20 May 2014 — Recycling is one of the fastest growing manufacturing sectors in Australia and also one of the most recession proof, according to environmental consultant Mike Ritchie, former national vice president and New South Wales president of the Waste Management Association of Australia. However, the success of the industry ultimately relies on policy settings creating the right pricing signals, he said.
“For the first time in Australia, the rate of recycling is now higher than the rate of waste going to landfill [on a tonnage basis],” Ritchie told The Fifth Estate.
“Up until now, the volume of both was increasing, but now the recycling rate is driving down the actual tonnages of waste going to landfill. Australia generates around 52,000,000 tonnes of waste a year, and 54 per cent of that is now being recycled.”
Mr Ritchie said the only state where the recycling rate is not increasing is Queensland, due to the state government dropping the $35 per tonne landfill levy, reducing landfill pricing.
Landfill pricing the key to increasing recycling
The cost per tonne of sending waste to landfill in South East Queensland is now between $30 and $100 a tonne, compared with $304 a tonne in Sydney, he said.
This has resulted in around 400,000-plus tonnes of waste – approximately 10,000 truck movements – heading up the Pacific Highway to deposit NSW waste in landfills in South East Queensland.
“The net effect has been a 20 per cent drop in the rate of recycling in Queensland, which has directly flowed through to, and no doubt affected, recycling jobs in Queensland,” Mr Ritchie said.
“There are good public policy reasons to increase the price of landfills – landfills are scarce and valuable. Governments need to get the pricing signals right.
“I don’t think moving 400,000 tonnes of waste to Queensland does anything to contribute to economic growth or jobs. Recycling employs five times as many people per tonne of waste as landfill.
“Recycling is one of the largely recession proof industries, and the only growing manufacturing sector. It employs around 30,000 people; it is a significant sector, and it should be supported by government.”
Every state has a different pricing for landfills. In the ACT, the landfill levy is inbuilt, in Victoria it ranges from $28-$48 a tonne, in South Australia it is approximately $30 and in NSW it ranges from $107.80 in Sydney to $53.70 in regional areas including Wollongong and Newcastle. Tasmania is considering introducing a $10 levy, and the Western Australian Government announced an increase to their landfill levy in May 2014, specifically to improve recycling rates.
“Most states hypothecate some of the money raised by levies to improving recycling infrastructure,” Mr Ritchie said.
“The NSW EPA scheme [for example] will provide $467 million in grants over four years, two thirds of those grants for local government, and one third to private operators.
“It is the best waste grants program in Australia, and the NSW government should be congratulated. It also shows that a levy can deliver significant infrastructure outcomes.”
The EPA is also using the grants scheme as a mechanism to reduce the attractiveness of trucking waste north, with grants confined to bodies that can demonstrate documented proof all waste is being sent to landfills within NSW.
Mr Ritchie said an estimated 70 per cent of landfill levies are paid by private companies, and 30 per cent by local councils. The return for councils in NSW, for every $1 invested in levies, is about $3 in grant assistance for recycling infrastructure and waste reduction programs.
The split of levy payment between private sector and councils reflects the source of the waste, with the private sector generating two-thirds of the waste sent to landfill, according to Mr Ritchie.
It’s not a level playing field for resource recovery
Mr Ritchie said that the recycling industry competes not only against poorly priced landfills, but against other sectors where underpricing or subsidies make it difficult for recycling to compete. Even landfills are given a less visible level of subsidy, where the externalities such as pollution management and mitigation become a public-purse responsibility.
“The [other] main competitor for recycling is the subsidised raw materials, such as aluminium, bauxite and iron. Recycling is basically mining the urban environment, and should be supported with the same degree of [public] support and [public] investment as regular mining,” Mr Ritchie said.
“The issue is not that the materials are not there [to be reclaimed], it is that the cost of recovering them is currently greater than the inherent material value [compared with new iron and aluminium]. There is a cost to getting them out of landfill.”
Even so, metal is one of the only waste streams, along with paper, which “recycles itself”, according to Ritchie, as these are products with a net return when recycled.
“Every other waste stream [that is recyclable] is subsidised by someone in the supply chain as there are not enough dollars in the commodity to pay for its recycling,” Ritchie said. “Glass for example – recycled glass cannot compete [in price] with the new jars, for example, coming in off the boat from China. Most mixed streams of recycling are subsidised by someone.
