August 4, 2015
By Elisabeth Comere, Director of Environment and Government Affairs, Tetra Pak
This past April, Waste Management’s CEO, David Steiner, declared that recycling in the United States is in crisis. He’s not alone. The CEOs from four of the country’s largest waste management companies have all recently called for a “dramatic overhaul” of our curb-side recycling system. These bold statements demand our attention and speak to a complex array of factors undermining recycling performance in this country.
Export demand for US supply of recovered materials has weakened as a result of the strong US dollar, and the low price of oil has made it difficult for recovered plastics to compete against virgin resin supply both domestically and abroad. The transition to single stream recycling systems has resulted in higher contamination levels which, coupled with softened demand and lower commodity value, wreaks havoc on recycling system performance and profitability.
With commodity prices falling, profits are taking a hit and the business case for recycling certain materials is eroding quickly. According to Steiner, the by-product will be belt tightening in the form of plant closures and a shift away from collecting low-value materials, like glass, in curb-side recycling programs.
For those of us working in this arena, we’re attuned to other system dynamics that hinder the potential of our country’s recycling system. For one, the ability of haulers to adapt to changing market conditions is stymied by restrictive, multi-year contracts. In addition, the patchwork of local recycling programs creates inconsistency with respect to materials collected and confusion among residents about what is recyclable. It also acts as an impediment to achieving economies of scale. And local governments across the country are increasingly saddled with program and capital costs they simply can’t afford. Low landfill tipping fees that act as a perverse incentive to squander valuable resources don’t help, nor does the propensity of some households to throw just about anything in their recycling bin while many others still do not recycle at all.
If that weren’t enough, we have new types of packaging launched on a near continuous basis that are disruptive to the existing recycling system. This isn’t to say that we should denounce innovation but rather we should recognize the impacts of our actions at the end of the chain and own up to the fact that expecting material recovery facilities (MRF) to take on the full burden of handling these new materials is not sustainable. If MRFs fail, the entire system fails. And then where will we be?
To put it starkly, not only have recycling rates stagnated in the US, we may actually start to go backwards. Already, companies like Coca-Cola have pulled back on their commitments to using recycled feedstock because affordable, suitable quality supply just isn’t there.
This is irrefutable evidence of a system failure. We are missing out on a huge opportunity to reap the benefits of what Accenture coined the “Circular Advantage” — the competitive edge enjoyed by those that act now and act big on making the shift to circular business models, resource recovery being one of them. Our current method for valuating material is a major hindrance to circular thinking. We separate materials into low- and high-value categories but what we should be doing is asking if an end-market exists for this material and if not, how can we keep it in circulation? Collectively, we need to think “out of the box” and use our collective innovation capabilities not just to design new packaging, but to discover new and creative applications for various post-consumer materials. With the right outlet and application, a material that is perceived as low value by today’s conventional standards could in fact be a highly valuable feedstock in the next cycle of product development.
And let’s not forget the environmental impetus for getting our system to scale. Recycling is an important weapon in our fight against climate change and, by reducing the need for virgin resources, helps to preserve natural habitats and biodiversity crucial to planetary and human well-being. READ MORE…