Pitch
As waste national legislation develops, a market pull for recycled materials must be developed by the industry to ensure a circular economy.
Description
Summary
At the moment, recycling rates in Brazil are very low and there are no market drivers and/or industry incentives to transform waste products into usable materials. Recently approved national legislation is forcing an increase in waste collection and to a certain extent, recycling technology is being funded by city councils. However, there are lack of knowledge and skills to guarantee proper application of the technology, waste segregation is inefficient, the material being produced is usually of a low quality and population don't see the benefits of recycling beyond the social aspects of cooperatives and waste pickers. As a result, industry will only use the material if it is cheaper than virgin material
So, investments are not resulting in improved waste management conditions in the country and even if the media and regional councils say that the amount of waste collected and recycling rates have increased, these potentially recyclable materials will continue to go to landfill if we don't urgently develop market mechanisms that promote and facilitate its commercialization and re-use.
Design 4 Climate Action Initiative
This project proposes the implementation of an Industry Led Initiative that will transform the plastic value chain by developing an exclusive market for recycled resins through a collaborative and innovative business model contributing to product value and company reputation.
This Initiative is in line with the “Lets partner on Climate Action Now” statement signed by 43 organizations in the spirit of the World Economic Forum to foster public-private cooperation. They affirm that the private sector has a responsibility to engage actively in global efforts to reduce greenhouse gas emissions, and to help the world move to a low-carbon, climate-resilient economy. As a result, they call upon governments to take bold action at the Paris climate conference (COP21) in December 2015 to secure a more prosperous world for all of us.
Category of the action
Reducing emissions from waste management
What actions do you propose?
The scale of the problem
Brazil produces an average of 200.000 ton of municipal solid waste per day (International Solid Waste Association, 2012), this means an increase of 21% from 2003 to 2012 while population has increased 9%. In São Paulo, the waste generation is around 1kg/day/person which is the same rate as developing countries but with no efficient waste management and recycling in place. A recent research carried out by McKinsey puts Brazil on the 5th place as the biggest consumer market by 2020, which means that more consumption will directly contribute to more waste generation.
Waste management and recycling is currently a hot topic globally, specially the discussion around how to develop a market pull and create value to recycled material. This is even more crucial in developing markets where lack or inefficient systems reflects directly on increased pollution, river contamination and health associated problems.
It is therefore extremely important to develop a holistic, collaborative and new economic view to transform this discussion incorporating the value of avoided pollution and emissions, as well as, creating an awareness campaign to change the consumer perception that recycled products are associated with low quality.
This initiative invites waste management companies, municipalities and brand owners to work together for the first time in Brazil to establish a new economics for value creation and brand positioning.
Actions will therefore be based in 3 stages:
- OPERATIONAL STAGE: Building a collaborative platform
Waste management companies, local council, resin manufacturers and brand owners must work together looking at the technical and operational side of the discussion. By having the supply chain together with the willingness to change it is much easier to establish common goals, develop a broader view of the situation and reach positive results.
- ECONOMICAL STAGE - Establishing a new business model
The objective is to work with economists that shall incorporate externalities into the price calculation going beyond existing models that have included “Payment for environmental services” or “willingness to pay” based on the value of ecosystems services and natural capital. The new business model shall identify not only the environmental and economic benefits directely associated with recycling but it will also identify costs and benefits from different public and private bodies that normally are not jointly assessed and incorporate them into an unique and merged balance sheet bringing to the market a new recycled resin that is perceived as a speciality raw material rather than a commodity negotiated by volume and price.
- DESIGN & AWARENESS STAGE - Creating product value
This new raw material would contribute to increase product value and brand reputation. Communication and marketing experts would be involved to develop a campaign that demontrate the value of recycled products and the positive connection between recycling with reduced pollution, reduced GHG emissions and better communities.
Overall benefits:
- Waste value and reduced pollution
Waste is not a waste if there is a value associated with it. As a result, it will not be left on the streets and it will be diverted for recycling contributing to reduced pollution, cleaner streets, rivers and better overall city environment.
2. New jobs and investment
Having a new economic model that add value to the industry to use recycled material will develop the market which consequently will influence new investment, generate new jobs, additional opportunites for city development and consequently increase the scale and market value.
3. Legal compliance and company brand value
The new national solid waste legislation in Brazil forces businesses to look at producers responsability around waste packaging and end of life. This initiative will help industry compliance and also connect with companies broader commitment towards Climate Change such as the “Lets partner on Climate Action Now” statement where they affirm their responsability to engage in efforts to reduce GHG emissions.
STEP BY STEP ACTIONS
OPERATIONAL STAGE:
* Evaluate and define pilot area
Select the area based on the willingness of the local council to participate and involve the waste management contractor. The ideal pilot area should be a small to medium sized community with a reasonable waste collection system in place. There are two potential communities being evaluated one on the Southeast region and one on the South of Brazil. Meetings with the local council and city waste contractor would be important to be carried out at this stage.
* Assessment of local waste: volume, type and quality of waste
Once the local council and waste management contractor has signed up for the initiative, we can start to visit the landfill sites and cooperatives to define the study baseline.
