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Recycling: Cost Benefit Analysis

Executive Summary

1 Introduction

2 Approach to Analysis

3 Waste Volumes

4 Benefits of Recycling

5 Markets and Value of Materials

6 Costs of Recycling

7 Net Benefits of Recycling

8 Conclusions

Annex 1: Landfill Assumptions

Annex 2: Willingness to Pay Survey

Annex 3: Analysis of Willingness to Pay Results

6 Costs of Recycling

6.1 Cost components

The benefits of recycling that were outlined in the previous sections need to be offset by the costs. In this section the net costs of recycling are estimated.

6.2 Kerbside collection costs

We develop generic costs for the collection of household materials for recycling. The costs are built up from the component parts as shown in Table 23. These assume collection of all materials except paper. These costs are used to estimate costs for individual materials, including paper, by adjusting for densities of materials.

Table 23: Kerbside recycling cost assumptions

Using these estimates, total costs of kerbside recycling are shown in Table 24. These results are for a large urban setting. We vary the costs to take account of differences in population density. We have captured regional variations using the following method. We use the kms/tonne (by TA) metric calculated in the cost of collection for landfill section (4.2) to scale the cost of kerbside collection for recycling. As earlier, Auckland is used as the base case ($168/tonne). In TAs that collect recyclable waste in co-mingled form, we have used estimated costs from the table below ($125/tonne).

Table 24: Total costs of kerbside collection

These base costs are adjusted reflecting household density in different locations; the resulting cost curve is shown in Figure 9. There is an initial step representing the jump from co-mingled to crate-based collection for the councils currently operating this system; thereafter the costs vary with location.

For analysis we separate out the costs of kerbside collection of the individual materials rather than using a single collection cost for each individual material. This is because we are interested in examining marginal changes, eg, collection schemes with and without plastics and so on. To do this we use the density of the individual materials to produce individual collection costs for each. The resulting ranges of costs are given in Table 25.

Table 25: Collection costs ($/tonne)

Collection costs for commercial waste are assumed to be the same as for household waste. This is likely to be an over-estimate of costs.

6.3 Sorting costs

Sorting costs for the materials collected from kerbside collections vary by waste stream. The cost assumptions are shown in Table 26; this includes separate cost estimates for materials that come from crate-based and co-mingled collections.

Table 26: Sorting costs ($/tonne)

1 These costs do not include the costs of beneficiation.

Source: industry estimates, interviews.

6.4 Organic waste (kitchen waste and green waste)

Currently organic waste is recycled largely through households and businesses delivering garden waste to transfer stations. This is achieving approximately 312,000 tonnes per annum currently (Table 5) through drop-off of organics to community recycling centres. The analysis here examines the costs and benefits of adopting a separate kerbside collection system for organic waste.

The costs arising from a kerbside organic waste collection are likely to be similar to those with existing kerbside recycling. Estimates of kerbside collection for organic waste range around $80–$120 per tonne.⁵⁸ This is similar to the collection costs for co-mingled collections which also use mobile bins, although organic collection would be slightly cheaper as trucks collecting organic material are likely to be able to cover a larger number of households than those collecting inorganics because organic waste can be compacted to a greater pressure.

The capital costs of setting up the green waste processing facility can be large enough so that it is cheaper to have large scale processing facilities with green waste transported from surrounding areas. For example, the Waimakariri District transports its green waste to Christchurch. Another set up cost that can be substantial is the resource consent process. The resulting costs for establishing a processing facility to process around 50,000 tonnes per year could be in the vicinity of $15 million–$20 million. Such a facility may have a lifespan of around 20 years and would incur maintenance and refurbishment costs.

