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EIO Country profiles 2010

May 2011

Eco-innovation in

Slovakia

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Eco-Innovation Observatory

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

analysis of an extensive range of eco-innovation information, gathered from across the European

Union and key economic regions around the globe, providing a much-needed integrated

information source on eco-innovation for companies and innovation service providers, as well as

providing a solid decision-making basis for policy development.

The Observatory approaches eco-innovation as a persuasive phenomenon present in all

economic sectors and therefore relevant for all types of innovation, defining eco-innovation as:

―Eco-innovation is any innovation that reduces the use of natural resources and decreases the

release of harmful substances across the whole life-cycle‖.

To find out more, visit www.eco-innovation.eu

Any views or opinions expressed in this report are solely those of the authors and do not necessarily reflect

the position of the European Commission.

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Eco-Innovation Observatory

EIO country brief 2010: Slovakia

Author: Michal Tvrdon

Coordinator of the work package: Technopolis Group Belgium

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EIO Country Brief 2010: Slovakia Part 1. Introduction: Innovation and Environment in Slovakiai

In 2008, the Slovak economy was the fastest growing among member countries of the Organisation for Economic Co-operation and Development (OECD) and the EU-27. Its growth had accelerated with no threats to macroeconomic stability until 2000, and after peaking in 2007, the dynamics of economic growth have been in decline since 2008. The global economy is currently facing the worst recession since the end of World War II. Since the second half of 2008, the Slovak economy has been experiencing a simultaneous decline in economic activities, and an increase in unemployment and public administration expenditures (EC, 2008). The accession to the euro area in 2009 has been beneficial for Slovakia during the crisis (OECD, 2010b). Slovakia’s economy is small but very open and is affected by the economic crisis mostly in terms of foreign trade and via the downturn in confidence regarding the restoration of positive economic development. By way of illustration, exports of goods and services represented 87 percent of Slovak

GDP in 2007, but fell to 70 percent in 2009 (Slovak Statistical Office, 2011), compared to an EU-27 average of around 37 percent (EUROSTAT, 2010). The development of the Slovak economy is closely linked to that of the economies of other EU member states, particularly Germany and the Czech Republic. Although Slovakia's GDP derives mainly from the tertiary (services) sector, the industrial sector plays an important role within the Slovak economy. It comprises mainly heavy industry and the automotive sector, situated mostly in the western part of the country. As stated in a 2010 OECD report, Slovakia’s economy is characterised by a relatively high share of energy-intensive industries compared to the OECD average, making the transition to a greener economy very challenging. Generally, the automotive industry does not represent a big share in energy demand. According to the Ministry of the Economy, statistical data from 2009 indicate that for every euro of added value in the automotive industry, 73.5 percent less electricity and 93.1 percent less heating energy is consumed than the average figures for Slovak industry. Industries with a higher energy demand are oil refineries, paper mills, chemical plants, woodworking plants and the wood manufacturing sector. Among the most discussed environmental issues in recent years in Slovakia are energy efficiency, the greater utilisation of renewable energy sources, and various adaptation measures including flood protection. Recent studies (Aurex, 2008) carried out in Slovakia, based on an assessment of current developments in the energy sector, have gathered and reviewed information on the potential of each individual renewable energy source in order to outline options for the utilisation of established commercial technologies and to propose targets to be reached by 2015. Measures exist to facilitate the meeting of those targets. The 2009 Environmental Technologies Action Plan (ETAP) mentions more ―soft measures‖ such as the assessment of project proposals and research and development (R&D) programmes on ecological indicators, an information portal for environmental technologies, and voluntary measures such as eco-labelling and eco-design products. Innovation and eco-innovation are presented and understood in public discourse from a variety of perspectives. While the Slovak Ministry of the Economy in the strategy, Innovation Policy of the Slovak Republic for the years 2008 to 2010 explains the term ―innovation‖ as an achieved situation in which innovations are one of the main tools of knowledge economy development and ensuring high economic growth of the Slovak Republic with the objective of achieving the level of the most

advanced economies of the European Union (MoE, 208), the concept of ―eco-innovation‖ is dominated by such terms as ―green procurement‖, ―energy transition‖, ―enforcement of energy efficiency‖, ―environmental labelling‖ and ―small and medium-sized enterprises‖. In both cases, the focus is on economic growth and its relation to the knowledge economy. Both approaches are referred to here, since activities related to the environment and eco-innovations are multi-sectoral. Energy efficiency and renewable energy sources (RES), for example, come under the competence of both ministries (the Ministry of the Economy and the Ministry of the Environment), but from different perspectives. However, according to the 2010 OECD report, the enhancement of eco-innovation in Slovakia requires more structural reforms in several areas, such as improving the innovation framework, fostering human capital formation and enhancing the business environment.

