Trash and Cash | Bleader

Trash and Cash

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Environmentalists have long pushed recycling as a key element of sustainability, but it’s really only viable on a large scale because it became so profitable as a business over the last 25 years. Collection and sorting systems became mostly automated, reducing labor costs while ensuring that recovered materials were in usable condition. And the demand for recyclables surged—manufacturers found more ways to use them while the price of producing virgin materials soared.

Then the economy fell apart. By last October, people around the world essentially stopped making and buying stuff, and the price of commodities—including recycled paper, plastic, glass, and metal—plummeted from historic highs to lows not seen in decades.

Compounding the problem was a nosedive in demand from China brought on by the end of the summer Olympics. For months Chinese manufacturers had ramped up production and gobbled up recycled commodities because they knew they’d have to scale back operations during the games, when the government ordered cuts in air pollution. By fall many of them had excess inventory and weren’t buying anything else.

“From September to November, the markets dropped 75 percent—in a few weeks,” says Cal Tigchelaar, the president of Resource Management, a recycling firm based in south suburban Chicago Ridge.

Paper and cardboard typically account for 70 to 80 percent of what Resource Management handles. Last summer recycled waste paper was selling for as much as $150 a ton. Now it’s more in the $40-$50 range, and Tigchelaar says that’s after it’s rebounded the last few weeks.

“Business isn’t quite as much fun as it was,” he says.

The dramatic falloff means it’s costing many municipalities more to offer recycling services. Some are mulling cutbacks; others are looking for help from above, as in the Obama administration.

But Chicago officials say we’re doing just fine—in fact, the city is continuing to roll out its blue cart program, even if it’s at a painfully slow pace. All of Chicago’s houses and apartment buildings with four or fewer units are scheduled to have the service by 2011; in the meantime, the city has created more neighborhood drop-off sites.

“The value of recyclables did experience a significant drop recently but is making a slow comeback,” Department of Streets and Sanitation spokesman Matt Smith told me in an e-mail. “This drop in value of the material that we collect does mean that we make less on those materials. But everything that we collect is still recycled and we still benefit financially when people recycle because of the safeguards that we put into place.”

By “safeguards” Smith means its recycling contracts with Resource Management, Waste Management, and Allied Waste. The amount the city is paid for each ton of recyclables depends on what these companies can get on the open market, but the floor is zero—meaning the city won’t have to spend money to get rid of the materials no matter how weak the demand for them gets.

That’s a huge improvement over the deals the city struck with contractors to carry out its failed blue bag program. As Smith notes, not only did the city get no money for its blue bagged commodities—it actually paid more than $20 a ton to have them processed and sold off at a profit.

Still, it’s not exactly true that Chicago has made it through this downturn unscathed. As recently as last summer the city was getting $81 a ton for its recyclables. Now it’s getting nothing. In January alone, according to the city’s own data, 3,038.79 tons of recyclables were collected from blue bins. Though the city received zilch for them, a few months earlier it might have gotten $246,000.

On the other hand, that's still a better deal than sending the stuff to a dump, which in addition to taking a toll on the environment would cost taxpayers $40 to $50 a ton in landfilling fees.

This means the economy isn’t so bad that the city’s waste can’t be recycled. Tigchelaar has been forced to lower his prices, but he isn’t having any trouble selling the material he brings in. “The reason that this stuff is being used is still fundamentally there," he says. "It’s cheaper to use recycled commodities.”

Of course, from a purely environmental standard, it would be even cheaper not to generate so much waste in the first place. But that’s another issue.

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