When future analysts look for events and circumstances that shaped their contemporary waste and recycling policies, it is likely that the year 2015 will surface as a significant mile marker. I am not convinced it will be revered in the same sense as the media does the first Earth Day. Rather, I am inclined to believe that this snapshot in time will be memorialized by what the folks from ReCommunity dubbed earlier this year as “The Perfect Storm.”
A Call to Action
The events of 2015 surfaced a reality we could no longer ignore. Accepting that all stakeholders share in the risks and volatilities was the first critical step we were asked to take. For many, accepting the economics of the recycling commodities markets, including the need for quality materials, was anything but a baby step. In fact, for a majority, it was closer to being pushed off a cliff.
To be fair, the wake-up call for the industry came prior to 2015. First when China implemented tougher enforcement of the Green Fence policy. Industry leaders hit the snooze button temporarily. A domino effect of global and domestic factors brought things to a head in 2015. This spring the industry’s “heavy hitters” explained candidly and in unison that their assumptions and projections did not foresee the “storm,” and previous practices were no longer sustainable.
Although this was a corporate call to action, the shared responsibility for the situation was not only implied, but also unmistakably directed at local governments and their constituents. Full with shareholder expectations, the message resonated loudly in the industry’s boardrooms, with their suppliers, their employees and the media. This fall it finally hit hard in local government offices as municipal collection and processing contracts expired.
As if plummeting markets and increased operational costs were not enough to make 2015 eventful, we rounded out the year with a visit and an environmental dictate from the Pope and the commitments made at the climate change talks in Paris. Both events heightened awareness for the effect of local practices on the global environment and economy.
The challenges of 2015 will influence the agendas of local government for the foreseeable future. Most of these programs will be faced with increased costs. The ability to adjust or eliminate some cost contributing factors may be limited by regulatory mandates. The availability of local resources and the political will to internalize new costs will certainly have an effect on program survivability. In fact, the ability of local processors and outlets to sustain operations is also a concern. These among a host of other issues are not short-term. How they are resolved will have a rippling effect in the marketplace for some time.
Newly inspired by the European Union’s move toward a circular economy, U.S. grassroots advocates and regulators are already demanding change in municipal programs. In spite of market conditions, included are diversion goals for greater types and amounts of materials. To meet these demands, new and hotly debated processing and energy-from-waste systems continue to emerge.
NYC... If You Can Make It There...
Nowhere is the clamor for change greater than in New York City (NYC). Outside groups have always felt compelled to offer their views and advice to the city. Earlier this year we commented on a study done by the Citizens Budget Commission of New York (CBC), the fourth in a series of reports on the staggering costs of the New York City Department of Sanitation’s current residential solid waste management system. In October, another group, Transform, Don’t Trash NYC (TDTNYC), released “Not At Your Service,” a study that targets New York City’s commercial waste and recycling system operated primarily by private sector service providers. Like CBC, this study follows a previous report issued by TDTNYC, “Dirty, Wasteful & Unsustainable.“
We used these widely publicized reports for a number of reasons. First, they provide a visible and convenient example. Second, because the studies were conducted by groups better informed than the average citizen, their level of understanding could be used as an awareness benchmark both up and down the food chain. Although there are a number of issues on which we could comment, for now we looked at these reports simply to see how well they captured the primary lessons learned from the events of 2015.We limited our scope to items in the reports related to shared risks and financial responsibility.
Collectively, the studies present a number of interesting claims and disturbing accusations. Both offer figures gathered from their research. In that regard, we find most of the data provided by CBC to be more grounded and less subjective than that presented by TDTNYC. However, when benchmarking NYC against the programs of other cities both use a lot of generalities without digging deeper into the data.
Although we agree that many of the conditions described by TDTNYC exist, the conclusions drawn too often leave out contributing factors. It is one thing to cast doubt and criticism of existing circumstances, but walking in Department of Sanitation Commissioner Kathryn Garcia’s shoes for even one day would be greater pressure than many of us could withstand. At a minimum, the suggestions offered should be vetted in an apples-to-apples scenario.
Because of the approach, we think the TDTNYC report unfairly determines the root of all problems to be consistently the service providers. Ironically, CBC reveals that private sector services in NYC are universally lower than the government controlled system. Although not the original intent of our review, we did note that the TDTNYC report fails to acknowledge some of the unintended consequences of franchising. A discussion to be had another day.
The biggest omission in the TDTNYC report is an honest recognition of the customers’ lack of willingness to pay for recycling services or to make long-term commitments. At least the CBC report insists that it is time for NYC to shift to a direct user fee system. Both share an assumption that recycling will always result in a savings. Each implies that the more a consumer recycles the greater their savings will be. Intentional or not, this message, in and of itself, perpetuates the myth that recycling is free – the very crux of many of our problems in 2015.
It is not hard to see that a system with fees assessed only on the amount of waste disposed cannot be sustainable if consumer recycling truly achieved zero waste. User fees directly tied to supporting the cost of processing and collecting the recycled material are necessary. The harsh reality for small businesses everywhere is that due to the low quantities of material generated the avoided cost of disposal rarely offsets the added cost of recycling collection.
Our initial reaction after reviewing these reports is that old myths and misinformation die hard. We have a lot of work to do before the end users of the system understand the relationship between service requirements and costs. We limited our comments to content in the report that was directly related to shared costs and responsibility. On those few points alone, it seems clear that public acceptance has yet to align with industry expectations.
Walk the Walk
Will the industry stand its ground by honestly representing the true risks and costs of the services desired by local governments, or will it cave to the pressure of competition? Will local governments and their constituents continue their programs with the likelihood of added costs? Once these added costs are evident, will consumers and local government demand more extensive extended producer responsibility policies for things like the packaging? The answers to all of these will determine the legacy of 2015.
At a minimum, 2015 could be our gateway down a path of notable changes designed to allow us to understand the global economy better and to embrace the complexities of sustainable materials management. If we meet the challenge, we will be able to sustain the infrastructure that the Closed Loop Fund is attempting to develop. However, if we cannot overcome the barrier of the lack of “willingness to pay,” along with contract and procurement practices that are not grounded in reality, it will signify that we have not learned much. Consequently, the “perfect storm” of 2015 will be relegated to little more than a cloudburst historically destined to repeat itself.
Michele Nestor is the President of Nestor Resources Inc., based in the Greater Pittsburgh area, and chair of the board of directors, of the Pennsylvania Recycling Markets Center, Penn State, Harrisburg.