Recycling conserves natural resources, prevents pollution, saves energy, and reduces waste sent to disposal facilities. It can also support American manufacturing, create jobs, and increase economic security by providing a domestic source of materials. For all of these reasons, when someone wants to improve the environmental impact of their business or household, recycling is often the first step they take.
Each week, Americans dutifully wheel their recyclables to the curb, unaware that the service they have come to expect and value is struggling to survive. At recycling facilities across the country, the crisis is clear: contamination levels are too high, commodity markets are too low, and recycled materials have few places to go.
Recycling has reached a crossroads. On its current path, residue rates will continue to rise, the demand for recycled commodities will dwindle, and recycling could become unavailable to most homes and businesses.
With a forty-year commitment to recycling, we at Casella want to lead the way to another path, a path that is headed toward the full recovery of clean, high-quality recyclables, and toward the establishment of diverse, domestic markets for recycled commodities. Through swift, decisive action, we believe that such a recovery is possible.
In this section, we describe the steps we’ve taken and our plan of action for the coming months. If all goes well, in our 2020 report, we hope to write that the commodity crashes of 2017 and 2018 were a blessing in disguise, shaking everyone out of complacency, and setting recycling programs on a path to true sustainability.
The chart depicts trends in Casella's Average Commodity Revenue (ACR) per ton, which is what we are paid for our sorted and processed recycled commodities, less the related processing, residue, and transportation costs.
As a percentage of 2011 levels; through June 30th, 2018
In 2017/2018, China rocked global recycling markets with a swift series of policy changes. The impacts - a 90% drop in market value for mixed paper and a 63% drop in the value of the traditional recycling stream - have left recyclers reeling.
It is no secret that a significant portion of the products in the global economy are manufactured in China. So it comes as no surprise that China became the top importer of recycled plastic and paper, the raw materials for all those products and their packaging. In recent years, Chinese manufacturers developed such a strong appetite for material, that they accepted it even with high contamination.
This lax approach changed abruptly early this year, when China banned the import of 24 types of recyclable materials and established exceedingly stringent quality standards for other recyclables. Even recyclers with high quality standards - including Casella - are now struggling to sell their outputs.
To date, China's actions have had negative consequences. With a shortage of recycled feedstock, demand for virgin wood pulp from timber harvesting has risen. Meanwhile, many recycling programs throughout the western world have been forced to curtail their recycling programs or dispose of recyclables.
Paper & Cardboard make up most of the recycling mix.Cardboard has increased as more consumers shop online and receive boxes by mail. Paper has declined as customers receive their media digitally rather than in the form of newspapers and magazines. We make processing equipment investments to accommodate these changes.
Glass is a growing percentage of the recycling mix. This strains recycling facilities because glass is expensive to process and markets are very limited. Some municipalities have begun to exclude glass from their recycling mix because of these challenges. We are exploring several ways to make glass recycling economically viable.
Trash in the recycling mix has reached alarming levels, due to confusion and carelessness about what belongs in the recycling bin. Our blended average has reached 9%, and individual loads come to us with contamination levels as high as 25% or even 50%! The impacts include risks to employee safety, damage to equipment, facility shutdowns, degradation of recyclable material, increases in disposal costs, and an overall decline in the efficiency and effectiveness of recycling systems. Coupled with recent market disruptions, the entire industry is grappling with this threat. We are working with our customers and partners to improve education and outreach.
Plastic & Metal are the high-value commodities in the recycling mix. Their overall presence (as a percentage of total weight) has not changed significantly. The presence of antiquated container deposit systems in some states continues to siphon valuable aluminum and polyethylene out of the municipal recycling stream, harming the economic equation that enables recycling of lower-value commodities like other plastics, mixed paper, and glass.
As the recycling mix changes, we must continuously innovate, upgrade our infrastructure, update our education programs, and help policymakers rethink legislative models. We must also be disciplined in deploying a business model that can evolve along with the recycling stream to keep recycling programs strong.
*Our focus today is on Paper, Glass, and Trash, which make up over 2/3 of the current recycling mix. We consider Mixed Paper and Glass to be "At-Risk", meaning there's not enough demand for them in the marketplace, and we need to cultivate new markets. Trash obviously does not belong in the mix, and we need to re-educate our customers to bring this number back down to 0%.
Percentages reflect outbound MRF tonnage, updated through June 2018