Is Resilience the Silver Lining to Chinese Waste Ban?
On July 19th, the long-rumored ban of scrap materials, including many types of post-consumer plastics, was formally announced by the Chinese through the WTO. This ban is seen as the culmination of escalating actions taken by the Chinese government to address the dumping of scrap and poor-quality material into China. Despite measures like the Green Fence and the National Sword, the Chinese government has judged the actions taken to date insufficient to address the continued dumping of various wastes by a “few bad actors” that harm the environment and the reputation of China on the national stage. And more announcements from China may be coming in the future according to ISRI. There is no doubt that the ban will have significant impact on the U.S. recycling industry, but perhaps there can be a silver lining.
For too long, the U.S. has overlooked supporting and developing its own domestic end markets for recovered materials. It has relied on easy access to foreign markets with a seemingly endless appetite for materials and underdeveloped quality and oversight standards. The U.S. recycling marketplace had taken advantage of these conditions, pushing quantity over quality and many municipal recycling programs and companies have grown as a result.
The downside is the growing dependence on exports for almost the full range of commodities produced by U.S. material recovery facilities (MRFs) and exacerbated the price volatility of commodities by exposing them to the vagaries of foreign policies. This is a house built on an unstable foundation. The U.S. MRF industry is still shaking out from the Green Fence initiative. What it has highlighted is that the U.S. recycling system has little economic resilience. And in an era of cheap fossil fuel, when recycled materials are in significant competition with virgin materials made with cheap energy or feedstocks, the industry can ill afford this.
So where is the silver lining you are probably wondering? While the adage is all recycling is local, we failed to carry that sentiment forward for end markets – the critical step that makes recycling work. The new Chinese policy is an opportunity to reset and shed some of the bad habits that challenge the economics of recycling and revisit the issue of quality over quantity. It presents an opportunity to make a more local recycling system with all of the benefits from jobs to economic resiliency. One of the signs that this may be possible is that it appears some companies were anticipating the announcement from the Chinese and are planning to shift operations to the U.S. to take advantage of being able to source U.S. material if it cannot be imported. PARC has already announced expanding operations in Romeoville, IL. And there are rumors of others. Clean intermediate processed materials like flake or pellet can be exported. China will continue to be a global manufacturing center, but while it wants to shed its’ reputation as a global dumping ground, it may be the catalyst to complete a more circular economy – emphasis on “economy” – for recovered materials in the U.S.