In WRAP, we ve talked about a loop for some time and we introduced the Resource Efficiency Loop for our Business Plan.

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1 Annual conference 2012 Liz speech FINAL When I was thinking about what to talk about today, I reflected on the developments we ve seen in the debate about the circular economy over the last year or so. In WRAP, we ve talked about a loop for some time and we introduced the Resource Efficiency Loop for our Business Plan. Of course, the circular economy has been around as a concept for some time, since the 1970s, but this loop was the result of our thinking about it. It reflected our belief at the heart of WRAP thinking that resource efficiency delivers both economic and environmental benefits. And when you look at the targets we ve set ourselves in our current business plan, you can see this recognised again as we have a balanced scorecard of environmental and economic benefits we re seeking to achieve. Earlier this year, the concept of the circular economy was given a welcome push with the publication of McKinsey s report Towards the Circular Economy, commissioned by the Ellen McArthur Foundation. WRAP was pleased to contribute its expertise as part of the compilation of that report, which has generated welcome debate. It built on earlier work by McKinsey examining movements in resource prices. The key conclusions of that work were that the increase in commodity process in the first decade of the 21 st century had erased all the real price decline of 20th 1 century and that price volatility levels.. in the first decade of the 21 st century were higher than in any single decade in the 20 th century 2. The outlook is for this to continue and McKinsey thinks that prices will remain high and volatile for at least the next 20 years. If the productivity of labour and capital were key concerns in the 20 th century, then resource productivity must be at the heart of public policy and business strategy over the next 20 years. 3 The circular, or closed loop, economy has traditionally been put forward as a way to delink rising prosperity from growth in resource consumption. Now, it may not feel that rising prosperity is our greatest problem right now, but if I may borrow from Chatham House - At a time when the greatest current challenge we are facing is lack of economic growth, the question is Can movement towards a circular economy contribute to growth, resilience and competitiveness? 4 I believe the answer is a resounding yes, and I aim to explain why to you this morning. 1 Mckinsey: Towards the Circular Economy 2 McKinsey: TCE 3 McKinsey: Resource Revolution: Meeting the World s Energy, Materials, Food and Water Needs 4 Chatham House: A Global Redesign? Shaping the Circular Economy

2 As well as the need to stimulate growth, there is also increasing recognition that resource efficiency and security are critical to future economic competitiveness and resilience for countries and companies alike 5 And the circular economy is a key player in achieving both. If we think about resource security for a minute, we know that this is high on the business agenda in the UK more than 80% chief execs from manufacturing companies told an EEF survey that shortages of raw materials presented a business risk now, in This isn t just something that is appearing as a speck over the distant horizon. And we know there is still huge potential to benefit from improved resource efficiency with the research from Defra suggesting that businesses could save more than 18 billion a year by adopting no-cost or low-cost improvements in their use of resources. Add in more efficient use of water and energy, and that figures rises to 23 billion. Just think how much the economy would grow if this was all re-invested by business. We also need to bear in mind that resource efficiency is not only an issue for UK. Recent McKinsey research showed that 30% of world s demand for resources by 2030 could be met through resource efficiency improvements. This could deliver global benefits of as much as $3.7 trillion a year. It s also interesting to reflect that developing countries have an opportunity to leapfrog and move to a circular economy. We know that China has embraced the concept of a circular economy in its 5 year plan, So, actually, the question is as much about how we compete in a circular economy as it is about how we move to one. So where does WRAP fit into all of this? WRAP has a, perhaps, unique role in helping to deliver the resource efficiency agenda.. our experience, skill and cross-sector perspective, our ability to act as a bridge between the public and private sectors all mean we can act as a catalyst for change We have the ability to work with whole supply chains and with all parts of the circular economy., We re one of the few if not the only organisations able to play this role bringing companies together around the table, commercial sensitivities set to one side, developing shared goals and harnessing that combined desire for change working towards a circular economy. Our ambition at WRAP is very much one of stimulating economic growth. We must be flexible and adaptable, able to respond to changing needs of business - acting as a catalyst to help you unlock and remove the barriers to growth and regeneration. What does this mean for taxpayers and businesses in reality? For every pound we spend on our work, we save you as householders, or businesses or local authorities 18 We ve stimulated an increase in reprocessing capacity in the UK of almost 50 million tonnes since we began 5 Chatham House

