Will Recycling Survive the Recession?
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The recycling industry is in a state of panic, hit by two forces beyond its control. The first problem is the economy (go figure). Demand for consumer products is down; retailers are focusing on price versus value. China (the manufacturer of the world's products) is not ordering recycled polymer. Indeed, a large number of factories in China are closing down due to lack of demand. On top of this, as recycling is a commodity industry, the price of plastic is directly related to the price of gas, and gas prices are low.
If you make virgin plastic, your costs are directly dependent on energy costs. However, if you are a recycler, your costs are not in the making of the plastic, but in the collection and sorting of it--and these costs are not as dependent on energy costs. Therefore, recyclers are faced with a problem that may be beyond a solution: They are forced to collect and incur costs (due to their municipal collection contracts) on a material that is worth 50% of what it used to be months ago and they cannot sell it anyway since there is less demand. The result of all of this is predictable: recycling centers are closing at a record pace. My prediction is that if nothing changed in '09 the recycling industry could die! (Too bad you can't short recycling).
There is a twist to all of this doom and gloom. Perhaps it will allow us to revisit the idea of recycling and why it is a risky proposition. If you define waste as a something you are willing to pay to get rid of then the approach to recycling is only 50% efficient. In other words when you make a plastic bottle you spend resources (money and energy) to create plastic and then additional resources to turn that plastic into a bottle. When a recycler gets that bottle they view the plastic as valuable and the shape as waste since they spend resources to destroy the shape to get to the valuable plastic.
If recyclers didn't focus on being a commodity business, they could instead collect soda bottles, clean them, sort them by volume (noting there are only a few shapes since most everything in our globalized system is standardized) and become a company that sold bottles to companies like TerraCycle. Not only would recyclers by definition become the cheapest source of packaging in America, they would also be the greenest source.
As Buckminster Fuller said, "Pollution is nothing but the resources we are not harvesting. We allow them to disperse because we've been ignorant of their value."
Let's revisit everything we consider "waste" since the solution many times lies in that realization.
Guest blogger Tom Szaky is founder and CEO of TerraCycle, Inc.
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