Green economy and recycling in Europe

Transcription

1 ETC/SCP working paper 5/2011 Green economy and recycling in Europe Prepared by: Christian Fischer, Ioannis Bakas, Anders Bjørn, Naoko Tojo and Christian Löwe European Topic Centre on Sustainable Consumption and Production June 2011 Project manager: Özgür Saki European Environment Agency

2 Author affiliation Christian Fischer, Ioannis Bakas and Anders Bjørn, Copenhagen Resource Institute, Naoko Tojo, International Institute for Industrial Environmental Economics, Lund University, Sweden, Christian Löwe, The German Federal Environment Agency Context The Topic Centre has prepared this working paper for the European Environment Agency (EEA) under its 2010 work programme as a contribution to the EEA's work on green economy and recycling Disclaimer This ETC/SCP working paper has not been subjected to European Environment Agency (EEA) member country review. Please note that the contents of the working paper do not necessarily reflect the views of the EEA. ETC/SCP 2011 European Topic Centre on Sustainable Consumption and Production Højbro Plads 4 DK-1200 Copenhagen K Phone: Fax: etc@etc.mim.dk Website:

3 Contents Summary Introduction Background Objectives The structuring of the report The coherence between recycling and green economy Development of the concept of green economy Green economy after the financial crisis Coherence between green economy and recycling The economic importance of recycling in Europe Criteria for the selection of recyclable waste streams Data about the value of recyclables Definition of the estimated value The turnover of seven recyclables The relation between export out of the EU and within the EU and import into the EU of each recyclable Drivers behind the increasing value of recycling Conclusions on the economic importance of recycling Recycling and resource efficiency Defining indicators to show the link between consumption of resources and recycling Data requirements for consumption and recycling Results of the weight indicators Economic indicators linking recycling and consumption Limitations in data available for economic indicators Results of the value indicators Conclusions on the link between recycling and consumption of resources Job creation Data about jobs in the recycling sector The recycling sector s development in employment Employment in the waste collection sector Proportion of waste collection in waste management activities Number of jobs in waste collection related to recycling level Conclusions on employment trend and recycling Rare metals and the future of (eco) technology development in the EU Basic information on rare/critical metals Common Scope Rare/critical metals from an environmental perspective Our scope..42 3

4 critical raw materials for the EU Basic market characteristics of critical metals Critical metals for future sustainable technologies and their recycling potential Approaches for the sustainable management of rare metals Projections of raw material demand and emerging technologies Conclusions on rare metals and recycling Main messages on green economy and recycling References Annex I. Methodology to calculate total value of seven recyclables The total turnover of recyclables in 2004 and Estimating of recycling after Total value of recycling of seven recyclables Annex II. Raw data used for calculation of the economic indicators Annex III. Product groups used for recycling and resource efficiency calculations

5 Summary Recycling has traditionally been promoted for environmental reasons, but it also has increasing economic importance. A review of the development of the concept of green economy indicates that recycling is an integral part of green economy. This report is about recycling and different aspects of its economic importance for Europe such as turnover, trade within and out of Europe and job creation. The report also covers how much recycling ensures total consumption of different materials in Europe currently and what the potential is for increasing this share. Special focus is also placed on the question of current and future need of rare metals. Regarding turnover and resource efficiency, the report analyses recycling of the following waste types: 1) Paper & cardboard 2) Plastic 3) Iron & steel, 4) Aluminium, copper and nickel, 5) Precious metals, 6) Other metals, 7) Glass, 8) Electrical and electronic equipment and 9) Construction & demolition represented by concrete. The report documents that the turnover of seven of the recyclables (glass, paper & cardboard, plastics and the above mentioned metal groups) has increased by almost 100% from about 32.5 billion Euros in 2004 to 60.3 billion Euros in The amount of and the importance of exported recyclables out of the EU has increased since 2000 until the financial crisis started in However, it seems that despite the financial crisis, the turnover of recyclables has already recovered quite a lot in the second half of In some cases the crisis seems to have even strengthened this trend. The export value of recyclables out of the EU is now larger for precious metals, plastic waste, paper and cardboard waste than the internal trade within the EU. The number of jobs linked to material recovery has also increased from422 inhabitants per million in 2000 to 611 in These figures do not include employment linked to processing of materials at certain manufacturing facilities such as manufacture of pulp and different metals. Interesting to note, however, is that available data does not provide a clear correlation between the number of people working in the waste collection sector per inhabitants and the achieved collection/recycling rate for selected recyclables. The report documents that recycling currently covers a reasonably large part of the EU s total consumption of certain materials. In weight the current coverage is between 10% and 42% for paper & cardboard, iron & steel, aluminium, other metals and glass. The percentage is between 5% to 10% for copper and concrete and below 5% for plastics and WEEE. This coverage can be increased if recycling is increased, but recycling can never cover 100% of total EU consumption. This is due to the accumulation of goods in a growing EU economy, for example in the construction sector. Therefore, recycling cannot solve all of our demands for raw materials driven by increasing consumption. Other solutions reducing our needs for raw materials are necessary to introduce. 5

6 Recycling can also ensure that the EU maintains secure supplies of rare metals that are necessary for the production of new technologies. Many of these rare metals are characterised by a dissipative use, which the current form of collection and recycling techniques has not focused on, which implies that many of these metals are lost. The development of recycling in Europe over the last decade is an interesting example of market forces and legislative demands working together to produce positive results. On one hand, the booming Asian economy has increased prices on recyclables while, at the same time, a number of EU strategies, EU directives and national initiatives have resulted in an increasing amount of recyclables being placed on the market. Using this integrated approach of market forces and legislative frameworks should be further strengthened if recycling is to play an even larger role in the green economy. Some important steps could include requirements prompting the better design of products to ease recycling, improve and integrate the recycling of rare metals into the existing recycling infrastructure, and stimulate research on the substitution of these metals. In 2011 the work will continue especially with more analyses of rare metals in WEEE and the potentials of recycling. 6

