Bbk waste management report poland

OFFICIAL PROGRAM P

Market Report

WASTE MANAGEMENT IN POLAND

DISCLAIMER

The information in this report were gathered and researched from sources

believed to be reliable and are written in good faith. S-GE and its network

partners cannot be held liable for data, which might not be complete, accurate

or up-to-date; nor for data which are from internet pages/sources on which

S-GE or its network partners do not have any influence. The information in this

report does not have a legal or juridical character, unless specifically noted.

WASTE MANAGEMENT AND WASTE WATER MANAGEMENT IN POLAND

This study lays out the current situation of waste

management and waste water management market in

Poland.

The aim of the study is to analyze what challenges and

opportunities Swiss investors face in the waste management

and waste water management market in Poland and what

solutions can be implemented to improve their position in

Polish market.

Language: English

Number of pages: 43

Author: Swiss Business Hub, APAX Consulting Group

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Contents

1. EXECUTIVE SUMMARY _______________________ 5

2. POLAND AND ITS KEY ECONOMIC INDICATORS _ 6

2.1. Poland – economic structure and economic performance6

2.2. Key economic indicators _____________________ 6

3. ANALYSIS OF THE WASTE MANAGEMENT

SECTOR _____________________________________ 8

3.1. Policy and regulation within the waste management

industry 8

3.1.1. EU legal regulations _______________________ 8

3.1.2. State legal regulations _____________________ 8

3.1.3. Goals and limitations within the waste management

industry 10

3.2. Current situation and future outlook for the waste

management market __________________________ 11

3.2.1. The waste management market in Poland ________ 11

3.2.2. Outlook for potential changes within the waste

management industry ________________________ 15

3.2.3. Key issues within the waste management market __ 21

3.3. Competition analysis ______________________ 21

3.3.1. Key drivers for competitive advantage in the Polish

market 24

3.3.2. Market fragmentation and its key players _______ 24

3.4. Potential investment and cooperation opportunities

within the industry __________________________ 25

3.4.1. Public sector ___________________________ 25

3.4.2. Private sector __________________________ 26

4. ANALYSIS OF THE SECTOR – WASTE WATER

MANAGEMENT _______________________________ 27

4.1. policy and regulation within the waste water


4.1.1. EU legal regulations ______________________ 27

4.1.2. State legal regulations ____________________ 28

4.1.3. Goals and limitations within waste water management28

4.2. Current situation and future outlook for the waste water

management market __________________________ 30

4.2.1. The waste water management market in Poland ___ 30

4.2.2. Outlook for potential changes within the waste water


4.2.3. Key issues within the waste water management market34

4.3. competition analysis ______________________ 36

4.3.1. Key drivers for competitive advantage on the Polish

market 37

4.3.2. Market fragmentation and its key players _______ 38

4.4. Potential investment and cooperation opportunities

within the industry __________________________ 38

4.4.1. Public sector ___________________________ 39

4.4.2. Private sector __________________________ 39

5. SUMMARY AND KEY TAKEAWAYS ____________ 41

List of figures

Fig. 1. The annual level of recovery and recycling required under the Act on packaging and packaging waste. ............................. 9 Fig. 2. Total waste generated in 2005-2011 in Poland. ...................................................................................................................... 11 Fig. 3. Municipal waste management in the European Union in 2010. ........................................................................................... 12 Fig. 4. Municipal waste treatment in the years 2007-2011. .............................................................................................................. 12 Fig. 5. Types and number of municipal waste treatment installations in Poland as on 31 December 2009................................... 13 Fig. 6. Municipal waste generated and collected in 2011 by districts. ............................................................................................. 14 Fig. 7. Composition of selectively collected waste in Poland in 2011. ............................................................................................... 14 Fig. 8. Recycling levels of individual packaging waste streams in Poland 2009 [%]. ...................................................................... 16 Fig. 9. Cement and clinker production in Poland in 2010-2014 [in thousand tons]........................................................................ 17 Fig. 10. Selected planned thermal waste treatment plants in Poland. .............................................................................................. 18 Fig. 11. Planned pyrolysis plants in Poland. ....................................................................................................................................... 19 Fig. 12. List of companies in wood and poultry industry in Poland having waste gasification plants in 2011. ............................... 19 Fig. 13. Comparison and general attractiveness of waste-to-energy chain. ..................................................................................... 20 Fig. 14. Division of Poland’s waste management market and its key players. ................................................................................. 22 Fig. 15. Location of plants of major waste management market players in Poland, in 2013. ......................................................... 22 Fig. 16. The most densely populated region by major international companies in waste management sector. ............................ 23 Fig. 17. Market fragmentation and its key players ............................................................................................................................ 24 Fig. 18. Deadlines and goals for reduction of biodegradable pollution. .......................................................................................... 29 Fig. 19. National Programs and general information ....................................................................................................................... 29 Fig. 20. Industrial and municipal wastewater requiring treatment discharged into waters/ground in 2011 ................................ 30 Fig. 21. Cities with high threat of industrial and municipal wastewater in 2011 (top 10). ............................................................... 31 Fig. 22. List of equipment (best prospects within the sector) .......................................................................................................... 32 Fig. 23. Production of sewage sludge depending on type (in thousands tons of dry residue) ........................................................ 33 Fig. 24. Cities (breakdown by population) ........................................................................................................................................ 35 Fig. 25. Businesses operating within sewage disposal and treatment ............................................................................................ 36 Fig. 26. Selected Companies within wastewater industry (per segment) ........................................................................................ 36 Fig. 27. Number of antitrust decisions (2005-2011) ..........................................................................................................................37 Fig. 28. Market fragmentation and its key players ........................................................................................................................... 38


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1. Executive Summary

The waste management market in Poland

The waste management market in Poland has undergone a significant change over the past few years, largely

as a result of the country trying to catch up with Western Europe. Transposition of EU directives has

accelerated the pace of modernization of existing plants as well as forced the companies to engage in further

investments, especially in the reduction of landfilled waste. At the EU level, perhaps the most important

directive was the Act on maintaining cleanliness and order in municipalities (2011), which entirely transforms

the system of municipal waste collection.

However, in terms of the waste-to-energy process, Poland’s market appears to be untapped. As will be shown,

merely 1% of municipal waste is currently thermally treated in Poland, whereas the majority of waste is

landfilled. This is a striking contrast when compared to Western European countries, which have invested in

incinerators and MBT plants many years ago. Although investments continue to pour into Poland, experts are

voicing concerns whether Poland – and more specifically local governments – will be able to successfully grasp

the new system of waste collection and disposal. According to statistics, the biggest potential for the industry

lies in urban areas that generate 80% of municipal waste.

In terms of opportunities for new investors, there is a significant demand for modern infrastructure, such as

thermal treatment plants, gasification plants and MBT installations, constructed according to the hierarchy of

waste management. Furthermore, there is a substantial opportunity for cooperation or mergers between

market players, given that the waste management sector is expected to consolidate.

The waste water market in Poland

The waste water market in Poland has witnessed huge investment over the past few years, largely as a result of

the country trying to “catch up” with EU specified regulations. At the EU level, perhaps the most important

directive which dictates municipal waste water is the Urban Wastewater Directive, signed originally in 1991.

Domestically speaking, cities and smaller municipalities are bound to comply with the National Urban

Wastewater Treatment program, largely having come into effect in 2003, shortly before Poland entered the

European Union.

Although investments continue to pour into the industry, most experts interviewed for this part of the research

paper believe that the largest potential lies – geographically – in smaller urban areas. This is due to a few

reasons. First, approximately 10 million Poles live outside of the EU wastewater system. This represents a

sizeable chunk of Poland’s population, almost 25% of the country’s total population. Secondly, demographic

trends show that Polish cities are expanding at a quick pace, with more and more rural settlements being built

just outside the fringes of larger cities. These smaller rural residential areas will need to be supplied with “local

solutions” and municipal governments will need to address this growing problem.

Lastly, in terms of the waste-to-energy process, tapping waste water sludge in Poland continues to be a huge

problem – and ultimately – a large opportunity for investors. As will be shown, less than 5% of sewage sludge

is currently thermally treated in Poland. This is a striking contrast when compared to countries such as

Sweden and Germany. Indeed, although the technology exists, two factors seem to inhibit the future for

thermal treatment plants, which are widely seen as the most effective method in dealing with waste water

sludge. First, the high costs of thermally treating sludge continue to act as an impediment to larger

investments in the sector. Secondly, the lack of a well-developed social conscience regarding the benefits of

investing in an infrastructure that supports a waste-to-energy process, still inhibits the industry.


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2. Poland and its key economic indicators

2.1. POLAND – ECONOMIC STRUCTURE AND ECONOMIC PERFORMANCE

At the beginning of February 2013, it was announced that Poland will receive 106 billion EUR from EU funds

for 2014-2020, making it one of the leading recipients of all EU countries with regard to funding. It is

estimated that the share of allocated funds dedicated to environmental protection and resource efficiency

promotion for 2014-2020 will be 9.9-12.4%, which includes waste and waste water management. In total, this

amounts to approximately 10 billion EUR in the indicated 7-year period.

The economic structure of Poland is similar to that of other developed European countries. Close to 70% of the

national output is produced in the services sector. Industry, though, still continues to play a significant role for

the Polish economy, constituting almost 32% of its GDP. Agriculture in Poland still plays a marginal role as it

accounts for about 3.5% of total domestic output. Such low figures are common for countries developing into

“information based” economies.

The significant improvement of the industrial sector in 2010 and 2011 was related to the global economic

recovery of this sector as well as the intensification of international trade. Better economic sentiment attracted

foreign investors to Poland. Moreover, it is important to see this significant relative improvement of the

industry in 2010-2011 in the context of a dismal 2009. However, the waste management and waste water

management sectors have been experiencing gradual growth of approximately 5% since 2009, due to

subsidized EU investments.

The events related to the international financial crisis caused a significant downturn in most European

economies. Negative spillover, however, had only a minor influence in Poland, as the country confidently

withstood serious economical turbulences. The clearest illustration of this can be seen in the fact that Poland

was the only country in Europe that maintained a positive GDP growth rate in 2009, while all other European

economies contracted.

Poland not only managed to avoid a major economic downturn, but it also just as impressively recovered with

solid growth in 2010 and 2011. The driving force behind this rapid improvement in 2010 was significant

internal demand, driven by a bourgeoning and increasingly affluent middle class. Furthermore, Poland’s lack

of a well-established derivatives market helped buffer Poland through the worst of the financial crisis the year

before. However, the GDP level in 2012 slowed down to moderate 2.0%. This result still represents one of the

better results in the EU. The forecasts for the next few years indicate that Poland’s GDP will have relatively

good growth rates.

2.2. KEY ECONOMIC INDICATORS

In 2011, Poland’s GDP level showed a growth of 4.3% from the year before, largely resulting from an increase

in individual consumption by 3.1% and investments by 8.1% year-on-year. As mentioned, the main impetus for

economic growth was strong domestic demand. In the same year, net exports measured at +0.7%.

As to year 2012, the GDP slowed down to 2.0%. This resulted from the moderate increase in individual

consumption by 0.5% and investments by 0.6%. The main impetus for economic growth was external demand

(+1.7 pp).


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Total sales within all industries increased by 0.8%, (1.0% within companies exceeding 9 employees). The

highest growth was noted in industry processing (+1.3% year-on-year). Construction production was 1.0%

lower than in 2011.

The results of domestic trade – or internal trade – remain high. Last year outperformed 2011 in this regard,

driven largely by a resilient domestic consumer base. Also helping the situation was a growing salary level, as

well as a marginal increase in employment (+0,1%). More so, in 2012, the value of retail sales increased by

2.3% in companies exceeding 9 employees.

