Eco-innovationinCroatia

EIOCountryProfile

2014-2015

Eco-InnovationObservatory

The Eco-Innovation Observatory functions as a platform for the structured collection and

analysis of an extensive range of eco-innovation information, gathered from across theEuropean Union and key economic regions around the globe, providing a much-neededintegrated information source on eco-innovation for companies and innovation serviceproviders,aswellasprovidingasoliddecision-makingbasisforpolicydevelopment.

The Observatory approaches eco-innovation as a persuasive phenomenon present in alleconomicsectorsandthereforerelevantforalltypesofinnovation,definingeco-innovationas:

“Eco-innovation isany innovationthatreducestheuseofnaturalresourcesanddecreasesthereleaseofharmfulsubstancesacrossthewholelife-cycle”.

Tofindoutmore,visitwww.eco-innovation.euandec.europa.eu/environment/ecoap

Any views or opinions expressed in this report are solely those of the authors and do notnecessarilyreflectthepositionoftheEuropeanCommission.

Eco-InnovationObservatoryCountryProfile2014-2015:Croatia

Coordinatoroftheworkpackage:TechnopolisGroupBelgium

AcknowledgmentsThisdocumenthasbeenpreparedwiththesupportoftherepresentativesoftheCroatianstateauthorities,namely:

•Dr.sc.LidijaRunkoLuttenberger,AssistantMinisterforenvironmentalimpactassessmentandsustainablewastemanagement,MinistryofEnvironmentandNatureprotection

•SnjezanaIvić-Pavlovski,SeniorAssociate,MinistryofEntrepreneurshipandCrafts

•DijanaVrebec,SeniorAssociate,CroatianChamberofCommerce,EnergyandEnvironmentalProtectionSector

AnotetoReaders

Any views or opinions expressed in this report are solely those of the authors and do notnecessarilyreflectthepositionoftheEuropeanUnion.Anumberofcompaniesarepresentedasillustrativeexamplesofeco-innovationinthisreport.TheEIOdoesnotendorsethesecompaniesandisnotanexhaustivesourceofinformationoninnovationatthecompanylevel.

This brief is available for downloaded fromhttps://ec.europa.eu/environment/ecoap/croatia

Tableofcontents

Summary...........................................................................................................................1

Introduction.......................................................................................................................2

1 |Eco-innovationperformance......................................................................................3

2 |Selectedcirculareconomyandeco-innovationareasandnewtrends........................5

3 |Barriersanddriverstocirculareconomyandeco-innovationinCroatia...................11

4 |Policylandscape:towardscirculareconomyinCroatia.............................................13

ANNEX:Policymeasuresaddressingcirculareconomyandeco-innovationsinCroatia.....17

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Summary

Croatia’s environmental and socio-economic issues indicate that Croatia is only beginning itstransition froma linear toa circulareconomy. Six yearsperiodofeconomic recession, a generallackofadequatepoliciesandcompetences,andaregulatoryframeworkthatremainsonlypartiallyadjusted to EU regulations all contribute to Croatia’s lag in eco-innovation and in its transitiontowardsacirculareconomy.

In2015, the compositeEco-innovation index forCroatiawas67%of theEUaverage.ThisplacesCroatia among five least eco-innovative countries in EU, occupying the same sphere as it did in2013. Eco-innovation input stands very low at 21% of the EU average, which is also almostunchanged since 2013. Croatia achieved its highest score in eco-innovation activities, where itreachedtheEUaverage.Yetthisouterlayermightbeexplainedbyalackofdataforsomeoftheindicators. Croatia is still showingmodest results in socio-economic outcomes, but some of theindicatorsshowcertainimprovementscomparedto2014.

These results confirm that there is still no long-term involvement in the push to transition to acircular economy at thenational and local level, aswell as at a business and consumer level. Inorder to achieve a sustainable, resource efficient and competitive economy Croatia needs toaddress this process as a priority and start acting accordingly. The biggest and themost urgentchallengeforthecountry lies inwastemanagement,whichrequiresonradicalchanges–namelyleavingbehindoldpractises and focusingon separatewaste collection.Muchmoreneeds tobedone in theareaof informationprovisionandeducationon the local level. Some improvementscan be recognised in the fields of energy efficiency and renewable energy. Step towards moreefficientinnovationsystemwastheStrategyforInnovationencouragementofCroatia2014-2020,whichdefinesthemechanismsforstimulatinginnovationandapplicationofnewtechnologies.

There exists broad based consensus that the transition to a circular economy presents a greatchallengeforCroatianpolicy-makers,nationalandlocalauthorities,aswellastoeconomicactors,such as business and consumers. Yet, there exists growing awareness among these actors thatcurrentcircumstances,brieflypresentedinthisreport,demandsystematicchangeinbusinessandmarketmodels,productdesign,waysoftransferringwastetoresources,andintheproducersandconsumers’relatedvaluesandbehaviour.

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Introduction

Eco-innovationdevelopment and the transition to a circular economy inCroatia are still at theirearlystages.Policesthatshouldfacilitatetransitionfromalineartoacirculareconomyarelargelyunderdeveloped. Yet, policy-makers in the responsible institutions emphasize ever more anorientationtowardsacirculareconomyasoneoftheirmainstrategicgoals1.PuttingastrongfocusonthetransitiontoacirculareconomycanbejustifiedgiventhecurrentCroatianenvironmentalandsocio-economicissuestowhichthisstrategicalorientation,toasignificantextent,maypresentasolution.

Since 2008 Croatian industry production has been continuously decreasing. Finally in 2014productiongrewbymodest1,3%andcontinuedgrowingin2015by2,6%.Despitetherecenttrendofgrowthinlasttwoyears,thecurrentleveloftheindustryproductionis15%lessthanitwasin20082. Due to the decrease in economic activity, financial means needed for developing andimplementingpolicesthataddresscirculareconomyconcernshavebeenreduced,particularlyonthe local level. A prolonged economic recession is also in large part responsible for slow andinsufficientdevelopmentofcleantechnologiesandeco-innovations inCroatia.Next torecession,the factor that certainly contributed to unsatisfying development in these areas is the lack oftargetedeco-innovationpolicies.

