Making the markets work

a look at the barriers to recycling by Liz Goodwin, Director of Materials Programmes, WRAP

With the creation of WRAP, the UK opted to employ a very different mechanism to the rest of the European Community to deliver a step-change in the country's recycling performance. Our market-driven approach is a significant departure from the state subsidies and regulatory regimes that have predominantly been used in mainland Europe and has sparked considerable interest within the European Commission and from other member states.

The description above more than hints at the barriers which currently limit the recycling potential for the material streams (glass, paper, plastic, wood, aggregates, organics) that come under WRAP's remit. It also demonstrates why WRAP has taken an integrated approach, using a number of mechanisms including R&D, capital grant funding, leverage of investment and training to overcome these obstacles.

Fit for purpose: Recycled materials are still widely perceived as second rate and the use of recyclate is often precluded by material-based rather than performance-based standards. For some recycled materials, compost for example, the lack of standards or verified performance data has constrained market development and confidence in the product.

Required supply: Unless higher value applications for recyclable materials can deliver increased revenues, local authorities face very real logistical and financial constraints in expanding the UK's collection and separation infrastructure to divert recyclables from the waste stream and ensure a consistent supply. In the private sector, recycling levels are unlikely to grow while they are driven largely by legislation (in the form of Landfill Tax and the Packaging Regulations) rather than by financial incentive and any investment in additional reprocessing infrastructure will only be undertaken if there is proven and sufficient material supply and market demand.

Appropriately priced and suitable quality: Recycling is not a 'cheap' option and the sophisticated reprocessing technology needed to deliver higher volumes and quality often means that recycled materials struggle to compete with virgin materials unless they are destined for higher value applications. Where PRN (Packaging Recovery Note) revenue is available, for example in the wood packaging waste recycling industry, it has been used to finance improvements in the technology and reduce reprocessing costs. For non-packaging waste streams, however, funding for improvements in efficiency or productivity can be difficult to find. This problem has been exacerbated by the gap between the availability of investment capital and the demands of small and medium-sized enterprises (SMEs) in the UK's recycling sector, which have largely been ignored by a risk-averse financial community.

Demand: There is a general lack of awareness and positive interest in recycled materials and products within industry, and among public and private sector procurement professionals and the general public. Some materials, notably wood and compost, have also been hampered by the limited availability and development of alternative end markets.

Increasing value as well as volume
Maximising revenue at all stages of the recycling chain could make a very real contribution to overcoming some of the barriers identified above. For some time, it has been recognised that whilst markets already exist for some materials like paper and glass, there are still barriers that prevent larger or higher value markets for these materials from being unlocked. Other materials, such as wood, still suffer as a result of under-developed market opportunities for recyclate.

To address this, a major part of WRAP's work to date has been focused on creating or expanding higher value end markets for recycled materials and products that generate sufficient revenue to encourage growth, investment and innovation. Critical to this work has been the R&D grant funding which has formed part of WRAP's initial three year programme.

In total, WRAP has invested over £7m in some 40 R&D projects across all its materials streams. These projects, all of which will have been completed by March 2004, have encompassed all aspects of the recycling process, from material sourcing and collection through to end product specification. They have included research to assess new potential markets for recycled materials (thermoplastic truck panels), to identify new reprocessing methods to enable specific problem waste streams (fluorescent lighting tubes, cathode ray tubes, PVC-U rich plastic waste) to be recycled, and to investigate processing methods to produce recycled material of a suitable specification to open up previously closed markets (fine ground glass).

As well as addressing the barriers to recycling created by the physical characteristics of recovered materials, some of the research has also investigated the social barriers, such as separation and collection issues, and the barriers created by standards and specifications that discriminate against recycled materials.

Progress on removing these barriers and developing new applications will help both diversify markets and encourage competition, both of which will in turn help to make the recycling markets more robust. But, market development requires an integrated approach, overcoming barriers at all stages in the supply chain from collection to manufacture as well as ensuring that there is sufficient demand.

Consequently, WRAP has also looked at mechanisms to expand the UK's recycling and reprocessing infrastructure. To date, targeted capital grant funding has been delivered, including £17m towards a new paper recycling line at UPM-Kymmene's Shotton paper mill which will produce 100% recycled newsprint, and create the capacity to recycle paper from an extra 4 million British households. Capital grants under the Aggregates and Wood Programmes have also been awarded and Open Competitions are currently underway to increase the reprocessing infrastructure for other materials such as organics and plastics.

Investment, innovation and expansion have also been encouraged through several financial initiatives. WRAP's Business Development Services was created to lever investment into the recycling sector and has already given help and advice to 400 firms. The £5m Recycling Fund, launched earlier this year, is designed to bridge the risk capital gap, and a new Residual Value Guarantee Scheme will increase access to operating leases for recycling plant and equipment.

Demand and reprocessing capacity rely on material supply, and collection methods also play an important part in determining the value of the materials collected for recycling, with higher value material more likely to find stable and efficient markets. A national training programme, best practice advice and model contracts are just some of the ways in which WRAP has been helping local authorities to maximise the volume and value of the recyclables collected. A recent study and associated information leaflet on paper collection systems, for example, provided valuable data on the performance of existing systems against European specifications and highlighted how local authorities can improve both the quality and revenue from their paper collections.

This work on improving collection levels will be stepped up over the next year with the creation of ROTATE (Recycling and Organics Technical Advisory Team) which will work closely with local authorities to help maximise the potential of kerbside collection for all materials. This work will link with a home composting initiative so that a sensible balance is struck between recycling and minimisation and will also ensure that best practice advice on improving civic amenity and bring site collections is made available to councils.

The future: The activities outlined represent just some of the mechanisms being used by WRAP to deliver a step change in recycling in the UK. Given the range of materials under its remit, and the complexity of the task, the challenge for WRAP is to ensure that it has the right tools to tackle each market barrier in the most effective way. One of the key tasks for the future will now be to bring the results of the R&D projects to market and to ensure that the new applications and technologies are developed on a commercial scale. This will be the specific responsibility of the new Market Development Managers appointed recently across all the material programmes.

In addition, the recent State Aid clearance from the European Commission for WRAP's proposed capital grant programme has cleared the way for greater flexibility, allowing WRAP to give funding to larger companies in future, not just SMEs or companies in National Regional Assistance areas as stipulated in the interim clearance. This will enable a number of capital projects across all of the material streams to go ahead, including several aggregates projects and a second capital grant competition in the organics field next year.

Coupled with new work on waste minimisation, recycling and home composting best practice and public awareness, WRAP is now positioned to deliver a truly holistic approach to improving the UK's recycling performance.



| composting | glass | packaging | Subsidies | supply chain | training


Waste & resource management

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