RCD recycling model
RCD recycling model
Business Model Description
>Invest on plants that collect, separate and treat construction and demolition waste (RCD) which can be transformed and reused as raw material in the manufacture of new products that can be sold back to construction developers as substitutes of natural inputs.
Expected Impact
This initiative intends to improve sanitary conditions and reducing the impact of the construction industry in pollution.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
Sector Classification
Infrastructure
Development need
15% lower government budget than needed to solve the infrastructure needs of the country (1). According to the World Bank's logistics index Colombia ranked 72/160 in infrastructure in 2018 (1). Poor infrastructure has long stopped the country from realising economic potential (1).
Policy priority
The ANI has in place a 5G infrastructure plan in place to make investment on road, air and water infrastructure with Capex of around COP 18,030 bn. Furthermore, the central government has a plan of reaching 17.9% of solid waste reuse by 2030. (2)(3)(4)
Gender inequalities and marginalization issues
Rural and vulnerable households are the most affected by poor conditions in transport infrastructure, water sanitation and communication barriers. Only 54.5% of households led by rural women have access to aqueduct, 21% sewerage and 30.2% waste collection. (6)
Investment opportunities
Investment opportunities through auctions of infrastructure projects (roads, air and river) as well as waste treatment plants (5).
Key bottlenecks
The country has many bottlenecks when it comes to infrastructure, logistics and road transport are one of the major problems hindering economic development.
Waste Management
Development need
22M tons of solid waste produced in Colombia per year (0.5 tons hab / year), an alarming figure compared to other countries, one of the main causes of the depletion of authorized land-fill sites.(7) 17% of wastes are recovered while the remaining 83% ends up in sanitary landfills.(8)
Policy priority
National Development Plan: Implement strategies and instruments to achieve sustainability, innovation and reduce environmental impacts, with a circular economy approach. (9)
Gender inequalities and marginalization issues
Only 54.5% of households led by rural women have access to aqueduct, 21% sewerage and 30.2% waste collection. (6)
Investment opportunities
The environmental industry in Colombia faces great challenges and opportunities in terms of waste treatment with several actores investing in new technologies to consolidate better practices (10).
Key bottlenecks
Linear economy systems prevail in the country, dominated by an extraction logic, the main bottleneck of the subsector is the transition towards a circular economy.
Waste Management
Pipeline Opportunity
RCD recycling model
>Invest on plants that collect, separate and treat construction and demolition waste (RCD) which can be transformed and reused as raw material in the manufacture of new products that can be sold back to construction developers as substitutes of natural inputs.
Business Case
Market Size and Environment
> USD 1 billion
10% - 15%
>According to a 2013 detailed financial and business model study a company that processes 15% of the RCD in Bogotá has an income of 10MUSD/year. Extrapolating assumptions for a 2020 scenario with current RCD volumes and prices, market size is $160MUSD.(11)
>The percentage of solid waste reused went from 14% in 2013 to 23 % in 2018.
Indicative Return
> 25%
Accoring to local investors interviewed, they expect IRRs of around 30% for waste management infrastructure.
Investment Timeframe
Medium Term (5–10 years)
According to a survey we performed to funds investing locally, expected holding periods for waste management infrastructure are around 7 to 12 years.
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Impact Case
Sustainable Development Need
> 22M tons of solid waste produced in Colombia per year (0.5 tons hab / year), an alarming figure compared to other countries, one of the main causes of the depletion of authorized land-fill sites.(7)
> 17% of wastes are recovered while the remaining 83% ends up in sanitary landfills.(7)
Gender & Marginalisation
>Only 54.5% of households led by rural women have access to aqueduct, 21% sewerage and 30.2% waste collection. (6)
> There are persistent differences in solid waste collection between urban and rural areas -98.5% vs. 27.7% (13)
Expected Development Outcome
> Increase the percentage of solid waste recycled in Colombia.
>Reduce energy required for the extraction of raw materials, and the resulting greenhouse gas (GHG) emissions associated.
> Reduce material being buried in the ground, which reduces the need for landfilling areas and the environmental issues associated with RCD disposal are lessened.(8)
Gender & Marginalisation
> Reduce inequality in access to public services of waste collection and treatment in rural areas, targeting households led by women.
Primary SDGs addressed
12.5.1 National recycling rate, tons of material recycled
Current level of recycling and reuse of solid waste materials (2018):10% (14)
Target level of recycling and reuse of solid waste materials (2030):18% (14)
Secondary SDGs addressed
Directly impacted stakeholders
People
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Planet
Outcome Risks
>Companies might end up using cheaper technology with poor results due to higher costs of proper equipment.
>Health and environmental impacts may be caused by improper handling of wastes.
Impact Risks
Execution risk: > unequal infrastructure development in urban vs peri urban areas, creating inequalities and vulnerabilities.
Drop off risks: > technology not adopted or used properly can lead to reduced positive impacts and even health hazards for workers. > companies taking too long to hire waste management services due to lack of education and high costs.
Impact Classification
What
Positive and significant outcome due to reduced pollution and better waste management.
Who
Population at risk of environmental diseases and general citizenship benefiting from a cleaner environment.
Risk
Failing to find a solution for solid waste could be a risk for public health and for the environment.
Impact Thesis
This initiative intends to improve sanitary conditions and reducing the impact of the construction industry in pollution.