The operating costs of these processing facilities depend on the mix of organic waste being processed. The total operating and capital costs of processing a mix of green and kitchen waste in an enclosed indoor facility range from $70–$170 per tonne, with an average cost being in the vicinity of $120.⁵⁹ The cost of processing only green waste into compost is around $50 per tonne, excluding capital costs.⁶⁰

A typical cost for transporting processed compost to agricultural users is estimated to be around $10–$15 per tonne.⁶¹ This cost reflects the fact that a large proportion of green waste would be generated in cities but compost would be used largely in rural areas. Because of its high volume and relatively low value, compost is typically sold within 100–150 kilometres of the composting facility.⁶²

Table 27: Costs of organic recycling

As for kerbside collection costs, the collection costs for organics vary by location reflecting population densities. The results are shown in Figure 10.

6.5 Construction and demolition waste

A barrier to recovering more timber and wood products is the need for C&D waste to be manually sorted. The separation of contaminants can be difficult, as with the identification of treated versus untreated timber. On-site sorting not only incurs labour costs, which may be borne by high value tradespeople, but it also requires additional bins to store the sorted material. This can be costly, particularly on sites where the area available for such storage is limited. Alternatively, C&D waste could be sorted at transfer stations when it is delivered for disposal. An estimate of the sorting costs to segregate plasterboard from the C&D waste stream at transfer stations is $40–$126 per tonne.⁶³ The cost of similar off-site sorting of wood may be within this range.

The cost of processing or chipping the wood to make it suitable as a fuel costs around $20 per tonne, although this value varies in response to moisture and ash content.⁶⁴

Prices for crushed concrete can range from $10–$22 per tonne, with a typical price in Auckland of around $12.70 per tonne. However, in other parts of the country, such as Canterbury, recovered concrete has much lower value given the abundance of lower-cost aggregate in the form of river gravel. For example, after the Christchurch City Council imposed a levy upon the disposal of concrete rubble and other similar material of $9 per cubic metre (approximately $6 per tonne of concrete) the disposal of this material decreased by 15 per cent.⁶⁵ Most of this material was instead recycled, particularly concrete.

Table 28: Costs of C&D waste recycling

6.6 Tyres

The major costs involved with the use of tyres as a fuel for cement kilns consist of collection and transport. The two cement kilns in the country are located in Westport (Holcim Cement) and Whangarei (Golden Bay Cement). According to Holcim Cement,⁶⁶ the cost of collecting and transporting tyres from the South Island to its kiln in Westport would be around $1.50–$2 per tyre, which equates to a cost of around $200–$260 per tonne.

Given the disparate distribution of tyres in the South Island and the relatively remote location of the Holcim Cement kiln, the costs of collecting and transporting tyres in the North Island to the Golden Bay Cement kiln would be lower, particularly as Auckland, which would account for around one third of the nation’s end-of-life tyres, is less than two hours from Whangarei by road. The cost of transporting tyres in the North Island could be around $1 to $1.50, which is equivalent to $130–$200 per tonne. This equates to $0.28 per tonne per kilometre. The value of tyres received by cement kilns is $104–$136 per tonne.⁶⁷ Dumping fees may also be able to be charged for receiving the tyres, particularly where the prices charged for landfilling tyres is relatively high.

The costs of grinding tyres into large granules to be used in bitumen manufacture is estimated at $120 per tonne. On top of this, the cost of collecting and transporting tyres to grinding plants is likely to be similar to the costs of transporting tyres to cement kilns. Although the transport costs could be reduced by shredding tyres, which reduces the volume of tyres by around 75 per cent, the shredding process itself would imposes costs. As noted above, it is not certain that this would be financially advantageous over existing production techniques.

Table 29: Costs of recycling tyres

6.7 Used oil

The collection and transportation constitute the bulk of the costs associated with recycling used oil. These costs were estimated to be $0.15 per litre for urban areas and $0.20 per litre for rural areas, with oil distributed around the country roughly proportionally to population.⁶⁸ Assuming that the costs of transportation have increased by around 15–20 per cent since 2001, based largely upon higher fuel prices,⁶⁹ the costs of collection are estimated to now be approximately $0.18 per litre to $0.23 per litre. These costs also include some processing costs as contaminants in the used-oil, such as water, need to be drained before it is suitable to be used as fuel. This cost does not include the cost of shipping the collected oil from various ports around the country to Holcim’s cement kiln.

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