To Scrap or not to Scrap: the future of recycling

About 90 percent of the 8 billion soda cans sold in California every year get turned in for recycling and a 5¢ refund. But cheaper commodity prices, plus lower Chinese demand for America’s used bottles and cans, have upended the economics of the state’s recycling industry. Over the past two years, California’s recycling rate has fallen enough to relegate more than 2 billion containers a year to landfills.  About 700 of the 2,400 redemption centers California had in 2011 have closed, according to CalRecycle, the state’s recycling agency, the majority in the past year. The mostly small companies that run the shedlike centers in parking lots outside grocery stores are being squeezed by a commodity bust that’s lowered the price they receive for recycled glass, plastic, and aluminum. The price they have to pay consumers for this detritus has stayed fairly high. A state subsidy program that was supposed to help make up the difference hasn’t kept up.,,

The decline in the value of scrap is draining California’s Beverage Container Recycling Fund, which relies on the proceeds from bottle deposits consumers pay upfront to reimburse redemption centers. As of June 30, it had $195 million, down from $246 million a year earlier. At this rate, it’s expected to run out of money in the first half of 2018.

“There’s been a massive crisis and a massive failure to respond to that crisis,” says Susan Collins, president of the Container Recycling Institute, an advocacy group in Southern California. Collins says the state needs to boost its “outdated” payment formula by as much as $1 million a month or follow other states, where bottling companies pay recycling centers a fixed amount per container. A spokesman for CalRecycle says the state is looking at all options.

China is the largest destination for U.S. scrap exports, taking about 11 percent by volume in 2015. Since 2013, under a government program called Operation Green Fence, China has been aggressively inspecting and in some cases turning away bottles and cans that are mixed in with food waste or other nonrecyclable scrap. The policy has forced waste processors in the U.S. to screen discarded containers more carefully, driving up costs and diminishing the value of some waste.

Excerpts from California’s Recycling Industry is in the Dumps, Bloomberg Business Week, Oct. 6, 2016

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