Policy Statement & Submission

ENVIROSERIES – A Forum for Sustainable Development


SUSTAINABLE WASTE MANAGEMENT:
POLICIES, PARTNERSHIP AND PROSPECTS

8 June 2005

Economic Aspects of Sustainable Waste Management Strategy in Hong Kong

By James Graham – Chairman of Environment Committee,
The Hong Kong General Chamber of Commerce



When I was asked by Dr Andrew Thompson to deliver an address regarding the Economic Aspects of Sustainable Waste Management Strategy in Hong Kong from a Hong Kong business perspective, I was more than happy to accept. Whether you will be happy to hear what I have to say is another matter. It is a widely held view that a ‘sustainable' waste management strategy should be socially acceptable, environmentally responsible and economically viable, and I will focus today on the economic aspects as they relate to Hong Kong business.


This topic has certainly been in the news of late with the recent announcement by the Sustainable Development Council, until recently chaired by Donald Tsang, and I, like many of you in the Hong Kong business community, find myself more and more supportive of the speedy implementation of a sustainable waste management strategy for Hong Kong. The time to act is now!


What is interesting is that in many Government discussions about sustainable waste management schemes, the Government's cautious answer to whether or not the schemes under examination will work in Hong Kong, is “Yes, but…” The “but” always then emphasises the fact that the schemes still need to be studied more closely and perfected for the precise social, environmental and economic requirements of the Hong Kong community.


Frankly speaking, there is a growing sense in the business community that we may never find the perfect solution and that in the absence of that perfect solution, the mythical silver bullet, it is imperative that we press ahead and get on with the job. As we all know, Hong Kong (to its credit) has spent and does currently spend an inordinate amount of time monitoring the trends and problems related to the management of solid wastes. We have studied numerous waste reduction measures, including legislation and technologies, that are adopted in overseas economies, and we have examined their applicability to Hong Kong; and Hong Kong, ever since I can remember, has been discussing possible waste reduction policies and programmes, as well as measures to handle different types of waste. The serious and scholarly nature of these studies is not to be taken lightly, because Hong Kong is searching for the right answers. But, in the meantime, we are accumulating more and more waste and we are running out of time as our landfills will be full in 6 to 10 years time according to Government and in a much shorter period if you divide the growth in daily landfill volumes into the available capacity of our existing facilities


And here is one of the main points I wish to get across today - let's all start being realistic and stop trying to please all and address each and every concern. The situation with any scheme anywhere, including Hong Kong, is never going to be perfect. We might be making a mistake shooting for perfection, when in reality a scheme that broadly satisfies the requirements and achieves consensus will allow action now. Either way, if we are waiting for the perfect solution to come along – well – it won't, and we'll be having this same discussion again next year. There have been too many delays to the implementation of these schemes. Many in the business community have remarked that there also is a real Legco-phobia related to these schemes, and a resulting Not-In-My-Term-Of-Office attitude from Government officials and Legco members further hindering the process. This needs to be changed and changed now. Thankfully, the light is now shinning on this issue and both constituencies are looking for action.


Can we identify schemes that broadly satisfy the social, environmental and economic imperatives? Do they exist? Yes, we in the business community believe that they do.


Another major objective in my address today is to drive home the point that the schemes need to be accompanied by legislation that ensures the polluter pays principle and adopts and encourages incentives. In order to do this, the business community and the Government are going to have to agree and cooperate to create economic viability where it does not exist. Laissez Faire and sustainable waste management are simply incompatible objectives. The business community is prepared to support legislation that creates a responsible management of the waste problem in Hong Kong with respective members of the community including the business sector sharing the burden of the cost that this brings. On this point let me add that there is a growing sense of acceptance in the business community to bite the bullet, be it silver or not, and to kick-start the necessary economic component of a sustainable waste management strategy.


In preparation for this address, I canvassed the opinions of many prominent and knowledgeable members of the Hong Kong business community to share with you schemes that would be worthy of the business community's support and Government legislation and incentives. My goal was to identify schemes either currently under consideration or ones that Hong Kong could take on board, and make an economic case for adoption and long- term sustainability. That includes creating the appropriate economic incentives for businesses, organisations and society to reduce, reuse, and recycle, and building a solid economic framework and foundation that will support businesses and industries engaged in reducing, re-using and recycling in Hong Kong.


One of the biggest problems facing the creation of a sustainable waste management programme is that Hong Kong produces too much waste to begin with. On average, each person in Hong Kong disposed of about 1.36 kg of municipal solid waste each day in 2004, which is enough to fill more than three Olympic-sized swimming pools with waste daily. With that knowledge, we need a more sustainable, long-term strategy for waste avoidance.


