Solid waste officials across the nation are discovering that without market development, recycling may not be all that it is cracked up to be.
By the late 1980s, recycling was at the core of most state solid waste programs. States passed mandates, such as Minnesota, where at least 25 percent of its solid waste must be recycled by the end of 1993. Other states have taken measures to encourage recycling, for example, local governments that have created voluntary recycling programs.
Now with the in-flux of recyclables, federal, state and local government is reevaluating recycling, and looking for ways to develop markets to close the loop.
A multi-faceted strategy must be taken in order to build recycling infrastructures, said Tim Nolan, Market Development Coordinator at the Minnesota Office of Waste Management.
Nolan cited several barriers to recycling market development: * The young age of the recycling industry. Nolan said if you focus on the industry material-by-material, the barriers become even more evident. For example, he said, recycled plastics are difficult to compete with virgin materials due to the processing costs;
* Lack of available capital for investments in the industry; and
* Uneven regulations. Leveling the playing field for regulations is essential, Nolan said. He cited the regulations recycled products must meet in comparison to virgin materials. Virgin materials are also subsidized.
To overcome these barriers, several states have accepted the marketing challenge. Market development initiatives include financial and technical assistance and in a few states, legislative action (see chart).
Wisconsin Wisconsin's recycling market development efforts are coordinated through an inter-agency team that includes representatives from seven different agencies.
The team, which includes members from the Department of Natural Resources and the University of Wisconsin System, is responsible for coordinating policies and expanding markets.
Janet Niewold, recycling market development coordinator, said that coordinating these efforts has been a challenge.
To help improve markets for products made from recycled materials, the state's recycling law requires state agencies and local governments to write purchasing specifications that encourage buying recycled products.
State and local governments are also required to buy a certain percentage of recycled paper.
Other state bills have founded the core of Wisconsin's financial assistance programs.
The Department of Development and the Wisconsin Housing and Economic Development Authority is responsible for the state grants, start-up and expansion loans, loan guarantees and rebates.
Through the Solid Waste Reduction and Recycling Demonstration Grant Program, $1 million is distributed each year. The money is issued to fund projects that demonstrate waste reduction and recycling activities.
Since 1991, the program has funded approximately 26 projects, Niewold said. She noted that one $150,000 grant recipient used the money to develop and test a new process that can sort and process plastics. Niewold said projects like this are beneficial to Wisconsin, a state with a lot of end-users but not many processors.
A recycling fund totaling up to $10 million in loans is available to Wisconsin businesses that can develop alternative uses for recovered materials. The state requires eligible applicants to start with post-consumer waste material and then produce a new, sale- able product.
Also, the Wisconsin Recycling Rebate Program offers money to new or expanding businesses that make products using recyclables as a raw material. Niewold admitted this program is difficult to manage. She said people think that just because the money is available, businesses are going to jump at the rebates.
"This is not the answer," Niewold said. "Loans alone will not make it happen. People need to know what is available, and this is where our technical assistance program comes in to play."
Technical assistance programs include workshops for haulers and brokers and supply and demand studies. The current study focuses on paper, glass, plastic and metal containers - the four materials that will be banned from Wisconsin landfills by 1995. After estimating the supply of recyclables, the study describes how the industry will absorb the supply of Wisconsin's materials, or meet the demand side.
According to Niewold, the states' recycling markets directory is being used as a model for other states. The directory lists more than 450 Wisconsin organizations that buy or accept recyclable materials. It is available in a printed version, on computer disk or in a quarterly updated version via mail.
On a similar note, the recycled products clearinghouse is an electronic bulletin board that lists recycled products for potential vendors. The recycled products clearinghouse also lists recycled content recommendations.
Other state-driven mandates target newsprint and plastic containers. All newspaper publishers are expected to use newsprint with recycled content. In fact, by 1995 the recycled content levels for total newsprint purchases will be 25 percent.
By January 1995, the state will require all rigid plastic bottles, cans, jars or cartons used in packaging food, beverages or drugs to contain at least 10 percent recycled or remanufactured material. This regulation is pending Federal Food and Drug Administration approval.
California In response to state statutes, the California Integrated Waste Management Board passed a plan last February to assure markets for recyclables. The plan will focus on:
* Procurement of recycled-content products by government and private sector;
* Financial assistance to the recycling industry; and
* The needs of manufacturers and local government in developing markets and use of recyclables.
