State of waste 2016 — Part 1

Australians now produce about 50 million tonnes of waste each year, averaging over two tonnes per person. There are more of us and we generate more waste per person, each year.

From 1996 to 2015, our population rose by 28% but waste generation increased by 170%. Waste is growing at a compound growth rate of 7.8%/year.

On the positive side, recycling is growing at a faster rate, and since 2005 we have actually seen (for the first time) a decline in tonnages of waste sent to landfill (in the most progressive states). We now recycle approximately 58% of all the waste we generate and send the rest to landfill.

Figure 1: Comparison of waste generation and population growth. MRA Consulting Group, October 2015.

Targets

Most governments have established recycling targets to divert waste from landfill and to capture and recover materials for the productive economy. Most readers know that almost all recycling comes at a cost to society compared to landfill.

Generally, metals, paper and cardboard and plastic (in sufficient quantities) are commercially viable recyclables. Almost all other recycling in Australia is subsidised by someone via gate fees, grants or the like. That includes most household, construction and commercial waste. Unfortunately, there is no free lunch in recycling.

It is important to point out that it is the proper role of state government to set waste policy and direction. Most governments have set targets of between 60–90% diversion by 2020. Having done so, governments should have the courage of their convictions and put in place the mechanisms to permit the private sector and local governments to achieve those targets.

Figure 2: National resource recovery targets. MRA Consulting Group, October 2015.

It is way too easy to put out a strategy with targets but then not bother to create the economic or policy conditions to achieve them. For recycling to work it must be commercially viable — whether for a private business, council or other generator.

To put it another way, waste is like a river — it flows downhill to the cheapest price. For most materials, the cheapest price is almost always landfill. Continuing the river analogy, diverting it to recycling requires a ‘weir’ (a price barrier on landfill), so that the river banks up and then flows into a different, in this case a lower, price channel (relatively cheaper recycling).

Levies

Most states have recognised this reality and introduced landfill levies to drive recycling (except Queensland and NT; NT has only 1% of Australia’s waste). NSW charges a levy of $133.10/t of waste (metro), Victoria $60.52, South Australia $57 and Western Australia $55.

Figure 3: National landfill levies (excluding ACT, Tasmania and NT). MRA Consulting Group, October 2015.

Queensland, on the other hand, has no levy and total landfill costs in SE Queensland are as low as $30/t, due to the removal of the levy (Figure 2), strong competition and an overabundance of landfill void space.

The effect of SE Queensland’s unsustainably low landfill price has been 477,000 tonnes of waste (2014) and 398,000 (2015) travelling (by road and rail) from NSW and Victoria to Queensland. The NSW Government needed to introduce the ‘proximity rule’ to try to slow the flow of waste to cheap Queensland landfills.

Not only did the Queensland policy settings attract 15,000 heavy truck movements onto the Pacific Highway, but NSW recyclers lost the opportunity to recover materials from that stream. It was and remains a significant unintended consequence of the removal of the $35/t levy by the (previous) Queensland Government.

It is important for all waste generators to understand that the levy is avoidable. It is only paid on waste actually landfilled. In other words, if you don’t want to pay the levy, then recycle.

Fix the economics of recycling

All states with compulsory levies hypothecate some proportion of the raised funds to support recycling (to lower the cost of that channel). Levies drive recycling by increasing the opportunity cost of landfill and providing funds for grants for recycling.

Taking NSW as an example, in 2013 the government introduced the $465.7 million ‘Waste Less, Recycle More’ four-year infrastructure and recycling services grants program. This provides real financial support for new resource recovery businesses and investment.

Testimony to the power of price, when the Queensland Government introduced its $35/t waste levy (on commercial waste only) in 2013, there was an immediate spike in recycling rates. But 18 months later, after the removal of the levy, recycling rates crashed by 15% overnight and have not moved since. In the same period NSW has achieved a 16% growth in recycling (Figure 3).

Figure 4: The effect of levies on recycling rates — Queensland vs NSW. MRA Consulting Group, October 2015.

