The Value of Recycling

Anne Johnson
VP Global Corporate Sustainability

Michael Timpane
VP Process Optimization and Material Recovery

Is recycling in America working? The mix of global market dynamics, domestic public policy and societal values that comprise the answer to that question is as complex as the stream of waste our highly local recycling systems are attempting to manage. The rate of consumer participation in recycling continues to grow. The total systemic value of recycling is greater than landfilling waste. But this moment in which world commodity prices are exerting extreme pressure on recycling brings into focus the question of who should bear its inherent economic risk.

Looking at the history of municipal recycling, it has seldom been profitable based simply on the value of the recyclables. Rather, it delivers a number of valuable services to consumers, communities and economic systems that surpass other material management systems. These services are not captured in the balance sheet of municipalities or recycling service providers.

Surveys over the past 20 years indicate that consumers are increasingly recycling and feel good when they do so. We see the increase in participation in the growth of total recycled material. There are many more individual units of packaging and paper in the recycling stream than a decade ago. Consumers enjoy the benefits of more convenient packaging and value knowing that it is recyclable. It is a small step they can take every day to make a difference.

Consumers also want recycling to be easier, and single-stream recycling – being able to put all of your recyclables in one container – has delivered it. As a result, net recycling per household has increased from 35 to 100 percent in areas with single stream recycling. Measured by total tonnage recycled in America, recycling rates have not declined despite a decrease of heavy printed materials such as newspaper and a shift to lighter and more efficient materials like plastics.

Along with these changes in materials, and with single stream driving more recycling, has come an expected increase in the complexity of recycling – adding cost, risk and pressure on the system. Mature single stream recycling programs in combination with other recycling efforts capture 60 to 75 percent of what is recyclable in the waste stream – and ever more quantities of contamination. Single stream is also driving rapid innovation in sorting technology and material reprocessing. Market based innovation highlights the difference between recycling and landfilling.

Landfills afford municipalities and waste collectors predictable budgets with low immediate risk because it is the end for materials. It is not the end for liability for communities, however. Recycling provides far greater value in the grander scheme of our economy and environment, but it comes with the risk inherent in the competition recycled materials face in the market place relative to virgin materials. At this moment in which global commodity prices are so low, that risk is painfully clear to everyone participating in the recycling system.

Is the risk worth it? The cost to maintain a robust recycling system in a community is estimated at 45 to 80 cents per person per week – less than a latte or a few data minutes. The total system cost today is about the same per ton of recycled material as it was ten years ago when collection was far less efficient and processing was simpler.

Ironically, in the context of today’s consternation about the state of recycling, the shift to single stream recycling in the U.S. was driven by a desire to reduce collection costs usually born by municipalities – despite protests from those who believed that source-separated recyclables would be more valuable. Because the costs of labor and equipment is the most expensive part of a municipal recycling program, collecting recycled materials in one bin to be sorted later is less expensive overall – even though it increases the cost of sorting those materials.

Curbside recycling has never net paid for itself except for brief periods in 1994-95 and 2005-2006. Commodity revenues have typically offset some processing costs but not processing and collection. Yet, recycling creates manufacturing jobs, extends the value of materials as feedstock for products, and conserves natural resources while making more landfill space unnecessary. According to Columbia University, we save a short ton of greenhouse gases for every ton of recycling vs. landfill disposal. These are benefits that other material management options like waste to energy and landfilling cannot claim.

The actual cost of disposing garbage is about 39 dollars per ton on average. This is about half of what recyclers must charge to remain profitable even in this down market. Similarly, the net price for recycling collection and processing (including revenue from commodity revenues) competes very well with collection and landfill disposal. If recycling and garbage routing is done efficiently, it is a very small additional cost in public refuse systems.

With low commodity prices, a buyer’s market has emerged in which some recycled materials are now being rejected, which is tightening sorting standards and forcing a focus on quality. Those low commodity prices are causing pain for municipalities and service providers whose recycling contracts were negotiated based on higher prices.

As long as recycling is a market-driven enterprise it will include that risk. The question is who should bear it. Currently the risk is borne by communities and the material recovery processing industry. Others in the value stream benefit without paying into the system: consumers get a household service for pennies on the dollar, material makers and brands gain entry into recycling programs for their packaging and make consumer claims on its services, and retailers do not have to offer recycling in their stores. They all benefit from recycling without paying for it.

With every recycling commodity market downturn – there have been five major ones since 1990 – similar questions about the recycling system are raised. These downturns have proven to be good checks on the industry, culling out uncompetitive costs and practices. They help determine what recycling will be in the future.

The question is how to distribute investment in a system that provides this public sector service through largely private sector services for doing the right thing, the right way. It ultimately comes down to how we value recycling.

What do you think about the value of recycling? Let us know in the comments section below.