SITA UK’s external affairs director, Gev Eduljee – also an ambassador for the upcoming RWM in Partnership With CIWM – discusses the threats and opportunities the circular economy offers to our industry in the wake of the revised CE Package currently under discussion… in a CIWM Journal Online exclusive
The UK’s recycling and reprocessing sector has been through a torrid time this past year, with businesses going to the wall in the wake of competition from lower-priced virgin material, and with soft global prices for recyclates barely able to cover the up-front cost of collection and processing. There has even been talk of moving to alternative options such as energy recovery for materials such as plastics – which have faced especially challenging market conditions – much to the consternation of reprocessors anxious to protect their businesses over the longer term.
This exposes a particular vulnerability of the circular economy: the inter-connectedness of the production economy with the management of waste and secondary resources. Because a viable business model for the creation of secondary materials relies unequivocally on reliable and predictable offtake markets, any weakness in the latter will impact the entire management chain, right down to the collection of these materials as a discard.
This puts our sector in an invidious position. Collection contracts with their recycling targets have to be honoured, but conventional terms of contract have insufficient flex to respond to a significant shock to offtake circumstances without impacting adversely on the business, in extremis to the point of destruction. Any shock to, or downturn in the production economy in general is likely, in a truly circular economy, to hit our sector far harder than in a linear economy. The latter might have had its drawbacks, but as a business model it was, comparatively speaking, relatively stable and more forgiving of knock-on economic shocks of the type that is now afflicting our sector.
Hence the emphasis our sector has placed on the development of so-called “pull” measures to help build resilient markets for these additional secondary materials, balancing out the “push” measures so beloved of policymakers – such as sky-high recycling targets and landfill bans. Concentrating on the latter to the exclusion of the former will merely destabilise our sector further.
220m Tonnes More
The importance of pull measures is apparent when the implications of supply-side measures such as higher recycling rates, are considered. According to the report Implementing EU Waste Legislation for Green Growth (BioIS, 2011), in 2008 a total of 184 million tonnes of secondary raw materials (SRM) such as paper, metals and plastics was generated EU-wide. Assuming the 50% recycling target required by Directive 2008/98/EC is achieved by 2020, an additional 156 million tonnes of SRM will be generated, an 84% increase over 2008. Prorating these figures to a recycling target of 70% by 2030, then an additional 220 million tonnes of SRM will be generated between 2020 and 2030, over and above the 340 million tonnes produced by 2020.
These large flows represent both a threat and an opportunity. As we are experiencing, the threat for our sector is manifested if markets, for whatever reason, were not conducive to placing this additional tonnage of SRM. Even at current recycling levels the EU exports about 25% of the SRM we generate, so our sector is already on a knife-edge with respect to internal markets for SRM. But with appropriate demand-side pull measures in place, the EU can build-up resource resilience by using the significant flows of SRM to correct its current reliance on imported virgin raw material – especially of metal ores, many of which contain critical raw materials on which EU industry is dependent.
Our UK and European trade associations have made strong representations to this effect, with regard to the Circular Economy Package currently under revision at the European Commission. From what little we know of the thinking of the main political parties, it is likely that the same battle for a balanced policy package will have to be fought in the UK, when the new government is formed after 7 May.
Gev Eduljee is an ambassador for RWM in partnership with CIWM – www.rwmexhibition.com