How the Big Blue Bin Has Made Recycling Awfully Expensive

Cities used to make a lot of money off recyclables. That's changed, largely because of what we're tossing into the recycling bin.

recycling sorting facility

A recent story in the Washington Post headlined “American Recycling Is Stalling” sent a shockwave through environmentalist circles. America’s recycling business, once lucrative for both cities and private employers, is now devolving into a “money-sucking enterprise,” the story concluded. And that’s despite years of growth in curbside recycling. One of the big culprits? Ironically, it’s blue bin recycling,  according to the Post:

Trying to encourage conservation, progressive lawmakers and environmentalists have made matters worse. By pushing to increase recycling rates with bigger and bigger bins — while demanding almost no sorting by consumers — the recycling stream has become increasingly polluted and less valuable, imperiling the economics of the whole system.

Before we go further, what exactly are the “economics of the whole system”? As ubiquitous as recycling has become, the business model is rather opaque. How does the city make money from empty soda cans on the curb?

Here’s a short primer. In cities like Philly with public recycling collection, the positive  — or negative — cash flow generated by recycling is heavily dependent on global forces. While the city’s Streets Department picks up recyclables, it contracts out the processing and resale of recyclables to a Materials Recovery Facility (MRF). The MRF is the place where monstrous conveyor belts and sorting machinery separate the valuable junk from the worthless plastic bags and other non-recyclables that make their way into recycling bins.

When there’s strong global demand for commodities like recovered plastic, MRFs pay cities on a per-ton basis for residents’ recyclables. But when markets are bad, it works the other way. Cities have to shell out a “processing price” to the facility, as these materials become more costly to process and less lucrative for MRFs to resell.

According to the Post, the nation is in the midst of “a three-year trend of shrinking profits and rising costs for U.S. municipalities.” The Post contends this can’t solely be explained by global forces. The story argues that local municipal management failures are also at fault. The biggest problem? People are cluttering up the recycling stream with too many non-recyclables. One of the reasons for that, the Post says, is that blue bins have gotten too big, and so people are tossing more litter into them:

With the extra room, residents stopped breaking down cardboard boxes. Because a full shipping box sometimes fits inside, even with foam and plastic wrap attached, all of it more frequently shows up at sorting facilities.

Residents have also begun experimenting, perhaps with good intentions, tossing into recycling bins almost anything rubber, metal or plastic: garden hoses, clothes hangers, shopping bags, shoes, Christmas lights.

That’s made sorting recyclables a harder, more expensive job for MRFs. Some have closed, including many facilities operated by the nation’s largest company, Waste Management, which posted a loss of $16 million in the first quarter of 2015.

But the Post’s analysis has many critics. Among them is Philadelphia’s recycling director, Phil Bresee. He acknowledged that Philly hasn’t been immune from the recent downturn in recycling revenue, but believes it’s a cyclical slump. For one, the city’s recycling program has only been in the red for one year.  This fiscal year, the city will pay out approximately $1.6 million in processing fees to the recycling facility it contracts with (or about $14 per ton of public collections of recyclables). But between FY2010 and FY2014, the city received $3 million annually on average for its recyclables.

That’s a big reversal, but one that can be explained by global forces, Bresee believes. He rattled off a few off: China (the largest importer of American recycled materials) is no longer sustaining an insane annual GDP growth rate of 10 percent, weakening demand for raw materials; the Chinese are also getting pickier about the quality of recycled materials; the cost of petroleum has been free-falling over the past year, making new plastic much cheaper to make and recycled plastic less cost competitive. There was also the nine-month labor dispute with West Coast dock workers that prevented lots of recycled materials from reaching overseas markets — costing MRFs money.

Bresee also thinks the Post missed a rather obvious and important point: Many cities that are not raking in revenues from recycling are still better off financially because of their recycling programs. Recycling might not pay like it used to, but it’s still cheaper for many of them to recycle than it is to dump. For example, Philadelphia pays $14 a ton to get rid of its recyclables in a down year. Dumping a ton of trash costs $60. That’s a delta of $44 a ton. In all, the city will save about $5.6 million in landfill costs this year by recycling rather than dumping.

That alone makes recycling much more than some City Hall subsidized environmental mission. But in other cities, the math looks worse. According to the Post, Washington, D.C. has been paying more to recycle than to dump, after the District replaced 32-gallon bins with either 48- or 64-gallon bins for residents starting last year. Contamination has “driven up the city’s processing price for recyclables to almost $63 a ton — 24 percent higher than if it trucked all of its recycling material, along with its trash, to a Virginia incinerator.”

Philadelphia uses smaller bins. That probably means there’s less contamination in the city’s recycling stream, which may help explain why the city hasn’t been hit as hard by the decline in recyclable values. But the Streets Department has been experimenting with larger blue bins — 32 gallons, compared to the standard 22 gallons currently — in a pilot program in two neighborhoods. In the study, one neighborhood started out with a higher-than-average recycling rate; one with a lower-than-average rate. (East Mount Airy and a small slice of the Northeast). The results? Larger bins led to a 25 to 30 percent increase in overall recycling rates, Bresee says.

So, would larger blue bins bode help or hurt recycling economics for Philadelphia? Bresee thinks that even if the contamination rate ticked increased a bit as a result of larger blue bins, the recycling gains will be worth it. He also thinks education and outreach can help Philadelphians figure out what belongs in the bin and what does not.

“As an industry, over the last five or 10 years, we focused much more on getting people to participate and be interested in recycling, and not much on ensuring the right materials are going into the recycling bins,” says Bresee. “We’ve refocused our own outreach towards recycling right and knowing the ins and outs.”