Waste360 held its second Recycling Summit September 19-21 in Austin, Texas. In this piece we explore some of the common themes and highlights that emerged from the wealth of keynote panels and education sessions.
The Evolving Ton Adds to the Degree of Difficulty
A persistent theme that popped up throughout the course of the summit was the concept of the “evolving ton” and the greater costs and degree of difficulty it causes for the materials recovery facility (MRF) operator. It was estimated by various speakers that over the past five years, recovered newspaper is down anywhere between 30 percent and 50 percent, while plastics are up 15 to 20 percent and old corrugated cardboard (OCC) has doubled. Residue has also doubled. Over the next five years, newspaper is expected to be down another 40 percent, while plastics and OCC are expected to continue to climb. This has caused a lightweighting and “voluming” of the waste stream, such that it requires a much greater volume of material, estimated at around 20 percent, to produce a ton of recycled material than in the past. And, even within plastic, more traditional recyclables such as PET and HDPE bottles are being replaced by much more difficult items to recycle, such as copolymer pouches and films, which also have more limited end markets and lower the quality of the plastics bale.
Broadly, various speakers at the conference put MRF processing costs in a very wide range of $40 to $80 per ton, depending on local conditions and advantages and local end markets, particularly for difficult items like glass. Industry participants in the session “The Costs of Recycling on MRF Operations” estimated and examined the cost of MRF operations in more detail. In the session devoted to MRF costs, Chris Hawn of Machinex put the operating costs of a MRF at about $41 per ton, with additional costs of more than $6 per ton for maintenance. He also estimated that downtime costs over $95 per minute! Pete Keller of Republic Services (RSG) put the all-in processing cost of MRF operations in a range of $65 to $80 per ton (including depreciation and amortization), and noted that at current recycled commodity price levels, the company was not covering the cost of processing and collection. In addition, he said that RSG had estimated that each percent of contamination costs the company $7 million. As a result, just as the industry needs more complex (and expensive) machinery and equipment to handle the changing waste stream, many companies are currently disinvesting due to the negative economics, though RSG believes it has to invest in diversion to stay relevant.
Glass and the Single Stream MRF
The problems with glass recycling have been discussed ad nauseam. Judging from the Summit, the debate still seems to center around “Is there a market or not?”, and the answer is still “It depends”. On the positive side, glass is endlessly recyclable, and there is strong demand for recycled cullet from glass producers, due to the energy savings. Jim Nordmeyer of Owens-Illinois estimated that out of over 12 million metric tons of glass containers consumed in the U.S. available for recycling, only 2.4 million tons are currently recycled back into glass packaging. Therefore, the opportunity and desire to utilize more recycled glass exists. The keys to successful glass recycling appear to be low transportation costs and cleanliness. Glass producers may want to use more recycled, but will not pay up for it given the low cost of virgin material, thus proximity to a glass manufacturing plant is crucial for successful glass recycling, given the weight of the material. The quality of the cullet is also very important to producers, so glass cleaning machinery or source separation of glass also appear to be key to a successful program. But here again, what MRF operator wants to invest in that equipment given the low returns inherent in glass recycling?
In light of the glass recycling problems (breakage and cleanliness), which have been greatly exacerbated by the surge in single stream recycling, the question was posed “Has single stream peaked?” Though there are exceptions, it would appear most municipalities who have gone the single stream route want to remain with it. Among municipal industry participants, the question seemed to be more along the lines of whether glass should be excluded, as it is in Houston, or source separated, as Portland does.
Recycling is Not Free
Another common theme that emerged was the need for increased dialogue between haulers and customers and municipalities in order to educate them that recycling in general, and particularly when including recycling collection, is not free. A number of participants noted that recycling should be viewed as a service to be paid for like any other service, particularly as other waste streams (i.e. food waste) are added. In the session “Municipal Contract Best Practices”, there was surprising agreement between processors and municipal speakers that they must be equal partners sharing the risks and rewards of recycling. It was stressed on both sides that open communication and transparency are the linchpin to this, and it is equally important to focus on the controllable issues, not the recycled commodity markets. Education efforts to control “wish-cycling” and lower residual rates are also key, given the perfect storm of the rise of single stream, China’s Green Fence and the depressed commodity markets. Ironically, it was noted that OCC, a very desirable commercial recycling stream, has become an issue for many municipalities as there is now too much of it for the bins, given e-commerce!
Is Franchising Necessary to Reach High Diversion Goals?
Despite the reality of the evolving ton, lightweighting of the waste stream and glass issues, most municipal and state recycling goals are still weight-based. It was noted that up to 40 percent of the waste stream is readily recycled (think of the traditional streams), another roughly 30 percent is attainable at a higher cost (think organics), while the remainder requires more technological and/or end market progress or may just not be recyclable at all. Yet, recycling goals well in excess of 50 percent and zero waste programs continue to proliferate. Lisa Carlson of the City of Los Angeles noted that the city’s establishment of a commercial franchise system was (at least in part) based on the fact it was viewed as an important tool in reaching its 2025 goal of 90 percent. To meet that, the city must divert 1 million tons annually from landfills, and the franchise system is expected to provide added control to enable that to happen.
Food Waste and AD
Food waste recovery is a perennially hot topic, and the general consensus was that it was inevitably going to increase, despite the higher costs involved. Anaerobic digestion (AD) seems particularly well suited to processing food waste, and a number of the municipalities and states that are pursuing or enacting food waste landfill bans or diversion goals are exploring or encouraging AD facilities. Given the scalability and cost issues which the AD industry still faces, however, digesters on dairy farms and municipal wastewater treatment facilities are more common and cost effective outlets for food waste currently. The downside is, in essence, capacity, as such facilities can only absorb limited amounts of food waste. So the question remains whether AD facilities will end up being a ‘Field of Dreams’ phenomenon or a chicken and egg conundrum?
Leone Young is the Principal of LTY ERC, LLC, providing consulting and research services to, and conducting special projects for, the environmental services industry, primarily the solid waste sector.