Investment in the resource recovery sector in Australia
In this article, we discuss the overarching policies put forth by the government at federal, state and local level to encourage investment in the resource recovery sector. We sought to analyse the effectiveness of these policies, and whether they have translated into tangible outcomes, in line with the set targets.
Solving the puzzle
Australia is under pressure to shift from a linear to a circular economy. Key to driving this shift is the waste and resource recovery sector, which has been supported by legislation, and funding initiatives to encourage investment. It is worth noting the commendable efforts and initiatives put forward by the federal government, some which we will highlight in this article. Despite these efforts, the investment landscape towards the resource recovery sector in Australia remains quite fragmented. This fragmentation poses a challenge in terms of coordinating efforts, aligning priorities, and mobilising the necessary resources to accelerate the transition toward a circular economy.
Government policies
The overarching policy driving this transformation is the Australian National Waste Policy 2018. The policy provides a framework guiding collaborative efforts among businesses, government and stakeholders in addressing waste management challenges until 2030. The deliverability of this framework has been underpinned by the National Waste Policy Action Plan (NWPAP), whose objectives include; regulating waste exports and banning the export of waste plastic, paper, glass and tyres, waste reduction and an 80% recovery rate by 2030, phasing out plastics by 2025 and the use of data for better decision making in the waste management sector.
Though the targets are an enablement to support innovation and investment, the policy is dated - having been put forward five years ago, with a few updates and revisions proposed in the 2021 Progress Summary Report and the 2022 Annexure. The updates identified amendments to deliverable timelines owing to the COVID - 19 pandemic, and other outdated and supposedly delivered action items up to September 2022. Though the NWPAP has delivered in other areas such as the waste export ban, there is still not enough evidence to show notable progress or success, specifically of the funding efforts made so far overall. In 2022, The Australia National Audit Office (ANAO) instituted a performance audit to assess the effectiveness of the Department of Climate Change, Energy, the Environment and Water’s implementation of the NWPAP. The audit evaluated the effectiveness of the government’s obligations and coordinating structures as outlined in the NWPAP. However, what was not assessed in the audit was the effectiveness of the initiatives and specific projects listed in the NWPAP, nor did it extend to evaluate the delivery of other waste related initiatives outside the scope of the NWPAP*.
In summary, the performance audit concluded that;
the NWAWP demonstrated partial effectiveness,
the planning and governance structures set up for implementation are fit for purpose, and
the effectiveness of the department’s execution and coordination of actions, and monitoring and reporting of progress is hindered by a lack of agreed upon scope or deliverables to evaluate progress on.
It is important to highlight that the current federal government has not reconfirmed the NWPAP, nor provided substantial insight into assessing the effectiveness of its initiatives' delivery. How will stakeholders get an insight into what progress Australia is making towards achieving the 80% recovery rate by 2030? Stakeholders anticipate a coordinated approach and clear delineation of action scope.
Consequently, on February 28, 2024, the federal senate initiated an inquiry into waste reduction and recycling policies, with a report due by November 22, 2024. This is the third waste industry enquiry since 2018. The inquiry seeks to assess the efficacy of the current government's waste reduction and recycling policies, achievements and advancements related to circular economy objectives - a welcomed opportunity to ensure accountability.
*This does not include projects that have been approved but still require deeds to be signed prior to the release of the data by the DCCEEW.gov.au
Key government funding initiatives
In discussing accountability and the overall effectiveness of the investment landscape into the resource recovery, we highlight the key funding initiatives outlined in the NWPAP, that have supported the action plans:
1. Recycling Modernisation Fund “RMF” (2018): As at 2023, the government committed to investing $250M as an agreement between the commonwealth and the states and territories to improve recycling outcomes, specifically through recycling infrastructure funding. It anticipates over $1 billion in investment in recycling infrastructure, with contributions expected from both states and territories as well as industry stakeholders. To date, funding has been allocated to 123 projects, out of which 28 have been successfully completed. This fund has been seemingly well received by stakeholders and lenders, with public private partnerships such as the Australian Business Growth Fund (ABGF) , set up by the federal government and six leading banks actively investing in the resource recovery sector.
