re implementing plans for farmers that include managing climate changes, digitalization, adopting Agriculture 4.0, valorizing energy potential and reducing the agri-food trade deficit. It’s a long-term process, dedication and consistency are crucial,” said Florian Ciolacu, Executive Director, Romanian Farmers Club.

Roxana Barbato, MBA, Sustainability & ESG Director, Raiffeisen Bank confirmed the direction: “We are also committed to being a facilitator for the transition to a green economy and sustainable communities. We have already issued green and sustainability bonds totaling 1 billion Euro, almost fully allocated to projects including circular economy initiatives, and we aim to further focus on extension of product life-cycles and utilization of waste as secondary raw materials projects. One perspective we have: it’s essential to support projects that not only aim to do good but also ensure they do no harm, highlighting the importance of eligibility criteria and the broader societal impact.”

“I think we can agree there should be a fair risk allocation both from the public entities and from private ones. So we need to make sure that the ground work is set up correctly, in a balanced way and both parties stand behind their commitments and together push the agenda even more,” concluded Murat Karaege, Senior Investment Officer with IFC.

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