the role of recycling in growing the economy jerry powell resource recycling portland, oregon
TRANSCRIPT
The role of recycling in growing the economy
Jerry PowellResource RecyclingPortland, Oregon
www.resource-recycling.com
What we’ll look at today
• Changes in recycling markets through the decades
• An assessment of where markets might be headed
• A display of the regional opportunities at hand for economic growth through recycling
• Questions and (attempted) answers
Recycling markets
A history of U.S. recycling markets over the past three decades would focus on:-- market growth, especially globally-- the removal of much of the market’s volatility (except for late 2008)-- domestic market contraction-- investment and consolidation
Recycling market growth
In many ways, recycling has moved from being a green, niche market to a fundamental way to acquire raw materials. This growth has been aided by:-- technological innovation, such as deinking-- rising disposal fees-- growing scarcity of virgin raw materials
Recycling market growth
Examples of technological innovation:-- from corrugating medium to linerboard-- bottles-to-bottles plastics recycling-- optical sorting of plastics and glass-- recycled plastic decking products
Total MSW generation (by material), 2009243 million tons (before recycling)
MSW managementin the United States, 2009
MSW recycling volumes and rate
Recycling rates for selected products, 2009
We have seen growth in collections
We have seen growth in processing
We continue to grow
Recycling’s growth
Yes, more than 10,000 communities, where 63 percent of Americans live, now collect recyclables curbside. Yes, 193 million Americans can set out recyclables weekly.
But our progress has slowed.
Recycling rates have flattened out.
UBC recycling rate
HDPE recycling rate
PET recycling rate
Paper recycling rate
Steel recycling rate
Less market volatility
The value of recyclables has risen over time:Material 1990 2010ONP and OCC $40-$60 $130-$160Aluminum cans 30-40 cts 70-90 ctsPET bottles 10 cents 30 cents
Less market volatility
At the same time, recycling’s price moves are less severe. What explains most of the growth in recycling markets over the past two decades and the rising level of market stability? Hint: It’s a five-letter word.
Less market volatility
We have seen a fundamental shift in critical recycling markets. The continuing rise in Chinese demand, even during a recession, has resulted in systemic changes in the American recycling market.
Plastics exports
Ferrous scrap exports
Less market volatility
Even with rising exports, recovered material pricing has been very attractive, except for a recessionary dip in late 2008.
Homopolymer HDPEbale prices
Aluminum can prices
PET bale prices
Recovered paper prices(18 grades combined)
ONP No. 8 price
Ferrous scrap prices(No. 1 HMS)
Less market volatility
So what happened in the Great Recession of 2008-2009?
Impact on exports in the first quarter of 2009
Material Volume PricePaper - 14% - 22%
Plastics + 15% - 32%
Aluminum - 40% - 31%
Ferrous Scrap + 12% - 26%
Domestic market contraction
The crunch created by high export demand has had a profound impact on a number of domestic recycling industries. We’ll look at two examples: PET bottles and newsprint.
Domestic market contraction
PET reclaimers have lost share to Chinese buyers. This is the share held by exports for bales of plastic bottles from the U.S. MRFs:
2000 22 percent2002 35 percent2004 37 percent2006 51 percent2008 57 percent2010 50 percent
Domestic market contraction
PET reclaimers are thus operating at less and less of their combined capacity:
2004 84 percent2006 86 percent2008 80 percent2010 73 percent
Domestic market contraction
The situation is far worse for recycled newsprint producers, including mills here in Tennessee.
Paper collections continue
Use of recovered fiber by U.S. paper industry sector
Recovered paper exports
2010 recovered paper market2010
Marketplace
61%
39%
2010 Marketplace
61%
39%
Versus 2009
+7.0%
-3.8%
+3.4%
Versus 2009
+7.0%
-3.8%
+3.4%
Million Tons
31.3
20.2
51.5
Million Tons
31.3
20.2
51.5
Domestic
Exports
Total
Newsprint: a serious problem
North American shipments in million tons:
2007: 12.22008: 11.22009: 8.1
2010: 8.6This is a loss of 30 percent in just three years.
Paper recycling markets:Bankruptcies
AbitibiBowater NewsprintCaraustar Paperboard
Newark Group PaperboardSmurfit-Stone Paperboard
.
Paper recycling markets:Closures
Blue Heron Oregon City, ORCaraustar Chattanooga, TNCaraustar Richmond, VACaraustar Charlotte, NC
International Paper Albany, ORSmurfit-Stone Missoula, MT
Sonoco Rockton, ILSonoco Lancaster, OH
Investment and consolidation
We are going through a multi-year period of industry consolidation. New investments are being made, especially in collection and processing, and end users are buying competitors.
Investment and consolidation
More and more recyclables will be collected and processed by fewer and fewer players. Mergers and acquisitions will continue.
