Why Australia’s recycling crisis could be a golden opportunity

By intouch * posted 03-05-2018 08:20


As Australia struggles to manage the deep cuts China’s National Sword policy has inflicted on its recycling industry, a leading waste management expert explains why this is the crisis we needed to have.

Mike Ritchie, Managing Director of environmental waste advisors MRA Consulting Group, says the fallout from China’s ban on foreign recycled waste is an opportunity to ‘reset’ Australia’s recycling systems.

hand-holding-light-bulb-with-energy_-fresh-green-leaves-inside-483808232_1930x1559.jpegWhile short-term action is needed to shore up the industry, Ritchie says Australia also needs to insulate itself against future fluctuations in commodity prices.

“Australia needs to make a decision,” Ritchie says. “Are we going to try and rely on the rest of Asia to continue to take these materials in the medium-term? Or are we going to try to insulate ourselves from these adjustments and reprocess this material on-shore, within Australia?”

In his keynote presentation at IPWEA’s Sustainability in Public Works Conference, Ritchie will discuss why the Australian Council of Recyclers and MRA is calling for a $150 million, one-off ‘industry adjustment package’, outlined in a recently released roadmap China National Sword: The Role of Federal Government

“The $150 million should be invested in new infrastructure, new systems and services and particularly the realignment of recycling policy in Australia, to make sure that governments play a far more active role in using the material that's generated out of the recycling system,” Ritchie says.

The roadmap calls for investment in: 

  • MRFs, fibre, plastic and glass reprocessing: $90 million (matched by industry)
  • Improvements in standards, policies, education and data: $28 million
  • Innovation in procurement and recycled content products: $32 million 

How the crisis is unfolding

In 2016-17, Australia alone sent 0.6 million tonnes of recycled material to China made up of 600,000 tonnes of fibre (paper and cardboard) and 40,000 tonnes of plastic bottles, from kerbside recycling.

China’s decision to stop importing the world’s recyclables has resulted in a massive oversupply of materials globally, meaning the materials recovery facilities (MRFs) contracted by councils to process kerbside recycling are no longer able to make a profit by on-selling materials.

Ritchie says kerbside recycling could collapse within a year if governments, industry and communities don’t step up and reprioritise recycling.

“We've never had a recycling crisis like this before. The world will change very quickly if we don't all understand the problem and act collectively –  industry, residents, government – to realign and reprioritise recycling in Australia,” Ritchie warns.

“China takes about 50% of the globe's kerbside recyclable material. As demand for that material has fallen, the international commodity price for those materials has collapsed. The value of those commodities has fallen by about 80% over the last six months, or from the point of view of the MRF a loss of $70-$100 per input tonne of kerbside material not including glass.

Ritchie says the demand for glass has also plummeted, adding another $40 per tonne of compensable losses MRF operators needs to recover.

“If you put all those numbers together, you get a picture of the MRF operator needs to charge councils somewhere between $70 and $150 a tonne additional than what they were doing six months ago,” Ritchie explains.

The worst case scenario is that MRFs will go out of business, and Australia’s recyclables will end up in landfill. To avoid this, Ritchie says a price adjustment for ratepayers will be needed in the short-term, which will likely translate to an additional 80 cents per household per week, or $40 per year (since each household generates approximately 250kg each year).

“That just keeps the MRF operator in business, operating as they were, prior to the fall in prices. On our surveys, most residents are more than willing to pay that for sustained recycling. Time will tell whether that needs to increased or, it is possible that the fall in commodity prices drives increased demand in other Asian countries such that this expected increase is ameliorated over time.”

Ritchie says the response among councils has been varied.  

“About third of councils that I know of have agreed to adjust their payments straight away, saying yes, we understand this is a problem that's outside the contractor and the MRF operator's control,” he says.

“About a third are still seeking information from the parties. And another third are saying no, we have a binding contract and we're not prepared to move.

“Ipswich made the decision that they weren't going to pay the MRF operator at all and they were going to send their waste to landfill – they got absolutely pilloried by their residents and the media, and they reversed that decision 48 hours later. I think they recognised the seriousness of what they were proposing – to send recyclables to landfill was just not acceptable to the community. Allowing the MRF operator to go broke was not tenable for most residents and ratepayers for the same reason.

The NSW State Government has announced $47 million funding to help industry and councils, and the Victorian Government gave cuncils $13 million in February.

But, Australian will need to do more than adjust the price of recycling if it wants to create a sustainable industry in the long-term.

The circular economy

Ritchie says governments can help create a vibrant economy for recycled materials by addressing their own purchasing policies and choosing products that incorporate repurposed materials.

“There are an enormous number of standards already written in Australia for things like using plastic or glass in asphalt, glass in road base, etc. What's missing is a proactive purchasing policy by the staff within governments, and some directives that they can preference these material,” he says.

“Councils need to make the conscious decision to preference recycled commodities over virgin material. Sand in building and construction works can be replaced with glass sand. Embedment material for piping can be replaced with glass sand. Glass actually increases the long-term wear of roads and actually improves the road operating surface considerably.

“Councils, as part of government, need to be talking about the circular economy and addressing their own purchasing policies for materials, particularly plastic, glass and organics, although organics is a separate conversation. But their own purchasing policies need to give priority to the use of glass and plastic in their own council activities. That would have an immediate effect on price and demand in Australia.”

Reducing contamination rates

Australia also needs to tackle the contamination rates in its recycling – and that falls to local government and households.

As part of its policy changes, China has slashed the acceptable contamination rate in its recyclables to 0.5% – the average contamination rate for Australia’s kerbside bins is 8% to 10%.

“The average for public place recycling is 30%. We heard the other day that Ipswich was trying to recycle kerbside material with a 52% contamination rate. No MRF operator can accept what is essentially garbage and try to turn that into saleable commodity,” Ritchie says.

“We need to have consistent signage and education around the country; local governments need to get more consistent with their bin systems. Educators do a great job but they have their hands tied by different bin systems and acceptable materials. We need to agree a minimum standard nationally,” he says.

“If we're serious about getting contamination rates down, we probably need to get the contamination rates in kerbside recycling down from 10%  to 2%-3%.

Ritchie says if we can't get contamination rates down to that level, then we're going to need to build more infrastructure to remove that contamination.
“And will that be a cost that councils, households and industry will need to bear,” he says.

Despite the challenges, Ritchie applauds the work local government has already done in this space.

“Councils have historically been the linchpin of recycling in this country. We have the highest rates of kerbside recycling in the world. Councils have invested a lot of time and money in recycling. Their efforts are to be congratulated and their continuing efforts welcomed,” he says.

Don’t miss MRA Consultants’ Managing Director Mike Ritchie discuss Australia’s recycling crisis at the IPWEA Sustainability in Public Works Conference, 14-15 May, Sydney.