7 1 Introduction 1.1 Background According to the EU s waste hierarchy, waste that can not be prevented or reused should be recycled, with other treatment options such as energy recovery and disposal given a lower priority. The EU has introduced a variety of recycling policies in the latest 15 years including specific recycling targets for different waste products and waste materials (WEEE, ELV, packaging, batteries and latest for household waste in general and construction and demolition waste). Furthermore, the EU Landfill Directive set targets for diverting waste away from landfills to either recycling or recovery. The European Commission in its 2020 strategy has resource efficiency as one of its seven flagship initiatives. Resource efficiency is not only energy efficiency, but also efficiency with material resources such as metals, minerals and food, and natural resources which provide eco-services, including clean air, land and water. Certain metals are especially crucial, if the EU wants to maintain secure supplies of rare metals that are necessary for the production of new green technologies (e.g. within electro mobility, information and communication technologies and renewable energies). Numerous reports from the European Environment Agency (EEA) and its Topic Centre on Sustainable Consumption and Production (ETC/SCP) have documented the physical aspects and environmental benefits of recycling. Recycling amounts and percentages, and transboundary shipments of recyclable materials have been analysed both in terms of absolute volumes and in terms of the related environmental impacts, for example, reduced GHG emissions. However, the EEA and the ETC/SCP have not looked at recycling from an economic, social and strategic perspective. These aspects of recycling are becoming more prominent, particularly issues surrounding the economic value of the current and the potential recycling activities, the number of jobs created by recycling, the strategic value of recycling of certain rare metals and using the recycling sector as a driver for green economy in the EU. Therefore, the European Environment Agency has asked the ETC/SCP to continue its work on recycling but with greater emphasis on green economy aspects. 1.2 Objectives In general a green economy is considered to be one where it is possible to create green jobs, ensure real, sustainable economic growth, and prevent environmental pollution, global warming, resource depletion and environmental degradation. The overall objective of the project is to answer the following questions: How does and how can recycling contribute to meeting green economy objectives and which measures can support such a development? This is a very general objective, however, due to the complexity of the green economy concept. Therefore a further clarification is needed in order to provide a useful working guide. A first step is to clarify the following sub-objectives: Define the role of recycling in the green economy. Document the value and importance of selected recyclable waste streams for the economy. 7

8 Document how much of the input of selected resources used in the EU can potentially be provided by recycling of the selected recyclable waste streams and what the economic benefits will be for the green economy. Analyse the job development related to recycling of waste. Analyse the demand and supply of rare metals in the EU that are necessary for the production of new green technologies and how recycling can contribute Analyse which EU policy measures can support recycling s contribution to the development of an EU green economy? 1.3 The structuring of the report The report is structured in the following way: Chapter 2 gives a more general introduction to the term green economy and its relation to recycling. Chapter 3 estimates the economic turnover for the EU of seven selected recyclables Chapter 4 presents the development in jobs linked to the recycling sector Chapter 5 estimates how much of our present consumption of selected recyclables is covered by recycling and its economic value Chapter 6 gives a presentation of the importance of having access to certain rare metals Chapter 7 includes our twelve messages on green economy and recycling The analysed recyclables are: 1) Paper & cardboard 2) Plastic 3) Iron & steel, 4) Aluminium, copper and nickel, 5) Precious metals, 6) Other metals, 7) Glass, 8) Electrical and electronic equipment and 9) Construction & demolition represented by concrete. These are the most interesting recyclables from an economic point of view. During 2010 the ETC/SCP has made some internal working papers, which document in more detailed the results of our work. These documents are not published. Except for the section on job creation where data available up to early November 2010 was used, the data presented in the report are based on data available by May

9 2 The coherence between recycling and green economy 2.1 Development of the concept of green economy The term green economy or related concepts such as sustainable economy, green growth, sustainable growth started to be visible in the policy discourse around the time when the concept of sustainable development (SD) came into policy agenda the World Conservation Strategy in 1980, the Brundtland report in 1987, followed by the Rio Summit in In some of the earlier works on green economy, the term green economy is used as a synonym of sustainable development. As the concept of SD allows a broad range of interpretation, the authors of these works seek to discuss the core element of the concept, and thereby define what a green economy may mean. For instance, Pearce, Markandya and Barbier (1989), in their report entitled Blueprint for a Green Economy, indicate that the purpose of their work is to investigate some of the economic underpinnings of the idea of sustainable development (Pearce et al, 1989). In their search for the meaning of sustainable development, they seek to make a distinction between development and growth, and the sustainable developments include, among others, the inter- and intra-generational equity. The authors stress the valuation of the environment is an indispensable component for integrating environment into sustainable economic development. Jacobs (1991), in his book entitled The Green Economy. Environment, Sustainable Development and the Politics of the Future, highlights the significance of the concept of sustainable development in overcoming the division between the utopian environmentalists and economic policy. He considers the following three elements to be the core of the concept of SD: 1) entrenchment of environmental considerations into economic policy making, 2) intra-generational and inter-generational equity, and 3) development instead of growth. He indicates a number of ways to improve environmental efficiency dividing them into the categories of renewable resources, non-renewable resources, reducing pollution, production processes, products and demand and proposes the creation of circular economy. Later, Jacobs (1997) argues that while the concept of sustainable development helped in developing the consensus between environmentalism and capitalism which was earlier considered to be incompatible, it did not contribute much in making a tangible environmental improvement. Demonstrating the political marginalisation of the environmental issues caused by the concept, he indicated several conceptual frameworks which facilitate environmental protection to be taken more seriously in the political arena. One such framework he highlights is ecological modernisation. While the concept acknowledges that environmental damage arises from many of the most fundamental features of modern industrial economies, the concept differentiates itself from the traditional environmentalism in that it acknowledges that fundamental restructuring of economic and social organisation required to realise ecological modernisation is not incompatible with the maintenance of capitalism and continuing (if probably slower) economic growth. (Jacobs, 1997). 9

