U.S. Cities in 'Waiting Game' as Recycling Industry Faces Major Correction

U.S. recycling companies—and the local governments they work with—are grappling with the new market reality that dawned this spring when China severely restricted imports of recycling material from abroad.

“We’re in a waiting game,” Kurt Fenstermacher, deputy director of El Paso’s Environmental Services department, told Route Fifty this week. “We’ve been forced to examine what we’re doing.”

“Everyone is just scrambling,” said Peter Kwon, a council member in the city of SeaTac, Washington. “We’re hoping this is a four- or five-year phase.”  

In San Diego, city spokesperson Paul Brencick said the Environmental Services department is hammering out a new arrangement with IMS Recycling Services and Allan Company, the city’s recycling contract companies. He doesn’t know what the contractors are doing with the recycling material they’re still collecting from the city. “You’ll need to check with [them],” he wrote in an email.

Those San Diego contractors didn’t return messages last week but, according to The Wall Street Journal, they’re doing what recycling contractors all over the country have been doing over the last few months—seeking out new markets beyond China for the piles of used paper, plastics and metals that are slowly rising at their sorting and packaging centers.

New-era Recycling

Beijing announced China’s new policy to restrict recycling imports—called “National Sword”—in July 2017. It took effect in March 2018. Then in May, Beijing announced it would accept no recycling material at all from the United States for a month.

The new Chinese policy both bans certain kinds of recycling imports and requires any materials the country does accept to come in much cleaner—a level of clean some have said is nearly impossible to meet.

How the market change might translate on the ground in the United States is only now coming into focus. Enormous amounts of material and significant local revenues are at stake.

On Monday, July 30, the EPA released its latest national recycling and composting estimates. According to the agency’s Facts and Figures Report on collections made in 2015, Americans generated 67.8 million tons of recycling. How much of that recycling went to China? A lot.

McClatchy reported that for just the month of January last year, according the Solid Waste Association of North America, U.S. recyclers sent more than 208,000 tons of paper and nearly 75,000 tons of plastics to China. University of Georgia researchers recently estimated that by 2030 the amount of plastics alone that would have been exported to China—and now would have to be processed or landfilled elsewhere—would weigh in at nearly 111 million metric tons, roughly the weight of 7 million full-load semi-trailer trucks, which would be nearly as many semis as there are cars registered in Los Angeles County.  

For some cities, all that paper, metal and plastic generated much-needed cash. In a report delivered to San Diego City Council members in May, the Environmental Services department reported that in 2017 the value of recycling materials exported from California alone—62 percent of which went to China—equaled about $5.2 billion. The report explained that beginning this year, however, much of the same material has become a great surplus that has sent market values spiraling downward. The few countries buying recycling—among them Brazil, India, Indonesia, Korea, Malaysia, Mexico and Vietnam—have dramatically dropped their prices. The price paid for a ton of recycling in the non-China Asian markets reportedly fell from $150 to $5 this year.

The upshot is that the private companies that have traditionally bought recycling materials from cities and towns are no longer in a position to do that.

San Diego’s contract with IMS Recycling Services and Allan Company, for example, generated $4 million in revenue last year for the city. In March, the contractors proposed suspending all revenue payments to San Diego and to instead charge the city $20 a ton for any recycling materials they haul away, which the city estimates will cost $1.1 million next year. San Diego, like cities around the country, is in talks with its recycling contractors.

For now though, business at curbsides in San Diego goes on as usual. “There have been no changes to the city’s collection of recyclables or to the collection schedules,” Brencick said.

Plastic Bags and Broken Coffee Machines

Many cities and their recycling contractors are looking at where they can quickly begin to make up ground.

Clean, well-sorted recycling raw materials are easier to process and to sell, so a main area of improvement is to encourage residents to hone their recycling skills. This means committing to rinsing their recycling, placing it into bins un-bagged and finding other places to unload “aspirational” material that perhaps seems like it should be recyclable but in fact is not—the loose plastic bags, paperbacks, aerosol cans and broken coffee machines that “wishful recyclers” pile into their bins.

“This is the strongest piece in negotiations right now with our contractor,” said El Paso’s Fenstermacher. “We see a 34 percent contamination rate in our recycling. It’s problematic and costly for the processor.”

El Paso, like many cities in the Southwest, contracts with Friedman Recycling. Friedman this summer began charging Durango, Colorado, $25 per ton to haul away its recycling, leading the city in June to begin including a $2.69 surcharge on resident recycling bills.

“It’s a very fluid situation, day-to-day, week-to-week,” CEO David Friedman told The Durango Telegraph.

El Paso City Council members plan to reexamine the city’s contract with Friedman in the fall. Meantime, the city’s Environmental Services department is conducting a mailer and social-media education campaign that features recycling tips narrowly crafted so as not to confuse.

“Remember, pizza boxes and styrofoam cups/plates are NOT recyclable,” read a tweet sent out during the “March Madness” college basketball tournaments.

The city is also running a 10,000-home pilot program that features teams of inspectors who walk the streets tugging on and peeking into bins, checking for telltale heaviness and for obvious non-recyclables. They tag bins filled with contaminated loads—a signal to residents to get it right and to pick up crews to leave the bin un-emptied at the curb. The inspectors are keeping tallies on how many bins they’re tagging to see how effective the program is at changing behavior.

“We’re using what I call ‘dumbed down technology,’ because it’s quicker,” Fenstermacher said. “It was trial and error. We started out with a phone app, but that took too much time to plug in the information. Then we tried a smartsheet. Again, took too long. Now the inspectors use mechanical push-button counters.”

Fenstermacher said that over the four weeks the teams have been doing their work, the city has seen “some positive trends.” The Environmental Services department plans to perform a full audit in September.

The Nuclear Option

SeaTac Councilman Kwon said the Council, together with contractor Recology Cleanscapes, is “exploring any and all alternative options” to the current collections system.

One option is to end the recycling program altogether and landfill the material. “I call that the nuclear option,” Kwon said. Other options include renegotiating the city contract with Recology to “provide temporary relief,” launching a new public education campaign on recycling, and allowing Recology to inspect and refuse to pick up contaminated recycling.

“The recycling industry in the U.S. has not kept up with innovation,” Kwon said. “It was a market problem. All those empty shipping containers going back to China after delivering consumer goods here—it was very cheap to send the recycling material over to China. So now we have to ramp back up. And we’re very early in that process.”

El Paso’s Fenstermacher is also confident the ruptured market in recycling will be corrected. “The market for scrap isn’t going away,” he said. “I mean, we’re seeing  glimmers—different process mills right here in house—in the United States—are starting back up.”

This story was changed after publication to correct the spelling of SeaTac Councilman Peter Kwon's name.