The Case for Decentralized Recycling (Episode 55)

One of the reasons is environmental but the other is economic. Labor in China has been increasing in cost and the Chinese figured, why should they pay to clean up US recyclables? So over the next few years, they kept on restricting more and more imports from the United States of single-stream material, and in 2007 they announced a very strict policy in which they literally stopped taking US imports through a variety of means. They stopped issuing permits, they started requiring inspections in the United States then doubling inspections back in China, they limited the number of ports that the materials can come in. And the bottom line is that they in effect cut off purchasing sloppy recycling or single-stream recycling. And as a result of that, it really threw US cities for a loop because all of a sudden the market for contaminated recyclables disappeared.

Cities that use single-streams … Excuse me, double stream systems, dual stream systems in which the paper is kept separate from the other recyclables, those materials are cleaner and moving to markets. In fact, the Chinese have not banned US recyclables from the United States, they just banned US recyclables that are contaminated. And what’s happening now is that US firms, Chinese firms mostly and other foreign companies are purchasing facilities in the United States. Some companies, Chinese companies are building their own facilities to process the plastic in the United States into pellets, very clean materials that are what we call furnace ready, meaning the manufacturing company that imports this has the material when it’s ready to go into their manufacturing process.

Orders for plastic pellets from China are soaring and the same thing is happening in paper. Chinese and other foreign investors are building and purchasing US paper mills so that they can collect paper in the United States, the US recycling stream is very, very rich in good materials, and sending over either fiber or finished paper back to China for internal use. At the same time, the Chinese are starting, just starting to recycle from inside their own industry and economy and that is a very slow process. We’ve been following what’s going on in Chinese cities and the recycling programs and composting programs are in their nascent stages.

And what consolidation meant was not increasing the economy of scale of operations but centralizing ownership, and this happened through massive influx of capital to a couple of companies that then started buying successful smaller companies, so that now we have the four companies that dominate the national scene. Probably 50 or 60% of the market for hauling in landfill belongs to four companies. The two biggest ones are Waste Management Inc and Allied. What these companies have done is to convince cities through bargaining, lobbying, all kinds of cajoling to switch from dual stream to single-stream to make it easier for them to collect the materials. And they went this way because US citizens changed the rules for recycling.

Citizens passed laws making recycling mandatory, requiring all kinds of new regulations to support and nurture recycling. And the waste companies immediately had to switch to recycling in order to keep their contracts, and the contracts were important because market share is critical for increasing your profits not necessarily efficiency but increasing profits. And as a result, the concentration of capital allowed the large companies to buy up smaller companies, convince cities to go to single-stream which means a big investment in capital, and then ship the recyclable materials to centralized processing centers called MRFs, material recovery facilities that are far out of town. So the centralization of collection and then large processing plants allowed the industry to dominate recycling. And prior to that point, recycling was seen as an escape valve from the control that these companies had over garbage.

And as a result of that, we have companies in charge of recycling that really don’t like to recycle because they make so little profit. Last few years they’ve actually been losing a little money, whereas on the landfill side, some advisors we talk to, point out that profits at landfill are in the 60-70% range and profits in the recycling area are marginal. And in fact, recycling is a marginal part of these companies businesses, and their interest in recycling is mass throughput not quality, and that’s why we had … the result is single-stream collection, sending materials to concentrated large scale processing plants whose purpose is mass throughput not quality recycling. In that piece I point out that single-stream recycling can be very, very effective and I use to examples one in Boulder, Colorado run by Eco-Cycle, a grassroots company. And the other in Twin Cities, Eureka, another grassroots enterprise.

Those companies operate mass material recovery facilities that maybe … Range of 200-300 tons per day, whereas the large centralized facilities that are located out of town are processing 900-1,000 tons per day. And there was a wonderful example of this a few years ago in Wilmington, Pennsylvania where a private entrepreneur built a composting plant scale to 300 tons per day of separated organics. They were operating well, the owner made the mistake in my opinion of accepting an investment from Waste Management Inc and he proceeded to lose control over the company. As soon as Waste Management Inc got control of the company they scaled up the plant to 600 tons per day to get more materials through to collect more tipping fees. The result was that the system broke down, composting did not work under those conditions, the place started stinking and within six months the place was closed down by the Delaware Department of Natural Resources. And there was no effort to fix the plant, Waste Management Inc just abandoned it.

