Is Recycling Profitable & Economically Viable?

Environmental advocates usually like to support recycling in some way, shape or form.

But, something that isn’t talked about perhaps as frequently as it should be is whether recycling is economical and profitable i.e. does it make financial sense?

Unless there is a good reason to subsidise or support recycling into the future, this is a question that needs to be considered.

 

Summary – Is Recycling Profitable & Economically Viable?

It can be, but it depends on various factors impacting profit and job creation including (but not limited to):

The material and product/item (including the design of the product) that is being recycled (different materials are more valuable as recycled resources than others)

What is involved in making a product new/from virgin materials (how cheap and easy it is to simply make something from new materials)

Collection fees for curbside recycling (single stream can be more cost efficient than double stream, but each one presents different pros and cons)

How efficient the recycling system is in a particular city (from picking up the recycling waste all the way through to sorting and eventually the recycled product – single stream facilities with the newest technology tend to be most efficient and cost saving)

Investment/capital costs for recycling facilities, and what it costs to maintain them

Transport costs of materials to recycling facilities, and then further down the recycled material/goods supply chain (which can eat into profitability)

The amount of jobs a particular recycling system and type of recycled waste stream can generate

The market demand and variations for different materials, and how they fluctuate (e.g. plastic prices fluctuate with oil prices … and this can be a long term risk for recycled plastic sellers and recyclers when prices drop)

The expectations for different countries and industries of recycled goods (what standard and quality they expect)

How governments help out and support recycling with new recycling technology, levies, deposit schemes, subsidies and more

Subsidies and long term price guarantees in particular can impact the market, and sometimes make it harder to gauge the economics of recycling compared to other waste disposal options

 

So, there are local, but also national and international factors that can determine the cost, profit and economic outlook for recycling.

In each city or town, different materials and products may make more, or alternatively less economic sense to recycle (compared to sending to landfill, or incineration)

Economics (job creation, revenue generation, saving budgets allocated to landfill disposal fees, and so on) obviously has to be weighed up against factors like resource depletion, environmental impact, and so on.

(Also note that new recycling markets may open up in the future, and waste management technology might change, which can also change things in the future)

 

Profit

We can look at examples…

Aluminum can be recycled infinitely because of how it keeps it’s quality and the fact that making aluminum new is expensive.

Some paper is hard to make from scratch or more expensive to make new compared to recycling it.

But, most plastics and on the other hand lose quality and durability each time they are recycled, and it’s also in many cases more cost effective to just produce new plastic material rather than recycle – especially in the case of plastic when oil prices (petroleum is used to make plastic) are cheap. There’s also a risk to recycling plastic – that if oil prices drop – the recycled plastic can be worth less than the cost of recycling them compared to what it costs to make new plastic.

Glass is another material that can be more expensive to recycle compared to making new.

 

Jobs

It depends on the recycling system set up – but in general, recycling provides more job than conventional landfilling in developed countries..

It’s probably also worth noting that recycling in developing countries can be profitable for pickers who may earn a higher wage picking recyclable materials, than if they were doing something else. So in this way – recycling creates jobs there, and also increases their overall recycling rate.

 

Overall

The type of material or resource being recycled has a lot to do with the economic sense and profitability of recycling, as well as local conditions and local recycling capabilities.

We might focus on recycling valuable resources, and not material with little economic value or that is cheaper to produce from new materials (and as long as the environmental impact is the same or less compared producing the material or item new)

It makes no sense to recycle low value materials and items just to say we are recycling and not dumping into landfill. Landfill technology has come a long way over the last 25-30 years, and are much better at capturing and treating methane and leachates in some cases.

The cost to transport waste and recycled goods also has to be considered – if the recycled material already has a lower economic value – transport costs only eat into an already unprofitable material or product.

Local governments can some things to help with making recycling a long term strategy for cities with investment in the newest recycling technology and facilities, as well as policies, subsidies, levies and fees that support recycling long term and in the short term.

Long term contracts between recycling companies and governments also help smooth the impact of market demand for different materials.

Even better – preventing low value recyclable waste from being generated at the consumer level is the most ideal approach. This can be addressed through consumer behavior, but also manufacturers changing the materials they use.

Whether or not recycling is profitable may be town or city specific, may be specific to a type of material and the product it’s used in, and may also depend on how markets and technology change over time. 

 

Further Information On How Recycling Can Be Profitable & Economically Viable

Profitability & Economics

  • … the relative profitability between recycling and the production of new plastic is strongly determined by oil prices.
  • When oil prices are low, it can be cheaper to make raw plastics than to recycle.=
  • … recycling processes can often lead to products of lower quality and economic value — often termed ‘downcycling’. This [can be an issue with trying to find a market for recycled goods and materials]

– ourworldindata.org

 

  • [China’s new policy on not accepting recycling waste impacted recycling rates in other countries]
  • … deposits schemes for plastic bottles, levies for certain waste like plastic lined coffee cups, and banning certain waste – can all help the recycling industry when it comes to economics and practicality. Certain types of waste like plastic lined coffee throwaway cups can be difficult and time consuming to sort, or just flat out not accepted by places like paper mills]
  • Recycling plastics can be profitable, but it is also capital intensive and risky [… when oil prices drop, recycled plastic becomes uncompetitive price wise]

