ISWA

China’s Ban on Recyclables: Beyond the Obvious…

China’s ban on recyclables is one of the most disruptive movements for the recycling industry and it is shifting the global landscape for resource recovery activities.

16 Jan 2018 -

For ISWA’s members and friends the disruption from China’s ban is not a surprise. We opened this discussion in 2014 with our groundbreaking report “Global Recycling Markets: Plastic Waste A story for one player – China” (authored by Costas Velis in the framework of the “Globalization & Waste Management” project). But still, the new reality provides the opportunity to think deeper on recycling & Circular Economy and to face the new landscape from a broader perspective. 

 

In his latest blog post, ISWA President Antonis Mavropoulos addresses the bigger picture and looks beyond the obvious to understand the global impacts of the ban.

1. China was the convenient answer to an inconvenient question 

For the recycling industry, the question was, and still is, how to find end-users for a continuously increasing stream of recyclable materials. The difficulty is that, as we have learnt, the more the recyclables we collect the less their purity and the worse their quality. China, as the global hub for recyclable materials, provided an easy answer for some time. For at least two decades, it was receiving recyclables, especially plastics, with high impurities. Most of the recyclables that were shipped to China were not suitable for other regional and local end-users, in USA, EU and Australia due to their low-quality. However, this was a win-win situation. The western world was able build high recycling rates, ignoring the quality problems involved, and China received cheap, low-end materials that were further processed or used as a cheap fuel, with vast environmental impacts in both cases. China’s ban brings us back to reality. 

 

As we have been accustomed to a continuous, and sometimes unjustified, rally for higher recycling rates, it’s time to recognize that more recycling can be a misleading scope if it’s a stand-alone one. The right target is to achieve more high quality recyclables. This does not always mean higher recycling rates, although in many cases this is definitely part of the job. In some cases, it means that we should work hard to “purify” further the existing recycling activities to make them more viable and to provide them more local and regional end-users. In other cases, it means that we must select carefully which materials are recycled and how. In all cases, it obliges us to rethink the feasibility of the recycling activities exactly as they are: as market-based activities.

2. China’s ban highlights the vulnerability of the recycling markets

Recyclables are part of the global supply chains. Thus, their prices are related to the prices of the commodities that they substitute. In 2008, we realized how close this relationship was when immediately after the collapse of Lehman Brothers’ Co, that signaled the beginning of the world’s worst economic crisis since the oil crisis in 70s, the prices of recycled paper and plastics collapsed too. Between 2008 and 2012, especially in USA and Australia, and less in EU, we watched thousands of recycling programmes shut-down or radically eliminate their coverage and intensity, because of the global economic crisis. China’s Green Fence operation in 2012-2013 was another signal, although with much lower impact, that demonstrated the high sensitivity of the global recycling markets to the Chinese dominance. Now, the recent radical China’s ban highlights that we have lost at least 10 years (2008-2018) to rethink and reshape the role and performance of the recycling markets, and to conclude that our recycling systems would never become sustainable if they remain so dependent on China’s, or anyone else’s, policies and attitudes.

 

But have we really lost ten years? My answer is yes, because ten years are more than enough to create policy incentives to boost local recycling markets. Because, as we have thoroughly and in depth discussed and documented in ISWA’s Task Force on Resource Management, we need much less than ten years to shift from massive recycling to selective single-clean stream source separation. Because we faced, day by day, the increasing complexity and cost of the “business as usual” recycling activities and we underestimated that this will drive the systems to higher vulnerability too. Because we did not say clearly that there will be no closed loops without high quality recyclables, and that the high recycling rates do not always mean better environmental results. Because we did not explain that recyclables are raw materials for industries that should be capable to receive them, and that is not always happening automatically and without proper policies, incentives and costs for the industrial sectors too.  

3. China’s ban will create global environmental impacts 

China, officially, explains that the recent ban is a part of its broader environmental and health protection policy. It is also a measure that will stimulate domestic recycling activities. The Chinese government puts a lot of efforts in place to reduce pollution and improve the environmental quality of the country. Any improvement, or deterioration, in the Chinese environmental conditions creates a global impact. But even if all those good intentions will be realized, the benefits for China will probably create environmental problems in other parts of the world.

 

As western citizens, we can’t complain about the fact that now we must ourselves deal with the pollution that was exported, together with the recyclables, in China for many years. We must find a way to deal with this pollution load and with the related recyclables. It will take us a transit period of 2-4 years, but there is no doubt that sooner or later, there will be a way to deal with the problem with minimum environmental impacts. Maybe we will recycle less but better, maybe some plastics will be dumped or burnt, but finally our waste management and recycling systems will adapt to the new reality.