According to Poland’s Main Statistical Office (GUS), the value of exports in 2012 was 141,9 billion EUR, 3.8%

more than in 2011. The value of imports reached 151,7 billion EUR and was 0.6% lower than in the previous

year. Although Poland recorded a negative balance of trade amounting to 9,8 billion EUR for this time period,

compared to the previous year this actually represented an improvement (in 2011, the negative balance of

trade was 15,9 billion EUR). Poland’s imports primarily come from Germany (21.1%), Russia (14.3%) and

China (9.0%). On the other side, its main export partners are Germany (25.1%), the United Kingdom (6.7%)

and the Czech Republic (6.3%).

Inflation in 2012 was 3.7%. The costs of transport grew by 7.0% (with fuel leading the way with an increase of

10.9%) and costs of living and energy grew by 5.8%. In the same time period, prices of production increased by

3.3%.

Years 2010-2011 represented a period of gradual recovery for the Polish economy. Although the year 2012

showed a moderate growth of Polish economic indicators, Poland continues to be one of the leaders regarding

economic growth in comparison with other countries of the EU.


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3. Analysis of the waste management sector

3.1. POLICY AND REGULATION WITHIN THE WASTE MANAGEMENT INDUSTRY

3.1.1. EU legal regulations

Over the past years, numerous legislative acts regulating the waste management issues at the EU level have

been adopted. Perhaps the most important document was the Framework Directive (2008) that obliges

member states to participate actively in waste recovery and the so-called separate collection of waste ‘at

source’. The Directive imposes the following targets and time limits on member states:

To introduce separate collection of waste such as metal, paper, plastics and glass by 2015,

To ensure re-use and recycling of the following fractions of municipal waste: paper, metals, plastics

and glass at the level of min. 50% by weight, by 2020,

To ensure re-use, recycling and other ways of utilizing materials, incl. backfilling operations using

non-hazardous construction and demolition waste, at the level of min. 70% by weight, by 2020.

Another crucial document enacted in 1999, is the Landfill Directive. The document stipulates the

procedures and rules of conduct that aim to prevent the negative effects that waste storage may have on the

environment, in particular the emission of harmful gases as well as the pollution of water and soil. The

directive provides for the possibility to create three types of waste storage: hazardous waste, non-hazardous

waste (e.g. municipal waste), inert waste.

Moreover, the document particularizes specific requirements regarding the handling of biodegradable

communal waste. Member states are obliged to devise national strategies for a reduction of the volume of

landfill waste by the following rates:

50% by 16 July, 2013,

35% by 16 July, 2020, relative to the mass of weight generated in 1995.

Besides this, another central directive introduced by the EU was the Packaging Directive (1994), which

suggests the implementation of packaging recovery systems and obliges member states to prevent the

generation of packaging waste.

3.1.2. State legal regulations

Poland, as a member of the EU, is obliged to harmonise its waste management laws with EU requirements.

Thus, the issues of waste management that have been reflected in directives at the EU level (Framework

Directive, Landfill Directive, Packaging Directive) lay the framework for the National Waste Management

Plan (KPGO 2014) as well as various regional plans.

The basic premise of municipal waste management in Poland is a system of regional solutions. Specifically,

each region of Poland (or voivodship) will be provided with a Regional Waste Management Plan, which

encompasses the assumptions contained both in the KPGO 2014 and in strategic documents of a region.

The Plan assumes that Poland’s modern waste management system should embrace the following range of

services:

Mechanical-biological conversion of mixed municipal waste, storage of mixed and recycled waste and

composting of green waste in regions > 150,000 residents,

Thermal conversion of mixed municipal waste in regions > 300,000 residents.


9

Moreover, local governments are obliged to arrange min. 5 / max. 15 waste management plants per region by

2014. As for landfill sites, their absorptive capacity should be sufficient for a period of min. 15 years of

utilization.

Meanwhile, the responsibilities of local authorities regarding waste management are set forth primarily by the

provisions of three acts of parliament:

Act on waste (2001)

Act on packaging and packaging of waste (2005)

Act on maintaining cleanliness and order in municipalities (2011)

Under the Act on waste that introduces the main principles and hierarchy of waste treatment into Polish law,

municipalities have been obliged to the following:

To include the whole population in the organized system of municipal waste collection and the system

of separate collection of waste by 2015 the latest,

To create conditions for the operation of a system of separate gathering and collection of municipal

waste,

To ensure proper conditions for the construction, maintenance and operation of installations and

equipment for the recovery and disposal of municipal waste,

To initiate and facilitate the creation of points for the collection of waste arising from electric and

electronic equipment.

Moreover, under the Act on packaging and packaging of waste, every entrepreneur who releases packaged

products on the market is obliged to ensure the appropriate level of recovery and recycling of packaging waste.

The Act sets the required annual recovery levels for packaging, recycling in general, and for individual

packaging. Companies that fail to accomplish the required goals are compelled to pay the product fee

calculated with reference to the difference between the required and the achieved levels of recovery and

recycling. These requirements are presented in the figure below, for the years from 2010, and from 2014

respectively.

Fig. 1. The annual level of recovery and recycling required under the Act on packaging and packaging waste.

TYPE OF PACKAGING

2010 2014

% level % level

recovery recycling recovery recycling

Total packaging 53% 35% 60% 55%

Plastic packaging 18% 22.5%

Aluminium packaging 45% 50%

Steel packaging 33% 50%

Paper and cardboard packaging

52% 60%

Household glass packaging 43% 60%

Wood packaging 15% 15%

Source: Deloitte, 2011

Lastly, by introducing the Act on maintaining cleanliness and order in municipalities, the EU aims to

enhance the role and responsibility of local governments in Poland’s waste management. Among others,

municipalities are obliged to create a modern system for waste collection and management. In this effort,

property owners will pay a fee for waste management directly to municipalities instead of arranging contracts

with companies themselves. Moreover, by 2020, municipalities are obliged to recycle and process at least 70%

of non-hazardous waste arising from construction. Municipalities that fail to comply with the respective

obligations will be directly fined by WIOŚ (Wojewódzki Inspektorat Ochrony Środowiska). The average

amount of waste tax per capita should not exceed PLN 18 / month. This amount is estimated to allow the local

governments the viable and legitimate disposal of waste.


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According to Jozef Mokrzycki, Chairman of Mo-Bruk S.A., it is likely that a new regulation equating the

marshal fee for mixed waste (code 20) and sorted waste (group code 19) will come into force at the beginning

of 2014. Such action is expected to eliminate the illegal practice of waste “decoding” to avoid the higher

marshal fee for waste disposal. This signifies the shift from waste code 20 to waste code 19 through the alleged

segregation that rarely occurs. This solution is also expected to eliminate the ineffective controls conducted by

the Regional Inspectorate for Environmental Protection (RIEP). The new regulation would also facilitate the

fulfilment of the guidelines imposed by the EU, i.e. reduction of landfill waste. According to press reports,

Poland is already facing non-compliance penalties of EUR 250.000 per day, which translates into EUR 90 m

per year.

Meanwhile, in the context of waste-to-energy laws, Poland has adopted a strategic document regarding the

energy sector, known as Polish energy policy until 2030 (2009). The basic premise of the document is to

develop the use of renewable energy sources (RES), including bio fuels. The key goals include the following:

To increase the share of RES in total energy consumption up to 15% by 2020 and more in the

forthcoming years,

To achieve a 10% share of bio fuels in the transport fuel market by 2020; this would embrace an

increased use of second generation bio fuels, further diversification of energy supply, creation of

optimal conditions for development of distributed energy based on locally available raw materials.

In 2010, the Council of Ministers adopted a series of directions for agricultural biogas plants for 2010-2020. It

is expected that by 2020, each municipality will have at least one biogas plant utilizing biomass from

agricultural sources. In theory, agricultural raw materials should be able to generate approx. 5 billion m3 of

biogas annually. Burning of this biogas in cogeneration will produce about 450 000 GJ of electricity and about

720 000 GJ of thermal energy.

3.1.3. Goals and limitations within the waste management industry

KPGO 2014 brings together the detailed targets for the management of municipal waste in Poland, which are

consistent with EU guidelines as well as national regulations. These targets include:

To incorporate the whole population in the organized system of municipal waste collection and the

system of separate collection of waste by 2015 the latest,

To reduce the share of landfill municipal waste in all generated waste, from 86.6% in 2008 to 60% in

2014,

To reduce the number of landfill sites for non-hazardous and inert waste where municipal waste is

sent, from 578 existing as of 31 December 2011 to a maximum of 200 landfill sites in 2014 and to re-

cultivate the closed down sites,

To collect 25% of the used portable batteries and accumulators in 2012, and to achieve a 45%

collection level by 2016,

To achieve a level of recovery of min. 60% and recycling at the level of min. 55% of packaging waste

by December 2014.

In addition to the main targets, KPGO 2014 adopts a number of detailed guidelines concerning:

Hazardous waste (containing PCBs, asbestos, waste oils, medical and veterinary waste, used batteries

and accumulators, electric and electronic equipment, end-of-life vehicles as well as superfluous

warfare agents and waste explosives),

Packaging waste (including plastics, aluminium, steel, paper and cardboard, glass and wood),

Other waste (end-of-life tyres, waste from construction, repairs and demolition of buildings and

infrastructure, municipal sludge and non-municipal biodegradable waste).

Unfortunately, Poland still struggles with an insufficiently developed network of plants. More specifically, the

existing installations would not be able to cope with tasks arising from the directives (Framework Directive,

Landfill Directive, Packaging Directive) due to a limited number of sites. Furthermore, a majority of these

existing installations specialize solely in mixed waste management rather than in the recovery of resources

from waste. Given their limited processing capacity, as much as 70.9% of communal waste collected in Poland


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is disposed off at landfill sites without any treatment. Moreover, little action has been undertaken to handle

hazardous waste as well as to eliminate the practices of illegal waste dumping.

Moreover, local governments are not fully engaged in establishing Regional Waste Management Facilities.

Rather, they are more supportive of small, municipal landfill sites that fail to meet the legal and technical

standards of the EU. On the organizational side, it appears that a uniform and efficient system recording waste

recovery and disposal is missing. Likewise, no studies have been conducted on the morphological composition

of municipal waste in rural and urban areas.

Despite the well-devised goals, meeting the EU requirements related to the management of municipal waste

poses a significant organisational and investment challenge for the economy. Solving these issues requires

efficient governance, use of modern technology and involvement of substantial funds – factors that are still

missing in many provinces.

3.2. CURRENT SITUATION AND FUTURE OUTLOOK FOR THE WASTE MANAGEMENT MARKET

3.2.1. The waste management market in Poland

With Poland generating over 12m tons of waste per year, the country ranked 6th in the EU regarding the

amount of waste produced in 2011, behind countries with greater populations such as Germany, France and

the United Kingdom. At the same time, the economy achieved one of the lowest rates of waste generation per

inhabitant (315kg) among EU member states. The disparity may come from the lower level of wealth and

consumption of Polish people as compared to Western European countries.

Moreover, between 1999 and 2011 the average annual growth rate of waste production in Poland amounted to -

0.2%, which implies that the amount of waste produced within the last 10 years remained practically

unchanged, as per the figure below:

Fig. 2. Total waste generated in 2005-2011 in Poland.

Source: GUS, 2012

According to the forecast presented in KPGO 2014, the quantity of waste generated per capita is expected to

rise up to 329kg by 2013 and 377kg by 2020. Equally, the growth rate will oscillate between 1.2% and 1.6% per

annum. This implies that by 2022, the amount of waste will exceed 14.7m tons.

