- China's decision to stop importing recyclable waste is tightening environmental regulations across the world.
- A ban on single use plastics bags by supermarkets is just the start for Australia.
- Citi analysts are forecasting improved technology and better recycling of plastic.
China sneezes and the global economics of garbage collection and recycling is turned on its head, causing the price of various recovered plastics to collapse and recyclable waste piling up around the world with nowhere to go.
The decision by China to no longer import about half the world’s scrap plastic and paper has meant garbage collectors can no longer get worthwhile revenue by selling what they pick up for recycling.
This has pushed up the cost of garbage collection and has accelerated bans and recycling investment across the world, including helping to bring a ban on single use plastic bags in Australian supermarkets.
If the global trend continues, coming soon will be bans, with proposals in the UK currently spreading to Europe, on plastic cutlery, straws and cotton buds/swabs.
Citi Australia’s Daniel Kang, Head of Chemicals and Packaging research, says the environmental push was already there before China came through with the ban on recycled plastics.
"That's really just triggered an acceleration in the western world in terms of improving the technology and trying to recycle more of the stuff that they no longer have the ability to send to China," he told Business Insider.
"The environmental and social push was already there but this has really just accelerated it."
Those countries which had been used to exporting their recycling waste will likely be forced to expand domestic recycling and cut back on the level of waste being created.
"Several Western ports have seen plastic waste pile up at storage sites following the Chinese ban, with port managers using empty storage sheds or shipping containers to store the overflow of material," according to major research report from citi, Rethinking Single Use plastics - Responding to a Sea Change in Consumer Behavior.
China’s exit from the global recycling market has heavily pressured profitability for recyclers by suppressing demand and creating a glut of oversupply of recyclable waste.
Citi says the average price per ton of mixed paper exported from North America to Asia has fallen to $US5 from $US150.
Sacramento County in California used to earn $US1.2 million a year by selling recyclables to private waste management companies. Now the county is paying $US1 million to offset those companies’ costs.
In Australia, local councils are under growing pressure to put up rates to cover the increased costs of kerbside pick-up of recycled waste following an importation ban by China.
China’s Ministry of Environmental Protection in July last year filed a notice to the World Trade Organisation advising that low grades of recovered mixed paper, textiles, plastics and some metals would be banned from import.
The ban, an extension of China’s Operation Green Fence policy to prohibit the importation of unwashed and contaminated recyclable materials, came into effect in January, barring 24 categories of solid waste, sending already weak prices for recyclable material to rock bottom and making some materials unsaleable and ultimately destined for landfill or for stockpiling.
Last year China created what it called the National Sword program to stop smuggling of foreign waste. China now says this flow of waste has seriously polluted its environment. It wants its industry to deal with its own waste rather than process the world’s.
More than 20% of Australia’s entire annual trade is with China.
Citi estimates 400 million tonnes of plastics are produced globally each year, with half of all global consumer packaging now plastic.
"Plastic packaging use mirrors a country’s per capita income growth, meaning economies use more plastic packaging as they become more affluent," says Citi.
"Plastics have revolutionised modern life and made products safer, cheaper, and easier to handle and transport, but as a material, its advantages are also its disadvantages.
"The widespread use of plastics has been driven by its several advantages over other substrates, including durability, weight, affordability, versatility, and amount of energy required to produce.
"However these features also drive the greatest environmental concern. Because plastics are so durable, it takes centuries for them do degrade. Because they are so cheap, it is often not economical to collect and recycle them."
Plastics end up in landfills or in the ocean and become part of the Great Pacific Garbage Patch, with microplastics entering the food chain via seafood. Plastics’ durability and affordability is also the cause of greatest concern for environmental stakeholders.
Bags and bottles can take anywhere from 500 to 1000 years to degrade, while only 14% of plastic packaging sold ends up being recycled.
Despite being made from a naturally occurring material, oil and natural gas, plastic doesn’t break down due to the unnatural manufacturing process that creates it.
One of the more intense plastic bans is in Mumbai which has banned the use of plastic bags, cups, or bottles. Penalties include fines ranging from Rs5000 ($70) for a first time offence and three months in jail for repeat offenders
Global chemicals companies and plastic packagers are responding to changing public sentiment.
They have focused on investing in plastic recycling companies, improving recycling systems, and creating bio-based polymers.
"Biodegradable plastics or polymers have been in production since the late 1990s in small commercial quantities," says Citi.
"These polymers can be sourced from sustainable resources such as corn starch and also synthetic (mineral-based) building-blocks."
But these solutions are expensive but regulatory changes could force the issue.
Citi's Daniel Kang says plastic has replaced different natural products over the years.
"Like cement bags used to be hemp and is now plastic," he says. "It could spring back the other way but it might be a bit of a hard transition.
"It's going to take time and so in the immediate term we don't see any near term impact.
"But if the pressure, environmental and social, push continues then plastics may face some pressure.
"In the meantime, Amcor and the other plastic package companies will devise new products to try to make it recyclable and reusable.
"Amcor's strategy is to make 100% of their products either recyclable or reusable by 2025. Currently that stands at about 70%."