Low prices for scrap are driving recyclers out of business.
About 90 percent of the 8 billion soda cans sold in California every year get turned in for recycling and a 5垄 refund. But cheaper commodity prices, plus lower Chinese demand for America鈥檚 used bottles and cans, have upended the economics of the state鈥檚 recycling industry. Over the past two years, California鈥檚 recycling rate has fallen enough to relegate more than 2 billion containers a year to landfills.
About 700 of the 2,400 redemption centers California had in 2011 have closed, according to CalRecycle, the state鈥檚 recycling agency, the majority in the past year. The mostly small companies that run the shedlike centers in parking lots outside grocery stores are being squeezed by a commodity bust that鈥檚 lowered the price they receive for recycled glass, plastic, and aluminum. The price they have to pay consumers for this detritus has stayed fairly high. A state subsidy program that was supposed to help make up the difference hasn鈥檛 kept up.
In most of the 10 states with bottle redemption laws, beverage companies such as PepsiCo pay recycling centers a fixed amount per bottle, which means the centers don鈥檛 need to rely on the market value of the scrap. In California, the state pays redemption centers for processing and handling recycled material. The centers also make money by reselling bottles and cans on the scrap market. Twice a year, California sets a minimum price that redemption centers have to pay consumers for their bottles and cans; it鈥檚 supposed to equal the deposit customers paid when they bought the drinks. This year, that鈥檚 $1.57 per pound for aluminum cans, down 2垄 from last year, and $1.19 a pound for plastic bottles, up 3垄.
Scrap prices have fallen much more. As of September, a ton of sorted aluminum cans went for $11.88, down 28 percent from two years prior, according to Resources Recycling Systems, a consulting company in Ann Arbor, Mich. A ton of plastic bottles went for $4.25, down 44 percent since 2014. Lower oil prices have also cut the value of recycled plastic, by making it cheaper than it was before to manufacture new plastics, and in some cases it鈥檚 cheaper than buying recycled materials.
The decline in the value of scrap is draining California鈥檚 Beverage Container Recycling Fund, which relies on the proceeds from bottle deposits consumers pay upfront to reimburse redemption centers. As of June 30, it had $195 million, down from $246 million a year earlier. At this rate, it鈥檚 expected to run out of money in the first half of 2018.
鈥淭here鈥檚 been a massive crisis and a massive failure to respond to that crisis,鈥� says Susan Collins, president of the Container Recycling Institute, an advocacy group in Southern California. Collins says the state needs to boost its 鈥渙utdated鈥� payment formula by as much as $1 million a month or follow other states, where bottling companies pay recycling centers a fixed amount per container. A spokesman for CalRecycle says the state is looking at all options.
China is the largest destination for U.S. scrap exports, taking about 11 percent by volume in 2015. Since 2013, under a government program called Operation Green Fence, China has been aggressively inspecting and in some cases turning away bottles and cans that are mixed in with food waste or other nonrecyclable scrap. The policy has forced waste processors in the U.S. to screen discarded containers more carefully, driving up costs and diminishing the value of some waste.
Since his local recycling center closed last year, Hiro Tani, a cook who lives in Santa Cruz, has had to take his used bottles and cans to a facility about 15 miles away. 鈥淚t kind of defeats the purpose if you have to drive that far,鈥� he says. Jose Ponce, who operates six centers in the Los Angeles area, says he鈥檚 struggling to keep his business open amid lower scrap prices. 鈥淚f it keeps going the way it is, I don鈥檛 know if I鈥檓 going to make it,鈥� he says. 鈥淭hat would be bad for the environment and also bad for people.鈥�
Waste Management, the top U.S. waste processor, has closed about 20 percent of its processing facilities nationwide in the past two years, says Brent Bell, vice president for recycling operations. 鈥淚f you told me today that China鈥檚 GDP growth rate was going to go back to 14 or 15 percent and the price of oil would go back to $100 a barrel, I would say we would go back to where we were. I don鈥檛 see those two things happening.鈥�
For more information visit聽