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Part 2. Eco-innovation performance This section is based on the EU-27 Eco-innovation Scoreboard (Eco-IS). The Eco-IS, via its composite eco-innovation index, shows the eco-innovation performance of EU-27 countries compared with the EU average and with the EU top performers. The Eco-IS is based on 13 indicators that are aggregated into five components: eco-innovation inputs; eco-innovation activities; eco-innovation outputs; environmental outcomes; and socio-economic outcomes.

Figure 2.1 EU27 Eco-innovation Scoreboard, composite index

According to the eco-innovation composite index, the overall eco-innovation performance of Slovakia is almost at the bottom of the ranking of EU countries (see figure 2.1) and is positioned in a group of countries with a lower eco-innovation performance. Eco-innovation inputs With a score that is one-third of the EU average, Slovakia’s performance in this index is rather low. The index comprises three indicators: the proportion of research personnel in national employment; cleantech venture capital investments; and the government’s environmental and energy R&D appropriations and outlays. The total R&D personnel and researchers as a percentage of total employment stood at 0.88 percent in Slovakia in 2007, while the community average was 1.43 percent. According to the latest data from Cleantech.com, there was no venture capital investment in eco-innovation projects in Slovakia between 2007 and 2009, which can be due to Slovakia’s lack of attractiveness as a destination for venture capital investment. Environmental and energy R&D allocation by the government in 2008 was 0.02 percent of GDP, which is half of the EU average index. Even though the scoreboard was used for this calculation in order to try to objectivise and compare data among countries, the Slovak Ministry of the Economy objected, since no system exists for the collection of real data.

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Figure 2.2 Eco-innovation composite index components Eco-innovation activities With regard to eco-innovation activities, Slovakia is near the bottom of the ranking of EU-27 countries and well below the EU average. The proportion of firms that are reducing their consumption of material and energy has been rising since 2000. In 2002, the share was 5.29 percent, increasing to 20.2 percent in 2008. However, the final figure of 0.9 organisations registered with the Eco-management and Audit Scheme (EMAS) per million of the population is rather low in comparison with the EU average of 5.4 organisations. Nevertheless, there has been active growth in ISO 14001 environmental certification since 2001 (rising from 73 in 2001 to 672 in 2008). In terms of the proportion of innovative firms reducing their material and energy consumption per unit of output through innovations, Slovak companies are among the last third of European countries. According to the Community Innovation Survey (CIS) in 2006, some 10.76 percent of innovative enterprises in Slovakia indicated that innovation contributed to the reduction of their material and energy consumption per unit of output. This value is rising: previous surveys refer to 5.29 percent of innovative firms contributing to the reduction of material and energy consumption in 2000; and 10.76 percent in 2006. The latest CIS for the period 2006 to 2008 registered 20.2 percent of firms in Slovakia using innovation to reduce their consumption of materials. Eco-innovation outputs This statistic is calculated as the number of eco-patents per million of the population (the sum of pollution abatement and waste management patents and patents for energy efficiency in buildings and lighting) (OECD). From this perspective, there were no eco-innovations in Slovakia. In spite of the plethora of scientific organisations and institutes, only a low number of eco-patents were filed. Between 1997 and 2007, only eight eco-patents related to energy efficiency and pollution management were filed in total (OECD 2007), an average of one per year. According to the INNO-Policy TrendChart (EC 2009), the alarmingly low rates of public and business R&D expenditure hindered cooperation between academia and the industrial sector, as reflected in the low levels of high value added throughputs (patents, designs, trademarks). Environmental outcomes Slovakia’s indicator in the area of environmental outcomes is 14 percent below the EU average, placing Slovakia in the middle of the European country ranking. Although Slovakia achieved one of

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the biggest reductions in CO2 emissions between 1995 and 2008, its CO2 intensity (at 0.5 kg of CO2

equivalent/euro) still remains very high, reflecting the country’s high energy intensity. The significant emissions reduction was achieved mainly by the closing down of industries in the late 1990s and by effective policy measures. Air pollution is expected to rise in the coming years in the absence of efficient policy actions. One of the biggest potential areas for energy savings is the building sector, including the refurbishment of the existing building stock. Socio-economic outcomes Aggregated statistics on employment in eco-industries, the size of eco-industry markets, and exports of eco-innovation products are used to measure socio-economic outcomes. The share of eco-industry employment out of the total Slovak labour force was 1.06 percent in 2008, which is approximately 19 percent lower than the EU average, placing it in the middle of the European country ranking. The export index is rather low: at 86 percent below the EU average it places Slovakia among the lowest-ranking European countries. This indicator is the lowest of the three indicators and suggests that eco-industrial exports in Slovakia play a relatively marginal role in the national economy. According to the INNO-Policy Trend Chart (EC 2009), Slovak businesses introduced large volumes of new-to-firm and new-to-market products. However, these products were developed elsewhere, as innovating capacity among Slovak firms ranked the lowest in the EU.

