On January 1, 2026, Serbia’s administrative-based incentive system for waste recyclers expired, pushing the country’s recycling sector into a state of transition and uncertainty. While processors report underutilized capacities and surging operational costs, the government is introducing a market-based auction model to place the industry on a more sustainable, competitive path.
Following a decision by the Serbian government, the direct state incentive system for waste processors officially concluded on December 31, 2025. This change led to immediate and visible consequences in the first quarter of 2026: waste flow has slowed significantly, and stockpiles have begun to accumulate at collection points and source locations—such as tire shops and electronics retailers—as the previous financial incentives for processing vanished.
Signs of Crisis: Full Warehouses and Idle Lines
The Serbian waste management sector is currently navigating a critical transition phase. According to Sanja Knežević Mitrović, environmental specialist at NALED (National Alliance for Local Economic Development), the expiration of the previous decree has shifted the full weight of treatment costs onto waste producers.
As a result, the volume of waste reaching operators has dropped drastically. The situation is most critical regarding hazardous waste, such as scrap tires, waste electrical and electronic equipment (WEEE), and used batteries. Many processing plants are operating well below capacity, while waste producers are forced to stockpile inventory for quarters at a time because there is no financial mechanism to cover the high costs of specialized treatment.
28,000 Jobs at Stake
Industry stakeholders have expressed serious concerns regarding the viability of the new system. According to statistical data, the Serbian recycling industry directly employs approximately 15,000 workers, with the livelihoods of an additional 13,000 people indirectly dependent on the sector’s functionality.
Due to the withdrawal of subsidies, some operators have been forced to hike service fees or temporarily suspend the acceptance of certain waste categories. Market participants argue that the secondary raw materials market in Serbia is not yet sufficiently developed to cover full collection and treatment costs without state support, especially for processes requiring complex technology.
The Future Model: Market Auctions for 2026–2028
In response to the crisis, the Serbian Ministry of Environmental Protection has drafted a new regulatory framework defining incentives for the 2026–2028 period. This new model breaks away from the previous “automatic right” to payments and introduces a competitive auction system.
Key features of the new system:
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Competitive Allocation: Operators will compete for funds through auctions, where companies offering the lowest treatment unit price (per kilogram or ton) will secure support.
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Targeted Support: The budget will be allocated to cover operational costs, the maintenance of collection networks, and sorting processes.
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State Aid Categories: Funds can be requested as classic environmental state aid or as de minimis support.
Questions of Sustainability
While the auction model is theoretically more efficient and transparent, sector representatives warn that the timing of its implementation is risky. The greatest challenge lies in ensuring system continuity during this transition. If the implementation of the new regulations is delayed, there is a significant risk that waste will bypass legal processors and end up in illegal landfills or rivers, undoing decades of environmental progress.
Experts emphasize that the transition to a market-based model is inevitable for EU integration and the establishment of a circular economy. However, success will require a stable investment environment and a new type of partnership between waste producers, collectors, and the state.
Official Source and Background: After the cancellation of incentives for recyclers in Serbia, a market model (eKapija) Additional Reference: Government of Serbia – Economic Incentives and Budget 2026