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China's Green Fence restricts packaging waste imports

There’s an old piano and it’s playin’ hot behind the Green Door, Stuart Hoggard, Asia Packaging, China, Green Fence
When 24 shipping containers of plastic waste from the US were turned away by customs from Shangdong port in February 2013, it sent the recycling industry in Europe and the US into paroxysms of fear that their lucrative business exporting rich Westerner’s garbage to China was being choked off.

Complaints reached the ears of the mainstream media eager for another China-bashing story about randomly applied ‘new’ regulations creating waste management from hell scenarios: more expensive kerbside collections, larger landfills in the US, and entire European countries falling into default under the Packaging Waste Directive.  

The reality, as we found out straight from China’s enforcement agency’s mouth (as it were) is far from the hysteria reported in the Guardian and Washington Post quoting 2nd and 3rd hand sources in the West.

To get the story straight from the source we held a one-on-one interview with a Customer Services Representative of China's General Administration of Customs (GACC) – yes they do have such CSRs - conducted as an on-line ‘chat’ – they have on-line chats, quite surreally similar to Facebook, a window pops up at the bottom right of your monitor and a message appears “Hi, I’m Judy, can I help you with a specific enquiry?” Of course it is on the CACC Chinese website and Judy’s messages were in Chinese.

Question: What is this Green Fence of China programme?
Answer: “It is a general instruction, issued in February 2013 to all border inspection units to strictly enforce existing regulations”

Question: When were the existing regulations published?
Answer: “Originally the specifications and conditions under which China will accept waste plastic and paper were published in 2008. Various small amendments have been made several times since”

Question: Were these regulations widely published and made known to Western suppliers?
Answer: “We notify the relevant enterprises within our own borders. CACC has no authority to notify enterprises outside China”

Question: Why was the Green Fence launched only in 2013?
Answer: “The CACC has been conducting random inspections since 2008. However it became obvious that many foreign companies were cheating and wrongly declaring the contents of containers. Random inspections discovered dirty unwashed materials which are prohibited by the 2008 regulations, and in some cases medical and other hazardous waste was discovered, which is in breach of international law”

Question: Can you send a copy of the regulations?
Answer: “Yes”

Email addresses were exchanged and within two hours an email arrived with a list of banned materials attached – in Chinese, of course.

Now, given the relative ease with which we obtained the prohibited list, and the fact that, with regard to recovered plastic, the current list is identical to the one I reported on in my reports here.

China’s Waste problem :

  • Between 2006-08 government launched a new national economic strategy that became The Circular Economy Law - the essence of which is ‘the waste from one process becomes the feedstock from another’
  • In September 2007, the State Council (Cabinet of Ministers office) issued the General Administration for the Recycling of Packaging Materials: A Master Plan that covers all packaging materials, excessive packaging, household collection and transport of waste materials – these are to go to centralised Eco-zones for reprocessing. It also contains very specific pre-qualification regulations for recycling company registration (minimum paid-up capital, professional qualification of executives etc)
  • There are more than 120,000 plastic recycling operators across China – mom-&-pop set-ups mostly employing 4-5 people
  • China’s domestic waste collection systems are inadequate and the new systems envisioned by the Master Plan are difficult to implement given the size and scale of the country and currently relies on scavengers and waste-pickers. As a result collection volumes and the quality of the waste stream are lower than industrial scale recycling plants require to be viable.
  • It is cheaper to ship a 40-foot container from Los Angeles to a Chinese port than it is to send it by train to a foundry in Chicago.

China's Waste Imports

Despite attempts to regulate the quality and quantity of materials, exports to China have been skyrocketing in recent years. Scrap was America's top export to China by value in 2011 – worth $11.3 billion, according to US trade figures - though in 2012 soybean sales knocked scrap and waste into second place.

The US exported 23 million tons of scrap, two-thirds of it went to China.

Poyry Consultants suggest that annual consumption of recovered plastics demand will surge to 85 million tonnes by 2020,while a projection from CBI China that Chinese demand alone for recovered plastics could top 29 million tonnes by 2015.

The UK’s Guardian newspaper reported that crime syndicates earn US$20 to US$30 billion a year from waste crime. Inspections at 18 European seaports found as much as 47% of waste destined for export was illegal.

Some reports have suggested that the Green Fence inspections will be scaled back in November 2013. Don’t bet on it.

For the foreseeable future, as long as China decided it is its economic interest to continue to enforce its laws to force-create a scalable domestic recycling industry, there will be a glut of recovered plastic and paper on the market in both Europe and the USA.

Where there’s muck there’s brass

Meanwhile, it is no coincidence that the world’s eighth richest man, octogenarian Hong Kong billionaire tycoon Li Ka-shing, has invested US$1.71 billion to acquire two recycling companies in New Zealand and The Netherlands.

According to Forbes, Li has an estimated wealth of US$31 billion. He is the Chairman of the Board of Hutchison Whampoa Limited (HWL) and Cheung Kong Holdings and through them he is the world's largest operator of container terminals, a significant Asian property developer, has a major stake in the internet in Asia, controls the world's largest health and beauty retailer A.S. Watson Group (ASW) with over 7,800 stores and a portfolio that encompasses retail brands in Europe such as Superdrug (UK), Marionnaud (France), Kruidvat (Benelux countries), and Watson's store and wine cellars in Asia.

There’s an old piano and it’s playin’ hot behind the Green Door, Stuart Hoggard, Asia Packaging, China, Green FenceHe also has significant investments in the power generation and supply sector. In 2010 he took over EDF's UK electricity networks for £5.8 billion, giving him ownership of grids supplying a third of the country's population, supplying power from the high-voltage grid to 20 million people in London and England's east and southeast. It also powers the London Underground, Heathrow airport and the Channel tunnel.

Last year, he took over British gas company Wales and West Utilities for US$1 billion.

In January 2013, Li’s Cheung Kong Infrastructure acquired New Zealand’s EnviroWaste Services Ltd from Australian private equity firm Ironbridge, for US$405 million (NZ$501million, including NZ$11 million in debt). And in June 2013, Cheung Kong (Holdings) Ltd, acquired Dutch AVRAfvalverwerking B.V. waste processing firm RAV Water Treatment I B.V. for US$1.26 billion (Euro 943.68 million) from the Van Gansewinkel Groep.

Since merging with Van Gansewinkel Groep in 2007, several divisions of the AVR business have been integrated into the waste collection and recycling companies of Van Gansewinkel. Since then AVR has developed into an industrial scale EfW (Energy From Waste) operation with projects to produce an optimal mix of heat, steam and energy, and with a total permitted capacity of over 1.8 million tons in two locations in Rotterdam and Duiven, AVR is the market leader in The Netherlands.

According to Cheung Kong Infrastructure Managing Director Kam Hing Lam: “We are making good inroads in the area of waste management. With waste treatment being an imminent issue in most places around the world, we see good growth potential in this business.”

Li’s recent investments in waste represent a closing of a circle which began with his first business venture set up in 1950: a plastic plant producing artificial flowers and within a few years he was largest supplier of plastic flowers in Asia it became the foundation of an empire.

With mountains of combustible waste piling up on the docks and railway sidings in Europe due to China’s Green Fence, Asia’s richest man will have plenty of plastic to burn.


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