Part 3. Leading eco-innovation areas When defining and setting leading eco-innovation areas, the main activities have to be embedded in the environmental technologies action plan (ETAP). According to the national expert in charge of eco-innovation, the originally elaborated ETAP will become the basis for the eco-innovation action plan

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The Slovak ETAP comprises soft measures such as green public procurement and eco-labelling, as well as hard measures such as supporting the greater utilisation of RES, with both soft and hard measures leading to eco-innovations. The following areas are defined in the ETAP:

assessment of project proposals and outcomes for government research and development programmes in terms of the extent of ecological indicators;

creation of an effective information portal for environmental technologies; voluntary environmental policy instruments; eco design and low energy use products; support for the development of the renewable energy sector; promotion of bio-fuel use in transport; enhancement of innovative environmental technologies; environmental state aid; Slovak Recycling Fund; green public procurement; funds for small and medium-sized enterprises to support the application of advanced

environmental technologies and eco-innovation. However, the most tangible results can be found in three main areas:

energy production – greater utilisation of renewable energy sources; waste recycling – introduction of new waste disposal methods; and energy savings – application of energy efficiency measures, mainly related to the construction

sector. Energy production – Greater utilisation of renewable energy sources A strategy for the greater use of renewable energy sources (RES) in Slovakia was adopted in 2010, covering three main areas:

the production of heat and cooling; the production of electricity; and transportation.

1 This information was provided by the national ETAP expert during an interview conducted in January 2011. The national expert represents the Slovak Environmental Agency.

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Slovakia is committed to increasing its share of RES from 6.7 percent in 2005 to 14 percent in 2020. According to Ministry of the Economy figures, in 2010 the total share of RES in all three areas was 9.5 percent. This is therefore an area in which an increase in eco-innovations can also be expected. The most neglected and least developed area of the three is transportation. By 2010, the production of electricity from RES was dominated by hydropower, followed by biomass, where Slovakia has recently achieved significant growth. In the case of small hydropower plants, an extended development programme has been drawn up including 250 selected sites for new plants, with a potential total installed capacity of 93 MW. Biomass has the highest additional mid-term potential of all RES, followed by biogas. Only a very small proportion of the biomass potential is currently being used. The government’s priority is to use this source in remote, mountainous areas, where natural gas is not available. For this reason, the government is supporting activities that are increasing the use of biomass for the production of electricity and heat energy, or both in combined heat and power (CHP). (See best practice example 1.) Waste Recycling – New waste disposal methods According to a study carried out by the European Environment Agency, 18 countries in 2007 met the 2008 target set in the Packaging Waste Directive (2004/12/EC), including Slovakia. According to this directive, countries need to recycle at least 55 percent of the packaging waste generated. Applying new technologies, such as the catalytic cleavage of polymers, helps to increase the amount of recycled materials (in this case mainly materials made of polymers). The best practice example given here is of the use of state-of-the-art technology for plastic waste disposal in order to prevent it being landfilled. (See best practice example 2.) Energy savings – Application of energy efficiency measures, mainly related to the construction sector In addition to increasing the share of RES, it is essential to highlight the importance of improving energy efficiency. Self-governing counties, as well as cities and municipalities, should by law prepare development concepts in the field of heat energy. At the same time, the Ministry of the Economy has issued a methodology for the development of a conceptual framework, which would secure a reduction in energy consumption while achieving the better use of territorial potential. Demand for energy in order to maintain comfort levels in residential, commercial and/or public buildings has recently increased. Several studies indicate that the building sector is emerging as the biggest area for potential energy savings. In order to reach maximum energy performance in buildings, while keeping energy consumption at a minimum, a combination of technical measures are needed, ranging from the building’s foundations to the construction of its roof. In some cases, small technical changes can result in huge energy savings. This technical potential and its application have dominated innovations in Slovakia over the last five years. There are many problems related to the existing building stock (approximately 650 thousand flats), the majority of which belong to individual owners. Most of the building stock dates from the early 1980s when there was less demand in terms of energy efficiency. The recent building stock is characterised by technical and sanitary deficiencies, and the apartment buildings do not meet energy efficiency criteria. The retrofitting of residential buildings is a necessity, but it is mainly down to flat owners to refurbish their living space. A secondary problem is that technical measures, such as the insulation of the building envelope, are applied inefficiently and energy losses remain due to other technical problems (thermal bridges, lack of window insulation). While it is clear that the existing building stock requires more attention, the best practice example given in the present study is of a new building constructed to low-energy standards. According to construction experts, the technologies used in this example are suitable for broad application, including the retrofitting of old apartment houses. A holistic approach to the technical innovations applied in the construction sector is vital, rather than random solutions as used in the example presented here. In addition to the appropriate insulation of the floor, walls and windows, the heating system should also be based on RES. (See best practice example 3).

