Achieving an 85% recycling rate within two years

THE ALUMINIUM PACKAGING RECYCLING ORGANISATION

ALUMINIUM PACKAGING 13

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Aluminium 26.982

ACHIEVING AN 85% RECYCLING RATE WITHIN 2 YEARS

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FOREWORD 13

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Aluminium 26.982

The media is consumed by the issues of packaging pollution. Householders are confused by the myriad of kerbside collection systems. Local Authorities are increasingly concerned about how they fund waste collections, whilst driving up recycling rates. Central and devolved governments are overwhelmed with demands to reform packaging producer responsibilities and bring in measures to reduce littering.

Alupro is an industry funded, not-forprofit organisation with over 25 years’ experience representing the UK’s aluminium packaging industry. We work to fulfil the industry’s commitment to meet, and exceed, recycling targets for aluminium packaging.

Whilst alternative solutions to address issues - recycling rates, littering, pollution, markets for materials collected, the longer-term impacts of packaging – are being considered, we were keen to understand the impact on recycling rates for aluminium packaging and drink cans specifically, within the existing system, and with the introduction of a deposit return system.

And there is compelling reason to understand the impact. The recycling rate for aluminium drink cans continues to increase year on year, hitting 72% in 20171 (up from 70% in 2016), whilst the national recycling rate for all aluminium packaging reached 51% (up from 50% in 2016).

Approximately 94,000 tonnes of aluminium packaging was recycled last year, generating an estimated £75m2 income for councils and waste reprocessors. Aluminium represents less than 1% of the household waste stream yet contributes around 25% of the value derived from the sale of recyclables by local authorities and their collection partners.

To better understand the future state, we commissioned independent modelling

by Resource Futures, to analyse scenarios based on anticipated recycling rates with a future scenario in which a DRS is implemented.

We strongly believe that detailed research, including full impact assessments, must be carried out into all the options which could deliver increased recycling, together with the required funding, to deliver the 25-Year Environment Plan and Circular Economy Package. This modelling is a meaningful contribution to that research.

RICK HINDLEY, EXECUTIVE DIRECTOR

1

The recycling rate for aluminium beverage cans is calculated by Alupro using data supplied by the national packaging waste database and by its member companies, using methodology consistent with that used across Europe to calculate recycling rates. http://www.metalpackagingeurope.org

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Based on conservative £800 per tonne value

Modelling aluminium recovery rates in the UK | 3

EXECUTIVE SUMMARY Aluminium packaging has an intrinsic high value. Not only is aluminium packaging recyclable, it is recycled endlessly. The recycling rate for aluminium drink cans continues to increase year on year, hitting 72% in 2017 3 (up from 70% in 2016), whilst the national recycling rate for all aluminium packaging reached 51% (up from 50% in 2016).

Data shows that 92% of the aluminium packaging collected for recycling in the UK, is recycled within Europe4; this demonstrates that there is more than sufficient capacity within the EU to recycle the aluminium packaging recovered for recycling in the UK. Indeed, today there is more than enough capacity to recycle all the aluminium packaging sold in the UK. It not only makes good environmental sense, it makes good commercial sense too.

“Sustainability is core to Novelis’ business. As the world’s largest recycler of aluminum, we have made a strong commitment to the UK market by establishing enough recycling capacity to recycle every can placed on the market. By doing this we are leveraging aluminum’s unique properties to meet the needs of our customers and help them deliver sustainable solutions.”

Andy Doran, Sustainability Manager, Novelis

This modelling, undertaken on our behalf by Resource Futures, provides us with several points for consideration.

Aluminium collected from IBA, once recycled, has the same environmental benefits as separately collected aluminium packaging. However, separately collected aluminium packaging can be used to make new aluminium packaging; aluminium recovered from IBA is used to make new products, but today it cannot be used in new aluminium packaging, as it may contain other alloys (due to the presence of non-packaging items in mixed domestic waste).

The good news is that separation technologies continue to improve, so in the future it may well be possible to recycle aluminium packaging from IBA back into new packaging.