Waste management in Poland is a far cry from the models observed in Western European countries and

Scandinavia. It is one of the countries where modern methods of waste disposal are used only to a limited

extent. In 2011, the percentage of waste deposited on landfill sites dropped from 78.2% (2009) to 70.9%

(2011). Despite this fall, only 16.7% of waste was biologically treated, 11.4% recycled and only 1% thermally

0

2

4

6

8

10

12

2005 2006 2007 2008 2009 2010 2011

M t

on

s

Total waste generated Waste generated from households


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treated (GUS, 2012). The numbers differ considerably from the norms designated by the European

Commission target for 2013 (in accordance with Directive 1999/31/EC on the storage of waste in 2013,

deposited waste should not exceed 50% of total waste generated). In comparison with other European

countries, Polish landfills contain by far the highest amount of waste. By comparison, Sweden incinerates

roughly as much as 48.9% of waste, recycles 35.7% whereas land filling accounts for roughly 1.4% (Deloitte,

2011). The following figure presents municipal waste management across the European Union in 2010.

Fig. 3. Municipal waste management in the European Union in 2010.

Source: Eurostat, 2012.

The last ten years have seen modest investments in the waste management market. To begin with, the number

of controlled landfill sites has been trimmed by 28% between 2009 and 2011. Likewise, there has been a drop

in the amount of landfilled waste, which arguably has been triggered by mass emigration and conscious efforts

to prevent waste. Meanwhile, there has been considerable growth in the adoption of biological waste treatment

and recycling. As a comparison, between 2007 and 2011 the quota of biologically treated waste quadrupled,

whereas the percentage of recycled waste doubled, as per figure below:

Fig. 4. Municipal waste treatment in the years 2007-2011.

MUNICIPAL WASTE TREATMENT 2007 [%] 2009 [%] 2011 [%]

Landfilling 90.2% 78.2% 70.9%

Recycling 5.8% 14.1% 11.4%

Biological treatment 3.6% 6.7% 16.7%

Thermal treatment 0.4% 1.0% 1.0%

Total collected waste 100% 100% 100%

Source: GUS, 2012.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Landfilling Thermal treatment Recycling Composting


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As of December 31, 2009, there were 278 waste treatment installations operating in Poland, and their total

processing capacity accounted for approx. 1.1m tons per year. The following map presents the existing types

and number of municipal waste treatment installations in Poland:

Fig. 5. Types and number of municipal waste treatment installations in Poland as on 31 December 2009.

Source: KPGO, 2014.

In order to achieve the objectives proposed in the EU directives, it is necessary to expand the network of waste

treatment installations in the forthcoming years. The capacity of the existing installations is insufficient to

dispose of the waste in a manner consistent with EU guidelines. Most importantly, it is necessary to launch

new thermal and mechanical-biological treatment plants. It is indeed in this sector that opportunities are

greatest, and it is likely that we will see the largest changes in the sector of waste management in the upcoming

years.

One of the managers working for a major international company operating in the Polish waste management

sector agrees that Poland is in the midst of a profound transformation. With the introduction of new legal Acts

regulating the waste management sector, new bodies are made responsible for waste disposal across the

country. At the same time, he expresses huge concerns about the state of preparations for implementation of

these changes in some regions. Similarly, “due to legal changes, Poland’s waste management market faces huge

challenge”, observes KIGO’s expert and follows that “it is difficult to predict the consequences of legislative

changes on companies, though many today are beginning to compete more and more on price sensitivity than

in the past.” Indeed, they will be forced to adapt increasingly to the Act.

Meanwhile, the estimated amount of municipal waste produced in Poland in 2011 was 12.1 tons. At the same

time, the amount of waste actually collected amounted to 10m tons. This difference of roughly 2m tons largely

stems from the fact that the organised system of municipal waste collection only covers 81% of the Polish

population (GUS, 2012).

Among the districts generating the highest amount of municipal waste are: mazowieckie, śląskie, wielkopolskie

and dolnośląskie. Altogether, these districts produce 55% of Poland’s total municipal waste (GUS, 2012). The


14

following figure clearly indicates the amount of waste generated and collected by regions (voivodships) in

2011:

Fig. 6. Municipal waste generated and collected in 2011 by districts.

REGION

POPULATION GENERATED MUNICIPAL WASTE

COLLECTED MUNICIPAL WASTE

Thousand people

% Thousand

tons kg /

person Thousand

tons kg / person

Dolnośląskie 2 877 7.5% 1069 367 915 314

Kujawsko-Pomorskie 2 069 5.4% 628 299 525 250

Lubelskie 2 157 5.7% 502 231 345 159

Lubuskie 1 010 2.6% 347 340 299 292

Łódzkie 2 542 6.7% 903 356 633 250

Małopolskie 3 298 8.9% 1022 306 751 225

Mazowieckie 5 222 13.7% 1904 361 1450 275

Opolskie 1 031 2.7% 301 298 257 253

Podkarpackie 2 102 5.5% 437 205 377 177

Podlaskie 1 190 3.1% 347 289 252 210

Pomorskie 2 230 5.8% 759 333 675 296

Śląskie 4 641 12.2% 1554 336 1360 294

Świętokrzyskie 1 270 3.3% 242 189 196 153

Warmińsko-Mazurskie

1 427 3.7% 448 309 327 225

Wielkopolskie 3 408 8.9% 1080 313 928 269

Zachodniopomorskie 1 693 7.7% 584 339 537 312

Source: GUS, 2012

The great majority (80%) of collected municipal waste comes from urban areas, especially from the

mazowieckie and śląskie districts. Likewise, the largest amount of waste collection per city is undertaken in

Warszawa (592,5 thousand tons) and Kraków (242 thousand tons).

Furthermore, the importance of separating the collection of waste at its source is growing, as seen by its recent

growth from 8.6% in 2010 (860,000 tons) to 10% in 2011 (984,000 tons). The following figure presents

specific composition of selectively collected waste in Poland in 2011:

Fig. 7. Composition of selectively collected waste in Poland in 2011.

Source: GUS, 2012.

27%

21%

18%

16%

11%

3% 2% 2% Glass

Biodegradable waste

Paper and cardboard

Plastics

Bulky waste

Textiles

Electronic appliances

Metals


15

Out of the total amount of municipal waste produced in Poland in 2011 (12.1m tons) as much as 70% was

generated in the urban areas with the remaining 30% in rural areas. Similarly, the share of biodegradable

waste was higher in cities and constituted (57%) of all waste compared to (48.8%) in rural areas. In terms of

municipal waste composition, kitchen and garden waste (32.1%) constituted the biggest share, to be followed

by plastics (12.7%), paper and cardboard (12.6%), glass (10.1%), metals (2.3%) and wood (0.4%) (Deloitte,

2011).

3.2.2. Outlook for potential changes within the waste management industry

As far as regulations are concerned, it is expected that in the forthcoming years intensive efforts will be

undertaken to include the whole population in the organised waste collection system. Due to binding waste

management plan deadlines imposed by the EU, Poland must place a bigger focus on launching modern waste

treatment installations in the upcoming years.

According to Sławomir Michalak, former CEO of Warsaw-based waste management company MPO, “the last

few years have shown that Poland falls behind with the development in the sector and what is needed is a

radical change in thinking and action, both at the regional and individual level.” He also points to the “need of

increasing educational activity that gradually enhances the awareness of Poles with respect to waste

management, promotes proactive behaviour and most importantly, instils the tenets of sustainable

development.”

Crucial investment plans for the upcoming years include construction and modernisation of 87-97 composting

and fermentation plants, 28-30 mechanical-biological treatment (MBT) plants (with processing capacity of

1.2m tons) and 27 sorting plants (with processing capacity of 1.8m tons). The projects are on the list of KPGO

2014 and the funding for most of them is planned with a significant involvement of EU subsidies under the

Operational Programme of Infrastructure and Environment.

Furthermore, there are plans for the construction of 11 regional waste treatment installations in Poland, with a

total capacity of 2,365 Mg/year. It is forecasted that the construction of incineration and MBT installations

would provide the additional processing capacity of approx. 3.6m tons within the next few years. Given that by

2020 it will be obligatory to dispose of approx. 6m tons by thermal treatment, it may be necessary to further

expand the regional processing capacity. Particularly, the sound implementation of the Landfill Directive is

likely to considerably trim the quotas of land filled biodegradable waste to 2.2m tons in 2013, and to 1.5m tons

in 2020.

Despite much work ahead in certain areas, recent successes indicate that Poland is slowly accomplishing goals

imposed by EU guidelines. In 2009, Poland exceeded municipal waste recycling requirements by almost 6.9%.

The following figure juxtaposes the required and achieved waste recycling levels for individual streams.


16

Fig. 8. Recycling levels of individual packaging waste streams in Poland 2009 [%].

Source: Ernst & Young

Recently, the cement industry has also helped to reduce substantial amounts of municipal waste in Poland.

Only in 2009, eleven of the country’s largest and most modern cement production plants generated 35% of

heat for clinker production by utilizing waste. It is estimated that with annual clinker production of 13m tons

and assuming that 50% of heat is generated from alternative fuels, it would be possible to incinerate over 1.1m

tons of waste in Polish cement plants (Deloitte, 2001). Indeed, this sector could become increasingly attractive

as a source of incinerating waste in the upcoming years.

3.2.2.1. Waste as a means of extending the waste-to-energy chain

Energy recovery from waste is gradually gaining recognition in the waste management field in Poland. Given

that every inhabitant produces approx. 1kg of waste daily (7MJ/kg calorific value), of which 95% is land filled;

the enormous potential of chemical energy contained in waste is squandered. The same amount of waste

treated in modern incineration plants and processed into alternative fuel may constitute a valuable source of

renewable energy, especially for waste producers.

3.2.2.1.1. RDF production

One of the means of converting waste into energy is production of RDF (Refuse-Derived Fuel). RDF stands for

alternative fuel derived from municipal solid waste using a combination of inter alia mechanical heat

treatment or mechanical biological treatment.

Although approximately 50% of alternative fuels are produced from municipal waste, one can trace a

significant difference between its demand and supply in the Polish market. Despite the fact that Poland

generates gigantic amounts of municipal waste, local companies are capable of producing only 700,000 tons of

fuel that match the quality requirements set by the cement industry. Roughly twice as much is needed (1.2m

tons). The major problem lies in the poor quality and high humidity level of RDF. Moreover, RDF production

market remains underdeveloped and dispersed. Consequently, numerous cement plants tend to import

alternative fuels from Germany.

Mr. Józef Mokrzycki, Chairman of Mo-Bruk S.A., posits that the future in the waste management sector lies in

thermal conversion of waste, especially at the regional scale. As far as the structure of waste generated each

year is concerned, approx. 25% constitute the combustible fraction, which translates into 3 million Mg of waste


17

suitable for incineration. Currently, Polish cement plants use only a fraction of this amount (1 million), which

makes room for other institutions. It is likely that the use of alternative fuel in Polish cement plants may not

become an upward trend in the coming years. One of the managers working for an international company

operating in the Polish waste management sector shares that point of view. He starches the importance of

waste incineration as the next step for the Waste Management industry.

The overall demand for waste is expected to surge. Although cement production dropped after the economic

downturn in 2009, analysts predict that a forthcoming boom in the housing market will trigger renewed

demand, as per figure below:

Fig. 9. Cement and clinker production in Poland in 2010-2014 [in thousand tons].

Source: Author’s own compilation on the basis of GUS and Puls Biznesu.