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Best practice examples

Best practice example 1 – PD Ludrová biogas plant (CHP), Slovakia

Picture 1: PD Ludrová biogas plant near Liptovská Štiavnica (Source: www.rudos.sk) Location: The biogas plant was built at the PD Ludrová agricultural cooperative near the small village of Liptovská Štiavnica (northern Slovakia). The farm focuses on livestock production and is one of the major producrs in the region. Technical data:

Digester tanks – 2 x 1,000 m3

Electrical power – 2 x 95 kW Material – manure, slurry, corn silage Daily input – 90 m

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Fermentation time – 20 days Detailed description: The biogas plant receives a daily 30 tons of material, complemented during the summer by grass silage and fresh grass. The daily input is 90 m

3 of substrate, which contains 12 percent dry matter.

The station has two towers (tanks), each with a volume of 1,000 m3. The biogas produced is used for

the combined production of electricity and heat. Two cogeneration units have been installed, TEDOM Cento 100 SP BIO CON, supplied by INTECH Ltd. The electricity produced is primarily sold to the grid and the heat is used partly for substrate heating in the reactors and partly on the farm for various purposes (heat for milk processing, heating of rooms and office buildings). The main supplier of all the technologies was RUDOS Ružomberok, s.r.o., rudos@rudos.sk, www.rudos.sk Sustainability impact: The plant uses biological materials that could otherwise only be used as a natural fertiliser. In addition, it produces combined heat and electricity, a technology enforced in European legislation. The heat is used locally for biogas plant processes and for heating farm buildings, thus reducing the use of fossil fuels for heating.

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Best practice example 2 – Plastic waste recycling plant, Lieskovec , Slovakia

Picture 2: Plastic waste recycling plant in Lieskovec (Source: www.sme.sk)

Location: Lieskovec is a small village in central Slovakia. Technical data:

Total investment: EUR 13.3 million Contribution from the Slovak Recycling Fund: EUR 3.319 million Volume of plastic waste recycled annually: 12 tons Volume of liquid fuel produced annually: 8 tons

Detailed description: Thanks to recent investment by the company Castor and Pollux Ltd., a new technology is being applied to the recycling of valuable, polluted plastic waste based on polymeric compounds such as polyethylene (PE) and polypropylene (PP). A recycling plant has been constructed in Lieskovec, which treats different types of plastic waste from a variety of sources: packaging waste, waste from electrical and electronic equipment, plastic waste from scrapped cars, separated municipal waste, and technological waste from the production and processing of plastics. The recycling of these plastics using standard methods is problematic, or even impossible, and the majority ends up in landfills or incinerators. Open, uncontrolled burning produces hazardous emissions that present environmental threats far beyond the site of the burning. Testing operations began in November 2010, and the testing of all the technological equipment in the recycling process is ongoing. The technological process is based on the catalytic cleavage of polymers into a mixture of liquid compounds similar to oil fractions. The final products are a valuable component of fuel for heating, gasoline, hydrocarbons that can be used in the chemical industry, and raw materials for manufacturing various chemical products, including the reverse synthesis of polymers. This advanced technology is not yet broadly applied or commercially proven. Several such plants are operating in Poland, and in Slovakia there is a similar installation in Moldava, which was one of the first applications of this chemical process to plastic recycling on an industrial scale. The proposal of Castor and Pollux Ltd. was supported by the Slovak Recycling Fund to the sum of EUR 3.319 million. The overall project is based on new technology developed and patented in Poland in 2004. The patent received several awards at international environmental fairs. Machines and technical equipment for the technology are produced at a plant in Hungary that is co-owned by the inventor of the technology. The final product of the recycling plant in Lieskovec is a liquid mixture of hydrocarbons for further processing in refineries or as a component in fuel cogeneration units. The mixture, which has the same chemical characteristics as light oil fuel, does not contain any sulphur or chlorine. The annual

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planned capacity of the plant is around 12 thousand tons of plastic waste, from which around 8,000 tons of oil fractions can be produced. Suppliers of plastic waste from Slovakia are able to meet the estimated demand. The technology, at least partially, contributes to the recycling of contaminated, mixed and otherwise problematic types of plastic waste, including plastics from the dismantling of old cars, as well as from municipal landfills, the disposal of which is currently a significant problem. Source: Hospodárske noviny, 3 / 2010, 16 September 2010

Best practice example 3 – The first low-energy apartment building in Slovakia

Picture 3: Apartment building of almost passive house standard in Zvolen (Source: www.asb.sk) Location: Kuzmany street in Zvolen (central Slovakia). Data: Number of apartments: 44 (+ two offices) Floor area: 4428.9 m

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Construction completed: March 2009 Investor: EuroEcology, p. r. o., Bratislava The first low-energy apartment building in Slovakia was constructed in Zvolen in 2009. It achieves annual heat energy consumption of 22 kWh/m

2, which is almost passive house standard. State-of-the-

art technology-based heat pumps save building residents up to 75 percent of the cost of heating and hot water, allowing them to reduce their dependence on fossil fuels. The heating system in the apartment building has a temperature gradient of 50/40°C, and the floor heating has a gradient of 38/32°C. The designed and implemented heating system is suitable for use with heat pumps as heat source, and the heat pump outlet temperature reaches 60°C.

