1.5 Build a circular economy for waste and recycling
Reducing waste, reusing materials and recycling resources conserves valuable virgin materials, increases economic productivity, and reduces pollution and greenhouse gas emissions. With targeted infrastructure initiatives and the right policy settings, Victoria can meet growing demand for resource recovery and accelerate the transition to a circular economy.1
A circular economy shifts away from the ‘take, make, use, waste’2 approach to a ‘closed loop’ system. A circular economy aims to reduce the environmental impacts of production and consumption by avoiding waste, and reusing or recycling materials.3 It creates commercial opportunities by improving the quality and quantity of valuable materials recovered from waste, reducing extraction requirements, increasing demand for recovered materials, and generating new jobs and skills.
Figure 8: Resource flows in a circular economy.4
This diagram shows the three principles of a circular economy:
1) Design out waste and pollution from products;
2) Keep products and materials in use for as long as possible;
3) Regenerate natural systems by redesigning food systems and recovering organic material.
Source: DELWP, Recycling Victoria: A new economy, State of Victoria, 2020, p. 9
In early 2020, the Victorian Government publicly committed to transitioning to a circular economy in its new policy framework Recycling Victoria: A new economy.5 This policy proposes a new waste authority,6 complements the national waste targets7 and advocates for effective product stewardship schemes governed by the Australian Government.8
Sustainability Victoria also released the Path to Half report in February 2021, prioritising solutions to reduce food waste by half by 2030.9 In May 2021, the Victorian Government released Victoria’s climate change strategy and its Waste sector emission reduction pledge, which reduces emissions and also reinforces the Victorian Government’s commitment to halving food waste by 2030 and diverting 80% of waste from landfill.
We estimate materials worth about $1.21 billion were recovered in Victoria in the 2018–19 financial year.10 While the value of recovered materials will vary with commodity prices, this figure demonstrates the economic potential of higher rates of resource recovery, particularly if materials are processed and used locally. For every 10,000 tonnes of waste recycled, 9.2 jobs are generated, compared with 2.8 jobs for landfill.11 Increasing Victoria’s recovery rate from 69% to 90% could support as many as 5000 more jobs12 in developing and producing high quality recovered materials for use in major infrastructure projects, manufacturing and agriculture.13 Many of these jobs would be in regional Victoria.14 If household waste was recycled more efficiently, the economic benefits for Victoria over 20 years could be as much as $3.6 billion.15
Victoria’s waste has untapped potential
Despite past objectives to transition to a circular economy and recognition of the waste hierarchy,16 Victoria is producing more waste today than ever before. From 2000 to 2018, waste generation doubled from 7.4 million to 14.4 million tonnes each year. About 30% was buried in landfill. Resource recovery rates have stagnated at just under 70% of total waste, with international market changes and weak local recyclable material markets causing significant stockpiling and landfilling.
The actual recycling rate may be significantly lower than this because the ultimate fate of recovered materials is often unclear.17 The recovery rate is higher for some materials, such as 90% for metals, and lower for others, such as organics at 43%, and plastics at 23%.18 Figure 9 shows that waste recovery rates are relatively high in the construction and demolition sector, but much lower for municipal waste.
Meeting the ambitious new targets in the Victorian Government’s new waste and recycling plan will require significantly more waste reduction and increasing recycling in accordance with the waste hierarchy shown in Figure 10. In 2017–18, Victoria exported 12% of material recovered for recycling,21 but many destination countries no longer accept it without meeting strict standards. By 2018–19, the quantity of materials exported for recycling had fallen by 11% compared with 2017–18, as exporters could not find overseas markets.22 These changes caused global prices to plummet, particularly for paper, card and plastics. Without enough local processing capacity, some facilities closed or stockpiled material, and several councils were forced to send their recycling to landfill. Sending potentially reusable materials to landfill, waste stockpiling and illegal dumping all pose environmental and public health risks, such as past stockpile fire in Melbourne, which caused
damage to the sites and surrounding areas.23
The Council of Australian Governments (COAG) agreed to progressively ban waste exports from 1 January 2021. Without immediate planning for and investing in local infrastructure to recycle more materials to local and global market standards, Victoria will have significant capacity and capability shortfalls for recycling paper and cardboard by 2024, followed by a shortfall for plastics in 2025. Similarly, Victoria’s capacity to manage recovered organics and e-waste will be exceeded by 2025 and 2030 respectively.24 Table 1 shows that Victoria will not meet its recovery targets for paper and cardboard, plastic, and organics from 2025 to 2039 without more investment in local recycling infrastructure and capacity and e-waste recovery targets will not be met in 2030 and 2039.
