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Are government subsidies going to save recycling?

December 9, 2008 - by Emma Ritch, Cleantech Group

The value of materials recovered in the recycling process is plummeting alongside oil and other commodities. 

Since favorable economics are credited with driving the recycling push of recent years (as opposed to eco-conscious consumers), the future of recycling is now in question.

The New York Times reports that the price of tin is down from $327 a ton earlier this year to about $5. Mixed paper is down from $100 a ton to $20 to $25. Glass is an exception, with prices remaining steady.

Prices are dropping because there's no longer a demand for recycled materials as the largest customer, China, has pulled back. Some collectors are stockpiling the recyclables until prices go back up, while others are refusing to accept more plastic and paper. Some are even beginning to charge to accept materials that they previously paid to obtain.

A new report last week showed that recycling paper and plastic consumes more energy and resources than it saves (see Report calls recycling a waste of energy). Metals were considered an exception to the findings, which suggested trash was better served as a fuel source for waste-to-energy plants.

So what does this mean for the businesses that have popped up to capitalize on the value of recyclables? It's unclear.

Philadelphia-based RecycleBank, for example, gets paid by municipalities to divert trash from a landfill to a recycling center.

If there's no value left in recyclables, will the industry have to resort to government subsidies to survive?

Comments

Bankruptcy: If OK for GM and Ford, it's good for recyclers too!

12/12

A potentially revealing double standard is at work here: if the 'environmentally concerned' believe bankruptcy is the solution for GM and Ford, then the same conclusion applies to the recycling industry, especially since recycling generates little or NOTHING to support the American people.

What's good for the goose is good for the gander!

Bankruptcy: If OK for GM and Ford, it's good for recyclers too!

I am not sure where you get your comment that recycling generates little or nothing to support the American people. It is well proven that recycling plays a significant role in reducing greenhouse gasses (see Stop Trashing the Climate referred to in my other response). Of course there are also the environmental benefits of reduced energy and water use and resulting pollution from turning pre-processed materials back into new products vs. what goes into mining and transforming virgin materials.

But the economic benefits have also been documented. According to EPA and other sources, recycling provides 2-10 more jobs/ton of waste than disposing of those materials in a landfill. And the National Recycling Coalition commissioned a study of the economic impacts of recycling using data from 1997-1999. Information about the study and an analysis of the methodology can be found on EPA's website at http://epa.gov/epawaste/conserve/rrr/rmd/rei-rw/index.htm

In Massachusetts, where I work on clean technology initiatives, we have identified materials reuse and recycling as one of five clean tech industries in which the state has leadership in terms of jobs, manufacturing, technologies, and academic researchers. According to a Northeast Recycling Council's study of economic impacts of recycling in Massachusetts (also around the same time frame as the national study), recycling employed about 20,000 people-- about 5-6,000 people more than the clean energy industry in the state in 2007. A few other facts from MA:

- the companies employing the 20,000 people in recycling (again, around the year 2000) had combined annual sales of over $3.5 billion. The indirect and induced effects associated with this activity include support of an additional 20,000 jobs and $142 in revenues

- the combined direct, indirect, and induced impacts of recycling in the state led to over $200 million being brought into state coffers in the form of taxes and fees

- in 2004, Massachusetts recycled 7 million tons of paper, glass, plastics, organics, textiles, etc. 4 million tons of that were turned by Massachusetts manufacturers into new products

- recycling the 7 million tons reduced greenhouse gas emissions by 2 million metric tons of carbon equivalent/year

What's currently going on in the market does not show a lack of planning or poor business practices as may be argued about the car companies (or the financial industry). It shows that 1) recyclables are commodities and will fluctuate up and down with international commodities markets, especially if we continue to not internalize pollution externalities of resource extraction and waste disposal and 2) that local markets should be developed to provide goods to local end-users, reducing transportation costs, environmental impacts, etc. It is another case that being so dependent on China to support our economy doesn't necessarily make sense.

But your comment also implies that government subsidies are what props up recycling, and this is also not the truth. Recycling collection services are paid for as a less expensive way to manage waste than sending it to landfills or waste to energy facilities. These facilities are not expected to pay waste generators to put their materials there. Why should recycling facilities, which provide much more benefit to society, be expected to do so?

Are government subsidies going to save recycling

We forget that throwing garbage away is a 100% subsidy, we don't ask for garbage systems to pay for themselves, yet some people seem to think that recycling has to stand on its own two feet, whatever that means.

There are many reports showing that materials reuse is benefits the environment. Stop Trashing the Climate is only one of them: http://www.stoptrashingtheclimate.org/

Recyclables are probably the only commodity that can still be used even with a negative price, meaning paying someone to take them is still cheaper than throwing them in the dump. So these commodities can still move in a slow market, as long as there is a use for them.

But despite all the clear environmental and economic reasons to recycle, let's ask these questions: who among us wants to live near a landfill, garbage incineration plant, strip mine or other extraction industry? If the externalities of virgin materials extraction and waste disposal were internalized- health impacts of air and water pollution, long term monitoring and clean up of landfills, etc- recycling would make even more sense economically. We've seen this over and over with many more environmental solutions: if the costs of pollution were internalized, you bet clean tech would be farther along.

The drop in primary, as well as secondary, commodity prices means that we aren't buying as much stuff. Hopefully it means we won't be mining or throwing away as much stuff, either.

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