The Polish cement market is consolidated and divided among several major groups. Potential recipients of

alternative fuel would be:

Górażdże Cement S.A. (HeidelbergCement Group) – 2 plants: Górażdże Cement Plant, Ekocem Sp. z o.o.,

Lafarge Cement S.A. – 2 plants: Kujawy Plant, Małogoszcz Plant,

Ożarów S.A. Group (CRH Group) – 2 plants: Ożarów Plant, Rejowiec Plant,

Cemex Polska Sp. z o.o. (Cemex Group) – 2 plants: Chełm Plant, Rudniki Plant,

Dyckerhoff Polska Sp. z o.o. (Dyckerhoff-Buzzi Group) – 1 plant: Nowiny Cement Plant,

WARTA S.A. Cement plant (Polen Cement Group),

ODRA S.A. Cement plant (Miebach Group),

Kraków Cement plant - Nowa Huta Sp. z o.o.,

Górka Cement Sp. z o.o. (Mapei Group).

Furthermore, the alternative fuel market will flourish as long as fuel producers will look beyond the cement

industry for potential business partners. The energy industry constitutes great potential for long-term

cooperation. A number of smaller producers, such as Almax and KOM-EKO, have already started to supply

thermal power stations. Specifically, KOM-EKO supplies alternative fuel to a few larger players, including

Elektrociepłownia Lublin-Wrotków, Megatem EC-Lublin and Łęczyńska Energetyka in Bogdanka. The

processing capacity of KOM-EKO amounts to 3,000 tons/year whereas Almax has capabilities amounting to

5,800 tons/year (Środowisko, 2007).

3.2.2.1.2. Waste incineration

In Poland, there is a serious shortage of thermal waste treatment plants and the capacity of the existent

installations does not allow for regular waste combustion, especially in urban areas. Currently, there are only

two incinerators located in Gdańsk and Warsaw (Targówek). The Warsaw plant combusts roughly 50,000 tons

of waste annually, translating into a mere 0.5% of the total national waste stream.

0

5

10

15

20

25

Clinker

Cement


18

There is a plan to construct 11 thermal waste treatment plants in the upcoming years, whose total processing

capacity is expected to reach 2.4m tons. The following figure presents locations considered for the investment,

project cost estimations, as well as EU subsidy estimations.

Fig. 10. Selected planned thermal waste treatment plants in Poland.

CITY

PROCESSING CAPACITY

PROJECT COST

ESTIMATE

PLN MILLION

EU SUBSIDY ESTIMATE

Thousand Mg / year

PLN million % of

project cost

Status of EU grant application

Warszawa 265 590 N/A N/A

Project not applying for EU subsidy in the programming period 2007 – 2013

Kraków 220 792 372 46.9% Subsidy agreement signed

Łódź 200 857 337 39.3%

Poznań 240 1 071 352 32.9%

Ruda Śląska 500 1 699 1 129 66.5% Application for EU subsidy planned for 2014-2020 financial perspective

Szczecin 150 576 255 44.3% Subsidy agreement signed

Bydgoszcz / Toruń 180 620 340 54.8% Subsidy agreement signed

Białystok 120 652 210 32.2%

Koszalin 120 403 198 49.2%

Konin 120 314 155 49.2%

4 PPP projects1 1 060 4 030 2 016 50.0%

7 remaining projects 1 305 4 083 1 627 39.9%

Total 11 projects 8 113 3 643 44.9%

Source: Deloitte, 2011.

The total cost of the planned incinerators will amount to approximately EUR 1.95 billion, mostly subsidised by

the EU under the Operational Programme Infrastructure and Environment.

According to the Polish Ministry of Environment, by 2020 approx. 25% of waste will be thermally treated at

incinerators. However, it should not be overlooked that the processing capacity of the planned installations

will not suffice the needs of an economy that generates more than 12m tons of municipal waste annually. Given

that by 2020 it will be necessary to dispose a min. 6m tons of waste, an additional 16 thermal plants will be

needed with a capacity of 250 000 tons per year.

3.2.2.1.3. Other waste-to-energy concepts

Currently there are no waste treatment installations utilizing pyrolysis to convert energy from waste to

electricity or gas in Poland. Pyrolysis refers to a thermo-chemical decomposition of organic material at

elevated temperatures without the participation of oxygen. This specific thermal process is considered to be

one of the most ecological methods for municipal and industrial waste, and most importantly, for waste rubber

products. Tire pyrolysis can convert the process of converting waste plastic/tires into industrial fuels like

pyrolysis oil, carbon black and hydrocarbon gas. End products are used as industrial fuels for producing heat,

steam or electricity.

Waste rubber products constitute a serious problem in Polish landfill sites. It is estimated that the products,

particularly tires, form as much as 80% of the total amount of used products, which in turn poses a serious

1 Public Private Partnership Platform: describes a government service or private business venture which is funded and operated through a partnership of government

and one or more private sector companies.

http://en.wikipedia.org/wiki/Private_sector


19

ecological problem. Moreover, the IMPiB Institute in Toruń warns that approximately 110,000 tons of waste

tires are produced annually, the majority of which backlog landfill sites.

Thus far, a large quantity of used tires have been channelled to cement plants where incinerated, hence

generating heat required for clinker production. To take a specific case, in Stalowa Wola, a private

entrepreneur Piroliza Sp. z o.o. provides disposal services of used tires based on pyrolysis. The company

processes approx. 10Mg and limits itself to a single product only.

In view of stricter laws on emission of pollutants as well as the possibility to secure EU funding for new

investment, regional authorities and private investors are showing an increasing interest in introducing

pyrolysis installations in the following locations (as per figure):

Fig. 11. Planned pyrolysis plants in Poland.

LOCATION INITIAL PROJECT OBJECTIVES INITIATOR

Świdnik

Municipal waste pyrolysis plant,

Utilization of 90% of waste in the region,

Selling gas to regional manufacturers, covering

energy needs for the region.

Regional authorities

Dobrzelin – Special

Economic Zone of Łódź

Municipal/industrial/medical waste and tire

pyrolysis plant,

Selling gas to manufacturers operating in the

Economic Zone.

Private investor

Kleszczowo

Municipal waste pyrolysis plant,

Processing capacity for 140 000 tons of

municipal waste / year,

Covering energy needs of the region, by

generating 10 MW of electric energy.

Eko-Region Kleszczów,

private investor

Source: Author’s own compilation on the basis of gminazychlin.pl, kurierlubelski.pl and lodzkie.naszemiasto.pl.

Likewise, modern gasification plants for municipal waste treatment have not been implemented on a wider

scale in Poland yet. The existent quasi-gasification installations, that are located in landfill sites, are usually

incapable of managing generated gas, as it tends to be neutralized through thermal treatment without energy

recovery. In contrast, modern gasification installations are employed on a commercial basis by some private

entrepreneurs. These are particularly popular in the wood and poultry industry, where companies neutralize

99% of their total waste produced. On a national scale, however, the number of such plants remains scarce.

Fig. 12. List of companies in wood and poultry industry in Poland having waste gasification plants in 2011.

COMPANY APPLICATION OF GASIFICATION

INSTALLATIONS

HEAT

RECOVERY

Indykpol Feather utilization with energy recovery N/A

Klose Czerska Furniture Plant Utilization of wood industry waste 2.5 MW

Rakom Poland Utilization of wood industry waste 7 MW

Enpal Słubice Utilization of wood industry waste 8 MW

EMG Szepietowo Utilization of wood industry waste N/A

Source: Author’s own compilation on the basis of MT&F presentation by Dr. M. Dudyński and MA Karol Bajer.

Nonetheless, there is a positive pattern in the development of biogas plants. According to a recent report by

Bio Alians Investment Consulting, Poland currently boasts 196 biogas plants with a total electrical capacity of


20

130MW. Almost 91 installations are biogas plants located at landfill sites, and 75 located at sewage treatment

plants. The remaining 30 biogas plants incinerate waste generated in agricultural production. It is expected

that by 2020, the capacity of Poland’s biogas plants will amount to 980 MWe.

Meanwhile, mechanical-biological treatment (MBT) appears to be a slightly more popular waste management

method than the aforementioned practices. In the period 2007-2011, the amount of mechanically-biologically

treated waste quadrupled and constituted app. 1,644 tons (16.7% in 2011). The Department of Waste

Management anticipates that by 2020, about 25% of waste will be subject to mechanical-biological treatment.

In 2010, kitchen and garden waste constituted the largest amount of MBT treated waste, to be followed by

waste from green areas, parks and cemeteries as well as gastronomy waste (GUS, 2011). Moreover, the overall

percentage of municipal waste suitable for mechanical – biological treatment is significant and includes:

Kitchen and garden waste: 32%

Waste from green areas: 4.5%

Mineral waste: 3.9%

3.2.2.1.4. Comparison and general attractiveness of waste-to-energy chain elements

As shown below, there is a huge market potential for extending the waste-to-energy chain, in particular

through waste incineration, waste pyrolysis, waste gasification, MBT of waste, recycling/packaging waste

recovery and RDF production.

The figure below illustrates the comparison and general attractiveness of the waste-to-energy chain in Poland.

Fig. 13. Comparison and general attractiveness of waste-to-energy chain.

WASTE-TO-ENERGY

CHAIN ELEMENTS MARKET POTENTIAL

Waste incineration

Waste pyrolysis

Waste gasification

Thermal waste management in Poland is still an untapped market, as combustion

and other thermal waste treatment plants are basically non-existent;

Rising demand for pyrolysis, given that Poland struggles with rubber waste;

Approximately 110,000 tons of waste tires are produced annually, majority of which

backlog in landfill sites;

Waste rubber products may form as much as 80% of the total amount of used

products.

MBT of waste

App. 25% of waste is estimated to be subject to mechanical-biological treatment.

Gradual increase in adoption of biological waste treatment (3.1% between 2007-

2009),

Recycling / packaging

waste recovery

In 2007, Poland’s recycling and packaging waste recovery market value accounted

for €26.3m and was expected to increase tenfold by 2014.

In 2009, Poland exceeded municipal waste recycling requirements by almost 6,9%

and recycling rates are gradually growing.

RDF market

High market concentration,

Alternative fuel supply (700,000 tons) does not match increasing demand (1.2m

tons),

Alternative fuel market expected to expand from 1.5m to 3m tons - as long as the

number of cement plants utilizing RDF remains fixed and the heat generated from

fuel increases from 45% to 75%.

Source: Author’s own compilation.


21

3.2.3. Key issues within the waste management market

The major factors influencing the waste management sector in Poland include:

Legal factors: The new Act on maintaining cleanliness and order in municipalities (2011) introduces

a bidding mode, according to which all companies, both municipal and private, compete in tenders

for waste collection and management. The decisive factor in winning the tender is competitive price.

Companies are given 3 years to adjust their installations to the new law.

Economic factors: Encompass large reductions in price for the collection and management of

waste.

Currently, due to legal changes, Poland’s waste management market faces turbulences. It is difficult to predict

the consequences of legislative changes forcing companies to compete on price and to adapt to the Act.

Meanwhile, according to a 2011 report by Deloitte, the most urgent issues that the Polish waste management

system must address include:

Municipal waste disposal is based mainly on land filling,

Insufficient number and processing capacity of modern thermal and mechanical-biological waste

treatment installations; incinerators are almost non-existent,

Local governments must address the problem of how to dispose of waste in the period between the

closure of the landfill sites and launching of waste treatment plants;

The waste management system does not cover the whole population and there is unsatisfactory

progress in separate collection of waste in households,

The system is not tight –most municipalities face a problem of uncontrolled waste dumps and lack a

system for collecting expired medicines from households,

Failure to fulfil packaging waste disposal duties by some businesses,

Ineffective system of monitoring the observance of regulations pertaining to environmental

protection inspectorate and the penalties system set by the Act on waste currently in force.

