by MAURA KELLER
China’s decision to ban imports of recyclable items, including paper and plastics, has eliminated a major end market for North American recyclers, negatively impacting the costs of recycled materials.
According to Stanley Chao, managing director of All in Consulting and author of Selling to China: A Guide to Doing Business in China for Small- and Medium-Sized Companies, and based on conversations with Chao’s recycling clients who sell to China, the ban was a complete shock to them and the timing of it didn’t give them time to look for alternative solutions.
“Looking at the U.S. recycling initiatives, the ban throws things into chaos,” Chao said. “Everybody thought China would buy our garbage for the next 30 years. Nobody, and wrongly so, ever thought things were going to change. China is the world’s manufacturing hub so it will continue to need recycled paper, plastics and metals.”
Chao advised that all of the Western companies selling to China need to be close to their Chinese customers so they can gauge the future of their business. Things change so fast in China that companies constantly need to monitor the market, their customers, their competitors and the government ministry or ministries that govern their specific industry.
“U.S. recycling companies didn’t do this. All of these waste companies sold to an agent or intermediary that sold to a Chinese recycling company. They were too far from the market and didn’t understand what the recyclers were doing with the garbage. They didn’t go to China to visit the end users of their product. They didn’t see the writing on the wall when China declared 10 years ago that it had to clean up its pollution with respect to the air, food supply, soil, water and waste management,” Chao said. “The U.S. companies didn’t understand the social climate developing in China, as people became tired of all the pollution. China is getting out of the “third world country” phase and wants to be the leader in technological advancements, geopolitical affairs, and on environmental concerns. It doesn’t want to be seen as the world’s garbage collector anymore.”
As Jon Pyper, North America associate director of sustainability and advocacy at Dow Packaging & Specialty Products explains, the Chinese ban is now challenging communities to collaborate and rethink the way they manage waste locally. And, despite the plastics industry’s efforts to increase the plastics diversion rate to 24 percent in 2014, per the U.S. EPA, the net impact of the China ban may result in a flat lining or decline of this rate.
“The ban is forcing recyclers and communities to get creative when identifying new local end markets, while trying to further increase diversion rates in the U.S,” Pyper said. “This may include the adoption of innovative technologies, such as sorting equipment, to improve the quality of their recyclables and energy recovery technologies, which capture embedded value from plastic and convert it into valuable resources such as oil, diesel and potentially chemical feed stocks.” As Pyper explained, mechanical recycling and energy recovery are complementary means to capture the value of used materials and prevent them from being placed in landfills.
Potential changes to a community’s waste management system present an opportunity to re-educate consumers on how to dispose, recycle and recover materials properly and to reinforce where discarded items go after they are collected at curbside.
To offset the effect of the Chinese ban, manufacturers are finding that they need to be creative. For instance, an important focus of Dow’s 2025 sustainability goals is the company’s dedication to sustainability through policies and programs that advance the vision of a circular economy, where waste is converted into new products and services.
“One of the ways we’re doing this is by developing technologies that allow for the recycling of packaging formats that could not previously be mechanically recycled,” Pyper said. An example of this is Dow’s RecycleReady Technology, which is helping customers create recyclable pouches with the same benefits of multi-material packaging. The latest evolution of this technology, RecycleReady Technology with RETAIN polymer modifiers, enables the development of oxygen barrier packaging that can be recycled in areas where store drop-off programs exist.
“We would prefer if all plastics could be mechanically recycled, but unfortunately that is not the case,” Pyper said. “However, if communities are unable to recycle certain plastic items and instead send them to landfills, they have the opportunity to utilize alternative diversion initiatives to capture their embedded value.”
That is why Dow has also collaborated with Reynolds Consumer Products and other industry leaders to establish the Hefty EnergyBag program. The groundbreaking initiative offers an innovative approach to diverting hard-to-recycle plastics from landfills and converting the materials into valuable energy resources. The program complements existing recycling programs and can help remove otherwise contaminated material from materials recovery facilities, thereby improving overall recycling efficiency.
Additional Steps to Take
In October 2017, Chao began receiving calls to find alternative countries willing to take his clients’ garbage. “I called recyclers in Malaysia, Vietnam, Indonesia and India. Some of the U.S. companies are starting to ship to these countries, but the garbage is still piling up,” Chao said. “These countries simply can’t make up for China’s void.” On top of that, the profit margins are much lower given the higher shipping costs and the lower prices for garbage with lower demand.
“My view is that these countries will never fill China’s absence,” Chao said. “The U.S. will just have to deal with more garbage, which means more landfills, more incineration centers and many new processing centers will pop up that can convert garbage into reusable raw materials.”
Chao said that, in short, the U.S. needs to process its own garbage.
“We need to take responsibility for our mess, our garbage, and take it seriously,” Chao said. “These are opportunities that waste management companies will have to get involved in. They know how to collect it, separate it, burn it, and bury it, but don’t know how to turn, say PET, into reusable raw plastic. I also see opportunities where the Chinese will setup processing centers in the U.S. They’ll use their expertise, Chinese-made equipment, and experience to possibly setup joint ventures with waste management companies to establish major processing centers throughout the U.S.”
Chao also envisions paper and plastic recycling to shift to high-tech artificial intelligence and robots as the U.S. will need “cleaner” garbage with less contaminant in it.
“Corporations, instead of dumping their garbage to third parties, will manage their own garbage, looking at ways to reuse them. This means that non-traditional players like Amazon, Ford Motor, and Boeing may get involved in garbage not just for themselves but for the general public.”
The Long-Term Impact
As communities across the U.S. continue to grapple with the impacts of the China recycling ban, they will need to find new ways to locally manage their paper and plastic recyclables.
“Our hope is that municipalities, NGOs, local materials recovery facilities and brand-owner facilities in communities impacted by the China ban can take advantage of the insights we have gained through the course of the expansion of the Hefty EnergyBag program,” Pyper said. “We believe mechanical recycling should be utilized to its full extent whenever economically and environmentally feasible. Recovery alternatives such as the Hefty EnergyBag program also play a role for communities in need of local diversion solutions for plastics they are unable to mechanically recycle.”
Chao said he believes China will still take the higher-end garbage like metals but the contaminant restrictions will be much higher. “This could continue for another 10 years until China shores up its metals supply from their One Belt One Road initiative,” Chao said. “For the U.S., it means taking recycling more seriously. We’ll see state governments taking more action of restricting reusable plastic bags, straws, etc. And we’ll see a new industry emerge – the recycling and processing of reusable raw materials.”
Published in the May 2018 Edition
