America's $100 Billion Recycling Industry Is About To Collapse
Published on September 01, 2018
Over the past few decades, America cleaned up the environment. We still have a long way to go, but it's a lot better than the 1960's and 1970's when we had an endless stream of headlines about lethal pesticides (DDT), burning tire dumps, massive ocean dumping, radioactive waste in landfills, and even rivers catching fire from pools of chemical sludge
. There are still a lot of questions about our environment and global climate change. Recent changes in regulations will make us less safe than in 2015, but we're still a LOT safer than in 1975. America's efforts to clean up the environment, recycling waste, and... What's that? We just shipped our garbage to China? And now they don't want it anymore? Well, that's... inconvenient!
America has passed a lot of rules and regulations, but we haven't built a lot of new facilities to deal with our garbage. Many cities have recycling programs, but most merely sort the valuable trash... plastics, metal, cardboard... and sell this to the commercial recycling industry. America's recycling industry generates $100 billion in revenue every year
. But this system only works if recyclables can be sold. Without the money from reselling our trash, many if not most of America's city recycling programs will die off.
Where is all of this recycling money coming from? Steel and aluminum can be recycled just about anywhere in the world. It costs far less to recycle these metals than to create new metal from raw ores. Cardboard, paper, and plastic are largely uneconomical to recycle domestically. Our technology is antiquated. If we did have advanced technology, we don't have enough recycling centers to handle our volume of paper. Commercial trash, for example, contains a lot of paper. Especially from offices. This type of high-quality paper is very much in demand... mostly, in China.
When America and China first started to trade goods in the 1980's (due to President Ronald Regan's free trade push), America and Europe received cheap goods from China in container ships. China, however, could not afford expensive Western goods, and containers returned to China empty. Eventually, someone thought that recycling Western plastic and cardboard in China and making new boxes and packaging for goods would make sense. And it did! All was good with the world. For a few decades. This win-win situation hit a snag in January of 2018 when stricter standards were enacted for recyclables sent to China. China's "Green Fence" standards were announced years ago, but few changes were made in America and Europe to address new requirements.
In the 1980's China bought Western trash because it was the best source of raw materials. Back then China didn't have much of a consumer market and few Chinese goods used western style packaging. Now, China is the second largest economy in the world, with a huge consumer market. China now uses local trash, instead of shipping it from the other side of the world
. Since the 1980's China has become one of the most polluted nations on earth. Unsurprisingly, a quick way for China to clean up their environment was to simply stop importing garbage.
China is still willing to import garbage, but only if it is flawlessly sorted and spotlessly clean. American and Europe cannot meet the new standards, at least not profitably. Ironically, if China had not bought our waste, America might have developed technology to cost-effectively deal with recyclables. Or we might have developed less wasteful packaging, and reduce the need for recycling.
Norway, for example, chose a different option. They burn their garbage, producing energy and heat for homes and offices. In America, we began to shut down incinerators in the 1970's. Research showed that incinerator smokestacks spewed remarkably deadly chemicals, like Dioxin. Norway uses advanced filtering to scrub toxins from incinerator emissions. The next issue was disposing of the rather toxic ashes, and their heavy metals and strange chemicals. But here too, solutions have been found. Ashes can be used in high-quality concrete, and the most advanced techniques permanently lock undesirable elements into the concrete
. That keeps toxins AND most of the carbon from burning out of the environment, forever!
But history went in a different direction when we outsourced to China. When someone pays for garbage, why reduce the amount you make? But now everything has changed. Corporations and municipalities were paid for high-quality trash IF they presorted their recyclables. American recycling centers largely just do more sorting, clean the plastic a bit, and then bundle bales of waste for the next player in the recycling pyramid. These bales will pass through several other intermediaries before they arrive in China, and their money enters the pyramid.
China is turning away more and more American recyclables, as they progressively raise their standards. Without this money, the whole process no longer makes sense. Bales of waste are piling up in recycling centers or are getting dumped into landfills. The selling price of recyclables has dropped rapidly. The price of "Mixed Paper", for example, has dropped by 90% compared to last year
. Not all areas are as severely impacted. Revenues at Casella Waste Systems, a very large player in the recycling market, are off by 40%. Even if the overall drop is less than 40%, with China continuing to reduce payments to the West, there isn't a lot of time left for the entire industry to make some very big changes. Add to that the trade war between America and China. President Trump has reiterated that a new, much larger, round of tariffs will hit in September. Will this trigger aggressive retaliation on our recycling industry?
As the recycling industry loses revenue, more recycling programs in cities and towns will shut down. Cities that made money off of garbage now need to pay to dispose of it
. And that's a tax on every American. Alternatively, we could copy China's model and find a way to... profitably... dispose of garbage. There is still time to do something, but that time is rapidly running out. Should the government invest in new technology, pay the cost of local landfills, or is there another option? Let's hear from our readers, what is the right answer?