Dented bean tins and crumpled drink cans may be rubbish to most of us, but to the recycling teams who collect them from the kerbside they have the glint of prospector's gold.

For people living in areas that have recognised the value of waste, the effort made to recycle can reduce council tax bills. Residents of Westminster have benefited from the seven-year deal in which the council ensured it received a share of recycling profits. The authority was able to claim back a portion of the income derived when the price of materials rose. Mark Banks, waste strategy manager at Westminster, said: “We are trying to get a balance between trying to keep council tax low and trying to avoid the high cost of landfill.”

“We need to benefit from increases in the market and not suffer too much from a downturn. Authorities need to balance the risk to the local taxpayer, while contractors will write in their own profit margin. But a fixed price on profits is the more common model as far as I am aware.”

The frustrations of a long-term waste disposal contract are felt sharply in Kent, which cannot cash in on the value of its residents' discarded metal and plastic. “Five years ago it was a very uncertain market as to whether you could get anyone to take them,” said Keith Ferrin, the council's cabinet member for environmental and waste services, adding that the best asking price was about £20 a tonne. “But now the price of metals is going through the roof. I think that typically councils are locked into very long contracts indeed, and that is a very real problem,” he said. “Some of them will include provisions for sharing profits. But I suspect a lot will not. I am saying to my people that I do not want to get into any long-term contracts at all, nothing over five years.”

The rise in value of waste is illustrated by the industry's turnover: £1.2 billion in 2006, and two years later, 66 per cent higher at £2 billion.

Recycled plastics, derived from fossil fuels, have proved particularly attractive and several plants have opened in Britain to reprocess them. In 2006 an estimated 200,000 tonnes of waste plastic, much of it bottles, was sent by Britain to China but the quantity exported is expected to fall sharply.

Britain's plastics reprocessing capacity has leapt from about 30,000 tonnes in 2006 to 150,000 tonnes — and by the end of the year it is expected to increase to 250,000 tonnes.

In June the first plant in Britain able to recycle plastic bottles to a standard sufficient for use in food packaging opened in Dagenham, East London. Closed Loop London processes polyethylene terephthalate (PET) plastic, used for water and drinks bottles, and high-density polyethylene (HDPE) plastic, and can recycle 35,000 tonnes each year.

In November a plant was opened by Intercontinental Recycling in Skelmersdale, Lancashire, with a capacity of 30,000 tonnes, though with a lower hygiene standard so the processed material is used for products such as plastic sheeting rather than food packaging.

Four other plants in Britain have a capacity of at least 20,000 tonnes, including the Alternative Waste Solutions plant, in Newcastle upon Tyne, which is to be extended from 25,000 to 100,000 tonnes by the end of this year at a cost of £14 million. By the end of next year, 70 per cent is expected to be of sufficient quality to be used in food packaging.

Jonathan Short, the managing director of the plant, said the decision to expand was taken 18 months ago, so that the rapid increase in recycled prices since then had been a bonus. “This decision was made before prices took off,” he said.

“The real difference is the margin — there's enough margin there now to justify the investment. Another factor is the demand for food-grade recycled plastic.”

Of plastics, Mr Banks said: “We anticipate this price continuing to rise in relation to oil prices, and also increasing demand from manufacturers to expand the ranges of plastics collected.”

Rises in oil prices have been key to the decision by the Waste & Resources Action Programme (Wrap) to invite tenders for Britain's first mixed plastics recycling plant. The plant should be operational in 2011 and it will be able to process plastics such as yoghurt pots, margarine tubs, egg cartons and cutlery as well as bottles. Steve Creed, of Wrap, said: “There is a lot of value in the material we are treating as rubbish. Maybe calling it waste is the wrong phrase - we should be calling it resources in the wrong place.

“There's been a strong growth in the sector. It's probably a combination of an increase in the value of the waste and the ability to benefit from economies of scale. The value of things like plastic bottles has gone up significantly because of the cost of raw materials — oil, in particular.”

Attempts to reduce carbon emissions are also playing a part in the switch to recycled materials.

The glass industry faces tougher emission regulations, so by using recycled bottles, which causes less carbon dioxide to be pumped into the atmosphere, rather than creating them from virgin materials, it can lessen its impact on climate change. Similarly, manufacturers using recycled plastic rather than creating it from fresh ingredients can halve their carbon emissions.

Carbon pricing, which is expected to become more rigorous, is likely to put further pressure on manufacturers to use recycled materials. “It's becoming more of a factor for people. The pricing of carbon is still in its early days but people are becoming aware,” Mr Creed said.

“I wouldn't want to see scarcity as the main driver but looking forward we are going to have to do something about using materials as many times as we can. Paper fibres can, for example, be used seven times. If we use them just the once we've missed out.”

David Hughes, a partner at the Foresight Group, venture capitalists specialising in environmental sustainable investments, expects more plants to be built in Britain and that these will encourage more people to recycle.

“We think there's a virtuous circle,” he said. “A lot of councils don't recycle the plastic waste because there haven't been processing facilities. We think by building plants you encourage more councils to recycle.”

CASE STUDY: 'There's money to be made'

Chris Dow has every confidence that his investment in plastics recycling will generate brass from muck.

“There's money to be made from rubbish,” he said. “The UK is the land of milk and honey for recycling and environmental technology.”

He has a personal stake in the Closed Loop London facility and uprooted his family from Australia to take up the post of managing director at the Dagenham plant.

The rise in commodity prices over the past two years has underlined the potential of recycling plants as green goldmines because of the improvement in profit margins.

“Obviously, it makes us more competitive with virgin resin, which is a product of the oil refracting process,” he said. “All the recycled alternatives have found themselves much more competitive.

“The past two years have been great for us and our investors — they've been great for the environment in general.”

For Mr Dow, the venture is more than just a way of making money. He sees recycling as an important and necessary way to protect the environment. The most obvious benefit is reducing the amount of waste that would otherwise be dumped in Britain's limited number of landfill sites.

“We take bottles from the kerbside, sort them, shred them, wash them and return them back to food-grade resin, which can be used to make bottles again,” he said.

It can also reduce carbon dioxide emissions, regarded as a prime cause of climate change. Recycling plastic consumes at least 50 per cent less oil than making plastic from scratch.

Mr Dow said of the reprocessing plant: “We are a small but important step in the right direction. I really believe in it. It's the way we need to go as a community and a society.

I consider it the best thing I've ever done in my life. It's the future.”

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