Talking about waste
The introduction of the Commonwealth Recycling and Waste Reduction Act 2020 (Cth) (Waste Reduction Act) is a clear indicator that the national waste and recycling industry will be overhauled within the next decade. The Waste Reduction Act is landmark legislation that will implement a waste export ban, which will be rolled out from 1 January 2021 in relation to export of waste plastic, paper, glass and tyres. In parallel, the Waste Reduction Act establishes a framework to encourage increased recycling of these materials.
Aside from the introduction of the Waste Reduction Act, the market for more sustainable waste management systems has continued to grow and develop in Australia in recent years. This growth in efficient management of waste and recycling can be attributed to a range of factors, such as the potential to:
- add value to an investor's project;
- support an investor's emissions reduction plans;
- comply with national, state and territory waste policy initiatives; and
- increase a company's ability to demonstrate its commitment to sustainability.
The Commonwealth Government's Recycling and Clean Energy National Manufacturing Priority Roadmap, released in April 2021, will underpin the development of an advanced manufacturing sector that is focused on opportunities to manufacture products from recycled feedstock as well as recycling of clean energy components.
Whatever reasons are driving this development, the more efficient treatment of waste and an increased focus on product life cycle management is becoming, and needs to be, a key consideration for everyday Australians and investors moving forward. The Waste Reduction Act, also aims to improve the existing framework for product stewardship by encouraging companies to take greater responsibility for the waste that they generate through the products they design, manufacture and distribute.
In this article we explore current trends in the Australian market in respect of waste, recycling and the circular economy. This also follows our recently published recycling and waste compliance snapshot, where we seek to critically analyse Australia's current compliance framework by honing in on the legislative and regulatory frameworks that govern waste and recycling, then explore how Australia's management of waste and recycling could be transformed in the future.
Getting the basics
The term 'circular economy' is increasingly used in media reports and company announcements, but what does it actually mean? Simply put, a circular economy is one which rejects the 'take-make-dispose' model of production and consumption and encourages the adoption of a 'reuse-repair-recycle' model.1 This essentially turns 'waste' into a 'resource'. The evolving waste industry is directing its current focus to waste avoidance, reduction, reuse, recycling and composting. However, a key modern example of a 'waste' into a 'resource' process is waste-to-energy technology (WtE) (also known as energy-from-waste (EfW)). WtE technology generates energy via the process of thermally treating (i.e. incinerating) waste that may otherwise flow into landfill. The priority of the current economy to avoid and reduce waste may be hampering long-term investment in WtE / EfW technologies, which indeed relies on the generation of waste to fulfil its function.
Historically, Australia's approach to waste management reflected a more limited understanding of the environmental impacts of disposing waste to landfill. In the 1960s and 1970s, when local councils stopped taking industrial waste into their garbage tips (often due to the consequential leaching and land contamination issues), residual industrial waste was disposed of into the ocean from barges, or via the sewerage system. In today's world, it is very difficult to imagine that the dumping of waste into the ocean was a good idea - on any level. Not surprisingly, in the 1970s, the public's concern for the protection of the environment grew. This resulted in a growing interest in recycling. By the 1990s, Australia began to adopt ambitious recycling targets, resulting in its commitment to waste minimisation, environmentally sound waste re-use. However, it was around this time that Australia's overall development in this area somewhat stalled. By the mid 2000s, Australia's recycling rate for commercial, demolition and industrial waste stood at 52% (however, other types of waste still largely flowed through to landfill).
Today, export markets are rejecting waste that has traditionally been shipped offshore from Australia and this change is driving a shift in the domestic management of recycled material. We are also facing contemporary concerns regarding the disposal of new-age products such as e-waste, and batteries containing chemicals that would be detrimental to the environment if disposed into landfill.2 The current inability to increase recycling, and now a growing problem with the disposal of waste, runs contrary to growing consumer sentiment and environmental sustainability objectives.
More recently, the Australian market is seeing a push towards better waste management and recycling. The Commonwealth Government's Recycling Modernisation Fund (RMF) is an example of Australia's emerging approach to the circular economy, which is set to provide funding of approximately $190 million towards the transformation of Australia's waste and recycling infrastructure.
A key objective of the RMF is the diversion of over 10 million tonnes of waste from landfill while creating around 10,000 jobs. The Commonwealth Government is also hoping to attract $600 million in private investment. The RMF will aim to support investment in new infrastructure for the sorting, processing and remanufacturing of materials like plastic, paper, tyres and glass. The RMF is set to be strengthened by:
- further funding of $35 million for the implementation of commitments under Australia's National Waste Policy Action Plan; and
- further funding of $24.6 million towards the improvement of Australia's national waste data (to measure recycling outcomes and track progress against national targets).
