Channelling the competitive advantage by the greening of the economy

Jovita Neliupšienė
Viceminister of Economy and Innovation
Ministry of Economy and Innovation

Osvaldas Šmitas
Economic Development Department, Ministry of Economy and Innovation

Audrius Masiulionis
Commercial Attache
Embassy of the Republic of Lithuania to Finland

What is in common between the mattresses the grandchildren of Queen Elizabeth II of Great Britain sleep on and green deal achievements in Lithuania? How comes that Lithuanian born unicorn is a part of sustainability aims? Why second life is profitable?

There is one answer to all three questions. A future oriented, visionary business model. About a decade ago, Mr. Viktoras Verpetinskis, the head of “Ivo ir ko”, implemented principles of circular economy in his company. People who value sustainable production are not indifferent to these provisions – Ivo ir ko produces and exports about 70-100 thousand mattresses a year. Since 2018 Vinted is a billion euro e-commerce platform, which allows all European citizens to sell second hand clothes. The company from Kaunas “IT Max – Refurbas” brings second-hand computers and other electronic equipment to a second life. And almost all of it is sold abroad. While Europe prepares to move to a circular economy, there are already successful companies in this field in Lithuania.

Lithuanian industrialists purposefully move to a circular economy and maintain their competitiveness in an increasingly conscious society. To reorient the country’s economy towards a circular economy, it is essential to set the direction and detail the objectives and incentives pursued to ensure private sector investment and close cooperation with science and the public sector. Lithuania is an industrial country with an industrial contribution to GDP of 20%. Industrial products account for over 80 percent. Lithuanian exports of goods, so in order to maintain Lithuania’s competitive advantage, it is very important to ensure its proper technological progress. The support of both the Ministry of Economy and Innovation and the Ministry of the Environment is important for business at this stage of industrial transition.

The roadmap for the transition of Lithuanian industry to a circular economy is the first co-creation project in Lithuania. The aim of the project is to envisage concrete actions that will help maintain the competitiveness of the industry, considering the principles of the circular economy. Involving stakeholders in the implementation of the project – representatives of Lithuanian industry, public organizations, and public authorities – aims to ensure a successful and efficient transition of industry to a circular economy.

Lithuania is not only ahead of majority European countries in moving towards circular economy, it is among the few countries in the EU where the “Green Deal” is a part of the official Programme of the Government as one of the three priorities, alongside digitization and education. It envisages that the energy, industry, transport and housing sectors will be restructured from above with a sharp rise of standards, with public funding for the transition.

More than a year ago the world realized that money trying to save a pandemic-stricken economy could either deepen the climate crisis or help overcome it. The European Commission has given a positive assessment to Lithuania’s recovery and resilience plan, which will be financed by €2.2 billion in grants. None of the plan’s measures will do significant harm to the environment.

38% of the plan’s total allocation for reforms and investments support climate objectives. €242 million for sustainable power generation: developing offshore wind infrastructure, and onshore plants for renewable energy sources (solar and wind power), and creating public and private energy storage facilities. In 2020 the Ministry of Energy and 19 organisations, including the Ministry of Economy and Innovation, the Ministry of Transport and Communications, business associations and large energy companies, have signed an agreement on the establishment of a hydrogen platform in Lithuania. The signatories have agreed to cooperate in the creation and development of hydrogen technologies, which will be crucial for achieving national and European energy and climate targets.

Reforms of the green transformation will make a significant contribution to the country’s strategic autonomy and address long-standing security challenges.

€341 million for sustainable mobility: Significantly reducing greenhouse gas emissions by phasing out the most polluting road transport vehicles (private, public and commercial) and by increasing the share of renewable energy sources in the transport sector.

The implementation of this measure will encourage faster changes in the composition of transport modes. Integrated regulatory, communication and investment measures will be implemented that the operation of electric vehicles becomes economically viable and rational. Preconditions for the use of public transport will be created and quality of public transport will be increased

€218 million for accelerating renovation of buildings: supporting the production of modular elements for renovations from organic materials and providing financial support to citizens for actual renovations. This will accelerate the renovation and modernization of apartment buildings by implementing measures to increase energy efficiency, as well as use of renewable energy sources, by reducing energy consumption in buildings and phasing out the use of fossil fuels in them.

Lithuania has political will, the EU provided good part of the money. But most important Lithuania has the ideas what to do. In Scandinavia students can already ride electric minibuses Altas EV Ecoline and Altas EV Cityline, which have been assembled in Lithuania by Elinta Motors, a company, which developed a unique electric engine and overall electric system without any use of scarce metals. Ecology unfolds both through the product itself and through its manufacturing process. Zero emission minibuses will make our cities cleaner and opens the new opportunities to choose environment friendly passenger transport solutions.

In Western part of Lithuania biggest factory in the Northern Europe is being built by VMG group to ensure Europeans could build sustainable wooden houses. The factory will mainly be run by robots, which will ensure sustainable and innovative materials and wooden parts to be used in assembling high quality wood houses.

In the middle of Lithuania (Panevėžys) Harju Elekter has constructed first engine for driverless vessel, which is tested in Scandinavia.

Many more circular ideas and green projects are in line. For that RRF or other European funds are not the only source. In addition, Lithuania is well on track to attract large scale investments providing the Green Corridor for big investors in advanced manufacturing, IT and other areas also contributing well to Green Deal goals. First agreements are signed after the new legislative package in force since the beginning of 2020. Several new important investments are being negotiated in the area of advanced manufacturing, thus enabling Lithuania to further climb up the value chain, introduce new clean and climate neutral solutions and create new jobs.

Lithuanian society, business, science and state institutions are cooperating towards a Green Deal to make the EU a climate-neutral economy by 2050. Green is competitive.

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