Creating economic wealth from emissions reduction – a case study of recycling

By Mike Ritchie, MRA Consulting Group

Australia contributes 1.3% to global greenhouse gas emissions and various voices in the Coalition are saying that is so small we don’t need to act, or don’t need to act faster, to reduce emissions because the adverse economic impacts are not worth it. I don’t buy that argument. Reducing emissions does not mean destroying jobs and the economy. It means growing jobs and economic wealth in different parts of the economy.

Let’s look at the recycling and waste industry as an example.

The waste and recycling industry contributes close to 3% of Australia’s direct emissions, essentially from methane leakage from landfills and carbon dioxide emissions from trucks. In 1996 it emitted 16MT of CO₂-e, had a recycling rate of 6% of waste generated, and employed 30,000 people.

In 2019 it had an emission footprint of 10MT of CO₂-e (almost 40% decrease), achieved a recycling rate of 58% and employed 56,000 people.

The Australian waste industry achieved a 40% reduction in emissions while growing jobs, economic wealth and improving recycling rates. How?

By imbedding the costs of climate change in the economic decisions of waste generators. What does that mean in English? By putting a carbon price on the waste we sent to landfill.

This was done both directly via the Carbon “Tax” of Julia Gillard (though it was never a tax but a fixed price trading scheme) and indirectly by the State Governments in the form of the landfill levies.

The effect has been significant.

Firstly, the carbon pricing mechanism encouraged landfill owners to install gas capture systems to reduce fugitive methane emissions from landfills. Methane is a potent greenhouse gas with a global warming potential of 25 times that of carbon dioxide. Put simply, every tonne of methane emitted from a landfill is equivalent to emitting 25 tonnes of carbon dioxide. Organics in landfill decompose anaerobically to generate methane.

The result of the carbon price was every landfill in Australia emitting over 25,000t of CO₂‑e per year has installed a landfill gas capture system. That single arrangement reduced landfill greenhouse emissions by at least 6 million tonnes per year[1].

The biggest challenge remains the cumulative emissions from all of the small landfills and the continuing fugitive emissions from large landfills (around the edges of the landfill, cracks and the long tail emissions after it has ceased operating). With the axing of the carbon price there is a much reduced commercial incentive to improve gas capture[2]. So fugitive emissions have continued.

The second key mechanism hasn’t come from the Federal Government but from the States. The State landfill levies are an indirect price on the ‘externalities’ of landfill. That is, they are an attempt to price the unintended consequences of landfilling our waste including odour, loss of resources, emissions, traffic, dust and the opportunity cost of not being able to recycle these products back into the productive economy.

State landfill taxes now range from $0 (NT, Tas and ACT) to $140 (in NSW and SA), with Vic, Qld and WA in between. They are the key driver of the significant growth in recycling rates across the country. And most important, the levy is only paid on waste to landfill. It is completely avoided if the material is recycled. (In the same way a carbon price would work). If you don’t cause pollution, you don’t pay the price.

And this is where I need to discuss the significant INDIRECT emissions reductions deriving from recycling.

While the direct emissions from the waste sector are 10MT (from landfill methane emissions), the indirect benefits of recycling are much bigger. The fact is that recycling sends useful products back to industry and by avoiding the extraction of raw materials it massively reduces associated GHG emissions. If we recycle, we don’t need to mine, transport and process the equivalent raw materials. These processes can be very energy and emissions intensive especially for products like aluminium, steel, glass and plastic.

So by recycling we are capturing the embodied energy of the recovered materials. That is the energy that went into making the plastic, glass, steel, aluminium etc in the first place.

In fact, recycling currently reduces the direct emissions of other manufacturing activities by at least 50MT of CO₂‑e per year. That is, 50MT more emissions that glass factories, aluminium smelters, steel smelters, paper mills etc would be emitting if they did not have access to the recycled product.

So, if we were to stop recycling, emissions would go up by 50MT of CO₂‑e. That is 10% of Australia’s 533MT national emissions. (I must note that some of this material is exported so it shows up in emission reduction accounts in other countries – but climate change doesn’t care where the emissions occur, just that they do).

So State government landfill levies have significantly reduced Australia’s emission footprint and contributed to global emission reduction of at least 50MT of CO₂‑e, so far.

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Which brings me to future emission reductions. We currently achieve a 58% national recycling rate. What if we could do even better?

Work done by Warnken ISE[3] and MRA more recently, shows that Australia could achieve at least a further 50MT of CO₂‑e emission reduction by expanding recycling and introducing Energy from Waste. Four simple and cost effective actions are required:

1. Divert organics from landfill and into compost for farmers – to reduce landfill methane generation and facilitate soil carbon storage[4]
2. Expand recycling to avoid emissions associated with mining and manufacturing new materials[5]
3. Expand Energy from Waste to displace fossil fuels[6], capture the embodied energy of non-recyclable materials and avoid emissions[7]
4. Increase landfill gas capture to capture the remaining direct landfill emissions

These four actions would reduce Australia’s greenhouse emissions by 10% (over one third of the total 26-28% Paris commitment).

Put another way, if we expanded recycling, captured the fugitive landfill emissions, introduced energy from waste and banned organics to landfill, we could avoid another 50MT currently emitted by other sectors. (These savings also do not include the massive greenhouse gas benefits of sequestering organics in soil via compost and biochar).

As I said, that is a third of our total Paris commitment.

Not only would that massively reduce our contribution to global greenhouse emissions, it would generate at least an additional 50,000 new jobs and a huge variety of new businesses. That will drive economic growth (and resource conservation).

So the idea that reducing emissions necessarily stifles economic growth and is a jobs destroyer, is simply not correct.

We can create a more sustainable Australia by reducing emissions, increasing recycling and growing new green jobs. Simple.

It just requires political will and the courage to take the next step.

We shouldn’t need more disasters to make this transition happen.

[1] Note that, in some cases, landfill gas capture systems have been required by regulators in licence conditions even before the carbon pricing mechanism.

[2] Landfills that installed gas collection systems shall continue to get credits but there is no incentive to go after small amounts of gas. landfills that installed gas Shall continue to get credits but there is no incentive to go after small amounts of gas. The cumulative effect of these fugitive emissions is in the order of 10 million tons.

[3] Potential abatement was calculated at around 38MT while theoretical maximum was 56MT.

[4] Typically, when waste is landfilled, less than 50% of the generated methane is captured. Even taking into account transport to composting facilities, composting is always better than landfill in terms of GHG emissions.

[5] Capturing this “embodied energy” in recyclables going to landfill can provide significant abatement.

[6] EfW through coal substitution alone can add another 46.7Mt in CO₂-e emissions savings.

[7] In 2015, the Clean Energy Finance Corporation (2015), estimated that new EfW and biogas projects “could avoid 9MT of CO₂—e each year by 2020, potentially contributing 12% of Australia’s national carbon abatement”. EfW from waste alone would abate around 4MT of CO₂-e each year.

As always, we welcome your feedback on this, or any other topic on ‘The Tipping Point’.

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