Recycling industry takes a beating as prices plunge

Trash and recycling truck -- plastic recycling industry

Trash and recycling truck

Do you remember when municipal recycling first started? If you do, you remember that some people assumed it would make a profit.

What the city or county collects becomes a commodity it must sell within the recycling industry. Commodity prices vary wildly. When they’re low, a lot of “recycling” winds up in the landfill.

At first, no recycling programs accepted any plastic. Then many places started accepting plastic with 1 or 2 in the little triangle. Recent years have seen a trend toward accepting most kinds of plastic.

With cheap oil, the prices recycling companies can get for plastic have plummeted. Paper prices are also low. The entire recycling industry is reeling. Many companies have gone out of business.

How the recycling industry works

recycling dropoff center -- plastic recycling industry

Recycling dropoff center, Kansas City, Missouri

Most Americans participate in recycling through their municipal government.

Many, but not all, cities, towns, and counties provide curbside pickup for recycling. Many provide drop-off centers in addition to or instead of curbside pickup.

Each town has its own list of what it will and will not accept. Most accept glass, for example.

In some places you can put the glass in the bin at the curb. Others accept glass only at a drop-off center.

Eventually, everything has to get sorted. There are many kinds of paper, glass, metal, and plastic.

Plastic presents the greatest variability. Packaging represents the bulk of what we recycle. It comes with a number to identify what kind of plastic it is.

The number means only that somewhere, some agency accepts it for recycling. It doesn’t mean that your community does. Chances are those Styrofoam containers with the no. 6 are not welcome.

Each state defines what’s recyclable differently. Each state has its own formula for calculating recycling rates. The EPA tries to calculate how much recyclable material gets collected. At best, its calculations can only be a rough estimate.

So we take our recyclables to the curb or drop-off center and forget about it. But it’s not gone. There’s no such place as away. After the municipality collects it, it has to sell it to a company that will make new products from it. And its ability to sell depends on the commodities market at any given time.

Commodity prices and the recycling industry

Processing, plastics recycling industry

Processing plastics for recycling

The recycling industry begins will collection and ends with making new products.

Brokers serve as middlemen to connect the collectors and manufacturers. Some brokers specialize in specific products, like plastic or paper.

In other words, our trash becomes a commodity to be bought and sold. Commodity prices fluctuate. They follow the law of supply and demand.

Surprisingly little of collected recyclables gets used locally. We export most of it, especially to China. In recent years China has been choosy about what it accepts. When it comes to plastic, the Chinese want only bales of plastic that have not only been thoroughly sorted, but cleaned.

And why shouldn’t they be picky? Whatever they can’t use winds up in their landfills. The Chinese people don’t like landfills nearby any more than Americans do.

Plastic comes from oil. When oil prices are high, manufacturers find using recycled plastic instead of virgin plastic attractive. It’s cheaper.

In a time of low oil prices, the cost of making plastic falls. So does the price recycled plastic commands. But perhaps not enough. For example, at the beginning of 2015, the cost of virgin PET for making drink bottles was 15% higher than recycled PET. A few months later, it was 7% less.

Some companies exist to use recycled plastic as a raw material. Repeve™, for example, makes polyester fabric from plastic drink bottles. It will continue to buy recycled PET. Other companies that once used it will switch to virgin plastic.

Not only low commodity prices cause recycling centers to shut down. Attempting to use less packaging, manufacturers are using flimsier packaging. If a water bottle basically collapses when it’s empty, sorting equipment can’t as easily separate it from paper. Sorting becomes more expensive.

Illegal dumping has forced closure of municipal drop-off centers all over the country.

Local effects of low prices for recyclables

recycling ready to sell -- plastic recycling industry

Recycling, Emmet Co. Mich–sorted and ready to sell

Nationwide, Waste Management alone has shuttered many of its plants. Smaller companies are either going out of business or charging higher fees for accepting recyclables.

In Kansas City, Kansas, a trash hauler used to take recyclables from the school system free of charge.

That was when it made money from selling them. Low resale value from falling oil prices meant that the company started to lose money on recycling.

This year, it wanted to charge thousands of dollars for the service. The school district couldn’t afford the unexpected cost. It had to eliminate its recycling program.

California has a stronger and more visible commitment to the environment than almost any other American government. It is among the states that charge consumers a deposit on beverage containers. It’s refundable when they return the containers to a recycling center. That kind of policy encourages recycling, because not recycling costs money.

Yet its recycling industry is in crisis. CalRecycle, a state agency, subsidizes recycling centers by paying up to half of operating expense. But those payments are based on commodity prices. As prices have fallen, especially for plastic, so have the payments from the state. And, of course, so has the income from selling the recyclables.

That combination has proved fatal for the for-profit recycling industry in California. Nearly a third of the state’s recycling centers have gone out of business, more than 800 in the past 16 months. San Francisco has lost a large majority of its centers; it has six now, down from 35.

While California’s recycling woes are widely reported, recycling companies are folding from coast to coast.

What can we do about it?

Trash bag -- plastic recycling industryI have dealt with this question most thoroughly in my post 27 Ways Not to Be Inundated With Trash at Home. Here’s a summary

Recycling is the third of the so-called three Rs of an ecofriendly lifestyle:

  1. reduce
  2. reuse
  3. recycle

The order is important. We acquire stuff. It comes in packaging. We use a lot of stuff only once, then get rid of it. Or we get new stuff and have to decide what to do with the old stuff.

Reduce means not to get so much stuff in the first place, but advertisers push stuff all the time. If you don’t look at all the advertising that comes in the mail, or the newspaper if you still get one, you won’t be tempted to buy stuff you don’t need.

Packaging is just trash we buy at the store to take home. So prefer products with the least packaging.

Single–use products likewise amount to trash before we pay for them. Prefer products you can reuse. That means not only dishes you can wash instead of paper plates. Maybe you can reuse some of that packaging. Take a dozen plastic bags to the grocery store instead of getting new ones.

Reusing also includes buying remanufactured, refurbished, rebuilt, or ordinary used products instead of new ones. Or donating items you no longer need to a thrift store so someone else can reuse them.

Recycling is what to do after we’ve reduced and reused as much as we can. And recycling doesn’t end at the curb. Complete the cycle by preferring to buy products made from recycled material.

If it’s more expensive, it might be just because low demand keeps it on store shelves longer. The store basically charges products higher “rent” in that case. The faster a product moves, the less it costs the store to carry it.

Meanwhile, buying recycled products helps keep recycling centers in business. And maybe reduces the amount of material the recycling industry has to export.

Falling Oil Prices Only the Latest Problem for Recycling Industry / Zachary Stieber, Epoch Times, April 14, 2015
US states banned from exporting their trash to China are drowning in plastic / Gwynn Guilford, Quartz. August 21, 2013
What the heck is up with California’s recycling program? / Alexander Sammon, Mother Jones. August 28, 2016
Why recycling business is feeling so discarded these days / Jeff Daniels, CNBC. March 9, 2016

Photo credits:
Trash and recycling truck. Some rights reserved by fairfaxcounty
Recycling drop-off center. Kansas City, Missouri Public Works.
Plastic recycling process. Some rights reserved by Argonne National Laboratory
Recycling center. Some rights reserved by Michigan Municipal League (MML)
Garbage bag. Public domain from Wikimedia Commons.

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