PERSPECTIVE: CIRCULAR OPPORTUNITIES
Why Hong Kong companies should start turning their waste into a supply source.
Why Hong Kong companies should start turning their waste into a supply source
Baotou Iron and Steel, a listed Chinese mining and steel operation, is looking to achieve zero waste in its operations, with the help of a chemical engineering research team. This is no small feat – China manufactures half of the world’s iron and steel, and Baotou pumps out 10 million tonnes of steel a year, drawn from its Baiyunebo Mine in Inner Mongolia. It’s a dirty business and one that seems far removed from environmental concern.
Slag – the term for the left-over material when metals are refined from ore – can be highly toxic. Over 20 years ago, slag was considered inert and innocently added to the construction materials for railroads, rooftops and roadways, among other things. Can it be transformed from an environmental hazard into a source of economic value?
Baotou is partnering with a spin-off from Columbia Engineering Lab, Greenore Cleantech LLC, to build a commercial plant where slag will be broken down in a process similar to mineral carbonation and rock weathering, using carbon dioxide in the process. With the help of Columbia Engineering Lab, Baotou will now be able to sell their processed slag on to other industries, from paper to cement, as a valuable resource. And because carbon dioxide – the world’s foremost greenhouse gas – is used in the process, it effectively reduces greenhouse gas levels in the atmosphere – another win for the environment.
This is an excellent example of innovation for what’s now known as the “Circular Economy”, a movement to turn supply chains, which often result in problematic waste streams, into supply circles – bringing value back into the economy. Accenture estimates that Circular Economy approaches can add as much as US$6 trillion (HK$46.8 trillion) in to global economic growth by 2030.
There are good reasons why Hong Kong should be paying attention to the Circular Economy. The price of waste is due to start going up. In March, it was announced that in two years’ time, Hong Kong citizens and businesses will begin to pay a fee of HK$0.11 for every litre of municipal solid waste (MSW) they send to landfill. Those who want to avoid additional costs will already have begun looking for ways to reduce waste – as will any sellers or suppliers not wishing to annoy buyers with unnecessary disposable packaging.
Avoiding the fees associated with waste isn’t the only reason for a circular economy – there is also reputation, as the movement for transparency links pollution to its sources. Revenue is another. As with Baotou Steel, businesses that can demonstrate the value of their own waste streams will also diversify their income sources, boosting their profit margins as well as their resilience.
Successful examples of the circular economy are becoming more plentiful. In the United States, The Materials Marketplace, an online platform for sourcing waste byproducts and recyclables as usable source material, has been launched. A pilot programme in 2015 wound up identifying some surprising ways to reuse waste. For example, two million tons a year of bauxite residue could be used in cement kiln co-processing, saving as much as 14,400 megatonnes of carbon dioxide emissions and about US$40 million a year.
In Texas, the Urban Mining Company is building a 100,000 square foot manufacturing facility to source permanent magnets, used in consumer electronics and the automobile industry, from postconsumer waste. In France, the carmaker Renault is setting up an experimental platform for end-of-life vehicle recycling called Innovative CAR Recycling 95% (ICARRE 95), supported by the EU. The goal is to be completely ‘closed loop’, that is to say, using materials from old vehicles to create new cars at the same level of performance as those made from new sources. Singapore-based China Navigation Company, a leader in the Sustainable Shipping Initiative, recently announced the recycling of two vessels in Alang, India.
The first step towards circular economy success is to map and match resource demands with waste supply. International Synergies, an organisation founded to help industry function more like ecology, is currently working with Wuhan DRC and
Wuhan University of Science and Technology to map circular economy possibilities in the area. Together, they will produce a prioritised map of the potential to reduce carbon emissions and costs, while delivering an infrastructure plan that includes metros, airports, roads and buildings, as well as policy recommendations to help realise the opportunities.
Hong Kong lacks an internal manufacturing hub to absorb its own waste, but the increasingly sophisticated industries in the Pearl River Delta may help. In 2010, the Hong Kong Chamber of Commerce proposed a model for circular economy growth between Hong Kong and the PRD, with Hong Kong waste becoming a handy source of low-cost secondary materials. The Chamber recognised that there needs to be: efficient transboundary supply chains; coordination of waste streams according to their potential value; and competitive pricing to ensure manufacturers don’t use virgin materials.
In August, I had the privilege of chairing a Sustainability Leadership breakfast discussion hosted by Metta, Hong Kong’s online/ offline gathering club for entrepreneurs and investors, asking what we can do to make this the greenest city in Asia. We were reminded of the waste not, want not mindset that was so alive in the city a couple of generations ago. Whereas then it was motivated (in part at least) by post-war poverty, now it can be to create lasting economic value through opportunities under our nose.
BUSINESSES THAT CAN DEMONSTRATE THE VALUE OF THEIR OWN WASTE STREAMS WILL ALSO DIVERSIFY THEIR INCOME SOURCES, BOOSTING THEIR PROFIT MARGINS AS WELL AS THEIR RESILIENCE