10 Ayres (1998) suggests a service-based economy as an alternative to a conventional economy based on the intensive exploitation of natural resources, mass production, consumption and waste. In addition to selling services (functions of the products) instead of products per se, repair, renovation and remanufacturing would help to reduce loss of materials and lead to job creation. A decade after the publication of their first book on green economy, Pearce and Barbier (2000) revisited the theme of their book from While they were relieved about the broad acceptance of the concept of internalisation of externalities, they acknowledged the difficulties of its implementation in practice. Despite various differences, an essential element found in these works is the necessity and feasibility of incorporating environmental agendas in main-stream economic activities. Elements of circular economy as a way of increasing resource efficiency and reducing environmental impacts related to raw material extraction are found. Indication that the governments of different levels have taken up the aforementioned relation between environment and economic activities are found in policy documents developed over the last two decades. In the EU, a manifestation of the attempt to achieve the dual policy goals survival in the competitive, dynamic and knowledge-based economy while fully integrating environmental consideration in this process is found in the European Environmental Technology Action Plan (ETAP). The ETAP (COM (2004) 38 final) essentially argues for the promotion of environmental technologies and innovation and making them central for economic development and growth as a way for Europe to achieve sustainable growth. The complementary nature of the Sustainable Development Strategy and the Lisbon Strategy has been stressed in, among others, the Thematic Strategy on the sustainable use of natural resources (COM 2005)670 final) and Renewed EU Sustainable Development Strategy (SDS) in 2006 (Council of the European Union, 2006). ESCAP (United Nations Economic and Social Commission for Asia and the Pacific) discusses green growth as an approach that seeks to harmonize the two imperatives of economic growth and environmental sustainability by promoting fundamental changes in the way societies produce and consume, as called for in the Johannesburg Plan of Implementation. (ESCAP, 2006). ESCAP indicates the necessity of moving two types of conceptual changes: 1) moving the perception of environmental protection from hindrance to economic growth to its driver, and 2) instead of viewing production and consumption as linear processes, they should be view in a holistic/life cycle/circular manner. Decoupling of economic growth and environmental degradation should be achieved (ESCAP, 2006). ESCAP (2006) further refers to sustainable economy as one which embodies the aspiration at the heart of sustainable development for human economy that satisfies the needs of all people while maintaining and enhancing the natural world, which is ultimately the source of all resources for human activity, and of life itself (ESCAP 2006, 20). Sustainable economy as they envision include the following elements. High material and waste costs drive systematic energy efficiency, material efficiency (dematerialisation) and waste minimisation. Systematic substitution of renewable for non-renewable resources, and benign for hazardous substances and emissions. 10

11 Design for environment greatly facilitates re-use and recycling Industrial ecology and industrial symbiosis (life cycle thinking and use of wastes as raw materials for another process) become standard concepts and practices (ESCPAP, 2006). Outside governments of different levels, the term green economy has also appeared in academic and trade journals as well as publications for the general public (see, for instance, Torgerson, 2001, Jackson 2005, Mcginn 2007, Rangwala 208). Despite the differences in the specific topics they discuss, they all deal with the possibility/means of integrating environmental/social considerations in economic development. 2.2 Green economy after the financial crisis More recently, the term Green Economy or related concepts such as sustainable economy, green growth, sustainable growth, Green New Deal appears in the policy discourse as part of the recovery measures from financial crisis that hit the economy globally in For instance, the United Nations Environment Programme (UNEP) advocates a so-called Global Green New Deal and defines it as follows... a set of globally coordinated large-scale stimulus packages and policy measures that have the potential to bring about global economic recovery in the short term, while laying the foundation for sustainable economic growth in the medium- and long-term (UNEP 2009a). UNEP (2009b) refers to Green Economy as one that is dominated by investment in and consumption of environmentally enhancing goods and services. The organisation, in their introduction to the Green Economy Report, provides the following definition as well: one in which the vital links between economy, society, and environment are taken into account and in which the transformation of production processes, production and consumption patterns, while contributing to a reduction per unit in reduced waste, pollution, and the use of resources, material, and energy, waste and pollution emission will revitalize and diversify economies, create decent employment opportunities, promote sustainable trade, reduce poverty, and improve equity and income distribution (UNEP n.d.). OECD (Organisation for Economic Co-operation and Development), in their declaration on Green Growth made in 2009, mentions: A number of well targeted policy instruments can be used to encourage green investment in order to simultaneously contribute to economic recovery in the shortterm, and help to build the environmentally friendly infrastructure required for a green economy in the long-term, noting that public investment should be consistent with a long-term framework for generating sustainable growth. Green growth will be relevant going beyond the current crisis, addressing urgent challenges including the flight against climate change and environmental degradation, enhancement of energy security, and the creation of new engines for economic growth. (OECD 2009a). The OECD declaration reemphasise the compatibility of the green and growth, and encourages, among others, green investment and sustainable management of natural resources. OECD (2009c), in their discussion paper on Green Growth: Overcoming the Crisis and Beyond, emphasises the importance of green industries, businesses and innovation. OECD (2009b) further discusses how eco-innovation in industry enables green growth. 11

12 Edenhofer and Stern (2009) recommend the following seven measures to be taken by the Group of Twenty (G20) advanced and emerging nations: 1. Improving energy efficiency 2. Upgrading physical infrastructure of the economy to make it low-carbon 3. Supporting clean-technology markets 4. Initiating flagship projects 5. Enhancing international research and development 6. Incentivise investment for low-carbon growth 7. Co-ordinating G20 efforts In the EU, it has been recognised that the integration of sustainability agenda in the Lisbon Strategy has been a challenge (COM(2008) 397/3) and the linkage between the two strategies has not been sufficient (European Commission 2010). The European Commission, in Europe 2020 (COM(2010) 2020) where a strategy for bringing Europe back on track from the economic crisis in 2008 and staying on track is presented, calls for smart, sustainable and inclusive growth, and defines sustainable growth as follows: Sustainable growth means building a resource efficient, sustainable and competitive economy, exploiting Europe s leadership in the race to develop new processes and technologies, including green technologies, accelerating the roll out of small grids using ICTs, exploiting EU-scale networks, and reinforcing the competitive advantages of our businesses, particularly in manufacturing and within our SMEs, as well through assisting consumers to value resource efficiency. Such an approach will help the EU to prosper in a low-carbon, resource constrained world while preventing environmental degradation, biodiversity loss and unsustainable use of resources. It will also underpin economic, social and territorial cohesion (COM(2010)2020). Europe 2020 (COM (2010) 2020) argues that sustainable growth would lead to the creation of more than 1 million jobs in the area of, for instance, renewable energy and energy efficiency enhancement. Scheplemann et al. (2009), in their report entitled A Green New Deal for Europe commissioned by the Greens and European Free Alliance in the European Parliament, define a Green New Deal as follows: targeted state investment in activities which produce goods and services to measure, prevent, limit, minimise or correct environmental damage to water, air and soil, as well as problems related to waste, noise and eco-systems. This includes innovation in cleaner technologies and products and services that reduce environmental risk and minimise pollution and resource use. Given the resource dependency of European countries on import as well as the enormous increase in the price of raw materials before the financial crisis, the authors stress the importance and the necessity of a Green New Deal having a broader focus than merely on climate change and energy issues. They consider sustainable mobility, energy and resource efficiency as the priority areas for regional transformation. Significant potential for cost reduction, improved competitiveness and job creation are among the positive economic and social effects highlighted in the area of resource efficiency (Scheplemann et al., 2009). 12