The introduction of the RMF has not come without criticism. The Commonwealth Government's proposal depends on a co-funding model, in that its funding will be contingent on commitments to contributions from states, territories and the private sector waste industry.3 In addition, to develop a sustainable waste industry, we will also need to see a genuine commitment from all levels of government to increase the use of recycled products, with the government leading by example to encourage a greater uptake.
Such a large-scale commitment could even require the implementation of a mandated national recycling policy. Further, some critics stress that recycling infrastructure may not be enough to solve the nation's waste problem - they argue that an effective governmental solution needs to also incorporate a focus on waste avoidance, reduction of contamination and a creation of markets for recycled materials.4 Without a multi-pronged approach, the recycled product manufacturing industry will not achieve its full potential.
Recycling and Clean Energy National Manufacturing Priority Road Map
In April 2021, the Federal Department of Industry, Science, Energy and Resources released the Recycling and Clean Energy National Manufacturing Priority Road Map which is targeted at developing Australia's world-leading advanced manufacturing industry that can seize opportunities from sustainability, clean energy transition and waste reduction demands by leveraging Australia's advantages in innovation, technology, renewable and mineral resources.
Government funding through the Modern Manufacturing Initiative is now available for recycling and clean energy manufacturing projects that enable recycling or use of recycled feedstock or clean energy. One area that is expected to see significant growth in the future is manufacturing opportunities from recycling of clean energy components (including PV panels, wind turbines, and batteries). Long-term solutions for the recycling of clean energy components is essential to ensure that the renewable sector is truly sustainable in the future. Applications for the recycling and clean energy grant closed on 5 May 2021.5
What trends are emerging in the Australian market?
As is often the case, the private sector is making inroads into initiatives promoting a 'circular economy' and better waste management - which is likely because an increasingly knowledgeable public and shareholder base is demanding change. Below are some examples of the emerging initiatives.
End-of-life tyres present a number of concerns to health and the environment. For example, a fire-affected tyre stockpile will release toxic gases. Landfilled tyres are a loss of recycling opportunity, as end-of-life tyres can be used to manufacture new rubber products or even for the construction of new roads.
The Federal Government's National Tyre Product Stewardship Scheme was launched in 2014 and is administered by Tyre Stewardship Australia. The scheme addresses the significant environmental challenges that arise from the disposal of used tyres and aims to increase the domestic recycling of tyres, expand the market for products derived from tyres and reduce the number of end-of-life tyres that are sent to landfill, exported or illegally dumped.
An interesting case study to note is that of Owen Henry, a farmer from the Sunshine Coast, who innovated a method of recycling end-of-life tyres for use on farms, thereby avoiding their trickle into landfill. Through his company Taurus Mats, Owen Henry facilitates the recycling of used tyres into tyre-based mats which are used on farms to stop cattle from slipping in feedlots. Usually, these recycled mats are imported from overseas, which brings criticism as 'bringing someone else's problems into Australia'. The initiative provides a new-age solution to the management of stockpiles of scrap tyres and is a creative example of working towards supporting a circular economy.
While end-of-life tyres have for a number of years been ground into small rubber flakes for use in playgrounds and sporting fields, more recently, technologies have been developed to convert these waste items into saleable commodities such as oil, carbon and steel. Further industry and government investment is still required to achieve full commercialisation and wide spread development of these advanced manufacturing facilities. This is likely to require a government mandate for the recycling and reprocessing of waste tyres. Otherwise, a significant proportion of these discarded tyres will continue to be disposed of at landfill sites or buried in coal mining voids. That being said, the environmental impacts associated with transporting and reprocessing these waste tyres for future reuse needs to be materially better than the current disposal options so as to justify the reprocessing approach from an environmental perspective.