 

The problem is which exactly will be the adaptation plan that the recycling industry will choose. In fact, if the adaptation plan involves continuing massive exports, although in a smaller scale, of “dirty recyclables” in different countries, trying to find the lowest environmental standards, cheap labor and lack of enforcement & control, then there will be substantial environmental impacts to other parts of the world, most probably nearby China in SE Asia and Africa too. Of course, no country can substitute China’s almost endless capacity to absorb the world’s plastic scrap, but there are already discussions to use neighboring countries and the same logistic networks to sustain the current business model as much as possible. This is already “sold” to some governments as developing a national competitive advantage or as an opportunity to develop low-tech recycling industries and cheap, but of-course very dirty, energy outlets.

 

We do not know if and what will be the alternative recyclables’ markets to China, but we do know that for the next period more low-quality plastics will be looking for outlets. We can only hope that they will not become part of the marine-litter and that they will find either proper recovery solutions or at least environmental safe final sinks. 

4. China’s ban signals the need to think Circular Economy beyond recycling  

If we want to be bold and ambitious, we have to grab the opportunity of the China ban to promote another adaptation plan. A plan that will prioritize waste prevention and reuse as the most urgent priorities of any system. A plan that will recognize the current technical and economic limitations of recycling. A plan that will boost eco and modular design, utilizing the unbelievable technological advances of the fourth industrial revolution. A plan that will demand not only the consumers to develop “greener behaviors”, but also, and mainly, the industries to develop new business models and manufacturing patterns. A plan that will stimulate Circular Economy as a realistic opportunity for specific materials and industrial sectors, rather than as an obligation of the waste sector.

 

China’s ban is a great opportunity to rethink Circular Economy and to prioritize the development of local closed loops, as a basic condition for the long-term viability of our systems. You will never see anyone involved in organic fraction source separation programs to be worried about China’s ban. Recycling the organic fraction into organic-rich soil improvers is a sustainable local closed loop that contributes directly to Circular Economy. Still, in EU there is no mandatory target for organics’ recycling – it’s time to fix this problem.

 

 

China’s ban is a great opportunity to move away from the fallacy that everything can be and should be recycled. It’s an opportunity to face materials’ recycling as just one intermediate, imperfect and sometimes costly solution that does not always contribute to Circular Economy. There are scientific works that prove that the more we push people to recycle, the more we cultivate the wrong idea that recycling (and not waste prevention, reuse, eco-design and the necessary industrial shift of the Circular Economy) is the solution. 

5. China’s ban for plastic scrap will result in more virgin plastic consumption

For the USA only, China’s ban has the potential to affect US$ 6.5 billion of annual exports and 150,000 related jobs. SWANA, ISWA’s biggest National Member in USA & Canada, has already filed its comments to WTO and offered technical assistance to the Chinese Government.  But what seems an existential risk for curbside recycling programs in USA, for some may be a minor loss for a high gain. To understand the whole picture, we must quit the waste management and recycling view.

 

The big money will go to the plastic industry. Morgan Stanley predicts that the China ban could shift about 2% of global polyethylene plastics supply from recycled to new plastic material!  For plastic producers those are great news, the ban will boost demand for new plastics by enough to nearly absorb all the new polyethylene output coming online next year in the USA!

 

The effects can already be seen in China’s increased appetite for virgin polyethylene, with imports up 19% this year as scrap polyethylene imports dropped 11%!  It seems that the US plastic industry is well prepared for the upcoming explosion of plastic exports to China. That’s because, according the Bloomberg, the US has become the cheapest place in the world to make plastic, thanks to a fracking boom that’s created a glut of natural gas, the main feedstock for manufacturing. Taking advantage of low gas prices, chemical producers have invested an unprecedented $185 billion to build new capacity. Just four new U.S. plastics plants will soon begin annual production of 3.6 million tons of polyethylene by year.

 

China’s ban for plastic scrap imports is a generous gift to the US plastic industry, that will help the US to rebalance the $250 billion trade deficit with China, a goal that has been on the top of President Donald Trump’s agenda.

 

China’s ban is a problem for recyclers and the waste industry, but a golden opportunity for the plastic industry. Circular Economy can wait while some hundreds of billion dollars will be invested to traditional “linear” systems that will promote the “throw-away” and “fast consumption” model…   


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