Friday, January 24, 2020

Talking Trash and Making Cash: FT Alphaville On The Garbage Beat

We knew something was up when, some weeks ago in a Further Reading linkpost, a story from Waste Dive appeared.
From FT Alphaville:

Why some markets are just garbage 
New regulations usually mean new costs. They can also mean new market and arbitrage opportunities. Which is why FT Alphaville is becoming really interested in... garbage.
The UK waste market is about to feel the full transformative brunt of regulatory change thanks to the Tories’ new waste and resources policy. And this is likely to lead to some fascinating developments and market adjustments, according to waste industry experts.

The policy stems from the 25-year environment plan, announced by Michael Gove and Theresa May in January 2018. But it’s only now that corporations and manufacturers are really coming to terms with what it might mean to them in terms of costs and liabilities.

A key part of the new policy includes reform of existing producer responsibility schemes. These were originally designed to transfer the cost of waste management and recycling away from public authorities and consumers, and over to manufacturers and producers directly.
In the UK such schemes have been applicable to four main waste streams for a long while -- packaging waste; end-of-life vehicles; batteries and accumulators waste; electrical and electronic equipment. But minimum tonnage thresholds have always limited the numbers of obligated companies. As a result producers bear only 10-15 per cent of the total cost of waste management. Pretty trashy.

One of the issues is the way the current system recoups costs through the sale of Packaging Recovery Notes (PRNs) for plastic and aluminium, which are issued by recycling plants as evidence that recycling is occurring. Producers are obliged to buy these up as proof of their compliance.
The certificates trade on the open market at rates that are supposed to reflect the throughput of recycled materials. The higher the price of PRNs gets, the more likely producers are failing to deliver a high share of recyclable material into the supply chain relative to their declared polluting inputs.
Except, as with many regulation-inspired offset or credit markets, the market mechanism that underpins them doesn’t always drive recycling behaviour as intended....

The "Talking Trash...." formulation is not original to me.
I first heard it from a mafia guy years ago as he was pitching the remunerative opportunities I would be afforded by portfolio or direct exposure to the municipal solid waste removal businesses serving the City of New York.

For folks looking for the philosophical underpinnings of waste we have on offer "Waste and Recycling: 'In the flow of things'" which links to the indispensable Discard Studies.

Some of their recent articles:
The power (& disempowerment) of Menstrual Hygiene Management
Myths of the Circular Economy

And their clickbait compendium The Dirt:
Discard studies is an emerging field that takes systems of waste and wasting as its topic of study, including but beyond conventional notions of trash and garbage. To keep practitioners up-to-date, Discard Studies publishes The Dirt, a monthly compilation of recent publications, positions, opportunities, and calls for proposals in the field. Here is The Dirt for September 2019.
For me, I'm going to stick with Izabella d'Alphaville.