– theguardian.com

 

  • [dirty and contaminated material, or low quality material, may not be accepted by recycling places in different countries or states, and this decreases recycling rates]
  • [because of the Chinese recycling export/import ban … the gate fee at a sorting plant in the UK] the council pays may increase because the sorting will have to be done to a better standard for new markets, or the price they get for any materials may decrease.
  • [the ban] could mean a double whammy for council tax payers if the price of our exported waste falls and the cost of UK disposal rises.
  • … hard-to-recycle plastics, such as meat trays and yoghurt pots [can be less economically viable to recycle]
  • … the UK’s market is geared towards shipping plastic scrap abroad. It is often more profitable to sell to Asia than Europe … because “European recyclers demand a standard of basic materials which is higher than the standard of things that can at the moment be exported

– unearthed.greenpeace.org

 

  • [recycling can work and be profitable – but it needs re-thinking and the systems and processes re-structured in some cities]
  • … materials – like tin cans and aluminum – are very hard to make using virgin materials and it’s best to recycle them
  • … But for others, like glass and plastic, if you take into account the cost of hauling the recycling to recycling centers (which can sometimes be further away than landfills), and how easy it is to make plastic and glass from virgin materials, it may not make sense to recycle them as much as we are now.
  • … there’s a life cycle associated with the recycling process and there’s a separate life cycle that’s associated with the landfill or disposing process [and both the financial and environmental costs and benefits have to be looked at for each]
  • … for recycling, it does take energy to collect that material, to process it, to transport it to recycling facilities, and then to finally put it back into production. And the benefit … is that for some materials, the ability to use those recycled materials offset the need to use virgin or raw materials for the same production processes. So that turns out to be a great benefit for some materials, but for others it doesn’t [in terms of cost and environmental benefit]
  • … aluminum cans or any forms of aluminum [is good to recycle]
  • … Bimetal tin cans (soup cans) … have a very, very positive life cycle signature
  • … paper as well has a very positive life cycle signature mainly, again, because it’s difficult and arduous to produce paper from scratch.
  • … glass bottles, plastic bottles, other forms of plastic … [generally aren’t good to recycle when considering the] environment and the economy … [in terms of cost and environmental benefit]. [the reasons for this are] it’s fairly comparatively easy to make plastic and glass from scratch, and the transportation cost because of the space bottles take up
  • [modern lifecycle costs and environmental benefits] look far more favorably on landfill now because of how they have advanced with how effectively they can collect and treat methane and leachate [and the same goes for incineration]
  • [so, recycling might work better for some types of waste, but not others, but – you probably have to look at the landfill and recycling technology being used, and the life cycle for different individual materials and items of waste]

– wbur.org

 

  • [have to consider whole lifecycle of recycling from pickup/transport, to the cost of running recycling plants, and selling recycled goods]
  • [recycling is a way we can reduce the consumption of some natural resources]
  • [the price of raw materials and how heavily subsidised by governments or residents of a particular city recycling is – are both factors that impact how profitable recycling can be]
  • [when we recycle glass – we are saving the virgin material sand]
  • …The best recycling is closed-loop: Steel cans and glass bottles are recycled into more cans and bottles, which are in turn recyclable. But some materials are currently “downcycled” into less desirable products that can be recycled no further. Soft-drink bottles made from PET (polyethylene terephthalate), for example, often end up as polyester fibers in clothing or carpets. It is possible to make new PET bottles from recycled stock, but the process is currently more expensive than making them from petroleum.
  • … Supply and demand also come into play [when considering economic impact]
  • … it’s difficult to get a clear picture of how much municipal recycling programs cost compared to landfilling or incineration, because of hidden subsidies and long-term price guarantees given to all types of waste disposal. But it’s fair to say that … it generally costs a little more to recycle waste than it does to dump it.
  • … Recycling economics are fundamentally local, since hauling and tipping fees [and collecting and processing fees] … paid to trucking operations and processing facilities that handle waste … vary from about $24 per ton in the south central and west central regions of the U.S., to more than $70 in the Northeast
  • [glass is made in part by sand, and plastic by oil – so the markets of these raw resources can tip the market for certain materials higher or lower in demand]
  • [long term contracts between recycling companies and a particular market or city can help smooth market fluctuations and add certainty to recycling economics]
  • [recycling technology isn’t cheap] … a typical single-stream facility costs $8 million to $10 million, more than double the price of a dual-stream facility (where paper is collected separately). [but, this can create a large increase in the recycling rate]
  • collection costs [of recycling] typically eat up 50 to 60 percent of the budget … [so single stream helps with efficiency and further lowering recycling costs]
  • [cost efficient recycling takes a large upfront investment in recycling technology, good market forces, and political policy]
  • [a recent study showed 90% of what goes to landfill has market value – so there could be further potential value in recycling than we thought]

– popularmechanics.com

 

