For decades, the western world has relied on China to accept millions of tonnes of low-quality recycling materials. But with the import ban known as the The Chinese Sword, the accepted contamination for many materials went from 5-10% to 0.5%, making it harder for industry to meet their requirements.
The Chinese Sword didn’t come as a shock to the waste industry. Environmental issues have climbed on the government’s priority list, and with warning signals like the Green Fence restrictions in 2013, waste managers, exporters and brokers had time to reroute waste exports before the ban went into effect. Still, the overdependence on China as a waste destination has left waste managers with few alternatives. Even China itself has felt the impacts, with large companies struggling to find enough packaging material because of dwindling fibre feedstocks.
Impacts in Asia
Malaysia, Vietnam and Thailand have all seen huge increases in material being exported to them for treatment. Often these alternative destinations have too poor waste infrastructure to deal with the quantity of low-quality materials being sent, meaning materials from western countries are being dumped in illegal sites and landfills.
As a result, Thailand has announced that it will ban plastic waste imports by 2021, and Vietnam and Malaysia have already restricted or stopped issuing import permits for plastic waste. Until recently, India had been the largest alternative waste destination, but as of March 1st this year, the country has banned imports of plastic rubbish. It is now clear that no country alone has the capacity to absorb the quantities that China used to import.
Impacts in the UK
Left to clean up are strained waste collection services in the western world. In the UK, a fifth of local authorities have seen their recycling service costs increase in the last year because of restrictions in Asia. The closure and uncertainty of end markets has also led to some councils’ costs of recycling mixed paper and certain types of plastic increasing by £500,000.
Councils have responded by restricting the accepted materials within mixed recycling bins at the kerbside or closed bring banks for mixed materials altogether. For example, Basingstoke and Deane Borough Council have closed 29 mixed plastic bring banks and told residents to only recycle bottles, shampoo and bleach bottles at the kerbside. Swindon and Southampton also implemented similar changes.
Impacts in the US
There’s a similar story to the UK across the pond. The US exported 70% of its plastic waste to China and Hong Kong in 2017. Just one year later, this was around 5%, when China’s share of US exports had been absorbed by other Southeast Asian destinations.
It’s been estimated that 111 million tons of plastic waste from the US will have no end destination for recycling by 2030 – and because of the restricted marketplace and reduced demand for material, prices have dropped dramatically. Bales of unsorted paper that would have been worth $100 per ton are now worth less than $5 in some markets, which is starting to cause stockpiling or result in recycled materials being sent to incineration or landfill.
The knock-on domestic effects
We’ve seen the knock-on effects of the Chinese sword particularly in our environmental and commercial due diligence projects, which are strongly impacted by presence and absence of local capacity.
Development of domestic waste processing capacity will be crucial to cope with the waste surplus generated. For the UK and USA, investment is not an easy decision due to complex planning processes and long lead-in times, high energy costs and low domestic demand for secondary commodities. For example, infrastructure projects that could generate an appropriate supply of high-quality secondary materials may take 5 to 10 years to implement. The chances of getting enough treatment capacity in place, and in time, are slim.
The waste industry’s strategic response has been to get better quality of recycled materials to meet contamination requirements. But this has put pressure on local authorities to make separate collection of material streams, on collection crews to reject contaminated loads and on Materials Recycling Facilities to get additional resources and slow down conveyor belt speeds.
What’s likely to happen next?
China will continue to push for tighter environmental standards, and with the Beautiful China pledge, abrupt environmental policies are expected to continue. Waste import licenses in the last quarter of 2019 will be only a quarter of those issued at the beginning of the year and a total ban on Chinese imports is coming, but this could be delayed until 2021.
Until we see the impact of the current policy changes allowing the expansion of current capacity at lower risk, recycling rates in the UK are likely to stagnate or reduce. As well, the recent UK Budget released at the end of October 2018 proposed a new plastic tax to be introduced in 2022 on packaging with <30% recycled content. This, along with the targets set out in the EU Circular Economy Package, means the demand for secondary commodities will increase significantly over the next five years. But with less material being recycled, manufacturers may find it even more difficult to secure supply.
To avoid this getting worse, investment in local infrastructure could help to produce higher quality commodities and to recycle more material close to home. Without these investments, more problems like the “China crisis” can be expected.
The Circularity Gap Report recently highlighted that the world is becoming less, not more, circular – which inevitably leads to a waste surplus. The Chinese Sword has therefore set in motion a domino effect, whereby countries that are overwhelmed by vast amounts of low-grade materials must close their ports to foreign waste.
The UK’s Resources and Waste Strategy shows awareness of the unsustainability of the waste system, and will be key to address this monumental challenge. However, most of the legwork has yet to be done.
About the Authors
Nick is a Consultant for the Waste, Resource and Sustainability team at Anthesis and has worked for a broad range of clients helping them to better understand resources and waste. Nick is an expert at analysing and modelling data to measure the potential impacts that emerging policy and market trends may have on clients business functions to help develop future strategy.
Klas is a recent graduate of Environmental Policy at London School of Economics, where he got a robust theoretical background to the environmental sector and how public and private actors respond to regulatory pressures. Before then, he was also awarded the Governor’s Prize and employed as Teaching Assistant thanks to his outstanding academic achievement at Imperial College, where he studied a BSc in Ecology and Environmental Biology.
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