3 We ve influenced a reduction in the amount sent to landfill from 80 million tonnes in 2002/03 to 44 million tonnes in In 2011/12, We ve helped councils and businesses save around 1bn in landfill taxes, reducing the pressure on their budgets To set this in wider context, the recycling sector alone now generates more than 10bn in sales, employs more than 30,000 people and contributes around 3bn in gross value added to the UK economy. And this sector has grown its sales revenue threefold since 1998, outstripping growth in the overall economy over the same period of time. Let me give you an example of exactly how we ve achieved this, drawn from the plastics sector. In 2000, just 3 per cent of plastic bottles were recycled and the remaining 411,000 tonnes was sent to landfill. Then, the infrastructure for reprocessing plastics simply didn t exist. Collection of the material was difficult there were market failures in all parts of the loop. They said it couldn t be done WRAP tackled these issues head on. We brought together local authorities, waste management companies such as Veolia; bottle manufacturers like Nampak; brands such as Coca Cola, retailers - M&S and Sainsbury s and banks (AIB). Together, we develop a shared closed loop vision, taking the humble plastic bottle back to its beginnings and mapping a new journey for its lifecycle one that did not involve landfill. The result of that approach? World-leading technology was developed, which could produce recycled material that meets the high standard specifications for food-grade plastic. Investment was secured to build a new plastics reprocessing plant. We created guidance for councils to help them establish effective collection schemes, and produced advice to help them communicate with their residents. When the Closed Loop Recycling plastic bottle factory in Dagenham opened 2009, it provided more than 100 local green jobs. Today, it processes almost 900,000 discarded soft drinks and milk bottles made. and recycles them back into food-grade plastic. The recycled plastic is used to make new bottles and food packaging. Using recycled content means that the process needs far less virgin plastic saving money, and avoiding the need to import virgin materials. The amount of food grade recycled polymer from drinks bottles going back into closed loop applications as bottles is at least 66,000t with a sales value of more than 66m.

4 Another thing to remember about this is that this is a manufacturing process Closed Loop Recycling is not a waste management operation it s clean, high tech. It was the first thing which struck me when I first visited. So now, every day, four million bottles that would otherwise have been exported for recycling, or sent to landfill, are now reprocessed in the UK, and re-enter the UK economy as new products. On an annual basis, this adds up to nearly 10% of the plastic bottles that are currently collected for recycling in the UK. Plastics also have an economic value - recycled plastic bottles, for example, at today s prices, fetch around per tonne. Not only has WRAP s work catalysed the building of similar factories across the UK, all contributing to regional growth and the UK economy, it has also encouraged the retailers and brands that have signed up to the WRAP brokered Courtauld Commitment to specify more recycled content in their packaging. They said it couldn t be done but it s happening. This all in turn provides yet more market pull for recycled materials. Today, we re able to collect just over half of all plastic bottles from UK households for recycling there are four plastics reprocessing plants in the UK able to produce food grade recycled plastic from plastic drinks bottles Nearly all plastic milk bottles have 10% recycled content.. and the dairy industry has set targets to reach 30% by % of Marks and Spencer s PET plastic packaging and 95% of its HDPE bottles contain recycled content And lest you think this was a lucky one-off, let me point you to the Biffa mixed plastics reprocessing plant in Redcar the UK s first sorting and processing facility for mixed plastics which created 28 jobs at launch today, it provides employment for 35 staff. I was lucky enough to be asked to open the plant which was like going back to my roots as I started my working life on the ICI site where the Biffa plant is located. Or to ECO Plastics in Leicestershire. Earlier this year we announced news of 1.15 million loan from WRAP which is enabling ECO Plastics to extend its existing bottle sorting and processing facility so it can recycle a total of 150,000 tonnes of plastics each year. In England, 295 local authorities now provide plastic recycling services for 20 million+ households, and many of those councils use the WRAP technical guidance and communications advice to help them get the best from those services. And to bring us right up to date, and to remind us of truly inspiring London 2012 Olympic Games. Coca-Cola pledged to recycle bottles from the event in just six weeks. The joint venture with ECO Plastics allowed more than 10.5 million clear plastic bottles from all the London 2012 venues to be recycled.

