Tariff Financing of Biogas Projects at Wastewater Treatment Plants: A Comparative Study of Russian Federation

Abstract

Effective environmental and energy management is crucial in the wastewater treatment sector. This article examines the implementation of biogas projects, which use anaerobic digestion to convert sewage sludge into energy and biofertilizer, in the Russian Federation. These projects, while common in the European Union, are rare in Russia due to financial constraints. Currently, they are primarily funded by utility operator investment programs, supported by tariffs for wastewater services. It is estimated that funding these projects through a five-year investment program would result in an annual tariff increase of 6-20% in the first two years. Additional financial mechanisms, such as 'green' credits and government interest rate compensation, have minimal impact on tariff growth. Any increase, however, can be burdensome for the population, and regional administrations may hesitate to implement these projects due to tariff concerns. Regardless, these projects are essential for Russia's transition to a circular economy.