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
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
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.