An opportunity that must not go to waste

The waste industry could become an unlikely pioneer in powering Australia’s post-COVID-19 economic recovery, but it demands a concerted pivot by policymakers towards viewing the sector in a new light, Kar Mei Tang writes.

A circular economy can be defined as the gradual decoupling of economic activity from the consumption of finite resources, and designing waste out of the system. In a circular economy, producers and users of goods and energy are mindful of driving down their energy and waste footprint, and maximising the productive life of what they use.

In 2014, the World Economic Forum estimated that the cost savings from adopting a circular economy would be over a trillion dollars per year by 2025 globally. For Australia, a recent study estimated that if the country’s food, transport and built environment sectors alone were to transition to a circular economy through several key initiatives, this could grow the economy by $25 billion by 2025, and $210 billion by 2048, generating 17,000 jobs along the way.

While recent policy attention has been focused on energy and water security, the waste sector cannot be ignored. The waste industry provides an essential service, and has an economic profile similar to that of other utilities: supply of and demand for its services are largely steady, and virtually every sector and household relies on it. The sector employs 34,000 people directly throughout Australia — more than the water and gas industries combined.

Remarkably, there is now an opportunity to unlock the significant potential in the waste and resource recovery sector to contribute to Australia’s post-COVID-19 recovery. This is thanks to the three crucial factors coming together.

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First, Australia’s current high reliance on landfill means there is significant potential to increase the value of resource recovery activity as an alternative to landfilling. Around 40 per cent of Australian waste still goes to landfill, compared to 23 per cent in the United Kingdom and two to three per cent in the Netherlands.

Research and commercialisation have already led to many alternative uses of processed waste as a reusable resource, often with economic and environmental benefits. Recycled plastic, glass, organic waste, and other waste types are used as inputs in manufacturing, construction, soil improvement or energy. The process of resource recovery from waste has even been referred to urban mining, and could be at least as vital as other forms of resource mining.

In addition, community appetite for moving towards a circular economy is already relatively strong. Australians already generate less household waste per capita than many other developed countries, such as the United States and New Zealand, and a recent survey of Australians found 72 per cent would recycle more if they knew that their household waste was reliably recycled.

A national policy roadmap – possible as part of the new National Cabinet’s job creation agenda – to substantially replace Australia’s reliance on landfill over the next 10 to 20 years would be a powerful policy move, and could also catalyse domestic recycling. Such a roadmap would also provide strategic certainty as some landfills with limited capacity will become full over this period, and their operators need a clear signal of government policy on future landfill use.

Second, recent trade restrictions on recyclable waste – first by China on its imports, and more recently by the Council of Australian Governments, which cut Australia’s waste exports – mean that policymakers need to very quickly scale up Australia’s capacity to process its own waste.

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Currently, Australia is only able to reprocess around 125,000 tonnes of its plastic waste. This capacity will need to be increased by 150 per cent to absorb the plastic waste that will cease to be exported over the next three years, when COAG’s waste export bans gradually come into effect. This increase does not even cover the additional capacity needed to recycle plastic that would otherwise go to landfill.

Australia’s waste reprocessing capacity must be accelerated through facilitative policy and investment in infrastructure and innovation. The government’s announcement this week of a $190 million Recycling Modernisation Fund targeted recovering more plastic, paper, tyres and glass from waste, creating 10,000 jobs in the process, is a great start.

However, a more ambitious strategy, embedded in the government’s post-COVID-19 recovery and resilience plan, would look at a broader focus to unlock the much greater economic and job creation potential of the circular economy.

Finally, the need to build up Australia’s recycling and remanufacturing capacity aligns with the broader national need to drive domestic productivity and sustainable new markets and increase domestic control over supply chains. Not doing so would represent a substantial missed opportunity, particularly given that the estimated direct employment per 10,000 tonnes of waste is 9.2 jobs for recycling compared to 2.8 for landfilling.

These are all powerful reasons for applying a policy lens which looks at the waste industry as a renewable resource industry.

Historically, public focus on waste has been on its collection and management, or the environmental benefits of recycling, with less attention paid to powering the economic potential of the recycling and remanufacturing sector.

The commercial reality is that high start-up costs, fierce competition with primary materials as inputs, emerging demand for some recycled content and volatile global trade conditions – as demonstrated in this CSIRO report on the recycled plastics market – mean that for some segments of the recycling industry, government intervention is necessary to become self-sustaining.

Governments also play an important role in promoting demand for recycled materials in order to embed wider awareness and adoption, such as with the procurement of recycled materials for construction activity. Whatever steps it takes, it is certainly clear that the government will be an important catalyst to scaling up and creating jobs in the sector, and if done right, a revitalisation of Australia’s waste system could contribute in a meaningful way to Australia’s economic and environmental future.