The battle of incinerators vs recyclers

Is recycling a silly middle-class habit, giving us eco-feelgood for minimal personal sacrifice?

There it was on the doorstep last week, a big green plastic box with a leaflet in it. Recycling has at long last arrived in Lambeth. Having lived for more than 20 years in this (until recently) worst governed borough ever, I snorted with disbelief. The leaflet (printed on recycled paper) asked for newspapers, cans, bottles, old clothes, old shoes and engine oil. (Engine oil?) Put out the box and it will be taken away, sorted and recycled. Oh yeah?

I'd read all the stories - how some authorities were caught dumping their collected paper because it was cheaper than recycling. Only last week a report said that bottle and paper banks were ecologically unsound, using more energy in Volvo journeys than was saved by recycling. Recycling is often mocked as a silly middle-class habit, giving us eco-feel-good value for minimal personal sacrifice, but pretty useless.

Not so. It turns out, on digging into all this, that recycling is about to become, or at least could become, very profitable indeed. But it needs the government to take the right action - and soon.

A battle is currently being waged between the incinerators and the recyclers - both claiming the ecological high ground. Recyclers claim there is a huge, voracious and growing market, especially for old paper, making it possible to turn waste into profit. It saves forests, energy and will save millions on waste disposal.

On the other hand, incinerators are being heavily promoted by the DTI, claiming that the electricity they generate from burning waste creates a sustainable energy supply. With incineration the cost of disposal remains constant, making boroughs' budgets easy to set, whereas recycling costs vary according to the rise and fall in the market for used paper, glass or aluminium. Prompted by the DTI, there is a sudden rush to build incinerators everywhere - four in Essex, several in Hampshire, five in Manchester and scores more - against fierce opposition from local residents.

This is happening just as the world is turning against incineration, on global warming and health grounds. Gordon Brown's threat to double the land-fill tax to stop more land being destroyed by poisonous waste means the councils are rushing to take out incineration contracts. But Japan and the US are now alarmed by serious health dangers from burning plastics, giving off cancer-causing dioxins. Whatever the claimed excellence of modern chimneys, incinerators may soon become as feared as nuclear power stations. The ash from them is especially hazardous. To deter burning, the EU may soon tax incinerators heavily, just as many councils move over to them.

I watched as a new odd-shaped green wagon came to collect the green boxes and the contents were sorted on the spot into various compartments. It didn't look economic. But it could be. The average council spends pounds 25 a ton collecting and pounds 25 a ton for disposal. Recycling makes collection more expensive, bringing the total price up to about pounds 100, but once up and running, some of the pilot schemes are now getting about pounds 27 a ton back for the material they've sold. (Incineration only earns pounds 15 a ton back in energy generated.) But the potential value of recycled material is far more - enough to eventually make waste disposal free, or even profitable as it is in Canada - if only there were a free and fair market.

As it is, a small group of paper remanufacturers, one single aluminium maker, and just two price-fixing glass makers drive down the prices, although they desperately want more material. In their greed to pay the lowest possible prices in the short term, they are throttling recycling schemes at birth, limiting the source of materials they need in the long term.

Paper is the biggest potential money-spinner. We import 60 per cent of pulp for paper now, yet London alone throws away the equivalent growth of a forest its own size every year. The pathetic 6 per cent of waste Britain currently recycles already saves pounds 1bn a year in imports. Using recycled paper for newsprint is 35 per cent cheaper than using new wood pulp, so the manufacturers certainly want it. One key paper maker is considering setting up a vast new recycled paper mill, but is hesitating in the face of many councils' plans to incinerate instead of recycling. Cities are the new forests, but we are about to burn the paper trees instead of using them.

This is all a very odd business. Why doesn't the law of supply and demand operate here? Why is there no futures market in recycled materials? Because of the cartels, which the Office of Fair Trading is investigating. The cartels are aided by a weird system whereby the government demands that supermarkets provide certificates showing they have recycled 25 per cent of their packaging. Because they can't be bothered to hit these targets, all the supermarket chains buy certificates which state that the requisite amount of recycling has been done - by someone. These certificates are available from a single outfit consisting of all the recycling companies. This, oddly, is legal. And it means everyone has an interest in keeping the price of recycled material as low as possible.

Last year a new organisation called London Pride Waste Action Programme, put together by economist Professor Robin Murray, started up pioneering pilot schemes to show how cost effective recycling can be. But councils are still hesitant. In London only 1 million out of 2.8 million households get any recycling. The start-up costs are steep and a single contract with an incinerator seems easier to the lazy and unimaginative.

However, politically, recycling has turned out to be amazingly popular. People really like it. And it is not just a middle-class fad. One Hackney pilot in a down-trodden high-rise estate got a phenomenal 60 per cent participation from residents. It was a rubbish-strewn estate where chutes were permanently jammed so mounds of the stuff were tossed over balconies - clearing it away was costing pounds 350 a ton. Recycling in such places pays even higher dividends in savings on cleaning-up bills.

The last government set a target of 25 per cent recycling by 2000, but did little to make it happen. However, if we reached that target, waste disposal bills would drop by 17 per cent, while creating large numbers of jobs in collection and paper and glass manufacturing.

But it needs the government to step in now and break this log jam. Gordon Brown needs to get the manufacturers round his famous breakfast table together with the local authorities. He needs them to agree fixed long- term prices, to persuade the authorities to invest heavily now in recycling. The OFT needs to break the manufacturers' cartels. More laws demanding the use of recycled paper would bring more manufacturers in to break the stranglehold of the present few. Otherwise, threatened with higher land- fill taxes, local authorities will go ahead and rush for incineration. I, at least, have no further doubts about the value of recycling.