For this reason, it is our priority to ensure that aluminium packaging is recycled through kerbside collections and on-the-go systems, rather than a reliance on aluminium recovered from IBA. If a deposit return system (DRS) was introduced, this would help to shift more material from IBA to separately collected packaging; however, this modelling predicts DRS will deliver a modest 4% increase in the total amount recycled.

We are concerned that a DRS may negatively impact on the kerbside collection of other aluminium packaging such as aerosols, food packaging and foil.

Based on the existing system, an 85% recycling rate for aluminium cans will be achieved by 2020. This rises to 90% by 2030, much of which will come from incinerator bottom ash (IBA). It is worth noting that a 90% recycling rate is already being achieved in areas where residual household waste is sent to incineration.

ALUMINIUM RECYCLING RATE IN THE NEXT 12 YEARS

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The recycling rate for aluminium beverage cans is calculated by Alupro using data supplied by the national packaging waste database and by its member companies, using methodology consistent with that used across Europe to calculate recycling rates. http://www.metalpackagingeurope.org

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The ‘End destination’ data was obtained under a “freedom of information” request from the Environment Agency. 51% of aluminium packaging collected was recycled in the UK and 41% recycled in Europe

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EXECUTIVE SUMMARY (CONTINUED) We, like many other organisations, are keen to see the following measures: • Investment in communications, so that people know what to do, and why • Consistency of local authority kerbside collections, to ensure that aluminium packaging such as aerosols, cans and foil continue to be collected • Investment in effective on-the-go infrastructure that increases quality recycling and reduces littering • Continuing to develop separation technology, so that material quality is improved and ultimately aluminium packaging recovered from IBA can be used to make new packaging • Reform of the packaging producer responsibility system, as already indicated by Michael Gove, Secretary of State for Environment, Food and Rural Affairs The effectiveness of any of the suite of solutions can only be measured if all data is reported. Therefore, every reprocessor and exporter must be obligated to report their data as part of the producer responsibility system.

Recycling an average 90% of the aluminium packaging sold in the UK isn’t an ambition, it is a reality, even today. As well as collecting used aluminium packaging at kerbside, in 2017 more than 80 local authorities sent their residual household waste for incineration. It is estimated these local authorities will already be achieving an overall recycling rate for aluminium packaging in excess of 90%.

“Kerbside collections play a vital role in providing a means of aluminium foil packaging remaining in the recycling loop. It is important that any changes to existing systems consider all consequences, in order that the high recycling rates already achieved are not disrupted.”

Ian Helme, Managing Director, Coppice Alupack

The Resource Futures’ study indicates that we can achieve our goals of maximising recycling performance whilst prioritising the recycling of separately collected aluminium packaging. It is vitally important that we work with national and devolved governments to properly evaluate all possible policy interventions before any decisions are made. It is critical that the environmental and economic impacts of any policy decisions are clearly understood, including the unintended consequences.

We have an opportunity to take a huge step forward in improving the UK’s overall recycling performance, we must take time to get it right and not just focus on “problem” materials in isolation.

Modelling aluminium recovery rates in the UK | 5

1 MODELLING 1.1 OUR APPROACH Using sources of literature detailed below and previous modelling by Alupro5,a current recycling rate for aluminium packaging was established, and particularly aluminium cans.

These estimates were compared with published capture rates, such as the recent Packflow 2025 6 report prepared by Valpak.

The following assumptions were then applied to the model regarding what would happen to the aluminium can recycling rate up until 2030 and these were compared with the outcome of a proposed widely implemented DRS. The assumptions were: 1. The quantity of aluminium drink cans placed on the market increases by 1% per year.

2. Steel drink cans are fully phased out and existing stocks are consumed by 2019, and so are replaced with aluminium cans in line with industry expectations.

3. Cans consumed at home are recycled at the kerbside at an average current rate of 60% 7. This is based on analysis of recycling capture, and composition analysis of comingled recycling and residual waste.

