Investor News

Recycling crisis sparks taxpayer funding

Recycling. We all do it. Or at least we try to.

Plastics, paper, metals and glass. They go in one bin.

Non-recyclables go in the other bin. If you're super dedicated, organics get composted.

Few people realised, until the recent recycling crisis, that we weren't, well... recycling. At least, not in the way we thought we were.

Most probably thought all that stuff got sorted into its basic categories before coming back as a new jar, can of soft drink, a container of milk or tin of baked beans.

Not so. Turns out we shipped most of it off to Asia in containers providing low paid sorting jobs overseas. No doubt some of it comes back as new products and packaging.

Very little value-added recycling is done here in Australia. Our cost of labour is too high to sort the huge volumes, making it cheaper to buy 'freshly' made glass, metal, paper and plastic.

Recycled products often rely on taxpayer support to make them financially viable, either through mandates, government purchasing or other mechanisms.

So, as Asia started becoming selective about what type of waste it would take, and how much, it started piling up at local depots.

For a while, those depots reached capacity and our commendable refuse separation efforts counted for nothing as councils diverted recycling to landfill, exposing the problem; the higher cost of local recycling.

Enter the government's $100 million pledge to support the rollout of domestic solutions.

The below article by David Sparkes at ABC News highlights the key components:

  • The Government has made big policy commitments for recycling including a $100 million Australian Recycling Investment Fund
  • Recycling companies say they are ready and waiting to apply to the investment fund
  • But industry insiders say the fund only addresses half of Australia's recycling crisis

The other half? Demand.

The fund only supports the building or upgrading of new facilities, addressing the supply side of the equation.

But without the ability to sell the output, domestic recycling solutions are pointless.

And given the cost of the recycled material is often higher than brand new material, this requires the government to do things like introduce mandates for product take-back or recycled content. An intervention already rolled out across the EU.

And if we've learnt anything about such mandates, we know they often cost the end-user (or taxpayer) more. Just look at the impact of mandated renewable energy which costs us about an extra $3 billion a year.

So, what can we do to deliver solutions that are both environmentally and financially sustainable?

Turning plastics into pallets, park benches, new packaging and the like is one approach. But, as mentioned, it's often cheaper to use brand new raw materials rather than recycled ones.

ECT is currently exploring another approach involving a novel waste-to-energy technology that turns plastics into diesel and other valuable by-products.

We're still undertaking our due diligence, but if we proceed we'll be able to take plastics and create a product with a ready market.

This negates the need for mandates or subsidies, playing into the existing markets without hitting the consumer or taxpayer in the hip pocket.

In terms of environmental credentials, compared to making diesel one may argue that making a park bench helps lock away the potential CO2 emissions. In isolation, this makes some sense, but in actuality, there's no net change to CO2 emissions, as regardless of the source (oil vs. recycled plastic) the total emissions remain the same at the point of use, with a big difference being we'd be avoiding the entry of new oil to the cycle, instead using old plastics.

There's still a bit of work to bring this solution to market, but the market is mature, well established and high volume. What's more, the technology is complementary to our own Coldry process, capable of providing the waste heat required to drive our drying, while Coldry enhances the performance of the waste-to-diesel process, improving the economics.

The below article from ABC News highlights the current state of play well, but what it doesn't mention is the potential impact of innovation on the recycling equation without the need to hit consumers with higher costs, creating a win-win-win:

  • Economic - offset imports of diesel, avoid costs of mandated recycled content
  • Energy - improved energy diversity and security
  • Environment - the diversion of plastics from landfill and no increase in net end-use CO2 emissions


Asia talking tough as race to recycle heats up after federal election investment fund promises

1 June 2019 | ABC News | David Sparkes

Source: Asia talking tough as race to recycle heats up after federal election investment fund promises - ABC News (Australian Broadcasting Corporation)

The recycling industry says it is ready to capitalise on election promises made by the Morrison Government to tackle Australia's waste crisis but has warned those promises only address half the problem.