In focus - Markets

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.

01/04/2019

Marc Hassler

Marc Hassler

Sustainable Investment Analyst

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

waste_per_day_global

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)

Co2_fossil_vs_waste_conversion

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.


1. https://siteresources.worldbank.org/INTURBANDEVELOPMENT/Resources/336387-1334852610766/Chap3.pdf

2. https://siteresources.worldbank.org/INTURBANDEVELOPMENT/Resources/336387-1334852610766/Chap3.pdf

3. http://www3.weforum.org/docs/WEF_The_New_Plastics_Economy.pdf

4. https://stats.oecd.org/Index.aspx?DataSetCode=MUNW

5. http://www.oecd.org/daf/competition/Waste-management-services-2013.pdf

6. https://www.independent.co.uk/environment/plastic-eating-bacteria-pollution-crisis-environment-microbes-student-a8423146.html

Important information

This communication is marketing material. The views and opinions contained herein are those of the named author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.

This document is intended to be for information purposes only and it 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. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy.

The data has been sourced by Schroders and should be independently verified before further publication or use. No responsibility can be accepted for error of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

Past Performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.  Exchange rate changes may cause the value of any overseas investments to rise or fall.

Any sectors, securities, regions or countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.

The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. Forecasts and assumptions may be affected by external economic or other factors.

Issued by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority.