Wall Street’s Next Big Play Is Garbage

The green push by the U.S. and state governments is turning trash into treasure and boosting the firms that handle America’s garbage.

Shares of the biggest players in the U.S. trash business, Waste Management and Republic Services, have traded at record highs since President Biden signed the climate, tax and healthcare bill in August. A recent decline notwithstanding, the stocks are popular picks on Wall Street to ride the sustainability boom higher.

“They’re sitting in this extraordinary position,” said Michael Hoffman, an analyst at investment bank Stifel. “Garbage will be on the forefront.”

Efforts to reduce greenhouse-gas emissions and to reuse materials are making it more profitable to mine landfills for energy and sift through refuse for the hot commodities of the green economy, such as detergent bottles and cardboard boxes.

WM and Republic are building plants to isolate methane from the fumes emitted by rotting garbage and pipe it into the natural-gas grid to be burned in power plants, furnaces and kitchens. They are also equipping recycling facilities with the latest in automation to better sort and process materials for the consumer-goods companies that are under pressure to keep their packaging out of landfills and the ocean.

Landfill owners are forecasting hundreds of millions of dollars in additional profit from rising demand for recycled materials and tax incentives for making energy from emissions that would otherwise seep into the atmosphere.

“We’re blessed to be sitting right in the middle of a megatrend,” Republic Chief Executive Jon Vander Ark said. “We used to think about getting 5% top-line growth a year; now we’re in double-digit top-line growth mode.”

Republic, which has 206 active landfills, has a joint venture with a unit of BP to install gasworks at 43 of its dumps. The Phoenix firm has 65 landfill-gas plants. Some feed utility pipelines. Others generate electricity on site.

Republic is also spending about $275 million to build four polymer-processing facilities that will sort the plastic it collects kerbside and turn it into flakes for new bottles and jugs.

Vander Ark said consumer-product companies face minimum post-consumer-content mandates in California, Washington and other states, as well as their own sustainability goals. Republic’s first plastics plant is scheduled to open later this year in Las Vegas. Customers lined up.

“There’s fighting among customers about who gets what,” Vander Ark said.

Analysts say one risk is that adding exposure to volatile markets for commodities and renewable-fuel credits might spook investors interested in the steady and predictable profits involved in dumping garbage into landfills. Executives say the sustainability businesses are supplementary and moneymakers even when commodity prices are low, like now.

“Yes, there’s a year-over-year impact, but recycling is still profitable,” said Tara Hemmer, WM’s chief sustainability officer. “It still is one of our highest return-on-capital investments.”

WM, which operates more than 250 landfills, is in the second year of a four-year plan to spend $1.2 billion adding 20 trash-gas plants as well as $1 billion expanding and automating its recycling business.

The Houston company expects new and upgraded facilities to increase its recovery of reusable materials 25% by 2025. Having machines do the dirty work also cuts labor costs, executives say.

A lot of hard-to-fill jobs will be replaced by optical sorters, which use infrared cameras to spot valuable materials in the jumble and blow the desirable bits into separate bins with pinpoint puffs of air, Hemmer said.

“In the past we might have had mixed-paper bales that had cardboard embedded in them,” she said. “Now we’re able to pull more of that cardboard out, it goes in the cardboard bale, and the price point on cardboard is much higher than mixed paper.”

WM says the blended commodity value from its automated material recovery facilities is about 15% higher per ton. Not only do the machines amass more of the valuable stuff, the company says the material emerges cleaner and can fetch more than messy bales.

The recycling investments will add $240 million to its bottom line over the next four years, WM says. It has higher expectations for its gas business.

WM says it will boost landfill-gas output eightfold and generate more than $500 million in additional earnings before interest, taxes, depreciation and amortisation through 2026.

That profit forecast assumes two prices associated with every million British thermal units of gas. WM is counting on the actual fuel selling for $2.50, which is lately about the price of gas from geologic wells. Another $23.50 is anticipated from renewable-fuel credits, which is in line with recent trading, according to energy-information firm Platts.

The outlook doesn’t count the $250 million or more of tax credits WM expects for building new gas plants.

Last year’s climate bill sweetened the economics of trash gas. A federal proposal to offer additional credits for biogas projects that produce power for electric vehicles could make the incentives even stronger.

Waste-company executives and analysts say that many are worth building anyway and that the incentives make it economical to install gasworks at smaller, less-gassy landfills.

“Landfill gas is essentially the only scalable biofuel that doesn’t have a food-for-fuel trade-off,” said Goldman Sachs analyst Jerry Revich. “These projects don’t need any subsidies, but they will take the free money.”

