The $6 billion GCC recycling opportunity

By Frederic Ozeir, Dr. Siavash Rahimi, Jad Moussalli, and Ankit Gupta


GCC countries can generate commercial opportunities and jobs if they change their recycling practices. Every year, GCC countries produce around ten million tons of plastic waste, and nine million tons of scrap metal, with plastic and metal waste growing at much faster rates than the global average. A change in policy, leading to more plastic and metal recycling, would have positive economic and environmental effects. To recycle more, governments need to reinforce standards and guidelines, strengthen incentives and penalties, develop the operational ecosystem, and build the necessary capabilities and public awareness.

At present, GCC countries recycle very little compared to developed economies such as Germany and Japan. On average, GCC countries only recycle, reuse, or recover around 10% of plastic and metal waste. Countries such as Germany or Japan, which have embedded the concept of the circular economy into policy, can have recycling rates surpassing 90% for metal, and 40% for plastics (also reaching 90% for plastics including energy recovery). The low GCC recycling rate leads to losses of large volumes of recycled metals, which can be used as an alternative to virgin material, and recycled plastics, which have numerous applications, such as in construction and food packaging. Worse, plastic and metal waste can endanger wildlife, the environment, and poor disposal practices can threaten human health.

By contrast, increasing recycling rates in GCC to an achievable target of 40% can create significant benefits. It would cut carbon dioxide emissions by 10 to 12 million tons each year and reduce primary energy consumption by around 4%. As local players companies see the commercial opportunity, we estimate that would create around 50,000 new jobs in the recycling industry, with total market potential of around $6 billion per year. Investors in this sector can expect healthy operating margins of above 15% in various opportunities across the value chain, such as waste electrical and electronic equipment recycling, plastics and packaging recycling, secondary metal semi-finished producers, or car spare parts manufacturing using recycled plastics.

However, considerable obstacles remain. Too often those companies producing plastic and metal goods do not make them easily recyclable because of a lack of guidelines and technical standards. There is a shortage of adequate recycling facilities, while community awareness of the issue is minimal. The necessary infrastructure and technologies are undeveloped or unavailable. Low levels of environmental protection and law enforcement mean there is excessive disposal in landfills and open dumps, with landfills inconsistently regulated. In particular, illegal dumping is widespread.

To improve the recycling rate, GCC governments should launch initiatives in four key areas:

Govern waste management and recycling

First, governments should use detailed technical directives and standards to govern waste management and recycling. For example, as in Japan, governments can mandate minimum recycled material content in public procurement. They can also introduce “take-back” requirements and recycling targets to make businesses responsible for products at the end of their life. In Finland, manufacturers are accountable for the collection and recycling of their packaging waste and related costs. Governments can consider introducing permits and licenses that oblige waste management companies to conform to technical standards and established recycling processes.

Use taxes, incentives, and penalties

Second, governments should use taxes, incentives, and penalties to promote healthy waste management. For example, deposit refund schemes could involve a surcharge on the price of a product likely to pollute the environment, with the surcharge repaid when the material is returned. A recycling fee for producers can discourage them from using certain packaging materials for finished goods. Taxes can help to counter harmful waste treatment methods, diverting it away from landfills.

Enhance the operational ecosystem

Third, governments should enhance the operational ecosystem. They should encourage active private sector participation in waste management initiatives, providing access to advanced infrastructure and financial support. In March of this year, the U.S. Department of Energy set up a fund to accelerate innovation and assist the development of plastic recycling technologies. In June of this year, the Australian government approved a recycling modernization fund to finance infrastructure that sorts, processes, and remanufactures waste materials in the country.

Equip the workforce

Fourth, governments should equip the workforce with relevant capabilities and waste management expertise. The U.S, Department of Education launched the Green Ribbon Schools initiative to increase environmental awareness among the younger generation. GCC governments can spearhead similar projects by partnering with the private sector and creating national champions to train the workforce. As has been done in countries such as Germany and Japan, they should also launch a comprehensive national level campaign to raise public awareness on circular economy initiatives, such as getting households to use multi-bin systems which separate different kinds of waste.

Introducing these changes demands radical vision, commitment, and co-ordination between the public and private sectors. If implemented successfully, the plastic and metal waste management sector can bring significant environmental, financial, and social and benefits to the GCC region.

This article originally appeared in Refining and Petrochemicals ME magazine, October 2020.

About the authors

Frederic Ozeir is a partner, Dr. Siavash Rahimi and Jad Moussalli are principals, and Ankit Gupta is a Manager, with Strategy& Middle East, part of the PwC network.

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Frederic Ozeir

Frederic Ozeir

Partner, Strategy& Middle East

Ankit Gupta

Ankit Gupta

Manager, Strategy& Middle East

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