What is a by-product: explore the difference between by-product and waste and the difference between by-product and secondary raw material. Discover examples of by-products and how to fill in your by-product data sheet.

What is a by-product

A by-product is a material that meets the requirements contained in Article 184-bis of Legislative Decree 152/06.

There are four conditions listed:

  • The matter originating from the process does not represent the primary purpose of the process itself;
  • The material will be subsequently used within the same production system that generated it or in other production/utilisation processes;
  • The material is used without undergoing further processing than normal industrial practice;
  • The material will be used in a legal manner and without harming human and environmental health.

It’s essential to remember that in case material loses even one of the requirements listed above, in one or more steps of the manufacturing process, it can no longer be considered a by-product, but will become a waste and will be managed as such.

Differences between by-product, product, waste and mps

In order to gain a deeper understanding of what a by-product is and its characteristics, it is necessary to highlight the main distinctions with other elements that can be very confusing at the company management level, because they’re similar to this type of material,

Difference between by-product and product

The main distinction lies in the purpose that the two elements have.

In fact, the product, meaning the end result of a process, represents the purpose of the process itself.

Whereas in environmental legislation, it is stated that “the material defined as a by-product cannot represent the purpose of the manufacturing process that generated it“.

Therefore, these two elements are different but equally difficult to identify, because what is not a finished product is potentially a by-product, depending on the individual case.

Difference between by-product and waste

The distinction between these two resources may be difficult at first glance, but the regulations provide clarity on the subject.

Waste, for environmental legislation, is defined as “that substance or object falling into the categories listed in Legislative Decree 152/06 and which the holder discards or has decided or is obliged to discard“.

The waste – or scrap – therefore, if it falls into the categories listed in the legislation and if it does not meet the basic requirements of the TUA, it will be labelled as resulting from a completed manufacturing process and for this reason categorised as waste.

Furthermore, it is essential to remember that the distinction between by-product and waste must be verified throughout the supply chain, as a by-product can become waste at any time.

This situation occurs when one or more of the requirements of the legislation are no longer met.

Difference between by-product and secondary raw material (mps)

The last major distinction is that between by-product and secondary raw material (mps).

The mps, according to the legislation, is “that material consisting of waste from the processing of raw materials, which has undergone recovery treatment to be transformed into new resources“.

Considering this definition, it is clear that mps cannot be considered a by-product from an End of Waste perspective.

That’s because, as explained within the TUA, “a material can be considered a by-product if it is used without undergoing further processing than normal industrial practice”.

Why it is important to know about by-products

The management of production waste is becoming increasingly complex for companies, which often, are forced to carry out rare and unsuccessful control actions due to the lacking of the the necessary skills, processes and resources,

In most cases, companies simply overload the temporary storage and procrastinate the activity, suffering both economic and managerial damage.

This is a worrying sign, but one that companies can remedy by training themselves and reaching a deeper technical level of understanding.

A learning process that starts by creating partnerships with specialised business that can provide the right support to join a network of companies interested in by-product exchange.

Business benefit

Knowing what by-products are, also from a regulatory point of view, how to identify them and how to manage them, allows companies to derive maximum benefit and economic advantage from their industrial leftovers.

It is important to remember that waste classified as waste is a cost that production companies have to bear.

A production residue classified as a by-product, on the other hand, represents revenue for the company: a new asset to take care of and which brings in cash flow.

By understanding this small but fundamental difference, companies can greatly expand their network of contacts and create new strategic relationships.

Engaging in the valorisation of by-products does not only lead to an economic advantage, but also provides benefits of an environmental and social nature.

In fact, the re-use of waste leads to the creation of virtuous processes of Circular Economy and the creation of relationships with other companies with a view to industrial symbiosis.

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Regulation of industrial by-products in Italy

The regulation of by-products in Italy is represented by legislative decree number 152 of 2006, also known as TUA (Consolidated Environmental Act).

Within the decree, Article 184-bis describes the four requirements a waste must have to be considered a by-product.

The TUA had uncertainties that kept people away from assessing their production residues as by-products.

Among the main limitations of Legislative Decree 152/06, there were unclear indications from the point of view of procedures, which unnecessarily lengthened processes, and several clauses that were difficult to interpret, such as those related to the “certainty of use” and the traceability of treatment to “normal industrial practices“.

To support the current regulatory text, therefore, Ministerial Decree No. 264 was introduced in the Official Journal on 13 October 2016 to provide clarification.

Through Ministerial Decree 264/16, it is indicated which changes are to be made in order to give more precise provisions to operators, administration and control bodies.

Thanks to this implementation on the regulatory level, industrial by-products can be qualified and classified more precisely.

By-product regulation in Europe

On the European level, by-product regulation follows the text of Directive 2008/98/EC.

