#1>>> OECD BETTER POLICIES FOR BETTER LIVES Co-funded by the European Union Mapping of Circular Economy in North Macedonia Diagnostic meeting with the Working Group 8 June 2023 111 OECD Global Relations South East Europe#2Agenda Key features of the project: objectives, timeline and main project pillars North Macedonia's key economic features and their relevance to circular economy Environmental trends and recent developments relevant to circular economy Existing circular economy policy landscape and initiatives in North Macedonia Potential circular economy priority areas for North Macedonia OECD South East Europe 2#3PROJECT PRESENTATION 3#4Project objectives Building on the greening work carried out as part of the OECD South East Europe's Competitiveness Outlook and SME Policy Index assessments, drawing on the OECD circular economy roadmap methodology and following the identified needs of the WB economies: . . Support for design of circular economy (CE) roadmaps to Albania and North Macedonia to serve as blueprint for their CE transition Support for implementation of CE roadmaps for WB economies, through different capacity building activities Broad societal consensus continuous dialogue - involvement of a wide range of stakeholders in a Direct contribution to the Economic and Investment Plan and the Green Agenda for the Western Balkans • Compass and the engine for a sustainable recovery 4#5CE roadmap methodology 1. Diagnostics: state of play of circular economy in North Macedonia • • Sectoral analysis and comprehensive review of the policy and regulatory frameworks Consultation process with key stakeholders to obtain insight into their views, experiences, challenges, needs and concerns regarding the circular transition: 2. Prioritisation: identification of priority sectors/focus areas key to CE transition • • Assessment to identify key economic sectors to be involved in the circular economy transformation, by considering: • • Economic importance (e.g. contribution to GDP, employment, productivity) Circular potential (waste management, resource and energy intensiveness) Government priorities Gaps and feasibility for CE transformation Identification of good practices that can be transferred to the economy 5#6Q4 2022 Q1 2023 Q2, Q3 2023 September 2023 . . • • . Timeline and key milestones Inception meetings to understand specific CE-related needs Mapping relevant stakeholders and institutions to create a wider CE stakeholder platform Nomination of the CE coordinator and the CE working group Analytical work: identifying the state-of-play of CE in North Macedonia Kick-start meeting with the key CE stakeholders in North Macedonia 19 April: Regional kick-off event at OECD Istanbul Centre coupled with a study visit Diagnostics meeting and consultation with key stakeholders on the CE transition and the state of play of CE Identifying the priority CE-related sectors/focus areas Meeting with CE working group to reach consensus on identified priority areas Q4 2023, Q1 2024 Q2 2024 • • Review of the draft CE roadmap by the CE working group Wider consultation process Publishing of the CE roadmap#7Role of the CE working group • Led by the CE coordinator and the OECD team, facilitate the CE roadmap development process Participate in meetings throughout the project, as part of the support for CE roadmap design: • Take part in consultations run by the OECD to share views on the circular economy transition in North Macedonia and provide further information/data where necessary Participate in prioritisation meeting to reach agreement on the priority CE areas/sectors in September in Skopje Provide feedback on the draft CE roadmap Participate in the support for implementation activities and regional knowledge sharing, if relevant 8#8DIAGNOSTIC OF CIRCULAR ECONOMY IN NORTH MACEDONIA 6#9North Macedonia's key economic features and their relevance to circular economy 10#10North Macedonia's key economic features relevant to circular economy SERVICES North Macedonia is a service-oriented economy, with wholesale and retail trade accounting for the largest share. Exports of services grew substantially but remain relatively low despite the strong. potential. The large share of SMEs working in the service sector can be a key driver in achieving circular objectives. Value added by grouped activity in North Macedonia (% of GDP), 2021 100 90 80 70 60 50 40 30 20 10 !!!! 