How the latest mandates from China could affect the waste and recycling markets here in the U.S.
Many of you followed our recent Coast to Coast Sustainability Tour. After two weeks on the road, starting in New York, the team ended the tour in Seattle, where we met up with the first ever ENGIE Insight Waste Summit. The summit brought together business leaders from hospitals to hospitality, restaurants to retailers, with the goal of helping them find success in their waste programs.
The two-day summit explored critical topics such as how to kick-start circular economy business models and leverage employees to drive increased diversion and savings. We saw examples of sustainability in action by touring facilities like the Bullitt Center, the world’s greenest commercial building, and experienced data collection first hand during a live waste audit. However, the session that had me on the edge of my seat was the “Three Rs” panel (Regulations, Recycling Markets, and Rising Costs). With local, state, federal and international regulations coming into place, the waste industry is beginning a new era. Here’s a look into my personal highlight reel:
Green Sword Rule and Impact on Recycling Markets
The full recycling bin at your home or office makes you feel pretty good, doesn’t it? That’s less waste going to landfills, and you likely assume that the paper, plastic, cardboard and glass will be sorted and made into something new. You are probably correct if you have kept non-recyclables out of the bin. But you may not know that most of the material is sorted at domestic facilities, then loaded onto container ships (nearly 4,000 per DAY) and sent to China, where manufacturers use the materials for new items that are shipped back to the U.S.
While single-stream recycling has made it easier to collect recycled materials, it has also increased the rate at which recyclables are contaminated by non-recyclables. Chinese landfills are often overwhelmed with contaminated materials—and the Chinese government has had enough. In 2013 it implemented Operation Green Fence, a five-year initiative to more carefully inspect imported recycling materials and turn away substandard materials. In 2018, its policy became even more strict with the “Green Sword”, a rule that now prohibits or limits up to 24 types of recycled plastics and mixed materials from being imported to China. The government also set a strict contamination rate limit of 0.3% (later raised to 0.5% in June 2018), which is nearly impossible to meet—the very best rate U.S. recyclers achieve today is between 1 and 2 percent.
So, what can we expect to see over the next couple of years? If we cannot find a use for our recyclable materials, one impact of the Green Sword will be more waste in U.S. landfills. Another impact is the potential end of single-stream collection and a return to dual-stream recycling—meaning separate bins for each type of material—which could reduce participation rates in recycling programs.
Reduced Value and Rising Costs of Recyclables
For businesses that see their recyclable materials as a commodity, these changes have caused the value of recyclables to decrease. In March 2017 a ton of old corrugated cardboard (OCC) was worth $160, but by March of 2018, that same ton was only worth $74, down by roughly 50 percent year-over-year. This will have a significant impact on businesses and institutions that have relied on these material “rebates” to offset some of their operational costs.
As the value of recyclables falls, the cost of landfill rates are rising. The average cost per ton of landfill waste was $50.30 in 2017 and is expected to increase by more than 6 percent over the next five years. Rates in the Northeast are highest since the region is more populated, while rates in the West—where there is more ‘available space’ are lowest. Chinese regulations directly affect these costs since our current landfills have a pre-determined lifespan. If U.S. landfills fill up more quickly than anticipated, haulers will have to haul waste further and raise their price per ton of material. Some national waste haulers are already implementing new recycling fees, such as “resource recovery,” to help offset other losses.
Waste Regulations, Bans & Fines
With changes in our recycling markets, it has become critical to monitor our waste, and more states and local governments are instituting new regulations and banning some materials altogether.
Most recently the plastic straw and utensil ban in Seattle has made the news. This inspired California to be the first state to announce a ban on automatically distributing plastic straws to restaurant customers (note: they will still be available to customers who specifically request one). Hawaii was the first state to completely ban plastic bags, but several large cities like Austin, Boston, Chicago, Los Angeles, San Francisco, Seattle and Portland also have bag bans. Kroger—the nation’s largest grocery store chain—recently announced its commitment to be plastic bag-free at all of its 2,800 stores by 2025.
Hazardous Waste Equals Big Fines
As I recently wrote about, penalties for hazardous waste violations are increasing across the country. In particular, California has some of the most restrictive waste regulations in the U.S. and supports an active enforcement agency – the Department of Toxic Substances Control (DTSC). Retailers and other businesses have been fined millions when bin inspections uncovered things like batteries, aerosols, expired over-the-counter medications, and other household hazardous products. This will impact businesses in the future by forcing them to increase different waste services and focus internal resources on ensuring certain materials are not making their way into waste bins.
The good news? These changes to our recycling markets, costs, and regulations bring opportunity for innovation and for businesses to create a competitive advantage through proactive waste management. For example, after the plastic straw ban was announced in California, Aardvark, the only producer of paper straws in the U.S., was immediately acquired by Hoffmaster Group out of Wisconsin in order to expand and meet future demand.
While the waste landscape is becoming more complicated, it also remains full of opportunity. It’s time for business to be more vigilant, agile, and educated about their waste stream. Your waste program is the next “low hanging fruit” to score some big sustainability and savings wins.