Waste: suddenly, rubbish is looking attractive

Industrial and commercial by-products that were once a cost have been re-cast as a resource thanks to commodity prices driven up by soaring Chinese demand. Higher energy prices are also making energy-from-waste schemes more attractive.

By Ross Tieman

“It is more and more evident globally – at least in the bigger-sized companies – that managers are starting to understand that waste is a resource available for re-use,” says Christophe Cros, chief operating officer of Paris-based Suez Environment. “Becoming resource-efficient is an issue that brings financial and competitive advantages.”

The scale of the opportunity is immense. Typically, for every tonne of product turned out, around 10 tonnes of resources such as raw materials and water are used.

Yet now, far from being paid to cart away truckloads of waste, Suez Environment, or its SITA operating businesses in the UK, often find themselves in partnerships where they effectively pay for the privilege of collecting corporate waste, then turn a profit on the materials they can extract and recycle.

Michael Averill, chief executive of UK waste processor Shanks Group, uses a cricketing analogy to describe how the business of industrial waste collection is changing: “In some factories,” he says, “we have people waiting to catch the waste in the slips as it comes off the production line”.

Getting close up to business in this way suits waste producers, treatment companies, and the environment. Faced with a barrage of legislation, disposal has become a challenging issue for many corporate producers, particularly in the UK where treatment requirements and costs have often lagged those in continental Europe.

The imposition of a UK landfill tax promised to rise further, fewer hazardous dumps, and the legal obligation to be able to demonstrate waste has been properly disposed of have combined to make disposal an important British corporate issue, as it has long been for companies in Scandinavia and more recently, continental Europe. So for waste treatment companies, the sales pitch is simple. “It’s like selling Aspirin,” says Mr Averill. “You have a headache: we will take it away.”

It is a sales pitch that has long been finding favour with big corporations. Véolia Environnement, another big Paris-based waste contractor, has a waste management contract with French carmaker Renault, covering 15 European sites. Under the deal, 200 staff from Véolia work on-site at Renault, contributing ideas to waste reduction as well as waste processing. And where appropriate, Véolia works with Renault suppliers, such as paint and industrial fluid makers, to reduce the production of toxic wastes and process safely that which can’t be avoided.

Not only did the deal enable Renault to comply effectively with international standards, it cut waste disposal costs by 10 percent in the first year alone.

Revisiting industrial processes to reduce waste is one part of the new global approach to waste. Keeping waste separated for recycling is another. The third leg of the modern approach is to design plants and systems to minimize environmental impact from the outset.

Large companies, whether in manufacturing or services, have the advantage of scale, economy, and ready access to expertise. And over decades they have built a lot of value into their brand and reputation, which has to be protected, as well as often acquiring a sense of corporate social responsibility.

Yet as Mark Hilton, a technical manager with consultancy Enviros points out, small and medium-sized businesses account for more than 99 percent of the UK corporate population and 51 percent of turnover. For the managing director of a 20-person firm, already struggling to combine the roles of chief operating officer, financial controller and personnel boss, delving into resource efficiency measures can be seen as a burden too many.

Even recycling can be difficult for small and medium-sized enterprises. A typical small company, producing 1,000 litres of waste a week, may separate out cardboard packaging, but struggle to find a waste company willing to pick up just 50kg of cardboard each week at a reasonable cost. “There are some real barriers out there,” he says, “however most small companies are willing to recycle if it is at least cost-neutral and convenient”.

The most significant gains, however, relate to reducing wastage at source. Mr Hilton says: “Often significant environmental improvements and cost savings can be achieved at low cost and with a quick payback.” Simple steps, such as reusing packaging and fitting lighting and washroom controls, can offer a start. Intermediate approaches might involve better process control (such as reducing evaporation of degreasing solvents), “lightweighting” of packaging and reusing cooling water for cleaning. More significant improvements may relate to the eco-design of products or investments in inherently more efficient machinery and systems to recover valuable materials from effluents.

Governments are aware of the issues and are using economic instruments (such as landfill tax and enhanced capital allowances) and support programmes (such as Envirowise, the Carbon Trust and WRAP in Britain), to motivate companies to take a more proactive approach. Despite considerable efforts at the national and regional levels, progress remains slow however. As Mr Hilton points out: “SMEs remain time- and cash-strapped and still respond mainly to legislation – where aware of it – clear cost signals and supply chain pressures.”

In the fight to combat global warming, the need to help smaller companies to become more resource-efficient has become even more urgent. Governments need to use strong and clear incentives, both the carrot and the stick, combined with a large helping of practical and co-ordinated advice, if progress is to be accelerated.

Article is copyright The Financial Times Limited 2006. Reprinted with kind permission.