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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 300dpi 1

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.

Figure 9 Municipal resource recovery rates are the lowest 300dpi 2
Figure 9: Municipal resource recovery rates are the lowest.
This graph shows that in 2020, the construction and demolition and the commercial and industrial sectors recovered more solid waste than sent to landfill, but more municipal waste was sent to landfill than recovered .
Source: Infrastructure Victoria, Advice on recycling and resource recovery infrastructure, Melbourne, VIC, Infrastructure Victoria, 2020, p. 46

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 300dpi 1

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

Table 1 Current processing facilities cannot meet future COAG targets for all materials 300dpi
Table 1: Current processing facilities cannot meet future COAG targets for all materials.
Source: Infrastructure Victoria, Advice on recycling and resource recovery infrastructure, April 2020, p.49

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).

Recommendation 28: Facilitate improved recycling infrastructure for priority materials

In the next year, focus efforts to increase and upgrade waste processing infrastructure on six priority materials. Facilitate increased recovery and reprocessing capacity and capability for paper and card, plastics, and organics by 2025. Revisit funding mechanisms and align recycling infrastructure with land use settings.

Victoria’s recycling and resource recovery system currently lacks the capacity and capability to process recovered materials to a standard that would allow them to be reused locally or exported for reuse overseas.43 There is a particular need to improve the recovery and reprocessing of plastics, paper and cardboard, glass, organic materials, tyres and electronic waste.44 These six materials are generated in large volumes, have relatively low recovery rates, pose significant environmental risks if improperly managed, and present economic opportunities for metropolitan and regional areas if their sorting and processing is improved.45

The Victorian Government should facilitate the development of new and upgraded recovery and reprocessing infrastructure focused on these six priority materials.46 Our Advice on Recycling and Resource Recovery Infrastructure sets out the specific infrastructure requirements,47 based on current and projected waste generation, existing infrastructure capacity and capability, and regulatory and policy changes by the Victorian and Australian governments. Our research determined 87 new or upgraded recovery and reprocessing facilities will be needed by 2039, 52 of which should be located outside of metropolitan Melbourne – indicative locations include Ballarat and Geelong.48 Greater capacity to reprocess organic material, plastics, paper and card is particularly urgent, as Victoria does not have the capacity to meet the 2025 targets for these materials agreed by the Council of Australian Governments in the National Waste Policy Action Plan.49 While processing facilities are owned by the private sector, the Victorian Government can assist by establishing objectives, identifying emerging infrastructure gaps, facilitating and leveraging public50 and private investment and providing funding to the sector to achieve targets and improve environmental performance.51 The Statewide Waste and Resource Recovery Infrastructure Plan was developed to guide infrastructure provision, but capacity and capability gaps remain.52

Long distances between waste sources and end markets add transport costs that make recycling economically unviable in some instances, particularly in regional Victoria.53 Locating a significant proportion of new and upgraded processing infrastructure in regional areas would allow those areas to process materials generated locally and from Melbourne and provide products, such as compost for agriculture, to local users with lower transport costs.54 The Victorian Government has allocated funding to accelerate construction of recycling infrastructure in Victoria’s regions.55

The Victorian Government should update the Statewide Waste and Resource Recovery Infrastructure Plan to support integrated systems56 and implementation with land use planning, economic development initiatives and resource strategies. It should strengthen the status of the Statewide Waste and Resource Recovery Infrastructure Plan in the Victoria Planning Provisions so waste management and planning decisions are coordinated between different governments. In January 2021, the Victorian and Australian governments announced a joint $46 million recycling infrastructure initiative. To date, seven projects have received funding totalling $8.1 million.57 The Australian and Victorian governments will also invest a combined $24 million, with Visy Industries contributing an additional $13 million, to fund Australia’s first drum pulper to recycle Victoria’s waste paper and cardboard at the Coolaroo Paper Mill.58 The Victorian Government should review the effectiveness of its existing funding mechanisms for co-investment in recovery and reprocessing infrastructure and trial new approaches. Improved approaches could include the use of auctions, bid schedule tenders, rebates, subsidies and low interest loans.59

Recommendation 29: Strengthen end markets for recycled materials

Continue to deliver market development for recycled materials by updating standards and specifications to be performance-based rather than material-based, and explicitly require the Victorian public sector to use recycled products where feasible. In the next five years, support research, development and demonstrations to build confidence and demand for recycled products.