2. Australian Recycling Investment Fund “RIF” - This was a $100M Fund, managed under the Clean Energy Finance Corporation (CEFC), established in November 2019, with a particular focus on large‑scale clean energy technology projects, to support the recycling of waste plastics, paper, glass and tyres. The Fund was repealed under Investment Mandate Direction 2023 as the fund was reported to have restricted the efficient function of the corporation. It is reported that only one transaction was funded under the RIF - a Construction and Demolition large scale recycling facility operated by Rino Recycling in Queensland. From July 2023, CEFC will continue to make recycling‑related investments in the future, drawing on capital in the CEFC General portfolio.
3. The Cooperative Research Centres Projects “CRC-P” Fund - This $51M grant offers matched funding ranging from $100,000 to $3 million short-term, industry-led research collaborations. Priority funding is for new and innovative solutions to plastic recycling and plastic waste reduction. Since the Fund was established nearly 30 years ago, the government is reported to have committed more than $5.8 billion to establish 238 CRCs and 253 CRC Projects, leveraging a further $17.4 billion in cash and in-kind contributions from collaborating partners from industry, research, government, and community organisations.
4. The Product Stewardship Investment Fund - this fund was set up to accelerate work on new industry led recycling schemes, including for batteries, electrical and electronic products, photovoltaic systems and plastic oil containers. To enable this fund, the government partnered with various research and industry groups to set up a Centre of Excellence. Grants between $300,000 and $1 million have been offered for use on new schemes or to expand existing schemes.
There are many more funding initiatives which we have not detailed here brought forward through state and local government initiatives, such as the NSW Waste and Sustainable Materials Strategy, private partnerships, venture backed funding, and commitments per the federal budget circular economy funding commitments.
There is ample appetite for funding and supportive legislation in the resource recovery sector. However, there's a concerning lack of clarity in measuring the success of these initiatives, and misalignment with national waste targets and action plans, particularly in tackling the challenge of rising waste volumes. While it will be interesting to observe the results of the waste reduction and recycling policies inquiry, it is hard not to be wary of yet another waste-related government inquiry. The sector needs action, not more inquiries.
What strategies work?
There are significant concerns about Australia's ability to effectively tackle these issues and achieve the desired transformation towards a circular economy. With evidence suggesting that the nation is falling short of its waste reduction targets, and the existing policies and funding initiatives failing to yield substantial, tangible outcomes, a critical question arises: How might Australia truly overhaul its approach and implement comprehensive strategies and investments that will drive a successful transition to a circular economic model?
There needs to be a cohesive, well-coordinated, and adequately funded action plan that addresses the fragmentation of policies, and the apparent ineffectiveness of current efforts. Stakeholders will likely seek solid recommendations that go beyond mere acknowledgment of the problems and how much funding is committed to projects, they need a clear roadmap for driving real change, accountability and indicators on progress made to date. The Circular Economy Advisory Group in their Advisory group meeting in December 2023, also noted that there needs to be an establishment of national and sector-specific circular economy targets, alongside supporting indicators, which should be consistently measured and reported through national economic and environmental platforms.
Finally, what is evident is that an integrated approach must be adopted, one that aligns the currently fragmented legislation and policies. There also needs to be a cultural shift towards sustainable waste management practices. Failure to address these systemic issues will render the waste management strategies ineffective while perpetuating that linear model we aim to dismantle. Continuing to invest millions in initiatives lacking proper measurement and reporting frameworks might not be beneficial, as it not only hinders our ability to course correct but also wastes valuable resources, brings no meaningful progress towards resource recovery goals with aspirations of transitioning to a truly circular economy remaining out of reach.
Sources:
1. Department of Climate Change, Energy, the Environment and Water (DCCEEW)
2. National Waste Action Policy Plan 2018
3. Department of Finance - Clean Energy Finance Corporation
4. Australian Government Transparency Portal
5. Australian Government Federal Register of Legislation
Stay tuned for these insights and more as we shed light on Australia’s evolving environmental infrastructure landscape.
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