13 The terms green economy, green growth and the like appear to have been also discussed in academic and trade journals as well as publications for the general public (see, for instance, Checket-Hanks, 2009, Electric Perspectives, 2009, Kahn, 2009, Engineers Journal, 2010). While topics most frequently discussed include energy efficiency, clean energy, sustainable building and potential for job creation, also included are recycling, environmentally friendly production, conservation and pollution mitigations. 2.3 Coherence between green economy and recycling Although the standpoints of the authors and emphasised issues may vary, the common thread found in the discourse of green economy is the necessity and feasibility of incorporating the environment/sustainability perspective when considering economic development/growth/ recovery. The overall concepts proposed over the last two decades are strikingly similar. These concepts include, among others, internalisation of externalities, improvement of material and energy efficiency that leads to the decoupling of material and energy use from economic growth, the shift from linear economy to circular economy and the shift from nonrenewable to renewable resources. In spite of the current strong focus on issues related to energy/climate change, material/resource efficiency is an integral part of a green economy. For instance, the strategy Europe 2020 developed by the European Commission highlights more efficient/effective recycling within their flagship initiatives (COM (2010) 2020). UNEP (2009a) highlights the importance of the sound development of the Green Economy in the long run, and urge governments to take measures to internalise the externalities associated with the waste and recycling sector. Vision 2050 (2010) developed by the World Business Council for Sustainable Development envisions that by 2050, closed-loop recycling is normal business practice. OECD (2009b), in discussing eco-innovation in industry as a way of realising green growth, highlights the significance of the implementation of concepts such as extended producer responsibility and closed-loop production. The importance of recycling has also been highlighted from the side of material security which is also an essential component of economic activities. The European Commission s communication on Sustainable Production and Consumption and Sustainable Industry Action Plan (COM(2008)397 final) indicates the reduction of the dependency on raw materials and encouragement of optimal resource use and recycling as one of their action plans. In the public consultation paper that the European Commission put together for the launch of the raw materials initiative, recycling is highlighted as one of the important measures to enhance the sustainable supply of raw materials (Commission, n.d.). The remainder of the report discusses how the enhancement of recycling can contribute to the furthering of green economy in Europe, focusing on specific elements as listed below: Increasing share of European trade and GDP. Enhancement of resource/material productivity/efficiency. Provision of employment. Ensure that the EU maintains secure supplies of rare metals necessary for the development of eco-industries and environmental technologies. 13

14 3 The economic importance of recycling in Europe This chapter gives an overview of some important economic aspects of recycling in the EU. First of all it shows the economic value of recycling for the EU of seven selected recyclables and the development of trade of these recyclables in exports between the EU-Member States, export out of the EU and import into the EU. 3.1 Criteria for the selection of recyclable waste streams It has not been possible to include all recyclable waste streams in the study. The following criteria have been used for the selection of waste streams: Data availability. Quantity of recycling. The selected recyclable shall represent a reasonable part of current recycling and of the total waste generation. Potential replacement of virgin consumption. It should be possible to relate the selected recyclable to the current consumption of the virgin material in the EU. Valuable recyclables. Among the metals, it will be relevant to include some very valuable ones, which have a great importance for the production of certain products, and where the recycling process can be more complicated, but where the use of virgin materials generates high amounts of waste and pollution. Contribution to the global warming mitigation. It would be reasonable to add the recyclables which have higher potential of reducing GHG emissions when used as raw material in the production instead of using virgin materials. (for ex: aluminium) Geographical level. The analysis will be done at an aggregated European level (EU- 27). Based on these criteria we have chosen to include the following waste streams: Paper and cardboard waste Plastic waste Metal waste (iron & steel; aluminium & copper & nickel, precious metals and other metals) Glass waste The total waste generation in the EU is about 2.8 billion tonnes per year. All together the above mentioned waste streams are above 1,150 million tonnes, of which about 680 million tonnes are recycled. In that way the selected waste streams are a reasonable part of the total waste generation. If construction and demolition waste is not included, the waste amounts are about 250 million tonnes generated and 130 million tonnes recycled. It has not been possible for all aspects of recycling to include all the above mentioned recyclables in the analyses. For example, it has not been possible to include the economic turnover of recycling of concrete and it has not been possible to relate the development jobs in the recycling sector to the different recyclables. 3.2 Data about the value of recyclables No data is available that provides an overview of the value of the selected recyclables waste to the European economy. The most useful economic data about recyclables available from 14

15 Eurostat is related to trade statistics. It is possible to use this data to extract information about the trade of recyclables in tonnes. Information on different types of recyclables wastes within, for example paper and cardboard waste, is possible to get from the database. However, this paper normally presents the value of the recyclables as aggregated values and not for each of the qualities within. The amount of traded recyclables represents only a fraction of the total value of recyclables in Europe. In order to get a more robust overview of the economic value of recyclables, it is necessary to include the amount used within the generating country (i.e. waste that is not internationally traded). We estimate this information by combining trade statistics and data about the physical amounts of recycled wastes in the EU. Eurostat can provide data for the total reported amount of recycled metals, paper and cardboards, plastic and glass for 2004 and The Eurostat recycling data for 2004 and 2006 are only minimum amounts: they do not include all recycled quantities of a given waste fraction because some recycling is hidden in mixed waste types. A German consultancy company Prognos has tried to overcome this problem in work undertaken for the Joint Research Centre (Prognos, 2009; JRC, 2009). Taking recycled plastic as an example, if it is assumed that the total amount of transboundary traded plastic for recycling = Y; total value of traded plastic for recycling =Y V ; total amount of recycled plastic= R and the transboundary traded value of plastic has the same value per unit as non-transboundary traded, then the total value of the recycled plastic Total v Plastic can be estimated as: Total V Plastic = Y V + (R-Y) *Y V / Y While trade data for the EU-27 goes back annually to 2000, data on the total quantity of recycled waste is only available for 2004 and To estimate the development of the economic value of recycled materials to the EU economy from 2000 to 2009 requires some assumptions about the total amount of recyclables for those years for which there is no data Definition of the estimated value Even if it is possible to estimate the total value of the selected recyclables based on trade and waste statistics, some important parts of the economic value of recyclables will not necessary be included. This is due to the special character of waste. Waste is not a normal good. Waste is produced even if there is no market for the recyclable, whereas a normal good will not be produced if there is no demand for it. Some wastes do not have an economic value before they have been collected and sorted into different qualities. Typically, the waste producer pays a fee for the collection of the waste. This can be the case for glass and plastic wastes even for metals, although producers of large quantities of these wastes type will normally be paid for their waste and do not have to pay a fee to the collector. The fees paid by the waste generators to the collector will normally not be included in the economic value of the traded wastes and unfortunately, it has not been possible to estimate this economic value. In that way the economic values of recyclables presented in this paper will represent minimum values of economic activity. 1 The recycling data work was finalised by May In November 2010 Eurostat has released recycling data for 2008, but it has not been possible to include these data in the project. Further, some of the new Eurostat recycling data for 2008 will be amended because some countries seem to have reported incorrect low recycling data for waste paper and cardboard. 15