The supply of recyclable materials has not been matched by demand for them.60 More reliable markets for priority materials – recyclable glass, plastic, paper and card, organics, tyres and electronic waste – would support economic development, help address the stockpiling of recovered materials, and reduce Victoria’s reliance on landfill. Markets for these materials vary substantially, presenting different challenges for each material. Ongoing research and development can help to identify new potential uses for recycled materials, either as direct substitutes for virgin materials or for new uses. A $30 million Recycled Markets Acceleration package will support local manufacturers and attract new manufacturers in making new products using recycled materials.61

The Victorian Government should continue work to remove the barriers to strengthen markets for recycled materials. Other than facilitating infrastructure (see recommendation 28), the Victorian Government should also improve the safety, environmental value, confidence in, and authorisation to use recycled products. The Victorian Government should prioritise working with the industry to develop clear, standardised approaches to communicate recycled content information in products. Existing industry approaches for product disclosure could be facilitated and promoted.

The Victorian Government’s Recycled First policy requires contractors to preference recycled materials and to justify using virgin resources. This should be expanded beyond its current limited scope that only covers major infrastructure projects. The Victorian Government should update its Social Procurement Framework62 to more explicitly require public sector agencies to use recycled materials, building on the requirement to use recycled content in construction.63 It should collaborate with local councils and the Australian Government to jointly promote public sector use of recycled materials.

The Victorian Government and responsible agencies should embrace performance-based specifications and standards for materials, such as specifying levels of fatigue or cracking. This prescribes the outcome required, and allows industry to determine compliant inputs, including recycled products.

In collaboration with the Australian Government, the Victorian Government should continue targeted research and demonstration activities for each priority material to alleviate product-specific challenges, such as applying organic materials to land and using recycled plastic in packaging. Previous collaborations have increased the use of recycled materials in roads and railways,64 and transport infrastructure remains an area of further potential.65

Recommendation 30: Address barriers to recycling and reducing waste

In the next year, reduce recyclable material contamination by supporting greater consistency in kerbside and commercial collection and separation of glass, paper, cardboard and organic materials. In the next year, design and implement behaviour change programs to reduce contamination, and consistently maintain further behaviour change programs in the next 30 years.

Over 90% of Victorians are open to putting more effort towards managing their waste.66 A simple, consistent sorting and collection system can reduce contamination and improve recycling quality, helping the community and businesses to understand recycling’s benefits.67

Contamination occurs when people dispose of items in the wrong bin. Contaminated recycled materials have lower market value, in turn reducing investment incentives in reprocessing and recycling infrastructure.68 Improving source separation and consistency in waste collection is essential for reducing contamination. Contamination rates in Victorian municipal solid waste averaged 10.5% in 2018–19, with different council areas ranging from 3% to 29%.69 Not all councils accept the same materials in recycling collections, due to differences in what local processors will accept, and bin lids differ in colour and meaning across the state.70 These differences confuse people and contribute to contamination. Infrastructure Victoria commissioned polling suggesting a quarter of people with co-mingled kerbside collection are unsure which bin to use.71

The Victorian Government has provided over $86 million to local government to deliver the new four bin service with standard bin-lid coverings for household collection. The Victorian Government should continue to deliver on Recycling Victoria’s commitment to implement a clear, consistent, statewide approach to kerbside collections, supported by greater separation of materials – including organics, glass, paper and cardboard. This should include requiring local governments to standardise bins for household collections, advocating for and supporting the review of the Australian Standard for Mobile Waste Containers, finalise delivery of the announced container deposit scheme,72 and establishing a minimum service standard for local government waste services for greater collection consistency.73

