U.S. companies deconstruct China's recycling import ban

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Some Western companies see China's upcoming crackdown on imported waste as an opportunity to upgrade their operations and use more recyclables in their own manufacturing, but challenges abound. 

In a bid to improve its image and decrease environmental health hazards, China will stop accepting 24 kinds of waste by March 1, including difficult-to-recycle plastic types 3 to 7, electronics waste and mixed paper normally headed toward its sorting and recycling facilities from around the world. The maximum amount of contaminated waste accepted will drop to .3 percent. 

Every day, about 3,700 shipping containers of recyclables are shipped to China, one of the world's top destinations for recycling due to its cheap prices for shipping and sorting waste and low levels of regulation. As China clamps down on the amount of hazardous contamination in its recycling bales, many of these shipments now idle in Hong Kong ports

"Recycling is a unique industry, but at the end of the day, it's a manufacturing environment. When demand for a product decreases ... we don't have the ability to stop the inbound flow," said Brent Bell, president of Waste Management's Recycle America program.

U.S. companies are scrambling to increase recycling capacity since recycled PET, PE, PVC and PS plastics, vanadium slag, recovered mixed paper and textiles will be banned by 2018. Scrap and waste are the nation's sixth-largest export to China. Meanwhile, low gas prices have spurred $185 billion in investments in U.S. petrochemical manufacturing.

In order to reduce the amount of waste going overseas, companies can turn to closed-loop recycling processes, which bring long-term benefits to organizations looking to save money on raw materials and lessen their environmental impact.

"In the U.S. market, you'll see a lot of paper mills start investing in other companies," Bell predicted.

And that's a good thing, as domestic recycling can drive revenues of at least half a trillion dollars across multiple industries, save cities more than $20 billion and reduce GHG emissions by more than 500 million tons of CO2, according to Closed Loop Partners.

Plastic, paper

Despite a dip in plastic bottle recycling in 2016, the five-year compounded annual growth rate for bottle recycling was a steady 2.1 percent, according to the Association of Plastics Recyclers (APR).

For instance, exports of high-density polyethylene, or HDPE (plastic No. 2) rose nearly 5 percent from 184 million to 193 million pounds from 2015 to 2016; however, the domestic collection of polypropylene (plastic No. 5, affected by the ban) rose by 15.3 percent in 2016.

"Some U.S. recyclers are seeing these short-term challenges as opportunities to innovate and invest in our plastics recycling infrastructure," said Steve Alexander, president of APR.

Some domestic companies are already thriving with recycled plastics. IntegriCo Composites manufactures rail ties from 100 percent recycled plastics in the United States. After partnering with Closed Loop Fund this year, it expanded its facilities to create new product lines from reclaimed plastic for the freight industry.

Companies such as beverage carton maker Tetra Pak, which aims to embrace the circular economy, are relying on public-private partnerships with materials recovery facilities and communities, including in China, to overcome the export hurdle.

Small volumes of such post-consumer cartons are exported to China by traders from the EU and North America, but in most markets, they are collected and recycled locally, according to a Tetra Pak Group spokeswoman. The company is working on the ground in China to secure local infrastructure for carton recycling, she said.

Zero-waste goals

Some companies, such as Subaru, P&G and Ford, are already eagerly diving in to match waste materials with useful inputs by setting zero-waste goals, whereby nothing goes to landfill and every output is matched with an end use.

These companies are either unruffled by the new regulatory landscape or see it as another building block for circular practices.

"An optimist might see this as an opportunity for improving quality and keeping recycled materials closer to home for a lower overall environmental footprint," said Steve Sikra, P&G's head of global R&D of material science and technology for packaging applications. The company plans to dispose of less than .5 percent of its manufacturing waste by 2020. "Ideally, this could lead to more quality PCR [post-consumer recyclables] available to support P&G's efforts to double our PCR use by 2020."

Automakers are on it, too. Subaru of Indiana Automotive (SIA), the automaker's only U.S. plant, has been waste-free for 13 years, saving $1 to $2 million annually. It ships no waste overseas, said SIA Executive Vice President Tom Easterday, but negotiates with suppliers to use reusable containers and absorbs faulty products back into production.

"In our bumper shop, if there is an error, we have a machine that instantly grinds it back to make new bumpers," he said.

Likewise, Ford has expanded its zero-waste-to-landfill program to 82 facilities around the world, diverting more than 240,000 pounds from landfills in the United States alone. Ford said China's new regulation won't alter its continued waste reduction efforts.

Although General Motors has a landfill-free production program, it feels pressure from China's waste ban and has reevaluated some practices, said John Bradburn, GM's waste reduction manager. "Like OCC [old corrugated containers] — do we really need to send that material to a market that consumes it in a traditional sense? Or could we do that along with making vehicle parts, like we did in using the physical properties of that material in sound absorption like the Buick Verano and Buick LaCrosse?"

GM has begun to design virgin plastics out of the production process by writing a specification to use polyethylene in packaging instead of using virgin mixed plastics, which "could drive the price down by creating more volume demand for that one particular type of material and create a better product."

"On a typical assembly plant in the automotive industry, we use around 250,000 to 300,000 pounds of that a year," he said. Yet designing for the circular economy makes companies more resilient. "It's not about being satisfied with returning to things how they were."

Out with the new, in with the old

Cross-industry business collaboration can help ease the burden of dealing solo with an influx of higher-priced recyclables. Last month, the Recycling Partnership and APR convened companies including Target, P&G, Coca-Cola and Keurig to pledge to use more recycled plastics in their industrial facilities and supply chains.

"We realized there are a number of materials that were on company's factory floors that can take a high amount of recycled material in them," said Dylan de Thomas, vice president of industry collaboration at the Recycling Partnership, including pallets, trash cans, caution cones and tote boxes. "It was a matter of flipping the switch." 

The goal is to create best practices to automate the use of up to 25 percent of recycled material, he told Bloomberg New Energy Finance.

Inter-company exchange platforms such as the Materials Marketplace can facilitate the transaction of ideas and materials. In 2015, a three-month pilot program involving 23 companies including Nike, Dow and 3M yielded 2.4 million tons of tradeable material.

"When the material was sent to China, it was brokered and managed by an agency in China that found manufacturers in-country who wanted it," said Andy Mangan, executive director of the United States Business Council of Sustainable Development, which created the marketplace.

Not only did the U.S. recyclers lose an easy outlet to the material, he said, "they lost connection to the true end users." The Materials Marketplace can let producers and consumers of recyclable and reusable materials communicate directly and efficiently, and create a supply channel that mitigates the risk of supply chain interruption.

Furthermore, "our shipment of these materials to China moved the environmental concerns relating their reuse mostly out of sight and out of mind," said Mangan. And now, state and federal environmental agencies are anxious to support users to safely process recycled materials and "mine the opportunities for jobs and revenues."