Is China’s National Sword programme a mixed blessing for the UK’s waste management industry?

Written by: Matt Clay | Published:
China has been a magnet for the world's materials over the years. (Adobe stock image)
So we all relied on China to take our waste and who cared what happened to it once it left the ...

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As part of its gargantuan economic and physical growth, China has been a magnet for the world’s materials over the years, sucking up global waste and recyclables like a relentless vacuum cleaner.

The Asian giant has been the destination of choice when it comes to exports – a reliable, steady and often easy output, keeping the global export market flowing.

However, this soon changed following efforts made as part of the National Sword operation announced last year and starting in 2018.

As part of the original campaign, China decided to ban 24 different grades of waste as part of a crackdown on importing “foreign garbage”. One of the reasons? Quality.

In a submission to the World Trade Organization (WTO), the country’s authorities said: “We found that large amounts of dirty wastes or even hazardous wastes are mixed in the solid waste that can be used as raw materials. This polluted China’s environment seriously.”

The filing included the following bans:

  • Eight categories of plastics waste (covering LDPE, HDPE, PET, PVC and PS) from living sources (post-consumer)
  • One type of paper waste (unsorted mixed papers)
  • Eleven types of textile wastes (not clothing)
  • And four types of metal slag (containing vanadium).

Following this, in November last year China said it would set new standards limiting all imported recycled materials to a maximum contamination level of 0.5%, increased from the 0.3% stated in August.

Community stockpiling

The impact caused ripples around the world’s waste markets. Take the United States. Data shows that in the first quarter of 2017, 4.1 million metric tons of scrap exports were sent to mainland China. Fast-forward to the same period this year and it drops to 2.5 million metric tons.

“China has been the largest customer for scrap materials, out of all of our countries not just the US, so this has certainly had an impact on recycling streams here in terms of directing those materials to market,” says Adina Adler, senior director of international affairs at the Institute of Scrap Recycling Industries (ISRI).

Speaking to RWW magazine, she adds: “There aren’t enough countries in the world that can pick up the volume that China used to pick up, so certainly some of the immediate short-term impacts have included stockpiling in our community; some communities have had to redirect recyclable material to landfill, which was an unfortunate scenario.”

Meanwhile, in the UK, data for January 2018 shows that 20,000 tonnes less than the year before was exported to China, according to The Recycling Association. At the end of March, association CEO Simon Ellin commented: “Make no mistake, we are mid-crisis. Minister for the environment Thérèse Coffey’s assertions that emerging markets would pick up the slack haven’t been borne out.”

For others, the initial impact of National Sword has sparked a shift in where material is going.

“It’s had a massive impact,” says Roger Baynham, chairman of BPF Recycling Group. He tells RWW: “The number of exports into China has already fallen away to a considerable extent. There is nothing going into China of significant consequence – perhaps a few hundred tonnes. The role that China now plays as an export destination is largely insignificant.”

To put Baynham’s comments into perspective, the UK was previously exporting over one million tonnes of recovered mixed papers and around 180,000 tonnes of post-consumer recovered plastic packaging to China. The country accounted for 70% and 25% of mixed paper and plastic packaging exports respectively.

“What we’ve seen is a migration to other export destinations, primarily in Asia, from Malaysia, Vietnam and Indonesia,” he adds. “The question really is to what extent those destinations will be sustainable markets. Or to what extent the sorts of changes that we’ve seen being pre-empted by China will have similar consequences or similar political reactions in other destinations. To a large extent, the jury is out on that.”

When the going gets tough

If the original ban of 24 grades of waste wasn’t enough to disrupt this status quo, things could get tougher. In addition to this ban, the Chinese government has since announced that more recyclable materials will be prohibited for import over the next two years.

The prohibited items include:

  • By end-2018: steel slag, post-industrial plastics, compressed auto pieces, small electric motors and insulated wires, and vessels.
  • By end-2019: wood pellets, stainless steel scrap, and nonferrous scrap excluding aluminium and copper.

