It’s hard out here on a recycler

Whole lot of not so good in there.

When Waste Management bought the plant in 2010 and converted it to handle single-bin recycling, commodity prices were high, the city was on board and Houstonians were eager to recycle. As the company introduced single-bin recycling, residents became ever more vigilant about keeping bottles, cans and newspapers out of local landfills. But they also started throwing in nonrecyclables, which gum up machines and drive up costs.

It’s a national problem that Waste Management, based in Houston and one of the largest trash and recycling companies in the country, and its competitors have been grappling with the past few years. Recently it’s gotten worse. Back when commodity prices were peaking in 2011, companies could absorb higher costs of weeding out trash. But prices have dived since, and Waste Management is finding it can cost more to sort and process material than what it can get for selling it.

The sorting process costs $75 to $150 per ton, depending on how contaminated a load is, vice president of recycling operations Brent Bell said. The company then sells recycled material for just $80 per ton on average.

“Unless we can work out a way where recycling is profitable over the long term, there’s not going to be recycling,” CEO David Steiner told investors during a downbeat conference call last week, noting that commodity prices have sunk to new lows.

“It’s as low as it’s ever been, but we haven’t seen any indication of a bottom,” he said.

[…]

But there’s so much confusion among consumers over what can go in their bin. Grocery bags, for example, are plastic and have a recycling symbol, but can’t be recycled curbside. (Many local grocery stores collect them.)

Now that profits have plummeted, companies have more incentive to communicate what is recyclable.

“You have this whole perfect storm of things that has put the MRFs (materials recovery facilities) in a very difficult position,” said Patty Moore, CEO of consulting firm Moore Recycling.

Most facilities are set up to handle more paper than other materials, Moore said, but as reading physical newspapers declined, along with other uses of paper products, many of those facilities now operate less efficiently.

[…]

Then there is the decline in commodity prices.

Not only has China, a major destination for recycled materials, tightened its standards on the materials it accepts based on contamination, known as China’s Green Fence, but the nation is paying less for recyclables. Growth there and in other developing countries has been lower than projected back in 2011, weakening demand. They’re also producing more of their own recycled materials.

“If you look at the whole economics of that industry, it’s not very favorable,” Bell said.

Cheap oil is also a culprit, as newly made plastic is no longer more expensive than recycled plastic. For better or worse, it’s a lot easier to be green when oil is up over $100 a barrel.

Something as simple as putting recycling in a garbage bag throws off the process because the bag can’t be recycled. Depending on the volume workers are dealing with on the conveyer belt, they may rip it open, or just throw out the whole bag and its contents.

In March, Houston’s contamination rate was 17.4 percent.

“A fifth or a sixth of the material that’s going in there is really of no value, and not only is it of no value in terms of the end product, it tremendously increases the processing cost,” said Puneet Bhasin, who now runs Waste Management’s recycling business.

Contamination is why most in the industry see one-bin policies, like that Houston is pursuing, as a step in the wrong direction. Once paper gets wet or gets food on it, it has pretty much lost all value for recyclers.

That was the first thing I thought about as I read this. Whatever you may think about the One Bin proposal, and whatever the state of the technology may be, the current level of recycled commodity prices may mean One Bin is economically unfeasible, at least for now. That’s why I keep harping on where the Mayoral candidates stand on stuff like this. As the story notes, Houston signed a sweetheart deal for the collection of its recyclables when commodity prices were good. The expansion of the single stream program was largely financed by the revenues this deal generated. What happens when that deal expires? How committed are the candidates to recycling if we can’t get paid, or only get paid a minimal amount, for it? This is a non-trivial amount of money we’re talking about. It sure would be nice to hear the Mayoral hopefuls talk about this.

As far as the existential question goes, times may be bad for recyclers, but they will get better. There’s no going back – we don’t have the landfill space, and even if we did too many people wouldn’t accept it. But maybe we need to start thinking about recycling more as a utility, like trash collection, and treat it more like that. If that means adopting trash fees to support it, then so be it. Again, though, that’s a question for the Mayoral candidates. See what I mean?

Finally, as far as the contamination issue goes, the story spends a fair amount of time on that and mentions an outreach program that Waste Management is doing to educate people about what should and should not be put into recycling bins. It was the first I’ve heard of it, but I’m glad someone is doing this. The folks who oppose One Bin advocate for more of this kind of public outreach to help boost Houston’s recycling rate to at least the national average. Putting aside the challenge that low prices for recycled materials creates for that, what does that kind of program look like? What is the time frame for it? Is there a city whose example we could follow? And again, what are the next Mayor’s priorities for this? The One Bin path and the Not One Bin path are very different, and each his its own risks and rewards. I’m not going to stop harping on this until the candidates give me a reason to stop.

Related Posts:

• It’s hard out here on a recycler, part 3
• RIP, One Bin For All
• Still unclear where One Bin For All stands