Local recycling surviving amid market collapse

Prices for scrap plunges, but local programs remain solvent


Local officials said that Middlesex County residents won’t be seeing any changes in the way they participate in their recycling programs, despite a severe drop in the price of recyclable goods that has some industry leaders worried for the future.

Recyclable goods such as glass, metal, paper and plastic have become one more causality of the current economic recession as prices have dropped to record-low numbers in a very short time. This is a worrying sign for those in the recyclable goods industry, who sell the cans, bottles and old newspapers people leave on their curb to companies looking to buy raw material for new products. As the economy worsens, demand for new products drops, which in turn causes a drop in demand for the raw materials to produce these new products, many of which are made from recycled goods. Consequently, recycling companies have reported steep drops in the price of items such as scrap metal, waste paper, and old plastic bottles, often by as much as half and sometimes more. Scrap metal, for example, was trading at $857 per ton in August but by No- vember had collapsed to $155, according to the Ferrous Scrap Price Index.

“When people stop buying materials and products, the demand drops for materials … It’s no different than what is happening to the price of oil: the demand for oil and gas goes down and the price drops, and the same thing with the recycled commodity market. Lower demand, and prices drop,” said Ed Skernolis, the acting executive director for the National Recycling Coalition, a nonprofit advocacy group.

Skernolis said that a result of this has been an increased financial pressure on public recycling programs across the country. Cities, when prices were up, would often make revenue off the materials that they collected from their residents by selling the bulk waste to private companies. As prices go down, revenue does, too. In some areas, programs are actually losing money as the costs to haul everything away exceeds whatever money they might have made. Consequently, some communities are storing their goods instead of selling them, waiting for the day when the market improves.

“I fear a prolonged recession … the longer this goes, as communities see the costs of recycling, as opposed to what might have been a revenue-producing initiative, go up, or the cost basis deteriorates, communities may be tempted to either slow down or stop their programs,” said Skernolis.

This is also a concern for environmentalists, who fear that reduced incentives to recycle might lead to increased use of landfill space. Sierra Club spokesperson Jeff Tittel said that while he is not concerned that recycling programs in and of themselves are in danger, he is worried that the amount New Jersey recycles could end up dropping at a time when the state should really be increasing the amount of material it recycles.

“We need to do a lot more recycling … Not recycling is a lose-lose for the planet,” said Tittel.

Tittel noted that when incentives to recycle go down, incentives to use landfills rise. He said that in the mid-90s, regulations that discouraged the use of landfills were dropped, such as the litter tax. This, coupled with a Supreme Court case that resulted in a drop in garbage haul prices, caused the state’s recycling rate to drop by nearly half, from 60 percent to 30.

Thomas Metzger, a spokesperson with the National Solid Waste Management Association, an industry group, however, said that as bad as things are getting with the recycling industry, he does not anticipate an increase in landfill usage as a result. While the specifics of how recycling is done vary widely from place to place, what they all have in common, he said, is that private contracts and public laws exist and manage how the process unfolds. Sending glass bottles to a dump instead of a recycling plant isn’t as easy as just telling the truck driver to go somewhere else, he explained.

“Every community is different, but what is true about all of them is that there are agreements in place, so a company or a municipality that has collected recyclable material can’t just turn around and deposit in a landfill without violating the terms of original agreements,” said Metzger.

Doing so would require changing local or state laws in the case of public entities, or renegotiating contracts in the case of private ones, and neither can be casually undertaken.

This is a point that Richard Hills, head of Solid Waste Management in Middlesex County, noted also, saying that they are actually not allowed to let recyclable materials go to a landfill. The only way to do so would be if the state Department of Environmental Protection gave an order allowing it. Furthermore, he said, landfill costs in New Jersey are rather high compared to what it takes to recycle, even now.

Skernolis, with the Recycling Coalition, made this point also, saying that the high price of landfill use in New Jersey should push incentives to recycle beyond what they are in other states.

“In your area, where landfill prices tend to be high, [low recycling prices] still may not be a reason to stop recycling, because the alternative is still very costly,” said Skernolis.

Hills said that it costs about $60 a ton to take garbage to a landfill, and that right now, the county has what he said were fixed floor price agreements with the vendors it deals with. This means that no matter what happens in the market with respect to recyclable goods, the prices are unable to drop below a certain point. If revenues drop below the floor, then the vendors make no profit. However, the county is fine. While it might make less money than it would if prices were higher, it’s not going to start losing money. So, said Hills, even if they were making zero dollars from their recycling program, it’s still better than paying for hauling recyclables off to a landfill.

“It’s better to get zero than pay $60,” said Hills.What he wanted to emphasize, though, is that Middlesex County residents will see no changes in how they recycle. The program will continue to be run as people have always known it.

“As of this discussion, there are no foreseeable changes,” said Hills.

Jeff Roderman, director of public works for Edison Township, had a similar assessment of the situation. Edison manages its own recycling program, outside the county’s, but it functions in similar ways, including negotiating fixed prices for materials with private vendors. Edison does its own curbside collections and sorts its own recyclables. It sells its paper and fiber products to a private recycler and, due to the fixed price, is still realizing revenues from it.

“We do have a bottom price on it, and we are fortunate at the time. Can’t say it’s the case going out, depending on how long the market stays depressed, but for the time being, we’re still taking in revenue for the

residents of Edison,” said Roderman.

Metzger said that downturns are not new to the recycling industry, pointing to similar slumps in 1974 and 1995. However, he said that industry leaders are calling this drop in prices “the most severe downturn they have seen and came on faster than any in the past.” While he did not fear for the industry itself, he said that the recycling infrastructure of the country, which has seen rapid growth in recent years, could be vulnerable.

Skernolis raised similar concerns and said that when the recession ends, the demand for recyclable materials will rise again, especially from China and southern Asia. With this in mind, it’s important, he said, to maintain the country’s recycling infrastructure in preparation for this day.

“Those folks don’t necessarily have all the resources they need to modernize their economies, and they will depend on recycled resources to meet expectations. We need to be prepared to make sure we’re doing materials recovery wherever possible,” said Skernolis.

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