* Identification of industry partners and potential funds/grants
The industry partners will play an important role in establishing a commitment to buy and use the recycled material. They will need to define metrics such as a % of recycled content on their packaging and/or product(s), demonstrate the increased brand value to their shareholders in connection to the company overall sustainability strategy and play an important role in demonstrating product value to their consumers.
There are a number of companies that signed the “Lets partner on Climate Action Now” statement that could be potential partners on this initiative considering their mission and vision, as well as, the potential opportunity for market differentiation and penetration in Brazil.
This project being approved by MIT Climate Co-Lab contest will certainly help on the recruitment and involvement of large organizations. Organizations from the textile, automotive, electronic and cosmetic sectors have been already identified as potential users.
* Technical specification: Resin quality and usage matrix
This is an important exercise to be carried out with the industrial users. Once the industry partner is defined, one product will be selected and the material specification defined by their own technicians and material experts. A series of potential applications would be evaluated based on quality and performance to define a matrix of options.
This assessment and development could be carried out together with a local university such as UFRJ and UFMG, where polymeric based research have been identified or international research centers or university such as MIT, Society of Plastics Engineering, Logoplast Innovation Lab and others.
In addition to that, Bernard Merkx, a worldwide renowned expert in recycling and convertion of (plastics) recyclates up into new products has already being approached and have demonstrated an interest in collaborating with this project. He is one of the first worldwide to have had converted plastics marine debris into valuable products. He is also involved with he preparation of the "WFO Golfinhos Alegres project" which aims to bring pragmatic solutions to the huge environmental problems in and around Guanabara Bay involving local stakeholders. MIT approval would certainly contribute to secure this partnership.
* Waste analysis against polymer technical specification: technological gap
At this stage, the waste contractor would be working closely with the academy, technical partner and materials engineers, polymers’ experts to evaluate local conditions to extract value from waste materials and/or the need for technological investments.
A resin manufacturer interested in including innovative and sustainable products on their product portfolio would be also an interesting partner and potential investors, as they could influence existing customers and contribute with their expertise. Global resin manufacturers such as Sabic and Solvay, already have in their product portfolio lines of resins made with post consumer materials in other markets and could bring this know how to Brazil.
ECONOMICAL STAGE
* Economical assessment of city waste management and pollution prevention and control programmes
It is important to assess government expenditure with a much broader and holistic view. Direct costs associated with waste management and recycling are related to waste collection, transportation and processing. However, there are additional indirect costs that increases exponentially as waste in not properly handled: the cost of dealing with waste dump, street cleaning, river drainage and increasing need to deal with community health issues due to air and water pollution. This are external costs that could be avoided with better waste management and with recycling systems in place.
So, it is important to disclose all this associated costs and develop an economic model that demonstrate the economical benefits of the avoided indirect costs to the local council. It is economical savings that will drive change.
* Environmental Benefits
A study carried out in 2010 by Brazilian research body IPEA ( Instituto de Pesquisa Economica Aplicada) has calculated the environmental benefits of recycling through the definition of the value of ecosystems loss and defined a model that incorporate the “Payment for environment services” to the recycling sector. There are positive learnings from this study and the fact that a much stronger economic argument is needed to drive change.
Indirect costs have never been considered which demonstrate the innovation behind this proposed initiative and the potential to transform the plastic value chain through collaboration and a new business model.
* Resin costing analysis
A good economical business case must be in place to ensure product value and positioning. As mentioned before, global resin manufacturers such as Sabic and Solvay, have already established a range of speciality resins and by bringing their expertise to Brazil they could contribute to reduce pollution, improve recycling and generate the market pull.
DESIGN & AWARENESS STAGE
* Marketing and communication
This is a consequence of the previous phase where designers and marketers will work together on the final message to highlight the value of this initiative. The aim is to change consumer perception that products made with recycled materials are not good enough. A good example that could inspire us is the StopThinkShop Movement in New York, produced by TYTHEdesign. This is a series of pop up shops featuring “social good” products that encourage a more conscientious future for designer and consumer behaviour. Curated through the lens of sustainable, ethical or local production, the shop highlights products with a parallel commitment to creativity and community, reminding us that high-quality design and social good can coexist.
The work around industry incentives will be the "cherry on the cake" and not needed for project implementation.
It could be carried out alongside all the above phases as a lobby exercise whenever appropriate to demonstrate good examples from other markets, such as The Comprehensive Procurement Guideline (CPG) program established by The Environmental Protection Agency in the USA where the purchase of recycled-content products ensures that the materials collected in recycling programs will be used again in the manufacture of new products.
This could be relevant to this discussion and initiative as there are a number of government procurement programmes being discussed on a national and regional level in Brazil at the moment and recycled content is not being included as an aspect that contribute to reduce product environmental footprint.
This should help market penetration and public awareness but are not essential for project implementation and should be seeing as a long term educational discussion.
Who will take these actions?
As the proposal owner, the Platform Exchange 4 Change will coordinate the project activities and will be responsible for the strategic analysis, government and business articulation, identification of key experts (designers, marketers and material engineers) and recruitment.
