Inside Waste Weekly reported last week that the government’s announcement of a carbon price plan might well lead to a rise in recycling rates for high embodied energy materials such as aluminium and plastics, but could also bring challenges such as increased operating costs. While the industry awaits further details from the government, industry consultant Mike Ritchie said the carbon plan is the right reform but that waste and recycling remain the “poor cousins”.
“People are not looking at the potential for recovering embodied energy from waste and it’s a real problem and a lost opportunity,” said Ritchie, “it could reduce Australia’s emissions by 7-8%”.
He said regulators need to understand what recycling has to offer in terms of scale and establish national accounting which can measure the carbon savings from recycling activities. It is hoped that some of the government’s $10 billion in funding for renewable energy technologies will go towards projects that convert waste to energy.
“Having said that, there is plenty the government could be doing right now to encourage more recycling…if there was a concerted effort by governments over the next five years that would have an enormous implication for carbon emissions,” said Ritchie, suggesting that a target of 70% would be achievable for diversion of waste from landfill.
He sees numerous benefits to the government’s carbon plan and Carbon Farming Initiative with the latter providing new revenue for small and regional landfill operators to capture gas from landfills. In terms of a carbon price he said, “You’ve got to ask the question will recycling become more valuable under a carbon price, the answer to that is yes…will recycling be advantaged within the domestic market, yes. There are differences if you are talking about companies operating in an export market”.
While input costs such as electricity will go up, companies that are recycling commodities will find their costs go up less than companies which are not recycling, under a carbon price according to Ritchie. Although he said it is difficult to make generalities when input costs for individual companies vary widely.
“For example, recycling aluminium cans is going to be proportionally more competitive than a company that’s getting its aluminium from virgin bauxite,” said Ritchie, adding that a carbon price will recognise in commercial terms the additional energy benefit of recycling. In the case of recycled aluminium the energy savings can be as high as 95%.
Secondly, a carbon price will lead to an increase in the cost of landfill for waste disposal. Ritchie believes this will drive development of alternative waste treatment (AWT) and greater diversion of waste from landfill.
“Wherever landfill prices go up, recycling becomes more affordable,” said Ritchie, “that happens instantaneously…the moment that landfill has to pay for its emission profile its costs go up and that happens in 2012.”
“Any products that are marginal in terms of cost between landfill and recycling, which includes materials such as plastics…it becomes proportionally easier to recycle because landfill has become $10-30 more expensive,” said Ritchie.
“The reason we don’t have AWTs or the three-bin system across this country is because landfill is historically very cheap and until that price gap is closed you won’t see the uptake of large-scale AWTs or recycling.”
Ritchie said only two factors have driven the development of AWTs, being higher landfill levies (generally where they are higher than the gate fees of AWT operations) and regulation.
He said while a carbon price won’t drive a massive transformation in the waste sector it may allow councils which are close to a price “trigger point” to make a decision in favour of AWT, particularly those that are faced with significant costs for landfill.
Ritchie believes that under a carbon price a range of products will become more economically viable for recycling including plastics and cardboard in regional locations.
“Plastic in 2011 is where cardboard was in 1990, it was a marginal business subject to booms and busts…the moment that the fuel price decreases plastic recycling becomes uneconomic and when fuel price rises all these exporters come out of the woodwork,” he said.
“When you add a carbon price and recognise the embodied energy of this material and landfill becomes more expensive then you put a floor under the variability, you make that commodity that bit more valuable.”
“Cardboard in low quantities is the same…as the landfill option becomes more expensive then the local shop that doesn’t have a recycling bin at the moment…they’ve now got an additional price signal to make the decision in favour of recycling.”
It’s possible that a carbon price may also help to accelerate waste diversion from landfill in the commercial and industrial waste stream, through making the operations of C&I materials recovery facilities more economically viable. Currently there are only three such facilities in Australia, all located in Sydney, with another one currently in the pipeline.
“You have to get up around $200 per tonne before sorting becomes viable,” said Ritchie in regard to developing infrastructure for C&I sorting, adding that landfill fees and a carbon price will be primary drivers.