This directive was introduced with the aim of:

  • Establish a legal framework for the treatment of waste within the European Union (EU);
  • Establish a single waste hierarchy for all EU countries;
  • Protect the environment and human health by highlighting appropriate techniques for waste management, re-use and recycling.

There are also several key points in the legislation, such as the concept of environmental responsibility, extended producer responsibility, hazardous waste an Industrial Waste management, recycling and recovery targets at European level, and the difference between by-product and waste.

Europe promotes Industrial Symbiosis

Thanks to the introduction D. L. 116 of 2020 it was possible to update the European Directive 2008/98.

Within the new decree, it is evident how Europe has decided to place by-products and industrial symbiosis as a strategic element to promote and implement the efficient use of resources and to implement the transition to the Circular Economy.

This facilitation at the level of legislation is explained in the text of the law, precisely in paragraph 1 of Article 184-ter:

“Measures may be adopted to establish qualitative or quantitative criteria to be met in order for specific types of substances or objects to be considered as by-products and not as waste, guaranteeing a high level of protection of the environment and human health while also favouring the careful and rational use of natural resources by giving priority to replicable practices of industrial symbiosis.

These criteria are adopted by one or more decrees of the Minister for the Environment and the Protection of Land and Sea, pursuant to Article 17, paragraph 3, of Law No. 400 of 23 August 1988, in compliance with the provisions of the EU regulations.”

Management and Contracts

The management and documentation part of by-products is also regulated within DM 264 of 2016.

First of all, it is essential to note how the choice made by the legislator was not to provide for any tools necessary to prove the requirements contained in the regulations.

In fact, the producer is granted autonomy within the boundries of their sector to choose the tools for identifying the by-product. These tools can either align with the specified regulations or utilize existing procedures already employed by the company.

Whereas the indications at standard level are different for the by-product management part.

How to manage a by-product?

In Ministerial Decree No. 264 of 2016, it is explained how the responsibility for managing the by-product passes through the entire by-product chain.

Each person who comes into contact with the by-product must prove, to the best of his or her knowledge and ability, that the resource is keeping the requirements of the regulation.

When, within the supply chain, the residue loses one of its basic requirements, it will be the operator who is in possession of it who will become the owner of the “former by-product“, which will become a waste by law.

In addition, the responsibility of the previous holders will cease about events that contributed to the loss of the requirements.

The importance of the by-product data sheet

Currently, the only recognised document to prove the conditions within the environmental legislation is the by-product data sheet (or by-product technical data sheet).

This sheet is a technical document that forms part of the contractual documentation of by-products, the compilation of which is not mandatory.

Companies are in fact free to use this tool, with the only limitation that the document must be stamped at the competent Chamber of Commerce.

Why fill in the data sheet?

Although the compilation of this document is on a voluntary basis, drawing up the by-product data sheet provides several advantages, not only related to the traceability of the material, but also to understand the processes and keep track of who has come into possession of it.

In particular, the by-product sheet makes it possible to

  • precisely identify the subjects operating within the by-product management;
  • trace the production process from which the residue originates;
  • make clear the technical specifications of the material to be used;
  • provide transparency on how the material is managed.
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If you are interested in improving the management of your by-product data sheet, fill in the form to request the service and get in touch with an Sfridoo® expert right away.

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How to fill in the by-product sheet?

Once the producer decides to fill in the by-product sheet, he must include specific information in it.

Data on the processes, the features of the by-product, and intermediaries are useful to provide a clear overview and, above all, are indispensable to verify the existence of the conditions contained in Art. 184 bis of Legislative Decree 152/06.

Summarised, the information that the by-product sheet must contain are:

  • description and characteristics of the production process
  • indication of the materials exiting the production process;
  • type and characteristics of the by-product and production method;
  • types of activities or plants suitable for using the residue;
  • destination plant or activity;
  • references of any intermediaries;
  • arrangements for collection and storage of the by-product;
  • indication of the place and characteristics of storage and of any intermediate storage;
  • maximum time foreseen for storage, from production to final use;
  • description of the timeframe and management methods aimed at ensuring the identification and effective use of the by-product;
  • conformity of the by-product with the intended use.

Example of by-product sheet

Giving a practical example of how to structure and fill in the by-product data sheet, let’s see what are the five areas to be included in the document

  • producer’s biographical data
  • by-products informations
  • storage and handling times and methods
  • organisation and continuity of the management system
  • signing/declaration of conformity
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List of by-products and types

The list of resources classified as by-products is constantly being updated, a consequence of the fact that institutions, such as regions, are increasingly considering and integrating this type of element into their environmental policies.

At the same time, there is also an increase in companies interested in this kind of opportunities and a growing willingness to network.

To find an up-to-date list of by-products, there is a dedicated portal of the Italian Chamber of Commerce called “List of By-product Producers and Users“.

Within this database, it is possible to search for specific categories of by-products by ATECO code, with direct references to producer and user companies.

Examples and main by-product industries

By-product types are diverse and are divided into groups identified by ATECO code.

