The fragility of the waste industry

Nicholas Nassim Taleb of The Black Swan fame, has recently written a new book called Antifragile. This book essentially takes the observation of black swans (highly unlikely, high impact events) and seeks to understand how the existence of black swans can be exploited.

Rather than systems being susceptible to black swans (ie fragile), or even resistant to black swans (resilient or robust), the goal is to design systems that thrive in the presence of black swans. Taleb coins the word "antifragile" to describe such systems.

What does that have to do with waste?

Well, I'd argue that it has a great deal to do with waste. Whenever the waste industry turns its mind to zero waste, it seems to do so in a perfectly fragile way.

Reality stranger than fiction

Today sees a guest post from Alex Serpo, editor of Inside Waste, Australia's leading waste journal.

It is presented unedited (other than to sort out hyperlinks), but before we present the article, some background.

The key piece of information required for the story is that New South Wales has landfill levy in the order of $95/tonne. Neighbouring state Queensland has a landfill levy, but it was set at $0/tonne when Campbell Newman was voted into the Queensland government earlier this year. Finally, at 800 km away, Sydney is not close to Queensland.

So here goes Alex. After Alex, some of my opinions.

Waste - racing to the bottom or the top?

Developing our waste processing plant, I am reminded of Seth Godin's blog post: The race to the bottom. In short, we can chose a race to the bottom or a race to the top.

The race to the bottom

This race is pretty clear cut. It involves bigger landfills, older trucks, cutting corners wherever possible to wring every last cent out of the business. Eventually, the last cent wrung out of the business is yourself. 

It assumes that the customer doesn't care what happens to their waste, and is purely driven by price. Of course, once you've created this race then it is self-fulfilling. You have convinced the customer that the only thing that matters is price.

Every market has its own race to the bottom, and every race to the bottom ends up at the bottom. You can only hope that race doesn't consume the whole market. 

In the field of waste management, but also in most other fields, you rely on regulators to protect you against the worst of the race to the bottom. Regulators can even call the race off (if they wish).

The race to the top

This race is also clear. It involves fewer landfills and more waste processing. It is probably more labour intensive as it seeks to extract every last resource from the waste received. Unlike the race to the bottom, it builds new businesses upon its success. 

Reprocessed material adds value and jobs to the economy - a recent report "The Australian Recycling Sector" estimates that

• 0.15 to 0.3% of all Australian jobs are in the recycling
• The sector has annual turnover of between $6-10 billion dollars, of which more than half is from the sale of recover materials
• A tonne of waste recycled creates more jobs than a tonne of waste landfilled

This race assumes that customers ultimately want good service, and are prepared to pay a little above the bottom of the market to receive it. Sell a vision and you will be surprised what you bring with you. Of course, it may be that the customers need some prodding.

For example, if you are building a waste processing plant, your key customers are waste collectors. Their customers are other businesses who sell, ultimately, to consumers. And consumers can be very influential in persuading businesses to lift their game. Selling the vision should not be confined to your immediate customers, but rather across all of society. It is the grand narrative that you want people to buy, not a selfish little "what's in it for me".

The race to the top is all but untouched by the regulator, but rather driven on by your customers and your ability to keep innovating.

Where would you rather be?

Long term, there is only one race you want to be in. The race to the bottom is easy. It is also a race to your own destruction. Sure, not now, but in a few years time (depending on the speed of change in the market).

The race to the top is hard. It requires a great ability to tell the story. It needs supporters, fans, followers. It needs a virtuous cycle of creating people who care, who in turn create more people who care. 

For all of this, the race to the top is the only sustainable race. When the bottom racers have collapsed, spent after slugging it out in the ditch, you remain strong and profitable.

And what do I do?

It is pretty straightforward - you can just keep spreading the word. Keep up your belief that the wrong thing is wrong, no matter how much people seek to persuade you otherwise. 

This and skim across my blog from time to time. In between digressing through some personal ramblings, I hope that the blog can keep inspiring ideas on what is right, what is possible, and how the bad can be replaced with the good.

The world of waste without us

Reading (again) the book "The World Without Us" by Alan Weisman, I'm reminded that we leave some very long-lived legacies.

One is obvious. High strength radioactive waste will be around for a long, long time. It is pretty unlikely to be able to be contained in a world without us, and so it will cause radioactive hotspots that last a long, long time. That is bad enough, but kind of obvious.

The thing that struck me was that plastics are also very long lived. There are (currently) no bacteria that are able to decompose most plastics, and so they will be around a long time. Weisman dedicates a chapter to this discussion (Polymers are forever), including a discussion of the Great Pacfic Garbage Patch. A startling fact reported is that, of the 1 billion tonnes of plastic produced in the 50 years, every bit remains in the environment (except for a small amount that's been incinerated).