The main environmental issues in Croatia lay in inadequate waste management and inefficientusageofresources.Duetoalackofsuccessfulsolutionsandanunsuccessfulenforcementoflawsandregulations,mostCroatianmunicipalitieshavealarmingproblemswithallsortsofwaste.Thus,itisimportanttostresstheimportanceofsolvingwastemanagementissues,particularlymunicipalandhazardouswaste,asanabsolutepriorityforCroatia,especiallygivenitsfunctionasoneofthecrucialelementsofacirculareconomy.

Water utility systems in Croatia suffer from significant water waste, which amounts to 48%,according to the latest official data3. Furthermore, despite advantageous geographicalpreconditions,theamountofenergyproducedfromrenewableresources,particularlyenergyfromsunandwind,remainsminimal.

DemographicdataforCroatiainthecontextofspaceusageshowsanalarmingtrendofpopulationdecline4, yet there exists a significant increase of 17% in artificial areas, which indicates a highdemandformorelivingspaceandconsequentlyabiggerconsumptionofnaturalresources.

In order to reverse the above presented trends, recent research as well as the interviews withrelevant informants5, indicate that there isagrowingawarenessamongthepolicy-makersof theneed to transition toa circulareconomy,which is increasinglybeing recognisedasnecessary forensuringsustainabledevelopment,amorecompetitiveeconomy,andbetterresourceefficiency.

1NewlyappointedMinisterofEnvironmentandNatureprotectioninoneofhisfirstpublicspeecheshasreferredtransitiontoCirculareconomyasapriorityofhismandate2DataprovidedbytheCroatianbureauofstatistics3Sourceofdatais2014Reportonthestateofenvironmentalprotection4Inlasttwodecadespopulationdecreasedfor10,7%5InterviewsareconductedwiththerelevantofficialsformtheMinistryofEntrepreneurshipandCrafts,MinistryofEnvironmentalandNatureProtectionandChamberofcommerce

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1 |Eco-innovationperformance

Theanalysis in this section isbasedon theEU-28Eco-innovationscoreboard (Eco-IS) for theyear2015.Via its compositeEco-innovation index,producedby theEco-InnovationObservatory (EIO),Eco-ISdemonstratestheeco-innovationperformanceofacountrycomparedwiththeEUaverageandwiththeEUtopperformers.Eco-ISisbasedon16indicators,aggregatedintofivecomponents:eco-innovationinputs,activitiesandoutputs,environmentalandsocio-economicoutcomes.

Figure1EU27Eco-innovationscoreboard2015,compositeindex

Source:EIO,2016

For the year 2015 Croatia is ranked low among the EU-28 countries in terms of eco-innovationperformance,as illustratedaboveinFigure1.Thecountryhasachievedanindex33%lowerthantheEUaverage.ThisplacesCroatiafifthfromthebottomintheEU-28rankingofeco-innovation.ThesamerankingCroatiaheldin2013whenitachieved66%ofEU-average.Thescoreinmostofthecomponentsdidnotchangesignificantly.Aminimalchange,upto10points,occurredineco-innovationinputs,eco-innovationoutputandresourceefficiency.

The component in which Croatia performs relatively better comparing to other areas is eco-innovationactivitieswhere itreachedEU-average. Itsscorehas increasedby15pointscomparedtoyear2013.However,thedatafortwooutofthreeindicatorswithinthecomponentaremissing.Therefore,thescorereliessolelyonthenumberof“ISOregisteredorganisations”,whichmaynotreflecttheactualstateofeco-innovationactivitiesinCroatia.Thelowestscoreisachievedineco-innovationinputswhereCroatiahasanindex79%lowerthantheEUaverage,whichpresentsonepercentage point decrease compared to year 2013. Particularly low scores are seen under theindicator “Governments environmental and energy R&D appropriations and outlays” and “Totalvalueofgreenearlystage investments”,whereCroatia’s scoreamounts to5%and7%of theEU

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average, respectively. Relative number of “Total R&D personnel and researchers” measured inpercentageoftotalemploymentinCroatiaisaroundhalfoftheEUaverage.

The Eco-innovation output score is significantly better than the input score accounting to 11%belowtheEUaverage.Again,theindicatorsthatcausedhigheroverallscoresare“Eco-innovationrelated publications” and “Eco-innovation related media coverage” where Croatia scores 14%below and 62% above EU average, respectively. In an arguably more relevant indicator “Eco-innovationrelatedpatents”,CroatiastillsignificantlylagsbehindtheEUaverageby81percentagepoints.

Figure2Componentsoftheeco-innovationcompositeindexforCroatia,2015

Source:EIO,2016

Inresourceefficiencyoutcomes,Croatiaplacesat80%oftheEUaverage.Amongtheindicatorsforresource efficiency, the highest score reaching EU average is achieved in “Energy productivity”,whilethelowest is in“Waterproductivity”wherethescore isonly45%oftheEUaverage.“GHGemissions intensity” and “Material productivity” is lower than EU average by 6% and 19%,respectively.

The only component inwhich Croatia scored significantly better than in 2013 is socio-economicoutcomes. In 2013 Croatia scored a modest 10% of the EU-average, while in 2015 that scoreincreased to 49% of the EU average. The only indicator used for this component is “Exports ofproducts from eco-industries” expressed in percentage of total exports. Data for two otherindicators “Employment in eco-industries” and “Turnover in eco-industries” arenot available fortheyear2015.

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2 |Selectedcirculareconomyandeco-innovationareasandnewtrends

In 2015 certain areas of progress can be identified in waste management and in increasingresource efficiency, which are both priority issues in Croatian environmental politics.Improvementscanalsobeobservedinotherareassuchasrenewableenergy,improvingair-qualityandeco-labelling.However,improvementsarerelativelymodest,whichconfirmsthedataanalysedinthepreviouschapterandtheresultsofsomestudies.