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Part 4. New trends: Areas on the rise The Slovak Republic has achieved substantial progress in recent years in terms of the introduction of medium- to long-term strategies related to environmental technologies, RES or energy efficiency; the development of specific legislation for energy efficiency; and the adoption of concrete action plans. There are tendencies towards the mobilisation of financial sources in the form of state support for building insulation between 2006 and 2008, or support for the greater utilisation of RES since 2009. As confirmed by the interviewed national eco-innovations expert, there is a good background of plans and strategies (ETAP Slovakia, which is expected to become the basis for the Action Plan for Eco-innovations in 2011), although their application is still not clearly defined. It can therefore be said that the future of new environmental technologies is rather market driven. National experts defined several areas that are on the rise:

Construction sector – the building of houses to low-energy, almost passive house standards, and even zero emissions houses.

Construction sector – the potential of wooden houses to function to passive house standards. Transportation – at municipal level, an improved public transport fleet including vehicles

operating on alternative fuel sources. Energy sector – greater utilisation of solar energy. Automotive sector – higher numbers of hybrid private cars (the production of hybrid cars is

expected by PSA Peugeot, Trnava, Slovakia). The integration of energy efficiency in economic, environmental and social policies is ongoing. Energy efficiency is being promoted in industrial innovation funds, for example, but continued efforts are needed. While Slovakia’s energy efficiency strategies have been driven to a large degree by the EU, a greater focus on domestic implementation is now needed, including dedicated resources from relevant ministries and agencies; a more comprehensive system of evaluation and monitoring; and an increase in the private sector’s energy efficiency capacity. The same applies to the ETAP: the national expert confirmed that more attention now needs to be given to its implementation. Greater attention will also need to be given to the rapidly growing transportation sector.

Example 1 Potential of wooden family houses

(Picture source: www.profibuilding.sk)

Description: Although houses constructed using wooden frames are very common in many parts of Europe (especially Austria and Germany), they are now rare in Slovakia. Wood is a good, sustainable

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resource for the construction industry, especially in countries like Slovakia, where 42 percent of the territory is covered by forest. Multilayered (so-called sandwich construction) houses are appearing on the market, but demand for standard brick houses still prevails. According to pioneers in the sector, such as Profibuilding Ltd., demand for wooden houses is still low, even though these buildings are sustainable from many perspectives (construction material and low-energy operation). These houses feature excellent insulation, a high level of air-tightness, and the heat recovery of expelled air. They offer the same level of comfort as conventional housing and no extra efforts or adaptation are required on the part of residents. (Picture source: www.profibuilding.sk) History of the producer: The construction company Profibuilding Ltd. uses advanced technologies and has worked in the sector since 2005. Benefits: There are five main advantages: solid construction; low energy demand; the use of easily recycled natural resources; precise and rapid construction; and affordability. Barriers: The construction company identified difficulties in bringing about changes in consumption patterns as the main barrier. Slovaks tend to be conservative and prefer using conventional materials (bricks and panels). The company also identified differences within the country itself, with most of the orders for such houses coming from western and southern Slovakia.

EXAMPLE 2 Trans-European Networks (TEN-T) – Bratislava The construction project Trans-European Networks (TEN-T) is based on the objective of promoting the free movement of persons and goods. In practice, the interconnection of all modes of contributes to economic ties, social cohesion, increased competitiveness and overall sustainable development. After relatively lengthy negotiations, the overall budget for these projects was reduced. Of the EUR 20 billion originally planned for the period 2007 to 2013, only slightly over ERU 8 billion were actually allocated. Of this, EUR 5.1 billion will go to support 30 priority projects, all of which are aimed at promoting cross-border cooperation in the EU. Bratislava is part of this project and the first stage of the construction has started. This type of project enhances sustainable transportation in the European corridor, while at the same time addressing transportation problems in the city of Bratislava, since it connects the main rail station, the airport and other train stations. The innovative aspect of this project is the fact that almost 90 percent of the tracks are below ground, potentially addressing the problem of growing levels of individual transportation. As part of the Paris–Strasbourg–Stuttgart–Vienna–Bratislava railway axis, the project aims to facilitate the construction of optimum local and regional transport connections in and around Bratislava. The project includes carrying out the studies needed for tender preparation in three key areas:

connection between Bratislava's three main railway stations (Bratislava predmestie, Bratislava filiálka and Bratislava Petržalka);

direct connection from Bratislava airport to the existing railway network; and the electrification of the railway track in the remaining section from Devínska Nová Ves

(Austrian border) with Marcheg, Austria.