It's not like, paper, which largely decomposes. Except when it is deep in landfill, when it can also be very long lived. Work done by William Rathje (who, I have just learned in researching this post, die just four months ago) found readable newspapers from the 1930s in current landfills. Incidentally, Rathje termed his work "garbology".

So we are here blithely using some of the most long-lived material in the world for such transient applications as single use packaging. This is why we are seeing such an explosion of community groups trying to reduce plastic use, seeing things like Two Hands Project, Plastic Free July and many others. These messages get real resonance, indicating that people care. They are important, as they try to reduce plastic creation.

Another avenue, perhaps a secondary mechanism, is to remove plastic once it's created and collected. One avenue that tickles my fancy is a small scale plastic-oil convertor. Pointed out by my good cyber-friend Ken, the "Blest Machine" converts plastic (except for PET) back into its constituent oil. For every kilogram of plastics, about a litre of oil is produced which can be further refined to diesel etc. The units are pretty expensive, but a great first step.

Blest Machine - plastic to oil conversion

The Blest website has more information, but it strikes me as a pretty cool idea for creating fuel where plastic is abundant. Thanks Ken!

I remember first reading The World Without Us and seeing plastic in a whole new light. What just another product, a bit challenging in terms of waste operations, became one of the most extraordinarily insane materials in use.

The world of waste without us...some pretty nasty radioactive hotspots and a general smear of plastic throughout the environment, including within animals as the plastics get smaller and smaller.

Plastics on water, source Green Team RSMAS

Values and value. Or how do our values affect our waste?

I was speaking today at a forum about the importance of values in our organisation, noting that our values are all internalised. We don't do signs (you know, "Please wash up your dishes", "Please turn off the lights", and in fact, that's kind of one of the values. We trust each other to get it.

This thinking can be transferred to waste. Waste really is a collective set of values that, I believe, permits us to turn away from our destruction. Engineering better landfills or incinerators kind of misses the point. The act of destruction is perpetrated when we, collectively, decide it isn't worth sustaining that material any more.

I believe that we suffer a little death whenever we make this decision, a little death that is easiest dealt with by closing our eyes to it, and by telling ourselves little stories to make it better. "The landfill is best practice" we say. "There will be no environmental impacts" we tell ourselves.

The story is only accepted because it is both implausible and deeply comforting. We want to believe it, we need to believe it, and so we do. This is how we construct our values to permit our lifestyle to continue.

I don't write this to send you, the reader, down a guilt trip. It isn't intended to tell you that you can no longer use your bin lest you go to hell. Rather, it is to encourage a rethink of your part in our collective values, which may in turn lead to a movement which can ultimately lead to change.

Slavery was abolished in this way. Slavery was deeply entrenched in society, necessary for it to maintain itself, and built off the lie that slaves are sub-human, or that the slaves are better looked after enslaved than free. That lie was challenged, and the values system built off it collapsed.

I believe rethinking the values enables us to challenge those who sustain the status quo. They will say there is no other way. Perhaps not as they have framed the problem. And so the problem needs to be reframed. Its boundaries expanded, new questions asked.

I realise this is no prescription for action, but like my organisation, it isn't a matter of signs. You just have to get it, and then live it, and then things start to fall into place around you.

The value in bulky waste

Sometimes it seems that the Universe conspires to help you. For me, this happened today.

The backstory is that I've been working up a business plan for the past few months around a facility to receive, resell and recycle bulky goods.

The plan is built off my 15 years of experience in running waste facilities, and so I think I have a pretty good feel for the industry. Based on this feel, I think there is enormous potential for a waste receival site that aims to send little or nothing to landfill.

My experience was as good as confirmed by a study recently published by WRAP (Waste & Resources Action Programme, from the UK) into bulky waste. This study suggests that there is a strong business case for a waste facility that separates and reuses bulky waste.

According to the data collected, 39 kg/hh/yr of bulky waste was delivered each year to waste facilities. Of this, 42% is furniture, 19% textiles and 19% e-waste.

Here is where it gets interesting. Of the total waste received at the site, 32% is reusable as is. With no repair. The reuse percentage increases to 51% being reusable with slight repairs.

Note that this is only what can be reused. There is another substantial category of waste that cannot be reused, but can be readily dismantled and the components recycled.

So work through the numbers. For a population of 100,000 households, there are 3,900 tonnes of bulky waste per year. Of that, about 2,000 tonnes can be resold with some minor repairs. Much of the remaining 1,900 tonnes can be dismantled and recycled too, but we'll leave that to one side for the purposes of this discussion.

Considering just the resalable, even if you sold it at a bargain basement price of $1.00/kg (ie a 20 kg bookcase going for just $20), then there are $2m worth of reusable goods being destroyed each year simply because there isn't the infrastructure to appropriately collect, repair and resell. Even worse, at $100/tonne, the landfill fees on the resalable goods represent a further $200,000 in costs.

