Why the UK needs to incentivise circularity

In the run up to COP26, Toby Woolrych, chief financial officer of Renewi, outlines the benefits of a circular economy and the role it can play in reducing emissions.


OPINION: Production of more secondary materials to reduce virgin material use is a condition of success at COP26

Toby Woolrych, chief financial officer of Renewi,

Last year we became familiar with headlines that outlined the visible effects of climate change including life changing wildfires in Australia, Greece and the USA, and deadly floods in Germany and the Benelux region. These events underline the urgency for action to reduce emissions. This must include building a circular economy through recycling and the use of secondary materials.

Becoming more circular will lead to a reduction in global greenhouse gas emissions by 39% and cutting virgin materials use by 28% within 9 years according to the Circularity Gap Report. This sounds like an obvious solution, but at present there are few or no incentives to back up government rhetoric on sustainability. The upcoming COP26 in Glasgow gives us an opportunity to push for change, to back up our policy with commitments, and to demand that building blocks for a circular economy are put in place.

The hurdles to a functioning circular economy may be easier to overcome than we think. Recycling, like most markets, is all about supply and demand. Supply is stimulated by banning or taxing landfill and incineration to create an environment in which sorting and processing to produce recyclates is economically competitive.

Further steps include mandatory pre-sorting of waste to remove recyclates before residues are incinerated. Demand is stimulated by setting targets for minimum recycled content for government tenders or indeed simply mandating certain levels of recycled content in all materials.

This is further backed by trends in consumer demand where a sustainable solution is appealing to a growing segment of the customer universe. Both stimuli are required to avoid some of the segment supply/demand imbalances that have caused excessive cyclicality in the last twenty years.

Recyclers have to play their part by continually investing and innovating to close the quality gap between virgin and secondary materials, working with designers and waste producers to do the same. All these supply and demand steps are already being implemented across in the North Sea in Belgium and the Netherlands.

By creating its own cross party clear regulatory framework and plan that incentivises recycling to create circular raw materials, the UK could make a real difference to the planet.

Recyclers have to play their part by continually investing and innovating

Legislation

The Circular Economy Package (CEP) framework has put forward a strong outline on how the UK strives to become more circular, including goals to “keep resources in use as long as possible, extracting maximum value from them, minimizing waste and promoting resource efficiency”. It’s now time to take action by preparing economic and regulatory incentives to begin the process of introducing circularity.

Of course, there are additional opportunities that arise from businesses becoming more circular, such as the creation of new and better jobs in the recycling industry, the protection of human health and biodiversity, as well as an estimated boost of $4.5 trillion economic opportunity by 2030. But to enjoy these opportunities, we first need to look at how we can become more circular.

Today the UK is prioritising on investing heavily in Energy from Waste (EfW). This is a step up from landfill, but it still wastes reusable materials and does not minimise carbon emissions.  Therefore, the hypothesis that the UK has to complete its transition from landfill to energy from waste before making the next step to circularity must be challenged: we can do both at the same time. Indeed by stimulating circularity, we reduce the future investment required in less environmentally friendly EfW plants.

Governments

Renewi’s experience working in the UK and Benelux shows us how governments can learn from one another.  In the European Union, we see many different approaches to accelerate circularity. For example, the UK could learn from the Flemish Vlarema regulatory framework which is a game changer in stimulating recycling levels. Likewise from the Netherlands, with its clear policy commitment to 50% circularity by 2030 and incinerator taxes of over €30 per tonne on domestic and imported waste.

France has the repair index mandating the repairability of electrical and electronic equipment be clearly displayed on each product. Mandated minimum recycled content to further stimulate demand is just a matter of time. And we are seeing the response in the corporate sector – an understanding that recycled materials, far from being a disappointing and dirty second choice, will be scarce and highly valuable materials in a circular future.

Many great visions and innovations all leading to the same goal – to enable circularity. We need to work together to realise this in the UK as well. Building a circular economy is about taking a thousand operational steps, not making a small number of grand gestures. Reducing virgin material production is an important step towards protecting the planet for the next generation.

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