In a consultation paper published today on “commercial instruments”, WRAP says that while it cannot tackle economic conditions such as the strength of the pound or the nature of the market for commodities, it can work to overcome specific barriers faced by the recycling industry.
And, in almost an about turn on not being able to tackle the nature of the commodities market, it suggests that it can take short or medium term measures “which will bring about about … market stability.” This could be by a price stabilisation mechanism in at least one of the key materials streams – glass, paper, plastics and wood – which WRAP is working on.
Investment barriers
The consultation document notes several barriers to capital investment and price stability. These include the fact that recycling is a relatively new industry, there is price volatility and a lack of standards to facilitate the trading of commodities “sight unseen”.
And, it considers that venture capitalists may be reluctant to invest because they require a high rate of return of 40%, the prospect of a national market and a 3-5 year buyout. “This is a very demanding profile for a recycling business.”
Among other suggestions from WRAP are that it sets up a programme to enhance communication between recyclers and potential investors and creates a revolving loan fund with seed capital, for smaller scale or particularly innovative projects.
Comments on the commercial instruments consultation document are invited by February 19 and should be sent to Ray Georgeson, policy director, WRAP, 8th Floor, 43 Marsham Street, London SW1P 3PY, tel: 020 7944 8861, fax: 020 7944 8864, email: WRAP policy
Further details are also available at the WRAP website.
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