Waste = Profit and More

The European Commission has announced that it is going to prepare a sustainability strategy to coordinate waste management at the EU level. At the moment, the average EU recycling rate is about 40%. This means that it is still a throw-away economy. The strategy should be outlined in December. Let’s take a look at 3 cases of waste management business to see some socio-economic implications of the Commission’s decision.

Case 1: Waste = profit + positive socio-economic impact

To measure the pace of urbanization, it is enough to take a look at the amount of waste a city generates. Take Lagos, the largest city in Nigeria. Bilikiss Adebiyi-Abiola, Cofounder and CEO of Wecyclers Corporation, has estimated that metal and plastic waste left on the streets is worth around $700 million. However, only 40% is collected, and even less is recycled: only 13%. There is a paradox: despite the big amount of waste available, local recycling plants do not have enough materials to process. Wecyclers came up with a solution: it developed a recycling business model based on social incentives. It employed over 80 residents of low-income Lagos neighborhoods to collect and sort waste. For every recycled kilogram, they receive points which they can exchange to things they need: electronics, household appliances, training or money. The collected waste is sold to recycling plants. Since its launch in 2012, Wecyclers has already collected over 525 tonnes of waste. Adebiyi-Abiola believes that the company could create 500,000 jobs in the country.

At first sight, Wecyclers’ case might seem to be irrelevant to discuss implications of the European Commission’s decision to coordinate waste management at the EU level. There are at least 2 arguments which dismiss this claim. “Trash is currency, and one that’s in every city,” Adebiyi-Abiola points out one of them. In addition, there are quite big economic differences between the EU member states, which is reflected in the way they handle their waste. In this context, Wecyclers can be taken as an example of how to address the problem of low recycling rates in some countries. Similar social enterprises can be an important instrument for implementing the EU sustainability strategy and improve its overall recycling standards. At the same time, they can help solve some socio-economic problems such as high unemployment and poverty in some parts of the bloc.

Case 2:  Waste = profit + energy

Over the past decade, Germany has closed all its landfills, built many waste-to-energy plants and composting facilities, and introduced a more elaborated recycling classification for household waste. Thanks to these measures, its recycling rate has reached about 65%. It is one of the best results in the world. However, intense recycling has caused a problem: German waste-to-energy plants are short of millions of tonnes of waste a year. As a result, they started importing it from countries like England, Ireland, Italy and Switzerland. Tolvik Consulting has estimated that waste processing costs $55 to $80 per tonne. It is an increase of over 57% to 128% in the past 34 years.

The European Commission’s decision to boost recycling across the EU will hit German waste-to-energy business. Stricter EU waste disposal regulations will further decrease the amount of waste needed to run waste-to-energy plants. Waste import from other countries will no longer be an option either. This means that eventually the European waste-to-energy market will shrink. To counteract the negative effect on energy supply, the EU will need to put more effort to better integrate the energy markets of its member states, diversify sources of energy and look for alternative options.

Case 3:  Waste = profit + innovation

Some fashion social enterprises have turned textile waste into an opportunity: they have built up their entire business models around the idea of upcycling. In contrast to recycling, it is a practice of repurposing items without decreasing their quality and in many cases actually improving it. Danielle L. Vermeer, Founder of Reclaimed, a social enterprise which creates dresses from upcycled vintage and gently worn clothing, believes that upcycling is transforming the fashion industry. In her opinion, it is one of the most innovative fashion trends at the moment because it combines 3 elements: sustainability, cost-effectiveness and creativity.

The EU sustainability strategy will boost local upcycling businesses, especially in creative industries like fashion or design. Better sorted waste will make it easier to repurpose or create new products and reduce production costs. Coordinated waste management will benefit everyone: upcycling companies will have an uninterrupted supply of materials, whereas customers will have better access to high quality unique products, often with ‘environmentally friendly’ labels attached.

References:  [1] Barbara Lewis, Reuters / [2] Athlyn Cathcart-Keays, The Guardian / [3] Eliot Brown, The Wall Street Journal / [4] Hipcycle / [5] Danielle L. Vermeer