WastemanagementpresentsthemostseriousenvironmentalissueforCroatia.Analmostdecadeyearoldplantobuild13Centresforwastemanagementby2018hasstillnotbeenrevised.Bytheendof2015,onlytwoofthecentreshavebeencompleted.Croatiaagreedtosortatleast50%ofwasteby2018andtheproposed13Centresforprocessingmixedwasteareperceivedbyexpertsasincompatiblewiththatgoal.AccordingtodataprovidedbytheCroatianMinistryofEnvironmentandNatureProtection,54millionEURhasbeeninvestedinwastecollectionandsortingtodate.In2015,18thousandgreen islands (whereseparatelycollectedwaste isstored)were installed,108recycling centers are in construction, and another 481 are planned for the next period. At themoment, almost 80% of citizens carry out some basic waste selection, which is a significantincrease compared to 2012 when only 45% of the population sorted out their waste. Separatecollectiontakesplacemainlyby“bringbacksystems”includingpaper,glassandplasticpackagingat collection points. Bio-waste is only collected by a few pilot separate door-to-door collectionsystems in selected neighbourhoods. Therefore, there has been no significant progressmade inbio-waste collection since 2013. There are no economic-incentives provided to consumers forreducing theamountofhouseholdwastenoranyhighly visibleawareness campaigns inCroatia.Accordingtorecentstudyentitled“Assessmentofseparatecollectionschemesinthe28capitalsoftheEU”,Zagreb(capitalofCroatia)hasthelowestcollectionrateoffractionedwaste,amountingto just 5 kg/cap (1%). In 2016, improvements are envisioned through a new Plan for wastemanagement,changesintheLawforsustainablewastemanagement,andthroughnewregulationformunicipalwaste.Changesarealreadyinpreparationandsomeofthepoliciesarecurrently inthephaseofpublicdiscussion.

In2014,Croatiaadopted theThirdnationalactionplanofenergyefficiency for theperiod2014-2016. Within the framework of the action plan, an “Energy Renewal Program of Homes” wasdevelopedandimplementedbytheEnvironmentalProtectionandEnergyEfficiencyFund.Theaimisto increasetheenergyefficiencyofexistinghouses,reducetheenergyusageandemissionsofCO2, and consequently reduce costs for consumers. The implementation of this program had apositiveimpactonlocaleconomiesgeneratinggrowthintheireconomicactivities.Progresscanbeseen in improvements meant to improve energy efficiency in the public sectors, with notableimprovements being the adoption of energy efficient street lighting, and investment in energyrenewable kindergartens, schools, hospitals etc. Furthermore, the Ministry of Environment andNatureprotectionalsoco-financespurchasesofelectricandhybridcars.Inadditiontosubsidiesforcars,cleanerpublictransportisalsosupportedbythegovernment.

InOctober2013, theEnvironmentalProtectionandEnergyEfficiencyFundandUNIDOsignedanagreement of cooperation and co-financing the “Plan for gradual decrease and eliminatingconsumptionofthesubstancesthataredestroyingtheozoneinCroatia“.Themainobjectiveoftheplanwastocarryoutretrofittingofolddevices inpublicbuildings.Accordingtothemostrecent

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calculations, the decrease in global warning with the implementation of the plan amounts to4.243.813kgGWPeq.Theprojectwasfinalizedin2015.

Energy produced from the renewable resources in Croatia amounts to 28,7% of overall energyoutput in Croatia, from which 26% comes from hydroelectric power plants, while the energyproducedfromtheotherrenewableresourcesamountsonlyto2,8%6.At themoment, thereare1207functioningrenewableenergypowerplantsproducingupto4301MWofpower7.Comparedto thebeginningof2015, thispresentsan increaseof137powerplants:130solarpowerplants,onehydroelectricpowerplant,threepowerplantsforbiomassandthreeonbiogas.Another138plantswillbeactivatedproducingup to502MWofpower. Investorshaveshowngreat interest,andquotasdeterminedbytheNationalplanforrenewableenergyresourcesfor2020forbuildingwindandsolarpowerplansarealreadyfilled.However,itisimportanttoemphasizethattherearealsomanycomplaintsfrombusinessandNGOsectorsabouttoolowquotas,particularlyforsolarenergy.TheystressCroatia’sability,comingfromitsgeographicalposition,toproducesignificantlymoresolarenergy.

Croatiahasbeenfairlyactiveintheproductionofbiofuels.However,in2015,theEUintroducedadirectivethatprohibitssubsidiestoproducersofbiofuels.Bio-fuelproducersstatethatthesepolicydevelopments threaten their survival and they have already reduced production of biofuel. Thismay indicate that the market of biofuel and other bio-based materials in Croatia is still notestablished.

In2014,aRegulationontheEUEcolabelwasissuedtodescribetheEUEcolabelprocessinCroatia.TheMinistryofEnvironmentandNatureProtectionalsooperatesanationaleco-label“Friendsofenvironment“,whichwasestablished in1993.Moreandmorecompaniesareapplying for theseeco-labelsandarewillingtoadoptandimprovetheirproductstocomplywiththecriteria.In2015,the Fund for the Environmental protection and energy efficiency provided subsidies to thecompanies that appliedand fulfilled conditions for gaining the label. The samemeasureswill beappliedin2016.

In the field ofwatermanagement, the focus is still on the constructionof devices for cleansingwastewaters and on the improving the canalization network. Croatia is rich in water resources,however its periodical and territorial allocation is unbalanced, presenting a significant problemparticularly during the summer. Much less has been done to promote and establish secondarywaterreuse.Themarketforsecondarywaterreuse,aswellasforsecondaryrawmaterials,isinitsinitialphases.Inordertoboostthesemarkets,goalsofwatermanagementinCroatianeedtoberesetandadoptedtothoseofacirculareconomy.

6ThegoalsetwithintheStrategyforthesustainabledevelopmentofCroatiais5,8%7DataispublishedinAugust2015byCroatianEnergeticsassociationintheStudyaboutthestateofrenewableenergyprojectsinCroatia

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In Croatia, investments in research and development are still relatively low, particularly in thecorporate sector. According to the latest data fromEurostat, of all investments in researchonly42,8%comesfrominvestmentsmadebyprivatesectorentities.Only5,7%of theall investmentsrelate to market oriented projects. In addition, there are still no visible improvements inconnecting the academic and private sectors. With this mind, much is expected from theimplementation of recently adopted strategical documents such as the Strategy for supportinginnovationinCroatia2014-2020andIndustrystrategiesinCroatia2014-2020,andfromtheSmartSpecialization Strategy that is about to be issued. Despite underdeveloped research anddevelopmentandinnovationsystemsinCroatia,therearesomegoodexamplesofeco-innovativeprojects,mainlyco-financedthroughEUfunds.

