ENVIRONMENTAL TECHNOLOGIES IN THE RUSSIAN FAR EAST

April 1, 2002

Summary. Over recent decades the environmental problems in the Russian Far East (RFE) have been accumulating to the extent that makes it urgent to introduce new environmental technologies to deal with them. Although the financing of environmental projects is still problematic, there are still some prospects for U.S. companies interested in exporting pollution control equipment, environmental technologies and consulting services to the region. There is also growing interest among local businesses in recycling technologies and cleaner manufacturing processes. This report gives an overview of the current situation in the environmental sector of the region, and business opportunities for U.S. companies.

Background

The RFE's economy has always been based on natural resource extraction and related industries, such as forestry and wood-processing, fisheries and fish-processing, mining, ore-dressing and metallurgy, oil and gas exploration, oil refining, chemicals production, etc. All of them have been associated with an enormous damaging impact on the environment. Although Russian federal and local legislation regulating environmental issues and environmental protection is rather strict, it has never been properly enforced. There has always been a discrepancy between the environmental norms and regulations and reality. Traditionally, the authorities emphasized industrial development, while the accompanying pollution, contamination, and damage to the environment was in most cases ignored. The technological processes at the majority of industrial enterprises were first of all aimed at achieving high output capacity, without serious consideration of the growing environmental problems. Over the last decade the levels of production, and consequently – of the industrial wastes, have dropped significantly, but environmental problems have been left unresolved for years, in many cases snowballing into real threats and hazards to the RFE's environment, ecosystem, and unique nature.

Solid Waste: Along with industrial pollution, the issues of municipal wastewater treatment, drinking water improvement, and residential solid wastes' utilization have become urgent. RFE's cities have inadequate funds to meet pressing local needs. The overwhelming majority of solid wastes in the RFE are being stored at landfills, and only a small percentage of them are being burned. Recycling virtually does not exist, but already has started to attract the attention of local businesses, especially wastes containing non-ferrous and precious metals. The municipal authorities of some cities (i.e. Yakutsk) have expressed interest in building trash-steam plants for residential solid waste treatment.

Wastewater: Less than one third of sewage in the RFE goes through any kind of treatment. In most RFE cities and settlements wastewater and sewage are directly dumped into the rivers and ocean, damaging the coastal waters and fish spawning areas (and the RFE is one of the world's richest territories in red and white fish species). A very low percentage of the wastewater is being purified. The situation in the cities located on the ocean is worse than in those that are situated on the rivers, because traditionally the latter received top priority for the processing of sewage. In most cases, cities located on the ocean dumped wastewater directly into the ocean with minimum purification. For instance, in Vladivostok only 8% of the wastewater is treated, in Petropavlovsk-Kamchatskiy – 25%, on Sakhalin – 50%. The technologies of the wastewater treatment plants in the RFE in most cases are outdated. Storage facilities for silt are not reliable.

The issue of the industrial wastewater treatment is most acute for mining companies. Most of the technologies used at local mining and ore-dressing enterprises lead to extremely high levels of wastewater overwhelming tailing ponds. The latter contain mineral resources that are currently idle, but can be extracted using modern reprocessing technologies.

Drinking Water: The tap water in the majority of the RFE's cities is not drinkable. The water reservoirs are contaminated, especially during rainy season. Water supply pipe networks and systems are old and not properly maintained, the leakage and water-loss percentage is extremely high. The majority of these systems need immediate refurbishment or replacement. The most critical situation is being observed in Nakhodka and Vladivostok. Due to the deficit of funding to replace the whole water supply system, some municipal administrations are considering equipping at least some social institutions (hospitals, kindergartens, schools, etc.) with "local" filtration equipment.

In 2000 the World Bank approved a $122.5 million loan for the Municipal Water and Wastewater Project in Russia. The framework of this project is aimed at the improvement of the operation and management of water supply and sewage systems in 14 Russian cities with a population not exceeding 500,000 people. The funding covers replacement of pumping equipment, refurbishment of water or wastewater treatment facilities, and purification of polluted water resources. Nakhodka is the only RFE city included in the project.

Energy Sector: The RFE's energy sector is primarily based on coal and diesel fuel. This result is a growing "greenhouse effect" and air pollution. "Clean" and more economically effective technologies (using solar and wind energy, or building micro hydroelectric power stations on mountain rivers in the remote territories) are attracting more and more interest of the local government, big industrial enterprises, and private firms. Alternative, environmentally friendly technologies are being considered now locally. Wind power stations have the most promising potential due to the specifics of local climate conditions (winds from the Sea of Okhotsk and the Sea of Japan are regular and strong). Solar energy can be most successfully developed in Primorskiy Krai where the percentage of sunny days per year is one of the highest in Russia.

