The time is right for recycling market development

Recycling market development is not a new concept. In the 1990s, the U.S. Environmental Protection Agency (EPA) created programs to try to drive recycling and recycled-content use and purchasing. Programs such as Jobs Through Recycling (JTR) included funding for grant programs like Recycling/Reuse Business Assistance Centers and Recycling Economic Development Advocates and facilitated a network of recycling market development professionals.

The 1997, the U.S. EPA publication “Jobs Through Recycling Program: What is the Connection Between Jobs and Recycling?” described the JTR program and its grant funding as supporting local companies using recovered materials with technical, business, financial and market assistance, including writing business plans, securing financing and assessing the marketplace for recovered materials.

These programs did affect jobs and recycling in the U.S.; however, support wanned—both political and financial. Initially, federal programs and mandates drove recycled-content purchasing within the government, but the private sector lagged behind. As political views shifted, so did the funding. Though results could sometimes be uneven or programs unexpectedly discontinued, these seminal efforts helped lead to the development of the current nationwide recycling system. 

Expanding manufacturing

Since the turn of the century, overseas manufacturing was expanding in light of its low-wage labor advantages and cost-effective overseas backhaul capacity. Strong trade trends made recyclable bales from Europe and North America very attractive. Over time, the capacity to use these recyclables outpaced supply. Consequently, export markets were accepting lower quality, off-specification bales to ensure supply requirements.

The focus for large importing mills that could handle more contamination became capturing a quantity of recycled materials. North American suppliers increased supply through convenience-sensitive single-stream collection programs and sped the mixed materials through material recovery facilities (MRFs) without removing all the contaminants. With little direct negative feedback in the form of rejections and downgrades, U.S. suppliers pushed the limits on contamination to meet supply demands. U.S. recyclers became comfortable with the export market and lagged in innovation to match the evolving recycling stream and packaging materials.

Quality restrictions

Smaller overseas mills and processors did not have the technology to deal with the contamination included in the commodity bales. That led to increased pollution in those countries. The Chinese government started to crack down on the contamination via increased inspections with its Green Fence and National Sword policies.

“The situation became untenable for regulators in those markets,” Michael Timpane, vice president of process optimization and material recovery at RRS, says. “The supply chain partners were missing the point that, though recycling is an essential input for manufacturing, off-spec materials with high contamination led to high disposal costs, lower yields and, in many cases, illegal dumping of plastics and paper contaminants into the environment, especially at smaller uncontrolled mill sites.”

When China instituted restrictions, other markets, such as Vietnam and India, started to take a large portion of materials that initially was going to China. But those markets, too, started to have similar issues with underperforming mills and the perception that the West was dumping its offal in their homelands. Inspections and bans followed in those destinations as well.

Overseas mills established their own MRF infrastructure and ramped up recovery domestically. In addition, large Asian mills started buying assets in the U.S. to generate materials to send to their manufacturing facilities overseas as either an intermediate pulp-state product or as a finished paper product.

“U.S. collection programs were under financial stress due to the decrease in commodity value and the need for capital investments to improve technology to meet higher quality specifications,” says Sean Duffy, associate senior consultant with RRS and former president and chief operating officer of ReCommunity LLC, a MRF operator.

Domestic focus

The market disruption cascading from National Sword and a growing chorus of outcry over environmental impacts related to recycling exports, particularly around the issues of ocean plastics and unregulated waste dumping/burning, led to a reinvigorated focus on domestic recycling market development. Improving domestic recycling markets was seen as a primary solution to make the U.S. recycling system more resilient and responsible while providing the supply chains necessary for brands to fulfil emerging goals around recycled content. 

© AMERIPEN, 2020

U.S. Annual Production Capacity, Current Usage and Future Committed Use (Goals) for Consumer Packaging PCR 

Policymakers and state agencies also are circling back to the notion that the recycling industry can be an effective economic development engine with triple bottom line benefits: people, planet and profit. Conditions are more favorable than ever to support recycling market development in light of technological advances and strengthened demand for recycled content through voluntary and mandatory requirements.

Recycling market development centers are entities or programs that typically are established and/or funded by state government. They are focused on improving recycling markets by supporting businesses that use recycled materials, bringing together resources, providing expertise and tools to coordinate strategies and overcome barriers and working to achieve positive environmental, community and economic outcomes.

States that had recycling market development programs since the 1990s and early 2000s, including Minnesota, South Carolina, Pennsylvania and Michigan, have been reinvigorated with a sense of urgency and added resources, while several states, including Washington, Colorado, New Jersey, Maryland and New York,  have begun developing new recycling market development centers,.

Developing domestic circularity

Recently, AMERIPEN and RRS published the report “Best Practices for State Recycling Market Development Centers” based on research into leading centers nationwide that highlights elements for state governments and related stakeholders to consider when establishing or improving recycling market development centers. Fundamental to a successful program are a proper establishing framework, implementation and operational funding, operational structure and programming tools and resources:

• Establishment includes the need to build political support through identifying champions, engage with state and local economic development communities and make the business and economic case for recycling. Once support and a clear vision have been developed, legislation can be outlined with clear intent and engagement of all stakeholders.
• Funding is needed to support staffing, overhead and programming. Diversifying funding sources can supplement state-allocated sources, including private sector sponsorships, grants, fees and even federal funding sources. Funding goes beyond running the program to also include funding that will support recycling supply chains and end markets that seek to establish or expand operations.
• Operations planning provides a layout of how the program will be lead (state-led or independent third party), staffing needs and advisory board responsibilities.  
• Programming outlines what the program will offer to develop recycling markets, including economic development tools, technical and business support, partnership/matchmaking facilitation and experts to provide research and recommendations for materials, supply chain, processing and communications.

"Recycling market development centers serve an important function to facilitate collaboration, innovation and partnership along the entire recycling value chain,” says Will Sagar, executive director of the Southeast Recycling Development Council (SERDC), Hendersonville, North Carolina. “This function is essential to connecting many of the disparate pieces within the recycling system, allowing domestic recycling markets to grow and thrive.”

State agencies play a key role in establishing and funding the center but also must engage a range of public and private partners, including local governments, collection and processing operators, reclamation and end market manufacturers, research institutions and trade organizations. There is no one-size-fits-all approach, however. Rather, each state has the opportunity to customize the approach based on local conditions.

Market demands

According to the “Post-consumer Plastics Recycling Data Report,” from 2010 to 2019, U.S. postconsumer plastic recovered for recycling shifted from an approximate 40 percent/60 percent export/domestic ratio to an approximate 10 percent/90 percent ratio. The COVID-19 pandemic has had a major impact on global supply chains for all products, and domestic supply chains could prove to be more reliable.

Additionally, U.S. paper mills are expanding and converting as a result of overseas regulations and increased demand for packaging, especially boxes, because of COVID’s impact on e-commerce.

“The U.S. recycling and manufacturing industries need to see each other as partners in creating products with recycled content for the consumer,” says Dan Felton, executive director of AMERIPEN, St.  Paul, Minnesota. “A collaborative effort is needed to improve commodity bale quality and create domestic end markets for these materials.”

Recycling should no longer be seen as simply an environmental practice that prevents material from going to the landfill. Recycling represents a tangible solution for climate action and is an engine for economic development, creating jobs and local investment in communities. The timing is right, and the opportunity is here for communities, recyclers and manufacturers to align and collaboratively drive growth and move forward toward a truly circular economy.

Bryce Hesterman is a consultant with RRS, Ann Arbor, Michigan, and can be contacted at bhesterman@recycle.com. Melissa Radiwon is the marketing director at RRS and can be emailed at mradiwon@recycle.com.