廣闊的垃圾市場(chǎng)：變廢為寶

1、Trash to TreasureManaging the worlds waste is a pressing issue that is gaining more headlines, with societal expectations mounting every day. Politicians and policymakers the world over are responding, as are industry, facing increasing pressure to drive sustainability. Going beyond the historical l

2、ogistical service, the opportunity for waste managers to invest in long-tenure waste treatment assets continues to grow and evolve. We assess the opportunity in Australia in some detail, evaluating project options and economics, the policy environment, the current state of play and, importantly, the

3、 impact on sustainability and ESG credentials.The urgency is greatWhile societal pressure has increased over time, the China National Sword policy acted as a catalyst to really focus the minds of all involved in the waste value chain. With many alternative destination countries following Chinas lead

4、 in restricting the importation of waste, the challenge has grown. Except for the highest quality plastic and paper/cardboard waste, export markets have become increasingly complex to navigate. In turn, this means the need for national solutions is fast becoming urgent. The implication of this is fe

5、wfold:Restructured supply chains. Many developed economies face radically altered waste supply chains, with the internalisation of waste management fast becoming urgent.Instructure need. Internalising waste within national borders requires infrastructure for its management. From more sophisticated s

6、orting at Materials Recovery Facilities (MRFs) to more advanced solutions to manage specific waste streams, the need for infrastructure investment is clear. Beyond the waste management space, other interventions are also needed to effectively close the loop within national borders, including among o

7、thers, some form of national manufacturing intervention.Commercial risks. While the initial response to the China National Sword policy gave waste managers the opportunity to adjust the commercial terms under which they were contracted to councils (in particular) to mitigate risks associated with va

8、riable commodity prices, this risk is still embedded in the supply chain. Again, mitigation seems centred in filling out parts of the loop that do not exist in-country. The commercial grounds on which this occurs will likely require targeted policy interventions.Fast-moving policy. On policy, the pa

9、ce of change across many Australian states over recent years has been great. States are developing more integrated waste management policies working to the reduction of waste generation but also the improvement in recycling and resource recovery. It will take some time for these policies to be fully

10、 implemented before we expect to see a significant improvement in waste recovery rates.A solid stock opportunityThe implications of our work are clear-cut for the waste managers. For some time, we have been bullish about the prospects emanating from waste infrastructure investment. CWY Maintain Outp

11、erform, lifting TP to $2.80. We think CWY is well positioned to invest in infrastructure in the C&I and MSW waste streams as well as potential larger-scale EfW opportunities. If we assume that CWY are able to deploy $30m in alternative waste treatment and $430m in NSW-based EfW, we foresee a 21% add

12、ition to FY21 EBIT once these investments mature. In a worst case scenario where we impair all landfill earnings, we still see a net addition of 11% to the EBIT base. Importantly, these developments would extend earnings visibility and enhance some of the groups infrastructure-like credentials. To r

13、eflect this, we lift our TP to $2.80 per share (from $2.60) as we weigh equally our previous SOTP valuation ($2.58) and a DCF valuation ($2.96ps) to reflect recent trends in risk-free rates. BIN Maintain Neutral. BIN has actively grown its network in NSW and, latterly, in VIC. Notwithstanding existi

14、ng investment intent, we think BIN could deploy a further $120m in non-putrescible waste management capacity, adding a little under $30m in EBIT, or 20% toits FY21 base. We think it unlikely, at this stage that BIN develops a large-scale EfW plant, but it could be in a position where it could secure

15、 enough material to warrant a plant in due course. Management have pointed to the potential in VIC, but we think BIN would need to secure more post-recycled PEF-like material to underpin this than is currently available to its network (unless, of course, the development is of a smaller scale). Furth

16、er near-term rerating would require an incremental improvement in earnings visibility, given residual cyclical risks.Australias waste vital statistics and how we stack up in the world (pages 8-23) Australia generates 54.5m tonnes of waste each year, with strong population growth and development acti