For decades, the world’s computing power has quietly expanded at an astonishing pace.

From the first transistor developed at Bell Labs in 1947 to modern processors containing billions and even trillions of transistors, each generation of technology has been faster, smaller and more powerful than the last.

But according to quantum physicist and technology entrepreneur David Reilly, that era of effortless progress is beginning to slow.

Reilly, CEO of Sydney-based Emergence Quantum and Professor of Physics at the University of Sydney, says the computing infrastructure underpinning modern economies is approaching fundamental physical limits.

And that could have enormous implications for finance, artificial intelligence and global investment.

Speaking at an industry event organised by Kanebridge International, Reilly said many critical parts of modern society depend on computing and the infrastructure used to process information.

The slowdown behind the tech boom

For years, the technology industry relied on a steady improvement known as Moore’s Law, where the number of transistors on a chip doubled roughly every two years.

More transistors meant more computing power, allowing faster software, smarter devices and ever-larger data systems.

Today, however, those gains are slowing.

“It feels to me very innate that I’m going to just find that next year there’s going to be another breakthrough,” Reilly said.

“But if you look at the data…there’s a slowing down, a roll off in performance that started some 10, 20 years ago.”

Rather than making chips dramatically faster, manufacturers are now largely increasing computing capacity by packing more transistors onto each processor.

The approach works, but it comes with growing complexity, higher costs and increasing energy demands.

The brute-force race for AI

That challenge is already visible in the massive data centres being built to support artificial intelligence.

In the race to dominate AI, companies are constructing vast computing facilities that consume huge amounts of electricity and water. Reilly described this expansion as a “brute force” approach driven by the global competition to develop advanced AI systems.

Yet the demand for computing power continues to accelerate.

Artificial intelligence, advanced robotics, healthcare research, pharmaceuticals and cybersecurity all require far more processing capacity than today’s systems can easily deliver.

The question now facing the technology sector is whether traditional computing can keep up.

Enter quantum computing

That is where quantum computing enters the conversation.

Unlike conventional computers, which process information using binary switches that represent ones and zeros, quantum computers exploit the unusual behaviour of particles at the atomic scale.

Reilly describes them as a fundamentally different type of machine.

“So a quantum computer is a wave computer,” he said.

Instead of processing information through simple on-off switches, quantum systems can use wave-like properties of particles to process many possible outcomes simultaneously.

Those waves can interact in complex ways, reinforcing correct solutions while cancelling out incorrect ones. In theory, this allows quantum systems to tackle certain types of problems dramatically faster than classical computers.

What it could mean for finance

The concept may sound abstract, but its potential applications are significant.

Quantum computers are expected to transform areas such as materials science, chemical modelling and pharmaceutical development.

They could also help solve complex optimisation problems in logistics, finance and risk management.

For financial institutions in particular, the technology could offer new tools for detecting fraud, analysing market behaviour and optimising portfolios.

But the shift will not happen overnight.

“One message to take away is that quantum is not going to suddenly solve all of your problems,” Reilly said.

Instead, he said quantum systems will likely complement existing computing technologies as part of a broader and more diverse computing ecosystem.

Why data centres may soon “go cold”

One key change already emerging is how computing systems are physically designed.

Many next-generation technologies, including quantum processors, operate far more efficiently at extremely low temperatures. As a result, future data centres may rely heavily on cryogenic cooling systems to manage heat and energy consumption.

Reilly believes that the shift will gradually reshape the computing industry.

“Over the next five years, you’re going to see data centres go cold,” he said.

“And as that happens, they almost drag with them new compute paradigms.”

Emergence Quantum, the company he co-founded, is focused on developing technologies to support that transition, including cryogenic electronics and integrated hardware platforms designed for quantum computing and energy-efficient systems.

A new technological era

For investors and businesses, the technology remains in its early stages. But the scale of global interest is growing rapidly.

Governments, research institutions and technology companies are investing heavily in quantum research, betting it could become a foundational technology for the next generation of computing.

For Reilly, the moment feels similar to earlier technological turning points.

In the 19th century, new discoveries in thermodynamics helped drive the development of steam engines and the Industrial Revolution. In the 20th century, advances in electromagnetism led to radio, television and eventually the internet.

Quantum physics, he suggests, could represent the next chapter in that story.

“Today we have, as a society, in our hands new physics that we’re just beginning to figure out what to do with,” Reilly said.

“But I think it’s an exciting time to be alive and watch what happens over the coming decades.”