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Part 5. Public policy in support of eco-innovation As in most countries of Central and Eastern Europe, there is no separate eco-innovation strategy in Slovakia, although there are a number of strategic policy documents that address the topic. In relation to the requirement set out in the EC ETAP, the Government approved the Resolution No. 1046/2005 on December 21, 2005, the document the Roadmap on implementation of the Action Plan for Environmental Technologies in Slovakia (known as the ETAP I). This was a roadmap to the implementation of the ETAP in Slovakia. The ETAP I was followed by the updated document, the Updated Roadmap for the Implementation of the Environmental Technologies Action Plan in Slovakia (ETAP II) which was approved by Government Resolution No. 19/2008 on January 9, 2008. It has been approved at national level and became the basis for the Action Plan for Eco-innovation (EcoAP) in Slovakia, which recently has been put into preparation. There has to be emphasized that EcoAP has to be prepared on the EU level first and then it can be implemented on national level. It is based on the Report of the Environmental Technologies Action Plan COM(2005) 16 and COM(2007) 162. The ETAP I contained 12 measures promoting environmental technologies at the national level. The first part contains an assessment of the 12 roadmap measures in Slovakia for the period 2005 to 2007. The second part focuses on greater support for research, development and the practical implementation of environmental technologies through 11 specific activities for the period 2008 to 2009 (see below). For each activity there is a brief description of the current situation, a description of the draft measure (activity), a measurable indicator of progress, and contact details for the responsible department or institution. A cross-sectoral approach has been adopted due to the diverse responsibilities of the ministries involved. Besides the ETAPs (ETAPs I and II), there are a range of national policies, including the Act on RES. The Slovak Environmental Agency, as the advisory body to the Ministry of the Environment, was appointed as the government authority responsible for eco-innovation. However, the Ministry of the Economy, the Ministry of the Environment, and the Ministry of Education, Science, Research and Sport also have competencies in relation to this issue. A working group has been in existence for several years to coordinate activities, mainly in order to fulfil EC requirements, and its work has been more focused on strategies (e.g. the Roadmap for the Implementation of the Environmental Technologies Action Plan). However, there is still a gap between these strategies and their actual application. The roadmap defines the following areas on which the eco-innovation strategy should be based in

2011:

Assessment of project proposals and outcomes for government research and development programmes in terms of the extent of ecological indicators.

The creation of an effective information portal for environmental technologies. Voluntary environmental policy instruments. Eco-design and low-energy products. Support for the development of the renewable energy sector. Promotion of bio-fuel use in transport. Enhancement of innovative environmental technologies. Environmental state aid. Recycling Fund. Green public procurement. Provision of funds for small and medium-sized enterprises for the application of advanced

environmental technologies and eco-innovation.

There are two further policies at European level that form and potentially influence national policies. The first is Com (2009) 442 final, Reviewing Community Innovation Policy in a Changing World, which addresses improvements to the framework conditions; helps to trigger greater and more rapid market uptake of innovative products and services; builds synergies; and defines financial sources for

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research and development. The second is Europe 2020, a strategy for smart, sustainable and

inclusive growth (COM, 2010). The European Commission is also preparing the Action Plan for Eco-innovation (EcoAP). After approval at European level, and following the agreement of national authorities, the responsible body for innovations and eco-innovation in Slovakia will prepare a national EcoAP. Policies at national level, programmes and strategies Although the main body responsible for eco-innovation issues belongs under the Ministry of the Environment, the greatest developments can be seen in economic drivers such as the energy sector, the automotive sector, and RES, which belong under the responsibility of the Ministry of the Economy. From this perspective, many policies have been implemented in this area. The Energy Policy of the Slovak Republic defines targets for gross inland consumption, final energy consumption, energy intensity in the national economy, the share of renewable energy sources in primary energy consumption, and CO2 emissions for the years 2010 and 2020, and provisional goals for 2030. The energy policy places emphasis on the supply side, with very limited demand side activities. The National Energy Efficiency Action Plan (NEEAP) for the years 2008 to 2010 was approved in October 2007 to implement EU Directive 2006/32/EC on energy end-use efficiency and energy services. The Act on Support to Renewable Energy Sources, which was adopted by the National Council of the Slovak Republic (Act No. 309/2009), has been of great significance in supporting the utilisation of renewable energies. This act is based directly on relevant legal acts of the European Communities and the European Commission (Directive 2004/8/EC). The Programme of the Ministry of the Economy for the Greater Utilisation of Biomass Boilers and Solar Energy in Households includes state support of up to 30 percent of the cost of a boiler to a maximum of EUR 1,000. There are certain technical requirements for the biomass boilers, but not for the biomass itself. A total of EUR 8 million were allocated from 2009, for the year 2011 is allocated 2.675.200,88 €. A system of fixed feed-in tariffs has been in place since 2005. Legislation passed by the Slovak Government to promote RES came into effect in September 2009. This act established a feed-in tariff to support the production of electricity from renewable resources, including biomass and biogas. The feed-in tariff is a 15-year premium payment schedule over the regular electricity price paid to renewable energy generators, and the legislation as a whole applies to CHP facilities as well as co-generation. The obligation to report the quality and quantity of biomass has helped investors in RES to better penetrate the Slovak energy market, mainly in 2009 and 2010.