SELFPROPRAIL

InCroatia,theselfproprailprojectbringsanew,innovativeself-propelledbulkcarriagetothemarket that does not need a locomotive for shuffling/moving during the process of cargounloading. The aim of the project is to remove barriers to market penetration of a self-propelled bulk carriage, which increases resource efficiency and reduces negativeenvironmentalimpactsduringrailwaymaintenance/construction.Theprojectshouldresultinreduced resource needs (deployment of locomotives), energy consumption, and pollutantemissionsresultingfromrailwayconstructionandreconstruction.

Theself-propelledbulkcarriageisrecognizedasresourceefficientwayofthe(re)constructionof railways. The carriage saves energy, human resources and shortens the time oftransportation and unloading. It is cost and time efficient, it enables point-to-pointtransportation, and it eliminates cost-intensive cargo manipulation machinery for freighthandlingortime-intensivecouplingandreloadingprocesses.

Keywords:self-propelledbulkcarriage,deploymentoflocomotives,resourceefficiency.

Website:www.selfproprail.eu

Contacts for further information: Dražen Vidović - director RZV, Producerdrazen.vidovic@rzv.hr

Source:www.selfproprail.eu

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GREENBLASTThe Greenblast project has developed an innovative solution to recycle glass. The aim of theproject is to prevent thousands of tons of waste going to landfill. Currently waste glass iscollected from homes (and businesses) for recycling. Due to the lack of demand there is anexcessofgreencolouredglasswhichmustbestoredorsenttoalandfill.TheGreenblastprojectproposesaneco-innovativeprocessandbusinessmodeltomakeuseoftheglassintwodifferentindustriesthrough“doublerecycling”.Firstly,wasteglasscanbeusedinplaceofcopperslagorgrit formetalsurfacepreparation.This techniquecalledblasting formsa largepartofshipyardwork.Using recycled glass for blasting has beenproven in small scale applications in previousprojects. The waste from this process consists of glass powder containing metal and paintparticles.Secondly,wasteproductfromblastingissuitableforuseintheheavyclayindustryinthemanufactureofbricks,pipesandtiles.Theuseofglassenables lowtemperaturekiln firingand/orhigherqualityendproducts,whichcanreducecostsandtheenvironmentalimpact.Theplannedresultsfromthisproject includethefollowing:thecreationofanewmarketforgreencolouredwasteglasswhichiscurrentlystoredorinlandfill;thedecreaseofhazardouswasteinthemaritime industryand reductionof costs inprocessingwaste streams; theconversionofawastestreamtoanincomestreaminthemaritimeindustry;loweringcostsofrawmaterialsfortheheavyclay industry;andfinallytherealworldtestingofanewbusinessmodelusingwasteglass.Keywords:Glass,Blasting,FluxingAgent,Brick,Concrete

Website:www.greenblast.eu

Contactsforfurtherinformation:ULJANIKShipyardJSC,Pula,Croatia.

Phone:+385(0)52373294

E-mail:shipyard@uljanik.hr

Source:www.greenblast.eu

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WASATEX

Wasatex stands forWater Saving Processes for Textile Production. The project aims to providesolutions in the textile sector for the treatment of wastewater by allowing for the recovery ofwastewater,whichcanamountto100%,invariousstagesofproduction.AtextilefactoryinOsijek(Croatia)ofbelongingtotheOlimpiasTekstilgroupwaschosenfortheindustrialdevelopmentoftheproject.WiththeadditionofthenewpurifyingunitsoftheWasatexproject,upto90%ofthewatercanbereusedin industrialprocessesandtheamountofwaterpumpedfromthewellwillbe lower than 65% (equivalent to a reduction of 1.020 m3/day). This allows for huge watersavings, cost savings in water extraction and discharge, and cost reductions of primary watertreatments(softeningandironremovalfilters).

Theenvironmentalbenefitsincludethelowerconsumptionofnaturalresourcestoheatthewater(recycledwaterhasa temperatureofabout30 °C compared toa temperatureof15 °C forwellwater)aswellasreductionsofgasemissionsandacostsavingsinfuel.TheWasatextechnologyistailor-madeaccordingtothecharacteristicsofthewatertobetreated,tocustomerrequirementsandlocalrestrictions.

Keywords:textilesector,treatmentofwastewater,watersaving.

Website:http://wasatex.eu

Contactsforfurtherinformation:DanijelaPanic,OlimpiasTekstil-Croatia

danijela.panic@olimpias.com

Source:http://wasatex.eu

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TEHNIX

CroatiancompanyTehnixisaleadingwastemanagementcompanyinSoutheastEuropefordesign,production,andtheservicingofmachinesandequipmentforwastetreatment.TEHNIXownsmorethan 50 patents and innovations embedded into over 350 products,which are launched into themarketastheirownproductorsoldasalicenseorinnovation.

Their most successful innovations are: PRESS CONTAINERS – solid waste compactors; PRESSES –BALINGPRESSES;SEPARATORS–devices forphysicalwater treatment;BIOROTORS–cutting-edgetechnology for biological water purification and MOBILE OIL PUMPS. In 2015 in Croatian city ofPrelogTehnixhasbuilt the factoryusingTehnixmethodology forminimizingamountofwaste fordisposal and implementing thenewest technologies forwaste separationasbiorotorsand specialseparators. City of Prelog is the most successful example for waste management in Croatia. Itseparatesmorethan50%ofthemunicipalwastewiththeplantoincreaseitto70%by2020.

