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The future of recycling. David Palmer-Jones CEO, SITA UK. The future of recycling. Population Growth. Extraction rate of virgin materials. Shift in manufacturing base. Scarcity and competition ‘Resource crunch’. Internalisation of material flows. Economic growth / volatility.
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The future of recycling David Palmer-Jones CEO, SITA UK
The future of recycling Population Growth Extraction rate of virgin materials Shift in manufacturing base Scarcity and competition ‘Resource crunch’ Internalisation of material flows Economic growth / volatility Legislation / carbon agenda
The future of recycling • Asian growth fuels demand for materials • Competition for materials increase values • Commodity prices mirror GDP / virgin prices • Industry and Government recognise resource efficiency and scarcity issues > Global resource extraction Hundred million tons “ Rare earth prices double in two weeks as China seeks to increase control. ”
The future of recycling • Industrial and Commercial recycling driven by cost, resulting in 5 million tonnes shortfall • Need new infrastructure and investment to extract value, between £0.5 to £0.7 billion • Zero waste = three per cent landfill, energy and recycling • UK still in infancy - 45 million tonnes still going to landfill, only 24 million tonnes is active waste. • Municipal targets 50% in England • The average is 38%, resulting in a 12% short fall of 2 million tonnes
The future of recycling • Infrastructure develops, resulting in more volumes recycled, resulting in the need for markets, leading to export • Lack of reprocessors in UK force export alternative • China develops local recycling market reducing demand for imports • Lack of reprocessing capacity in the UK and demand from Asia leads to a drop in commodity prices and higher quality demands Circular economy is leaking
The future of recycling • Industry recognises resource agenda – business sustainability • Voluntary producer responsibility deals become key to cost control and material capture • Examples • Tesco reverse vending • Car manufacturers owning stakes in metal reprocessors (Renault)
The future of recycling Mattresses • Legislative and fiscal drivers (i.e. landfill tax) create new markets • Problem material becomes valuable resource • Large market disposed of per annum • Cost increasing for disposal with tax • Consistent supply of valuable materials - such as wood, textiles, metal - results in a positive environmental impact Mattress recycling
The future of recycling AggMax Street sweeping • Landfill tax creates a new market • Low grade material becomes of value • Recycled materials reused in construction • Rare earth metals? Gravel Sand
The future of recycling ELP diesel • Market led problems • one million tonnes to landfill • Increasing cost • landfill tax burden • Environmental benefits • 20% lower CO2 emissions • Synergy with SITA UK’s business • ‘natural hedge’ • Local reprocessing • ‘waste to product’ Plastics to diesel
The future of recycling Conclusions • Resource extraction growth and increased scarcity resulting in the value of secondary raw materials increasing • Recycling moves from a political/environmental ideal to integral to sustainable growth • From ‘laissez faire’ to interventionist – Government begins to aid the circular economy • Minimisation and re-use strategies begin with the re-engineering of products leading to the creation of more easily repaired and recycled materials • Cultural acceptance increases as ‘recycling generation’ grows up
The future of recycling Conclusions • Industry reacts in ‘resource wars’ moving to ‘closed loop’ take back schemes • Commodity values intrinsically linked to economic volatility increasing risk profile for market / industry • Speed of infrastructure development influences speed of landfill diversion – planning hurdle • Active private sector investment needed to develop this new infrastructure - but limited • Export demand diminishes as Asia internalises own recyclables – 70% by 2015? • Government react too late to create stimulus for development of UK / European reprocessing industry • Recyclers move up the value chain to refill the export loss producing higher grade base materials