News from the front desk issue number 522: When Macquarie Group makes an investment, you know there’s money in it; they didn’t dub it the millionaire’s factory for nothing. With the move into the waste business with the purchase of Bingo Industries (subject to shareholder approval) valuing the company at $2.3 billion, the bell chimes around sustainability and climate investments just became a very loud peal.
Maybe even noisier and more impactful than Bingo’s new $100 million facility in Sydney’s west at Eastern Creek will be when it’s in full operation.
On Wednesday night several hundred of the company’s closest friends, associates and some curious observers gathered in the far western reaches of the metropolitan area to see what all the fuss was about.
It might have been just a co-incidence that the agreement on the sale was announced in the same week as the opening. After all, it must have taken weeks of planning to organise the gala event requiring buses from the city, and from Auburn station, with yet more shuttling from the parking areas to the actual facilities, not to mention organising the big band and celebrity host Melissa Doyle.
All well and good. The facility, designed to process construction and industrial and commercial waste, is definitely impressive. Check out Duncan’s story here (he’s our new journo – welcome Duncan). But for our purposes, what’s more instructive are the top end machinations and the size of the investment. Bingo isn’t alone in spending up big and being the subject of big spending. In recent weeks, Cleanaway emerged as a buyer of Suez Australia for $501 million after a merger between Veolia and Suez failed.
The AFR puts the interest down to the governments’ stimulus package and infrastructure splurge creating a rise in demolition waste but also a bigger focus by policymakers on recycling. China is, after all, no longer taking our rubbish.
But there’s more. The people working at the pointy end of sustainability and climate say we are facing big changes in how we manage our natural resources through materials and waste that are either imminent or should be.
First is the massive amount of carbon emissions at stake. A full 70 per cent of our emissions come from managing materials, according to Gayle Sloan, chief executive officer of Waste Management and Resource Recovery Association of Australia.
People like Bingo do a great job, she says. But what’s needed in a mass redesign of our supply chain. We need to eliminate the concept of waste and introduce new thinking about our resources.
“It’s not about waste and resources, it’s about material and material management.”
Let’s think about the virgin material and design them right from the start, she says. Let’s use high value plastic and timbers that don’t have chemicals, for instance, so we can recycle them at the end of life with much greater ease than we can now.
She calls for a big emphasis on design so that we all take responsibility for design and manufacture.
The approach to waste in the EU’s Green Deal is a favourite for Sloan, which calls on the polluter pays principles, improved materials management and government-mandated procurement targets for recycled content.
Now imagine that. It was the Feds mandate of minimum green building standards that sprouted the green building industry. Not just for the weight of their market size but for the leadership it signals.
There are signs of leadership on this front from our current batch of Feds but unfortunately, they’ve skimped on the potential to date, Sloan says, with words such as “have regard to” in relation to using recycled content instead of something stronger.
They need to go stronger and prioritise the use of recycled materials, she says. “It’s the only way it’s going to work”.
Companies have moved well beyond a net zero stance, to adopt goals and strategies that could remove carbon dioxide from the atmosphere – From The Green List
Paul Klymenko, CEO of Planet Ark, which has been working with Bingo for 10 years, says people are starting to set targets for procurement, called circular procurement or demand driven circularity. He points to the what the Dutch government has done, for instance, sending out a tender for uniforms with a mandate to use as much recycled materials as possible, which can then be recycled again.
Klymenko says the state governments – and local – are looking at these procurement policies. Key will be harmonised standards so when you’re looking at what composition you need for a road base, for instance, there will be one national standard, not seven.
For now, there are a lot of barriers. Progress might look slow, he says, but it’s happening.
And things will ramp up from the federal government as well, he predicts. Right now, when it comes to procurement, it’s about establishing a baseline.
The next important thing, Klymenko says, is separation of waste materials. This is important and what Bingo is looking to do in facilities that he understands are world leading.
Do this right and you can disassemble plastic, for instance, to its base component as oil, not to burn it, mind, but to turn into brand new plastic.
Jeff Angel, executive director of the Total Environment Centre, wants to see bigger action, such as mandatory targets on private and public purchasing. He too points to the voluntary consideration element in the federal government’s sustainable procurement guide and says there’s not a lot of leadership from the states.
“We’ve yet to see anything definitive or substantive from the state governments,” he says. Some of the local councils are moving, such as SSROC (The Southern Sydney Regional Organisation of Councils).”
On packaging there is some progress with goals to achieve 50 per cent recycled content by 2025 and 20 per cent for plastic.
Lisa McLean, chief executive of NSW Circular, is working on a task force with other states and territories that might change the dynamic in waste and recycling. She says this is clearly a very exciting time for the industry.
There is a huge appetite to do something about waste, she says, because “people can’t stand it”. The opportunity is to take it and turn it into a productive resource.
McLean points to the consumer trends starting to take off: fashion as a service, for instance, and whitegoods companies that will take back the product at the end of its useful life for recycling. There’s also consumer goods like a hydrating machine that can turn your organic waste into dry chips that you can sprinkle as compost on your garden and inhouse water recycling units.
Underlying the consumer popularity of such elements are the serious global pressures spurring action – namely that the planet is heading to 10 billion people “and we don’t have enough resources to sustain consumption levels.”.
The circular economy isn’t a nice to have, says McLean, “it’s essential to achieve net zero and to meet our Paris obligations”.
The legacy of landfill levies
While we were waiting at one of the ferrying spots to depart the Bingo event we got talking to consultant Gregor Riese of GCS Consulting who these days is an environmental planner specialising in waste facilities but who has had significant stints in the Environmental Protection Agency and other waste industry related work.
In his view, it was the landfill levies by the EPA that can be thanked for the creation of the Eastern Creek facility by Bingo.
That investment of $100 million in infrastructure is proof that the EPA’s strategy is working. “No-one puts that kind of money in otherwise,” he said.
While there was a time when he railed against the cost of the levies because it penalised industries doing well with recycling, he says credit is due to the state government – it stuck to its guns over a decade and now there is a strong business case for industry participants to act on.
In a phone conversation on Thursday morning, Riese explained to The Fifth Estate he was not always in favour of the levies.
The impact of the levies, which moved from $20 a tonne about 10 years ago to close to $150 a tonne now, was particularly bad on metal recyclers.
This is an industry, he says, that “always ran without any government intervention. Along comes the EPA with their views and I was one of the few voices [opposing the levies]. The levies went too high too fast.
“They went from paying a zero levy in about 1988 to $10 million a year, which came straight off the bottom line.”
“Most metal recyclers run metal shredders. They get 80 per cent recovery and 20 per cent residual.
“When levies are high even a slight variation in the component materials that can’t be recycled and must be sent to landfill – say from 20 per cent to 25 per cent – can throw your business model out, he said.”
“This sort of investment shows that the EPA has been very consistent with this and the government never shifted policy on it.
“It never blinked and now people accept it and behave accordingly. So you’re getting a lot of things going to landfill and people are desperate to find alternatives to landfill.”