Recycling plastics and metals a win for economy and environment

A 30% increase in the recycling rate for metals and plastics across GCC could cut millions of tonnes in carbon emissions and substantially reduce environmental damage, on top of generating up to $6 billion in annual economic benefits. This is according to Strategy&.

At this point in time, GCC countries generate nearly 20 million tonnes of plastic waste and scrap metal every year. Strategy& points out that this figure is not only growing faster than the global average, but the low recycling rate in the GCC means that most of this material goes to waste.

Only 10% of this waste material is recycled, reused or recovered. Compare this to Germany and Japan, for instance, where this figure stands at 90% for metal and 40% for plastics. For Strategy& partner Frederic Ozeir, the region’s current setup is simply leaking value – both in economic terms as well as with respect to environmental preservation targets.

“The low GCC recycling rate leads to losses of large volumes of recycled metals, which can be used as an alternative to virgin material, and recycled plastics, which have numerous applications, such as in construction and food packaging. Worse, plastic and metal waste can endanger wildlife, the environment, and poor disposal practices can threaten human health,” he said.

Consider the numbers purely from an environmental standpoint. If the recycling rate was bumped up from 10% to 40%, carbon emissions could be cut by up to 12 million tonnes every year. In tandem, primary energy consumption would drop by 4%. For a region experimenting with more sustainable modes of operation, this represents a tremendous opportunity.

Then there are the economic benefits. Increasing the recycling rate by 30% will require manpower – 50,000 new jobs worth of manpower according to Strategy&. The resultant market potential amounts to $6 billion every year. All that remains is for investors to get involved, and they have plenty of reasons to do so.

The recycling economy

The experts point out how a higher recycling rate will create an entirely new value chain spanning recycled electrical equipment, electronic equipment, plastics & packaging recycling, secondary metals and car spare parts, among several others. According to the authors, investors face the promise of clocking operating margins of more than 15% across this value chain.

So there appear to be only upsides to a higher recycling rate. Given that the GCC expects to be generating nearly 35 million tonnes of plastic by 2022, recycling policies could be decisive for the regional economy – either propelling it forward or weighing it down considerably. The problem is that there remain myriad challenges to improving recycling rates in the region.

Strategy& Principal Siavash Rahimi listed some of these. “Too often those companies producing plastic and metal goods do not make them easily recyclable because of a lack of guidelines and technical standards. There is a shortage of adequate recycling facilities, while community awareness of the issue is minimal. The necessary infrastructure and technologies are undeveloped or unavailable. Low levels of environmental protection and law enforcement mean there is excessive disposal in landfills and open dumps, with landfills inconsistently regulated. In particular, illegal dumping is widespread.”

The way forward

As a result, the road ahead is complicated. The experts put forth four high impact areas, where focused policies could help clear the way for more recycling. For one, waste management needs a regulatory framework. Standards and technical specifications need to be laid down for manufacturers and producers in the region, so as to make material more suitable for recycling.

Another instrument is tax. Through tax incentives and penalties, both manufacturers and consumers can be incentivised to recycle more. Number three is to get the private sector involved. Much like private companies are leading the charge on green innovation, funds could be set up to encourage innovation in recycling infrastructure – building what the researchers term an “operational ecosystem.”

Last is to equip the workforce with the skills and expertise necessary to enhance recycling. Strategy& experts suggest launching nationwide awareness campaigns and other such initiatives to instill the importance of recycling among the public. Similar campaigns have proved successful in key markets such as Germany and Japan, and could generate substantial value in the GCC as well.