The California Market Development Zone program, which was created in 1990, helps stimulate the recycling of post-consumer waste generated in California. The program designates acceptable real estate properties as Recycling Market Development Zones. According to Howard Levenson, a California Integrated Waste Management Board advisor, Recycling Market Development Zones can range from a one-acre parcel to an entire county. Levenson said to be designated a zone, applicants must:
* Demonstrate a commitment to recycling;
* Meet the environmental impact statements;
* Have incentives to attract recycling businesses; and
* Offer other incentives to the community and local government. Local government incentives include waiving permit fees and permit streamlining.
Applicants must also present a plan that identifies a steady supply of specific post-consumer waste or "feedstock." And finally, as required by state law, applicants must be able to help the community meet its 25 percent diversion goal by 1995 and its 50 percent diversion goal by the year 2000.
According to Levenson, there are presently 17 zones. While the primary benefits of becoming a zone is the financial and technical assistance available, Levenson noted that zones also receive "relaxed or suspended building codes and zoning laws" from the communities.
Benefits for the zone designees and businesses within the zones include: * A recycling investment tax credit (see chart);
* Technical assistance such as: financing strategies, information on how to market a zone nationally and internationally and insight on working with other state economic development agencies; and
* Local tax breaks and other assistance. For example, some zones offer Small Business Administration loans and low-interest zones for equipment, construction or expansion.
Levenson said a six-person board sets California market development policies. California statutes include minimum content laws, procurement policies and compliance laws for rigid plastic containers. He said the states procurement policy has helped increase demand.
"We are trying to push the demand side," said Levenson. "A linkage is starting to form between demand and economic development through our zones. It is happening, but slowly."
Minnesota The Minnesota Office of Waste Management established the Recycling Market Development Program in 1987.
Today, the four-member staff works with businesses and local governments to increase the use of Minnesota's post-consumer recovered materials.
"Since 1980 waste management legislation has been at the forefront of recycling," Nolan said. "In Minnesota, 6.5 percent of the sales tax collected funds all recycling including markets and waste reduction." Annually, he said, this amounts to $20 million.
Since the passage of Minnesota's 1989 Waste Reduction and Recycling Act, a large share of the states market development has rested on financial assistance. This includes county grants, low-interest loans and research grants.
To be eligible for county grants and loans applicants must: * Improve the quality of recyclable material supplies;
* Create or expand manufacturing capacity to use recyclable materials; or
* Increase the demand for recycled products.
The state awarded grants and loans to 22 projects in 1992. Using state money, a Paynesville, Minn., facility was able to add one ton per hour of capacity to sort post-consumer plastics and a Maple Lake, Minn., facility added four tons per day of capacity to a commercial/ industrial foam plastics reclamation facility.
The Private-Sector Capital Loan Program funds projects that create or expand the manufacturing capacity of projects that use recyclables or provide end-markets for Minnesota recycling programs.
"Recycled materials need to be looked at long-term," said Nolan. "In order to understand the performance of recycled products, we need to understand how products will stand up." Nolan said the research and study grant program has been developed to explore the feasibility of market development projects. Through the program, research institutions and private organizations receive grants for initiatives that support regional, state or county market development efforts.
Past recipients include the Minnesota Department of Transportation which was awarded $55,810 to research shingle scrap as an ingredient in asphalt pavement and Hennepin County/Office of International Trade which was awarded $37,500. Hennepin County used the money to research exporting recyclable materials, semi-processed materials and products manufactured from recycled materials.
Once projects are underway, the state continues to help. Through the technical assistance program, state agencies, local government and private and non-profit organizations are nurtured. "We help to explain a lot of the nuisances [in recycling] that are not discussed or understood," said Nolan.
The program works to locate recyclable materials supply, determine end-market conditions and connect suppliers with markets. Also, the Minnesota Recycling Directory lists recyclers, end-markets and material specifications.
An information clearinghouse provides a plethora of information on recycled products and how to purchase them. The clearinghouse lists results of market and product research and recycled products performance information.
New York "Markets need to be nurtured and helped to facilitate," said William Ferretti, director of the New York State Office of Recycling Development. At the market development office, "arm twisting" techniques, such as leveraging by financing are used, said Ferretti.
The Office of Recycling Market Development has issued approximately $54 million in loans and loan guarantees, according to Ferretti. These funds are available from state appropriations and federal monies from the Petroleum Overcharge Restitution Act of 1987.