Again, for this strategy to be successful, government must create legislation that catalyses economic incentives for widespread participation or establish policies to mandate legal compliance.


Let us examine two successful examples where governments were able to curb the use of plastic bags. Three years ago, Taiwan and Ireland sharply reduced the use of plastic bags by imposing levies. Pre- levy (imposed in July 2002), Taiwanese used 909 bags per person per year. After the levy was introduced, Taiwan reported an 80 percent drop in the number of plastic bags used. Irish consumers used 256 plastic bags per person per year, before a similar levy was introduced in March 2002. Since then Ireland has reported a 90 percent drop in the number of plastic bags used while the Government raised the equivalent of almost HK$100 million in the first year of the levy.


For comparison, and think about the possibilities and economic gain, Hong Kong consumers are among the world's highest users of non- recyclable plastic bags, using 6.7 billion plastic bags a year, or 1,294 plastic bags per person. You are an educated audience I will leave you to ponder how an incentivised waste reduction scheme in this area alone might benefit the community.


The next logical step in waste avoidance is to attempt to reduce the amount and type of waste that makes it out of the shop and into the home. We, in the business sector, are best positioned to accomplish this by reducing packaging materials, instituting green packaging programmes and by redesigning items like bottles with waste avoidance in mind. Recent European Union initiatives like the Waste Electrical and Electronic Equipment (WEEE) Directive and the End of Life Vehicles Directive are good examples of very comprehensive producer responsibility schemes that go a step further and address the ‘cradle to cradle' responsibilities of manufacturers and producers.


Last year, Hong Kong produced over 20 million of tonnes of construction and demolition waste, and 18 million tonnes was inert and recyclable and dumped at public filling facilities for re-use. Reclamation used to be a way in which Hong Kong could re-use this C&D waste, but with that now, at a virtual standstill, this no longer is an option for the disposal of this type of waste.


One possible option for disposal of inert waste emerged recently when Secretary for the Environment, Transport and Works Dr Sarah Liao signed an agreement with Beijing that will allow exportation of clean, inert C&D material to Guangdong.


The idea is that the C&D waste now accumulating in our landfills could be exported raw or processed and would provide much-needed building material for concrete and road construction in a resource-hungry market, and we are already producing secondary building materials which can be used in a market if specifiers would become more aware and receptive to the opportunities to use them.



Another scheme that is being advanced and expanded is the polluter pays principle, which has the full support of the business community. This is the beginning of a longer-term investment in creating an economy around the re-use of C&D waste, where incentivising businesses to minimise waste production or giving them opportunities to save costs by introducing waste reduction schemes or giving them outlets for their waste products. A fine example of this is the use of PFA in the production of concrete in Hong Kong.


When queried about this issue, members of the business community and the construction industry believe that further measures and incentives will be necessary to make re-use economically viable and a reality in Hong Kong. In other territories like the UK, re-use is widespread and that is because in addition to a landfill tax there also is a significant tax on the use of new, virgin aggregate, and furthermore, important government bodies have made re-use of C&D waste compulsory by including its use in the contracts that are let to the private sector.


The proceeds from such schemes, which can in effect broaden the tax base in Hong Kong, could be used to set up new recycling markets. In other jurisdictions, the taxes generated are partially put into environmental trust funds that provide money for research and development, public awareness projects, and seed money for the establishment and continuation of businesses in the recycling industries.


Landfill Tax plus Aggregate Tax plus Government legislation have provided one solution in other territories. One of Hong Kong's most prominent engineering contractors has conducted in-house studies concerning the feasibility of re-using C&D waste versus the continued use of virgin aggregate. The conclusion, taking into account the polluter pays scheme, found that re-used C&D waste would still cost about 10-20% more than using virgin/fresh aggregate from China (even with the cost of shipping the aggregate from China) due to sorting and quality control issues and the very low cost of virgin aggregate from China. If we are serious about dealing with the earth's resources a responsible policy is necessary here.


Since the launch of the Waste Reduction Framework Plan in 1998, Government has been promoting waste reduction and recycling through the use of 3-coloured waste separation bins placed at housing estates for collection of paper, aluminium cans and plastic bottles. Since 1998, 500,000 tonnes of paper, 20,000 tonnes of aluminium cans, and 4,000 tonnes of plastic bottles have been recovered, amounting to a total market value of HK$500 million and a HK$65 million estimated savings on landfill costs.


The programme also has helped to generate income for residents as recyclables are separated within each housing estate and sold to recyclers direct.
According to the Government, in the case of one public housing estate, the sale of recyclables has brought an income of more than HK$100,000 to its property management company in 2004, net of the income to the cleaners.


