News, Opinion

Innovators will get competitive advantage

The Federal Government has enacted elements of the Recycling and Waste Reduction Act 2020 (the Act) ensuring Australia takes responsibility for its waste for generations to come. The Act provides a national framework to manage waste and recycling across Australia. It has been developed to align with seven key goals of the Australian Waste Management Plan:

  • Ban the export of waste plastic, paper, glass and tyres.
  • Reduce total waste generated in Australia by 10 per cent per person by 2030.
  • An 80 per cent average recovery rate from all waste streams by 2030.
  • Increase the use of recycled content by governments and industry.
  • Phase out problematic and unnecessary plastics by 2025.
  • Halve the amount of organic waste sent to landfill by 2030.
  • Make comprehensive, economy-wide and timely data publicly available to support better consumer, investment and policy decisions.

It is hoped that the reforms introduced in the Act will lead to increased recycling and remanufacturing of waste materials, which will transform our industry and boost jobs, as well as make it competitive. To illustrate this point, the waste export ban is expected to see the Australian economy generate $1.5 billion in additional economic activity over the next 20 years.

Read more: What circular economy?

If Australia is to have a hope to achieve these goals, some other critical areas require support including:

  • diversion of landfill levies to support investment in the recycling sector;
  • continued local, state and federal funding;
  • development of reliable markets for waste-derived products;
  • acceptance of waste-to-energy as part of Australia’s arsenal of landfill diversion technologies;
  • improvement in environmental planning process to facilitate the development of new resource recovery operations;
  • expansion of product stewardship schemes;
  • implementation of risk-based frameworks to facilitate the beneficial reuse of waste;
  • increased investment in research and development and most notably commercialisation to realise tangible innovation; and
  • active development of infrastructure to cater for emerging waste types and contaminants.

I have no doubt the key to success lies in Australia’s ability to reinvent the sector through tangible innovation. This means we will have to not just invest in research and development programs to drive innovation, but carefully support innovation through all stages of commercialisation. I often see good innovative technologies fail at the point of commercialisation.

Fundamentally, the goal of innovation is to provide organisations with a competitive advantage within the market in which they operate. In the waste management and resource recovery sectors, this is typically focussed on cost reduction. However, other areas such as sustainability and the customer experience can also provide differentiation. The key is to understand what your customers want and also what factors drive the market (e.g., landfill levies). For the waste industry, the market is going through unparalleled change, particularly driven by the export bans, which has upset the recycling equilibria around the world. In this context, the goal of innovation in the waste management sector should logically be focussed on developing domestic resource recovery solutions. Ultimately, the organisations that innovate will obtain a competitive advantage by reducing their costs but also achieving a sustainable future.

Innovation in the waste management and resource recovery sector requires the sector to consider not only the future drivers of waste generation in Australia, but the world. Most importantly, we need to consider the drivers in the economy and what impact these will have in the future state. For example, if you consider the rapid adoption of technology, whether it be an iPhone or flat screen TV, it is fairly predictable that the volume of these wastes will generate in line with the market expansion.

Now, what about emerging wastes? One excellent example is the adoption of electric vehicles. These vehicles all need reliable energy storage in the form of batteries such as Lithium-Ion Batteries. Batteries all have a lifetime where they lose efficiency and need to be safely recycled. Although Australia has recently approved a product stewardship scheme for batteries, this doesn’t include those generated from electric vehicles as there is a train of thought that business will solve that problem through R&D and innovation. This may well prove to be the case, but at present there is only a handful of brave and innovative SMEs paving the way with limited support. Given the potential of this sector, one would think that the support would be more focussed in this regard.

The other consideration for the sector is the prevalence of emerging contaminants. An example are per- and polyfluoroalkyl substances (PFAS). These chemicals are persistent in the environment and in the human body – meaning they don’t break down and they can accumulate over time. Emerging contaminants such as PFAS are starting to raise the heads through the waste management and resource recovery sector. We need to ensure that our sector is robust and can accommodate for the rapidly changing landscape, or we jeopardise achieving the above-mentioned goals, particularly the 80 per cent landfill diversion target by 2030.

The key to innovation is to invest at the right time. If you invest too early you run the risk of not obtaining a reasonable return on your investment; too late and you simply fall behind the competitive advantage gained by other players in the market. As a country, we need to have long-term vision and an investment horizon (often 10 + years) that supports us in realising this vision. There is also a significant need for government, at all levels, to support innovation in the sector. This can include providing innovation funding, product stewardship schemes, landfill levies (and bans), as well as ensuring that the planning process supports rather than hinders investment. It is clear that the Australian population expects the industry and government to uphold environmental and sustainability standards. Whether it be the illegal export of e-waste to the developing world, or banning single-use plastic bags in our supermarkets, the community is driving social change.

The waste sector is competitive and has always shown itself to be adaptable to change with the constant evolution of the market. However, there is no doubt that the current challenges we face in Australia will require more intensive investment in innovation, infrastructure and technology. This type of investment requires strong government policy making, so that the industry has confidence that the investment will provide a reasonable return on capital over the lifetime of the investment. For this to occur, there needs to be a strong alignment with the waste management industry and policy makers so that the investment risks are specifically addressed.

Executed well, Australia will join other leading nations in developing a competitive, sustainable future including the development of a robust circular economy. Executed poorly, and we will see major stockpiles of waste and a deterioration in social sentiment towards recycling.