Enabling Environment
Policy Environment
(National Development Plan): Implement strategies and instruments to achieve sustainability, innovation and reduce environmental impacts, with a circular economy approach.(16)
Circular Economy National Strategy: Promote entrepreneurship and attract investment as a result of new forms of production, consumption and use of waste, which reduces the burden on sanitary landfills, considering a five year useful life of sanitary landfills in 321 municipalities.(17)
(National Policy for Waste Management): Regulates non-hazardous waste management within sustainable development and climate change mitigation to move towards a circular economy.(18)
Financial Environment
Other incentives: EPMFCP Fund, invested in RCD recycling models: Reciclados Industriales (2016) and Triciclos.(22)
Financial incentives: Asobancaria leads an initiative to provide green credits for sustainable building in the country (23)
Fiscal incentives: Fiscal incentives for sustainable construction include VAT exemptions and income tax exemptions up to 25% (24).
Regulatory Environment
(Secretary of Environment 0472 Resolution): Describes the guidelines and principles for the comprehensive management, use and disposal of construction and demolition waste. It establishes that at least 25% of materials used in construction should be recycled materials.(19)
(Conpes document 3874): Refers to the national policy of integral waste management seeking to adopt measures to prevent waste generation, promote recycling and avoiding greenhouse gas emissions (20).
(Decree 605 of 1996): establishes the rules of public waste disposal (21),
Marketplace Participants
Private Sector
15 companies are certified to manage the RCD of construction companies and report disposal and recycling information to the central tracking system (ID5). The South African company Shisalanga Construction recently launched a pilot project to build a road using recycled plastic waste.(25)
Government
The government is actively seeking to promote RCD initiatives.
Non-Profit
UNDP set out to innovate solid waste management by integrating social inclusion strategies: poverty reduction, incorporation of the gender perspective and the promotion of youth.(26)
Target Locations
References
- (1) El Nuevo Siglo (2020) -Requieren $342 billones para cubrir necesidades de infraestructura. Accessed February 8th 2021
- (2) Financial Times (2020) - Colombia pushes ahead with ambitious infrastructure plan. Accessed February 8th 2021
- (3) ANI (2020) Audiencia Pública de Rendición de Cuentas
- (4) DNP (2018) Objetivos de desarrollo sostenible. Accessed February 8th 2021
- (5) Procolombia (2019)OPPORTUNITIES TO INVEST IN INFRASTRUCTURE IN COLOMBIA. Accessed February 8th 2021
- (6)DANE (2018) Mujeres Rurales en Colombia
- (7) Castaño et. al (2012) – Waste management from construction and demolition (RCD) in Bogota: prospects and limitations. Accessed May 25 2020
- (8) Suarez-Silgado et. al (2017) - Diagnosis and proposals for the management of construction and demolition waste in the city of Ibague. Accessed May 25 2020
- (9)DNP (2017) – Plan Nacional de Desarrollo
- (10) Portafolio (2017) Las oportunidades en el aprovechamiento de residuos solidos. Accessed February 9th 2021
- (11) R. Misle y L. Lasso (2012) “Evaluacion Tecnica, Economica e Institucional de la Gestion de Residuos de Construccion y Demolicion en la Ciudad de Bogota”, Pontificia Universidad Javeriana, Bogotá. Accessed May 14
- (12) Castaño, J. O., Misle Rodríguez, R., Lasso, L. A., Gómez Cabrera, A., & Ocampo, M. S. (2013). Gestión de residuos de construcción y demolición (RCD) en Bogotá: perspectivas y limitantes (link)
- (13) Semana (2020) A comprometernos con el manejo de residuos sólidos. Accessed February 8th 2020
- (14) DNP (2018) Objetivos de desarrollo sostenible. Accessed February 8th 2021
- (15) El Tiempo (2017) - La contaminación le cuesta a Colombia el 4,1 por ciento del PIB. Accessed May 14th 2020
- (16) DNP (2017) – Plan Nacional de Desarrollo 2018-2022. Accessed May 2nd, 2020
- (17) MADS (2019) – Estrategia Nacional de Economía Circular. Accessed May 2nd, 2020
- (18) Ministerio Vivienda (2014) Guía para la elaboración del Plan de Gestión Integral de Residuos de Construcción y Demolición (RCD). Accessed May 2nd, 2020
- (19) Ministerio del Medioambiente (2017) – Resolución 0472 para la reglamentación integral de la gestión de RCD. Acceso Mayo 2, 2020 (link)
- (20) DNP (2016) Documento Conpes 3874. Accessed February 8th 2021
- (21) Función Pública (n.d.) Decreto 605 de 1996. Accessed February 8th 2020
- (22) Programa Ventures EPM (2020) – Inversiones. Acceso Mayo 2, 2020 (link)
- (23)El Tiempo (2019) - Incentivos para la construcción sostenible en Colombia. Accessed February 8th 2021
- (24) CCCS (2018) La sostenibilidad integral ya tiene incentivos. Accessed February 8th 2021
- (25) Afrik21 (2019) - Pilot Project for building a road out of recycled plastic. Accessed August 2020 "26) UNDP (2018) - Aportando soluciones para la gestión integral de residuos sólidos para el desarrollo sostenible inclusivo. Accessed August 20th 2020 "
- (27) Caracol (2019) ¿Cuánto se recicla en Colombia?. Accessed February 8th 2020.