We are still a long way from achieving each state government’s recycling targets. Further intervention via levies or other instruments, such as bans, grants and regulation, is required.

One of the main frustrations of the waste sector is that plenty of new recycling/recovery technology is available, and the sector has the appetite for capital investment, but the main barrier remains government willingness to shift market economics. Only where recycling is commercially viable will companies invest.

Household waste

In the household sector, consumption continues to grow with the economy. The major trends in domestic waste treatment are:

• The average garbage bin contains 60% organic material waste. The bulk is food (40%) and garden waste (20%). The introduction of food/garden organic bins in many council areas will go a long way to achieving the targets for the household sector.
• New technologies in composting and anaerobic digestion will accelerate organics diversion.
• Almost one-third of all recyclable items are placed in the garbage bin and end up in landfill. Education and enforcement are the best solutions.
• Approximately 17% of households fill their recycling bin to capacity each fortnight. These households need more recycling volume usually via a 360 L recycling bin.
• Many councils are also contracting alternative waste technologies (AWT) to sort through the garbage bin, to recover recyclables and convert the organic component into low-grade compost. These will continue to grow.
• Some minor streams including mattresses, polystyrene and batteries can now also be recycled, as a result of support by government and the participation of charitable organisations.

There are a plethora of minor innovations but the diversion of significant tonnages of household waste will be achieved by three initiatives:

• Three-bin organics (or AWT processing of two-bin systems) combined with energy from waste for residuals.
• 360 L recycling bins.
• Education to reduce leakage of recyclables and reduce contamination.

Commercial waste

In 2013–2014, the commercial and industrial (C&I) sector generated 17.13 million tonnes of waste, representing just under a third of all generated waste in Australia. Around seven million tonnes still ends up in landfill.

By 2020, the sector will generate 29 million tonnes of waste. The effect of the levies has been to drive waste costs for most companies from 1% of operating costs towards 2–3%. While these are small numbers, they are a hit on EBITDA and profit.

Most businesses want to do the right thing, but they are also economically rational. They will recycle to the extent limited by cost and return.

Improved technology and service offerings are contributing to improving the rate of commercial recycling outcomes. Organic materials represent over 60% of commercial waste (pallets, timber, food, etc).

The major trends in commercial waste treatment are:

• Source-separated food/organics collections will increase with levies and grants. Only with an increased opportunity cost of landfill can a business owner justify the increased labour and collection costs associated with separated food and organics.
• Product stewardship will see the producer or importer liable for the end-of-life disposal of ‘problem wastes’. Over the past few years, schemes for televisions, computers, oil and tyres have been introduced. Similar schemes are under review for paint, batteries, smoke alarms and gas bottles.
• Weight-based billing for front lift skips and 240 L bins, etc, offers the potential for price signals to be directed at waste generators, encouraging recycling behaviour change.
• ‘Commercial dirty materials recovery facilities’ (MRFs) are now becoming commercially viable due to the rise in landfill levies, combined with new government infrastructure grants.
• Alternative waste treatment of commercial waste streams will increase with levies.

Construction waste

Construction and demolition (C&D) waste (typically timber, concrete, plastics, wood, metals, cardboard, asphalt and mixed-site debris such as soil and rocks) comprises approximately 40% of Australia’s total waste generation. The good news is that most is recycled. Recycling this material is generally cheaper than landfill and, being made up of heavy materials, C&D waste is particularly sensitive to landfill levy costs. As such, the sector has achieved 75% recovery rates, and rising, in many states.

A study released in 2013 found that, on average, 21–30% of cost overruns in construction projects were due to material wastage. As landfill costs rise, the commercial incentive to better manage materials flow will rise, further improving recovery rates. And with over 500 active businesses in the C&D sorting and recovery system, it is a strong supplier of jobs and resources to the productive economy.

Part 2 of this article will address the key reforms required in the areas of infrastructure, landfills, energy from waste and jobs, as well as the role of government, in order to move closer to our recycling targets.

*Mike Ritchie is the Director of MRA Consulting. MRA specialises in waste, resource recovery and carbon and provides advice to companies and all levels of government.