3.3. COMPETITION ANALYSIS

Competition within the waste management market is fragmented, largely consisting of small private

companies and a small number of bigger players. In the Mazowieckie region alone, there are over 180 small

companies operating in the market, of which 60% is controlled by three major players. Due to a changing legal

environment, the sector is generally expected to consolidate by 2015. Accordingly, the largest waste

management companies operating in Poland plan to construct a series of modern waste recovery and

management installations. It is also expected that in the aftermath of consolidation, at least 50% of active

companies (approximately 2,000 out of a total 4,000) will withdraw – or will be forced to withdraw – from

business.

The following simplified figure presents businesses operating in the market:


22

Fig. 14. Division of Poland’s waste management market and its key players.

Source: Deloitte, 2013.

The following map presents the location of plants of major players in Poland’s waste management market.

These are predominantly international companies with a network of plants, specializing in processing and

recovery of waste. The highest density of plants occurs in Śląskie and Mazowieckie regions.

Fig. 15. Location of plants of major waste management market players in Poland, in 2013.



23

Fig. 16. The most densely populated region by major international companies in waste management sector.


Competition in thermal waste management

In Poland, competition in thermal waste management is non-existent. The plants located in Gdańsk and

Warsaw (Targówek) are monopolists in the incineration market. Meanwhile, pyrolysis plants have not been

introduced in Poland aside for one private company – Piroliza Sp. z.o o. – which capitalizes on tire utilization.

Likewise, there are a few firms operating in the wood and poultry industry that have established gasification

plants for their own needs. On a national scale, however, the number of such ventures remains scarce.

Competition in the recycling and packaging waste recovery market

After many years of fragmentation, Poland’s recycling and packaging waste recovery market is becoming more

consolidated. Small players are either merging with large ones or are forced out of business. Meanwhile, large

players are starting to capitalize on the gradual disappearance of firms engaged in illegal practices with respect

to waste utilization.

Currently, as much as 85% of Poland’s recycling and packaging waste recovery market is dominated by a

handful of players. A few of the most notable ones are: Polski System Recyklingu (PSR), Rekopol, Ekopunkt,

Biosystem and Brązowa Organizacja Odzysku.

Competition in the RDF market

There is a huge number of companies of all sizes (capabilities ranging from 1,000 – 30,000 tons) that produce

pre-RDF fuels (feedstock for the production of alternative fuels). Its major producers are at the same time the

largest waste collection companies, equipped with sorting installations, namely Remondis, Sita and Alba.


24

Given that large cement plants co-operate with suppliers of high-quality fuel, pre-RDF manufactures are

suppliers to RDF producers, not their competitors. Among the major players in the alternative fuel market are

ZUK USKOM and Mo-BRUK SA. Both companies capitalize on waste recovery and alternative fuel production.

3.3.1. Key drivers for competitive advantage in the Polish market

Depending on the size of a company, there are a number of factors that determine competitive advantage in

the waste management sector.

Sławomir Michalak, former CEO of Warsaw-based waste management company MPO, observes that a strong

position in the market is secured as long as companies “possess a modern fleet to collect waste from property

owners that fulfils the highest noise and emission standards.” Additionally, Mr. Michalak emphasizes

possession of a modern waste handling and storage infrastructure, in particular modern recovery, processing

and management installations (so called RIPOK installations). These are said to “guarantee proper waste

treatment according to the hierarchy of waste disposal.”

Bigger players such as Remondis also point to the importance of exploiting synergies. A representative of a big

waste management company in Poland states that “being part of a network of 40 subsidiaries not only enables

flexibility, but also allows for quick and efficient reactions to market changes and in optimizing logistics costs.”

One of the biggest market players further reinforces its position through a strategy securing income

diversification. As a waste management company’s representative notes “we have intensively developed our

waste treatment services and alternative fuel production. On top of that, departments associated with winter

maintenance services, road cleaning and urban landscaping, as well as successful cooperation with the

industrial and retail sector, altogether accounted for their financial success at the end of 2012.”

3.3.2. Market fragmentation and its key players

As shown in the competition analysis, Polish waste management industry can be categorised according to

thermal waste treatment, recycling and packaging waste recovery as well as RDF production. The below figure

illustrates key players within each of the categories. Fig. 17. Market fragmentation and its key players

MARKET FRAGMENTATION KEY PLAYERS

1. Thermal waste management

market

Gdańsk incineration plant,

Warsaw incineration plant,

Poznań incineration plant (under development),

Piroliza Sp. z o.o.

2. Recycling and packaging waste

recovery market

Polski System Recyklingu (PSR),

Rekopol,

Ekopunkt,

Biosystem,

Brązowa Organizacja Odzysku

3. RDF market Remondis,

Sita,

Alba,

ZUK USKOM,

Mo-BRUK SA. Source: Author’s own compilation.


25

3.4. POTENTIAL INVESTMENT AND COOPERATION OPPORTUNITIES WITHIN THE INDUSTRY

Considering the recent transformation of Poland’s legal environment, new opportunities have emerged in the

waste management sector. Since the market appears to be untapped with respect to modern solutions towards

waste disposal, there is considerable potential for new investors.

First and foremost, there is significant demand for modern infrastructure, such as thermal treatment plants,

gasification plants and MBT installations, constructed according to the hierarchy of waste management. Given

a number of deadlines, Poland has to restrict landfilled waste and achieve required recovery and recycling

levels. MPO’s former CEO, Sławomir Michalak observes that there is a spate of investments awaiting the

company within the next 5 years. The Polish company plans to “modernize the existing installations

(incinerator, MBT plant) as well as construct a brand new plant that would encompass an infrastructure

adjusted to the new legal requirements, namely: landfill site, sorting plant for selectively collected waste,

composting plant”. MPO also plans to depollute existing landfill sites.

Furthermore, there is substantial opportunity for cooperation or mergers between market players, in order to

tap a greater market share. The waste management sector is expected to consolidate in the coming years, and

minor players will surely go out of business due to the recently introduced bidding system for contracting

waste collection services (Deloitte, 2013). Smaller players will find it increasingly difficult to compete at price.

Major market players such as Remondis are planning to broaden their scope of services offered to the industry

– particularly – by outsourcing waste management for large industrial plants and business chains.

Furthermore, as one of the waste management company manager states, “Our company aims to intensify

waste reclamation and devise an efficient model of cooperation with local governments.” The company is also

bound to be active in projects encompassing thermal waste treatment; specifically it plans to construct and

manage a number of incinerators. Such projects require experienced partners with tremendous capital back-

up.

3.4.1. Public sector

MAIN OPPORTUNITIES IN THE PUBLIC SECTOR:

Since a network of landfill plants is insufficiently developed, it is necessary to further develop it

especially from the infrastructure point of view,

As there is a plan to construct 11 thermal waste treatment plants combined with launching new

mechanical-biological treatment plants, know-how and technology transfer is needed,

There are no waste treatment installations utilizing pyrolysis to convert waste into electricity or gas,

however, the regional authorities are showing increasing interest in introducing pyrolysis installations

in their regions,

The existing installations are unable to address the regulation imposed by the EU directives (they fail

to meet the legal and technical standards). On top of that, the modern methods of waste disposal

are used only to a limited extend by Polish communal landfill plans. This starches the importance of

know-how transfer and technology-based advice,

Since only part of the Polish population is covered by the waste collection system (the system is

introduced partially), there is a need for uniform and efficient solutions (transfer of know-how),

RDF production market remains underdeveloped and dispersed in comparison to other European

markets,

There is a need for educational activities that would enhance the awareness of Poles with respect to

waste management (organisation of conferences, know-how advisory promotional events).


26

COOPERATION OPPORTUNITIES IN THE PUBLIC SECTOR:

Cooperation with the National Board of Waste Management (KIGO) and other central bodies (e.g.

Ministry of Economy, Polish Information and Foreign Investment Agency, Polish Agency for

Enterprise Development, Waste Management Companies Directors’ National Forum) in know-how

and technology transfer,

Cooperation in know-how and technology transfer with local authorities,

Participation in public tenders on waste management projects.

3.4.2. Private sector

MAIN OPPORTUNITIES IN THE PRIVATE SECTOR:

There is an insufficiently developed network of waste treatment installations in Poland, which

creates a large spectrum of cooperation opportunities as far as technology and infrastructure

transfer is concerned,

Similarly to the public sector, there is a lack of waste treatment know-how among Polish companies

in the sector,

There are no waste treatment installations utilizing pyrolysis to convert waste into electricity or gas,

however, the private investors are showing increasing interest in introducing pyrolysis installations

and other new waste management technologies allowing for energy production,

Since the key market players would like to tap a greater market share, there is an increased activity

within the mergers and acquisition spectrum. Numerous players are looking for external financial or

strategic investors expected to buy into the market, while financing the necessary capital

expenditures. Such cooperation also opens opportunity gates for financial institutions willing to

launch waste management focused products (e.g. loans, project finance, etc.),

There is limited access to different sources of financing of waste management projects.

COOPERATION OPPORTUNITIES IN THE PRIVATE SECTOR:

Transfer of know-how to Polish waste management companies,

Transfer of technology to Polish waste management companies,

Providing and distributing installations systems to Polish companies,

Business partnerships with key market players,

Participation in Polish trade fairs (International Trade Fair Of Environmental Protection Poleko,

International Trade Fair of Municipal Technologies KomTechnika).


27

4. Analysis of the sector – waste water management

4.1. POLICY AND REGULATION WITHIN THE WASTE WATER MANAGEMENT INDUSTRY

4.1.1. EU legal regulations

Dozens of regulations concerning water and waste water management have been signed into EU law over the

past few decades. Perhaps most encompassing and unquestionably the most ground-breaking was the

adoption of the Water Framework Directive (WFD) in 2000. The all-encompassing Directive introduced a new

legislative approach to managing and protecting water, based not on national boundaries but on natural

geographical and hydrological formations. The key element behind this was that of river basins, hence creating

the river basin approach.

The river basin approach, in essence, brings together all interests upstream and downstream. It addresses

inland surface waters (rivers and lakes), transitional waters, coastal waters, groundwater and, under specific

conditions, water dependent terrestrial ecosystems and wetlands.

Although the WFD provides the overarching framework for EU water policy, it is complemented by other

legislation regulating specific aspects of water use. The most important being:

The Groundwater Directive (2006)

The Environmental Quality Standards Directive (2008)

Two Commission Decisions (2005 and 2008), on ecological status, established a register of almost

1500 sites included in an intercalibration exercise to allow for comparison of different countries’

standards, and published the results.

Previous and, equally important, legislation includes:

The Urban Wastewater Directive (1991)

The Nitrates Directive (1991)

The New Bathing Water Directive (2006)

The Drinking Water Directive (1998)

More so than any other legislation or directive, EU legislation concerning waste water collection, treatment,

monitoring and discharge is determined by The Urban Wastewater Directive 91/271/EEC adopted on 21

May 1991 by the European Community. Specifically, the Directive requires:

The Collection and treatment of waste water in all agglomerations of >2000 population equivalents

(p.e.),

Secondary treatment of all discharges from agglomerations of > 2000 p.e., and more advanced

treatment for agglomerations >10 000 population equivalents in designated sensitive areas and their

catchments,

A requirement for pre-authorisation of all discharges of urban waste water, of discharges from the

food-processing industry and of industrial discharges into urban wastewater collection systems;

Monitoring of the performance of treatment plants and receiving waters, and

Controls of sewage sludge disposal and re-use, and treated waste water re-use whenever it is

appropriate.

Although the European Commission for the Environment initiates and defines new environmental legislation

and ensures that agreed measures are put into practise in all EU member states, the domestic coordination of


28

the Program rests upon the National Water Management Board, which was established in 2006 by the Polish

Ministry of Environment.