16 3.3 The turnover of seven recyclables Table 3-1 shows the total recycled amount of the seven analysed waste streams independent of whether the waste is recycled within or out of the EU. The table shows that an increasing amount of the seven waste types has been recycled for all waste types but other metals from 2004 to In 2008 there is a stabilisation or a minor decrease, which has continued in Table 3-1 Total amount of recycling of seven recyclables in the EU in 1000 tonnes in 2004, Rcycling in 1000 tonnes Glass 10,700 12,300 12,841 12,897 Paper and Cardboard 44,200 54,000 56,302 57,658 Plastic 4,500 5,225 5,540 5,473 Cu, Al and Ni 4,000 4,764 5,405 5,299 Iron and Steel 77,700 79,700 79,720 81,514 Precious metals Other metals 1,734 1,632 1,649 1,513 Total 142, , , ,417 Sources: 2004 and 2006 figures are taken from (JRC, 2009) and (Prognos, 2009), with the exception of the figure for plastic in 2006 which based on own calculations based on Prognos (2009) and the reporting of recycled packaging waste according to the EU Packaging Directive. The JRC and Prognos figures are higher than the data for recycling published by Eurostat, whose recycling data does not include all recycling and generation of the specific waste types, since some amounts are included in mixed waste types. Furthermore, the Eurostat figures for recycling include in principle according to the Waste Statistic Regulation only the amounts of waste recycled at facilities in the Member States including imported amounts and excluding exported amounts. JRC and Prognos have estimated these additional amounts by using other sources to 2009 figures are own calculations based on Prognos (2009) and Eurostat (2011). The calculation is described in more detail in annex I. The main principle for the calculation is that the increase and decrease of the total recycling of each waste material is assumed to be linked to transboundary traded waste and not to the amount generated and recycled within the same EU-country. It estimated that the recycled amounts are minimum amounts. The turnover of the recyclables is shown in Table 3-2. It shows that the turnover of the seven recyclables has almost doubled in current prices from 32.5 billion Euros in 2004 to 60.3 billion Euros in While the economic value of all recyclables increased, this trend is especially notable for the different types of metals. The crisis has prompted a decline in overall value, but it seems that value has recovered more in the second half of 2009 than the first. Table 3-2 Total value of recycling of seven recyclables in the EU in million Euros in current prices in 2004, Turnover of recycling in million Euros based on amounts and values for the whole year 2009 based on amounts and values for only the second half of 2009 Glass Paper and Cardboard 4,148 5,168 6,648 6,913 4,892 5,265 Plastic 1,331 1,975 2,180 2,084 1,653 1,792 Cu, Al and Ni 4,677 9,683 10,496 9,617 6,608 8,094 Iron and Steel 19,337 25,161 31,161 36,124 18,917 21,061 Precious metals 1,028 1,752 2,072 2,798 2,742 3,518 Other metals 1,612 2,752 3,012 2,422 1,800 1,910 Total 32,535 47,008 56,082 60,524 37,229 42,299 Sources: Own calculations based on Eurostat, (2010), JRC, (2009) and Prognos, (2009) and own assumptions (ETC/SCP, 2010). 16

17 Further, this value of recycling forms an increasing share of the EU s gross value added (GVA) or GDP. Within four years from 2004 to 2008 the value of the recycling related to the gross value of the manufacturing, electricity and waste management sector increased from about 1.70 to 2.70 percentage points. Although the financial crisis has reduced this level, the importance of recycling for the economy is still higher now than five years ago. If the economic importance of recycling is related to other economic parameters such as total gross value added or GDP a similar positive trend can be seen, albeit at a lower level, cf. Table 3-3. Table 3-3 The turnover of recycling of glass waste, paper and cardboard waste; plastic waste; iron &steel scrap; aluminium, copper and nickel scrap; precious metals and other metals in million Euros and in % of economic parameters The turnover of recycling related to other economic parameters based on amounts and values for the whole year 2009 based on amounts and values for only the second half of 2009 Turnover of recycling of seven recyclables in the EU in million Euros-current prices 32,535 47,008 56,082 60,524 37,229 42,299 Total gross value added of the manufacturing, the electricity and the waste management industry in the EU in million Euros-current prices 1,930,790 2,113,325 2,221,800 2,243,801 1,919,044 1,919,044 Turnover of recycling of seven recyclables in % of gross value added by the manufacturing, the electricity and the waste management industry Total gross value added in the EU in million Euroscurrent prices 9,490,956 9,877,205 10,405,157 11,011,791 11,188,957 10,603,892 GDP in the EU in million Euros-current prices 10,607,861 11,062,206 11,682,467 12,362,664 12,506,038 11,812,145 Turnover of recycling of seven recyclables in % of total gross value added in the EU Turnover of recycling of seven recyclables in % of the GDP in the EU Sources: Calculations based on Eurostat, (2010) and Eurostat, (2010e) and own assumptions (ETC/SCP, 2010). The increasing turnover of the seven recyclables is also illustrated by comparing the increase with other sectors, where there has been a big increase in turnover. Figure 3-1 Index, 2004=100 Development in turnover of seven recyclables in comparison with the renewable energy sector and the mining and quarrying sector without energy producing materials Turnover index of the seven most valuable recyclables related to other sectors. Based on current prices and 2004= Sources: Eurostat, (2010e); EREC, (2010) and Table 3-1. Mining and quarrying except energy producing materials The seven most valuable recyclables Renewable energy sector When compared with a sector characterised by as fast a growth rate as the renewable energy sector, the turnover of the recyclables is in fact quite high. 17

