Recycling in a carbon constrained environment

Gerard van Rijswijk* presents his opinions on how the planned Australian Carbon Pollution Reduction Scheme (CPRS) may impact the recycling industry. It is a summary of one of his presentations from the recent EcoForum conference in Sydney.

Under the Australian CPRS, local operators of landfills will have a liability for waste-related emissions for all new waste.

Since carbon emissions primarily result from the landfilling of organics, it would make sense then for differential gate charges to apply on the basis of organic content. In this way, inert materials that do not contribute to carbon emissions would not attract the carbon-related cost signal. Most household recyclables would come into this latter category.

As individual state landfill levies are in part based on the rationale of internalising carbon emissions, there is also a case for reducing those taxes after the CPRS commences.

The CPRS leads to increased costs at every stage where fossil fuel-based energy is used, eg, each time waste or recyclables are transported. This will make recovery of recyclables from remote locations more expensive and less viable. It will also affect the viability of transporting recyclables to remote processors. The cost of energy used in processing recyclables will also rise. Hence, where differences exist between virgin and recycled material in terms of the source and quantity of energy, the CPRS will accentuate that difference.

Paper from virgin material tends to be based on energy extracted from the raw material (wood) and can be seen as carbon neutral, while the energy used to recycle paper tends to be fossil fuel based leading to a bias in favour of virgin material, other factors being equal.

The CPRS will also impact the cost of manufacturing across the board. Where the recycling of a material is part of a wider manufacturing operation, the ongoing viability of both is affected. For example, Visy¹ says that a $20/tonne carbon cost could force the closure of two paper recycling plants costing 160 jobs. These closures would impact the local paper recycling effort and change wastepaper markets.

The CPRS will disadvantage local manufacture against imports simply because importers are not impacted by the scheme. Local recycling is supported by the local manufacture of packaging and packaged goods. As local volume drops due to substitution by imports, the capacity to recycle materials here declines. Industry will also respond to CPRS costs by changing the type of packaging used - decreasing the use of packaging with higher inherent carbon costs - and by importing a higher proportion of packaging and packaged goods. This will result in a change to the overall packaging mix and hence the type and range of materials available for recycling.

The introduction of the CPRS will also require a review of what is recycled and where. For example, it might be better to burn paper and organics. It might also be better to landfill inert materials such as plastic or glass as a means of lowering both impact and cost.

All of the abovementioned trends will develop gradually as the cost of carbon increases. One way of predicting the impact on recycling would be to use shadow accounting. This method postulates a certain carbon price and estimates the effect of that price on the system, allowing future material and process trends to be identified more precisely and their impact on recycling to be more clearly defined. Schemes could then be adjusted to reduce costs and emissions.

At the state or national level it may be appropriate to regularly review recycling schemes and the contribution made to costs by each of the materials in them with a view to optimising the range of materials collected.

In short, the level and type of recycling post CPRS needs to be allowed to respond to the cost pressure imposed by the scheme. Not to do so would frustrate the intent of the scheme.

* Gerard van Rijswijk has, for over 25 years, managed industry associations for sectors that needed to address environmental issues. He ran the National Packaging Covenant Industry Association for its first five years. He is technically trained with a science degree from the University of New South Wales and holds a Master of Environmental Law degree from the University of Sydney. He was the Australian industry (ACIC) delegate to the OECD workshops on EPR and currently consults to the National Association of Retail Grocers of Australia as Senior Policy Advisor.

1 Visy submission on the government CPRS Green Paper.