4.1.2. State legal regulations

Poland has introduced the standards and requirements of the WFD, as well as the more specific Urban

Wastewater Directive of 1991 into domestic legal acts, thus working towards harmonizing Polish

environmental law with European Community environmental law. In doing so, Poland bases its approach on

the global principle of sustainable development.

Arguably, the most important domestic legislations concerning waste water management are:

Act on Water Law of 18 July 2001 (later known as the National Urban Wastewater Treatment

Program),

Act on Protection of Environment of April 2001,

Act on Collective Water Supply Systems and Waste water discharge of 7 June 2001,

Act on Wastes of April 2001,

Regulation of Ministry of Environment on conditions of discharges into water and soil of July 2006.

However, most telling and arguably most formative, in December 2003, 6-months before Poland entered the

European Union, the Council of Ministers of the Republic of Poland approved the National Urban

Wastewater Treatment Program. The Program – an integral part of the Act on Water Law of 18 July 18

2001 – is to serve in the implementation of the EU Council Directive of 1991 (91/271/EEC) for municipalities

with populations above 2000 persons. Broadly, the Program assigns responsibilities for water and wastewater

issues to local authorities (so called “gminas”). Gminas can charge water companies with this specific task of

building and operating networks and systems for water and wastewater management to supply public services

on their territory.

The total implementation cost of the National Urban Wastewater Treatment Program which will run to 2015 is

about 42.6 billion PLN or about 12 billion EUR.

The success of the Program mostly depends upon the initiatives of municipal governments and their ability to

raise financial resources. Preference loans and various credit options have been set up with the aim to secure

financing of investments in this regard. Furthermore, the Cohesion Fund provides opportunities for large

agglomerations or their groups to obtain the investment resources required for water and sewage

management. These instruments are aimed at encouraging self-governmental authorities to speed up

implementation of the projects covered by the Program.

Though ultimately the responsibility of the Program falls upon the Ministry of Environment, it is the National

Water Management Board established in 2006 that plays the central coordinating task. Furthermore, the

Board is also responsible in implementing the national “Infrastructure and Environment Operational Program

for 2007-2013” for Axis III “Resources Management and Protection of Environment.”

4.1.3. Goals and limitations within waste water management

The aim of the encompassing EU Water Framework Directive (WFD) is to gain good ecological status of all

water bodies by 2015.

Specifically concerning waste water, the implementation of measures necessary to accomplish demanded

standards of waste water treatment can be loosely divided into the following three domestic programs:

National Urban Wastewater Treatment Program (> 2000 p.e.)

The Program for providing agglomerations below 2000 p.e. with Wastewater Treatment Plants

(WWTP) and sewerage systems

Agro-Food Industry Program (p.e. > 4000)


29

The largest and most costly is unquestionably the National Urban Wastewater Treatment Program. As

introduced under section 4.1.2, the Program was approved by the Council of Ministers in December 2003 and

will require about 12 billion EUR until 2015 to be completed. The goal is to reduce the production of

biodegradable pollution by 100% by 2015, with the following goals and deadlines:

Fig. 18. Deadlines and goals for reduction of biodegradable pollution.

DATE OF REALIZATION

NUMBER OF AGGLOMERATIONS

REMOVED LOADING FULFILLING REQUIREMENTS, P.E.

% REDUCTION OF LOADING

31/12/2005 674 28 301 667 69

31/12/2010 1069 35 274 542 86

31/12/2013 1165 37 325 387 91

31/12/2015 1577 41 016 909 100

Source: U.S. Commercial Service 2011

A second program – The Program for providing agglomerations below 2000 p.e. with Wastewater Treatment

Plants (WWTP) and sewerage systems – set up in 2007 targets agglomerations below 2000 persons. Though

no real regulations exist at the EU level for waste water treatment for towns containing less than 2000

persons, the program – on paper – seeks to provide waste water treatment plants and sewerage systems, with

a focus on modernizing existing waste water treatment plants.

Finally, a third program – the Agro-Food Industry Program – also fulfils the recommendations of the EU WFD

in scope of its discharges of biodegradable pollution to surface waters. The program identifies the investment

needs of installations for biological and chemical treatment of sewerage and management of sludge from

WWTP as well as pollution prevention. Unlike the previous two programs which focus on municipal

wastewater, this program deals with wastewater produced by a specific industry.

The below figure shows all three programs in more detail:

Fig. 19. National Programs and general information

PROGRAM PERIOD OF

IMPLEMENTATION GENERAL

DATA ESTIMATED

COSTS

STAKEHOLDERS: COORDINATION /

INVESTORS

National Urban Wastewater Treatment Program (>2000)

2003-2015

1577 agglomerations 37 000 km of sewerage 1 700 WWTP

Approx. 12 000 mln EUR

National Water Management Board / Regional and local governments and their associations / Water Companies

The Program for providing agglomerations below 2000 p.e. with Wastewater Treatment Plants (WWTP) and sewerage systems

2007-2015

379 agglomerations 1 200 km sewerage 221 WWTP to be extended or modernized 30 new-built WWTP

Approx. 230 mln EUR

National Water Management Board / Gminas / Regional

Funds / Water Companies

Agro-Food Industry

2007-2010

N/A

Approx. 50 mln EUR

Regional Boards of Water Management & Local Governments / Agro-Food Companies

Source: Coalition Clean Baltic “Report on wastewater pollution management in Poland” 2008


30

4.2. CURRENT SITUATION AND FUTURE OUTLOOK FOR THE WASTE WATER MANAGEMENT

MARKET

4.2.1. The waste water management market in Poland

The last ten years have seen huge investments in the waste water market. At a macro level, the municipal waste

water treatment market has consumed more than 15 billion EUR, with well over 3 billion EUR having come in

the past 3 years. It is predicted that another 2 billion EUR will have to be spent each year within the sector

until 2015, investments which should bring Poland in line with EU requirements.

Perhaps most telling is the increase in newly constructed waste water treatment plants servicing both cities

and villages. Since 2000, the number of waste water treatment plants in Poland has grown by nearly 25%,

from 2475 in 2000 to 3223 in 2011. This number does not take into account modernizations of existing

treatment plants. More so, the rise in wastewater treatment plants is exclusive to villages, with 2401 plants

being counted in 2011, up from 1510 plants in 2000. The total number of plants in cities has actually declined,

from 965 in 2000 to 822 in 2011. These numbers support what many analysts and experts have long believed;

the real potential surrounding waste water treatment and management has been – and indeed continues to be

– in smaller rural areas.

Geographically, in terms of industrial and municipal wastewater requiring treatment that is eventually

discharged into waters and the ground, 5 of 16 voivodships together amount to nearly 60% of the total high

threat water. Although from these 5 voivodships about 90% is treated using various methods as shown in the

figure below, the grand majority of untreated water comes from just two voivodships, namely, Śląskie and

Mazowieckie. Consequently, huge investments (almost exclusively driven and owned by municipal funds) have

been targeted at these two regions over the past few years. The following figure shows industrial and municipal

waste water requiring treatment discharged into waters or into the ground by voivodship in 2011.

Fig. 20. Industrial and municipal wastewater requiring treatment discharged into waters/ground in 2011

VOIVODSHIP

INDUSTRIAL AND MUNICIPAL WASTEWATER REQUIRING TREATMENT DISCHARGED INTO WATERS OR INTO THE GROUND

Total

Treated Untreated

Total Treated

Mech. Treated

Chem. Treated

Biolog. Treated

Biogen Removal

Total untreated

From sewerage

system

in cubic hectometres

Poland 2271,9 2097,9 626,7 113,8 322,8 1034,6 174 55,7

Śląskie 382,6 313,6 138,5 22,3 20,8 132 69 2,1

Małopolskie 306,9 302,3 181,9 4,5 18,9 97 4,6 0,1

Mazowieckie 246,9 193,7 4,1 5,1 49,3 135,2 53,2 52,8

Wielkopolskie 223,9 223,5 111,3 0,5 19,6 92,1 0,4 0

Dolnośląskie 174,6 169,3 33,8 26 27,6 81,9 5,3 0,1

Source: GUS Environment Report 2012 (Table 32(85) p. 165)


31

When broken down to the city level, the following figure shows the top 10 Polish cities with high threat of

waste water in 2011:

Fig. 21. Cities with high threat of industrial and municipal wastewater in 2011 (top 10).

CITIES TOTAL

TREATED UNTREATED

Total Treated

Mechanically Treated

Chemically Treated

Biologically Treated

Biogen Removal

Total untreated

From industrial

plants

From sewerage

system

in cubic decametres

Bukowno 163774 163774 159427 4093 254 - - - -

Warsaw 112702 59896 6 4468 573 54849 52806 8 52798

Kraków 54435 54375 1028 - 1012 52335 60 60 -

Łódż 43090 43059 - - - 43059 31 31

Jaworzno 40170 40137 37146 574 86 2331 33 33 -

Police 38821 38821 - 37447 - 1374 - - -

Kwidzyn 35216 35216 1149 - 34067 - - - -

Sosnowiec 34144 27926 19645 - 72 8209 6218 6218 -

Wrocław 33496 33496 425 140 6805 26126 - - -

Katowice 33344 24441 10940 16 1527 11958 8903 6997 1906

Source: GUS Environment Report 2012 (Table 32(88) p. 168)

Although the above figure clearly shows that the largest threat of waste water arises from some of Poland’s

largest agglomerations, it also shows that issues regarding the treatment of waste water aren’t equal in the ten

cities. From the top 10, Warsaw, Sosnowiec, and Katowice pose the biggest problems in terms of untreated

waste water. Clearly, in such agglomerations the potential for treatment plants and development within the

sector is high, and works are being done to address the large amounts of untreated water.

Indeed, principally through a series of public tenders, a few treatment plants have been opened and/or

modernized in recent years. The majority of them, however, are operated through municipal water service

companies owned by the municipalities themselves. Of those, as of 2011, only six municipalities had private

investors co-owning the municipal waterworks: Gdansk, Glogow, Dabrowa Gornicza, Tarnowskie Gory,

Bielsko-Biala, and Szczecin. Unquestionably one of the most impressive modernizations in recent years has

been that of the Warsaw Wastewater Treatment Plant “Czajka”. Owned and operated by the City of Warsaw, it

has become the largest and perhaps most successful waste water treatment plant in Poland, with a daily

capacity of over 435 000 m3. Works, though, are underway with a foreign partner to deal with the colossal

problem of managing the capital’s sludge.

Indeed, demand concerning sludge treatment and disposal (like in many other European countries) remains

high according to leaders within the field in Poland. In 2010 alone, Poland produced 707 000 tons of sludge.

Only two incinerators in the country had the capacity to convert the sludge to energy (specifically 40 000 tons

of sludge or approximately 5% of the total). Indeed, Poland ranks very low in terms of sludge treatment

(converting 3-5% of sludge), far below countries such as Switzerland and Germany which, respectively, treat

97% and well over 50% of their sludge. As will be addressed in this paper, the issue of sludge is broadly

recognised as being the largest challenge – or opportunity – for investors in coming years.

Sludge aside, according to one leading waste water technician with decades of experience within the industry

in Poland, geographically the largest potential lies with smaller town areas with populations below 15 000.


32

Poland still has much work to do before it meets the domestic need for water consumption and waste water

discharge. As of 2011, Poland treats slightly more than 50% of its waste water.