18 As mentioned in section not all economic activities related to the recycling of the seven recyclables are included and, further, not all recyclables are included. In that way the economic values of recycling can be seen as minimum values. If the turnover and the amounts are related to each other it is possible to get an average price per ton of each of the recyclables. It has to be underlined that this average covers over different types of quality within each recyclable. Table 9-5 in Annex I shows the unit prices. There has been an increase in unit prices until the crisis started in Afterwards unit prices had a steep decrease. In other words the decrease in turnover by 2009, which was shown in Table 3-2, is first of all related to a decrease in unit prices and not so much to the amounts recycled. Table 9-5 in Annex I also shows that for glass, precious metals and other metals the average unit prices are higher for trade out of the EU compared with trade within the EU. 3.4 The relation between export out of the EU and within the EU and import into the EU of each recyclable Figures 3-2 to 3-8 show how the monthly value of transboundary traded recyclable glass, plastics, paper & cardboard, iron & steel; aluminium, copper and nickel, precious metals and other metals has developed related to export out of the EU and within the EU and import from outside the EU into the EU. For all seven recyclables the general trend is from 2000 until the crisis started in 2008 that the importance of the value of the export out of the EU in relation to the value within the EU has increased. The crisis seems even to have strengthen this trend. For glass waste the internal trade between EU Member States has been much higher than the export out of the EU. The limited amount of export out of the EU reflects also that the unit price of glass waste is quite low and glass has a heavy specific gravity, which means it is prohibitively expensive to send glass out of the EU for recycling Figure 3-2 Monthly value of transboundary traded glass waste related to export out of the EU and within the EU and import into the EU. Stated in current prices Total export and import into the EU of glass waste 9 8 Montly value in million Euros Source: Eurostat (2010) Export out of the EU Export within the EU Import into the EU

19 For plastics and paper & cardboard the value of the export out of the EU has risen above the export value among EU Member States. Regarding import into the EU the value of paper & cardboard waste and plastic waste has been low and quite constant throughout the period Figure Monthly value of transboundary traded plastics related to export out of the EU and within the EU and import into the EU. Stated in current prices Total export and import into the EU of plastics 80 Montly value in million Euros Source: Eurostat (2010) Export out of the EU Export within the EU Import into the EU Figure 3-4 Monthly value of transboundary traded paper and cardboard related to export out of the EU and within the EU and import into the EU. Stated in current prices Total export and import into the EU of paper and cardboard Montly value in million Euros Source: Eurostat, (2010) Export out of the EU Export within the EU Import into the EU For iron & steel the export value out of the EU has also increased, but the internal trade within the EU is still larger, even if the difference between the two has decreased from a factor of three to a factor of two. Further, the value of import into the EU and the export out of the EU is almost equal until the crisis started in 2008, after which the value of export out of the EU has been higher. However, it should be noted that throughout the period the value per ton of the iron & steel exported out of the EU has been lower than that imported into the EU. That indicates the EU is importing better qualities of iron & steel waste than it exports. 19

20 Figure 3-5 Monthly value of transboundary traded iron & steel related to export out of the EU and within the EU. Stated in current prices Total export and import into the EU of iron and steel 1,600 1,400 Montly value in million Euros 1,200 1, Source: Eurostat, (2010) Export out of the EU Export within the EU Import into the EU For aluminium, copper and nickel recyclables the value exports out of the EU has significantly increased from 2000 until 2008, even though internal trade within the EU is still larger and also after the crisis started. The value of exported copper out of the EU has shown a particularly strong increase. The import of copper, aluminium and nickel into the EU has also increased but not to the same extent. Figure 3-6 Monthly value of transboundary traded aluminium, copper and nickel related to exports out of the EU and within the EU. Stated in current prices Total export and import into the EU of Cu, Al and Ni Montly value in million Euros Source: Eurostat, (2010) Export out of the EU Export within the EU Import into the EU Precious waste metals are the only one of the seven recyclables where the value of the imported waste into the EU is considerably higher than the exports out of the EU. During the economic crisis this pattern seems to have changed; in 2009 the value of exports out of the EU became approximately the same as the imports into the EU. 20

21 Figure 3-7 Yearly value of transboundary traded precious metals related to exports out of the EU and within the EU. Stated in current prices 3500 Yearly value of export and import of precious metal waste Yearly valeu in million Euros Import into the EU Export out of the EU Export within the EU Source: Eurostat, (2010). The value is stated yearly due to very large variations in the monthly value, which does not necessarily reflect that the value differs but more that the relatively limited amount of precious metals is traded irregularly. Before the economic crisis, the value of precious metals exported within the EU had been higher than the export out of the EU. After the crisis the value of the export out of the EU has been the greater. It has to be underlined that precious metals is a very aggregated category including many different metals such as gold, platinum, silver and other precious metals. For other metals the value of exports within the EU has been larger than exports out of the EU. The Other metals category is also quite aggregated and includes, among others, lead, zinc, tin, tungsten, molybdenum, cobalt, cadmium etc. Figure 3-8 Yearly value of transboundary traded other metals related to export out of the EU and within the EU stated in current prices Yearly valeu in million Euros Yearly value of export and import of other metals Import into the EU Export out of the EU Export within the EU Source: Eurostat, (2010). The value is stated yearly due to very large monthly variations in the monthly value, which does not necessarily reflect that the value differs but more that the relatively limited amount of other metals is traded irregularly 21