Keywords:wastemanagement,biorotors,separators.Website:www.tehnix.hrContactinfo:tehnix@tehnix.com

Source:www.tehnix.hr

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3 |Barriersanddriverstocirculareconomyandeco-innovationinCroatia

Croatia underwent a significant period of economic recession from 2008 until 2014, which hadsignificantnegativeimpactsonthescopeof investments, includingthoseincleantechnologies.Amajor consequenceof the recession included significantly less fundsallocated forenvironmentalimprovementsaswellasforresearchanddevelopmentintheenvironmentaltechnologiessector.In 2014 and 2015 amodest growth of production was observed. Slow rates of growth are alsopredictedfortheyear2016,howevergrowthishighlydependentonexternalfactors.Thus,accessto investments for eco-innovation and circular economy development remain mainly providedthroughEUfunds.

WithinEUfundingprograms,theCompetitivenessandInnovationFrameworkProgramme(CIP) isconsidered very successful in terms of co-financing projects related to eco-innovation. CIPconcludesattheendof2016,butprogramssuchasHORIZON2020andCOSMEwhichmayfurtherstimulate the development of eco-innovation. Some Croatian firms have increased theircompetitivenessthroughinvestinginmoderntechnicalandtechnologicalsolutions,andthereforeable to benefit from the opportunities through EU funds to further improve their innovativeproducts.Eco-innovationcouldbefurtherdevelopedandpromotedinCroatia.Asmentionedintheprevious chapters, there still exists no targeted eco-innovation policy. Current efforts ofresponsible bodies to support technological innovation in general (which primarily focus on thesmallandmedium-sizedbusinesssector)maynotbesufficient to improveeco-innovation.Thereareexamplesofbusinesseswitheco-innovativeproducts thatarenot fully recognizing theireco-innovationpotential.Forexample,eventhoughthesecompaniesproduceproductsthatfulfileco-label criteria, they may not be have eco-label status due to the lack of information and/orcomplexityoftheprocedure.

Croatia has a relatively long tradition in the energy industry, particularly in electro-energeticsystems.Dominantfirmsintheenergysectormainlyproducespecificequipmentandareexport-oriented.Theirmainproblem(andageneralproblemofCroatianindustry),however,isthelackofinfrastructure for the industrial research, experimental development and for testing thecomplianceoftheirequipmentandproductswiththeEUnormsanddirectives.MuchmoreneedstobedoneinCroatiatoimprovethecollaborationbetweenresearchinstitutes,universitiesandtheprivatesector.

EventhoughCroatiahassignificantpotentialtoproduceenergyformrenewablesourcesfromsolarandwindsources,theEnergyStrategyoftheRepublicofCroatiafrom2009recognisescoalasoneoftheprincipalresourcesoftheCroatiaenergysystem.InaccordancewiththeStrategy,bytheendof 2015 the national electricity company planned to start the construction of a large coal-firedpowerplant.ThisplanispartofthehighlycentralisedenergyproductionsysteminCroatia,whichhasbeenwidelycriticizedbyexpertsandenvironmentalists.TheseactorsemphasizethefactthatCroatianeedstoturntowardsamoredecentralisedanda“greener”systemofenergyproduction.

InMarch 2016, theMinister of Environmental andNature protection announced that due to itsnoncompliancewithEUenergypoliciesandCroatia’splanstoreorienttowardsrenewableenergiessources in energy production, construction of new power plant on coal is probably going to beredefinedorcancelled.Afinaldecisiononthefutureof theprojecthasstillnotmadeasofApril2016.

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Anotherthreat toeffectivetransitiontoacirculareconomy inCroatiamaybe found in itswastemanagementpractices.Asmentionedpreviously,13CentresforwastemanagementareplannedtobeconstructedinCroatiaby2018.However,bytheendof2015onlytwowerecompletedandtwoofthemwereinadvancedphaseofconstruction.TheCentresforwastemanagementproducealternativefuelfromwasteusedforgeneratingenergy.However,onlyaround35%ofallthewasteis used for that process,whereas the rest of thewaste is disposed of in landfills. There is largedebate in Croatia at themoment onwhether to continuewith the construction of the Centres.Someexpertsandtheenvironmentalistareagainstit,arguingthattheCentresasplannedarenotinlinewithcirculareconomybecauseshouldthe13Centresbebuilt,therewouldbelessofaneed(orincentive)torecycleastheCentreswouldneedaconstantsupplyofwastetofunction.Expertsstress thatCroatiamustdecidebetweenthese twochoices: minimizationofwasteand increaserecycling or to construct those initially planned Centres to generate energy through burning ofmixedwaste. Inaddition,Croatia’spolicyonwastemanagementrequiresat least50%separatelycollected waste by 2018. Therefore, with the above in mind, the currently set goals – theconstruction of 13 Centres for processing mixed waste and separate waste collection with theultimate goal of zero waste - seem mutually exclusive. By the end of 2015, there was still nosolutiontotheseissues,buttheMinisterofEnvironmentandNatureprotectionhasexpressedhisintentiontoredefinethepurposeoftheCentresortoreducethenumbertobeconstructed.

Another key barrier towards a circular economy identified in relevant research and alsoemphasized by stakeholders lies in the Croatian regulatory framework. The followingcircumstancesareidentifiedasthemainissues:

• CurrentCroatianlawsandregulationsarenotyetfullycompliantwiththeEUregulation• Most of the national strategies,which server as the legal framework for the creation of

lawsandregulations,havenotbeenupdatedandarenotincompliancewiththegoalsofcircular economy. Moreover, their content tends to be complex and in some casesambiguous.

• Theprocessofdevelopmentofsomestrategicdocumentshasbeenrelativelyslow,whichhashadanegativeimpactonthestateoftheoverallregulatoryframework.8

Inaddition to thepointsabove, another important issue lies in the failed implementation oflawsandregulations,particularly in the fieldofwastemanagement.Thecauseof theproblemisthe absence of political action to guarantee the enforcement of fines for breaking the law.Onestakeholderstatedthat,“Inthecurrentsituation,theminorityofthosewhoactaccordingtothelawsandregulationsaredisadvantaged,becausethosethatbreakthelawsarenotbeingpunished.Further,someofthelawbreakersarealsotherecipientsofsubventionsandfunds.”9

In addition to the political, economic and regulatory barriers, other serious challenges withCroatiantransitiontoacirculareconomyisseeninitsterritorialcharacteristics(e.g.shapeofthenationalborders,including50populatedislandsandtwopeninsulas),whichaddtothecomplexityoftheprocessintermsofestablishingefficientinfrastructures.