This programme is an economically sustaining, win-win situation whereby the recycler harvests recyclables, the management companies or cleansing contractors collect additional income that will in turn be beneficial to the residents, and more waste is diverted away from landfill disposal to recycling.


But this plan is still voluntary, and Government has yet to formalise the programme because it is still identifying the modes that are convenient to residents, cost-effective and best suit local needs. While it is clear that there may be different modes for different types of buildings in Hong Kong, and that each participating housing estate will adopt the best mode of waste separation and recovery tailor-made to suit its particular physical constraints, this programme should be extended, not just for the Government facilities and public and private housing estates, but for all commercial and industrial buildings as well. Separation can be expensive and challenging due to the labour costs and the fact that recycling must be completed before wastes are mixed even if waste is simply split into wet and dry. The success of the voluntary programme demonstrates that it can be done in Hong Kong and can be economically viable.


Hong Kong has a number of districts that house old buildings and warehouses that could, under certain circumstances be refurbished for residential and commercial use. However, without significant incentives to refurbish those buildings, some requiring significant infrastructure upgrades and additions, the economic argument for refurbishing is not convincing, and the numbers naturally will lead the owner or developer to tear it down: yet more C&D waste.


Another alternative is for Government to mandate that all C&D waste from demolished building must be recycled – that includes everything in the building from the concrete to the steel and the fixtures. A good example of this is the environmentally sensitive demolition of Swire Properties' No. 16 Westlands Road and No. 23-29 Wing Fung Street. Waste was collected and sorted by hand resulting in over 80% of the waste prepared for recycling and re-use, leaving just 19% of waste for landfill disposal. It can be done and we look to others in both public and private sectors to take these type of opportunities in their development plans.


For the future of waste separation and recycling, the Government must also play its part in making environmentally friendly buildings a standard in Hong Kong. This would include the use of recycled waste in the construction process; designs that include a workable, operational waste management system, mandatory waste chutes as well as sufficient areas to incentivise waste separation.


As an incentive and in return for such requirements, the Government could further increase plot ratios. A great example of this is TaiKoo Shing, where all the stakeholders have successfully worked together over a number of years to improve waste management practices at the Estate.


Further, in existing industrial estates, where businesses produce waste, space could be set aside for the establishment of integrated waste management facilities comprising incinerators, or even waste to energy facilities, and waste treatment options like composting combined with the appropriate economic incentives to sustain this type of activity, including reduced land costs or flexible leasing arrangements allowing our semi redundant industrial estates to become ‘eco-parks' housing sustainable and successful recycling industries.


Moving now to talk about the waste that is created and cannot be recycled or reused. The Environmental Protection Department has communicated that landfills will be full in six to 10 years time and on this basis there is an urgent need to find an alternative. With a dearth of available land and future land sterilisation and restoration issues, clearly, incineration for Hong Kong can comprise a cost-effective way of managing solid waste, and the Environmental Protection Department has highlighted the need to build advanced and large-scale incineration facilities that will meet stringent emission standards. I make no bones about this- incineration is a part of integrated waste management in any territory and needs implementation as soon as possible.


There are a growing number of supporters in the business community for incineration, including business chambers and associations, who through position papers strongly support clean, modern waste incineration in Hong Kong. The great challenge in Hong Kong is to overcome the artefact and legacy of incineration in Kennedy Town and Kwai Chung where aged incinerators belched black smoke and created fears of dioxin.


The technology is available to deal with this and through education, discussion and demonstration of the stringent emission standards and safety of the most modern facilities in other parts of Asia and Europe, combined with the support of the business community, there will be a successful outcome to the incineration debate including waste to energy schemes as a part of the process.


This is one of the most exciting developments in recent years, and there are numerous successful implementations and technologies on view throughout parts of Europe, North America and Japan; but energy need not be the only sustainable and economically viable by-product that can arise. Waste incinerators also can yield final, dry products, for instance, that serve as suitable, construction or agricultural materials.


Changing the economics of waste management from the ground up is complex, but it is the only kind of change that will produce a long-term, sustainable waste management strategy for Hong Kong. I have outlined some schemes that will work for Hong Kong, and discussed the collective responsibility we all bear to push this forward both from the public and private sectors. The business community must not only contribute to the sustainable waste management debate but we must help to inform and educate and show our support for environmentally acceptable, economically viable schemes that are acceptable to society. This is a significant, leadership opportunity for Hong Kong business across the environmental platform and together with the Government we are ready to play our part in an integrated waste management strategy for Hong Kong. The time for that action is now.




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