17、vity driving waste generation growth over the last decade. SA and VIC have the highest recovery rates of 83% and 69%, respectively, which compares with the national rate of 60%. Higher recovery rates in C&D and Commercial & Industrial (C&I) have been achieved due to access to markets that can reuse

18、and repurpose waste for new construction products and other solutions. However, the MSW stream is complicated by higher contamination levels and lack of source separation infrastructure, resulting in lower recoverability. Landfill levies play a key role in discouraging waste disposal, however this a

19、lone has historically not shown to be an enduring mechanism to see a long term increase in recycling (NSW currently has the highest levy of $144/tonne). This suggests that Australia may be battling with recycling capacity issues and more infrastructure is required to curb disposals. The export marke

20、t is also an important part of the ecosystem, as recovered materials are sold for recycling purposes offshore. However, following from Chinas National Sword policy in Jan 2018, foreign countries are increasingly enforcing tighter import restrictions, which have added further pressure on the domestic

21、 recycling market. Looking at the global context, EU, Japan and Singapore have much higher recovery rates of80%. Higher population density and space constraints in these regions have limited landfill development. As such, incineration EfW processes are far more prevalent. In the EU, strict landfill

22、bans coupled with high landfill levies have resulted in advancements in recycling and energy recovery technologies.A decent-sized prize (see pages 24-33)Looking at the size of the prize, we have performed a high-level assessment of the investment opportunity by state, to get a sense of potential EBI

23、T pools, utilising our detailed project analysis contained later in the report. We focus on large-scale opportunities, but do not dismiss the possibility that smaller-scale, economically viable opportunities do exist. We filter the opportunity assuming Energy from Waste (EfW) opportunities at 300ktp

24、a and Processed Engineered Fuel (PEF)/Construction & Demolition (C&D) sorting at 200ktpa.Fig 1 Investment opportunity in EfW, PEF and C&D SortingFig 2 Potential EBIT pool in EfW, PEF and C&D SortingAUDm 120 0100 08006004002000NSWVICQLDWAAUDm 180160140120100806040200NSWVICQLDWAEfWPEFC&D S ortEfWPEFC&

25、D S ortSource: Macquarie Research, July 2019Source: Macquarie Research, July 2019 Our assessment points to an $800m+ investment opportunity in each of NSW, VIC and QLD, with WA progressing towards a number in excess of our indication as the EfW plants in the state are worth $1bn+. On the basis of av

26、ailable waste, each of these states could support two EfW plants at 300ktpa each, with NSW and VIC supporting further C&D sorting capacity investment. We stress again that this is a theoretical approach that does not assume cross- use of waste streams, but assumes more liberal waste definitions unde

27、r policy rules and unconstrained logistics, grid hook-up and the like.The ESG angle (see pages 34-44)Key considerations from an ESG perspective are; Closing the loop to shift towards a circular economy. In 2018, the Senate completed a review of the waste and recycling industry in Australia (link to

28、HYPERLINK .au/Parliamentary_Business/Committees/Senate/Environment_and_Communications/WasteandRecycling/Report report) with the number one recommendation being that Australia prioritise the establishment of a circular economy. To achieve a circular economy significant shifts are needed in the produc

29、tion and consumption of goods as well as the management of waste in Australia. Recycling infrastructure needs to be put in place, as do product stewardship programs. Benefits include a reduced environmental impact with lower emissions and lower raw materials use. In addition a circular economy could

30、 see the removal of supply chain inefficiencies as well as the potential for jobs creation (see pg.29) and reduced risk of offshore human rights labour concerns. Environmental impact of waste. The waste sector in Australia was responsible for 11,788 Gg CO2-e emissions in 2017. This represents 2.2% o

31、f total emissions in Australia.Disposing of waste in landfill causes a significant environmental impact through emissions to air and water, degradation to local biodiversity as well as reduced amenity for nearby communities. While waste-to-energy plants still result in emissions, they are significan