8Forinstance,Strategyforsmartspecializationareexpectedtobeapprovedonlyinsummer,2016.ThesamerelatestonewNationalplanforthewastemanagement.9Quotationfromtheinterviewwithoneoftheinformants

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4 |Policylandscape:towardscirculareconomyinCroatia

InCroatia,themostrelevantpoliciesforthedevelopmentofcirculareconomyandeco-innovationinclude:

- SustainableDevelopmentStrategyof(2009)

- StrategicalplanofMinistryofEnvironmentandNatureProtection2015-2017

- Nationalrenewableenergyactionplanuntil2020

- StrategyforinnovationencouragementoftheRepublicofCroatia2014-2020

- Thirdnationalplanforenergyefficiency2014-2016andWasteManagementStrategy

Theseinitiativesaredescribedindetailbelow.

SustainableDevelopmentStrategy(2009)containsananalysisoftheexistingsocio-economicand

environmentalstateinCroatiaandprovidesguidelinesforlong-termactions.Itsetstheprinciplesand measures for achieving sustainable development. The main priorities are environmentalprotection, sustainable production and consumption, and energy independency. However, the

strategy does not define the indicators to monitor the progress towards transitioning tosustainabledevelopment.

Strategic plan of Ministry of Environment and Nature protection 2015-2017 (2014) sets threemain goals. Among the objectives under these main goals are the establishment of the

preconditionsforthesuccessfulwastemanagement,ozoneprotection,climatechangemitigation,continuous monitoring of the state of the environment and nature, and establishing moreadvancedsystemsfordatamanagement.Areasof lessemphasisarerenewableenergiesandthe

promotionofnewformsofconsumptionandreductionofwaste.

Nationalrenewableenergyactionplanuntil2020(2013)setstheguidelinesforachievingthe20%target of renewables in energy consumption by 2020 as determined by the EU directive onrenewableenergy.Theactionplanwascriticizedbytheacademiccommunityandotherexpertsfor

itsnoncompliancewiththeEnergystrategyofRepublicofCroatiaduetoitsrefocusingfromsolarand wind energy to energy production from biomass, biogas, cogeneration plants and smallhydroelectricpowerplants.

WasteManagementStrategyfrom2005 isduetobereplacedwithanewStrategyin2016.Eventhoughitcallsforthepromotionofawastemanagementhierarchy,thecurrentStrategydoesnot

have clear goals regarding waste reduction nor does it set deadlines for achieving results. Thestrategyismainlyfocusedonenergycaptureanddisposal,whereasmuchlessguidanceisoffered

for waste minimization, recycling and reuse. Its weak point is also in undefined measures formonitoring and control. Therefore, it can be concluded that new improved and adopted wastemanagement guidelines are urgently needed as an overarching strategy for wastemanagement

andcirculareconomyrelatedregulations.

14

National Programme for Energy Efficiency for the period 2008-2016, adopted in 2008, includesthreethree-yearactionplans.TheThirdActionPlan(2014-2016)was launched in July2014.Theplanoptimisticallypredictstheachievementofthestandardssetfor2016,whicharethereduction

ofend-useenergyconsumptionby20%by2016.Incomparisontothefirsttwoplans,thisplanhasintroducedasystemofmeasurementandverificationofobtainedresults.

TheStrategyforInnovation2014-2020(2014)aimstoincreasethelevelofcompetitivenessoftheCroatian economy and increase social well-being. The document includes a list of around 40

guidelinesstructuredaroundfourthematicpillars:(1)developmentoftheinnovationsystemandsettingupalegalandfiscalframeworktoencourageinnovation;(2)strengtheningtheinnovationpotentialoftheeconomy;(3)encouragingcooperationandknowledgeflowsbetweenbusinessand

academia;and(4)strengtheningofthehumanresourcesininnovationandcreationofanattractiveenvironmentforworld-classresearchers.

Croatiahasrecentlylaunchedseveralotherinitiativestoimprovethenationalinnovationsystem.For example, the “National project for creating innovation networks for the industry and the

development of thematic innovation platforms”, “Science and Technology foresight” and“Predictionofsmartskills”arecurrentlyunderdevelopment.Themainfocusoftheseactivitieswillbeondeveloping strategies for research,developmentand innovation in thebusiness sector for

eachthematicpriorityareafromtheupcomingStrategyforSmartSpecialization.

CroatiaiscurrentlyintheprocessoffinalizingaSmartSpecializationStrategy,whichwasinitiallydue for final approval at the end of July 2015. Two of the five priority thematic areas of thestrategyare“energyandsustainableenvironment”and“foodandbio-economy”.Initiativesundertheseprioritiesultimately involveeco-innovationandseek todevelop thewholeentrepreneurial

ecosystem in Croatia. The strategy also contains two horizontal thematic areas which areInformationandCommunicationTechnology(ICT)andKeyEnablingTechnologies(KET).

New Waste Management Strategy, Smart Specialization Strategy and other key regulatorydocumentsthatareinpreparationandareplannedtobeissuedin2016areincompliancewiththe

EUactionplan for theCircularEconomy.However, itshouldbenotedthatcertainmeasuresanddeadlinesfortheirimplementationsetbytheEUactionplanarerecognizedbysomestakeholdersastooambitiousforCroatia.

OtherrelatedpolicyinstrumentseintheareaofcirculareconomyincludetheEnergyEfficiencyAct

(2015),Croatianresearchandinnovationinfrastructuresroadmap(2014),NationalactionplanforGreenprocurement(2015)andActonRenewableEnergySourcesandHighEfficientCogeneration(2015).

