According to the Lithuanian Agency for Science, Innovation and Technology, four out of five Lithuanian companies are still practicing linear economy based on an intensive use of raw materials and energy, and resulting in large amounts of waste. In 2019, only 20% of businesses in Lithuania managed to reduce waste generated in production. There is also a need for a more comprehensive national strategy aimed at the implementation of circular economy (CE). In the summer of 2019, the Ministry of Economy and Innovation of the Republic of Lithuania started implementing the project “Roadmap for Lithuania’s industrial transition to a circular economy” which is expected to serve as an action plan to help transform the industry towards a circular model. An expert from the Business Environment and Economics Department of the Lithuanian Confederation of Industrialists claimed that “creating circular economy is a holistic project, so, in order to preserve the competitiveness of Lithuanian business, it is necessary to create comprehensive conditions favorable to the implementation of these goals: from a predictable and reliable regulatory environment to a consistent innovation financing model. So far, we still lack this broader vision”.
The Eco-Innovation Observatory report echoes the above concerns by pointing out to two major challenges that CE and eco-innovation face in Lithuania:
- on the technological level, the linear production model still dominates the industry; and
- there is a lack of regulatory framework supporting the introduction of circular principles.
But there have also been some notable achievements in this area. One of the most popular CE and eco-innovation projects in Lithuania is a deposit-return system that was introduced in 2016. It created incentives to return used beverage containers for recycling: consumers pay a deposit amount of €0.10 when purchasing eligible drink containers and receive a refund after returning them to the recycling stations. With almost 90% of return rates, this system is regarded as success among similar programs in Europe.
Moreover, starting in 2019, NGOs are emerging as important stakeholders promoting CE ideas. Thanks to their work, CE is gaining more media attention, which in turn generates interest in both the public and business circles. They are also serving as conduits between the government, public, and business. One of the examples of such NGOs is a non-profit organization “Žiedinė ekonomika” (Lith., circular economy). According to their website, the organization was founded with the goal to promote circular use of waste, zero-waste movement, eco-lifestyle and popularize the principles of CE in business and governmental institutions. They actively collaborate with municipalities and the Ministry of Environment of the Republic of Lithuania. More specifically, they have contributed their expertise to developing of laws and regulations necessary for promoting CE and consulted businesses to help them transition to CE business models.
To better understand the new developments in this area, we interviewed the founder of “Žiedinė ekonomika,” Domantas Tracevičius. Below is an overview of the topics we discussed during the interview in February of 2022.
Domantas became interested in CE while working in the waste management sector. It was his efforts to share his knowledge of good practices in this area that led to establishing the NGO. Another reason for establishing the organization was his goal to engage more directly in the process drafting the legislation to ensure that Lithuania adopts laws that both enable and oblige business to move to CE. According to Domantas, the necessary condition for a successful transition to CE models in business is the development of an appropriate legal framework and regulations that favor CE.
When asked about the general situation in Lithuania, Domantas suggests that the most important driver in the transition to CE have so far come in the form of the EU regulations. This is because few businesses have the capacity and ambition to move to circular business models. According to Domantas, local business adopts CE as part of their compliance with existing regulations, and sadly this often happens only formally. Even though there are businesses that have started showing interest in CE, the vast majority do not take it seriously. Domantas believes that the responsibility for informing and educating consumers lays primarily in the hands of producers. Even though consumers drive the demand, they make choices based on the information provided by producers. Consequently, “Žiedinė ekonomika” is collaborating with state consumer rights protection authorities to prepare a guide providing detailed instructions for how producers and sellers should establish and substantiate their claims to quality and sustainability of green products.
We also asked Domantas what he thought about the role that ecological values play in markets. According to Domantas, consumers often declare commitments to ecological values, but when it comes to purchasing, that is to choosing a particular product, they are far more motivated by price than by ethical reasons. When speaking about ecologically motivated customers, Domantas emphasizes the importance of accurate and reliable information about products. Therefore, one of his NGO’s stated missions is creating procedures for safeguarding the information provided by producers so that consumers would not be misled. However, Domantas suggests that the consumers’ impact on the sustainability of a particular product is relatively limited, while significant and/or systematic changes can be achieved when producers are required to offer greener products. Domantas thinks that companies often are inclined to transfer responsibility for choosing greener products to consumers, but it is not fair, as consumers rarely have the full information and they are not always able to discern which products are environmentally friendly and which are not. This means that in order to create circularity in business, it is more effective to focus on developing appropriate legal and financial means that can be used to ensure that the markets offer more environmentally friendly products (e.g. if all companies in a particular sector are required to provide a longer guarantee service, the quality of the products would be higher, products would last longer and in this way, this would contribute to CE).
With regards to the topics related to CIRCLE, Domantas is concerned that the application for CE in Lithuanian agriculture is still limited. This is because the majority of farmers seek to make profit at any price, but also because the existing support schemes provides payments based on the area of arable land and not methods of farming. It creates a system where commercial farmers are not encouraged to apply environmentally friendly practices. As a result, they use fertilizers and pesticides that are toxic and polluting. This is a troubling situation as agriculture is responsible for soil degradation and loss of biodiversity. Domantas cites the loss of birds species as an example of the dire consequences that such approach has brought: since 2000 Lithuania lost half of its bird population. Ecological farming would be more environmentally and biodiversity friendly, but the existing financial incentives are insufficient for it to scale up. In Domantas’ opinion, in order to promote ecological farming, we should think about these issues more systematically and institutionally. For example, supporting and requiring that all public schools buy ecological products for their canteens would not only create a market for ecological products and generate positive environmental outcomes, but would also contribute to improving public health in the long term.
In Domantas’ view, the situation in the forestry sector is not much better than it is in agriculture. Forests habitats are still poorly protected; not enough resources are dedicated to maintenance; and logging continues to endanger forest sustainability. But there are also opportunities to transition to CE, including the potential contribution of the timber industry. Many unsustainable products can be replaced with wood, however it should be done by carefully weighing environmental consequences, protecting natural habitats, and leaving enough protected forests. Looking from the perspective of CE, developing efficient recycling infrastructures for recycling wood (e.g. shredding furniture panels and then returning them to production) offers new ways to meet consumer needs with limited environmental impact.
In summary, what we gleaned from our early research is that the transition to CE can be facilitated with the implementation of appropriate legal regulations and laws. According to Domantas, in an ideal situation, people might be willing to be environmentally friendly and it might come naturally to individuals, but this is not the world we live in. Although ecological awareness is important in adoption of CE practices, but it is not as impactful as various financial and legal incentives. There are already signs of a positive development in this area: as the young generation become more concerned with ecological issues in Lithuania and globally, their political views translate into actual votes that have the potential to bring positive change. There is also a growing number of NGOs who put pressure on institutions to move towards green politics and CE and it is reasonable to expect that we will see more positive changes in the future.
Authors: Aistė Bartkienė, Renata Bikauskaite, Diana Mincyte