  • [in some places] cans and corrugated cardboard [has value] … but, mixed plastic isn’t worth processing
  • recycling plants want clean recycling material … much of the post-consumer plastic recyclate is dirty and filled with debris
  • Sorting the various types of plastics by hand alone is a huge—and costly—job, and if the money isn’t there to make the recycled plastic worth the effort, it will go to the landfill
  • … Sorting is costly; careful sorting and cleaning of plastics that contain food remnants, labels and other debris to get the quality of plastics needed for reprocessing into pellets is even more costly. With the price of recycled plastics declining, recycling is becoming a less profitable business
  • … [the key to a successful recycling plant is to sort waste quickly and efficiently]
  • recycling involves collecting, sorting, cleaning, bailing, shipping, reprocessing and repelletizing
  • [to make recycling more economical, collectors might pay a higher price to deposit material, and haulers might pass this cost onto households for trash collection and disposal]
  • Recycling has been great for the paper and corrugated industry. While it still takes a number of resources (including fossil fuels and water) to collect and reprocess paper, that commodity is not nearly as labor intensive as plastics.
  • With the value of post-consumer plastic scrap being mostly in the BTUs that plastic can deliver in the form of energy, it makes little sense to recycle most plastic.
  • PET, which seems to be the most widely recycled material with the most benefits, will likely end up being the best bet for recyclers and reprocessors that need to be profitable

– plasticstoday.com

 

  • [in 2014] the recycling industry was an enormous economic driver in the United States. In 2014, the recycling industry employed more than 1.1 million people, generated over $236 billion in gross annual revenues and saved municipal budgets over $3 billion in avoided landfill disposal fees.
  • [having said that, the way municipal recycling contracts are structured need to be changed to factor in market demand drops and increases for certain materials. This will allow recycling companies and the communities more stability in the long term. They should redefine recycling contracts to value each commodity type individually in order to share in the true costs and benefits of the recycling market]
  • … the near-term and historical average price for recycled cardboard, paper, aluminum and rigid plastics is above the processing cost and therefore profitable to recycle. 
  • … recycled glass, on the other hand, currently lacks a robust end-market
  • [Profits for different materials in new structured contracts might be … cardboard at $50 a ton … paper at $5 a ton … PET plastic bottles at $150 a ton … HDPE plastic (laundry detergent, shampoo bottles) at $250 a ton …. and aluminum at $1,325 per ton.
  • [with materials like glass where the cost to recycle is more than the cost to re-sell … glass manufacturers might need to look at new and alternate uses for recycled glass that make economic sense]
  • [Overall, when communities and cities are deciding what is recyclable, they should consider that the market value of that commodity pays more than the cost to process it at the recycling facility.]
  • [recycling definitely has a place in our communities for creating local jobs, building shareholder value, preserving our natural resources and generating revenue for municipalities.]

– greenbiz.com

 

Job Creation

  • … a complex recycling and composting operation can be an engine for job growth
  • … for each ton of material, 20 more jobs are created when you recycle than if you put that material in a landfill

– cnbc.com

 

  • [in 2014] the recycling industry was an enormous economic driver in the United States.
  • In 2014, the recycling industry employed more than 1.1 million people, generated over $236 billion in gross annual revenues and saved municipal budgets over $3 billion in avoided landfill disposal fees.
  • [recycling definitely has a place in our communities for creating local jobs, building shareholder value, preserving our natural resources and generating revenue for municipalities.]

– greenbiz.com 

 

Alternative Options To Recycling

From theguardian.com:

  • … [instead of recycling plastic, a better approach might be] use less, re-use more, recycle the rest
  • … educate about recycling and the risk of contamination, more on-street bins for the most valuable, food-quality, plastics.
  • Uniformity [in recycling procedure and process] across the UK would be a bonus, but at the moment every council has a different contract and different standards [which can make economics hard].
  • … the fight should start before recycling, and before re-use. It should begin with the producer: use less plastic packaging
  • Make the polluter pay.

 

Sources

1. https://www.cnbc.com/2018/07/13/how-san-francisco-became-a-global-leader-in-waste-management.html 

2. https://ourworldindata.org/faq-on-plastics#recycling-landfill-or-incineration-which-should-we-choose 

3. https://www.theguardian.com/commentisfree/2018/jan/07/the-guardian-view-on-recycling-throwaway-economy-is-not-cost-free 

4. https://unearthed.greenpeace.org/2017/12/07/china-plastic-scrap-ban-crisis-uk-recycling/ 

5. https://www.wbur.org/hereandnow/2015/10/14/economist-rethink-how-we-recycle 

6. https://www.popularmechanics.com/science/environment/a3752/4291566/ 

7. https://www.plasticstoday.com/recycling/recycling-big-business-it-profitable/19442800958772/page/0/1 

8. https://www.greenbiz.com/article/yes-recycling-still-good-business-if-happens

1 thought on “Is Recycling Profitable & Economically Viable?”

  1. Would there ever be enough profit in recycling that they could give a small amount of profit to consumers for recycling used goods? The consumer would have to sort, and turn in cleansed items, in return for a very small amount of profit. Every one would be likely to recycle if they had a few dollars from it. Our world would be better off for it too.

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