EnergyEfficiencyAct(2015)

The Energy EfficiencyAct regulates efficient energyuse, adoptionof local, regional andnationalplanstoimproveenergyefficiencyanddeterminesenergyefficiencymeasuresandrequirements.The purpose of the Act is to achieve sustainable energy development, to reduce the negative

environmentalimpactsoftheenergysector,toimprovethesecurityofenergysupplyandtomeetthe needs of energy consumers and international commitments of the Republic of Croatia

regarding reductionofgreenhousegasemissionsbypromotingenergyefficiency inall sectorsofenergy consumption. The act defines obligations of the energy regulatory authority, distribution

15

andtransmissionsystemoperatorsandenergymarketoperatorsrelatedtotransmission,transportand distribution of energy. It also determines consumer rights regarding the implementation ofenergyefficiencymeasures.

ActonRenewableEnergySourcesandHighEfficientCogeneration(2015)

TheActonRenewableEnergySourcesandHighEfficientCogenerationwasadoptedinSeptember2015. The Act harmonizes Croatian legislation with EU regulation and consolidates Croatianlegislationinthefieldofrenewableenergy.ThepurposeoftheActistoincentivizeproductionand

consumptionofelectricenergyproducedinrenewableenergypowerplants,toexplorepossibilitiesof construction of electricity production facilities on the state property, to regulate the

management of a register of projects and to stimulate international cooperation in the field ofrenewable energy. The main novelty of the Act is that it changes the model of incentives andinstead of the present feed-in tariff system, a new concept of market premium model is

introduced.

Thenew legislationbringsmore transparency to the systemby regulating themanagementof a

register of projects, project holders and eligible preferential producers of electrical energy. Theregister will be publicly accessible, thereby providing an overview of existing projects, obtained

licensesandanupdatedstatusonquotas.TheActdefinespossibilitiesand tenderprocedure forconstruction of electricity production facilities using renewable energy or high efficientcogeneration on the state property. Furthermore, it contains rules on takeover of surplus of

electricalenergyfrompurchaserswithitsownproduction.

NationalactionplanforGreenprocurement(2015)

TheCroatianGovernmentadoptedthefirstNationalActionPlanforgreenpublicprocurement in

August 2015, for the period from 2015 to 2017. The aim of the National Action Plan for greenpublic procurement is to include some of the criteria for green public procurement for 50% ofpublicprocurementproceduresinCroatiaby2020.Thefocusisontheintroductionofbasicgreen

standards in public procurement for priority groups of products and services: paper for printingand copying, motor vehicles, office and computer equipment, electricity, telecommunicationservicesandmobiletelephoneservicestogetherwithequipment,andcleaningservices.Thegoalis

to contribute to a cleaner and healthier environment, to stimulate the innovation and provideincentivestoindustryforthedevelopmentofgreenproductsandservices.

16

References

Brbore et al., 2015, Our water – the analysis of water management in Croatia, Green Action,http://etnar.net/wp-content/uploads/2014/03/zelena_akcija_voda_za_web.pdf

CEPOR Center development of SME, 2014, Report on the SME in Croatia for 2013,http://www.azo.hr/Publication08

CroatianBureauofStatistics,2012,InnovationActivitiesinCroatianEnterprises,2010-2012,No.8.2.2.

CroatianBureauofStatistics,2013.AStatisticalPortraitofCroatiaintheEuropeanUnion,2013,http://www.dzs.hr/Hrv/important/PressCorner/StatPortraitOfCroatiaInTheEU2013.pdf

Croatian Environment Agency, 2015. The Environment in Your Pocket I.,http://www.azo.hr/Publication08

Croatian Ministry of Science, Education and Sports, 2014, Croatian research and innovationinfrastructure road map,https://www.google.hr/?gws_rd=ssl#q=smart+specialisation+strategy+croatia

Delomez Yann, 2012. Renewable energy in Croatia, Embassy of Belgium in Croatia – EconomicandCommercialOffice

European Bank for Reconstruction and Development (EBRD), 2013. Transition Report:http://tr.ebrd.com/tr13/images/downloads/357_TR2013v3.pdf

Energy Institute Hrvoje Pozar, 2010. Annual Energy Report, Energy inCroatia:http://www.eihp.hr/hrvatski/projekti/EUH_od_45/Energija2010.pdf

______________ 2012. Case Study on Energy Efficiency Financing, Croatia:http://www.unece.org/fileadmin/DAM/energy/se/pp/eneff/IEEForum_Issyk_Kul_Lake_Sept.2012/day_2/workshop_4/5a_Zeljko_JURIC_Croatia-EIHP.pdfEuropean Commission (EC), 2013. Operational Programme ‘Environment’,http://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?gv_PAY=HR&gv_reg=ALL&gv_PGM=1356&LAN=7&gv_per=2&gv_defL=7Sevic, D. and Gerasina, R. 2009. Regional Study on Financing Eco-innovation in South EasternEurope,TheRegionalEnvironmentalCentreforCentralandEasternEurope(REC).

Svaljek, S. 2012. R&D Tax Incentives in Croatia, Beneficiaries and Their Benefits. Institute ofEconomics, Zagreb.World Bank country overview; Croatia:http://www.worldbank.org/en/country/croatia/overview

World Economic Forum, 2013, The Global Competitiveness Report 2014-2015

17

ANNEX:Policymeasuresaddressingcirculareconomyandeco-innovationsinCroatia

Groupofpolicymeasures Typeofpolicymeasure

Specificmeasure

Pleaseprovidereferencetoorbriefsummaryofspecificmeasures(national,regional)

addcellsifnecessary

Focusofpolicymeasure(tickifrelevant)

Circulareconomy

Genericfocusoneco-

innovation

Resourceefficiencyimproveme

nt

Energyefficiencyimprovement

Reductionofemissionsincl.CO2

Otherrelevantareas(e.g.renewableenergy,etc)

SUPP

LYSIDEFO

CUS

Equity/businesssupport

Publiclyco-fundedventurecapitalfunds

-Croatian Private Equity and Venture Capital Association (CVCA) – Facilitates private equity and venture capital investments in Croatia and South East Europe. CVCA organises events of the VentureXchange South East Europe and aims at improving the investment environment in Croatia and the region.