32、tly less when compared to those of landfill and the use of coal to generate the same level of power. However, waste feedstock should be that which cannot be otherwise recycled, lest valuable material be unnecessarily destroyed. Carbon policy in Australia currently incentivises the waste industry to

33、reduce emissions by earning Australian carbon credit units (ACCUs) via the Emissions Reduction Fund. Eligible activities include the capture of landfill gas and as well as the use of alternative waste treatments such as composting, anaerobic digestion and process engineered fuel manufacture.There ar

34、e many other implicationsThis work has shone the light on a broader range of impacts as society adjusts to the implications of a growing waste management conundrum. Using the waste hierarchy as a framework, we have let our thoughts run a bit to consider broader sectoral impacts, which we intend to e

35、valuate in follow-up work.ImplicationAvoid & reduceReuseProduct stewardshipRecycle Recover energy TreatDisposeSectoral impactRetail, packaging, manufacturersFig 3 The broader impacts of more effectively closing the loopConsumption reduces, sharing growsRetail, packaging, manufacturingInfrastructure

36、to recycle, product designInfrastructureReduced landfillWaste managers, manufacturers, retailersWaste managers, incumbentenergy providersWaste managersSource: Macquarie Research, July 2019The policy contextThe policy environment continues to evolve in support of increased recycling and resource reco

37、very. Globally, the societal pressure being applied to this issue is broadly supportive of legislators doing more to encourage better waste management practices. In an Australian context, this continues to play out too. Having said that, there are still complexities like a state-based oversight stru

38、cture which results in many disparate policy settings. Nonetheless, we think the policy environment is likely to continue to evolve in favour of waste managers.Four Rs before we toss our wasteGlobally, the waste hierarchy informs a large swathe of the worlds waste policy. This is so in Australia too

39、, where the focus remains on reducing waste generation, reusing resources, recycling what we can and then recovering energy from material in order to minimise landfilled volume.Fig 4 The waste hierarchy drives policySource: NSW EPA, Macquarie Research, July 2019There is a strong focus on the EfW opp

40、ortunity at present. EfW serves as credible alternate disposal option relative to landfilling waste. However, if one applies the waste hierarchy, the emphasis on the recycling and extraction of recoverable material is a vital component of policy strategy. So, while EfW presents a significant opportu

41、nity for role-players, we think there are a number of other investment opportunities that could present attractive options too.Australian regulation is strongly predisposed to using post-recycled material to fuel EfW plants, as one would expect. This is not necessarily the case in other jurisdiction

42、s, although the underlying premise is that material is recycled prior to combustion. This means that the available pool of fuel is diminished to the extent that recycling is successful.Policies are set at the state level in Australia and are based on the three waste streams: Construction & Demolitio

43、n (C&D): waste generated from building and demolition activity. Commercial & Industrial (C&I): waste collected from commercial and industrial customers. Municipal Solid Waste (MSW): household waste that are generally serviced by kerbside collection companies.Fig 5 A summary of state waste policiesAp

44、plicationWaste per capitaLandfill avoidance targetCurrentTarget dateLandfill levyPlasticContainer EfW policy of wastereduction targetrecovery ratebansdepositevident?hierarchyschemesMSWC&IC&DACTWaste generationgrowth 50% to gate fee prices.States with no landfill levies have the highest disposal rate

45、s as this is the cheapest form of waste treatment. In 2017/18, NT disposed 88% of waste, while TAS and QLD had disposal rates of 50% and 55%, respectively, noting QLD introduced a $75/tonne levy on 1 July 2019. These compare with the national disposal rate of 40%.In contrast, NSW and SA charged the

46、highest landfill levies of $141/tonne and $100/tonne, respectively. With higher disposal costs, waste operators find more economical waste treatments to avoid the landfill levies. As such, disposal rates were lower, particularly in SA where only 17% of waste was landfilled. NSW generates relatively

47、more MSW, so its disposal rate is higher.Interestingly, VIC managed to record a low disposal rate of 31%, despite having the lowest landfill levy of $64/tonne.Fig 1450% of gate fees involve pass-through of landfilllevy costsFig 15 VIC and SA have the lowest disposal rates300250$/tonne20015010050100

