8.25.2015

China's stock market crisis and recycling Trend #4: Market volatility and emerging business models


I have to thank you for the enthusiastic emails I received for the previous 3 blogs on future trends for recycling and waste management - however, it will be very useful of some of you would publish their views as comments, rather sending them directly to me - in any case it is obvious that we need a lot of discussion about it, so all the comments are more than welcomed and useful. Back to work now.

What is China's interest rate?
Will China lower interest rates?
What interest rate do we pay China?
Why is China cutting interest rates?
Why doesn't China want the U.S. to raise interest rates?

All those questions are on top of each and every business discussion those days. However, China's and India' growth provided the background for the viability of most of the recycling systems worldwide. Will it still be the case? 

Back to school again - we need to study the lessons taken by the recycling markets and reimagine the way forward.

Let's move to trend #4: Market volatility and the emerging new business models.

At the same time Fitbit arrives to India, creating the background for wearables recycling programs, there is a growing pressure to the viability of recycling programs due to the following factors.

1. The past decade was characterised by the biggest commodity boom in history, fuelled by rapid Chinese and Indian growth. But the market has shifted and structural issues are now being exposed. High material prices are no longer fundamental for the viability of recycling viability of recycling services.

2. Falling commodity prices at the back end are enabling manufacturers to be more demanding with regard to their inputs. This means that prices are down and at the same time quality demands are going up. The mismatch between these two ends of the recycling supply chain is squeezing everyone in between.

3. Especially in EU, "this fundamental market shift has shown how exposed operators are to volatile material prices. In the highly competitive environment of the waste service industry, where margins are bid away to very low levels, it doesn’t take much of a fall in prices to erode that safety net and put contracts at risk" as it was explained by ESA's executive director.

Of course the problem is not simply European, it becomes global as there similar signals from USA recycling market too.

If you add on top of this, the long-term trends for energy prices, then there is a clear conclusion: the recycling and waste management industry have to re-invent their cost structures and business models, they have to rethink profitability, risk-sharing and diversification in order to create viable businesses on the long-term.

At the same time UBER fights for its business models in Rio de Janeiro, the erosion of the current dominating business models comes from another source too. And this is the emergence of new business models that stimulate circular economy approaches, like sharing practices, replacing ownership with service models etc. Those business models are generated from new answers to five simple questions:

  • How can we design our products with asset recovery in mind?
    How can we develop product lines to meet demand without wasting assets?
    How can we source material in regenerative loops rather than linear flows?
    How can we develop a revenue model that protects value up and down the chain, and
    How can we get our customers to cooperate with us?
So, finally the conclusion is simple but crucial. Both recycling market volatility and the emergency of circular business models demonstrate the importance of well-designed and adaptable business models for the long-term viability of successful waste management and recycling systems. At the same time, there is a growing emphasis for high value for money ratios and functional but still low cost solutions especially in the developing world. It seems that the recycling and waste management industry must reinvent itself - why not?

8.24.2015

Back to school: Trend #3: SWM industry should study thoroughly E-waste management

Since the kids, in most parts of the world, are preparing themselves to go back to schools, after weeks or months of vacations, I believe it is the right time for computer and the waste management industries to study their lessons from the current E-waste management status. And I believe that those lessons are elementary for the future of waste management and recycling - so this is Trend #3: E-waste management. And the reason is because E-waste management includes all the dimensions of the future problems: rapid change of materials and products, fast consumption, valuable resource recovery, serious environmental and health impacts, multinational non-state giants, global conventions  and a conflict between developed and developing worlds. In brief, the situation goes like this. 

Although China stock market is at the centre of recent discussions (e.g. see Dow's free-fall), China's problems by inappropriate E-waste management might be even more serious than the problems of its stock market. The title CNN used is correct "China: The electronic wastebasket of the world".

According the most recent statistics by STEP (Solving The E-waste Problem) initiative, in 2014 roughly 42 million tones of E-waste were generated. The global production of E-waste is continuously rising and it will be exponentially increased as developing economies grow and new technologies are developed.

For any given country, the total number of computers and other potential E-waste items is strongly correlated with the country's GDP, because electrical and electronic items are essential for the functioning of all but the most primitive economies. But the main problem is not their rising generation but their inappropriate management and the associated illegal exports - recycling and dumping practices, mainly at India, SE Asia and China. 