Like Minnesota, the New York office issues feasibility study grants. The grants, which can be as much as $50,000 per applicant, are available on a competitive basis. They are issued to evaluate recycling technologies and systems or to manufacture products from recycled materials.
For example, through a $50,000 grant, Brandt Manufacturing Systems Inc., Windsor, N.Y., was able to develop a new glass recycling processing system. The new system colors bottles via a coating process and eliminates the need to color-sort glass containers for recycling. After signing a license agreement with a glass container manufacturer, the company received a different loan to relocate and purchase new equipment.
Interest subsidies on loans are available through the recycling technology financing program to finance the costs of building a recycling facility or purchasing equipment.
Eligible applicants include small- to medium-sized businesses with gross annual sales of less than $10 million or nonprofit organizations with less than 500 workers. To target specific needs such as start-up and first year operation of multi-town marketing cooperatives, grants are available on an announced basis.
The Office of Recycling Market Development staff is located in three offices across the state. Technical assistance is divided into four main areas including:
* The recycling markets database which provides market information for businesses and communities to find suppliers and outlets for recyclables;
* An outreach staff which helps municipalities and businesses maximize the materials that have already been collected;
* A matchmaking service to bring material suppliers together with users; and
* A market research staff to monitor market conditions and publish analysis of the supply and demand of recyclable materials.
Ferretti has found cooperative marketing agreements to be beneficial.
For example, New York Dairy Foods Inc. has joined with schools in central New York to develop a supply of milk cartons. Meanwhile, the Office of Recycling Market Development is working with New York paper mills that have expressed a need for milk cartons.
Washington While many states have found grants and loans to be an effective market development tool, the Clean Washington Center (CWC) has turned elsewhere.
The Clean Washington Center, which was established by the state legislature in 1991, has targeted five of the most difficult recycled materials to market - mixed waste paper, plastics, compost, tires and glass.
Elizabeth Burger, the assistant marketing manager at the Clean Washington Center, emphasized the challenge each recyclable material presents.
To meet the challenge, CWC employees have each tackled a different recyclable material. Employees meet with industry experts to find out what the center can do to market the material to compete with virgin materials. "It is a strategic process," she added.
Currently, Washington is co-sponsoring a technical study to analyze the use of post-consumer glass as a construction aggregate. Burger said the problem of marketing recyclables is compounded by a lack of data. Sponsoring studies, Burger said, is one way to accumulate the hard-core data needed.
The technical assistance program is CWCs key to establishing the needed information.
For example, if a company wants to test products made from recyclable materials, CWC can allocate the funds. In exchange, the center receives the data and the company receives funding. Between 12 to 15 businesses are expected to receive funding this year.
The Clean Washington Center seeks companies that can use recyclable materials in their process.
For example, CWC is working with a plastic manufacturing company, Perstorp Xytech, to show them the benefits of using recycled resin in its plastic containers. CWC has compiled a list of 12 other Washington manufacturers that use plastic in processing.
CWC has also established a relationship with the state's pulp and paper industry to investigate the feasibility of polycoated paperboard recovery and processing.
"At this point," said Burger, "there are not a lot of recycled products to choose from." For now, the Clean Washington Center markets the distribution of recyclables through trade shows and workshops. As demand increases, Burger anticipates additional ways to distribute the recycled materials.
And lastly, the Clean Washington Center publishes two directories, the Recycled Products Directory, with more than 600 listings of recycled products and the Directory of Recycled Content Building and Construction Products.
Washington views market development as a temporary mission for state government, as a result, the Clean Washington Center will close permanently in 1997.
The National Recycling Coalition (NRC), Washington, D.C., has formed the Recycling Advisory Council (RAC) to evaluate the following policy options:
* Product-specific minimum content standards;
* Material-specific utilization requirements;
* Manufacturers' responsibility;
* Shared responsibility;
* Virgin materials tax; and
* National secondary materials utilization trust fund.
To help finance RAC marketing activities, the United States Environmental Protection Agency has awarded a $100,000 grant for the fiscal year 1993.
A demonstration project with the Chicago Board of Trade is allowing the RAC Market Development Committee to research a system that would link buyers and sellers of recyclable materials together on an electronic cash exchange.
The steering committee wants to see if this exchange could help to standardize trading and refine the markets for recyclables, said Ferretti, steering committee chair.
"Market development will take as much time to get going as collection did," said Nolan. "It can take a long time, but we are making progress." Next, he said, Federal government will have to level our playing field.