4. The ‘consumer recycling rate’ describes all cans consumed at home or on-the-go but excludes aluminium cans captured by incinerator bottom ash (IBA). For the model, the ‘consumer recycling rate’ is reduced to 55% to account for lower recycling rates of cans consumed outside the home.

5. The ‘consumer recycling rate’ (at home, on-the-go, etc.) will increase by an anticipated 0.6% each year to 2030.

6. The amount of recycling includes the estimated additional 13% of material thought to be processed by unaccredited operators8 to reflect the ‘true recycling rate’.

7. A DRS would capture 75% of consumed aluminium beverage cans based on Valpak6 which is more closely aligned to Sweden’s capture rate of 77% 9.

8. Residual waste treatment capacity of energy from waste (EfW) and gasification continues to increase. All plant that have already obtained consent or are in construction come online as planned. The model conservatively assumes no other plants are commissioned and built 10 11 12.

9. The model assumes that 85% of aluminium cans which are thermally treated (EfW and gasification) are recovered from IBA; a conservative assumption.

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Alupro commissioned a study in 2015 which found at least 10,000 tonnes of aluminium packaging material was handled by unaccredited reprocessors and exporters on top of the 76,000 tonnes recorded in the PRN system. Reference: Alupro (2016), Study reveals ‘real’ aluminium packaging recycling rate, https://bit.ly/2JHiMIx

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Valpak (2017), Packflow 2025, http://bit.ly/2yQoTre

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Compositional data from 81 UK authorities were analysed to determine capture rates for metal packaging. Datasets from July 2012 – December 2014 were selected to represent socio-demographic groupingt

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Based on estimates of unaccredited reprocessors in 2015

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It is important to note that other nations that have achieved capture rates have done so by imposing a very high deposit on containers. Germany for instance achieves 98.5% with a deposit of over 30p per item. It is fair to say that everyone has their price and that higher deposits might lead to greater returns. However an increase on the base price of some of beverages could serve to increase social inequality and thus exclude lower income consumers.

It has been assumed unlikely that the British Government would impose such a high levy on consumers, especially in the face on ongoing austerity measure. We therefore feel that the 90% capture rate proposed by Eunomia is unlikely in England and that Valpak’s 75% pragmatic estimate is more likely.

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Resource (2017), residual waste treatment expansion could set ceiling on UK recycling, https://bit.ly/2xzBAmR

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Resource (2017), UK facing residual waste treatment gap until 2030, says SUEZ report, https://bit.ly/2xDzVQC

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Resource (2017), BIFFA becomes latest waste giant to decry EfW capacity gap, https://bit.ly/2Hm90NA

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1.2

RESULTS OF OUR MODELLING

The modelling process began by establishing a baseline which is shown in Figure 1 below.

The black line (‘Consumer Recycling % – Baseline’) represents the proportion of aluminium cans which are recycled by consumers directly; either at home, in municipal collection banks or in on-street recycling bins. Previous modelling carried out in 2015 indicated that people recycle around 50% of cans directly. If we forecast forward at previous levels, recycling is expected to increase to around 61% by 2030.

Baseline modelling

Aluminium can recycling rates (%)

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Total Recycling % - Baseline 2030 Circular Economy Package target (60%)

Figure 1: Baseline model showing aluminium cans recycled directly by consumers (black line) and the ‘total’ aluminium cans recycled which includes material recovered from incinerator bottom ash (red line). For reference, proposed EC targets for aluminium packaging (including cans) are shown by grey dashed and dotted lines

Aluminium can recycling rates (%)

However, this is only part of the story. Over the last 20 years, the UK has shifted away from landfill and continues to invest in 100% waste-to-energy infrastructure. As well as generating electricity and heat, modern incinerators extract metals from incoming waste, or use third parties to recycle materials from the residue known as incinerator bottom ash (IBA).

