Don’t let this recycling crisis go to waste

Alex Serpo, Policy Officer at the National Waste and Recycling Industry Council, explains five beneficial recycling programs that should be implemented at scale in response to China’s National Sword program. 

Inside every crisis is an opportunity, and the Chinese ‘National Sword’ program is no exception.

For those not across the facts, allow me to first offer some background. In July 2017, China notified the World Trade Organization that it planned to effectively ban imports of 24 types of scrap, which its environment ministry at one stage referred to as “foreign garbage”. This program is part of National Sword – a customs inspection program launched in February, 2017.

According to a technical report from the International Solid Waste Association Globalisation and Waste Management Task Force, China received 56 per cent by weight of global scrap plastic exports in 2014. Meanwhile, the Australian Bureau of Statistics estimates that 64 per cent of Australia’s waste paper and cardboard and more than 60 per cent of our plastics go to China, either directly or via Hong Kong. So we are very much dependent on China for recycling.

The implementation of the National Sword program was brought forward by the Chinese Government with little warning. It made large changes to market conditions. The program is putting strong downward pressure on prices for recycled materials – which means materials recovery facilities (MRFs) can’t provide the same value to its clients. The price changes are dramatic.

In some cases, the price for paper has fallen from $250 per tonne to $60 or even less. The price of mixed plastics has fallen from around $300 per tonne to $50 or less. Glass has effectively become worth $0 and is either being stockpiled or given away to make road base for the cost of transport. In essence, the price of a ‘bin’ or commingled recycling has fallen by anywhere between 50 to 95 per cent.

So let nobody be confused – this is a crisis. Without sudden action, kerbside and commercial recycling could be shut down in the worst affected regions. Speaking about the formation of the United Nations following the Second World War, Winston Churchill said: “never let a good crisis go to waste”. If he was alive now, perhaps he would say ‘don’t let a recycling crisis go to waste’. With this spirit in mind, here are five beneficial programs which could be created out of this challenge.

1) An opportunity to stimulate fuel manufacturing in Australia

In between landfill and re-manufacturing is fuel manufacturing. Mixed kerbside materials can be turned into pelletised, high calorific fuels. These fuels can be used as a low cost, low pollution alternative in cement kilns and other energy generating facilities. As we use more fuel than packaging globally, these markets are more robust. Fuel manufacturing is an important part of the circular economy and it’s essential that we don’t let the perfect be the enemy of good. In other words, let’s not push the industry towards an impossible perfect and get nowhere and instead accept the good. SUEZ-ResourceCo’s process engineered fuel plant in Wingfield, South Australia is the type of infrastructure we need.

2) Container deposits schemes must work for and not against MRFs

NSW has just introduced its Container Deposit Scheme (CDS), Return and Earn, with Queensland to follow in 2019 and Western Australia likely in 2020. This means CDS schemes will cover every Australian jurisdiction except Victoria and Tasmania. Container deposit schemes can work for or against MRFs, with industry initially questioning the scheme for NSW on the basis that it may undermine existing kerbside recycling programs. The obvious answer to this problem is to ensure that cash for can schemes work for and not against MRFs.

CDS’ work against MRFs when they effectively ‘compete’ with MRFs because they provide a cleaner stream of recycled materials and they result in picking of kerbside bins which reduces their overall value to a recycler.

CDS’ work for MRFs when the MRF operators can claim the deposit on incoming bottles (not local government), making them extra income and ‘picking’ of recycling bins is kept to a minimum.

3) It’s time to talk about contamination

Now is the time to implement new action plans to reduce contamination. Luckily, we have a new national program ready to go – it’s called the Australasian Recycling Label (ARL). If adopted, the ARL means that what can and can’t be processed by MRFs will now be determined by an independent umpire. It’s a good example of many new source separation initiatives which are ready to go.

4) Let’s put those levy funds to work

Landfill levies are substantial and have been getting larger, meaning state governments have banked up big capital. For example the Municipal Association of Victoria estimates that the Sustainability Fund created by landfill levies, sat at $466 million as at 30 June 2016. Meanwhile, landfill levies in Australia are expected to raise more than $1 billion in 2018. Some of these funds should be redirected to the MRF sector as a response.

To deploy these funds effectively, the NWRIC has made two suggestions. Firstly, that all state and territories develop 10 and 30-year waste and recycling infrastructure plans. We’re pleased to see that Victoria and SA have now done that. Secondly, that levies are deployed effectively and fairly. One way to do this is to deploy levy funds via a national ‘recycling bank’, which could operate in a similar manner to the Clean Energy Finance Corporation. This would see the government offer recyclers low or no-interest loans to fund new infrastructure.

5) Now is a golden opportunity to stimulate domestic
re-manufacturing capacity

Ultimately, long term recycling will depend on establishing domestic demand for recycled materials. Having sat through multiple ‘crisis’ meetings with industry and government, it has become clear that China has permanently changed its appetite for accepting contaminated foreign waste, but we can still sell clean material.

Therefore, if we want a long term recycling industry in Australia it must be built off the back of domestic demand. Luckily, governments are ready to provide capital and recyclate has never been cheaper. So if you’re thinking about setting up a domestic re-manufacture business, now is the perfect time.