WASTE.AGENCY: ENVIRONMENTAL TRILEMMA OF CHEAP OIL

A striking environmental trilemma is occurring with the sudden fall in oil prices since summer 2014. The reduced cost of living is seen as welcome respite after years of continuous large price increases, offering countries the potential to grow economies once again. Yet for many areas of the recycling industry, each cut in oil prices puts further financial pressure on the prices that can be charged for recycled materials, with the risk of driving many companies out of business. Without support, there is real risk of the recycling industry being decimated, reducing recycling capacity and the availability of recycled materials, adding more pressure to landfill and the use of virgin materials.

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There has been a clear economic benefit to many people throughout the world from reduced oil costs. Fuel prices decrease the financial burden of personal travel, transport of goods, energy prices for heating and cooking and offers huge benefits to industry. From an individual prosperity viewpoint, there is much to celebrate even if the price reduction only translates into a slightly bigger meal. From the environmental viewpoint the consequences appear starker.

The ‘rebound effect’, first described by William Stanley Jevons in 1865, references how efficiencies (or price decrease) generally lead to increase use of resources rather than create savings. Taking a quick snapshot of a friendship circle may reveal that the apparent benefit of substantially lower petrol prices does not translate into more money in the pocket but more driving in the car, or the purchase of new garden furniture or a short overseas break. A lower oil price offers the opportunity to consume more. Where there are very tight budgets this can prove particularly welcome, offering the option to buy cheaper food providing improved health and other benefits.

With better living standards comes the issue of increased consumption and waste.

Those with concern for the environment are generally keen in seeing improvement for people across the world. Through a Western lens this means sanitation provision, clean water, shelter and secure food supply as a minimum to fulfilling basic needs. The issue, as Maslow explained, is once these needs are fulfilled then dreams often become needs. Lower oil prices are one of the key drivers to lifting people out of poverty and providing opportunities for self-efficiency. Once achieved new demands need to be met; better shelter, television, mobile phone etc. Products are more likely to become attainable if the raw costs in producing them remain relatively low. Subsequently more ‘stuff’ is manufactured generating further waste leading to additional environmental damage.

This increase demand on resources brought about by cheaper oil and dealing with the extra waste produced creates a further issue leading to an environmental trilemma.

Collapse of Recycle Industry

Falling oil prices have another effect that few recognise; that of the cost of recycling and environmental reuse. The political and economic system that the West imposes on the entire world means that recycling/waste management must exist within the market parameter. This means that recycled plastics, etc. must compete on both price and comparison. When the oil price is high this is often achievable yet the market creates exceptional difficulties when the oil price drops. Add in the investment needed to build and maintain a recycling facility the numbers can quickly turn red as manufacturing markets flow towards the cheapest raw materials.

Examples

Speaking with Steve Everett, CEO at EMS-Europe, he explained that the falling oil price has meant that it is now difficult to make a return on the cost of recycling videocassette cases, as the price of virgin material is lower than recycled material. [1]

Friends of the Earth are running a campaign to try and get UK supermarkets to honour a pledge that supports milk bottles being manufactured using 30% recycled plastic. The company, Closed Loop Recyclingin Essex has invested heavily in a new state of the art plant that converts used plastic bottles into food grade material removing thousands of tons of plastic destine for landfill. The company is facing closure as supermarkets threaten torenege on this agreement. The cost to supermarkets is estimated to be 0.01p per bottle, yet in a competitive market where shareholder return and prestige run roughshod over all other concerns, this extra cost appears to be unacceptable.

A lower oil price has potential to see personal prosperity improve generally, generating higher consumption and more environmental impact. Simultaneously, the recycling that offsets some of the damage this increase prosperity causes becomes an ever smaller proportion of the overall cycle as the market moves back towards using virgin materials.

Poverty, consumption and environment

The trilemma is how can people improve their own lives, create prosperity throughout society while simultaneously being less destructive and diminishing key resources all living creatures rely upon?

Figure 1: Environmental trilemma of cheaper oil

IF, this is a big if, oil prices remain low then there is the potential for a huge crisis where the living standards of millions, possibly billions, rapidly improve coinciding with greater demands for virgin material and decrease in the use of recyclables. If the recycle industry is not protected it will not be able to invest as a minimum consequence or survive at the worst. With insurance underwriters becoming jittery regarding potential damage recycling can cause and the often poor working conditions, there are increasing pressures that bode badly for the industry.

Rethinking the Model

The Waste.Agency believes that there requires a complete rethinking of the global economic model.

  • Marketers in the West have a duty to dilute the constant pressure for people to consume products.

  • New forms of leisure for the rich need developing that diverts, or at least reduces, desires to buy and discard manufactured goods.

  • Working methods, like Circular Economy, needs to become more of a tenet for people rather than a system or procedure.

  • The West and other wealthier people need to realign thought processes and ways of living to reduce drain on resources and provide better provision for those struggling within their own societies.

  • Personal situations of people living in poorer conditions outside of the West need to see faster improvements while still being able to embrace traditions and local circumstances without reverting to Western consumer habits.

Self-Actualisation needs to be prised from the jaws of marketers, a new phone does not provide self-actualisation regardless how many times advertisers, life coaches and celebrities may state otherwise.

End Shareholder Value

The shareholder value model of multinationals must end. People working within multinationals hold the key to fundamental change. Through training, education and embracing of life in all its forms they have the potential to unlock a more prosperous world, which might actually prove more enjoyable to live in.

The City, Wall Street and other financial hubs need to acknowledge their role in changing the behavioural structures of multinationals.

Stage 1 of the Waste.Agency in the City demonstrated that there is a growing understanding that finance must take a more active role in rethinking an economic system built using cheap oil and depleting natural resources. A strong environmental leader will probably have to emerge in the finance industry with the confidence to robustly discuss the issues and forward possible solutions. Such a voice is clearly lacking, at least in the part of the City of London we observed. Interestingly, it may yet prove that the risks that an unstable climate produce will force the reserved, yet powerful, insurance industry to become the white knight that saves the planet and solves the trilemma.

John McKiernan was the producer and curator of the www.waste.agency, an art intervention in the City of London from October 2014 to February 2015.

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1. Conversation by phone with Steve Everett, 2nd April 2015

Image: Maslow’s Triangle: By J. Finkelstein (I created this work using Inkscape.) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/)%5D, via Wikimedia Commons {found at http://commons.wikimedia.org/wiki/File%3AMaslow’s_hierarchy_of_needs.svg} [on 5th April 2015]

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