This means that a significant proportion of the aluminium which consumers don’t separate for recycling is recovered . As more waste-to-energy infrastructure is built, we expect to recover increasing quantities of aluminium anyway1380% this way. As indicated by the red line in Figure 1, it is estimated that IBA recovery could increase the total aluminium can recycling rate to around 94% by 2030, far exceeding the targets proposed in the recent EU Circular Economy 60% Package proposals.

40%

“We share Alupro’s primary objective of maximising the recovery of clean aluminium packaging from kerbside and on-the-go collections. As a company who is investing 20%in EFW, we also recognise that it has a vital role to play as part of the UK’s heavily waste and resources strategy; continuing improvement in separation technologies will undoubtedly play a key role in ensuring that aluminium delivers recycling rates of over0%90%.”

2015 2019 2023 2025 Dr Adam Read, External2017 Affairs Director, Suez 2021 Recycling and Recovery UK

Consumer Recycling % - Baseline Consumer Recycling % - with DRS 2025 Circular Economy Package target (50%) DRS Capture rate

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Total Recycling % - Baseline Total Recycling % - with DRS 2030 Circular Economy Package target (60%)

The Italian aluminium packaging recovery scheme Consorzio Imballaggi Alluminio (CiAl) and the Polytechnic University of Milan have conducted research into the 100% transfer ratio of aluminium from metal packaging into the IBA of energy recovery plants. Reference: European Aluminium Association (2014) More aluminium packaging recovered from incinerator bottom ashes than expected, https://bit.ly/2GW2NEL

s (%)

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Modelling aluminium recovery rates in the UK | 7 20%

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Consumer Recycling % - Baseline 2025 Circular Economy Package target (50%)

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Total Recycling % - Baseline 2030 Circular Economy Package target (60%)

With the baseline established, the model was used to investigate what would happen to the direct consumer recycling rate (the proportion of aluminium cans directly placed in recycling bins by the public). Based on well managed systems in other countries, we anticipate that a DRS which was implemented widely would capture about 75% of the cans in circulation (shown by the red dotted line in Figure 2), and that implementation would be effective relatively quickly about two years - assuming it was done efficiently.

Impact of DRS on overall recycling rates for aluminium cans

Aluminium can recycling rates (%)

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Consumer Recycling % - Baseline Consumer Recycling % - with DRS 2025 Circular Economy Package target (50%) DRS Capture rate

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Total Recycling % - Baseline Total Recycling % - with DRS 2030 Circular Economy Package target (60%)

Figure 2: The impact of improved consumer recycling (black dashed and dotted line) is superimposed on the baseline described in Figure 1

Aluminium can recycling rates (%)

It is estimated 100% that the impact of the DRS on top of local authority collection systems would increase the consumer recycling rate to around 89% by 2022. However, this would then only increase fractionally to 90% by 2030 (shown by the black dashed line in Figure 2). The modelling indicates that after 2025, recycling rates for aluminium cans would have been80% greater than Circular Economy Package targets for recycling, irrespective of a DRS because of the additional recycling of aluminium from IBA (red line).

DRS will deliver a 4% increase in the amount recycled vs what will be achieved in the baseline current situation.

20%

Impact of DRS = max 4% additional capture rate

Figure 3 provides an illustration of the increased volume of aluminium cans recovered from IBA with DRS. This reaches 60% a theoretical ceiling because some material will always be lost in the incineration process. It is estimated for aluminium cans the increased capture rate will be no more than 98% in total (red dashed and dotted line Figure 3), just 4% more than what40% would be expected anyway in the baseline scenario.

