New Zealand invests in growing its domestic recycling industry to create jobs and dump less rubbish at landfills

Shutterstock/corners74

Jeff Seadon, Auckland University of Technology

New Zealand’s government recently put more than NZ$160 million towards developing a domestic recycling sector to create jobs as part of its economic recovery from the COVID-19 pandemic.

New Zealanders recycle 1.3 million tonnes of materials each year, but 70% is currently exported. A recent NZ$36.7 million funding boost to upgrade recycling plants throughout the country followed a NZ$124 million injection into recycling infrastructure to grow processing capacity onshore. The investment signals a focus on supporting services that create employment and increase efficiency or reduce waste.

The potential for expansion in onshore processing of recyclable waste is enormous – and it could lead to 3.1 million tonnes of waste being diverted from landfills. But it will only work if it is part of a strategy with clear and measurable targets.

COVID-19 impacts

During New Zealand’s level 4 lockdown between March and May, general rubbish collection was classed as an essential service and continued to operate. But recycling was sporadic.

Whether or not recycling services continued depended on storage space and the ability to separate recyclables under lockdown conditions. Facilities that relied on manual sorting could not meet those requirements and their recycling was sent to landfill. Only recycling plants with automated sorting could operate.

New Zealand’s reliance on international markets showed a lack of resilience in the waste management system. Any changes in international prices were duplicated in New Zealand and while exports could continue under tighter border controls, it was no longer economically viable to do so for certain recyclable materials.

International cardboard and paper markets collapsed and operators without sufficient storage space sent materials to landfill. Most plastics became uneconomic to recycle.

New Zealanders recycle 1.3 million tonnes each year.
Shutterstock/Josie Garner

In contrast, for materials processed in New Zealand — including glass, metals and some plastics — recycling remains viable. Many local authorities are now limiting their plastic collections to those types that have expanding onshore processing capacity.

Soft packaging plastics are also being collected again, but only in some places and in smaller quantities than at the height of the soft plastics recycling scheme, to be turned into fence posts and other farm materials.

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The investment in onshore processing facilities is part of a move towards a circular economy. The government provided the capital for plants to recycle PET plastics, used to make most drink bottles and food trays. PET plastics can be reprocessed several times.

This means items such as meat trays previously made from polystyrene, which is not recyclable from households, could be made from fully recyclable PET. Some of the most recent funding goes towards providing automatic optical sorters to allow recycling plants to keep operating under lockdown conditions.

Regulation changes

The government also announced an expansion of the landfill levy to cover more types of landfills and for those that accept household wastea progressive increase from NZ$10 to NZ$60 per tonne of waste.

This will provide more money for the Waste Minimisation Fund, which in turn funds projects that lead to more onshore processing and jobs.

Last year’s ban on single-use plastic bags took more than a billion bags out of circulation, which represents about 180 tonnes of plastic that is not landfilled. But this is a small portion of the 3.7 million tonnes of waste that go to landfill each year.

More substantial diversion schemes include mandatory product stewardship schemes currently being implemented for tyres, electrical and electronic products, agrichemicals and their containers, refrigerants and other synthetic greenhouse gases, farm plastics and packaging.

An example of the potential gains for product stewardship schemes is e-waste. Currently New Zealand produces about 80,000 tonnes of e-waste per year, but recycles only about 2% (1,600 tonnes), most of which goes offshore for processing. Under the scheme, e-waste will be brought to collection depots and more will be processed onshore.

Landfilling New Zealand’s total annual e-waste provides about 50 jobs. Recycling it could create 200 jobs and reusing it is estimated to provide work for 6,400 people.

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But all these initiatives are not enough. We need a coordinated strategy with clear targets.

The current Waste Strategy has only two goals: to reduce the harmful effects of waste and improve resource use efficiency. Such vague goals have resulted in a 37% increase in waste disposal to landfill in the last decade.

An earlier 2002 strategy achieved significantly better progress. The challenge is clear. A government strategy with measurable targets for waste diversion from landfill can lead us to better resource use and more jobs.

Jeff Seadon, Senior Lecturer, Auckland University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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BlackRock is the canary in the coalmine. Its decision to dump coal signals what’s next

John Quiggin, The University of Queensland

The announcement by BlackRock, the world’s largest fund manager, that it will dump more than half a billion dollars in thermal coal shares from all of its actively managed portfolios, might not seem like big news.

Announcements of this kind have come out steadily over the past couple of years.

Virtually all the major Australian and European banks and insurers, and many other global institutions, have already announced such policies.

According to the Unfriend Coal Campaign, insurance companies have stopped covering roughly US$8.9 trillion of coal investments – more than one-third (37%) of the coal industry’s global assets, and stopped offering reinsurance to 46% of them.

Blackrock matters because it is big

The announcement matters, in part because of Blackrock’s sheer size.

It is the world’s largest investor, with a total of $US7 trillion in funds under its control. Its announcement it will “put climate change at the center of its investment strategy” raises questions about the soundness of smaller financial institutions that remain committed to coal and to a carbon-based economy.

Exract from BlackRock’s letter to clients, January 14, 2020

Blackrock is also important because its primary business is index funds, that are meant to replicate entire markets.

So far these funds are not affected by the divestment policy. BlackRock’s iShares United States S&P 500 Index fund, for instance, has nearly US$23 billion in assets, including as much as US$1 billion in energy investments.

But the contradiction between the company’s new activist stance and the passive replication of an energy-heavy index such as Australia’s is obvious. The pressure to find a solution will grow.

In time, the entire share market will be affected

One solution might be for large mining companies such as BHP to dump their coal assets in order to remain part of both Blackrock’s actively managed (stock picking) and passively managed (all stocks) portfolios.

Another might be the development of index funds from which firms reliant on fossil fuels are excluded. It is even possible that the compilers of stock market indexes will themselves exclude these firms.

The announcement has big implications for the Australian government.

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Blackrock chief executive Laurence Fink noted that climate change has become the top issue raised by clients. He said it would soon affect all all investments – everything from municipal bonds to mortgages for homes.

Once investors start assessing government bonds in terms of climate change, Australia’s government will be in serious trouble.

Australia’s AAA rating will be at risk

The bushfire catastrophe and the government’s inadequate response have shown the world Australia is both among the countries most exposed to climate catastrophe and one of the worst in terms of contributions to solutions.

Once bond investors follow the lead of Blackrock and other financial institutions, divestment of Australian government bonds will follow.

This process has already started, with the decision of Sweden’s central bank to unload its holdings of Australian government bonds.

Taken in isolation, Sweden’s move had virtually no effect on Australia’s bond prices and yields. But the most striking feature of the divestment movement so far is the speed with which it has grown from symbolic gestures to a severe constraint on funding for the firms it touches.

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The fact that the Adani corporation was unable to find a single bank willing to fund its Carmichael mine is an indication of the pressure that will come to bear.

The effects might be felt before large-scale divestment takes place. Ratings agencies such as Moody’s and Standard and Poors are supposed to anticipate risks to bondholders before they materialise.

It’ll make inaction expensive

Once there is a serious threat of large-scale divestment in Australian bonds, the agencies will be obliged to take this into account in setting Ausralia’s credit rating. The much-prized AAA rating is likely to be an early casualty.

That would mean higher interest rates for Australian government bonds which would flow through the entire economy, including the home mortgage rates mentioned in the Blackrock statement.

The government’s case for doing nothing about climate change (other than cashing in on past efforts) has been premised on the “economy-wrecking” costs of serious action.

But as investments associated with coal are increasingly seen as toxic, we run an increasing risk that inaction will cause greater damage.

John Quiggin, Professor, School of Economics, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.