Finally, waste water technologies and equipment used in the sector continue to be in high demand. According

to a report from mid-2011 by the U.S. Commercial Service, the following list of equipment highlights best

prospects within the sector in the near future:

Fig. 22. List of equipment (best prospects within the sector)

HS CODE NAME OF EQUIPMENT

8414 80 90 0 Air blowers to be used in sewage treatment plants with the efficiency of more than 15,000 m3/day

8414 90 90 0 Components of equipment used in deep aeration of sewage

8421 19 99 0 Sludge water centrifuges with an output of more than 1500 m3/day

8421 29 90 0 Filtration presses and sewage screens for sludge drainage

9026 10 91 0 Portable automatic flow meters

9026 80 99 0 Kits for fluid collection - liquids, gases

9027 80 19 0 Measuring devices for biological oxygen demand (BOD)

9031 80 39 0 Equipment for the automatic collection and analysis of sewage samples

Source: U.S. Commercial Service 2011

4.2.2. Outlook for potential changes within the waste water management industry

Analysts and those with considerable market knowledge agree that possible upcoming regulation changes will

have the most profound effect on the industry. As repeated by one waste water expert “regulations bring about

changes, as nothing can be produced without proper waste management guidelines in place to deal with the

waste.” The head of the division mentioned that we will likely see some regulatory changes sometime in 2014-

2015. Not only will an important deadline pass for Poland and other newcomers in to the EU; “but new

regulations stir up challenges that markets can react to” stated the expert.

Aside from regulatory changes, Poland’s demographic future is an important element to consider. According to

a comprehensive report on waste water pollution management in Poland published in 2008 by the Polish

Ecological Club in Gliwice, “the number of scattered settlements in Poland will grow in the future due to [a]

trend of residential buildings [being developed] in the country side.” This will put more and more pressure on

the need to expand sewage capabilities and will likely give rise to the need to develop “local solutions” or

smaller local wastewater plants.

Such demographic changes will become increasingly magnified by the simple fact that neither the National

Urban Wastewater Treatment Program nor the Program for agglomerations with populations below 2 000 will

cover all of Poland. Although the goal is for 100% of the population in urban areas to be covered with sewage

systems and waste water treatment facilities, only 60% of the rural population will be (at best) covered.

Indeed, this is an important factor to consider when looking at the long-term prospects of the industry. An

expert quoted above is certain that this demographic push outside of city centres will bring new opportunities

for the waste water sector. More so, with no legal regulations in place for smaller rural settlements with

populations less than 2 000 people, local authorities will find it difficult to finance such operations. They will

increasingly look for partners to help finance and lead such projects.


33

Waste water as a means of extending the waste-to-energy chain

Waste water as a means of extending the waste-to-energy chain is proving to be an area of great interest by

scientists and engineers. Specifically, waste streams as well as the treatment of sludge from waste water

treatment plants can be digested under specific conditions. Most often, this is done under anaerobic conditions

with the result being gas, which in turn can be turned into energy, with heat being the by-product.

Furthermore, technologies exist that enable water streams (that contain nitrogen and phosphorus) to grow

algae. Algae, in turn, can be used as a ground source for bio fuels, plastics, and artificial products. Finally,

much work is being done with the goal of improving the critically important drying process of waste water

sludge, and transforming the sludge into a granulate used to produce glass by means of vitrification. There is

indeed much value that can be derived from both waste water and waste water sludge given the appropriate

technologies.

The below figure illustrates the breakup of sludge production between industrial treatment plants and sludge

arising from municipal treatment plants. Although the figure has a ten-year timeline ending in 2010, it does

help illustrate the growing need – and indeed trend – in dealing with municipal sludge as opposed to

industrial sludge (which has been seeing a decline in recent years):

Fig. 23. Production of sewage sludge depending on type (in thousands tons of dry residue)

Source: Archives of Waste Management and Environmental Protection, vol. 14 issue 4 2012 (p. 72)

Once again, as seen in figure 23, sludge from municipal treatment plants has been steadily increasing in terms

of annual tonnage, while industrial sludge has seen a decline, most markedly since 2005. In terms of

application of sludge from municipal sewage treatment plants, sludge used for agriculture purposes has seen

the most use in recent years, while sludge destined for reclamation of land has seen one of the largest

decreases.

One of the more successful and modern plants to be built to support this waste-to-energy process is in Gdansk,

northern Poland. In 2011, at the Gdansk ‘East’ wastewater treatment plant, a biogas plant was developed that

today has the capacity of producing 68 736 MWh of electricity and 69 984 MWh of thermal energy a day. The

use of biogas at this plant not only helps reduce greenhouse gas emissions into the atmosphere, but also has

had an impact on the level of conventional fuel purchases. The total cost of this project was 23 million zloty, or

slightly above 5 million EUR. Nearly 50% of the funding came from EU structural funds, with the rest coming

from local municipalities.

0

200

400

600

800

1000

1200

1400

1600

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Production of sewage sludge depending on type in the years 1999-2010

Sludge from industrial treatment plants Sludge from municipal treatment plants


34

Moreover, leaders within the waste-to-energy industry that deal with waste water are hopeful regarding the

outlook of the industry. The manager of a medium-sized Polish company specializing in waste water treatment

looks to the future with optimism. His company, aside from offering technologies that deal with the dewatering

process needed in sludge treatment, also offers comprehensive consulting-based solutions for clients. As stated

by manager, “the real potential in the industry is offering services which combine efficient dewatering

solutions as well as energy production capabilities.” In essence, the manager is betting that energy providers in

the future – be it power plants or biomass plants – will want to deal with companies that offer a one-stop shop

for them. More particularly, the real potential is the systemic integration of the dewatering process of sludge

with proven energy development capabilities.

Another manager with decades of experience in the industry echoes the above outlook and is excited about the

opportunities in the industry too. The company, which possesses nearly 80 patents (some pending) within the

waste water industry, has developed unique methods in the dewatering process. Although not disclosing too

much, the manager is bullish regarding the need to develop more effective dewatering methods as well as the

need to build additional waste water treatment plants in Poland.

Lastly, both managers agree that a lack of education amongst regular Poles is inhibiting the development of the

sector. Both stress the need to educate Poles on waste water treatment capabilities. Unfortunately, as stated by

one of them: “regular Poles and their district leaders are not keen to allow tons of sludge into their

municipalities, despite potential benefits in terms of energy savings.” Indeed, the country needs to work on

developing a social conscience and understand that the long-term benefits outweigh the short-term costs.

4.2.3. Key issues within the waste water management market

When addressing key issues within the waste water management market, it is critical that one differentiates

issues brought on by regulatory changes (or a lack of regulations), and issues that are beyond the influence of

regulations. Concerning issues that have to do with regulations, perhaps none is as important as the fact that

no EU-wide regulation enforces stringent policies for small agglomerations below populations of 2000.

Though a domestic program exists, there is agreement amongst experts that ensuring rural areas in having

access to sewage and treatment plants will be a key issue in the upcoming years. Indeed, many experts feel that

this sizeable population in Poland (those living in rural areas with populations below 2000) has been

overlooked. An expert and member of the Regional Office for Water Management in one of the Polish cities

holds that “over 10 million Poles currently live outside the EU wastewater system, and more and more housing

developments are being built further and further from the large urban areas of Poland.”

Indeed, out of 908 agglomerations in Poland in 2011, 901 were served by sewerage systems, and 822 had

access to waste water plants. Although these are relatively strong figures, they can be misleading. The more

important question is what percentage of the population of these agglomerations is connected to existing

sewerage systems and treatment plants. The following figure shows that, indeed, the main issue lies in smaller

towns with only about 76.6 percent of the population of rural municipalities below 2000 person connected to

waste water treatment plants:


35

Fig. 24. Cities (breakdown by population)

SPECIFICATION

POPULATION

Total Below 2000

2000 - 4999

5000 - 9999

10000 - 19999

20000 - 49999

50000 - 99999

Above 100000

Cities... 908 48 269 183 185 136 48 39

...served by sewerage system

901 47 264 183 184 136 48 39

(mechanical) 3 1 1 1 - - - -

(biological) 401 39 195 98 48 19 2 -

(with increased biogen removal)

497 7 68 84 136 117 46 39

...not served by sewerage system

7 1 5 - 1 - - -

Wastewater plants servicing cities

822 42 222 141 165 113 52 87

Population in cities connected to wastewater

treatment plants (in thousands)

20 670 61 714,7 1092,5 2376,8 3891,3 3008,7 9525,9

% of total population in a

given group of cities 88,4% 76,6% 80,2% 83,8% 88,0% 91,3% 92,6% 87,4%

Source: GUS Environment Report 2012 (Tabl. 45(98) p. 181)

Another key issue, which certainly affects and will continue to evolve within the wastewater industry in Poland,

is the question concerning sludge. As has already been addressed, Poland, like many of its neighbours, has a

serious issue with sludge. Experts and analysts agree that both municipal and industrial sludge will pose a big

problem in future years and has to be addressed thoroughly. Although statistics show that sludge is

increasingly being treated thermally in Poland (arguably the most preferred method of treatment), an

alarming amount of sludge continues to be land filled.

Up until 2011, the total historical accumulated sludge in Poland amounted to 64 796 000 tons. Although this

number has fallen by nearly 30% since 2005, accumulated sludge actually increased from 2010 to 2011. In

2011 alone, 9’168’000 tons of sludge were produced. Of this, approximately 20% was land filled, while

approximately 5% was thermally transformed.

A last issue concerning waste water management is the continued high level of phosphorous in waste water.

The above-cited expert of the Regional Office for Water Management stresses how important it is to tackle this

problem at its source. Rather than focusing on regulation, it would make sense to “address companies that

produce products with an unusually high amount of phosphorous.” Indeed, by attacking the problem at the

source (Germany is one example of a country which does this), Poland could dramatically reduce the amount

of investment that goes into chemically ridding high-levels of phosphorous from clean water.


36

4.3. COMPETITION ANALYSIS

Taking into consideration the total number of companies in the Polish waste water management market, the

sector largely consists of small, private companies (1732 companies existing out of a total of 2265). However,

the most important firms in the sector are bigger, treasury owned and commercial companies.

Such a high number of private, small companies involved in sewage disposal and treatment can largely be

attributed to the fact that treatment includes septic tank cleansing, waste water pick-up/drop-off at catchment

points, and many other small jobs, which are often outsourced by larger companies. The following figure

shows the specific break-up as of 2009:

Fig. 25. Businesses operating within sewage disposal and treatment

# Organizational/Legal Form # of companies

1 Treasury owned 221

2 Commercial companies 201

3 Private (individual) companies 1732

4 Civil Partnerships 110

5 Cooperatives 1

Total 2265

Source: Office of Competition and Consumer Protection; Report on Sewage and Wastewater Industry p. 15, November 2011

In terms of large-scale operation, the market can be divided into three segments.

The first segment consists of companies that take part in the construction of infrastructure needed within

waste water management. These are largely domestic companies which have huge economies of scale and are

active in various building projects (not strictly related to this industry). The second segment consists of

companies that are involved in the exploitation of the waste water plants. These are companies that often work

in partnership with local authorities in providing service and specialized know-how to run such plants.

Additionally, they often provide joint-funding for such projects. Finally, the third segment consists of

companies that produce specialized technologies that are used to outfit such waste water plants. Although the

majority of such technologies are imported, there are a handful of Polish companies which operate on the

Polish market and, indeed, export their products around the world.

Below is a list of selected companies active in Poland per business segment:

Fig. 26. Selected Companies within wastewater industry (per segment)

# Construction/ Infrastructure

Exploitation Specialized Technologies

Company Type of technology

1 Warbud

Saur-Neptun Gdansk

H. Cegielski Poznan S.A. Radial blowers, compressors,

marine engines

2 Budimex Aquanet Poznan FP Spomax S.A. Radial blowers, marine engines

3 Polimex-Mostostal

MPWiK S.A. (per city)

Spomasz Wronki Sp. z o.o. Dewatering and sanitary

stations for sewage deposits

4 Skanska N/A KFP Białogon S.A. Wastewater pumps

5 Saur-Horyzont S.A. N/A Redor Sp z o.o. Wastewater mixers



37

Interestingly, compared with many other EU countries, Poland experiences a very high number of antitrust

cases each year within this market. As shown by the following figure, there have been over 218 decisions

handed by the Polish Office of Competition and Consumer Protection regarding anti-monopoly breaches since

2005.

