Residential recycling programs have existed in the United States for the better part of the last 30 years. Recycling from home generally has made good sense environmentally and economically for everyone involved, despite the ups and downs of the markets for recovered paper, plastics and metals.
Residential collection haulers, whether operated by municipalities or private companies, collect materials for processing at material recovery facilities (commonly known as MRFs). MRF operators pay the collection companies for each ton of material delivered. In good times, collection companies can receive a substantial price for the recyclables. The earnings from these recyclables have helped subsidize the cost of providing the collection service to residential customers who expected recycling to be “free” or at least at a lower cost than trash collection.
The recycling world, however, has changed dramatically in the last six months. We have gotten to the point where longtime recycling veterans are saying, “Recycling as we know it isn’t working.” (This was James Warner, the chief executive of the Solid Waste Management Authority in Lancaster County, Pennsylvania, in the Wall Street Journal article titled “Recycling, Once Embraced by Businesses and Environmentalists, Now Under Siege,” from May 13, 2018.)
Residential recycling will not make economic sense today in many places in the United States unless customers pay more for the service. The current price that recycling collection companies charge to collect recyclables from residential homes does not come close to covering the costs of deploying a truck and driver and the cost of delivering recyclables to a MRF. MRF operators are now charging collection companies close to, if not more than, the cost to landfill the same material.
The current conditions are the result of several factors, the two most critical ones are: 1) high levels of contamination in the recycling material collected from homes and 2) changing international markets for recycling commodities, especially in China.
What do we mean by contamination?
When recyclers put out their bins full of old newspapers, cardboard boxes, junk mail, water bottles, aluminum cans and milk jugs, they face a dilemma: Should I put this item in the trash or in the recycling bin? When recycling bins were small, people put the objects that might or might not be recyclable in the trash. But when customers were provided with big carts for recycling, the default became putting the object in the recycling container in the hope that it would get recycled (a behavior referred to as “wish cycling”). Confusing recycling arrows and messages have not helped.
Single-stream recycling (where a resident can put all recyclables into a single container) is also part of the challenge. There are countless stories of objects that have come across MRF conveyor belts that have no business being there—plastic bags, strings of Christmas lights, dirty diapers, hoses, bowling balls, car mufflers, etc. In most cities, the contamination levels of recyclables collected on the curb range between 15 and 30 percent.
MRF operators try, with some success, to get the contamination out of the finished commodities. Bales of processed cardboard, however, typically contain at least 5 percent contaminants by weight (92.5 pounds of junk for every 1,850-pound bale of material). To reduce contamination levels to acceptable levels, conveyors need to slow down and additional sorting (either in the form of people or devices) need to be added—both of which have caused processing costs to soar. As a result, MRF operators have to charge more to stay in business.
What does China have to do with recycling? A lot. For over a decade Chinese paper mills have been important buyers of recovered paper from the United States. Last year, the Chinese bought almost two-thirds of the recovered paper (about 10 million tons), most of the mixed plastic and half the scrap aluminum that the U.S. sold overseas, according to the Institute of Scrap Recycling Industries (ISRI). For years, Chinese mills complained about the quality of the recovered paper they bought from U.S. recyclers, but they continued to buy it, and we continued to sell it to them.
Things have changed now, and the Chinese are unlikely to be the active buyers they once were. The Chinese government has responded to concerns that China had become the dumping ground for other countries’ trash. Pollution levels in China are high, and air and water quality are poor, and people were noticing. In early 2018, the Chinese government imposed a restriction of no more than 0.5 percent contamination in recovered paper sold to China (That equals 9 pounds of junk in a 1,850-pound bale.). The country also imposed a ban on mixed residential recyclables of any kind and on postconsumer plastics, while also making a push to develop its own recycling programs.
Without the Chinese market, U.S. MRFs have turned to other markets in Asia as well as to domestic producers; but, recovered paper has flooded those markets and prices have come crashing down. The price for a ton of mixed paper (a hybrid of small cardboard, newspaper and cereal boxes) that sold for $80 per ton one year ago has a value today in many parts of the U.S. of less than zero. Similar trends in old newspapers and mixed plastics have further reduced the entire value of the recycling stream.
Like most commodity markets, the recycling market has been cyclical, and adverse conditions eventually turned around; but, this time it is different. The importation of recyclables/trash has become a political subject in China, not just an economic one.
What does this mean to the recycling customer? In the short term, it means the cost of recycling outweighs the value of recycling for most companies involved in the process. MRF operators who face rising costs and falling values for their commodities must pass those costs on to collection companies to survive, and collection companies, in turn, must pass on those costs to customers. No collection company is immune to this challenge. Some may charge more for trash service to continue the illusion that recycling is lower-cost than trash collection, while others will charge appropriately for recycling services and explain why higher prices or additional fees are warranted.
Although the convenience of residential recycling is attractive to consumers, it has to make economic sense for companies or local governments to continue providing it. No one is happy about the situation we find ourselves in today, but recycling that is not economically grounded is just not sustainable.
Bill Caesar is chief executive officer at WCA Waste Corp., Houston. This is an edited version of an essay that he first shared on LinkedIn May 24, 2018. It is reprinted with his permission.