The market
Solid waste generated annually in urban areas worldwide exceeds 10 billion tons, less than half of which is collected and disposed of. Municipal solid waste (MSW) management is currently valued globally at over $300 billion in revenue and is experiencing rapid growth. The European Union (EU) produced a total of 3 billion tons of municipal solid waste in 2010, or 6 tons per person per year. Despite all the campaigns to reduce, reuse, and recycle (3Rs), the total volume is projected to increase by another 45% to reach 4.4 billion tons by 2020. The global distribution of waste shows that North America, with barely 5% of the population, produces 30% of the waste; at the other extreme, Africa, with 13% of the population, is responsible for only 3% of MSW. However, even a few percent poses a major threat to the health of millions of people and to the environment.
In 2010, the German municipal solid waste management market was dynamic, generating total revenue of €35 billion. Remondis, the national market leader with 20,000 employees and €5.4 billion in revenue during the same period, has acquired 400 local waste management companies over the years. Besides the 10 major players, there are 5,000 smaller operators in Germany. Waste Management Inc. is the world's largest waste management company with revenue of $13.1 billion and over 50,000 employees. The option of transporting and burying waste is declining sharply worldwide. The number of landfill sites in the United States has fallen from 8,000 in 1988 to approximately 1,500 today. The trend toward incineration was initiated by Japan, which operates 1,800 of the 2,500 facilities worldwide, with 290 new plants planned outside Japan. The waste-to-energy (WTE) sector grew from €3.7 billion in 2010 to €13.6 billion in 2016. There are more WTE facilities under construction in China than anywhere else in the world.
WTE appears to be the only recycling option, applied in 93.2% of cases. Biological treatment (as described in Scenario 51) accounts for a mere 6.8%. Composting, while very popular on a small scale and practiced by millions of urban households, fails to gain a foothold in the market, even though it is the cheapest option for treating a ton of organic municipal solid waste. Incineration is the most expensive choice, with an average price of $125/ton, and leaves operators with toxic ash that still needs to be landfilled. Although the composition of municipal solid waste varies from city to city, real-world examples from around the globe have demonstrated that 95% of it could be recycled in one format or another, generating more jobs and revenue than could ever be produced by burning waste.
Innovation
One of the main challenges in the sector is that each provider offers unique solutions. The market has evolved towards specialized engineering services, and few providers offer a full range of services encompassing composting, recycling, incineration, biological treatment, and/or gasification. Consequently, this vast portfolio of options competes for every contract, with each provider promoting their own solution, whereas they should be viewed as complementary, with the primary focus on resource recovery. However, the biggest challenge is that municipal solid waste is expensive. While urban mining has been widely discussed as a future commercial activity, it is not profitable today. The dominant business model relies on being paid for waste management. Long-term public contracts are the most common standard, funded by tax revenues. Given that the barriers to entry are enormous and the capital requirements are beyond the reach of many, there is little room for entrepreneurship.
Tom Szaky discovered during his freshman year at Princeton University that molded earthworms are the best fertilizer. He couldn't believe that cafeteria food waste was ending up in a landfill. So, he decided to feed it to worms by bottling the production in recycled plastic containers. He believed he had created the most environmentally friendly fertilizer possible. Better yet, he could sell it at a profit, at a price lower than any competitor. Tom then created a national program to collect used packaging and containers. He devised a business model that paid schools and non-profit organizations to pick up all kinds of used items. He invited people to imagine, design, and produce high-quality products like backpacks and kites using collected and sorted waste as raw materials. Instead of recycling, he called it “recycling plus,” just like the title of the book published by the founder of the blue economy in 1999 in Germany. Tom then created TerraCycle. Located in New Jersey, USA, this rapidly growing company operates a new business model for waste. In its model, waste is no longer even thrown in the trash.
Tom's model goes beyond simply recycling and creating valuable products from waste: it puts a brand on waste. Until now, companies have preferred to hide their name in waste, mix it with other waste, or burn it because ashes don't carry a logo. Tom has developed products that tell consumers who originated the raw materials from which a final product is made. Capri Sun juice pouches are transformed into tote bags; used Frito Lay chip bags are recycled into trash cans and beverage coolers. Koolaid in Canada and Tang in Mexico and Brazil follow the same concept. Twenty percent of TerraCycle's waste conversion program is labeled. This is one of the innovations that characterizes the blue economy, as it generates added value and jobs while sharing social capital.
The first cash flow
Today, TerraCycle works with over 45,000 schools across America, as well as businesses, civic groups, and gyms, which sign up on the TerraCycle website to collect various waste streams such as juice boxes and candy wrappers, toothbrushes, and pens. It makes payments to schools and charities for sending the waste and also covers the postage costs. While preventing waste from going to landfill, TerraCycle creates products and materials that replace other products made from virgin materials. Walmart (USA) has featured TerraCycle's licensed recycled products. During Earth Month 2010, 4,300 Walmart stores sold TerraCycle products alongside the original product. Tote bags made from Frito-Lay wrappers were sold with Frito-Lay chips. Backpacks made from Capri Sun drinks were sold next to the juice. Handbags and shoulder bags made from M&M and Skittles packaging were on sale next to candy and chocolate bars from the Mars company.
None of the companies object to their waste being transformed into branded retail products; on the contrary, these products foster customer loyalty and repeat sales. Just ten years after first proposing this business model at Princeton University, TerraCycle generated an estimated $13.5 million in annual revenue in 2010 with just 50 employees and is projected to reach $18 million this year. This demonstrates that the genius lies in the design of the business model, not the technology. Indeed, all the technologies needed to operate the company are readily available and off-the-shelf. TerraCycle's environmental benefits have been confirmed by third-party life cycle assessments.
The opportunity
Tom Szaky has a simple goal: to recycle "non-recyclable" waste. His global reach now extends to twelve countries. This business model could be applied anywhere brands are willing to help cover the cost of collecting non-recyclable waste. Not only does waste have value, but there are enormous job opportunities. While many have already practiced waste recycling, such as fashion in Brazil, selective waste collection in Curitiba (also in Brazil) in exchange for access to public transportation, and waste-to-art in Africa, Szaky's model mobilizes young people locally. This funds school projects and empowers citizens who can donate $0.02 per unit of waste to the school or charity of their choice. It is this network of institutions and individuals that has mobilized waste while unlocking its value with a sense of commitment and responsibility, a strong dose of enthusiasm, making everyone aware and happy in the process.