0% 2015

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Consumer Recycling % - Baseline Consumer Recycling % - with DRS 2025 Circular Economy Package target (50%) DRS Capture rate

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Total Recycling % - Baseline Total Recycling % - with DRS 2030 Circular Economy Package target (60%)

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Consumer Recycling % - Baseline Consumer Recycling % - with DRS 2025 Circular Economy Package target (50%) 0% DRS Capture rate 2015

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Consumer Recycling % - Baseline Consumer Recycling % - with DRS 2025 Economy target (50%) The impact ofCircular additional IBAPackage recovery DRS Capture rate

Total Recycling % - Baseline Total Recycling % - with DRS 2030 Circular Economy Package target (60%) 2023

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Total Recycling % - Baseline Total Recycling % - with DRS 2030 Circular Economy Package target (60%)

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Impact Impact of DRS = max 4%of DRS = max 4% capture rate additional captureadditional rate

can recycling rates (%) Aluminium canAluminium recycling rates (%)

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Consumer - Baseline Total Recycling - Baseline Figure 3: The impact ofRecycling additional%IBA recovery on top of the previous modelled outputs % shown in Figure 1 and Figure 2

Consumer Recycling % - with DRS Total Recycling % - with DRS 2025 Circular Economy Package target (50%) 2030 Circular Economythe Package So far, we have shown the modelling for aluminium cans. However, we have also modelled impacttarget of the(60%) DRS on DRS Capture rate 4) including cans, aerosols, food trays, closures and other aluminium packaging products. aluminium packaging (Figure

Aluminium packaging rates (%) Aluminium packaging recycling ratesrecycling (%)

The overall consumer recycling rate is lower for aluminium packaging compared to aluminium cans on their own (black 100% with IBA recovery it is virtually the same as for aluminium cans. Importantly, the projection for 2030 shows lines). However, that the differential between packaging collected under a DRS and expected projections is virtually the same (~3%).

80% of aluminium packaging Comparison 100% 60% 80% 40% 60% 20% 40% 0% 20%

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Total Recycling % - Baseline Total Recycling % - with DRS 2030 Circular Economy Package target (60%)

Figure 4: Comparison of aluminium packaging recovery across each scenario (aluminium packaging includes aluminium cans, trays, aerosols and other types of packaging)

1.3

Kerbside

CONCLUSION OF THE MODELLING and bring recycling

The outputs of the modelling indicate that the UK is already well on the way to achieving very high recycling 41%which are far beyond the targets proposed in the EU Circular rates for aluminium packaging, including cans, In Total Economy Package with or without DRS. Kerbside Projections for the implementation of a DRS indicate that the home projected recycling rate will increase byand approximately 3% for bring 4% in the long run for aluminium cans and recycling can packaging overall. aluminium recycling 70%

53% In

Residual 41% waste

2%

Total

Modelling aluminium recovery rates in the UK | 9

2 CURRENT PRODUCER RESPONSIBILITY SYSTEM The current producer responsibility system involves the issue of Packaging Recovery Notes (PRNs) which are purchased by packaging producers from packaging recyclers. The system is designed to encourage the recycling of packaging and obligate producers to contribute towards the process.

However, although the PRN system is thought to have provided support for domestic recycling, there is no correlation between recycling rate and the value of PRNs14. Critics of the PRN system also point out that it places a disproportionate administrative burden on businesses, lacks transparency and the system is widely acknowledged to need reform.

In addition, the adoption of the EU Circular Economy Package is likely to result in producers paying a minimum of 80% of the necessary costs of collecting packaging.

3 ENHANCED STRATEGIC PRODUCER

RESPONSIBILITY SYSTEM (ESPRS) Improvements to the producer responsibility regime are clearly a Government priority, which we fully support.

We have concluded that the following policy interventions should be fully evaluated as part of the review of the existing packaging and producer responsibility regimes.

1. Reward “real” end of life recycling rate 2. Producer costs must reflect “net cost” of collection for individual materials 3. Improved collections consistency 4. Fines/fixed penalty notices (FPNs) for householder contamination 5. Pay-as-you-throw measures 6. Improved recycle-on-the-go services to impact litter and recover recycling 7. Increased landfill tax 8. Implementation of incineration tax 9. Investment in recovery technology research 10. Improved contracts between the buyer and seller to reduce contamination 11. Alignment/standardisation of measurement of recycling rates 12. Reduced de minimis15 13. An obligation for all reprocessors and exporters of used packaging to be registered as part of the system to ensure recycling rates are accurately reported 14. National coordinated communications 15. Enhanced on-pack labelling 16. Education in schools Many of these interventions are congruous with the recently adopted EU Circular Economy Package.