There is obvious demand for oil-spill prevention and treatment technologies, as well as personnel training, especially due to the ongoing development of the multi-billion Sakhalin shelf oil and gas projects. The RFE ports and shipping companies (those who have tanker fleets) are also among the customers for U.S. oil-spill technology providers and consultants.

Nuclear: Nuclear waste utilization and treatment is another issue of concern in the RFE, which is the base for the Russian Pacific Navy and its nuclear submarines. With the dismantling of its submarine fleet, this problem has even attracted international attention. In the mid 90s the Japanese government financed a project to process liquid wastes from Russian submarines being cut and recycled at "Zvezda" plant in Bolshoy Kamen, Primorskiy Krai, and the U.S. firm McDermott won the tender to construct the barge, which was the base for a specialized liquid nuclear waste treatment facility. Another local project for solid nuclear waste treatment is being discussed now in the Ministry of Nuclear Energy. There are now 75 nuclear submarines in the RFE (in Sovetskaya Gavan, Kamchatka, and Primorskiy krai) that need to be dismantled.

Forestry: Forestry and wood processing are among the top four sectors in the RFE. Severe fires combined with poor harvesting methods cause a ruining effect on the local forests. Modern technologies for fire-prevention and extinguishing, forests reforestation and rehabilitation are required to deal with the above environmental problems. There is also growing demand for wood-wastes (slabs, edgings, ends, saw dust, bark, etc.) minimization and recycling into commercial products, as well as utilization of timber waste (i.e. for boilers and power generators).

Industrial: Coal mined and used in Primorskiy Krai and Sakhalin contains a rare metal called germanium (Ge). It can be recovered in sufficient industrial volumes through filtration of the smoke and extraction from ashes. Experimental Ge production from smoke has already been functioning on Sakhalin, but the potential is much higher in Primorskiy Krai. Ash landfills from power stations in the RFE also need to be treated.

Over the last decade large amounts of non-ferrous scrap and wastes were illegally exported to China. But recently recycling of non-ferrous scrap, wastes, and batteries is becoming another sphere of growing commercial interest. There are also huge amounts of ferrous-metal scrap (especially old vessels and ships) locally that need to be treated.

Other Industries: Local fish-processing, one of the leading industries in this region, is associated with huge amounts of wastes (up to 35% in the form of viscera, heads, fins, oil) due to the outdated production technologies and equipment. Wastes are usually discharged directly into the rivers and sea. Therefore there is a growing demand for advanced technologies for the new products' manufactured out of fish-wastes.

The RFE is one of Russia's leading regions in terms of the number of automobiles per capita, due to its proximity to Japan and access to the Japanese market of second-hand cars and accessories. In this respect, tire-recycling technologies will also have a potentially promising market locally.

Financing

Financing is a major problem for exports and application of new environmental technologies in the RFE. While low-scale waste recycling and utilization projects can be funded by local enterprises, larger ones (like municipal sewage and water purification systems, solid wastes' treatment, etc.) need considerable capital investment, which is hardly possible under existing economic conditions in Russia. Foreign countries and international institutions have already been funding some environmental projects in the RFE. The Japanese government is considering funding feasibility studies for projects under the Russian-Japanese government loan agreement. The USAID program Ecolinks provides grants to local companies interested in implementing environmental technologies, and assists them in searching for U.S. partners who can provide such technologies and/or expertise.

Assistance for U.S. Companies

This information is being provided by the U.S. & Foreign Commercial Service in Russia, which offers its services to U.S. companies wishing to sell U.S. products and services in Russia, including identifying distributors and arranging meetings with prospective buyers during business visits. Commercial Service Russia has offices in Moscow, St. Petersburg, Vladivostok and Yekaterinburg.

Contact: For further information you are welcome to contact the author of this report at CS Vladivostok:

Yana Tselikova

U.S. Commercial Service Vladivostok

32 Pushkinskaya Street

Vladivostok, Russia, 690000

Tel.: (7-4232) 300-093

Fax: (7-4232) 300-092

Int'l Fax: (7-509) 851-1211

E-mail: Yana.Tselikova@mail.doc.gov or Vladivostok.office.box@mail.doc.gov

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)