How the UK can counter the proposed Chinese import ban

Written by: Adam Read, external affairs director at SUEZ | Published:
Adam Read, external affairs director at SUEZ

China is without doubt a leader in international world trade, and for many years has been the largest importer of many types of foreign goods, including recyclables.

Last year, Chinese manufacturers and recyclers imported 7.3 million metric tons of waste plastics (valued at $3.7 billion), accounting for over 50% of world imports in that category, and they also hoovered up more than half of the world’s exports of waste paper.

However, things are changing rapidly. On 18 July this year, China notified the World Trade Organization that it would ban imports of 24 categories of recyclables & solid waste by the end of 2017, as part of its campaign against yang laji or “foreign garbage.”

The proposed ban applies to several plastic resins (including PET, PE, PVC, PS, and “other” plastics), textiles, and unsorted mixed paper. And, whilst there is still a lot of ambiguity surrounding the exact specifications of what will be banned, one thing is for certain: China will be accepting a lot less material and the doors close in the next couple of months.

Now, this should not come as a huge surprise, as it is not the first time China has got tough on its recycling based imports. China’s Green Fence initiative in 2013 imposed quality restrictions on imported recyclables and the more recent National Sword campaign, aimed at cracking down on illegal imports, has significantly increased inspection and enforcement activity.

Both policies caused a great deal of disruption to global commodity trading and to the global recycling sector, and this time is the impacts are expected to be more widespread and far-reaching.

So why have they restricted access to their market?

Although in many respects China’s latest announcement should be seen as a simple extension of its previous efforts, there are some important differences.

Both Green Fence and National Sword focused on quality concerns and illegal trading, whereas the impending import ban appears to be driven more by environmental and human health concerns on one hand and on the other an effort to increase domestic collection and recycling to 350 million tons by 2020 - a 42% increase on 2015 levels.

As such the import of specific recyclable materials will be replaced with domestic resources, from the ever growing middle-classes and the expanding groups of western-influenced consumers.

So what does this mean for the UK?

This question has been very high on my agenda these last few weeks, from debates had at RWM, to focused discussions at the Scottish Resources Conference, and of course the less formal chatter at the RECOUP annual conference.

Whatever way you look at this, the latest policy development in China will have global ramifications, not only on commodity prices and markets, but fundamentally to how we deliver more circular economies, more closed loop systems and how we meet local recycling targets.

The sector is rightly concerned, with the ESA convening a number of discussion groups and supporting a joint trade association letter, with the likes of the Resource Association amongst others, to the Environment Minister asking for the Government to take action.

Ray Georgeson has also laid down a call to arms for the waste sector and the reprocessors to fly to China to plead our case to their Minister to change his stance. So what are we concerned about?

Aside from disrupting billions of dollars in trade, many worry that much of the waste that China imports annually, especially the lower-grade materials, will have nowhere to go. Now for some of our commercial clients sending plastics captured for recycling to energy recovery or even landfill may be OK in the short term, but as a contractor working with a large number of local authorities (and as such the general public) I am less sure that they will be so comfortable with this outcome.

Can you imagine the press coverage if local authority recycling rates drop by 5 or 10% because the plastics have no market to got to? So we need to start some grown up conversations with all our clients about the short term issues and our short, medium and longer term plans. Of which we have a few.

So what could we do?

I am not sure what all the options are if the ban comes into force as proposed; should we store the materials at our sites, in the hope that markets are found or the ban is lifted, but for how long could we do this for?

Should we seek alternative end markets in other locations perhaps to Southeast Asia, the Middle East, or Latin America, and would we feel confident about the guarantees on offer about end uses and work forces etc.? Should we find new uses for the plastics (and paper) closer to home?

And of course the UK’s EfW market is pretty saturated, so our most likely outcome, after using up any market capacity for the recyclate or the fuel will be to landfill it, or to add it to the SRF production line, which might just be fine for the short term.

But longer term we need to grab the problem by the horns and start solving it, over-reliance on one market is what has led us to this point, and we need to change our reliance on China for underpinning much of the UK’s recycling outputs.

The problem is a real one, and one that all waste management contractors and reprocessors are very much focused on right now. But just how aware of the situation are the local authorities that we serve, and those that deliver their services in-house.

International commodity trading will be hit, and so any authority expecting an income from its recyclate will have some budget and revenue uncertainty for some time to come.

Some will be able to use local spare capacity perhaps, at a landfill or EfW, but that may have significant economic impacts, even in the short term, so will some authorities seriously consider stopping certain material collections, or removing materials from their commingled services?

I hope not, but we do need to start having the debates sooner rather than later, and changes in materials and collection services are already under review in the USA.

From pain to gain?

So, having spent many days debating the issues with colleagues at Suez, in Brussels, Paris and further afield, and listening to the needs of the Scottish Circular Economy for greater remanufacturing, the answer seems obvious – to grow our UK reprocessing capacity and protect ourselves from the markets.

Now, as I said at the Scottish Resources Conference this is not a short term solution, not with the investment needed and the time to build the plants and re-direct the feedstocks, but we could be well on the way in the next 18 months or so if we as the UK waste & resources sector believe it is the right thing to do and of course if it makes commercial sense to do so.

Certainly spending the day with the great and the good of the recycled plastics space earlier in the week gave me hope that we could find solutions to this and related problems. Plastics capture is up and public attitudes to plastics recycling are improving, and we can’t afford to undermine this with concerns about China.

There are excellent initiatives across this space from innovative packaging design, and greater recycled content, to reuse, refurb, and repurposing throughout the system.

And of course the huge attention being afforded to black plastics, deposit return schemes (in Scotland) and to marine litter (globally) can only help drive on innovation and the encourage the spirit of collaboration and joint working.

It really is time for the plastics supply chain to work together to fully define the problem, understand the options, and develop solutions that work; we need to look after ourselves and each other – designers, retailers, consumers, collectors, handlers, reprocessors et al.

Looking ahead?

I am sure I am not alone in believing that more UK based reprocessing is part of the answer, even if former joint ventures involving the likes of Closed Loop and Coca Cola failed.

The markets are different today, the drivers have evolved, and the sector and the UK is clearly more ready for this type of development than ever before. And not only for plastics, but for paper too.

However, according to SUEZ research (Mind the Gap) the UK is already facing a capacity problem for its waste management, and the inability to find homes for millions of tons of plastic and paper that were traditionally recycled in China will only make this problem worse.

So is this the opportunity for Government to step up and offer us the leadership that we have all been crying out for? We have the Industrial Strategy on its way and wouldn’t remanufacturing potentially be an important part of feeding the UK economy?

It could provide chemicals to the petrochemical sector, fuels to the transport and aviation sectors, packaging for UK based produce protection, and of course heat and power to a much wider community and suite of industrial sectors.

Perhaps I am day dreaming, but the time to act is now and the stars are certainly aligning. I just hope enough key organisations are ready to get on the same page and make it happen.

I have no crystal ball, and there are far too many moving pieces in this global commodity space. But the UK could really take a big step forward, following the agenda set out in Scotland for a more circular economy, and by using the Industrial Strategy as the focal point.

Future UK economic growth could be triggered and underwritten by these materials and more of them as we get capture right at the till, kerbside, on the go and in the workplace.

Wastes are fuelling future industrial and transportation sector innovation, and feeding new remanufacturing and innovative materials and chemical industries, whilst protecting the UK from international commodity price fluctuations and improving our energy self-sufficiency.

Now that sounds like a vote winner to me, and something that Defra, Treasury, BEIS and DfT could all get behind. I hope so, and I intend to help make this happen.

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