Policy makers need to lead the way with circular economy transition

In 2020, we are going to hear a lot more about the circular economy. While it is a catch cry that has existed for years, across the globe the push to embrace circular economy principles is accelerating with unprecedented pace. And, while Australia’s food, beverage, and grocery manufacturing sector is working hard to embrace the change that comes with the circular economy, policy makers also need to ensure appropriate time frames and incentivisation schemes are in place to help business transition.

What is the circular economy?
Establishing a circular economy means much more than recycling – that is only a small part of the equation. It is restorative by design, focused on extracting maximum value from resources through continued re-use, using as few resources as possible.

Central to the concept is the idea that things should be designed to be maintained and reused and, when no longer useful in their original form, can be used for something else. The loop is closed. In terms of the food, beverage and grocery manufacturing sector, the obvious area where the concept of the circular economy can be applied is in regards to packaging, especially plastic packaging. And in Australia, the sector is collaborating to make it happen.

Food waste
With a rapidly growing global population, a reduction in agricultural land, and increasing climate change concerns, reducing food waste is now a global priority. If food waste was a country, it is estimated it would be the world’s third largest carbon emitter (after the USA and China) and utilise a cropland area the size of China. Currently, Australia generates an estimated 11.3 million tonnes of food waste per year, with 2.3 million and 2.5 million tonnes being generated on farm and in the home respectively. Currently a mere five per cent of household food waste is diverted from landfill, presenting an opportunity to embrace circular economy principles.

Food manufacturers are leading the charge and have focused on reducing food waste. Currently, they divert 95 per cent from landfill to higher order uses such as food rescue, animal feed, application to land and composting, which are already driving significant circular economy outcomes.

2025 National Packaging Targets
Across the board, Australian food, beverage and grocery companies are working hard to increase the recycling rate of packaging and reducing the impacts of litter. Many are playing an important part through their commitments to the 2025 National Packaging Targets, led by the Australian Packaging Covenant Organisation (APCO).

The four targets, which were set in 2018, are:
to make all packaging 100 per cent recyclable, re-usable or compostable;
to ensure 70 per cent of plastic packaging is recycled or compostable;
to ensure 30 per cent average recycled content in packaging; and
to phase out problematic and unnecessary single-use plastics packaging.

Recent research undertaken by APCO has confirmed that industry has already exceeded the recycled content target and is now collaborating with Government to set a more ambitious target to stimulate demand in the circular economy.

As members of APCO, companies are collaborating to reduce the harmful impact of packaging. Membership extends across organisational size and industry and enables “the sharing of best practice resources and strategies to improve packaging design, optimise waste management processes and reduce business costs relating to packaging waste”.
There is increasing demand for packaging that includes recycled content and some of the largest companies are leading the way. For example, Unilever has committed to halving its use of virgin plastics, Coca Cola is using 100 per cent recycled plastic content in 70 per cent of its bottles, and Lion Dairy & Drinks’ Dairy Farmers Heritage 1.5L milk bottle is already made with 50 per cent recycled content, with all Juice Brothers 1.5L bottles to be made using 50 per cent recycled content by end of March. There is also a focus on consumers, with the increasing adoption of the Australian Recyclability Label on packaging helping guide them on what can be recycled.

While the industry is wholly supportive of the national packaging targets, achieving them is not without its challenges.

Barriers to achieving 2025 National Packaging Targets
The key barriers facing the industry as it strives to achieve the 2025 National Packaging Targets are many and varied. They include: the lack of clean glass from kerbside collections, which limits the recycled content in local bottles; the lack of availability of recycled food-grade plastic packaging; a need to review quality standards of recycled content to ensure food safety is not compromised; the ability to ensure traceability around the packaging supply chain to prevent modern slavery; and a general lack of local processing infrastructure.

Rectifying these issues requires all stakeholders to collaborate and mandating targets for one stakeholder group will not go far in achieving a circular economy. The responsibility must be shared by the food and grocery manufacturing sector, the packaging industry, retailers, the waste sector, government and APCO. Working together the actions required to address these barriers can be adequately addressed, National Packaging Targets reached and, ultimately, a circular economy achieved.

APCO recognises an interrelated, whole-of-supply-chain approach is needed, and has established working groups, comprising of industry and other stakeholders, to address specific issues identified with the recoverability of ‘problematic’ packaging materials.
Collaboration between all levels of government and jurisdictions, all stakeholders along the packaging supply chain, and secondary processors is required. As highlighted in the recent APCO baseline report, 86 per cent of packaging is currently recyclable, yet only 49 per cent is actually recycled. This is due to a combination of factors ranging from product design, community education and collection methods, to a lack of specific local recycling infrastructure. APCO is playing an active role in facilitating this collaboration and encouraging whole-of-supply-chain enablers to meet the targets.

Moving towards a circular economy
While there is ever-growing momentum within the sector to embrace circular economy principles, there are several key barriers standing in its way.

Currently, the demand for recycled plastics exceeds the supply, resulting in a lack of availability and inflated pricing. Increased availability of post-consumer plastics and increased competition in its supply is required to reduce costs for brand owners procuring recycled plastic. This will protect local manufacturing jobs and assist Australian companies to compete with low cost imports.

Incentivisation from state and federal governments through capital funding assistance will be essential moving forward.

This is because:

  • Recyclers need funds to install improved optical sorting equipment to increase the availability of clean uncontaminated PET and HDPE.
  • Packaging companies need funds to install decontamination infrastructure in order to meet food grade packaging specifications.
  • production lines.
  • Fiscal support for research and development into alternate uses of plastics, such as chemical recycling or use in roads, is also necessary.

Finally, there is need for a nationally consistent approach.

While the independence of the states allows governments to implement waste policies tailored to their needs, it can also produce adverse impacts that ultimately produce commercial inefficiencies, undermine commercial confidence for circular economy stakeholders to invest, and reduce potential environmental gains. Nationally, consistent kerbside collections will allow brand owners to design products to a national recycling specification and allow recyclers to design recycling infrastructure to sort a set of common household materials into high-value commodities for further processing and ultimately manufacturing into new products.