The role of subsidies and economic support for resource recovery

Last updated: 27 April 2021

By IndustryEdge

Originally published as part of the July 2020 Recovered resources market bulletin

One of the obvious roles played by subsidies and economic support is to create the conditions where investment can occur to provide a beneficial recycling outcome for a particular material.

At the less obvious level, those same subsidies that remove a specific material from the recovery stream, often improve the overall quality and value of the remaining proportion, reducing landfilling of both the target material and other materials. Progressively extracting recovered resources from any commingled mass means the extracted material itself will not be landfilled and makes it less likely that the remainder will end up in landfill because it is ‘contaminated’.

Stories of contamination in the commingled recycling stream abound. The estimates of the extent of that contamination are widely varied. In recent weeks, in both formal and informal discussions, there have been widely different estimates provided by collectors and MRF operators.

At their least charitable, some suggest the higher estimates are self-defined by operators seeking to exclude some materials from their facilities. More charitably, the proposition is often that contamination arises from changing social circumstances, including enforced periods at home.

However, in the circular economy, today’s contamination is tomorrow’s opportunity, for the next recycling activity. Some argue that there is no 'waste' in a truly circular economy. The more resources that are positively removed because they are going to be recycled, the closer we come to making that possibility a reality.

This has become all the more pressing because whether it is Australia’s export bans or the import controls and potential bans of recipient countries, recovered materials must be free of contaminants, including of other recyclable materials.

As an example, right now, one of the main ‘contaminants’ in the paper stream is liquid paper board (aseptic and gable top). Volumes are small compared with corrugated boxes and are typically difficult to discern in the mass crossing the conveyors at a MRF. But, if they are not identified and separated, they add to the materials not considered recyclable: the contaminants, bringing recovered paper closer to current contamination thresholds.

If separated however, liquid packaging board can be recycled into some quite novel products. But just as important, the residual is improved because it is less contaminated, bringing it closer to contamination thresholds and moving it further from the prospect of non-beneficial landfill.

That separation will only occur where there is a financial incentive for the MRF operator or another sorting facility to go to the effort and expense of that activity. MRF operators are experts in their field and make their money from strategically separating, sorting and baling materials they can sell for recycling. So, it could be argued that if there was money in it, the MRF operators would already be separating the LPBs.

How much money? If we assume the material has no other use it would in theory end up in landfill. So, the rational incentive required to separate the material is up to, but no more than, the cost of landfill.

But just paying an operator to separate the material does not ensure it will be recycled. There is plenty of evidence of that.

That is why subsidy programs are largely focussed on supporting recycling activities that will reprocess recovered materials into a product. That product creates demand for the rational separation of more material.

In that context, State and Federal investments in recycling solutions are critically important. They provide the impetus and support for investment to identify, isolate, separate and reprocess a specific material, creating a new product for the future.

While that is helpful in its own right, what that same process also delivers is an improved residual volume, one that incrementally comes closer to meeting domestic specifications or the export designations and reduces the likelihood of landfill outcomes.

Subsidy and support programs support the development of a circular economy.