What potential does recycling have to support manufacturing risk mitigation and boost the UK’s economy?
From oil-based plastics to minerals and rare earth metals, price volatility and availability of many raw materials are putting pressure on manufacturers of a huge range of products.
Yet many have not grasped existing opportunities to relieve themselves of these burdens by simply reusing the materials which they – and others – have already bought and sold.
There are massive opportunities for manufacturers to reduce risk and increase visibility of input costs through creating closed loop product cycles – wherein materials and products are perpetually recycled. There is also huge scope for the economy to benefit as new sub-sectors of manufacturing accommodate closed loop product systems, creating employment and reducing geo-political risk exposure in accessing certain raw materials.
“The government subsidises the export of waste plastic. That is lost business to me” Jonathan Short, ECO Plastics
A report, Towards the Circular Economy, commissioned by the Ellen MacArthur Foundation and published by McKinsey in January, identifies potential annual net material cost savings of over $380 billion across a selection of EU manufacturing sub-sectors. How? By moving their products to closed loop cycles.
Take steel – the report says that imposing circular design models for recapturing products and materials at end-of-life could release 100 million tonnes of iron ore globally by 2025.
But while creating closed loop systems for products such as cars, washing machines and even buildings has massive potential, creating such systems will require radical changes in design concepts and business models.
For manufacturers in some other sectors, the opportunity is far more immediate and is supported by a fast growing manufacturing sub-sector – plastics recycling.
An economic diamond in the rough
The plastics recycling membership of the British Plastics Federation turns over in excess of £226m a year and employs around 2500 people. The UK is also home to the world’s largest post-consumer plastics processing facility, EcoPlastics in Leicestershire.
EcoPlastics’ £40 million turnover operation processes around 150,000 tonnes of plastic every year. This has required £30 million of investment in automation to date and supports the employment of 160 people on site.
The mixed plastic feedstock for EcoPlastics is sorted, cleansed and processed to re-manufacture several plastic base products, most commonly recycled PET for use in the food and drink industry. EcoPlastics even hosts a £15m joint venture extrusion facility with Coca-Coca Enterprises to protect consistency of access to quality recycled PET for the bottling giant.
Other grades and types of plastic produced at the site (including recycled clear and coloured HDPE and mixed polyprothene) finish up as products as diverse as piping, wheelie bins and plastic bags. EcoPlastics CEO Jonathan Short says that he expects these applications, particularly piping, to grow as a proportion of his total business in the next year. The firm already supplies two piping manufacturers in the UK and more in Europe. It has just signed a new contract in this sector worth around £3m a year.
And EcoPlastics is not the only plastics processor on the rise.
Yorkshire-based R3 Products started making substitutes for concrete and wood construction products from recycled post-commercial plastics last year and was the UK’s biggest manufacturing start-up in 2011. Its early success has since attracted more investment from specialist equity firm Iona.
Resource efficiency: New designs for a circular economy
The bigger picture for a closed loop economy is under scrutiny.
A competition run by the Technology Strategy Board hopes to encourage business-led collaboration on new designs which reduce reliance on strategic materials and challenge our acceptance that products have to go through a ‘disposal stage’.
The competition is backed by a £1.25m fund and has just accepted its first submissions. Another round of applications to the competition will be held in February 2013.
The competition is being supported by a campaign from the Royal Society for the advancement of Arts Manufacture and Commerce (RSA). The Great Recovery aims to raise awareness of the requirement for “design for disassembly” which, the sponsors hope, will grow alongside interest in closed loop product systems.
The campaign will run for three years and will include research into how service design models, systems thinking and continuous professional development resources can help the design community collaborate with industry better in the advancement of a circular economy.
The pain of PRNs
The guilty legislation is the system for issuing Packaging Waste Recovery Notes (PRNs) and Packaging Waste Export Recovery Notes (PERNs). PRNs and PERNs were introduced around 15-years ago with the admirable intention of ensuring packaging producers paid for the development of recycling infrastructure to deal with their waste.
But the government’s approach does not support a level playing field for UK plastic processors and is holding back the development of recycling infrastructure in the UK, Short asserts. “The government subsidises the export of waste plastic – and that is lost business to me.”
Restrictions put on UK plastics processors incentivise the export of waste – or raw materials from EcoPlastics point of view.
Under existing laws plastics processors in the UK can only issue a PRN – which packaging producers are obligated to buy – if they are seen to produce a finished product. To claim this, they must satisfy a long list of requirements to the Environment Agency including; certificates of conformity, invoices, delivery notes and confirmation of product specifications from both EcoPlastics and its customers. With no such requirement needed for exported plastics and with UK PRN prices becoming massively inflated this year, packaging producers are far more likely to send their waste abroad, says Short.
“The PRN system is full of good manufacturing best practice which I have no objection to,” says Short. “But a man with a van can take a tonne of waste – which may be dirty, contaminated and with no quality checks – put it in a box, export it and generate a PRN for the producer. That is not a level playing field and it is holding back the expansion of the UK recycling industry.”
Short calculates that around 300 jobs in the plastics processing industry and 450 jobs in the supply chain could be created if the UK retained the 200,000 tonnes of post-consumer plastic currently exported every year from Britain.
Jonathan Short is not the only one to protest at the unfairness in the current PRN system. The British Plastics Federation’s Recycling Group is pushing for reform as is the Royal Society for the Advancement of Arts, Manufacture and Commerce (RSA) as part of a wider campaign supporting progress towards a circular economy (see box).
“The government’s most recent waste strategy was poor,” says Sophie Thomas, co-director of design at the RSA. “It was a very safe strategy which did nothing to incentivise a change of perspectives about how waste is viewed as a raw material or how the opportunities available through reprocessing waste are acted upon,” she says.