Circular economies can minimize waste

Circular economies can minimize waste

Designing physical activity into the infrastructure of a city can translate into higher wellbeing, lower crime rates and less pollution.

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Businessman and workers near recycled bins

City leaders should remember that old mantra ‘one man’s waste is another man’s treasure’. If they could create a circular economy that exploited sources of waste as a supply chain for other businesses this would also increase recycling and reduce landfill.

By 2030, the world will have an extra 3 billion middle-class consumers, all wanting fridges, cars, and mobile phones.1 We simply do not have the raw materials to continue producing these goods. With city authorities already under pressure to increase recycling rates, circular economies could be the answer.

Clearly, it is more efficient to extricate any mineral wealth prior to putting resources in landfill. This calls for an integrated plan of how best to deal with waste, with city leaders needing a clear vision of a common goal. If they are attempting to reduce plastic waste, then they need to make that clear across the organization and have the wherewithal to follow that through. 

Promoting recycling initiatives and penalizing waste is a good start but there is more that city authorities can do. While behaviors are changing and consumers are getting better at recycling, it is no good stockpiling plastic bottles if you do not know what to do with them. 

If the markets do not provide incentives, then city or national governments need to. The EU is pressing for a small charge on every bottle of water sold which goes back to funding the end of life processing of that bottle. This has already worked well in Beijing, which allows you to pay for train tickets with plastic bottles, Istanbul, which exchanges them for dog food and Sydney, which exchanges them for bus tickets. 

KPMG in South Africa helped develop a similar “producer pays” model in the country, which I have presented for use elsewhere. Under the REDISA initiative, each tire imported into the country pays 2.30 rand per kilo. This gives a clear line of sight and certainty on the raw material (the old tires) which has led to the development of a whole industry around how to use them. 

City leaders could use this sort of initiative to tackle food waste. Introducing a charge on retailers, restaurants and other businesses within a geographic area would provide an income stream to support recycling initiatives and reduce waste itself.

Another potentially valuable revenue stream is the extraction of minerals from waste products. Globally 320 tons of gold and 7,500 tons of silver are used annually to make PCs, tablets, mobile phones and other electronic goods. The waste from defunct devices in landfill is worth more than the ore remaining in mines around the world.

This leads to the concept of urban mining. One of the biggest centres is in Guiyu, China, which processes 1.5 million tons of waste a year, generates $75 million from electronic waste annually.3 Cities with old industrial and domestic landfills may soon find they are sitting on a far more valuable asset than simply one to burn for energy generation.

The conversion of waste back into raw material is the ultimate goal, but using it to generate energy is a good interim step. As technology develops, the opportunities increase. Several companies exist that take some of this plastic waste and convert it back into an oil or gas that can be used for energy, replacing fossil fuels. 

Right now the oil price is so low, it is cheaper to manufacture virgin plastics than recycle. So councils also need to think about financial incentives to encourage sustainable behavior. Preferential business rates, tax breaks and support for companies tackling conversion of waste streams are all helpful, as well as providing forums for individuals to connect and share experiences.

Waste is a resource, not a problem. If cities do not see that, the eyesore of growing landfill mountains should provide a timely reminder. 

© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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