0 North Macedonia WB6 Average EU OECD ■Agriculture Industry Services Employment by grouped activity in North Macedonia (% of GDP), 2012-21 Services represent 57% of GDP and 58% of employment Wholesale and retail trade account for 19% of GDP Services account for 25% of total exports 69% of SMEs work in the service sector Sources: World Bank, 2022; OECD, 2021; MAKSTAT, 2022 70 60 50 40 30 20 10 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Agriculture Industry Services 11#11North Macedonia's key economic features relevant to circular economy Expanded INDUSTRY over the past Value added by grouped activity in North Macedonia (% of GDP), 2021 100 90 80 decade: 70 60 establishment of special economic zones played important role. Metallurgy is the largest industry but is energy and carbon-intense and the production of secondary materials is almost non-existent. Textile is the second biggest industry but is characterised by low recycling and reuse, leading to pressure on resources. The strong recovery of the automotive industry is a key driver of economic rebound. Industry represents 22.5% of GDP and 31% employment Textile accounts for 10% of exports and 13% of industrial GDP Metals production accounts for 11% of exports The automotive industry was responsible for 65% of exports in Jan 2021 50 40 30 20 10 0 !!!! North Macedonia WB6 Average EU ■Agriculture Industry Services OECD Employment by grouped activity in North Macedonia (% of GDP), 2012-21 70 60 50 40 30 20 10 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sources: World Bank, 2022; OECD, 2021; Invest North Macedonia, 2022 Agriculture Industry Services 12#12North Macedonia's key economic features relevant to circular economy AGRICULTURE Prevalence of subsistence farming, low- skilled and low-waged jobs in the agriculture sector. Agricultural productivity is very low and further development of the sector is undermined by several factors. Agricultural and food products exported most: tobacco, lamb meat, vegetables and fruits and wine. Organic production has grown in recent years. Agriculture represents Agricultural productivity is less Value added by grouped activity in North Macedonia (% of GDP), 2021 100 90 80 70 60 50 40 30 20 10 0 North Macedonia WB6 Average EU ■Agriculture Industry Services OECD Employment by grouped activity in North Macedonia (% of GDP), 2012-21 70 60 50 40 7.2% of GDP and 10% of employment 30 than 25% of the EU 20 10 Agricultural and food. 0 products account for 10% of exports 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Agriculture Industry Services Sources: World Bank, 2022; OECD, 2021; Invest North Macedonia, 2022; Ministry of Agriculture, Forestry and Water Management, 2021#13Environmental trends and recent developments relevant to circular economy 14#14Environmental trends relevant to circular economy Energy and emissions trends CO2 emissions by source, 2021 High dependency on oil and coal energy generation undermines North Macedonia's climate commitments and the long-run sustainability of its energy sector. Electricity and heat generation is responsible for 72% of CO2 emissions, mainly covered by coal. 34.9 5.1 10.6 49.4 - Cement ■Gas Oil Coal Energy mix in North Macedonia and the EU (% of total energy), 2020 North Macedonia 8% EU average 13% 10% Renewable energy only accounts for 14% of North Macedonia's energy supply, the lowest share in the Western Balkans, and nearly all is derived from hydro generation. 11% 14% 29% 18% 35% 24% 38% Sources: World Bank, 2020; Eurostat, 2022; IRENA, 2022 Coal Oil and oil products Natural gas Renewable energy Other 15#15Environmental trends relevant to circular economy - materials trends North Macedonia is endowed with considerable natural resources, but high levels of extraction cause environmental pressures. North Macedonia's DMC has been on a slight decreasing trend since 2015, with resource productivity reaching an all-time high value in 2018. North Macedonia's DMC is dominated by fossil energy materials due the high reliance on fossil fuels followed by biomass, due to the relatively high contribution of agriculture to GDP and the use of firewood for heating. Metal ores' DMC is 3 times higher than in the EU due to the strong mining sector. Structure of DMC in North Macedonia (% of total DMC), 2021 180 160 19% 18% 28% 35% ■Biomass and biomass products ■ Fossil energy materials ■Metal ores and concentrates ■ Non metalic minerals GDP, DMC and Resource Productivity in North Macedonia, 2012-2020 (Index 2012-100) 140 120 100 80 60 Resource efforts in efficiency mining 40 waste in operations, smelting and refining: processing of residues and secondary metals and materials 20 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 GDP Total DMC •Resource productivity Sources: MAKSTAT, 2021; Eurostat, 2022 16 Circular bioeconomy: more resource efficient primary production, management (composition and anaerobic digestion) and the use of residues agricultural practices#16Environmental trends relevant to circular economy - waste trends North Macedonia level of municipal waste generation has been increasing over years, but data collection remains a challenge (based on estimations). 