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?


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...


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. 


10 trends that will reshape waste management - Trend #1: Internet of Things

Following my latest blog, I will continue writing about the 10 trends that will reshape what is called "waste management" today.  It is mentioned that Circular Economy is not included in this list because it is considered more as a background concept that influences all the current trends and less as a trend itself (see my earlier posts about it). 

So, Trend#1: Internet of Things

Maybe a lot of people are already involved in the rumours around Apple's new iPad and its multitasking capacity. However, the revolution is much wider.

The convergence of the current web with the emerging web of sensors (already more than 13 billion sensors are on-line worldwide and they are expected to be more than 30 billion in 2020) and the growing web of small energy generators will create new unprecedented opportunities and threats. The pace of change is very fast, already Google Cloud Platform's entire big data suite is available.

The deluge of data generated by transactions, medical and legal records, videos, social media, sensors, cameras, bar codes and transmitters embedded in the world around us has an enormous economic and technology potential. 

However, I believe the most important change is another one. There is a fundamental change underway in how the world solves problems like poverty, gender based violence and environmental degradation. In the past, these problems were mostly left to national governments and international bureaucracies. Today, there are hundreds or maybe thousands emerging “global solution networks” where self-selecting networks of individuals and organizations convene across sectors to advance their own solutions. In many cases, these emerging solutions are more agile, innovative and effective than the traditional state-based institutions. 

In the new, networked model of problem solving, technology provides the enabling platform on which diverse participants come together to develop and implement solutions to global problems. Technology not only fosters low-cost connectivity across borders but also provides a richer palette of data, tools and techniques with which to transform the way we solve global challenges. 

The proliferation of RFID, satellite imagery, cheap personal video recorders, smartphones, and a global grid of wireless sensors have driven quantum leaps in the amount of Internet-collected data available to scientists and policy makers. Robots will be also available for many waste management applications - just have a look at the recent MIT's robotic bartender and you will get an idea of the future. Besides all, the development of low cost and high connectivity sensors is expected to transform the design, construction and operation of all kind of facilities and it is expected that sanitary landfills will also benefit a lot from that. 

There will be many and radical impacts to waste management. Let me just mention some of them. The Internet of Things will make zero waste approaches and circular economy a tangible reality for everything that's worthy enough to hold a sensor. Or just imagine what driverless cars will mean for waste collection systems, in a world where mobile apps are already available for connecting cars!. It will redefine the very concept of "waste" and it will boost the replacement of ownership with the service model. It will also redefine the way we design and implement logistics and facilities, creating new hybrid models where citizens and equipment will interact continuously towards optimisation targets. At the same time, it will create new ways for preventing and reducing waste in all the phases of the life-cycle of a product. And this is just the beginning of the third industrial revolution. You better be ready for radical changes within next 10-15 years. 

I hope that those changes will be helpful (of course subject to their use and social context) to tackle the global environmental challenges that are still underestimated: just yesterday, Global Footprint Network announced that humanity has spent our planet's budget for the entire next year! But, remember, this is just Trend #1  - much more are coming


The future of waste management as seen from Mars: the context

Well, sometimes I wish to travel with NASA's Curiosity, this magnificent spacecraft that has already provided us with many unique pictures and insights from Mars (some recent can be seen here). And I wish to be there just to see our blue planet from a distance and try to imagine, from such a time and space distance, the future of our planet and of course, the future of waste management. Some of you already know that I like to think a lot about the future, in many different ways.

My article on the future of waste management around 2030 has been a huge success, with hundreds of thousands readers. I guess this is time to rethink on that specific subject and this is not only by ...Curiosity. This is also because our world is changing much faster than we are able to adapt to the changes, faster even than McLaren 650S, this great piece of science and technique advances, which is going to be replaced in 2018.

Although it is very difficult to identify future trends with a relative certainty (as Niels Bohr put it “prediction is very difficult especially about the future”), there are certain ways that are helpful in order to outline the key-trends. First of all, the future of waste management should be studied in the context of the future trends of our world. Waste management is an integral part of our day to day life and the major shifts that affect people’s daily lives, in one or another way, affect behaviours, technologies, logistics and finally waste management arrangements too.

Listening to industry experts is a certain way to understand some future trends, especially the ones that are more close to industrial innovation activities. Industry experts are familiar with the major problems that they face to their day-to-day activities and they create the conceptual basis for the future improvements required, although this is usually done through continuous optimization procedures rather than radical shifts. Studying the evolution of research topics and activities, talking with researchers and following the most important scientific publications is another key-element to identify issues related to the future of waste management. A sensitive and careful analysis of the major research priorities and trends creates a good picture of “what’s next”. 