X X X X X

-HAMAG-BICRO (Croatian Agency for SMEs, Innovations and Investments) is a government agency that promotes foreign investments in SMEs and publishes a catalogue of private companies looking for equity investments

X X X X X

Publicguaranteefunds

The Government provides guarantees to the Croatian Bank for Reconstruction and Development that supports SME sector, energy efficiency projects and renewable energy, among other activities.

X X X X X X

SupportforR&Dinpublicsectorandindustry

R&Dfunding

HORIZON 2020 - The EU Framework Programme for Research and Innovation

European Structural and Investment Funds: Operational Programme Competitiveness and Cohesion 2014-2020

X

X

X

X

X

X

X

X

X

X

X

X

HAMAG-BICRO – Croatian Business Development Agency provides funding for SMEs through several programmes; Proof of Concept (PoC) – the programme supports entrepreneurs in the early development phase of new products, services and processes (pre-commercial activities)

X X X

18

RAZUM – Programme that supports development of knowledge-based companies and provides financing to start-up or established SMEs that apply research in developing new or improved products and services. IRECO – Programme that encourages SMEs to cooperate with scientific and research institutions

EUREKA – program that supports the cooperation of SME with the international partners in R&D activities

EUROSTARS – common initiative of EK and EUREKA; precondition is cooperation in R&D of minimum two counties

HAMAG-BICRO provides funding to public sector through several programmes:

- Proof of Concept Grant - supports scientists and researchers from Croatian universities and institutes to help turning the scientific results into a commercial potential. This programme supports established and start-up businesses and university spin-outs for developing innovative products and processes.

Technology Infrastructure Development Programme (TEHCRO) – aims at increasing the competitiveness of Croatian economy through development of effective institutions that would create favourable environment for technology transfer and increase the opportunities for growth and sustainability of innovative technology companies, in particular those that arise as the "start-up" or "spin-off" companies, with its foundation based on knowledge, the results of scientific research and the use of new technologies.

Program TEHCRO has four program lines:

- Technology Incubators

- Technology and Business Centres

- Centres of Competence

- Research and Development Centres

- Technology Oriented Projects (TEST Programme) - provides government subsidies to applied research in the field of technology with the emphasis on encouraging hi tech development.

X

X

X

X

X

X

Collaborative grants

Croatia participated in the EU’s Competitiveness and Innovation Framework Programme (CIP) from 2007-2016

X X

Croatia has been a member of the EU COST Programme since 1992.

X X

Croatia participates in the EU EUREKA Programme and TEMPUS Programme.

X X

19

Croatia participates in the EUROSTARS Programme

R&Dinfrastructure

Costs related to R&D infrastructure are eligible under HAMAG-BICRO programmes

X X X X X X

Fiscalmeasures

TaxincentivesforR&Dandstart-ups

- profit tax base can be lowered by 150% of the eligibility cost for fundamental research, 125% for industrial research and 100% for development research

X X

- for SMEs, further 20% for industrial and development research can be applied, and for medium-sized companies additional 10% - most tax incentives went to big companies according to 2008 – 2009 data and 90% went to companies located in the capital city and county of Zagreb (Svaljek, 2012)

TaxincentivesforR&Dpersonnel

Eligible costs include salaries and reimbursements for employees directly participating in researches X

Education,trainingandmobility

Tailoredtrainingcoursesforcompanies,entrepreneurs

Advise/consultingforstartups,companies,entrepreneurs

Business and Innovation Centre of Croatia (BICRO) provides advise for SMEs X X X

Placementschemesforstudents

SupportforR&Dworkersrecruitments

Competencecentres,

clusters,science-technology

X X X

20

Networksandpartnerships

parks Biosciences Technology Commercialisation and Incubation Centre – BIOCentre, is developed in partnership between BICRO, the University of Zagreb and the city of Zagreb with support of the Instrument for Pre- Accession Assistance (IPA).

The aim of the BIOCentre is to facilitate cooperation between basic and applied scientific research and industry, technological infrastructure and new biotechnology companies in the process of developing new products.

Centre for Technology Transfer , Zagreb, supports SMEs

Rudjer Innovation, provides services regarding the Intellectual Property Rights

Technologyplatformsandinnovationnetworks

Foresightandcommonvisionbuilding

Marketintelligenceandotherformsofinformation

sharing

DEMAN

DSIDE

FOCU

S

Regulationsandstandards

Regulations,targets,cap&tradeschemes

National Programme for Energy Efficiency for the period 2008-2016; Third Action Plan (2014-2016)

X X X X

The Strategy for Innovation encouragement of Croatia 2014-2020 X X X Energy Efficiency Act (2015) Act on Renewable Energy Sources and High Efficient Cogeneration (2015)

Draft of Smart Specialization Strategy 2015

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

Performancestandards,labeling,certification

EU Ecolabel X X X

Publicprocurement

“Green“publicprocurementofgoodsandservices

GPP2020 is being implemented in Croatia since 2015

21

R&Dprocurement

Pre-commercialprocurement

TechnologyTransfer

Advisorysupportfortechnologyadopters

Financialorfiscalsupportfortechnologyadopters

(e.g.grantsforpurchasingnewtechnology)

Supportofprivatedemand

Taxincentivesforconsumers(e.g.forpurchasing

environmentallyefficientproducts)

Taxreductionsforproductsandservices(e.g.VAT

reductions)

Demandsubsidies(e.g.eco-vouchers,consumer

subsidies)

Environmental Protection and Energy Efficiency Fund initiated “Program of family houses energy renewal”. It gives subventions to 80% for improving energy efficiency of private houses and public buildings. The fund also co-finances purchases of electric and hybrid cars.

X X X X X

Awarenessraisingandinformationprovision

AbouttheEco-InnovationObservatory(EIO)

The Eco-Innovation Observatory (EIO) is the initiative financed by the European Commission’sDirectorate-General for the Environment. The Observatory is developing an integrated informationsource and a series of analyses on eco-innovation trends andmarkets, targeting business, innovationserviceproviders,policymakersaswellasresearchersandanalysts.

VisitEIOandDGENVEco-innovationActionPlan(EcoAP)websiteandregistertogetaccesstomoreinformationandtoaccessallEIOreports,briefsanddatabases.

www.eco-innovation.euec.europa.eu/environment/ecoap