In mid-2017 China announced a range of waste import restrictions under the National Sword program, and further strengthened these through the Blue Sky program which runs from March to December this year. The restrictions largely focus on the level of contamination in plastics and other solid waste recyclables imported from various countries including Australia. It is not surprising that China, given the choice, would implement such policies. What is surprising is how these restrictions caught Australia asleep at the wheel and how quickly market forces have required government action. The crisis highlights several interesting policy dimensions across a range of topics from offshoring environment externalities to manufacturing, developing a circular economy and government leadership in consumer behaviour. First though, we need to consider whether the government response thus far is fit for purpose.
Commonwealth, State and Territory Environment Ministers met in April to outline their response to the recycled waste crisis. Publicity of the resulting ministerial agreement focuses on the target of 100 percent of Australian packaging being recyclable, compostable or reusable by 2025 or earlier. Of all the agreed actions, this is the one least likely to solve the current recycling crisis.
Collecting products for recycling is relatively well engrained in Australian culture. In 2014-15 around 54% of waste generated in Australia was sent for recycling and more than 90% of Australians use municipal kerbside recycling. The cost of collecting and sorting this material (as well as of disposing of contaminants) is funded through various measures with around 26% of income across public and private waste management service organisations being from sales of recyclable or recoverable materials. As education and community awareness of recycling efforts grows globally, and countries impose levies and regulation to reduce waste streams to landfill, we are seeing a corresponding growth in supply of recyclable material which has been putting downward pressure on price.
The announcement of the new Chinese ‘National Sword’ policy destroyed an already weak market. These restrictions are estimated to directly affect 99% of recyclables Australia sends to China or around 30% of our total recyclable exports. The existing oversupply and the impact of the restrictions on other markets has seen the price of recyclables plunge and waste management organisations are no longer able to cover the cost of collection. Cleanaway, Australia’s largest waste collector, is reportedly considering both stopping collection of bins and sending some existing stocks of collected material to landfill because it can no longer move stock.
The 2025 plan will, if anything, exacerbate this oversupply problem. Instead, increasing demand for recycled products, as outlined in the agreement, particularly through government leadership and leverage of large business holds far more promise. New community education campaigns, such as recent focus on single-use plastics and plastic shopping bags, have initiated momentum towards consumer demand not only for ‘green’ products but for responsible corporate decision making. However, uptake of products with a large recycled component, has been slow. The complexity of messaging around the value of recycling (including whether some recycled products have a higher environmental cost than their virgin counterparts) makes consumer choice in this area complicated. There is also a perception that products made with from recycled materials are of poor quality (to the point that many companies with products made recycled components avoid promoting this).
In key high value markets, such as aluminium and steel, manufacturers have invested in processes to recycle material for over 100 years, largely due to strong demand for end use products in construction and beverage packaging and the relatively high virgin cost. This provides the example of how to achieve a closed loop market – by encouraging demand rather than overwhelming supply manufacturers can be confident enough to invest in green R&D. The Ministers agreements further support this goal by actively encouraging growth in our recycling capacity. The clearest ways to do this are to support investment in new onshore recycling processes and to use government procurement policy to encourage well-research recycled products, as well as to establish long term contracts with companies willing to invest in the appropriate R&D. This would build upon the growing community momentum and provide the demand stability necessary to encourage investment in products made with a significant recycled component. It also increases consumer exposure to high quality recycled products via two million public sector employees.
Encouraging waste reduction in the first place is the most important aspect of the agreement. It is by far the most efficient way to ensure resources are not entering the waste stream (no packaging is better than recyclable, compostable or reusable packaging). In the same way as community awareness, procurement policy and investment in new manufacturing process can drive demand for products with a significant component of recycled material, they can also drive demand for products and suppliers with significantly reduced waste components. However, for a range of reasons including hygiene and convenience, we will not reduce packaging completely, which makes recycling an important partner in waste management systems.
While publicity of the recycling crisis could have focused on some of the more influential aspects of the potential solution, it will hopefully have provided a significant wake up call to the broader community that will ensure a better understanding of their role in the recycling process and, at a pinch, begin to influence their behaviour. We know Australians are committed to recycling which is a fantastic outcome of previous education campaigns. The next key task is maintaining this commitment while expanding knowledge of the finer details (such as rinsing, and not putting items inside plastic bags) while also growing commitment to purchasing products with minimal packaging and high percentages of recycled material.
What is encouraging is that through the pains of the current export crisis, this agreement takes a broad focus that if implemented fully, will encourage investment in onshore R&D and new processing facilities, move Australia towards a closed loop recycling economy and potentially develop a new manufacturing industry supporting new jobs in the sector.
Catriona McNaughton is the Communications Analyst at FPL Advisory.
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