The impact
Big supplier Million tons/yearReCommunity 1.0
Greenstar North America 2.0Republic/Allied Waste 3.3
Waste Connections 1.0Waste Management 8.5
The impactBig consumer Million tons/year
Abitibi-Bowater 2.0Caraustar 3.0Cascades 2.1
Georgia-Pacific 4.0International Paper 5.0Rock-Tenn/Smurfit 4.7
The impact
Steel company Processing plantsCommercial Metals 36
Nucor 58Schnitzer Steel 42Steel Dynamics 27
The impact
Paper company Processing plantsInternational Paper 33
Newark Group 11Rock-Tenn/Smurfit 37
Sonoco 17SP Newsprint 21
6: Continued consolidation
Top 50 recovered paper processors:o handle nearly half of all collected fibero operate 612 plantso average plant does 3,200 tons per month
Source: Moore & Associates, 2010.
6: Continued consolidation
Top four metal processors handle 23 million metric tons per yearo Sims: 7.2 million metric tonso OmniSource: 5.8 million metric tons o Schnitzer Steel: 5.2 million metric tons
o David J. Joseph: 5.0 million metric tons
Investment and consolidation
Consolidation and investment are changing recycling. For example, MRFs are getting bigger. As more and more large, regional, hub-and- spoke MRFs come on-line, you’ll see smaller and smaller communities moving to single-stream recycling collection.
Investment and consolidation
And more people will be provided single- stream recycling collection service:
2005 – 29 percent of the population had access to single-stream collection2010 – 64 percent had access
The future: deindustrialization
The lack of attention in the U.S. toward an industrial policy will hurt recycling. As piles of recyclables climb, states will be urged to, once again, launch recycling market development programs.
The future: deindustrialization
Only 9.3 percent of American worker force is in manufacturing.
The U.S. added 937,000 jobs in 2010, while Foxconn, China’s largest employer, added 300,000. The company now employs one million.
The future: Chinese economic growth
Recycling markets will again shift as China becomes a developed country:
-- modest return of U.S. manufacturing-- higher westbound freight rates will dampen demand for
U.S. recyclables-- investment by China in raw material production in Africa, Asia and elsewhere-- China will become much more self-sufficient in recycling
The future: Chinese economic growth
National Association of Manufacturers: “China’s challenge to U.S. manufacturing has
peaked, and its competitive advantage is in decline.”
The future: Chinese economic growth
National Association of Manufacturers: “China’s challenge to U.S. manufacturing has
peaked, and its competitive advantage is in decline.”
Chinese CRT glass processing
Resource RecyclingPortland, Oregon
Resource RecyclingPortland, Oregon
Regional opportunities
Three large opportunities exist here, especially given the strength of the region in terms of recovered fiber, plastics and metals.The first is business retention.
Regional opportunities
Ahlstron, American Tissue, AbitibiBowater, Buckeye Technologies, Cascades, Chattanooga Paperboard, Domtar, Kimberly-Clark, Kruger, Lydall, PCA, Ponderosa Fibres, Rock-Tenn, Sonoco, Southern Cellulose, Tamko, Temple-Inland
Regional opportunities
Regional opportunities
The second opportunity is to increase supply. Here are just some of the ways:-- serve more sources, such as multi-family-- charge higher tipping fees-- make recycling participants do a better job
(the 20-60-20 theory)
Regional opportunities
-- consider mandatory requirements-- consider deposits-- provide convenience, convenience and more convenience-- implement pay-as-you-throw systems-- institute MRF best practices
Regional opportunities
The third opportunity is to establish new businesses in the region that rely on recovered materials. Place recycling and composting as key elements within any economic development initiative.
Conclusion
We are far from being a sustainable practice, and more effort is required for us to move forward. That is recycling’s greatest challenge going forward.
SustainabilityEconomy
EcologyEquity
Conclusion
We are ready once again to move forward. And we must.
Energy consequences of not recycling
Material
Annual lbs per
Household
Barrels Saved per
Ton Barrels Lost
Annually
Energy Value Lost
(@$75/bbl in billion
dollars)Value per
Household
Fiber 1,821.6 1.70 85,425,000 $6.407 $116.14
Aluminum Cans 27.0 40.00 28,936,875 $2.170 $40.47
PET Bottles 39.0 16.30 28,115,870 $2.108 $23.87
HDPE Bottles 30.1 16.30 20,454,870 $1.534 $18.41
Glass Bottles 883.4 0.12 4,543,855 $.341 $3.98
Steel Cans 19.2 1.80 1,141,756 $.085 $1.30
Total 2,820.4 1.93 168,618,226 $12.645 $204.16
168,600,000 barrels or 3.5%Source: SWANA/SRI
We are sending moneyto the landfill
Disclaimer Any resemblance to real persons, living or dead, is purely
coincidental. Some assembly required. Batteries not included. No warranty is made as to the accuracy of any prediction, opinion or
conclusion. Contents may settle during shipping. Use only as directed. No other warranty expressed or implied. Do not use while
driving a motor vehicle. No trans-fats. This is not an offer to sell or buy securities. Apply only to affected area. May be too violent for some viewers. For recreational use only. If condition persists, see
your physician. Freshest if consumed before date on the carton. No postage necessary if mailed in Canada. For off-road use only. Colors
may fade. One size fits all. Many suitcases look alike.