And it led to a lot of speculation that the investment by Waste Management Inc was done on purpose to shut it down, because Waste Management Inc, when stuff is composted, it’s not landfilled and they lose profits. That is an allegation. That’s logical given what we’ve seen what big waste has done, pushing incineration, pushing single-stream recycling, pushing mega-mass and mega landfills. So the efficiency in recycling and waste management is in decentralization. Localize the system and you save a fortune. I’ll give you another example, this time from DC. Up until about 10 years ago, DC had a very good dual stream recycling system. The materials were collected by unionized crews, they would be delivered to a dual stream processing plant in the city, owned by a minority company with about 20-25 workers. Well, for reasons that have never been explained, the city switched to single-stream which meant that company went out of business.

And instead of sending materials to a facility in DC on North Capitol Street, DC is now sending its materials about 40 miles up the road … 35-40 miles up the road to Elkridge, Maryland where it is being processed. The transportation costs alone up probably about $500,000 a year that are totally unnecessary because you don’t need to ship 25,000, 30,000 tons of recyclables 40 miles when you could process them in town or across the border in Prince George’s County.

And they collect them separately and deliver them directly to end markets or efficient processing centers and they revenue-share with the companies, whereas if you have a large waste company taking your materials, even if you recycle a lot, your price for services from these companies is not going to go down. Whereas if you go to a company like Roadrunner and you’re recycling a lot and you’re getting revenue share, the amount of waste and money that you have to pay to a large hauler is greatly diminished. So the more source separation, the lower the cost and the better the bottom line of these companies.

So what Eureka has done was to establish the escape valve for reasonable prices and good recycling. And one of the comments I’ll make John, you mentioned that separating into six or seven bags is a pain in the neck, if you will but very few communities ask citizens to do that. Most dual stream systems just ask you to keep two separations, paper and all the other mixed materials. And dual stream recycling which I just described takes about two minutes per person per week in a family to participate in, which is not a burden and in fact it’s an educational opportunity for children in the household.

One city, a city of about 75,000 people, Weston, Massachusetts. Since they went to unit pricing 20 years ago they’ve saved $10 million dollars from their budget because of avoided disposal fees at landfills and incineration. So pay as you throw or unit pricing is one thing that is an immediate help. Focusing on compost is another because composting if you do it yourself in your backyard you eliminate 15% of your household waste stream, it never enters the waste stream and of course composting curbside, you need more centralized facilities. We recommend about 200-300 tons per day as a maximum for composting separated organics. And the third thing that’s important is that there needs to be in town or in city processing. None of this shipping recyclables 35 or 40 miles away. There are a number of bad elements in that, I’ll get to that.

But the key is that whether it’s dual stream or single-stream, if it’s scaled properly, if the facility is owned by people who want to recycle, not just divert materials that’s critical, so scale and ownership are important. And then finally quality is important, single-stream materials can be recycled at the proper scale and if you don’t do it at the proper scale, you wind up in the situation that DC is in. Right now DC is sending glass along with other materials in single-stream format, glass is about 20% by weight of the recycled fraction of the city’s materials. So right now DC is sending 20% of its waste … Excuse me, of its recyclables 35 miles away and the system cannot recover glass in a format that can be used by industry. Glass is used by making bottles, sandblasting, cement manufacturing and construction clean fill.

It’s a very value material, it’s homegrown you could recycle it forever but right now DC’s glass for which they pay a lot of money to collect and ship up there cannot be recycled. It has to be used as landfill cover by Waste Management Inc. So the city is paying a lot of money to get the glass up there and get no benefit from glass recycling.

The other important part of recycling and composting for greenhouse gas emissions is the use of compost. There’s a wonderful group of people out in Marin County, I think it’s called the Marin County Compost Project in which they’ve shown that putting significant amounts of compost on arable lands actually reduces greenhouse gases. So these are very important reasons for the economy of cities, but also for cities to reduce their environmental impact on the earth.

In addition to this one company that’s now locating here as I mentioned, there’s another company in Manassas, Virginia, which is about 20-25 five miles away. Obviously the closer the facility is to the city the less expensive it’s going to be. But DC is also setting up a curbside compost program. We have a very active backyard compost program, thanks to new legislation passed this year in 2018, which provides monetary incentives to households that do a compost in their backyards or side yards. And as I mentioned before, it’s very wise of the city to spend 50 bucks per household to get them to do backyard composting. The 50 bucks is for a professional recycling bin, which of course you don’t need, you can build your own. But as I said, for every household that composts in its backyard you have 15% less waste coming out of that household, so a $50 investment to eliminate 15% of the waste forever is quite a bargain.

