A change in policy, leading to more plastic and metal recycling, would have positive economic and environmental effects. To recycle more, governments need to reinforce standards and guidelines, strengthen incentives and penalties, develop the operational ecosystem, and build the necessary capabilities and public awareness.At present, GCC countries recycle very little compared to developed economies such as Germany and Japan. On average, GCC countries only recycle, reuse, or recover around 10% of plastic and metal waste. Countries such as Germany, or Japan, which have embedded the concept of the circular economy into policy, can have recycling rates surpassing 90% for metal, and 40% for plastics (also reaching 90% for plastics including energy recovery).
The low GCC recycling rate leads to losses of large volumes of recycled metals, which can be used as an alternative to virgin material, and recycled plastics, which have numerous applications, such as in construction and food packaging. Worse, plastic and metal waste can endanger wildlife, the environment, and poor disposal practices can threaten human health.By contrast, increasing recycling rates in GCC to an achievable target of 40% can create significant benefits. It would cut carbon dioxide emissions by 10 to 12 million tonnes each year and reduce primary energy consumption by around 4%. As local companies see the commercial opportunity, we estimate that would create around 50,000 new jobs in the recycling industry, with total market potential of around $6bn per year.
Investors in this sector can expect healthy operating margins of above 15% in various opportunities across the value chain, such as waste electrical and electronic equipment recycling, plastics and packaging recycling, secondary metal semi-finished producers, or car spare parts manufacturing using recycled plastics.However, considerable obstacles remain. Too often those companies producing plastic and metal goods do not make them easily recyclable because of a lack of guidelines and technical standards. There is a shortage of adequate recycling facilities, while community awareness of the issue is minimal.
The necessary infrastructure and technologies are undeveloped, or unavailable. Low levels of environmental protection and law enforcement mean there is excessive disposal in landfills and open dumps, with landfills inconsistently regulated. In particular, illegal dumping is widespread.To improve the recycling rate, GCC governments should launch initiatives in four key areas.
First, governments should use detailed technical directives and standards to govern waste management and recycling. For example, as in Japan, governments can mandate minimum recycled material content in public procurement. They can also introduce ‘take-back’ requirements and recycling targets to make businesses responsible for products at the end of their life.
Second, governments should use taxes, incentives, and penalties to promote healthy waste management. For example, deposit refund schemes could involve a surcharge on the price of a product likely to pollute the environment, with the surcharge repaid when the material is returned.A recycling fee for producers can discourage them from using certain packaging materials for finished goods. Taxes can help to counter harmful waste treatment methods, diverting it away from landfills.
Third, governments should enhance the operational ecosystem. They should encourage active private sector participation in waste management initiatives, providing access to advanced infrastructure and financial support.In March of this year, the US Department of Energy set up a fund to accelerate innovation and assist the development of plastic recycling technologies. In June of this year, the Australian government approved a recycling modernisation fund to finance infrastructure that sorts, processes, and remanufactures waste materials in the country.
Fourth, governments should equip the workforce with relevant capabilities and waste management expertise. The US Department of Education launched the Green Ribbon Schools initiative to increase environmental awareness among the younger generation.GCC governments can spearhead similar projects by partnering with the private sector and creating national champions to train the workforce. As has been done in countries such as Germany and Japan, they should also launch a comprehensive national level campaign to raise public awareness on circular economy initiatives, such as getting households to use multi-bin systems, which separate different kinds of waste.
Introducing these changes demands radical vision, commitment, and co-ordination between the public and private sectors.
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