Pacific, West and Northeast are hit hardest by rising recycling costs and disappearing end markets

By Christina Weiler, Colgate University, Founder of UCan Nonprofit Organization

China’s material import ban continues to wreak havoc the United States recycling industry. In previous posts, we explored the worsening effects on recycling infrastructure in individual US States, based on Waste Dive’s ongoing investigation. In this post, we analyze industry impacts by region.

Based on Waste Dive’s assessment, the Pacific and West regions are most affected by Chinese policy, followed by the Northeast. The Midwest and the South are significantly less affected. The table below outlines the degree of impact by region, indicating the percentage of respective states considered Heavy, Noticeable, or Minimal impact. The rightmost column lists the overall “impact score” of each region.*

The recycling industry in the Pacific shows the greatest disruption, with 100% of states identified as Heavy impact, resulting in the highest possible impact score of 3. Since China announced its material restrictions, the region, and to a lesser degree the West, has been scrambling to reorient its recycling infrastructure after losing its primary customer in China. Similarly, all Northeastern states are affected, with 18% showing Heavy impact and 81.8% showing Noticeable impact. In all regional cases, the impacts can be explained by the disappearance or unavailability of the closest markets: China for the Pacific and U.S. processors for the Northeast.

Over the last decade, many domestic processing facilities, or material end markets, were put out of business because of market competition in China. Exporting material to China became more profitable than domestic processing for US waste managers, or material suppliers, since China was willing to pay more per ton of recycled material and international shipping was cheap. However, after Chinese markets began to dissolve in 2016 with the advent of the Green Fence program, it became apparent that the remaining domestic end markets were insufficient to handle the material collected by US recycling programs. For example,  Waste Management has closed 20% of its recycling facilities since 2014.  

Today, domestic processing capacity resides principally in the Midwest and the South because of lower land and labor costs. With local end markets to fallback on, impact scores in these regions are comparatively lower. Conversely, given higher processing costs and competition from overseas and lower-priced domestic recovered materials processors, the industry in the Northeast has largely disappeared. Recently, a cardboard recycling plant closed in Connecticut, and tons of glass were left market-less after a glass manufacturer closes in Massachusetts.  the absence of end markets, and high transportation costs obliterating the option of sending material cross-country, Northeast material suppliers are forced to close. Ultimately, there is insufficient capacity to process even half of the total materials collected domestically, which contributes to the country’s widespread difficulty.

Another contributing factor to the high impact in certain regions is that high diversion rates result in more material available, which, ironically, makes these areas more vulnerable to disruption if outside markets evaporate. Diversion rates are defined as the percentage of waste materials not buried in landfills, and most likely processed in recycling or waste-to-energy plants. After China banned imported recyclables, many end markets for materials vanished and high performing recycling regions felt the impact first. The Northeast and Pacific, for instance, recover the most municipal solid waste (MSW) at 37.1% and 34% respectively, and are the most affected regions with impact scores of 2.25 and 3 respectively. The Midwest and the Southeast, however, have the lowest material recovery rates at 26.2% and 23.2% respectively, and therefore are the least affected regions in the US with impact weights of 1.75 and 1.53 respectively.

Naturally, regions that separate a high volume of recyclables and also lack end markets will experience enormous pressure. As the cost to recycle a ton of waste increases, the profitability and possibility of increasing recycling declines. For instance, in some Northeastern municipalities, the cost to recycle a ton of materials is double or triple the price of landfilling, and set to increase further. As a result, materials set out on the curb by residents for recycling often today end up landfilled or incinerated. Even the greenest cities are forced to landfill materials that communities intended to recycle with some having stopped accepting recyclable material from residents entirely. In the case of Pensacola, Florida, residents were not informed that all materials collected for “recycling” had been landfilled for the past seven months, much to their chagrin.

Unfortunately, landfilling our recyclables is only a temporary solution that will end up costing even more money in the long run. Once people learn that recycling programs are paused or will be resumed at a cost, it will be extremely difficult to get people to start recycling again due to broken trust and lack of economic incentive. This, in turn, will make it more difficult to finance domestic recycling infrastructure.

In the short run, it will be relatively cheaper to landfill a ton of waste as municipalities temporarily dump recyclables. As the waste supply increases, landfill capacity fills more quickly and in turn this will raise disposal prices, so people will end up paying more for both recycling and waste management.

Despite these obstacles, many municipalities have begun implementing innovative solutions within the context of their climate, industry, and community strengths. This can be seen in Arizona where the state has found a market for mixed paper by selling a high quality “special news mix” to private recyclers in China. The arid Arizona climate keeps the paper dry, and thus, material quality high. Other municipalities that lack dry climates seek to channel mixed paper into composting streams in the interim of proper markets. To target contamination rates, Sacramento County launched a pilot education program for residents, aiming to clean up recyclables at every stage (product development, consumer disposal, and post-consumer processing). Utilizing a political approach, Colorado’s Department of Public Health and Environment has created grant programs to strengthen recycling infrastructure. Colorado is also exploring temporary materials end markets in Mexico and Korea.

The severity of impact is increasing by the day, as analysis in our previous blog post emphasizes. The US must develop infrastructure to process recyclable material domestically. Considering that recycling is currently economically unfavorable, even just maintaining the current anemic level of recycling, which has been stagnant for at least 3 years, requires communities themselves to insist recycling is worth the investment. After all, the first recycling facilities were built in the 1970s as a result of grassroots efforts to preserve the environment by reducing greenhouse gas emissions before becoming a profitable industry. Let us not forget, however, the public good of recycling. Recycling is an act of morality first and foremost. Savvy business models will restore the economics.

To rescue the movement, waste managers, governments, and communities must collaborate to create solutions that educate the public, optimize material quality, and form profitable end markets. Municipalities and facilities that adapt quickly will be most prepared to thrive in the brave new world of domestic markets for recyclable material.

*“Impact score” is calculated by assigning an impact value (1 = Minimal; 2 = Noticeable; 3 = Heavy) to each state in a region and calculating the weighted average of overall impact. The higher the number, the greater the impact.