It is worth noting that the forthcoming amendments to the Waste Framework Directive (2008/98/EC)16 will require producers to fund 80% of waste collection costs, therefore making considerable funds available for the measures listed above.

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Valpak (2017), Packflow 2025, http://bit.ly/2yQoTre

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In the UK, businesses handling less than 50 tonnes of packaging per annum and with less than £2 million turnover do not have to participate in compliance with the producer responsibility system. This is known as the ‘de minimis threshold’

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EC (2018), Proposal for a Directive of the European Parliament and of the Council amending Directive 2008/98/EC on waste, http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CONSIL:ST_6516_2018_INIT&from=EN

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“As a major supplier of aluminium drink cans, we are committed to continuing to improve recycling rates. Drink cans are the best example of the circular economy in action.

We believe it is vitally important that all policy options are considered to ensure 20% the full potential of aluminium, as a sustainable packaging material, is realised.�

Ramon Arratia, Sustainability Director, Ball Corporation 0%

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Consumer Recycling % - Baseline Consumer Recycling % - with DRS 2025 Circular Economy Package target (50%)

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Total Recycling % - Baseline Total Recycling % - with DRS 2030 Circular Economy Package target (60%)

3.1 THE OUTCOME OF THE PROPOSED ENHANCED PRODUCER RESPONSIBILITY SYSTEM It is our view that a coordinated national approach which comprises these complementary measures and focusses on the entire packaging and non-packaging waste stream at multiple levels is the most effective strategy for maximising recycling rates and avoiding litter.

In home can 53%

Kerbside and bring recycling 41%

Residual waste 29%

On-the-go recycling 7% Out of home can 47%

Residual litter bins 16%

Total recycling 70%

2%

EfW 21%

Landfill 30%

Disposal or losses 30%

Sweepings 5%

Figure 5: Estimate mass flow for aluminium cans consumed in the UK in 2017

In home

Kerbside and bring recycling 59% Total recycling

On-the-go recycling 7% Out of home can 47%

Residual litter bins 16%

EfW 21%

Modelling aluminium recovery rates in the UK | 11

Landfill 30%

Disposal or losses 30%

Sweepings 5% The Sankey diagrams indicate our estimates for the projected impact of the ESPRS system (Figure 6) compared to the current baseline (Figure 5). 43% of beverage cans are consumed at home and 43% outside the home, of which 12% were consumed at work17.

In home can 53%

Kerbside and bring recycling 59%

Residual waste 5%

On-the-go recycling 21% Out of home can 47%

Residual litter bins 5%

Total recycling 98% 7%

EfW 12%

Landfill 0.03%

Disposal or losses 2%

Sweepings 2%

Figure 6: Aspirational material flow for aluminium cans consumed in the UK by 2030 following enhanced strategic producer responsibility system

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18

ity income £/tonne

£1,200 £1,000

Based on online survey fieldwork undertaken by Icaro with a nationally representative sample of 2,101 adults aged 18+ in the UK. Fieldwork took place from 18–19 October 2017. The results were compared with previous research undertaken in early February 2015.

£800 WRAP (2018), Materials Pricing Report https://bit.ly/ZrfCR3 £600

Residual litter bins 5%

can 47%

losses 2%

0.03%

Sweepings 2%

APPENDIX A AVERAGE PRICES OF BALED USED ALUMINIUM BEVERAGE CANS SINCE 2003 £1,200 £1,000 £800 £600 £400 £200

19 Jun 17

23 May 16

12 Jan 15

01 Nov 13

24 Aug 12

0% 04 Jun 10

26.982

29 May 07

Appendix

APPENDIX

01 Jan 03

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Local authority income £/tonne

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Figure 7: Sale price of aluminium cans collected from local authorities throughout the UK (WRAP MPR)18

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