China’s Green Fence Changed Recycling – What Does It Mean For You?

Recycling is one of the best ways to protect natural resources and preserve the environment for future generations, but recent regulatory actions in China have changed the way America’s recycling industry works, causing many recyclers to closely examine their business model and contracts with customers and municipalities.

The catalyst is “Operation Green Fence,” an enforcement of regulations on imported recyclable scrap materials like paper and plastics collected from single stream programs and processed at material recovery facilities in the United States and other countries. Chinese authorities started enforcing regulations aimed at preventing the import of waste that was contaminated, as defined below, which reduced the value of the recyclable materials in 2013. Prior to Operation Green Fence, the demand for materials was high, and the enforcement of contamination specifications was lax which resulted in lower processing costs and higher market prices. Many in the recycling industry built their business models anticipating a higher threshold of contamination and sustaining the same high volumes of demand for single stream recycling. Some of these models also provided for subsidization of pricing in contracts with customers and municipalities.

The Green Fence may not seem like a big deal, but according to the Institute of Scrap Recyclers (ISRI), two-thirds of the 23 million tons of recyclable scrap material America collected in 2011 (almost half the total tons collected nationwide) went to China. This change is forcing the recycling industry to reevaluate their business model and cost structures.

Reducing Contaminants Creates Higher Costs and Lower Market Prices
China’s Green Fence changed the equation by cutting acceptable contamination levels in incoming recyclable scrap material from between 3 and 10 percent to 1.5 percent. Contaminants may sound like a bad word, but in recycling it refers to any material included in a bale other than the material being sold, so a piece of newspaper in a bale of cardboard is considered a contaminant.  Other contaminants include broken glass, organic materials like food waste and grass clippings as well as many other recyclable items that get mixed up during the collection and separation processes.

U.S. domestic mills responded by adopting and enforcing similar contamination standards to those associated with the Green Fence. As a result, recyclers added extra staff and machinery to improve the sorting of incoming material, which increased the volume and costs for disposal of contaminants and increased processing time, all raising the cost of recycling.

Chinese mills are also changing their buying habits and inventory management practices which is impacting demand and market pricing. Even with the added capacity in markets like India and Mexico, the reduction in demand from China has caused market prices to fall for nearly two years. Due to the impact of higher processing costs combined with lower market prices, many recycling companies are struggling to survive. Most likely, the Green Fence isn’t coming down anytime soon, this situation is here to stay and recyclers are adapting their businesses to become economically sustainable in this new paradigm. Signs of change can be seen in the United Kingdom market where they are migrating away from a focus purely on recycling volume to more on recycling quality. The United Kingdom increased their share of municipal waste recycling from 12% to 39% between 2001 and 2010 but are seeing recycling loads being rejected by mills and their costs increasing due to material contamination and are focusing on ways to improve the quality.

The New Green Paradigm
Advanced Disposal is dedicated to sustainable solutions for a healthier planet, and we support recycling, and we need to adapt to the new paradigm. The challenge is the solution needs to be a collaborative effort between consumers, collectors and processors. We need to start with consumers and educating them on the impact of contamination and the role they play in improving the quality of the recycling material at the curb or at their business. Single stream recycling, where consumers place all types of recyclables in one bin and recyclers sort it out for them, increases recycling volumes but also significantly increases contamination, requiring more costly sorting at material recovery facilities.

Are you Recycling Right? Read about what can and cannot be recycled along with common recycling myths at Advanced Disposal’s Recycle Right resource page.

Consumers often throw a container with food in it, inadvertently include clothing, used paper towels, or even trash like garden hoses and dirty diapers into a recycling bin. The combined impact of those individual recycling mistakes adds up to a huge problem and very high costs. Single stream recycling shifts the sorting responsibility to the recycler, and the process costs a great deal of time and money, even more with stricter contamination standards. Waste collectors can also improve in educating their workforce to recognize materials that contaminate recycling loads. The UK found that educating their workforce to recognize these materials reduced their contamination from 11% to 5% in one city and from 22% to 13% in another borough. At times this puts the collector in an uncompromising position of trying to service the customer but also enforce the rules that reduce contamination. This illustrates the need for collaboration between the consumer, business owner or municipality in enforcement.

One of the benefits of China’s Green Fence is that it has forced recyclers to produce a better product and provided the impetus to do a better job of educating consumers and business owners about how to better recycle, starting with simple steps like knowing what to recycle and what to throw away.

Committed to Recycling, Committed to the Environment
While China’s Green Fence changed the way recyclers do business, it won’t end our dedication to recycling. We can all take part in making a healthier planet by recycling smarter and working together to keep America’s recycling industry strong in spite of China’s Green Fence.

Sources: Improving the Quality of Curbside Collected Recyclables by Dr. Nia Owen and Dr. Adam Read



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