NAB’s Chief Economist, Alan Oster provides his thoughts on the Australian and Global economy.
Extracting maximum use from products and resources, by recycling and reusing as much as possible, will help move Australia closer to a circular economy that minimises waste.
Until recently, many Australian householders believed the recyclables they placed in council bins were trucked off to be recycled into new materials.
It was a shock to learn that a third of paper and plastics were actually being shipped overseas for processing, until China raised its standards for recycling and effectively stopped taking in waste from the US, Europe, and Australia 1. Glass, paper and plastics were stockpiled in warehouses or sent to landfill, as councils around Australia struggled to cope.
China’s decision is forcing other countries to adapt and has put the spotlight on the infrastructure required to dramatically expand Australia’s ability to sort and reprocess recyclable waste into new and useful products.
“All of these recyclables now need to find a home in Australia,” said Gary Sofarelli, Director, Infrastructure at NAB. “People are looking to state governments to start mandating and creating new markets for those products.”
Australia produces about 67 million tonnes of waste each year, and more than 21 million tonnes ends up in landfill. The federal government has set targets to progressively ban the export of waste products, but we’re yet to see the detail on how these targets will be achieved since kerbside collection is the responsibility of individual councils.
“It’s not a one-size-fits-all approach,” said Sofarelli. “If you think about where we generate waste it is over so many different facets. Each waste stream has a particular end use that it could go to and specific infrastructure that it needs in order to get to that end use.”
Just last week, the Victorian Government announced a 10-year plan for waste and recycling, with initiatives including a container deposit scheme and a new fourth bin to separate glass recycling from other materials to ensure more is effectively recycled. The Federal Government has also announced government procurement will now need to consider using recycled content.
Organics make up more than 10 million tonnes of the total 21 million tonnes of waste in Australia that goes to landfill, where they ferment and create the potent greenhouse gas methane.
Some local governments are finding new ways to treat food waste on an industrial scale, so that it never ends up in landfill. In southeast Melbourne, the South Eastern Organics Processing Facility opened in 2019 and will turn up to 120,000 tonnes of food and garden waste a year from eight councils and into 50,000 tonnes of high quality compost.
The processing facility, developed by Sacyr Environment Australia and built by Sacyr Industrial with financing advised by NAB, will reduce greenhouse emissions by the same amount as taking nearly 14,000 cars off the road.
Councils haven’t traditionally had the scale to develop large infrastructure projects (resource recovery facilities cost A$500m-700m to build), hence the need to work together and to work closely with state governments.
“The challenge is that local governments are generally not familiar with procuring infrastructure of this scale,” said Vijendra Singam, Acting Head of Energy & Utilities at NAB. “It may be that state governments become the party that tries to coalesce councils into one framework to build these facilities. Consistency in approach would help encourage investment across all the states and territories.”
Long-term solutions will require reducing the amount that households, business and industry consume and discard – in other words, behavioural change.
“Landfills will eventually fill up,” said Joy Leet, Director, Infrastructure, at NAB. “Recycling and recovery are actually latter steps in the waste hierarchy — the first choice is still to avoid and reduce waste as much as possible.”
The concept of the waste hierarchy is an inverted pyramid that sets priorities for the efficient use of resources: avoidance; reuse, recycling, recovery; and as a last resort, disposal.2
Reducing waste was the key message of the ABC’s hugely successful War on Waste series, which prompted initiatives to slash the generation of waste at home, at schools and in businesses such as banning single-use plastic bags and switching from plastic straws to paper.3
Companies are also working to reduce their environmental footprints. At NAB, we have reduced our waste sent to landfill by 26% since 2015, cut office paper use by 43% and water use by 5%, as part of a broader push towards greater sustainability across all our operations.
Global giants such as Unilever, Adidas and Nestle are moving to a circular business model, to ease the strain on resources. The goal of a “circular economy” is to keep resources in use for as long as possible to extract the greatest value from them — in contrast with the linear economy, in which goods are produced, consumed, and then discarded.4
A better alternative to landfill is emerging in Australia as part of a broader solution. A new waste-to-energy plant south of Perth, the East Rockingham Resource Recovery Facility with financing jointly arranged by NAB, will divert waste from landfill by treating 300,000 tonnes of council and commercial waste a year. It’s the second plant of its type in Australia.
“Waste-to-energy is a relatively new sector in Australia and it can be one aspect of the response,” said Leet. “With landfill methane being 25 times more potent in its greenhouse gas effect than CO2 , emissions from landfill are significantly higher than emissions from the plant.”
The plant will incorporate state-of-the-art combustion technology that meets even the strictest EU regulations and will reduce CO2 emissions by the equivalent of taking 64,000 cars off the road, as well as generating 29MW of baseload energy. The technology has come a long way in recent decades and is now considered sufficiently safe and reliable that in northern Europe these facilities are centrally located to maximise the social benefit of the electricity generated.
Leet said one of the key elements of the transaction was that the councils did not have to sign up to fixed volume contracts for the waste they will send to the East Rockingham facility. “Councils can still adopt waste reduction strategies over time. Waste-to-energy isn’t trying to compete with recycling; it’s competing with landfill and it’s a smart last step before landfill.”Speak to a specialist
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