Part 6. Understanding eco-innovation performance

Main barriers to eco-innovations in Slovakia In the 2010 OECD (2010b) report, Chapter 3 (―Reaping the benefits of a transition to greener growth‖) concludes that reforms are needed in order to support innovation and R&D spending. These reforms include making existing R&D public support more efficient; strengthening the protection of property rights; and developing the venture capital market. There is also a need to reduced administrative entry barriers to the product market; foster competition in the energy markets and telecommunications; and reform the tertiary education system. The three main barriers to eco-innovation can therefore be defined as lack of investment in human and knowledge capital; insufficient economic capital; and shortcomings in the regulatory and policy framework.

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The most significant barrier is low investment in human and knowledge development. For several years, investment in research and development has been underestimated, resulting in a situation in which inadequate human and knowledge capital is lowering the country’s competitiveness. This has recently been one of the most discussed topics, with direct questions being posed by the Slovak research authority, the Slovak Academy of Sciences and the Slovak Government, while constant cuts are being made to the R&D budget. From the perspective of strategies such as the Innovation Strategy of the Slovak Republic for 2007 to 2013, there are clearly defined barriers to research and development as well as measures that should be taken into account when trying to overcome them. However, according to the 2010 OECD report, there is still a lack of a coherent national innovation plan that clearly defines responsibilities and sources of financing. Some of the barriers from the period prior to 2006 have been removed — such as the lack of a central body controlling R&D activities — attempts have been made to resolve disputes regarding applied and basic research and their connection to the business sector. However, there is still very low total gross expenditure on R&D, which, according to the OECD (2010), is the second lowest among OECD countries. In addition, the country has faced a brain drain in recent years, with scientists finding better conditions abroad and leaving Slovakia. This is another barrier to the development of a knowledge society and has an impact on tertiary education. The second barrier identified is insufficient economical capital, resulting in low levels of R&D and lack of investment from private companies. Relationships between the research/education system and companies are very poorly developed. At the same time, there is a lack of innovative co-financing schemes focusing on the specific problems of SMEs, which are not currently fully focused on the commercial use of science. According to the Innovation Strategy of Slovakia for 2007 to 2013, there is little mobility among science and research workers between academia and industry and vice versa, which would otherwise facilitate knowledge transfer and companies’ ability to apply scientific knowledge in practice. It would also be helpful to create more effective financial schemes. A similar reference to the need for a better regulatory and policy framework is made in the OECD review (2010). Fostering eco-innovation — meaning the implementation of innovative products, processes, marketing methods, organisational structures and institutional arrangements that lead to environmental improvements. In the report they call for structural reforms, which can be effectively applied only with the support of a regulatory framework. The report also states that structural reforms are required in several areas, such as improving the innovation framework, fostering human capital formation and enhancing the business environment. The transition to a greener economy in countries such as Slovakia, which have a high share of energy-intensive industries and automotive industry, is a huge challenge. In order to meet this challenge, there is therefore an urgent need to overcome the barriers described above. Major drivers of eco-innovations in Slovakia Concrete steps have already been taken towards creating a knowledge economy, that is, an economy based on innovation with drivers such as research and innovation. In recent years there has been an increase in the mobility of researchers and the exchange of knowledge between Slovak and foreign research institutes and universities. The Slovak institutes are becoming part of a broader network in an international context. Attempts to create a good administrative structure can be considered as good organisational capital. Such attempts have been made in relation to both eco-innovation and research and development. Institutional frameworks were created under the Ministry of the Environment and the Ministry for Education. Prior to 2006, there was no central umbrella body for innovation issues. Specific measures were decided on and implemented by different state administrative bodies, particularly the Ministry for Education and the Ministry of the Economy and their respective agencies. Documents such as the Roadmap for the Implementation of the Updated ETAP have laid a good foundation for the further development of the framework and will become the cornerstone for its enforcement.

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Although a lack of financial resources for R&D has been identified, the extensive support given by the Ministry of the Economy to RES and energy efficiency issues deserves mention. The Ministry of the Economy supports activities to increase the use of RES and progressive energy-efficient technologies through the Operational Programme ―Competitiveness and Economic Growth‖, Axis 2: Energy Sector, Measure 2.1: Increasing energy efficiency in both generation and consumption and introducing advanced technologies in the energy sector. Two calls for grant applications were issued under this measure in 2008, with a total financial allocation of EUR 106.2 million. Nearly 83 percent of the total of EUR 71.2 million in approved grant applications under this operation programme is dedicated to projects promoting the use of RES. One call for grant applications was issued in the first half of 2009, with a financial allocation of EUR 15 million. This call is currently at the evaluation stage. Under the timetable for calls for 2009, a call with a financial allocation of EUR 44 million was issued under Measure 2.1: Increasing energy efficiency in both generation and consumption and introducing advanced technologies in the energy sector in October 2009.

