Why next generation infrastructure is an opportunity not to be wasted

TURNING TRASH INTO PROFITS

Australians generate 2.9 tonnes of waste per head annually, a large portion of this is organic waste.

Food waste in Australia is staggering: Food Bank Australia estimates that 7.6 million tonnes of food is wasted each year – enough to fill the Melbourne Cricket Grounds nine times – and costing the Australian government $36.6 billion. This amounts to 17.5 million tonnes of CO2 annually.

The National Waste Plan has set a target of reducing the amount of organic waste to landfill by 50% by 2030.

Despite significant investment from state and federal governments, there are still gaps in the policy coordination and funding designed to address these issues; the largest of these is the infrastructure gap.

The organics recycling industry in Australia is highly fragmented and many businesses are generationally family owned.

Much privately owned waste infrastructure lacks the efficiency to effectively manage waste as necessitated by circular economy targets.

As these businesses mature and undergo a generational shift in ownership, many families will seek to transform their assets or sell the business.

The convergence of this shift and the gap in public infrastructure funding creates an opportunity for private capital to accelerate the next generation of circular waste infrastructure.

Next generation waste infrastructure is an opportunity for investors to access assets that are increasingly economically and environmentally relevant.

Since they are an essential service that is critical for public safety, waste management assets feature stable and recurring cash flows, coupled with unique downside protection.

This is bolstered by high barriers to entry owing to industry vertical integration and increasing regulation. The social benefits of funding these assets is also substantial.

Alongside making strides in achieving Net Zero and dramatically reducing landfill, it is estimated facilitating a circular economy will create 17,000 full-time jobs and contribute a present value of $210 billion to the Australian economy[2].

Australia faces complex socio-economic challenges in the Race to Zero, but solving these challenges presents a unique opportunity.

As the capital gap grows, changes in regulation, technology, and asset ownership provide investors with the opportunity to fund the next generation of infrastructure: assets and businesses that are greener1, smarter, and more inclusive.

Palisade Impact invests in businesses that we believe will rise to this challenge.

We invest for the long term, to help these businesses grow and create the infrastructure of the future.