Second hand bookcase, from Second Hand Furniture

In short, a community of 100,000 households represents a largely untapped $2.2m business in its bulky goods alone! This is quite extraordinary, and confirms that there is a business here.

Infrastructure or disruption

There is an argument that waste management is about providing infrastructure that services economies.

Under this model, it is the responsibility of government to provide a core service that gets rid of waste as quickly and efficiently as possible. Cheaply too. There is an emphasis on planning, on making sure that you never get into a situation where you can't get rid of the rubbish.

The outcome of this sort of top down approach is that waste tends to get treated in aggregate, and the least bad outcome pursued. The approach tends to reinforce the position of established players, and reduce the chances for innovation. It is safe mediocrity.

An alternative is to see waste management as having ample scope for disruption. That waste is no different to any other industry in a free market, and that is, established players are on a permanent slide to being consumed by nimbler businesses around them.

If you see the potential for disruption, then planning is the last thing you will want to do. Not only are plans impossible, but creating the plan removes the ingredients for disruption. Disruption requires bottom up action, people and businesses recognising and acting on opportunities close to the ground rather than from the stratosphere of spreadsheets built on dodgy assumptions. Planning tends to create solutions that prohibit bottom up solutions.

It would be fair to say that I have a strong bias toward bottom up solutions. This seems more entrepreneurial, more innovative, efficient, alive. It seems to me to create the necessary preconditions for excellence. Nevertheless, there remains a role for base level infrastructure.

There needs to be somebody providing a safety net solution that prevents disease, but a net that can be built upon. I think that is what landfills are all about. They are imperfect but sufficient. They do not suffer greatly from waste being taken out and recycled, and indeed their existence is so repugnant that you feel obliged to do something. They do not demand large volumes to be viable. In fact, the existence of landfills might even be a necessary precondition for disruption in the waste industry.

Landfill, complete with compactor and seagulls. From Zerowaste SA.

And so, like so many things, you have to conclude that it is not a matter of either-or, but both-and.

That is not to defend landfills (though I've run many). It is simply to acknowledge them as an imperfect part of an imperfect world. A part we should not rest within but rather build upon.

The changing economics of waste

Waste has classically been an industry where labour is minimised at the cost of more landfill. This made sense when landfill was cheap. This dynamic is changing.

The graph below shows the cost at a Perth landfill, and the minimum wage per hour.

Landfill and labour costs - Perth, Western Australia

The graph shows a jump in landfill costs for 2010 coinciding with a jump in the landfill fee per how of labour. In 2000, each tonne of waste was equivalent to three hours of minimum wage labour. In 2012 it has jumped to over 6.5 hours on a landfill fee of about $110/tonne.

In Sydney, the Eastern Creek landfill charges twice this gate fee, making a tonne of waste equivalent to over 13 hours of labour. And trends around Australia (except, perhaps, Queensland) are for landfill costs to increase much faster than the cost of labour.

What does this mean?

In short, it means that the innovators in waste management can afford to invest labour to reduce waste to landfill. This will be difficult for established operators to acknowledge, as they are hamstrung by their existing operations.

As discussed in my post marginal thinking and waste, existing operators are all but forced to frame the problem in terms of how to marginally improve on what they have. Which is bulk handling systems that minimise labour at the expense of waste to landfill.

The field is wide open for new players to enter this market.

Landfill mining

A comment in my post on the 20th of July "What will the IT revolution look like when it hits waste?" referred to a future of landfill mining, with Hackerspaces such as the Perth Artifactory being a prelude to this future.

The comment intrigued me, and reminded me of a reference in Green Mars by Kim Stanley Robinson to landfill mining. At the time it made quite an impression on me. The idea of mining landfills, of these vast dumps of that must hold incredible value which is currently unattainable. It is an amazing idea, and you wonder if you could recover it.

Then you spend years in the industry and learn the many, many reasons for why you can't recover the value. Perhaps the reasons are sound, though a Fast Company article in 2006 suggests that the economics are beginning to change.

So lets go back to Green Mars and see what was written.

Before its acquisition, he [Art Randolph] had been the co-founder and technical director of a small company called Dumpmines, which was in the business of digging up and processing old landfills, recovering the valuable materials that had been thrown away in a more wasteful age.

and then

So when starting Dumpmines he had taken the technical directorship, and had done some good work on their Super-Rathjes, the giant robot vehicles that did the extraction and sorting at the landfills...

Robots digging out and sorting waste from landfills. Obviously not now, and maybe needs development in waste sorting technology to recover the most valuable components that then cover the cost of processing. The gold and so on that is in the waste.

But perhaps we are getting close. Perhaps if we look at landfills that occupy valuable land, we might manage to make it pay off. The gold might not be within the waste, but beneath it.

So thanks for the comment Ken, it reminded me of some inspirational memories.