Using the Market to Get Better Results in Recycling

by | Oct 16, 2013

gardner, paul, recycing reinventedIn a recent column published in the Environmental Leader, Laura Thompson, Director of Sustainable Development for Sappi Fine Paper North America, asked about the necessity for industry-financed recycling programs when many recycling programs already exist. This isn’t an unusual question to hear from the business community.

I would ask the question a different way: Is the nation’s recycling system meeting the needs of the marketplace and delivering the desired results?

The answer to that question is no.

Unlike problem materials like paint, household pesticides, and old televisions whose end-of-life management incur only costs, recyclables that you put out at the curb are commodities. They are bought and sold globally every day. They have value. But I’ve talked to many executives whose companies can’t get enough of our waste materials to make new products, packaging, and paper due to rising global demand and because we are putting a lot of it into the ground.

Industry both in the US and abroad deserves a lot of credit for getting recycling to where it is now. Back in the early 1990s, communities were collecting a lot of recyclables and manufacturers couldn’t handle it all. But thanks to a lot of hard work and major investment, the nation’s steel mills, aluminum smelters, plastics processors, paper mills, and glass plants have not only accommodated recycled materials, but in many cases they are now desperate to get more of it. Combined with increasing global demand for these resources from countries like China, prices for this material are likely to be very volatile in the decades to come. They need more supply.

Then the next question is, “What’s the best way to get more of this material in the most cost-effective way?” I believe that despite some great recycling programs out there, our current system needs a lot of work, and local government can’t do it at the scale necessary. Private sector leadership—with a little bit of government—using extended producer responsibility (EPR) would be the most efficient and cost-effective way to get the job done.

With our partner, Nestlé Waters North America, Recycling Reinvented has been making the case for EPR with major consumer brands, manufacturers, retailers, environmental groups, labor, and state and local government. The name “extended producer responsibility” sounds scary enough to many that it deserves a quick explanation.

Right now, taxpayers and ratepayers pay for household recycling on property taxes, utility bills, and hauler bills. We propose having the companies that sell packaging and printed paper (PPP) pay for the cost of that recycling instead. Acting together at a state or regional level, these consumer brands would charge themselves for the cost of recycling and then contract with vendors (including some efficient public sector programs) to use and enhance existing recycling infrastructure. Companies would have the scale to negotiate better prices, work with specialists to expand best practices, harmonize the types of materials collected, and otherwise promote more efficiency that local governments cannot do on their own. Fees charged to brands would be internalized into the cost of new products. Consumers would then pay for recycling according to their consumption but they wouldn’t see a line-item fee on their bill at the check-out counter.

These systems exist elsewhere, but usually government initiates and carries out the program without much input from the people paying the bill. American-style EPR for PPP would allow brands to design the system (with some protections by government of the public interest) in the most efficient way.

My company is now carrying out a cost-benefit study focused on Minnesota to show how EPR would work. By the end of the year, you will be able to see what the cost of our current system is, how it can be improved, how much it will cost to improve it, and how much that will cost consumer brands. We believe that EPR can get better results at a lower cost per capita. We’ve shared our methodology with two dozen experts from the public, private, and nonprofit sectors—including people who don’t agree with us—to see if we are framing the data in a useful way.

The bottom line is that the status quo is not working. We will not truly expand access to recycling or recycling rates in a meaningful way if we don’t take bold steps to change how we fund and manage the system. At least EPR moves us toward a solution.  Failing to act will allow solid waste costs to grow, miss the opportunity to create jobs, and leave industries paying higher and higher prices for those commodities we all just paid to put in the ground.

Paul Gardner is executive director of Recycling Reinvented.

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