The future of recycling

1. The future of recycling David Palmer-Jones CEO, SITA UK

2. The future of recycling Population Growth Extraction rate of virgin materials Shift in manufacturing base Scarcity and competition ‘Resource crunch’ Internalisation of material flows Economic growth / volatility Legislation / carbon agenda

3. The future of recycling • Asian growth fuels demand for materials • Competition for materials increase values • Commodity prices mirror GDP / virgin prices • Industry and Government recognise resource efficiency and scarcity issues > Global resource extraction Hundred million tons “ Rare earth prices double in two weeks as China seeks to increase control. ”

4. The future of recycling • Industrial and Commercial recycling driven by cost, resulting in 5 million tonnes shortfall • Need new infrastructure and investment to extract value, between £0.5 to £0.7 billion • Zero waste = three per cent landfill, energy and recycling • UK still in infancy - 45 million tonnes still going to landfill, only 24 million tonnes is active waste. • Municipal targets 50% in England • The average is 38%, resulting in a 12% short fall of 2 million tonnes

5. The future of recycling • Infrastructure develops, resulting in more volumes recycled, resulting in the need for markets, leading to export • Lack of reprocessors in UK force export alternative • China develops local recycling market reducing demand for imports • Lack of reprocessing capacity in the UK and demand from Asia leads to a drop in commodity prices and higher quality demands Circular economy is leaking

6. The future of recycling • Industry recognises resource agenda – business sustainability • Voluntary producer responsibility deals become key to cost control and material capture • Examples • Tesco reverse vending • Car manufacturers owning stakes in metal reprocessors (Renault)

7. The future of recycling Mattresses • Legislative and fiscal drivers (i.e. landfill tax) create new markets • Problem material becomes valuable resource • Large market disposed of per annum • Cost increasing for disposal with tax • Consistent supply of valuable materials - such as wood, textiles, metal - results in a positive environmental impact Mattress recycling

8. The future of recycling AggMax Street sweeping • Landfill tax creates a new market • Low grade material becomes of value • Recycled materials reused in construction • Rare earth metals? Gravel Sand

9. The future of recycling ELP diesel • Market led problems • one million tonnes to landfill • Increasing cost • landfill tax burden • Environmental benefits • 20% lower CO2 emissions • Synergy with SITA UK’s business • ‘natural hedge’ • Local reprocessing • ‘waste to product’ Plastics to diesel

10. The future of recycling Conclusions • Resource extraction growth and increased scarcity resulting in the value of secondary raw materials increasing • Recycling moves from a political/environmental ideal to integral to sustainable growth • From ‘laissez faire’ to interventionist – Government begins to aid the circular economy • Minimisation and re-use strategies begin with the re-engineering of products leading to the creation of more easily repaired and recycled materials • Cultural acceptance increases as ‘recycling generation’ grows up

11. The future of recycling Conclusions • Industry reacts in ‘resource wars’ moving to ‘closed loop’ take back schemes • Commodity values intrinsically linked to economic volatility increasing risk profile for market / industry • Speed of infrastructure development influences speed of landfill diversion – planning hurdle • Active private sector investment needed to develop this new infrastructure - but limited • Export demand diminishes as Asia internalises own recyclables – 70% by 2015? • Government react too late to create stimulus for development of UK / European reprocessing industry • Recyclers move up the value chain to refill the export loss producing higher grade base materials