June 30, 2014
When the EPA published its “Municipal Solid Waste (MSW) Generation, Recycling, and Disposal in the United States: Facts and Figures for 2012” report at the end of February, it calculated that the recycling rate had dropped, albeit very modestly. This fact caused a bit of a stir and sparked some controversy that recycling may have peaked, or was at least stagnating, which has been simmering ever since.
While we do not profess to have a crystal ball on the future recycling rate, in this month’s issue of the Circular File, we take a look at some of the underlying cross currents beneath the headline number.
The EPA’s MSW Facts and Figures
To recap, the latest EPA MSW report, based on 2012 figures, showed a recycling rate of 34.5 percent, down from 34.7 percent the prior year, though that was still up from 34 percent in 2010, to keep it in perspective. That said, it was the first recorded decline since the EPA had been compiling the data for this particular report (more than 50 years).
Also of great interest to the industry, the data indicated that the landfill rate also ticked up, to 53.8 percent from 53.6 percent in 2011, though down from 54.3 percent in 2010. Since 2010, overall tonnages for both recycling and landfill have fluctuated in a very small band, reflecting essentially flat MSW generation of about 251 million tons. Per capita generation peaked in 2000 at 4.74 pounds per person per day and was 4.38 in 2012.
“Green Fatigue” Does Not Appear to be the Cause
Although a major player in the United Kingdom’s waste management industry recently pointed to “green fatigue” in citing the U.K.’s likely failure to be able to meet the European Union’s 2020 recycling goals, based on the continuing stream of announcements from both municipalities and corporations in the U.S., the desire to raise recycling rates has not abated.
On the public sector side, in just the last several months, Indiana and Minnesota have raised their recycling rate goals; Connecticut has stated its intent over time to shift from waste-to-energy to more recycling, and even cash-strapped Michigan is talking about more recycling. Walmart is spearheading a $100 million recycling fund to provide financing to projects that increase recycling.
According to the Wall Street Journal, 72 percent of Standard & Poor’s (S&P) 500 companies produced reports on their sustainability efforts in 2013, up from 53 percent in just one year. Obviously, recycling plays a major part in corporations’ sustainability efforts.
And, as noted in the Circular File covering WasteExpo 2014, the buzz over organics recycling may have quieted, but the movement looks to have legs, despite currently insufficient infrastructure. In recent news, New York City has expanded its organic waste collection efforts, while Tucson has launched a pilot food waste collection and composting program, albeit with the caveat that it is trying to determine whether it can be cost-effective.
Mix Issues Are Certainly a Factor
Paper has long been the mainstay of recycling programs, with one of the highest recovery rates, at roughly 65 percent. However, in 2012, waste paper tonnage and the recovery rate actually declined from 2011, by 2 percent and 1 percent, respectively, principally due to reduced paper usage and the economic slowdown in China. When figures are released for 2013, they are unlikely to reverse, given the continued slowdown in China, exacerbated by China’s Green Fence operation.
Recovered paper exports to China declined roughly 6 percent in 2013. The American Forest and Paper Association (AFPA) believes these factors to be temporary, and projects paper recovery rates will continue to rise over the longer term. AFPA’s recovery goal remains 70 percent by 2020.
On the other hand, the longer-term, secular decline in paper usage (if not packaging) is an inexorable negative factor. In 2012, food waste and yard trimmings generation together just nudged out paper as the largest waste stream.
However, the flip side to that, is that as food waste recycling/composting increases it will tend to skew the recycling rate back up, as the recycling rate is calculated based on tonnage, and food waste is a very heavy category. Additionally, the recycling rate of food waste is currently less than 5 percent, versus paper’s 65 percent.
On the subject of weight, and its impact on the recycling rate, changes in packaging are also a factor. Over time, plastics have increasingly replaced glass as a packaging material, which has a twofold impact. Obviously that impacts the weight of the material recycled, but also traditionally plastics have had a lower overall recycling rate as a category. In 2012, the glass container recycling rate was 34.1 percent, versus 30.8 percent for PET bottles and jars.
As a result, plastics manufacturers and users (i.e., bottling companies) have come under increased pressure regarding the extent of plastic in the waste stream, particularly plastic bottles, and there have been concerted efforts by the large beverage companies to increase the recycling of plastic bottles.
Lastly, with regard to mix issues, e-waste has to be considered as well. As noted by Chaz Miller of the National Waste & Recycling Association, e-waste has flattened out according to the EPA data, but largely due to the fact that the devices are smaller and lighter weight.
Economic Realities May Dampen Green Intent
Unfortunately, economic realities are not aiding recycling at the present time, as commodity pricing remains at depressed levels. Particularly disappointing is recycled paper pricing. At this point in the year, our industry sources had anticipated not only a pickup, but possibly a strong one, which not only hasn’t materialized, but rather pricing has actually lost ground.
As of June (according to RISI’s Pulp and Paper Week), old corrugated cardboard (OCC) was down for the third straight month, falling $5 in four regions, $3 on a national average, as demand from China (but also India and Mexico) was again weak. This puts the national average now at $97 per ton, $9 less than in a year ago, according to RISI.
As the very near-term outlook remains uncertain, paper industry (RISI) forecasts for higher OCC pricing in 2014 versus 2013 are looking increasingly optimistic, even unlikely. Likewise, scrap metal prices have been down year over year since this past February. A brighter spot has been plastics (PET) pricing, which has crept up month by month since the beginning of this year.
As detailed in previous Circular Files, the poor economics in recycling in the over last several years (versus 2011), has caused the industry players to respond, either by restructuring contracts as they renew, or by rationalizing capacity and becoming more cautious on the extent of future investment in MRFs.
Thus, when confronted by less favorable economic terms and contamination limits, municipalities desire to recycle (especially at increased rates) may be curtailed. This, in turn, hinders the expansion of recycling in and to rural areas in particular, where large scale recycling facilities do not make economic sense at current commodity levels. History has shown that pocketbook green concerns tend to outweigh environmental green intentions.
All in, recycling rates may not have not peaked, nor are they in a secular decline, but growth in recycled tonnage is more likely to be similar to the average annual growth rate of less than 1 percent since 2008, versus the 5 percent+ average annual growth rate that characterized the 1990-2008 timeframe.