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REDISA: When circular economies work

REDISA: When circular economies work

Feb 17, 2015

By Hermann Erdmann, CEO of REDISA

It is commonly accepted that the current ‘take-make-dispose’ linear product use approach results in massive waste. According to an article published in The Guardian, 90% of raw materials used in manufacturing becomes waste before the product leaves the factory, while 80% of products made get thrown away within the first six months of life.

The alternative is to develop a circular economy which goes much further than recycling (given that this is often energy intensive) and there is a strong business case for its development.

Analysis by McKinsey estimates that shifting in this direction could add $1 trillion to the global economy by 2025 and create 100,000 new jobs within the next five years.

Here in South Africa, the tyre industry has led the way towards developing a successful, and sustainable circular economy.

A little over a year ago, the Recycling and Economic Development Initiative of South Africa (REDISA) was established to take responsibility for the recovery, recycling and processing of waste tyres in South Africa – with a focus on the reduce and reuse principals.

In exchange for shouldering the responsibility of dealing with the product waste at the end of the life cycle, REDISA receives a waste management fee of R2.30 per kilogram from all tyre manufacturers and importers in the country. We use the money to develop a new tyre recycling industry and, in the process, create hundreds of jobs and small businesses.

The REDISA model is working: Tyre manufacturers and importers are taking responsibility for their waste without losing sight of focusing on their core business; unemployed people are finding gainful employment, SMMEs are being developed and supported by the REDISA Plan, and the environmental disaster that waste tyres represent is being economically and effectively addressed.

Why governments should get involved
Interestingly, the Guardian article references the importance of government intervention for circular economy development. In my opinion this is because experience shows that where manufacturers regulate themselves, some do and some don’t. Some pay and some won’t. The South African government (the Department of Environmental Affairs, specifically) is the first government globally to legislate the development of a circular economy – with particular reference to the tyre industry.

This legislation is in the form of the REDISA Integrated Industry Waste Tyre Management Plan and it is attracting significant international interest.

To provide context, in Germany 60% to 70% of tyre manufacturers at most pay an industry body to discharge their extended producer responsibility for them (or to take responsibility of the product waste at the end of its life cycle). Here in South Africa, the figure stands at 99.8%. The difference is that in Germany, extended producer responsibility is voluntary; in South Africa, it is mandatory.

When extended producer responsibility is voluntary, it becomes a competitive issue: Those who choose not to pay gain an unfair cost advantage.

Competitive issues fall away when producer responsibility is compulsory, and while the waste management levy they pay REDISA is an additional expense, tyre manufacturers and importers know they are receiving value for their money.

Impact on consumers
Consumers ultimately end up paying the price, quite literally, as manufacturers will begin to price into their products the cost of remediating the waste at the end of the product’s life.

Unfortunately there is no other option but for us to take this route as mining raw materials becomes unceasingly unfeasible. This is not only because of the cost implications or the environmental impact, but because with three billion new middle-class consumers due to come online in the next 20 years, there will just not be any more raw materials left to mine.

References: The Guardian

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