Investing in Waste-to-Value
Executive Summary
Worldwide, approximately 2.22 billion tons of municipal solid waste (MSW) are produced annually. A 2018 report from the World Bank stated that if current conditions persist, municipal solid waste generation will increase to 3.75 billion tons by 2050, an increase of 70 percent. The amount of waste humanity produces is now growing faster than all other environmental pollutants including greenhouse gases (GHGs).
Plastics are the most problematic form of MSW, with nearly 330 million tons generated annually. Plastic waste has long been implicated for its role in killing marine life and suffocating our oceans, which play a crucial role in absorbing carbon from the atmosphere. At the local and regional levels, inadequate waste collection, improper disposal, and inappropriate siting of facilities have devastating impacts on environmental and public health. Landfilling organic waste in sites without gas recapture systems allows fugitive methane to escape into the atmosphere. Roughly 11 percent of global methane emissions can be attributed to municipal solid waste, and methane’s near-term impact on global warming is more severe than CO2.
In many developing countries, poor or little waste processing and uncontrolled dumping or open burning of solid waste are still a reality, resulting in significant environmental pollution. When waste is burned in an uncontrolled setting, the resulting toxins and particulate matter in the air can cause respiratory and neurological diseases, among other harmful effects.
MSW throughout the world has typically been managed in a linear manner in locations where resources are extracted, and products are manufactured. Products are used until they are discarded and disposed of as waste. Economic success is defined by maximizing the number of products created and sold. Technological advances and investor interest are enabling a shift from a linear model to a circular economy, through systemic sustainable materials management, where waste is ultimately converted into valuable materials.
An emerging term that describes how waste becomes a resource in a circular economy is Waste-to-Value. This concept revolves around taking the waste we generate and repurposing it to serve social, environmental and economic purposes, so that investors today realize the untapped potential of waste. By investing in innovative technologies, resource recovery infrastructure, and leading-edge solutions for products, services, and technology, both developed and the developing economies can make massive efficiency gains. Waste-to-Value processes and investment outlooks go hand in hand with a circular economy, aiming to more productively use and reuse component parts. In useful ways, the emerging Waste-to-Value industry monetizes the Sustainable Materials Management (SMM) framework that aims to conserve resources, reduce waste, and slow the climatic and environmental impacts of human consumption.
To encourage and focus investment into this growing market, Boundless conducted interviews with a range of industry and investment experts and gathered insights from a variety of stakeholders throughout the value chain. Experts represented investment firms, private equity firms, debt finance firms, trade associations, and private companies. The private companies included early-stage ventures, mature companies, and those in intermediary stages of development. Our research uncovered several notable factors that will influence the future of the industry, evolving business models and financing needs. The following report details these trends and highlights opportunities to invest in groups that are pioneering Waste-to-Value solutions.
There are several methods of recovering value from waste and aligning with a growing societal concern for the management of materials. By acknowledging the finite nature of our natural resources, as well as the limitations and dangers of methods like waste burial and uncontrolled incineration, we move closer to adopting a circular economy. In this system, every output can become an input once again. Additional revenue from recovery efforts can be used to supplement disposal budgets, fostering the growth and progression of sanitation systems in the developing world. GHG emissions can be mitigated by driving private capital towards innovative technologies that improve waste collection, waste reduction, reuse of products, recycling, organics waste management, and processes for creating renewable biofuels from waste.
Engaging private capital is becoming less of a challenge for Waste-to-Value companies, as more information and innovation in the industry have shifted its perception among investors. There is increasing appreciation for the difference between mature companies and growth-stage companies pioneering innovative technologies that achieve greater environmental impact. Some investors are still wary of new waste technologies, especially after plasma gasification companies sustained over $2 billion in losses. This report aims to inform and improve investors’ ability to gauge these factors, allowing for an informed assessment of social and environmental impacts as well as the potential returns that investing in Waste-to-Value can generate.
Our research found that regulatory changes and consumer awareness are important factors, but business solutions present the strongest avenue for improving the broader waste management system. Impact-minded investors can play an important role in this process by supporting growth stage companies and developmental technologies that can address systemic challenges. And as the Waste-to-Value market grows, the financial returns for those same impact investors will grow as well, if they invest in companies and funds that are integral to that system-wide evolution. Companies that can capture strategic early-stage funding, provide measurable environmental impact, demonstrate economic savings through demonstration projects, and prove their system-wide benefits will be the market leaders.