Investing in Zero Waste: Some Lessons for L.A.

Date: 1 Jun 2010 | posted in: waste - zero waste, Waste to Wealth | 0 Facebooktwitterredditmail

Zero Waste is becoming the new conventional wisdom when it comes to handling municipal solid wastes. Public and private sector investors are staking claims to growth industries and doing well. At the same time, however, there are lemons and pitfalls to avoid. In the last few months, for example, it was announced that two successful Hollywood regulars were caught up in tens of millions of dollars of bad investments in a crumb rubber enterprise. (Processing old tires into useful products.)

The urge to do well by doing good can lead to a bad bottom line. Here are some things to look for as you explore zero waste investment opportunities:

1. Identify key sectors that will need immediate and long-term attention

… e.g., tires and rubber compounds, electronic scrap, construction and demolition (C and D) waste, organic materials.

2. Focus on companies that address large sections of the waste stream, and produce quality products that will be in demand.

Here are a few great examples:

  • Crumb rubber companies that produce high value virgin-substitute quality directly back to the tire, shoe or gasket manufacturer … not companies that produce crude low value material suitable only for roadbeds and asphalt mixes. The key strategy in crumb rubber from old tires is the pre-processing, or deconstruction of the tire into its component parts, before final processing. This includes separating the different kinds of rubber that comprise a modern car or truck tire. There is a crumb rubber company that meets these requirements; and, it is already qualified by the California Integrated Solid Waste Management Board. The company is looking for a site in the state.
  • Electronic scrap hand dismantling companies that recover working parts and segregate alloys … not companies that shred mixed products to recover lower value metals.
  • C and D companies that recover materials for reuse in construction and rehab … not those that dispose of the estimated 200 million tons of this material annually.

Organic matter comprises 50% of the estimated 250 million tons of municipal solid waste (garbage) discarded annually by households and businesses and government offices. These materials are a perfect recipe for high quality black gold–topsoil, amendments needed by agriculture and industry–worth $100 per ton and a requirement for a sustainable food sector.

3. Look for companies that are responding to new rules and regulations.

Electronic scrap and old tires, for example, have been or will soon be banned from landfills and incinerators. In Pasadena, California, a new ordinance came into effect in October containing new standards aimed at reducing C and D waste from going to the city’s landfill. Contractors must recycle at least 75% of this material. In San Jose, a contractor must put up a bond before building takedown. The bond is reimbursed after proof of recycling is presented to the city.

4. Track record.

Only consider companies with an operational history and established markets. Only consider newly developing companies that have provided independent, objective financial, market, political and legal review.

5. Purchase industrial land for recycling and composting industries.

Referred to as Resource Recovery Parks, these zones can form the backbone of the infrastructure needed for sustainable resource management in the near and long-term future. California has pioneered in developing Recycling Market Development Zones throughout the state. The City of Los Angeles has such an RMDZ. Private developers can invest in properties and recruit companies that would pay rent, as well as provide the zone developer with equity positions in each company recruited. Other innovative local governments include Hawaii County, Hawaii, and Alachua County, Florida. Hawaii County has developed an industrial site for the use of companies that process green waste and FOGs (Fats, Oils and Greases) into new biological products. The County has issued an RFP for companies that would use the public facility. In Alachua County, 300 acres adjacent to the current county solid waste facility have been purchased for the development of an ecological industrial park. The Gainesville Chamber of Commerce is assisting the county in recruiting new companies as well as helping existing recycling companies expand.

There are many companies out there that meet these few simple requirements for safe and profitable investment. Many companies are open to and often more than willing to partner with local non-profit community development organizations. These joint ventures open up additional sources of project financing.

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Neil Seldman

Neil Seldman, Ph.D, directs the Waste to Wealth Initiative. He specializes in helping cities and businesses recover increasing amounts of materials from the waste stream and add value to the local economy through new processing and manufacturing facilities. He is a co-founder of the Institute for Local Self-Reliance.