So, in my next blogs, I will present the major trends that I believe they will reshape the future of waste management and recycling industry. But let's start from the general global context.

We are living in an era of rapid technological growth that generates game-changers like drones, driverless cars, sensors for everything, big data systems, the web of machines and interconnected things etc. There is a growing literature that characterizes our era as the most transformative period of modern history. 

Information technology is entering the big data era. Process power and data storage are becoming almost free; networks and the cloud will provide global access and pervasive services; social media and cyber-security will be large new markets. This growth and diffusion will present significant challenges for governments and societies, which must find ways to capture the benefits of new IT technologies while dealing with the new threats that those technologies present. Fear of the growth of an Orwellian surveillance state may lead citizens particularly in the developed world to pressure their governments to restrict or dismantle big data systems. But the technological progress runs faster than Usain Bolt. As an example, see the recent Obama's call for 1 Exaflop super computer in next decade.

New manufacturing and automation technologies such as additive manufacturing (3D printing) and robotics have the potential to change work patterns in both the developing and developed worlds. In developed countries these technologies will improve productivity, address labor constraints, and diminish the need for outsourcing, especially if reducing the length of supply chains brings clear benefits. Nevertheless, such technologies could still have
a similar effect as outsourcing: they could make more low- and semi-skilled manufacturing workers
in developed economies redundant, exacerbating domestic inequalities. For developing economies, particularly Asian ones, the new technologies will stimulate new manufacturing capabilities and further increase the competitiveness of Asian manufacturers and suppliers.

Breakthroughs, especially for technologies pertaining to the security of vital resources—will be necessary to meet the food, water, and energy needs of the world’s population. Key technologies likely to be at the forefront of maintaining such resources
in the next 15-20 years will include genetically modified crops, precision agriculture, water irrigation techniques, solar energy, advanced bio-based fuels, and enhanced oil and natural gas extraction via fracturing. Given the vulnerabilities of developing economies to key resource supplies and prices and the early impacts of climate change, key developing countries may realize substantial rewards in commercializing many next-generation resource technologies first.

New health technologies will continue to extend the average age of populations around the world, by ameliorating debilitating 
physical and mental conditions and improving overall wellbeing. A recent example considers the world's first braille smartwatch that allows blind people to read i-phone messages. The greatest gains in healthy longevity
are likely to occur in those countries with developing economies as the size of their middle class populations swells. The health-care systems in these countries may be poor today, but by 2030 they will make substantial progress in the longevity potential of their populations; by 2030 many leading centers of innovation in disease management will be in the developing world.

So there is a major question: will technological breakthroughs be developed in time to boost economic productivity and solve the problems caused by a growing world population, rapid urbanization, and climate change?

The answer to this question depends a lot on (global, national and local) governance patterns and their evolution. During the next 15-20 years, as power becomes even more diffuse than today, a growing number of diverse state and non-state actors, as well as subnational actors, such as cities, will play important governance roles. The increasing number of players needed to solve major transnational challenges—and their discordant values—will complicate decision-making. Prospects for achieving progress on global issues will vary across issues. The governance gap will continue to be most pronounced at the domestic level and driven by
rapid political and social changes. The advances
during the past couple decades in health, education, and income—which are expected to continue, if not accelerated in some cases—will drive new governance structures. 

The widespread use of new communications technologies will become a double-edged sword for governance. On the one hand, social networking will enable citizens to coalesce and challenge governments. On the other hand, such technologies will provide governments an unprecedented ability to monitor their citizens. It is unclear how the balance will be struck between greater IT-enabled individuals and networks and traditional political structures.  And although the debate regarding the moral aspects of this revolution is going to be much stronger and substantial, as it is the case now in India, with the block of porn sites, the pace of change will continue to accelerate. 

The current, largely Western dominance of global structures such as the UN Security Council, World Bank, and IMF probably will have been transformed by 2030 to be more in line with the changing hierarchy of new economic players. Many second-tier emerging powers will be making their mark—at least as emerging regional leaders.

So another major question is will governments and institutions be able to adapt fast enough to utilize the change instead of being overwhelmed by it?

 Well, the answers to those questions will certainly determine the future of waste management too - but we will dig deeper later on that.