“Plastics get recycled when the international fuel price goes up [therefore increasing the raw material cost of plastics], or when the price to landfill goes up. The costs of kerbside recycling, including collection and sorting, is directly subsidised by councils.
“Governments are recognising this, and are pushing up landfill rates with market-based incentives and regulatory intervention. It’s a slow burn [however], and we need faster activity. The NSW EPA grants are an excellent model.”
Is national container deposit legislation needed?
On the topic of proposals for national container deposit legislation, Mr Ritchie said the real question was what such a scheme would cost to the kerbside recycling system, and whether the actual container waste volume – currently less than four per cent of total waste streams – justifies the energy being put into considering such a scheme.
“CDL does improve littering, and gives an extra revenue stream to kids and community groups; the question is does it cost the economy more or less?” he said.
While advocates of a national scheme refer to South Australia’s successful CDL scheme, it’s the regulatory intervention the state government has imposed on the regular household bin that Ritchie believes gives a good roadmap for positive action for other states.
Organics are the big ticket item
By cutting materials out, specifically organics, from what can be put in the regular rubbish bins, the volume of waste going to landfill has been substantially reduced, as has the amount of greenhouse gas emissions. As Chair of the WMAA Carbon Division and Alternative Waste Technologies Working Group, this is something Ritchie is passionate about.
“Organics are 60 per cent [of general waste volumes] – that includes paper, cardboard, timber pallets, textiles, food and green waste. If the waste sector is going to help fix climate change, we’ve got to fix that,” he said.
“The only waste which makes a direct contribution to climate change is organic waste [which generates methane when decomposing]. We can’t capture enough methane to counteract [its emissions]. The big ticket waste item is organics.”
The “third bin” is now becoming a major trend in NSW, with both urban and regional councils introducing a third bin for compostable organics.
Penrith, for example, has introduced the “FOGO” bin for food waste and green waste, which Ritchie estimates has led to a recovery rate of 90 per cent for green waste, and a reduction in volumes to landfill of 70 per cent.
“This also provides a direct saving on costs,” Ritchie said. “However, the revenue being gained from compost sales is always less than the cost of doing it. Avoiding landfill costs makes up the difference.
Energy from waste – can it compete?
“The next big move will be energy from waste. Making it work commercially is the challenge. The competition at the front gate is cheap landfill; the back gate competes with cheap coal, so it is difficult to make [energy from waste] a bona fide competitor with the [coal-fired] electricity supply.”
Ritchie said that for energy from waste to succeed [in NSW], it needs to be a project with a bona fide energy plant, which will need to meet Group 6 EPA emissions standards and deal only with residual waste streams. “This puts a certain cost framework around energy from waste,” he commented.
“The best option [for organics] at the moment is pocket sized pyrolysis plants to produce biochar to sequester carbon back into the soil,” Ritchie said. “I can’t see a mass burn incinerator [to generate energy] being approved anytime soon.”
It’s all upsides
Overall, Ritchie described the state of the recycling industry as “all good, it’s all upsides”.
“The recycling and waste industry has grown to around $11 billion in value. When you compare it to textile, clothing and footwear sector, it is three times the size,” Ritchie said.
“It is one of the only growing sectors of manufacturing and yet most governments do not yet recognise its important contribution.”
The things we can – and cannot – control
One of the areas of frustration Ritchie has overall is the degree to which the economic growth remains coupled with waste generation and rising consumption. Along with population growth this means ever increasing waste generation.
“Waste growth is forecast to be around four per cent,” he said. “It dropped 22 per cent [however] during the GFC.
“Both [economic growth and population growth] are outside the control of the waste industry. Also, most of the goods we send to landfill are generated overseas, and our ability to influence those [manufacturers] is limited in terms of things like making items smaller or the packaging lifecycle,” Ritchie said.
“So the best thing we can do is deal with the waste that is presented to us. We need to make sure we deal with the economics of that, because if we don’t get that right, we won’t have an effect.
“That’s the challenge. We need to address the economics of waste generation, recycling and landfill so that companies and waste generators get direct price signals and can make a rational decisions based on real costs and environmental effects.”