48、%90% of total v olumes80%70%60%50%40%30%20%10%0%$16 0$14 0$12 0$/tonne$10 0$80$60$40$20$00NSWVICQLDWASANTTASACTWaste to L andfillEsti mated Resource RecoveryState la ndfill l evy (1 Jul 19)Lan dfil l op erating costs + margin s201 9/2 0 L andfill Levy201 8/1 9 L andfill LevyNote: Landfill rates per

49、Inside Waste Industry Reports assumed MSW disposal cost by state.Source: Macquarie Research, July 2019Source: State policies, Inside Waste Industry Report, Macquarie Research, July 2019Historically, when landfill levies increased, particularly in cases of significant step-up in prices, we saw a mate

50、rial fall in disposal volumes in the following year. This was seen in NSW (2014/15), VIC (2013/14) and SA (2016/17).The success of higher landfill levies as a tool to discourage waste disposal appears to have been most effective in VIC, where waste disposed per capita has been maintained at levels 2

51、0% below those seen prior to the hikes.However, in NSW and SA, the impacts of landfill levy hikes have been temporary, with waste disposals trending upwards in following years. The short-term impacts suggest that although landfill levies are an important driver, higher prices alone are not an enduri

52、ng mechanism to see a change to market behaviour that results in a permanent reduction in landfill waste. This in part is also attributable to insufficient recycling capacity in Australia to recover waste material.This means that waste going to landfills will not stop tomorrow. However, we are seein

53、g states restricting landfill permits, with SA even banning development of new landfills servicing metro Adelaide. Increasing disposal volumes coupled with reducing available landfill capacity would force waste managers to seek alternatives and thereby invest in recovery technologies and processes.F

54、ig 16 VIC saw significant change in disposal ratesFig 17 however NSW experienced a temporary reduction.0.850.80Million tonnes0.750.700.650.600.550.5009/108010/1113/1460$/tonne4020014/1515/1616/1717/180.950.90Million tonnes0.850.800.750.700.650.6009/1010/1115/1616/1717/1816013/1414/15140$/tonne120100

55、806040Waste disposed into landfill per ca pitaLan dfil l levySource: ABS, National Waste Report, Blue Environment, Inside Waste Industry Report, Macquarie Research, July 2019Waste disposed into landfill per ca pitaLan dfil l levySource: ABS, National Waste Report, Blue Environment, Inside Waste Indu

56、stry Report, Macquarie Research, July 2019Fig 18 as did SA.Fig 19States with no levies have higher disposal rates0.450.40Million tonnes0.350.300.250.2009/1010/1113/1414/1517/1810015/1616/1780$/tonne60402002.202.00Million tonnes per capita1.801.601.401.201.000.800.600.400.2009/1010/1113/1414/1515/161

57、6/1717/18Waste disposed into landfill per ca pitaLan dfil l levyQldNTTasSource: ABS, National Waste Report, Blue Environment, Inside Waste Industry Report, Macquarie Research, July 2019Source: ABS, National Waste Report, Blue Environment, Inside Waste Industry Report, Macquarie Research, July 2019Ca

58、n do more in recycling and waste recoveryBased on the Inside Waste Industry Report data, Australia recovers 60% of waste generated each year, which means some 32.4m tonnes of waste was either recycled or used in energy recovery processes in 2017/18. C&D waste has the highest recovery rate of 68% as

59、materials can typically be sold and reused to produce construction and steel products, mulch and other solutions. C&I also sees higher recovery rates of 60% as materials such as paper & cardboard, glass and organics can be recycled or used to produce compost.However, as general MSW waste is typicall

60、y mixed with contaminated materials (e.g. organics) which are difficult to recycle, recovery rates are markedly lower. In 2017/18 we saw a dramatic drop in the recycling rate, falling from 55% in the prior year to 47%. The introduction of the China Sword policy would have impacted the industrys abil