Although this could be the second in a double sucker-punch to UK recyclable/waste exporters, this move shouldn’t cause as much disruption as the earlier bans, according to Dr Adam Read, external affairs director at SUEZ Recycling & Recovery UK.

He says: “We expect a similar ripple effect to the previous tranche of targeted materials. I think the only upside is we are talking about much less quantity and so the potential headache is less. We have been given over seven months’ warning of the impending change, so there is time to act.

"Some of these materials, like waste wood, scrap metals, etc, should have growing UK and European markets as the attention should be focused on supporting these and ensuring the quality is right.”

For Jakob Rindegren, recycling policy adviser at the Environmental Services Association (ESA), the fact that China could keep banning materials provides ambiguity.

The concern is, of course, that other materials are included in the future and this uncertainty is unhelpful. However, it is likely to be less easy to replace imports of old corrugated containers (OCC) and the focus for any remaining materials must be to improve quality, which is also needed for domestic recycling,” he said.

“We expect that the upcoming Resources & Waste Strategy will include measures to stimulate the demand for recycled material in the UK, not least for plastics, to ensure we increasingly recycle more of our waste in the UK.”

A blessing in disguise?

Meanwhile, across the Atlantic in the US, ISRI estimates this second round of changes could impact more than 676,000 metric tons, worth about $278m, in US scrap commodity exports to China in the first year, and another 85,000 metric tons worth more than $117m in the second year.

Adler believes the shift away from China’s exports is adding to a circular economy movement already taking place in the US.

“We are already seeing a trend towards the demand for cleaner, higher-quality materials – even higher quality than we were already producing,” she says. “I think what’s going on in China is that our largest customer now has a similar sentiment. It just sheds a light on the fact that this trend is already happening but now it’s on a bigger scale.”

ISRI is currently working with the US administration and Capitol Hill as the infrastructure package is finalised, which Adler describes as a “huge opportunity” to use recyclable material in construction.

Meanwhile, UK experts believe both parts of the China’s National Sword campaign have been a wake-up call.

“We should not be reliant on a single market for any of our globally traded commodities, it is unhealthy and has proved risky,” adds SUEZ’s Read. “A lack of UK policy and leadership left the market to find its own solutions, hence the global commodities trading that has been prevalent for the last decade or so.

"Without policy intervention, a clear direction of travel, or alternative interventions, it was always going to end in our reliance on key international markets; now we have felt the shock and the policy machine is responding.”

Reforming PRN/PERNs

The BPF’s Baynham adds: “Our historic strategy has been predicated on exporting into low-cost, deep-sea markets. This has to change.”

One solution to this challenge, the organisation says, is to reform the packaging recovery/export recovery note (PRN/PERN) system. The BPF Recycling Group has issued a policy paper urging the government to “implement a strategy to future-proof markets for plastic waste”.

“One of the issues is the fact that the Environment Agency has been unable to manage the quality of the waste that’s being exported, or being produced,” adds Baynham. “There are incentives under the PRN system for waste management companies not to create the highest quality material because they are able to gain a full-value PRN for everything that goes into a container, not just what can be recycled. This is why this situation has been so unfair to domestic recyclers.”

In conclusion, it’s clear that part two of the National Sword campaign will have further impact on an already diminishing amount of materials being exported to China. If it has galvanised regulators and the industry alike to make sure materials being exported are of a higher quality, then this should be seen as a positive move for the UK and wider circular economy ambitions.

Matt Clay is a freelance correspondent for RWW.


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Comments
So we all relied on China to take our waste and who cared what happened to it once it left the port. Rates of contamination was known by all but also we ignored as long as they kept accepting the imports.... On the back of this waste collectors made an easy return which allowed for low bids. So helpful that Chinese standards were lower and recycling standards were minimal. Never mind the environmental damage and worker conditions. Now waste collectors are scrambling to find other poor countries to export to ideally now at any price. Where was the drive for recycling it at home or even in Europe? its not like the volume was low.

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