22 3.5 Drivers behind the increasing value of recycling The increasing value and importance of recycling are related to different factors: The unit prices increased in current prices until 2008 and they have recovered reasonably after the beginning of the crisis. The booming Asian economy has needed more recyclables. The increasing Asian demand has not only been positive for the unit prices of the recyclables it has also consumed larger and larger amounts of recyclables generated in the EU Different EU directives that specify an increasing percentage of specific waste types to be recycled in EU Member States have lead to an increasing amount of recyclables being put on the market. The increasing amount of waste sorted out as recyclables due to EU and national requirements can be related to the introduction of a huge range of recycling initiatives and targets in different EU directives and strategies: The Packaging and Packaging Waste Directive (Directive, 2004), the End of Life Vehicles Directive (Directive, 2000), the Waste Electrical and Electronic Equipment Directive (Directive, 2002), the Thematic Strategy on the Prevention and Recycling of Waste (2005), the Batteries and Accumulators and Waste Batteries and Accumulators Directive (Directive, 2006) and the Waste Framework Directive targeting construction and demolition waste and waste from households (Directive, 2008). The EU s Landfill Directive (Directive, 1999) introduced restrictions on the quantity of biodegradable municipal waste allowed to end up in landfills and the directive in that way guides waste to either recycling or other recovery. An example of what the EU recycling requirements mean for increasing the amount of recyclables is the Packaging and Packaging Waste Directive. Table 3-4 shows the increase in recycling of different packaging recyclables in the EU from 2004 to Table 3-4 The amount of recycled packaging waste in the EU stated in 1000 tonnes and related to different materials Recycling of packaging waste in tonnes Increase of amount recycled in % Glass 9,371,138 10, , Paper & cardboard 21,084,092 23,846,340 24,447,851 16,0 Plastic 3,250,344 3, , Metal 2,753,191 3, , All packaging 36,458,765 41, , Source: Eurostat, (2010f).The amounts cover all packaging waste generated in the EU and recycled either within the EU or outside the EU). The amount of packaging waste recycled has increased for the four waste types by 6 million tonnes from 2004 to The total increase of recycled amounts from 2004 to 2007 of the seven analysed recyclables is estimated to be 18 million tonnes, cf. table 9-1 and table 9-2 in Annex I. In other word about one third of the total estimated increase of recycling is related to the Packaging and Packaging Waste Directive and its requirements of increased recycling in the period 2001 to The drivers behind the increasing value of recycling are therefore a good cocktail of legislative and market instruments. Historically, market forces and legislative forces have often been in conflict. However, in this case it seems that market forces and legislative forces have underpinned each other. 22

23 3.6 Conclusions on the economic importance of recycling The seven analysed recyclables are estimated to constitute the main part of the waste generated within the EU, which is recycled either within or out of the EU and also has an economic value. More and more of the recyclables are transboundary traded either as export out of the EU or export within the EU in the period from 2000 to On the other hand the import into the EU of the recyclables has been quite stable and on a much lower level than exports out of the EU. The only exception is the value of import into the EU of precious metal waste, which has increased and has constituted a large part of the value of imported recyclables into the EU. For all seven recyclables analysed, the amount of and the importance of exported recyclables out of the EU has increased since 2000 until the crisis started in The crisis seems even to have strengthen this trend. The export of recyclables out of the EU is now larger for plastic waste, paper & cardboard waste than the internal trade within the EU. The total turnover of recycling in the EU has increased from about 32.5 billion Euros in 2004 to 60.3 billion Euros in This is almost a doubling of turnover and can be explained by a combination of the increasing amounts of recyclables put on the market and increasing prices of the different recyclables, especially for plastic waste, iron & steel waste and aluminium, copper and nickel waste. When the crisis started in 2008 it implied a decrease of the economic value of the seven recyclables. The turnover for 2009 compares with the 2008 decline from 60.3 billion Euros to between 37.1 to 42.2 billion Euros in current prices. This decline is first of all related to decreasing unit prices and not very much to the recycled amounts. It seems that the development in the second part of 2009 is much better than the first half of However, we need a longer data series in order to assess the development properly. Furthermore, it looks like for plastic waste, paper & cardboard waste, iron & steel waste and aluminium, copper & nickel that the value of exports out of the EU has recovered much more than internal exports within the EU: This development can be explained by the quick recovery of Asian recyclable consuming industries compared with their European counterparts. The boom in the Asian economy continues and at the same time even more manufacturing work places have been moved out of the EU since the crisis started. One explanation for the increasing economic importance of recycling is the booming Asian economy. However, even if unit prices have been increasing especially for metal wastes and plastic waste until 2008 another important factor is that an increasing amount of recyclables are sorted out and put on the market. Unfortunately, it has only been possible to include developments since 2004, which is the first year of reporting to Eurostat of total recycling. Since 2004 at least 15% more of the seven recyclables have been sorted out and put on the market. This development is also due to the implementation of different EU waste directives such as the Packaging and Packaging Waste Directive, the End of Life Vehicle Directive, the WEEE Directive and the Landfill Directive. All these directives create an obligation to recycle or recover increasing percentages of waste. The emerging economic importance of recycling is therefore a very good and successful example of how market forces and legislative demands are working in the same direction. If the economic importance of recycling should continue to increase in the EU it requires both initiatives that support the demand of recyclables in the industry in the EU and outside the EU together with initiatives that ensure the recyclables are recovered and not disposed of. In that way a combination of market oriented and legislative oriented initiatives seem to be the right tools. 23

24 4 Recycling and resource efficiency A crucial role of recycling in green economy is the enhancement of resource efficiency and productivity. Schepelmann et al. (2009) argue that in addition to the importance of resource security in society in general, an increase in resource productivity leads to a reduction in material costs in the manufacturing industry. They consider a resource-efficient and recycling-based industrial sector as one of the four key components for Europe to enhance its resource efficiency in the long run. It is crucial that the recycled material is preferred and prioritised by the economy compared to virgin materials, in order to avoid further intensive interventions to the global ecosystem services and to avoid using valuable, limited and sometimes scarce resources. Moreover, the EU covers a significant part of its resource requirements by importing them from abroad. It would, therefore, be interesting to evaluate the contribution of recycling to the demand for resource consumption. The comparison of the demand for resources with recycled quantities can be made in two ways. The demand for virgin resources can be divided into imports and domestic extraction. The EU satisfies its need by extracting resources within its territory or by importing them from abroad. Recycled material can substitute part of either of these two sources. Recycled material can be delivered to production chains, which in turn avoid buying virgin materials from the domestic extraction industry or from abroad. Since environmental benefits lie with the preference for utilisation of recovered material, it would be interesting to examine how much of the EU economy s material demand can be satisfied through recycling. Such an evaluation must address both current and possible recycling levels and material demand 2. The current system does not of course guarantee that the recovered quantities are utilised within the EU. Instead, the recovered material enters the free market like any other product and can be traded both within and outside the EU. Therefore, there is a product system which is based on the exported recycled material, which is in turn imported into the EU in a processed form (products). Therefore, the clear objective of this chapter is to investigate the correlation between the consumption of a resource and the recycling of the corresponding waste stream. This correlation can be made in physical (weight) or economic (value) terms. The concepts that this investigation is based on are questions around Europe s security of resources, the level of self-sufficiency achieved by recycling resources, the distance to a close-loop recycling society. 4.1 Defining indicators to show the link between consumption of resources and recycling By leaving all market considerations aside, one aggregated question can be formed for recyclable waste streams: What is the coverage (C) of the EU s total consumption of a specific resource (Consumption i) that can be achieved through recycling (Recycling i)? 2 The possible recycling is assumed to be equal to the waste generation of the material. 24

