David Newman, managing director of BBIA and president of the World Biogas Association introduces the programme Making Carbon Count, pricing in the externalities of resource management…
When I heard Dr Janez Potocnik speaking at the CIWM meeting in London June (pictured), I asked him if pricing in the externalities would get more resources back into recycling and recovery and help achieve the ambition of the circular economy and naturally he replied yes.
Not in the technical sense of how these can be recovered, we know all the technologies are available and that huge volumes of resources are already going back into industrial re-use. No, the mechanics are not the problem. The problem is the economics.
Every waste practitioner knows that almost all materials cost less to buy new than to buy from recycling – most metals excluded. The cost of collecting, sorting, processing and transforming waste materials into secondary raw materials is usually greater than cutting them out of the forest, extracting them from the gas pipe, or digging them out of the ground.
This is why we have taxes and EPR systems of course. But they are not enough. As we see across Europe, but more generally on a global scale where 70% of waste is simply landfilled or dumped, recycling is a rich man’s game. So from Greece and Romania in the south and east of Europe, to Portugal in the west, achieving recycling rates above 10/20% is a struggle. Landfills still dominate waste management disposal routes.
As we see across Europe, but more generally on a global scale where 70% of waste is simply landfilled or dumped, recycling is a rich man’s game.
The financial resources simply are not available, as they are in Sweden, Germany, or the UK. The UK is a case – since austerity measures have cut local government budgets, recycling has fallen. And here lies the principle reasons why after nearly two years negotiating, we still do not have a new circular economy package agreed among the EU-28. It’s about money.
At the same time the European Union is going through another process, that of deciding how the Emissions Trading System will look post 2020. The 2016 Paris accords have given new impetus to policies to reduce GHG emissions. Carbon trading is one instrument to help make this happen, though clearly not enough on its own.
The call for a global carbon price has strengthened in the last year. An initiative from the World Bank, IMF, several nations and several leading energy producers, has added weight to the demand for a carbon price. China is planning its carbon trading market now, and if the EU gets its own system in place by 2020, around 40% of the world’s emissions will be in a carbon pricing system. Not enough to reduce global emissions by what we need, but a positive step nonetheless.
So I asked Dr Potocnik: what if we brought these two processes together? What if we looked at how a carbon price could drive up resource recovery? How would that work? Would pricing in the externalities of the emissions caused by making virgin plastic, or virgin wood pulp, or virgin aluminium, actually make secondary, recovered plastic, paper and aluminium more competitive? Or would it simply add to everyone’s costs and raise prices ? What would happen if we taxed the CO2 emissions from WtE plants? Would this stimulate recycling or just add to costs? Would food waste suddenly have a value? And were landfills not taxed on the waste entering them but on the emissions coming from them, how much would that disincentivise landfills and promote recovery?
As with all taxes, someone has to pay and what are the implications for this in long term financial markets?
Studies exist, there are experienced analysts we can call upon to lead us through the debate, and many industrial sectors have already priced carbon into their internal accounting in preparation for the day when a price is applied. Indeed, many industries believe this day to be imminent. The waste industry is generally not however awake to the risk, opportunities or challenges of pricing in carbon emissions.
We have asked a highly qualified group of experts to come together and join us, from the waste and resource industry, on December 11th to discuss these options and eventualities. If a carbon price is going to be applied as many believe, we need to get ready for it and understand what this will mean for us all, waste recyclers, WtE operators, AD operators, landfill managers, and raw material producers.
I believe this day will be extremely interesting in looking at future scenarios and help us all understand the resilience of our own companies should (or when) they have to face the cost of carbon.