The Victorian Government should consistently invest in behaviour change programs to encourage waste minimisation, contamination reduction, and purchase of more recycled, reusable or compostable products. Current waste education focuses on handling waste after generation, rather than avoiding its production. It is generally provided in an unplanned way, and underfunded compared with other government campaigns, limiting behaviour change effects.74 Making recycling simpler, easier and more consistent also supports more effective behaviour change programs.75

Limited coordination and sharing of behaviour change campaign materials between the Victorian Government, local governments and industry makes disseminating simple, consistent messages complicated. Partnerships between governments and industry should develop these messages, supported by Victorian Government management and funding. Statewide messaging should allow for nuance where needed, such as in different regions, or in culturally and linguistically diverse communities.76 Program monitoring, evaluation and consumer research should inform continuous program improvements.77 To the maximum extent possible, programs should be integrated with relevant industry and national packaging and labelling initiatives, such as the Australasian Recycling Label and National Packaging Targets, and leverage consumer behaviour research from the private sector.78

Recommendation 31: Minimise waste and improve residual waste infrastructure planning

In the next two years, improve infrastructure planning for managing residual waste, and further clarify the role of waste-to-energy facilities. Over the next 30 years, consistently invest in waste avoidance through behaviour change programs, pricing, regulation and other incentives.

A circular economy means using materials for as long as possible. Residual waste is material that cannot be viably recycled or reused. Currently, almost all residual waste is buried in landfill. This is the least preferable outcome on the waste hierarchy, as all remaining value of these materials is lost. Energy can be extracted from materials that are no longer useful, using thermal and biological waste-to-energy facilities as an alternative to landfill.79 This recovers some value, reduces greenhouse gas emissions from organic waste and reduces landfill’s long-term environmental impact. Waste-to-energy also has a role in contributing towards water sectors emission reductions.80 For example, sewerage is converted to biogas at the Western Treatment Plant to meet most of its electricity needs81 and Greater Western Water’s waste-to-energy facility will reduce the plant’s greenhouse gas emissions by about 900 tonnes annually.82

The Victorian Government should increase and accelerate efforts to minimise waste production across all sectors through facilitating collaboration,83 behaviour change programs, pricing, rules and regulations (including planning or operational permits), and other incentives. Waste avoidance is the best way to manage waste. If Victoria continues on its current trajectory, residual waste is projected to increase from 4.4 million tonnes in 2017–18 to 5.7 million tonnes in 2037–38.84

The Victorian Government should improve monitoring of the production, composition and destiny of residual waste with better data collection, analysis and reporting. Victoria needs enough planned landfill and waste-to-energy capacity to manage its residual waste. Landfill will always be a part of waste management systems and is especially important for contingency planning. The Statewide Waste and Resource Recovery Infrastructure Plan, aims to minimise waste going to landfill and planned for no new metropolitan landfill sites. Waste-to-energy can support this goal by keeping existing landfill capacity for unrecoverable materials.

The Victorian Government should strengthen infrastructure planning to manage residual waste through the Statewide Waste and Resource Recovery Infrastructure Plan. Waste infrastructure planning should account for integration across waste streams,85 options to co-locate infrastructure,86 and the changing generation and composition of residual waste. Infrastructure planning for residual waste should explicitly consider landfill as well as waste-to-energy facilities. Waste-to-energy processes generate residual materials which, unless used elsewhere, will go to landfill. Landfill planning should include the potential need to manage these residual materials.

Victoria should be looking to link its strong agricultural sector with renewable energy and recycling by using waste (domestic, commercial and agricultural) to create on-demand renewable energy with bioenergy, biomass and composting facilities.87 The Victorian Government should give effect to Recycling Victoria’s commitment to develop a waste-to-energy framework.88 Clear policy is necessary to achieve desired outcomes and mitigate against risks, such as feedstock demand creating perverse incentives for more waste generation, undermining reuse and recycling improvements. The Victorian Government should regularly review the cap of 1 million tonnes per year on the amount of waste that can be used in a thermal waste-to-energy facility in Recycling Victoria.89

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