80% of the population was served by waste collection services in 2020, mainly so in urban areas (compared to 98% in the EU). Municipal waste treatment (%), 2020 Landfill Recycling Incineration Composting 19 4.6 0 0 0.3 26 30.6 30 69 23.9 Municipal and industrial waste management is a challenge. Waste separation at source is almost non-existent and the majority of waste is landfilled or untreated. Recycling is mainly conducted by informal waste pickers. Bring systems for packaging waste, regulated under EPR schemes are established. NORTH MACEDONIA 23 EU AVERAGE 45% of waste produced is organic Around 1000 illegal waste dumpsites 20.5 OECD AVERAGE Over 1/3 of industrial waste generated by the mining sector 40% of packaging waste placed on the market is recycled Sources: Eurostat, 2023; OECD, 2022; EEA, 2021, MAKSTAT, 2021 17#17Existing circular economy policy landscape and initiatives in North Macedonia 18#18Existing policy landscape relevant to circular economy National Strategy for Sustainable Development of North Macedonia. 2010-2030 National Strategy for Sustainable Development of North Macedonia, 2022-2042 (in the drafting process) SME Strategy, 2018-2023 Plan for Accelerated Growth, 2022-2026 Sustainable development Forest Land Strategy for Sustainable Development of Forestry, 2006-2026 National Spatial Plan, 2020-2040 Water National Water Strategy, 2012-2042 Private sector development Technical Cycle Biological Cycle Biodiversity National Strategy for Nature Protection and Action Plan, 2017-2027 National Biodiversity Strategy and Action Plan, 2018-2023 1 Industrial Strategy with a focus on Manufacturing, 2018-2027 Industry Raw Materials Bioeconomy Circular Economy National Operational Broadband Plan, 2019-2029 National Strategy for ICT, 2021-2025 Digitalisation Waste Management For Municipality Ohrid: National Strategy for Sustainable Tourism Development, 2020-2025 Tourism National Plan for Waste Management, 2021-2031 National Plan for Waste Prevention, 2021-2027 Transport National Strategy for Agriculture and Rural Development, 2021-2027 Agriculture Climate Long-Term Strategy on Climate Action, 2021-2050 Energy National Energy and Climate Plan, 2021-2030 Energy Development Strategy, 2019- 2040 National Strategy for the Transport Sector, 2018- 2030 National Aviation Development Strategy, 2021-2030 19#1920 20 Existing policy and regulatory landscape relevant to circular Waste management economy The Law on Waste Management was adopted in 2021 and a set of laws targeting specific waste streams and management schemes were adopted in parallel, fully transposing the EU waste Framework and regulating EPR schemes. The National Plan for Waste Management (2021-2031) and the National Waste Prevention Plan (2022-2028) are expected to accelerate the circular transition by reducing waste production and increasing levels of reuse, recycling, and recovery of products. Public procurement The Law on Public Procurement (2019) includes relevant provisions on green public procurement, and the Law on Energy Efficiency (2020) introduces requirements specific to energy efficiency. Private sector and industry The Industrial Strategy with a focus on Manufacturing (2018-2027) has a key objective to "Catalyse Green Industry and Manufacturing". Green The SME Strategy (2018-2023) has a special focus on environmental policies. The Plan for Accelerated Growth (2022-2026) foresees the introduction of several instruments to promote and finance green projects. The development of the Smart Specialisation Strategy envisage the transition to the circular economy.#20Overview of main circular economy stakeholders in North Macedonia Academia Schweizerische Eidge Confideration suisse Confederation Confedeviza International Organisations OECD umweltbundesamt ENVIRONMENT AGENCY AUSTRA THE WORLD BANK RD-WORLD giz Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Interreg European Bank Rand Desplopment Economic Research & FINANCETHINK Pality IECE ANE impe ΑΠΠΕ cif wb6 SHTETE KAPHA OEMVP Institute METOAN CKOID Еко свест СОЛА НА СТОПАНСКИ КОМОРИ НА МАКЕДОНИЦА коп CE SMEs Private Sector M MACEF Go Green [ДЕМ NCDIEL Let's do it Macedonia! FOR SAL IN VIVO ПАКОМАК Z Civil Society »#21POTENTIAL CIRCULAR ECONOMY PRIORITY AREAS FOR NORTH MACECONIA 22 22#22Potential CE priority areas for North Macedonia 1. Textile 2. Metallurgy 3. Automotive 4. Mining 5. Agri-food sector 6. Municipal waste / improving waste prevention and recycling 7. Plastics 8. Upscaling CE business models 9. Horizontal: Economic instruments (green public procurement, landfill tax, household waste charge, extended producer responsibility schemes) 23 23#23OECD BETTER POLICIES FOR BETTER LIVES Thank you for your attention! For further information please contact: Jovana PAVLOVIC DJUKIC Team Lead-Green Economy and Sustainability OECD South East Europe Division e-mail: [email protected] Anita RICHTER Deputy Head of Division OECD South East Europe Division e-mail: [email protected] Clémence GIRIN Policy Analyst OECD South East Europe Division e-mail: [email protected] https://www.oecd.org/south-east-europe/programme/ OECD South East Europe Regional Programme Co-funded by the European Union wwwwwww