Figure 10: Avoiding waste and reusing material are the most preferable approaches.20
This diagram shows the waste hierarchy, with avoiding waste the most preferable, following by reuse and recycling and the recovery of energy. Treatment and containment are less preferred and disposing of waste is the least preferred.
Source: Infrastructure Victoria, Advice on recycling and resource recovery infrastructure, Melbourne, VIC, Infrastructure Victoria, 2020, p. 44
In April 2020, we delivered our advice to the Victorian Government on the infrastructure required for, and the role of government in, supporting a more sustainable resource recovery and recycling sector.25
This advice informed government action, and the release of a new plan for waste and recycling.
We found $1 billion in infrastructure investment from government and the private sector could transform Victoria’s resource and recycling sector to recover up to 90% of waste by 2039, cutting emissions, reducing reliance on virgin materials, and limiting impacts on the environment. This would require 3.1 million more tonnes of processing capacity.
Supporting actions would be needed for the infrastructure investment to be successful, including governance changes, market development, and changes to community and business behaviour. Waste-to-energy has a role in managing non-recoverable or non-recyclable waste. Energy recovery is a better outcome than disposal to landfill, but Victoria should still prioritise waste reduction, reuse, and recycling. Waste-to-energy solutions higher on the waste hierarchy, such as anaerobic digestion of organic materials, are higher priority than incinerating mixed residual waste. Waste-to-energy solutions will require careful management to avoid risks, such as demand for feedstock creating perverse incentives to generate more waste, or undermining improvements to reuse and recycling options.
Governance can reshape investment opportunities
The Victorian Government sets objectives, makes policies, regulates the recycling and resource recovery sector, monitors and evaluates performance, and makes infrastructure plans. It can facilitate and leverage private investment to achieve its objectives.26 It can also help develop the new markets that recycling industries need for long-term sustainability.27 Local government manages household waste collection, disposal and recycling. Water corporations manage the removal and treatment of wastewater and sewage.28 All governments should encourage a sustainable recycling and recovery industry, but their roles often overlap and are not always clearly defined. Legislative and regulatory gaps, uncertain funding, and lack of clarity about roles and responsibilities can make long-term planning difficult and prevent the sector functioning efficiently.29 Different recycling services in different local government areas, driven by complex and varied waste management approaches,30 have contributed to confusion and material contamination.
A few private firms own, operate and fund most of Victoria’s recovery and reprocessing infrastructure. This has curtailed competition, innovation and investment, and made the sector slow to respond to local and global market changes.
Harmonising Victoria’s policy and strategy to improve recycling and resource recovery with applicable legislation and regulation could provide significant benefits.31
Our research into jurisdictions with high performing recycling and resource recovery systems, such as Wales, Germany, South Korea and South Australia indicated the foundation of success is an overarching policy framework for waste, recycling and resource recovery. It includes long-term commitments and multiple interventions across the material value cycle. Policies, planning and performance monitoring need to be appropriately funded, adapted over time and supported by targets that incentivise performance.32
Victorians are willing to change their behaviour
Victorians are passionate about recycling. In late 2019, we surveyed 1000 people about household waste. We found most want to do the right thing. The vast majority feel it is important to reduce landfill waste, consistently recycle when provided with a kerbside recycling bin, and almost all are willing to change the way they sort rubbish.33 But about a quarter thought the content of recycling bins ended up in landfill, and a similar proportion were unsure of the correct bin to use.34 Victorians told us they want a simple, consistent system which supports the benefits of recycling.35 In the long term, a genuinely sustainable approach will require changing behaviour.36 In 2018, only 39% of household waste was recovered, with the rest sent to landfill.37
Victorians can make a real difference if supported to reduce waste and improve household waste recovery rates through separation of different materials. Food waste is a particularly big opportunity.38
Over one-third of household waste is food, almost all of which can be reprocessed,39 but instead most goes to landfill. The commercial and industrial sector also sends significant food waste to landfill.
Food waste comprises 19% of all material buried in landfill each year, creating significant greenhouse gas emissions and pollution.40 A well-promoted, carefully designed system could capture as much as 70% of food waste41 and reduce emissions.42
Recommendations for a circular economy
Building on our previous advice and considering progress since then, Infrastructure Victoria makes the following recommendations to help Victoria transition to a circular economy. While our circular economy recommendations focus on waste and recycling, our recommendations on climate change, transport, and energy also support moving towards a circular economy. For example, they include increasing the use of stormwater and recycled water (recommendation 13), increasing electric vehicle adoption (recommendations 1 and 2), and augmenting energy transmission for renewable energy (recommendation 3).