The aim of this article is to provide an insight into the recycling industry of New Zealand and attract attention to the potential business opportunities. Stereotypically, New Zealand is viewed as a very green country, both in terms of the flora and with regards to the environment, however in truth this is not necessarily the case when it comes to recycling.
My interest in the industry was sparked by a conversation with a fellow train traveller, who turned out to be an owner of a small recycling business in NZ. The business was started by his parents and having inherited it, he significantly expanded it. When he was younger all the business involved was occasionally transporting a couple of trucks of waste but now he owns some processing plants and attends recycling R&D conferences in different parts of the world; in he was actually travelling from one when we met. What was a surprising and an interesting finding for me was that even though NZ is a highly developed country, recycling as an industry is very much lagging there comparing to what it is like in the UK, for example. However, the changes to the business throughout my fellow traveller’s life are indicative of development of recycling industry nationally, which is going to be explored in this article.
Recycling in the UK
In the UK, there is more than one potential sequence of events for the contents of a household’s bins depending on the region of the UK. The difference may be as dramatic as one carton ending up being used as a recovered material to make cardboard and the other ending up in landfill. However, such details matter less on national scale. Generally, all waste put into bins is collected and taken to a sorting facility. How the sorting is done depends on what materials are recycled in the area, but once the recyclables have been taken out of the general waste flow and sorted by material, they are taken to recycling plants specialised by material. There the waste is processed and made into a ‘recovered’ material and then delivered to factories where it can be reused for making new products. Note that usage of recovered materials are heavily regulated because of their origin, so very few types products can be made out of them.
Knowing the process lets us have a better idea of where the costs of recycling are. They can generally be divided into four categories:
Transportation of waste has three stages:
- Between collection and sorting
- Between sorting and processing
- Between processing and further use
Based on such superficial knowledge of the recycling process we can draw some conclusions. For example, it is obvious that it would probably be inefficient to sort waste with a reasonably small percentage of recyclable plastics if we could only recycle those plastics and no other type of waste.
Background to New Zealand
We are going to introduce the relevant NZ data by comparing it to the UK data to be at a better position to implement the knowledge about the general recycling process to picture the industry in NZ.
Given that both the UK and New Zealand are highly-developed countries, it is reasonable to assume that average households representing the two countries produce similar amounts of waste. Since waste data is not as readily available, let us look at the populations of the two countries as proxies: the population ratio UK: New Zealand is about 14:1. Clearly the UK produces a lot more waste than NZ.
Given that UK and New Zealand are roughly the same by area, the average population density is much lower in New Zealand. However, it is important that 86% of population is urban in NZ, which is similar to 83% in the UK. This means that given sorting and processing plants were put not far from major cities, it would be possible to recycle big proportions of waste with lower transport costs than if the population density were homogeneous throughout the territory.
As it was mentioned previously, it would probably be inefficient to only recycle one material. Hence if a recycling system were to be set up in an efficient way, it would be required to install processing plants for as many materials as possible (of course taking into account the percentage of waste of that material). There are technological limitations on what and how can be recycled and extending possibilities would require a lot of R&D funding and time. Installing many recycling plants at once requires a lot of capital upfront, which is a limitation for any government.
Recycling is a merit service, which means that the public benefit of recycling is underestimated by consumers. In other words, consumers would not be willing to pay for recycling ‘at the point of sale’. Hence, recycling is to be paid for through taxation and thus to be organised by government.
NZ has a lot of area with extremely low population density, thus there is a lot of space for landfills, which would have much less direct immediate negative impact on people’s quality of life than a landfill would in the UK. Hence government may have more incentive to take landfills further out of the cities and pay higher transport costs instead of investing in development of the recycling industry.
Another important factor to take into account is whether the recycled materials can be put to use. As mentioned previously, they are only suitable for some uses and require different treatment to freshly produced materials, which may be more expensive. It may be much less attractive to set up a processing plant for a material that would have to be transported far to be put to use after it has been recycled.
Recycling in New Zealand
Currently there are few waste processing facilities in NZ and none that recycle significant amounts of waste. Mostly, waste is collected and sorted in NZ and then sent overseas for processing. Other countries, such as China, Indonesia, India and Vietnam purchase sorted waste for recycling.
This means that that the NZ government have to pay for transporting and sorting, but get some income for sorted recyclable waste from overseas companies.
The overseas processing companies are very particular about what waste they are willing to purchase, so the higher the quality of sorting and cleanliness of the waste the more expensive it is, which acts as an incentive for NZ sorting and cleaning businesses to invest into new technologies. Some recyclables are not in demand at all due to absence of technology in the purchasing or their business strategies; the question of usage of recovered materials is very relevant here.
The processing facilities that exist in NZ currently are relatively small in terms of the amounts of waste they can process and predominantly work very locally. The industry is on its rise with small businesses establishing relations with local councils and advertising themselves to citizens. There are many accepting centres for old electric goods.
An example of a new recycling company is EcoCentral, founded in 2011. The company operates three types of services and is 100% owned by Christchurch City Council:
- Centres accepting recyclable waste from businesses and households
- A shop selling goods produces from recovered materials
- A sorting and processing facility for the recyclables from bins
The shop mostly sells furniture and electrical goods.
There is space for recycling companies to grow to operate on a regional/national level to take advantage of the economies of scale. The market may become subject of penetration by multinational companies, however, they may approach the opportunity from a different perspective compared to developing local businesses: for example, Dell has initiated a computer recycling programme in Auckland, Wellington and Christchurch.
There are multiple programmes educating the population of NZ about recycling and its benefits and more strict environmental regulations aimed at businesses as well as local councils about waste disposal are being introduced. It is important to note that in general worldwide, having the reputation of environmentally friendly is becoming more of a trump for businesses, evident in companies engaging in and initiating environmentally oriented community projects. Such governmental moves and changes in perception of ‘being green’ may lead to local governments becoming more interested in supporting waste companies or even required to do so from the perspective of providing the necessary infrastructure for businesses to successfully follow the fresh regulations, in which case becoming more environmentally friendly by ensuring adequate access to recycling facilities may make communities and locations more attractive for businesses to move into and create jobs.