In focus - Economics
Trash talk: why waste might not be wasted
With consumers showing few signs of cutting down on the waste they create, we look at how our rubbish can be used to produce energy and reduce the use of fossil fuels.
1 April 2019
Nobody wants to see it, but it is everywhere. The volume of municipal solid waste - consisting of discarded everyday items - is set to almost double from 1.3 billion tonnes to 2.2 billion tonnes by 2025 according to the World Bank1.
That growth implies an increase from 1.2kg to 1.4kg per person per day over the next 15 years2. Oceans will contain more plastic than fish by 2050, according to World Economic Forum estimates, emphasizing the scale of the challenge3.
Rising incomes and more urban populations play a critical role, accelerating the amount of solid waste produced. The developed nations of the Organisation for Economic Co-operation and Development (OECD) generate almost half of all global waste.
Waste generation per capita, per day
Source: World Bank, March 2012
Another man’s treasure
Increasingly, however, waste is being seen for what it could be: a valuable commodity. A tonne of solid waste can generate 500-600kWh of electricity. With roughly 700 million tonnes of waste generated in OECD countries annually4, this implies approximately 370,000 GWh of electricity potential, approximately 35% of which is currently sent to landfill sites5. Turning all this solid waste into electricity could reduce electricity generated from fossil fuels in the OECD by approximately 6%, which is – depending on the fuel mix – approximately equivalent to eliminating all greenhouse gas emissions of Norway, Portugal and the Slovak Republic combined.
The amount of carbon dioxide that converting waste could save
Annual tCO2e emissions (thousands)
Source: WTET, Columbia University
It is of course, a complex topic. There is no one-size-fits-all solution to the waste-to-energy conundrum and capturing value will almost certainly be less straight forward than our estimates suggest. Not all waste is equally suitable for generating energy of any sort. Our simplified example above just outlines the potential scale of the opportunity to extract value by reprocessing waste productively.
However, regulators and corporates are increasingly aware of the possibility to cut the impact upon global emissions significantly, and their actions, along with improving technologies, provide increasingly attractive business opportunities.
The field is likely to continue to evolve; technologies range from traditional burning of waste for heat to newer approaches like plastic eating bacteria6, with new ideas continuing to emerge. Regardless of the technology used, consumers are showing few signs of cutting down their consumption or the waste they create. Turning trash into treasure looks crucial in limiting temperature increases to 2°C.
Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. To the extent that you are in North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada. For all other users, this content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.