Some by-product producing/using industries are:

  • textile industry
  • agri-food industry
  • alcohol production industry
  • animal breeding industry
  • mining industry
  • paper industry
  • tobacco industry
  • chemical industry
  • construction and furniture industry
  • plastics industry
  • metal industry
  • medical industry
  • sports industry
  • transport and logistics industry

Within the Italian Chamber of Commerce database, you can find the complete and detailed list of sectors.

Real Case Study

A virtuous case study focussing on the valorisation of industrial residues is the one that involved the Sfridoo team and a partner company that is part of the start-up network.

Specifically, the by-product that was recovered was grinding sludge, one of the main waste products resulting from the mechanical processing of metal surfaces.

Here are some interesting facts about the project:

  • A 70% saving in oils used in machining;
  • A 60% reduction in the cost of filter cloths;
  • Improved process efficiency.

Important numbers that have given the company an enormous economic advantage in its processes and a competitive edge over its competitors in the sector.

Players involved in by-product management

Within the by-product management system, three parties are involved:

  • The first is the producing company, which produces the by-product;
  • The second is the user company, which uses the by-product within its processes;

The by-product intermediary: who he is and what he does

By-product intermediary id the key player, a figure who can also help support the fulfilment of certain requirements regarding the existence of by-product status, namely:

  • It gives evidence of the existence of contractual relationships or commitments between the parties involved (the producer and the user);
  • It certifies the producer’s responsibility in relation to the management of the by-product only in the stages prior to delivery.

The triple role of the intermediary

To better understand its role, the by-product intermediary can be defined by considering three different interpretations, which are:

  • Intermediary as “facilitator“, i.e. the third party who interfaces with both parties, understands their needs and carries out analysis actions, in order to find the right connection, keeping in mind the objectives of both companies.
  • Intermediary as company contact, in cases where the service is outsourced, who has the task of selecting the best producers and users of by-products by creating the most advantageous commercial agreements.
  • Intermediary as trader, who buys by-products, stores them in his own warehouse and then resells them to end users. In this case, the intermediary acts as a ‘buffer’ against the production and utilisation needs of the production process.

Since the intermediary has various facets, his figure must never be confused with that of the waste intermediary, who is instead the person in charge of waste management by companies.

The role of the producer company and the user company

The work of the intermediary would be in vain if there were no companies willing to sell and buy by-products.

When it comes to by-products, we distinguish between two main types of companies: producer and user companies.

Producer companies are those businesses that decide to manage their production waste as a by-product and therefore put in place all the regulatory guidelines to give the waste this status.

User companies, on the other hand, are those that can and/or want to use by-products in their own production processes, in addition to and/or instead of virgin raw materials or semi-finished products.

Advantages of byproducts for companies

By-products, as mentioned earlier, are a real business asset.

They are resources that if exploited in the right way can bring numerous advantages to the businesses involved.

This is why, when it comes to by-products, we speak of what is referred to as a win-win situation, i.e. a situation where both parties gain from the operation performed.

In fact, the producing company will gain from the sale of the waste resulting from its processes.

While the user company can save money by purchasing a raw material at a lower cost.

What benefits do by-product producers have?

Those who produce by-products have several advantages, which are:

  • Improvement of the company’s green image. Those who take by-product management to heart are first of all sending a message of environmental sustainability to their stakeholders.
  • Elimination of disposal costs. Those who sell their byproducts eliminate the disposal costs associated with processing waste and profit from their sale.
  • Creation of collaborations and partnerships for your network. Producing and selling by-products leads companies to forge business relationships to create virtuous alliances with a view to industrial symbiosis.
  • Decrease in production residues destined to become waste by finding new uses for residues within new supply chains.
  • Coherence with Circular Economy and re-using dynamics. Whoever manages his own by-products, relies on the principles of the Circular Economy, reintroducing into the system a new non-virgin raw material that other businesses can use.
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If you are interested in improving the management of your by-product data sheet, fill in the form to request the service and get in touch with an Sfridoo® expert right away.

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What benefits do by-product users have?

Those who decide to use by-products in their processes also have several benefits, which are:

  • Increasing the content of recovered material in the finished products, making the product itself more sustainable.
  • Obtaining tax relief, equivalent to the effort put in.
  • Achievement of excellent competitive advantages and distinction from the competition by meeting industry standards.
  • Creation of collaboration and partnerships for one’s own network, with a view to industrial symbiosis.
  • Reducing the cost of the raw material used, which is highly performing.
  • Identification of new business opportunities, resulting from the creation of more sustainable products, new product lines, certification and patents on the innovative processes tested.
  • Optimisation of the production process, valorisation and protection of the supply chain.
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Manage your by-products properly

If you are interested in improving the management of your by-product data sheet, fill in the form to request the service and get in touch with an Sfridoo® expert right away.

get data sheets