25 The consumption is defined as the EU s production of resources (i) plus imports minus exports of the same resource (i). The recycling is defined as the EU s total recycling of its generated waste independently whether the actual recycling is taking place within the EU or outside the EU. The factor is C(I)= Recycling of recyclable i /Consumption of resource i. This factor can be defined in two ways. One way is in relation to the current recycling in the EU and the other is the potential recycling in the EU. By using information from a study done by the Prognos in 2009 the potential amount of recycling can be calculated. The indicator can be calculated either using weight or economic value. However, the economic analysis presents problems that are avoided by the use of weight for comparison. A recycled product does not always replace a resource of equal value. The level of processing of the recycled product or virgin product determines its value. For example, in mass terms iron & steel scrap can be compared to primary iron & steel products, but not in economic terms. The cost of processing the scrap metal into primary forms of metal products renders the latter more expensive. Therefore, these economic indicators can only refer to a comparison of the total turnover of recycling versus resource consumption. Other relevant indicators could be: or What is the coverage of the EU s imported consumption in resources that can be achieved by the net exported recycled material out of the EU? In other words, the EU is exporting outside its territory recyclable material that is used in production abroad. Then, parts of the produced articles are imported as products in the EU. Therefore, the EU s waste is used for new products consumed by the EU, but produced abroad. What is the coverage of the EU s domestic production in resources that can be achieved by the recyclable material that is domestically treated? Contrary to the above mentioned indicator, this indicator refers to recycling of the EU s waste that happens within the EU soil. The recycled product is consecutively fed to the EU industry for production. So, the question that arises is how much the recycling happening in the EU supports the production within the EU in terms of resources. In the following sections 4.2 to 4.3 the weight indicator is analysed and we only look at the indicator, where the total EU consumption and the total recycling are compared with each other. The reason for this is that we can hereby better illustrate the potential of recycling, since we are including the total recycling in the calculation. 4.2 Data requirements for consumption and recycling First of all, it is important to underline that we only analyse the EU as a whole, so no national data requirements are foreseen. In order to accurately and comprehensively reply to the aforementioned questions, it is necessary to combine different types of macro statistics. Material flow statistics can cover the demand of resource clusters of data, while trade data can apply to the data gaps referring to imports and exports of resources. On the other hand, waste statistics can be used for the estimation of waste generation regarding each of the resources and their actual recycling. The maximum potential recycling is assumed to be equal to the generation of a resource 25

26 within waste, except if there is evidence supporting limitations in the maximum recycling potential, due to e.g. contaminants or technical requirements. The main source for data mining is Eurostat which publishes data for the selected resources/ waste streams. The total demand of resources can de defined by using Eurostat s Prodcom database. Waste generation data are taken from Eurostat (Waste database) and recycling data are taken from JRC, (2009) and Prognos (2009), which are based on Eurostat data. Each of the chosen streams (paper and cardboard, plastic, metals, glass, WEEE, C&DW) has been analysed separately and the total amount of consumption, waste generated and recycled have been defined for each material type. Table 4-1 gives an overview of how the amounts are for each of the streams in 2004 and Table 4-1 Overview of the raw data used for the calculation of the mass indicators In 1000 tonnes Total Recycling Total Generation Total Consumption Paper and ,200 79, ,485 Cardboard ,000 80, ,274 Plastics Iron & Steel Aluminium Copper Other Metals Glass WEEE Concrete ,500 26, , ,225 27, , , , , , , , ,100 4,600 29, ,100 4,700 29, ,400 11, ,400 11, ,743 3,325 5, ,632 2,908 5, ,700 21,600 92, ,300 24,000 90, ,871 2,628 43, , ,498 1,666, Sources: (Eurosta, 2010 Prodcom; Eurostat, 2010 (Waste database); Prognos, 2009; JRC, 2009) The present amount of recycling related to consumption indicates how recycling at the moment can contribute to the EU s consumption needs. The generated amount of a waste type gives information on what is the maximum amount which can be recycled theoretically. By assuming that all generated waste is recycled, we can get an indication of what amount of recycling can potentially cover the EU s consumption. This percentage is the upper limit value because it is not realistic to assume that all waste generated can be recycled. Figure 4-1 shows how recycling at the moment can contribute to consumption and how recycling potentially can contribute. 26

27 Figure 4-1 How much can the EU s recycling contribute to the EU s consumption of different materials, indicated in % and for 2006 Sources: (Eurosta, 2010 Prodcom; Eurostat, 2010 (Waste database); Prognos, 2009). The reference year is 2006 for all materials except for concrete (2004). 4.3 Results of the weight indicators The results are quite different according to the fraction in question, so it is difficult to draw overall conclusions. The combination of the indicators (current) and (potential) shows: In general the recycling of all recyclables can potentially cover a larger percentage of our resource consumption in the EU (difference between current and potential), For all recyclables the EU consumption of resources is so big that recycling cannot cover our total net consumption. In fact, except for paper & cardboard and steel & iron, less than half of consumption can be covered by a potential 100% recycling. Paper & cardboard together with iron & steel are the most exploited waste resources. The facilitated recyclability coupled with the value of the resources are the reasons behind the higher recycling rate compared to other materials. Plastics and WEEE present the lowest figures in both the current situation and in the potential situation. For plastics this is explained by the overall low recycling percentage achieved due to the complicated sorting procedure and the lower quality of the final recycled product. In addition the high heating value of plastic renders incineration an attractive alternative to recycling. This cannot be said for WEEE, since high recycling is reported. However, the export of second hand electronic and electrical equipment out of the EU is rather widespread as well as the increase in stocks for electronic and electrical equipment. Aluminium also presents relatively low numbers, in spite of the high levels of recycling. This is because of increased consumption compared both to the generation of waste and recycling. Aluminium is being used more and more in construction operations, therefore increasing the stockpiling. 27