I am looking for global partners experienced in developing a market pull for recycled materials, product design and government policies that could bring knowledge and expertise to Brazil and as a consequence, help to influence the market.
Industry partner: responsible to define the technical specification for potential applications and establish a % recycled content on the product to be developed.
Academic, technical and materials expert: waste analysis against industry technical specification in order to develop the resin quality and usage matrix.
Waste management/public body: assist by providing all the necessary information about waste volume and quality and available infra-structure allowing site visits, sample collection and contribute to get waste pickers and cooperatives on board.
Resin manufacturer (essential or not): assist the resin development based on their own experience and interest in including innovative and sustainable products on their product portfolio.
Designers: responsible for product design and applicability of the new resin.
Economists: responsible to develop a costing model that ensures the right balance between resin price and value.
Marketers: responsible to ensure that the vision of this initiative will be demonstrated through a creative marketing campaign getting the community on board and committed to waste segregation, change public perception about the negative aspects of recycled products, demonstrate the positive impact towards avoiding waste and emissions and finally demonstrate that such initiative is contributing to industry’s co-responsability towards packaging waste within the national government legislation on solid waste.
Where will these actions be taken?
Actions would be taken on the selected pilot area and at the partners sites while the marketing campaign and government lobby could reach national discussions forums in Brazil.
What are other key benefits?
This initiative ca also contribute to mitigate climate risks specialy in relation to water pollution. This is due to the fact that once the value of waste is established, it will be better managed, disposed properly minimizing the risk of waste getting into rivers and oceans and as a result, strengthen societal resilience.
I am very keen to demonstrate the connection between recycling and marine waste. If we improve waste management conditions on land, we definitely contribute to reduce the amount of waste going into the rivers and oceans. At the same time, there is a direct connection between circular thinking on product design and business model innovation that contribute to reduce waste generation.
Moreover, by removing plastic waste from land and oceans, we reduce eco toxicity, reduce the depletion of natural resources and add value to waste collection.
How much will emissions be reduced or sequestered vs. business as usual levels?
If one consider that business as usual is the lack of waste collection, inefficient waste segregation and waste disposed in the environment, such a programme that proposes better waste management conditions will bring tremendous benefits to the society and local community.
Waste being re-used and not disposed on landfill will contribute to direct reductions of carbon emissions. The overall emissions reduced would be directly related to the amount of waste materials being processed and re-used to produced the new polymer. Moreover, by demonstrating the value of waste materials, we hope that we will get better waste disposal and collection reducing the amount of material being thrown away causing pollution and healthy concerns.
I am welcome to global partners that can contribute to the modelling part of this project. I should be also assessing the Climate CoLab experts to estimate the reduced carbon emissions based on a pre-defined waste volume
What are the proposal’s costs?
For the assessment phase, there is an initial estimate of US$ 100.000 for 2 years considering the expert team, a dedicated professor and a research center/lab with all the necessary equipments and tests capability.
For the prototypes, the industry partners will also be contributing allocating funds and human resources.
This proposal has highlighted the need to develop a market pull for recycled materials in Brazil which can lead to the transformation of the recycling sector, contributing to better waste management and reduction of waste and pollution. This is certainly a long term aspiration that will require the commitment from the industry, government incentives and awareness raising campaigns.
Time line
This timeline highlight the deliverables for the assessment phase described for the initial 2 years, based on the feasibility studies for the initial prototypes and economic evaluation of indirect costs. In the short term, materials assessment, product development and calculation of indirect costs from different public and private bodies would be evaluated.
In the medium term, local council would have seen the economic value of recycling with a broader view that incorporate the avoided indirect costs. Moreover, industry would have also understood the benefit beyond recycling in connection overall corporate strategies and brand value.
In the long term, material quality together with a new business model and consumer demand would have transformed the recycling and waste management sectors in Brazil creating a new generation of consumers that see the value of circular design and recycled materials.
DELIVERABLES
1st quarter
- definition of pilot area, city infrastructure, costs and industry partners
2nd quarter
- indirect cost evaluation: city pollution prevention and control programmes
- definition of potential industry funds
- resin technical specification
3rd quarter
- waste assessment completed
- incorporation of the indirect costs into the new business model
4th quarter
- resin and usage matrix completed
- first recommendations for the resin costs based on matrix
- first ideas for prototype and marketing campaign - customer survey results
- new business model being tested
5th quarter
- 1st draft of proposed marketing and communication campaign
6th quarter
- prototype completed for the product with the speciality resin
- costing analysis of the prototype - discussion between economists and industry buyers
7th quarter
- adjustments to the business model - liaison with key stakeholders
8th quarter
- final prototype with suggested cost for the speciality resin
- marketing campaign completed
- final recommendation for new economic model
obs: I have written a detailed gant chart, but was unable to add to the proposal as a URL.
Related proposals
References
http://www.epa.gov/epawaste/conserve/tools/cpg/index.htm
http://www.solvay.com/en/sustainability/CEO-Climate-Leader.html
Pesquisa sobre pagamento por servicos ambientais urbanos para gestao de residuos solidos, IPEA, Diretoria de Estudos e Politicas Regionais, Urbanas e Ambienatis (Dirur) - Brasilia, 2010
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