5 So, to refer back to the Chatham House question yes, a move towards a circular economy can indeed contribute to growth, resilience and competitiveness, as ably demonstrated by this example. Growth: We have grown the plastic reprocessing sector. Resilience: It has reduced the dependence on virgin plastic and offers a wider supply base for manufacturers. Competitiveness : It means UK manufacturers can be more competitive in world markets by providing high quality, locally-sourced re-processed plastic. I think it s also important to acknowledge that this was also a great example of innovation food grade HDPE was a world first an example of the UK leading the way. We are now looking for innovative solutions for other things such as food grade polypropylene and rigid black plastics to help ensure the UK stays at the leading edge. I mentioned just now the loan we made to ECO Plastics. WRAP across all the nations in which we work operates a variety of loan funds and business grants designed to help companies overcome some of the barriers they face in adopting a more resource efficient approach. We know that these barriers can include lack of access to investment, and the WRAP funding, administered on behalf of all the UK governments and the EU, can help companies like ECO Plastics, Biffa and others to turn their ideas for innovation and growth into a reality. The Closed Loop Recycling plant example not only offers an excellent illustration of the closed loop, or circular economy approach, but also demonstrates very clearly how WRAP works -applying its skills, experience, evidence-based research and partnership working approach, alongside with, and influencing all parts of the supply chain. We ve taken a similar approach in the area of household food waste in 2008/09 our research showed that we were throwing away 8.3m tonnes of food. Today, that figure has fallen to 7.2m tonnes and we know that this reduction is attributable in large part to the work that WRAP and its many partners have done. The LFHW website we launched in 2007 is just one example of what we ve done to help engage with consumers the site has received more than four million visitors since its inception and continues to be the go to place for advice and ideas on getting the most from the food we buy. We estimate that the value of the food we ve prevented from being wasted is around 2.5bn a year. Which in turn translates into savings for local authorities in reduced landfill tax bills. The grocery sector has invested an estimated 10m helping their customers reduce food waste The Courtauld Commitment, the voluntary agreement brokered by WRAP, brings together players from 92% of the UK s supermarkets. Together, the signatories have stemmed the growth of packaging and food waste and are on track to deliver great results against the current targets.

6 These voluntary agreements are another example of the kind of tools WRAP has in its armoury to promote and aide resource efficiency and let s remember Courtauld tackles both supply chain and household waste. Courtauld is a good example of how a well-designed and managed voluntary agreement can deliver benefits both to the environment and the economy. Such agreements can also stimulate competition in delivering the targets, driving innovation and, importantly, delivering change that works well for business customers. We have now widened our approach to tackling food waste with the hospitality and food service agreement focusing on other parts of the economy. Of course, not creating waste in the first place is the most desirable outcome. But moving around the loop to deal with any food this is discarded, what then? Businesses in the AD sector have to date invested 500 million in plants with the potential to generate millions of pounds in cash each year. And WRAP funding from the Anaerobic Digestion Loan Fund has helped both Malaby Biogas in Wiltshire, and Emerald Biogas in the north-east with their plans to create or extend plant. This fund is designed to stimulate growth in the AD infrastructure, and in the case of Malaby, the new plant sources feedstock from non-packaged food waste. This is supplied by a new commercial collection operator. with additional material potentially coming from other commercial and industrial food waste providers within the local area. Emerald s venture will be the North East s first-ever commercial food waste anaerobic digestion facility and will process the 800,000 tonnes of food waste currently generated in the region. There are already customers on same industrial estate ready to take the heat output which the plant will generate. It will also produce quality digestate for agricultural use, offering a cheaper, more sustainable alternative to fertiliser. These are further examples of how a circular economy can and does work, and show how the food loop can be closed. Both present a good story about investment, growth and creating new markets. There s an international dimension to all this. other countries from around the world have expressed interest in the WRAP models and the results we ve been instrumental in delivering. WRAP s expertise is being acknowledged... from Rio to Australia, from Berlin to Slovakia increasingly others are recognising that resource efficiency is a must-have, a critical ingredient in delivering long-term, sustainable economic growth and they want to know more about WRAP s role in delivering this. We re also receiving some funding from European sources for a range of projects which include... the provision of expert consultancy support services for manufacturers in Wales.. guidance on sustainable procurement. as part of the European Pathway to Zero Waste programme we re working, mainly with public sector organisations across health, education, local government, to develop best practice