I would say that the most important thing is in-town processing, create job, proper scale good quality materials. It could be single-stream, it could be dual stream, if the owner and the scale are proper. I must give a shout-out to two of our close allies, Susan Kinsella and [Rich Kirkman 00:32:15] who wrote a piece, which is footnoted in my article on the Guidelines For Sensible Single-stream recycling. It includes compaction ratios, it includes not using cement floors, using sort of astro turf floors, and it also recommends the configuration of equipment at which point in the processing you take out glass. Obviously it’s good to get the glass out as early as possible, as soon as the glass is out it’s not a threat to the other materials. And also glass is the threats of the machinery, glass shards get involved, they get stuck in the oil and gum up the works, if you don’t mind my informal language. It’s in town processing, it’s composting, and it’s unit pricing, I think can get any city to 50% recycling and even more.

The length of contract is very important, and you have to do a balancing. You don’t want to give the company too long on their contract, because you want competition to come in. On the other hand you want the company to have enough security in their contract to make a decent investment and make the system work. So three years seems to be a reasonable length of contract for these recycling and garbage services. And some cities would add a one year option either for the company or for the city to renew.

Well, Recology used to be Sunset Scavengers which was a cooperative of Italian immigrant businesses in the 1930s, it could have gone back to the 20s. And for reasons that have been researched but I’m not quite familiar with the history, in the 1930s, the city charter was rewritten so that Sunset Scavenges had the exclusive right forever to serve the city of San Francisco for garbage and then recycling services. So San Francisco is unique in that it has a forever contract with this one company. Sunset Scavenges eventually evolved into this new company called Recology.

In fact, there was a major article on it couple weeks ago in the Sunday paper here in DC. There’re specialty companies, building deconstruction companies. There’s a wonderful group out in Lane County, Oregon, Eugene, St. Vincent de Paul that specializes in creating jobs for the hard to employ people and giving them the social services, the housing services, the training that are necessary for them to survive to do well in the economy and they’ve created 500, 600 jobs in their system. There’s another classic example in Baltimore, The Second Chance where the city and Second Chance, a nonprofit created some unique contracts giving … Any time a job is open at a Second Chances building materials company, it’s filled by someone on what’s called the Tanf roles, T.A.N.F. I forget what it stands for but it’s basically the welfare roles.

And if these people who are recruited through the system from the city complete a 10 week training program, they are guaranteed a full time job with health insurance and many other services. Well, when we started helping that company in 2003, they had six employees. Now they have 175 and all of those new employees have been recruited from the hard to employ. So as the people at second chance say, we’re not only saving materials and products, we’re saving people which is literally true. And these repair groups St. Vincent de Paul, Second Chance, the National Deconstruction, a nonprofit called the Reuse People they have branches is 16 different cities. These companies not only create good jobs and divert bulky materials from the landfill but they have incredible social impact, particularly E-scrap, electronic scrap reuse.

There’s one company called Recycle Force in Indianapolis, the national recidivism rate is about 75, 76%. In these reuse companies, speaking about Recycle Force, the recidivism rate of their workforce is 25, 26% and that dramatic reduction in people, young men and women going back to prison is an incredible savings in terms of expenses but also reduced crime, reduced hardship from criminal activity et cetera for both the victim and the perpetrator. So the social impact of reuse is dramatic and I always point out that in Eugene, Oregon the cost of living for low income people has gone down about 3% because through their 13 thrift stores, they sell all their refurbished materials, so not only are they creating good jobs for people but they’re providing people with furniture and appliances and clothing et cetera at a very reduced cost.

In fact their policy is, if you can afford it just take it. So these companies have … Reuse companies have a tremendous social as well as economic impact and we recommend that when cities have warehouses, own or control warehouses, that they turn these over to these reuse companies. And this is exactly what happened with the Second Chance, not only does Second Chance have the contract to train workers, it has a contract with the city to go into any school building or public building that’s scheduled to take down and the workers can what’s called cherry picking, pick out the very valuable materials before demolition. The other aspect of their contract is, Second Chance now owns 300,000 square feet of show space and storage space in downtown Baltimore, formerly owned by the city now transferred to Second Chance.

So these folks have worked with the city, the benefits to the city are dramatic and the benefits to the workers and patrons of the company are also dramatic. So I would say setting up a reuse center, a warehouse if available, each reuse business needs 20,000 square feet and will employ about 15 to 20 workers, so one warehouse can become a major reuse center for a city or even a region.