Redefining tailings for a circular economy
Improved waste management practices are not limited to residential and construction sectors, with significant advancements also being seen in the mining industry. In the process of extracting metals and minerals from mined ore, tailings are a combination of the fine-grained materials remaining after the extraction process, in combination with any water used in the recovery process.6 One of the challenges faced in the mining sector is the management of tailings, including the provision of non-polluting storage for them as well as the mitigation of public health and safety risks, and their environmental impact after a mine's closure.7
In light of new technological developments and methods, tailings are now being viewed as a potential resource rather than being dismissed as waste. A case in point is NQ Minerals' tailings processing plant in its Hellyer Operations in Tasmania. NQ Minerals' mission "is to rehabilitate the environment of former precious metal mining operations and sustainably extract minerals required to build a cleaner world. In short, to be a responsible, green minerals exploration and extraction company for the 21st century." In 2017, NQ Minerals acquired the Hellyer Gold Mine and subsequently proved a reserve of over 8 million tonnes of minerals for processing. It put this discovery to good use by commencing a project to reprocess these high-grade tailings. As a result, NQ Minerals has produced lead concentrate, zinc concentrate and precious metals concentrate with a realisation value of around $5.7 million in sales at the end of 2018. This was achieved without expanding the mine's footprint and simultaneously reducing the tailings legacy. In April 2021, NQ Minerals also indicated preliminary success in their rehabilitation of a nearby wetland that had been used since the 1870s for the disposal of untreated mine water. Further, the company gained a potential windfall of up to $30 million, following the discovery of gold in the waste water.8 Other mining companies are investing research and development funding into technologies that use advanced chemistry and mechanical processes to break down and process residual coal waste, resulting in the separation of pure hydrocarbon from mineral waste. The hydrocarbons produced through these technologies can then be used on the mine site as fuel for equipment.
Other initiatives in waste recycling
Over the last decade, there have been a range of other waste recycling initiatives that have seen considerable growth, including:
- it is now relatively common across Australia for recovered glass to be processed through a glass crushing plant, producing glass sand to be mixed with other materials and turned into road base, or to be used in drainage works and pipe bedding;
- early stage circular solar trials are exploring the commercial and logistical feasibility of collecting solar panel and battery systems for recycling and reuse. It is forecast that NSW will generate 3,000 - 10,000 tonnes per year of waste solar PV panels and battery storage systems by 2025, rising to 40,000 - 71,000 tonnes per year by 2035. In October 2020, the Federal Government announced $15 million in funding to support research at six Australian universities to find a sustainable solution for used solar panels; and
- recycled fibre (paper and cardboard) that has been rejected by China and other Asian countries due to contamination concerns can now be processed in Australian fibre beneficiation facilities. These facilities de-contaminate and sort the fibre into clean cardboard, newspaper and mixed paper which will meet the criteria for sale to local paper mills.
The push for better waste management and recycling processes is borne out of a number of driving forces, including:
- increased public awareness of the circular economy; and
- improved commercial understanding of the value to be added by a company's sustainable operations.
Unfortunately, from a practical perspective, changes in Australia's recycling industry have also been driven by overseas bans on the import of recyclables, initially by China, and subsequently followed by India and Taiwan. This meant that recyclable material became stockpiled in warehouses or sent to landfill in Australia.
Unsurprisingly, these offshore policies were major driving forces behind the Australian Government's decision to focus on and increase domestic waste processing. The Government's waste export ban, which commenced on 1 January 2021, enforces a prohibition on the export of unprocessed glass. Most mixed plastics will also be banned from export from 1 July 2021 and waste tyres from December 2021. The Commonwealth Government announced in the 2020/21 Budget provided an additional $6.6 million over three years to assist with implementing this ban. The 2021/22 Budget provided a further $77.9 million in new investment to reduce the impacts of waste, including $67 million to help divert organic waste from landfill to use in agricultural soils.
These bans on waste export create commercial opportunities here in Australia, further strengthening the case being brought by shareholders and consumers who are demanding more environmentally sustainable production processes. With increased investment flowing to tyre, plastic and technology recycling, and large scale companies being either pushed or regulated to commit to more sustainable practices, the circular economy is moving positively beyond the use of Keep Cups and paper straws, and towards an economy-wide process of increased sustainability and value creation.
Our next article will seek to explore Australia's current compliance framework by analysing the legislation and regulations that govern waste and recycling in Australia, with a view to assessing how these frameworks impact Australia's efforts to achieve a circular economy. If you have any questions about this series, please feel free to reach out to a member of the McCullough Robertson team below.
1 Stijn van Ewijk and Julia Stegmann, 'Why we'll still need waste in a circular economy' (17 June 2020) The Conversation [Link].
2 Total Environmental Centre, Waste Not, 'History of Waste' <http://www.wastenot.org.au/history-of-waste/>
3 Trevor Thornton, 'Waste not, want not: Morrison government's $1b recycling plan must include avoiding waste in the first place' (2020) The Conversation [Link].
6 Tailings Management Handbook [Link].
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