7 ..and pan-europe work on food waste and the food supply chain. The challenge of delivering resource efficiency and delivering sustainable change is that there are opportunities pretty much wherever you look. WRAP seeks to focus on those areas which will yield the biggest impacts. Which supply chains can we influence and work with, not only to identify where the opportunities for growth lie, but also to help develop solutions that will make the most of those opportunities? The electricals and electronics supply chain is a prime example. Our research shows that in general, strategies that extend the life of goods or reduce the consumption of electronic and electrical goods have the greatest impact. We don t have all the answers but we do know there are opportunities here to influence all the stages of the supply chain, from encouraging the designing out of waste at the start of a product s life, through to encouraging consumer repair and re-use. maximising the life of the phone, TV or IPad. And when product has reached the end of its useful life, what then? We re running trials to test whether technology can successfully help us extract the often rare materials used in their manufacture. For example, we purchase 22.5 million mobile phones a year. Between them they collectively contain 0.9 tonnes gold, 9.4 tonnes of silver and 332 tonnes of copper and the Design Council says there is about as much gold in one tonne of computer scrap as there is in 17 tonnes of gold ore! It s not enough to know that innovation and technological know-how can crack the process. We also need to know whether the process presents an economically viable option - so our trials are examining whether the business model not only works, but is sustainable. Again, this is all about the same interventions that have proved so beneficial in other sectors: about evidence gathering, analysis, collaboration, testing some way towards closing the loop on this but our previous experience tells us it s worth the effort So, returning to the subject of the circular economy. I think we have made progress in a number of areas. It s not easy it takes time, patience and commitment. But WRAP has demonstrated that we can help the UK move to a more circular economy where businesses are more resilient to risks such as resource security and where we all make better use of the resources we use and consume. I m delighted that the subject is getting more air-time but what s also needed is the practical skills and experience of making it happen which is where WRAP comes in. So what about the future for WRAP in this space? We believe we should be helping to build the circular economy, working with the sectors where we can make the most difference and in support of our funder priorities. We ve been having very positive discussions with all our funders who are clearly ambitious to see growth and to see resource efficiency playing its part in driving this forward. As part of that, we will, of course, keep focused on cost, delivering value for money and leveraging other sources of funding where we can.

8 One of the reasons for holding an annual conference is that it gives us the opportunity to discuss some of the big issues with all of you our key stakeholders. So, let me pose some of the questions to you which are on my mind How do we get resource efficiency more widely recognised as being part of the solution for growth? I talked earlier about the drivers for moving to a circular economy. We need more people to make the link that this is part of the solution and that there is a very real economic role for resource efficiency... real, joined-up thinking! What more should WRAP be trying to do to catalyse this change? is it about raising awareness, encouraging new business models, working with supply chains, what else? What are the main things holding us back? I look forward to debating some of these issues with you during the day. As I said earlier, I think there is an important role for WRAP because of our practical expertise and experience we add value and just to emphasise that point, I ll leave you with one reminder: The A in WRAP is for Action and it remains at the heart of what we do. Thank you. And now it is my great pleasure to hand over to Defra s Minister for Resource Management, Lord de Mauley. I m particularly delighted that Lord de Mauley has found the time to be with us today. Lord de Mauley, Parliamentary Under-Secretary for Resource Management, the Local Environment and Environmental Science was appointed as Parliamentary Under Secretary of State in September this year. He has been a Government Whip in the Lords since 2010, as well as being Government spokesman on environment, food and rural affairs issues. In Opposition, he held a number of briefs, including serving as Shadow Minister for Business, Innovation and Skills. We know from his visit to WRAP s Banbury offices last month that he has strong views on the value and role of resource efficiency, and that he is keen use this morning as an opportunity to listen and to learn from all of you. ends