The table below illustrates strengths, weaknesses, opportunities and threats in the field of eco-innovations.

SWOT analysis:

Strengths Weaknesses

Strategic documents (existing framework)

Support in EU legislation (new Energy Performance of Buildings Directive)

Relatively educated and skilled workforce representing a potential for innovations and their wide application

Some eco-innovations do not have support among the general public (e.g. new construction methods, wooden houses)

Low level of patents

Underestimated budgets for research

Persistent lack of emphasis on applied research.

Opportunities Threats

Green market potential

Use of international cooperation, exchange of experience and know-how in the field of innovation and support tools to stimulate innovation

Consumption patterns

Lack of financial support to research and development (recently 0.8 percent of Slovak GDP)

Missing link between research and the private sector

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References:

AUREX (2008) National report for the preparation of the Moscow Declaration, Bratislava.

European Commission (EC) (2009) INNO-Policy TrendChart – Innovation Policy Progress Report Slovak Republic, 2009, Brussels.

European Commission (EC) (2008) Economic Forecast Autumn 2008 European Economy. EC, Directorate-General for Economic and Financial Affairs, Source: http://ec.europa.eu/economy_finance/publications/publication13290_en.pdf

Ministry of Environment of the Slovak Republic (2008) Innovation Policy of the Slovak Republic for years 2008 - 2010, Source: www.economy.gov.sk

OECD (2010a) Environmental Performance Reviews: the Slovak Republic, Paris, March 2010.

OECD (2010b) Economic Surveys: Slovak Republic, November 2010, Source: http://www.oecd.org/eco/surveys/slovakia

COM (2010) 2020-Communication from the Commission: Europe 2020. A strategy for smart, sustainable and inclusive growth, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:2020:FIN:EN:PDF

Act No. 309/2009 Coll. on Support to Renewable Energy Sources and Highly Efficient Combined Production and on Amendments to Certain Acts

Directive 2004/8/EC (OJ L 052 of February 21, 2004) of the European Parliament and of the Council of February 11, 2004 on the promotion of cogeneration based on a useful heat demand in the internal energy market and amending Directive 92/42/EEC (Extra issue OJ 12/vol. 003; OJ L 52, 21. 2. 2004).

Directive 2001/77/EC (OJ L 283 of 27.10.2001) of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market (Extra issue OJ 12/vol. 002; OJ L 283, 27. 10. 2001).

COM (2005) 16, Communication from the Commission. Report on the implementation of the Environmental Technologies Action Plan in 2004.

COM (2007) 162 Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee of the Regions. Report on the Environmental Technologies Action Plan (2005-2006),

Ministry of Economics of the Slovak Republic (MoE) (2008) Innovation Policy of the Slovak Republic for the years 2008 to 2010, Source: www.economy.gov.sk

Slovak Statistical Office (2011), Quarterly GDP data for 2010 at constant prices on the base of

previous year, http://portal.statistics.sk/showdoc.do?docid=28934

EUROSTAT (2010) The statistical office of the European Union

http://appsso.eurostat.ec.europa.eu/nui/show.do

i The Slovak EIO Country Brief draws on information from diverse sources. The report was elaborated on the basis of the Eco-Innovation Scoreboard, including 13 sub-indicators aggregated into five composite indicators. It also draws on the OECD report Economic Surveys: Slovak Republic published in November 2010; and on a plethora of national reports published by different ministries. This may result in a certain level of inconsistency arising from the different evaluation methods used at national and international level. An objection was also raised by the Ministry of the Economy regarding the Eco-Innovation Scoreboard and some of the sub-indicators. For example, data collection at the national level does not recognise the term ―clean technology‖ as part of the sub-indicator ―capital investment in clean technologies‖, which makes it difficult to separate the amount of investments in clean technologies. The same applies to the sub-indicator on total research and development personnel and researchers, since separate categories do not exist at national level. Regarding the use of ―cleantech investment‖ data that is not collected by government agencies: the source for these data is Cleantech.com, a private company that monitors global trends in cleantech projects/deals (including venture capital, and mergers and acquisitions). The company’s data are available only upon payment and are certainly not available from national statistics agencies. According to cleantech.com, there was no venture capital investment in clean technologies in Slovakia between 2007 and 2010. This country brief therefore has rather an informative character, and the Slovak Ministries would welcome a more detailed expert preview before publishing, which has not been undertaken mainly due to lack of time.