Despite the many international efforts to resolve the problem, E-waste management is becoming an emblematic failure of our modern societies as it combines a. rapid and continuous technological progress in manufacturing and process power b. fast consumption and rapid change of products or their versions and c. an unprepared waste management system which finally pushes e-waste to SE Asia for environmentally harmful management. 

Contamination associated with E-waste has already caused considerable environmental degradation in poor countries and negatively affected the health of the people who live there. 

The rapidly growing literature and evidence on the serious environmental and health impacts posed by current management practices in China and India is a certain signal for the importance of the problem.  Thus, E-waste should be considered as a global health emergency too. For the available scientific evidence you can check the article "Health consequences of exposure to e-waste: a systematic review"

There is still limited knowledge on the ecological effects, human health risks and remediation options for some E-waste contaminants, such as Li and Sb, since they are not normally environmental pollutants.   But this is not hopeful at all, in contrast, there are many reasons to be afraid of our limited knowledge.

Now, why do I believe that the solutions that will be formulated in E-waste will define future waste management trends? Simply, because E-waste is becoming a so emblematic problem that needs an emblematic solution too. If governments, waste management companies and of course, most of all, the big and powerful gadgets' producers (Apple, Samsung, Google etc.) are going to create viable recycling and resource recovery networks for this global problem, then this will be used as a patterns for other, similar, universal waste streams. If this will not be the case, then sooner or later, the current disastrous management of E-waste will destroy the reputation of the companies that produce gadgets. And this will impact, certainly, their products distribution and popularity. And of course, there is no solution without redesign of the main products, the fourth and maybe the most important R in this case, after Reuse, Recycle, Recover

Instead of conclusions, I feel that rich countries have self-interest in mitigating the negative environmental effects of E-waste because it will negatively affect the quality and quantity of food and manufactured goods that are imported from poor countries.  Let's hope they will act on time...

8.20.2015

Technology of the future - Trend #2: New materials - new waste - new recycling technologies


This post deals with the second trend that I believe it will reshape the future of waste management and recycling.

So Trend #2: New materials - new waste - new recycling technologies and advances required.

The advances in materials' science will play an important role to recycling and waste management. The future of material's technologies (or the technologies of the future pf materials) will reshape recycling and waste management in an astonishing way. We are living in the beginning of the third industrial revolution, where a huge improvement in resource productivity has already started to happen. But resource productivity (boosted by the Internet of Things) is just a part of the whole picture. The advances in materials' science will play an important role to recycling and waste management. The future of material's technologies (or the technologies of the future pf materials) will reshape recycling and waste management in an astonishing way. Just have a look at the miracles created regarding superconductivity materials and you will have a good idea of the world of the new materials arriving. 

Researchers are also talking about the 9 materials that will change the future of manufacturing like cutting-edge foams, coatings, metals and other substances to make our homes, vehicles and gadgets more energy efficient and environmentally friendly. 

As in all industrial revolutions, a tsunami of new products will replace old ones and the term “waste” will be redefined on both the industrial and the domestic scale. If you want a recent example just see the new swimming wearable that Misfit and Speedo team up to create. But wearables are a small fraction of the new products that should find their own way to be recycled or managed as residuals. Many new products are rapidly produced and circulated worldwide and their consumption will create new challenges for our industry. 

The gradual wider application of 3D printers will also play in important role in redefining the term waste and recycling too. For an introduction to 3D printers and the change that they will bring, just have a look at Todd  Grimm's video

Spent photovoltaics, gadgets, mobile phones, wearables, nanomaterials, new composite packaging materials and complex biomaterials are just some examples of what the industry has to manage already, without adequate know-how and established practices. The shift to circular economy will certainly provide some solutions, sooner or later, but we can’t expect that this will be the prevailing paradigm in the near future, despite the efforts made.

In brief, what we can already suppose is that each and every new material or product it will need its own life-cycle analysis, its own management cycle and its own design for recycling, if and when recycling will be the case - otherwise, it will need a certain way to dispose it of safely, until recycling or recovery techniques will be available. We are living already this problem with the rapidly increasing stream of e-waste.

Unfortunately, I believe this is just the beginning of our problems, since  materials and new products are coming much faster that our know-how and capacity to manage them as recyclables or waste streams.