Fig. 27. Number of antitrust decisions (2005-2011)

Source: Office of Competition and Consumer Protection; Report on Sewage and Wastewater Industry p. 75, November 2011

What makes this figure interesting is that, in terms of a percentage of all antitrust decisions concerning

monopolistic behaviour in Poland, the sewage and waste water market absorbs an unusually large share of

decisions. Indeed, in 2005, approximately 10% of all antitrust decisions regarding monopolistic cases in

Poland fell within the sewage and waste water sector. This number has grown to represent over 40% as of

2010. The reason for this largely lies in the fact that although the market is saturated by small players that take

care of “petty jobs,” the large jobs (waste water processing, treatment, etc.) is done mainly by a handful of large

players. Thus, this section of the market is inherently monopolistic in nature.

4.3.1. Key drivers for competitive advantage on the Polish market

Given the large economies of scale and heavy capital expenditure needed to enter the waste water market,

barriers to entry are high. This is why the grand majority of projects within the realm of waste water plants –

be it in large cities or smaller towns – are financed by various sources. Almost all projects have private

financing involved, however the bulk of the capital comes from EU financing as well as municipal

governments. From an investor’s point of view, ensuring a sound financial set-up is critical for the future

success of such an enterprise.

Specifically, in the case of one of Poland’s largest and leading waste water plants in Gdansk – run by Saur

Neptun Gdansk – proper financing as well as a stable future roadmap were critical to success. Saur Neptun

Gdansk was able to secure a 30-year contract with municipal authorities, ensuring them cash-flow as they also

heavily invest in alternative technologies within the industry. After speaking with the PR manager at the

company, it was divulged that alternative technologies that deal with waste water are very much the future of

the industry.

Although investments in alternative technologies can indeed bring profits in the future, the PR manager was

quick to point out that this alone does not secure profits. Indeed, “in an industry where capital expenditure is

huge, costs are a key competitive driver for any municipality when selecting the appropriate technology.”

Hence, a focus on costs is at the core of any decision made within the industry, and is especially important for

municipal governments when deciding with whom to work.

Other key competitive advantages relate to the potential of integrating the various processes of a critically

important and growing municipal (and industrial) problem – dealing with waste water sludge. As mentioned

0

10

20

30

40

50

2005 2006 2007 2008 2009 2010 2011

11

39 43

24

40

31 30

Antitrustdecisions


38

by two CEO’s with decades of experience in the industry, taking care of the entire process chain of dealing with

sludge holds great potential for the future. More and more domestic companies are offering consulting services

and teaming up with project engineers in integrating their products in the complex process chain of waste

water sludge treatment.

4.3.2. Market fragmentation and its key players

As shown in the competition analysis, the Polish waste water management industry can be divided into a

construction of infrastructure sector, an exploitation of the waste water plants sector and a sector covering the

production of specialized technologies used to outfit waste water plants. The below figure illustrates key

players each of these sectors.

Fig. 28. Market fragmentation and its key players

MARKET FRAGMENTATION KEY PLAYERS

1. Construction of infrastructure needed within

waste water management

Warbud

Budimex

Polimex-Mostostal

SKANSKA

Saur-Horyzont SA

2. Exploitation of the waste water plants Saur-Neptun Gdansk

Aquanet Poznan

MPWiK SA

3. Production of specialized technologies used to

outfit waste water plants

H. Cegielski Poznan SA

FP Spomax SA

Spomasz Wronki Sp. z o.o.

KFP Białogon SA

Redor Sp. z o.o.


4.4. POTENTIAL INVESTMENT AND COOPERATION OPPORTUNITIES WITHIN THE INDUSTRY

The waste water industry remains attractive and potential investment and cooperation opportunities exist

within the industry. Perhaps most compelling and indeed seeing the most potential are rural areas, as already

mentioned earlier in this report. In the 2008 Baltic Report – cited earlier – the “huge infrastructure gap

between urban and rural areas in Poland and [the] urgent need for sustainable sanitation systems to be built in

the small villages” give rise to huge business opportunities. Establishing ties and working out joint-cooperative

liaisons with local municipalities is indeed the best way to proceed – not to mention entering project bids

which are held often.

The fragmented market of waste collection and transport constitutes another area of potential investment and

cooperation. As previously mentioned, this sector of the industry is composed of thousands of smaller players,

who are hired on a site-to-site basis. It is expected that this part of the industry is likely to consolidate in the

near future, largely in reaction to competitors trying to out-price other competitors by reducing prices. Such

price-wars have depressed the market, and it is likely to witness consolidation in upcoming years.

Finally, the huge issue of sludge remains probably the most important area for the country in terms of

potential investment and cooperation opportunities. This is echoed by the experts and company CEO’s

interviewed for this section of the research paper. However, unlike other sectors, a cross-industry educational

program is needed to educate the masses – and municipal leaders – of the positive externalities that are gained

when tapping sludge for energy. The CEO of Polish waste water management company mentioned the

difficulties municipal leaders often face when seeking to convince their electorate that bringing in tons of


39

sewage sludge for treatment is an economically viable option. Indeed, cross-industry cooperation is needed in

the hope for better educating the Polish public of the potential benefits of dealing with sewage sludge.

4.4.1. Public sector

MAIN OPPORTUNITIES IN THE PUBLIC SECTOR

Poland ranks very low in terms of sludge treatment, converting only 3-5% of sludge. Such low

penetration of that market opens significant opportunity windows for infrastructure providers as well

as any advisory company,

There is a huge potential surrounding waste water treatment and management in smaller rural

areas. These installations tend to be particularly underdeveloped. Once bundled with an effective

financing solution, such initiatives may receive a warm welcome,

Warsaw, Sosnowiec and Katowice pose the biggest problems in terms of untreated wastewater,

There are only two incineration plans in Poland that have the capacity to convert sludge to energy,

Although sludge is increasingly being treated in Poland thermally, an alarming amount continues to be

land filled. Experts say such trend may soon impose compulsory treatment regulations and limitations in

landfill opportunities,

The grand majority of wastewater management projects are co-financed by EU and municipal

governments,

Lack of wastewater management education amongst regular Poles.

COOPERATION OPPORTUNITIES IN THE PUBLIC SECTOR

Cooperation with national institutions (e.g. National Water Management Board, Ministry of

Environment) in: legal aspects of waste water management, leading waste water management

projects, waste water management education on thermal capabilities and its benefits,

Delivery of waste water technologies and equipment to municipalities,

Financial partnerships in waste water management projects,

Financial and operational partnerships in leading waste water management projects,

Delivery of services combining efficient dewatering solutions and energy production capabilities at

the same time.

4.4.2. Private sector

MAIN OPPORTUNITIES IN THE PRIVATE SECTOR

The waste water management market largely consists of small private companies operating as one-

man shops. Hence, the market is fragmented and expected to consolidate in the coming years,

There is a lack of know-how and new technology knowledge among the Polish waste water

management companies. Entrepreneurs are consistently looking for new innovative solutions

available on other European markets and applicable in Poland,

There is a noticeable lack of waste water equipment and infrastructure in Poland. The equipment

like: air blowers used in sewage treatment plants, sludge water centrifuges, filtration presses and

sewage screens for sludge drainage, portable automatic flow meters are in high demand (see fig.

“List of equipment” (best prospects within the sector)).


40

COOPERATION OPPORTUNITIES IN THE PRIVATE SECTOR

Modernization of existing wastewater treatment plants,

Delivery of waste water technologies and equipment,

Know-how transfer and consultancy services in implementing the best technologies in different

regions,

Partnerships in financing the wastewater management plants,

Partnerships in leading and developing the wastewater management projects.


41

5. Summary and key takeaways

The waste management market

As seen, the waste management market in Poland has witnessed rapid development in recent years and will

continue to see further development especially as we enter a new period – EU new perspective (2014-2020).

The investment plans for the upcoming years include construction and modernisation of composting and

fermentation plants, mechanical-biological treatment (MBT) plants and sorting plants. Plans are also in place

for the construction of 11 regional waste treatment installations in Poland.

In terms of structure, the legal basis of municipal waste management in Poland consists of a system of regional

solutions. Such a structure means that each region of Poland – through a Regional Waste Management Plan –

is responsible for its own waste management and is accountable to action all elements within the National

Waste Management Plan 2014. Furthermore, the new Act on maintaining cleanliness and order in

municipalities (2011) has a significant impact on the waste management market. In regard to competition

within the industry, the market is largely fragmented. Consisting predominately of many small private

companies and a small number of bigger players, due to a changing legal environment, it is expected the

industry will consolidate in the very near future.

The Polish waste management industry must address certain key issues going forward, such as: the continued

popularity of land filling of municipal waste, the growing problem of disposing waste in the period between the

closure of landfill sites and the launch of waste treatment plants, unsatisfactory progress in individual

collection of waste from households, growing threat of uncontrolled waste dumps – and finally – the lack of a

system for collecting expired medicines from households. One further issue that must be resolved pertains to

social education, not only of the benefits of waste treatment, but also concerning the penalties that local

governments – and hence its people – face as set forth by the Act.

Indeed, although much work has been done in this industry over the past years, there remain a great number

of unsolved problems that need to be addressed. Not only are domestic laws pushing this, but so too are EU

regulations. The need to catch up and prove a formidable eco-friendly player in the enlarged EU provides

many investment opportunities for foreign investors in Poland inter alia in: know-how transfer, consultancy

services and investments in plants and other specialised installations.

The waste water market

As shown, the waste water market has seen tremendous growth in recent years. Most of this growth has been

centred on Poland’s largest agglomerations, ensuring that both industrial waste water and municipal waste

water is treated. Although changes in regulations are possible in the years to come, at the moment Poland

remains busy catching up and ensuring that important deadlines are met. A critical year will be 2015, and it is

likely that Poland will suffer fines if it does not meet EU specified criteria as part of The Urban Wastewater

Directive 91/271/EEC.

Until then, the industry will be busy in a wide array of segments. In recent years, the industry has seen largest

growth in rural areas, outside the fringes of larger cities. Partially reacting to demographic trends as well as to

a portion of the market that lies outside of any real EU specified regulations; huge potential rests in supplying

rural municipal agglomerations with waste water treatment capabilities. Virtually every expert interviewed in

this part of the report agrees that this geographic section of Poland’s waste water market is one of the few

untapped markets left.


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In terms of specific technologies, there is a variety of equipment that is likely to see a strong demand in the

coming years. Most of the equipment deals with waste water sludge treatment, though some also relate to

more general needs. Amongst the best prospects are: air blowers, sludge water centrifuges, components used

in deep aeration of sewage, and filtration presses for sludge drainage. Indeed, given recent investments in

sludge treatment centres around Poland, demand for such equipment will certainly see a rise.

Experts agree that sludge treatment – and more particularly – the dewatering process needed in the process of

waste-to-energy is an important challenge. With less than 5% of sewage sludge thermally treated in Poland, the

country must invest in technologies that enable this process. Aside from economic reasons (mainly cost), one

of the most powerful factors inhibiting evolution in this sector of the industry is an underdeveloped social

conscience. All experts interviewed agreed that municipal leaders find it difficult to sell the idea of bringing

sewage sludge into their geographic boundaries to their populace. It will be important for the industry as a

whole to address this issue, possibly through the use of broad awareness programs.

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