David Lank

THE PARADIGM SHIFT Changes in the Recycling Industry

Carolinas Recycling Association March 2016 David Lank

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THE OLD PARADIGM Recycling is source separated from trash OCC is large and flat Fiber is 2 dimensional, mostly newspaper Containers are 3 dimensional Containers are bottles and cans made of one material MRFs are sources of net revenue Markets accept what MRF’s produce

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THE OLD PARADIGM Most MRF’s were designed and are operated based on the old paradigm Separate 2D from 3D – fiber from containers Separate the containers based on properties of materials of construction – optical, visual, magnetic, eddy-current, fracture

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THE PARADIGM SHIFT

MRF

COMMODITY MARKETS

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QUALITY DEMANDS

INBOUND COMPOSITION

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THE PARADIGM SHIFT

QUALITY STANDARDS HAVE INCREASED AT THE SAME TIME

THERE HAS BEEN A SIGNIFICANT DECREASE IN THE PRICES IN THE GLOBAL MARKET

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THE PARADIGM SHIFT

SHIFTING CONSUMER PREFERENCES AND NEW PACKAGING DESIGNS ARE

CAUSING A SIGNIFICANT CHANGE IN THE COMPOSITION OF WASTE STREAMS PROCESSED BY MRFS

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COMPOSITION PAPER AND NEWSPRINT Increased online consumption of news and media has significantly reduced the amount of newspapers and magazines available to recycle.

SOURCE REDUCTION Aluminum and metal containers are becoming thinner and lighter, requiring more units and effort at the MRF to collect and sort the same metric tonnage.

BIO-BASED PACKAGING Non-recyclable bio-based packaging, like PLA, often gets mixed with recyclables like PET, thus contaminating the stream and reducing overall value.

FLEXIBLE PACKAGING Manufacturers are seeking out and using flexible composite plastic packaging, instead of paper or glass. These materials are difficult to recycle, if they can be recycled at all.

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•  Stream composition changes have significantly raised the cost of recovery

•  Many existing MRFs were designed for traditional paper products (e.g. Newsprint) and can only process these new materials at lower throughput rates

•  More units must be processed (often by hand) to yield the same material output

•  Lightweight, flexible packaging is difficult to sort and impairs overall recovery rates

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OVERVIEW

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CONTINUING DECLINES IN THE VOLUME OF NEWSPRINT GENERATED FOR RECYCLING BY U.S. CONSUMERS HURTS MRF OPERATING EFFICIENCY

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PAPER

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•  Increased online consumption of news and media has significantly reduced the amount of newspapers and magazines available to recycle

•  Page count and density of printed media has decreased significantly over the past 10 years; Magazines and newspapers are thinner than ever

•  There are no more domestic ONP mills in the U.S., thus less market/competition and more transportation costs to get this product to market

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DECLINE OF NEWSPAPER •  Newsprint Facts (Source: EPA) o  1960: 7 Million tons of Newsprint

o  2000: 15 Million tons of Newsprint

o  2012: 8 Million tons of Newsprint

•  Newspaper Circulation Facts o  1990: Daily & Sunday papers just under 70% of U.S.

households

o  2010: Daily & Sunday papers under 40% of U.S. households

Source: Communications Management, Inc. “60 Years of Daily Newspaper Circulation Trends”

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Electronic consumption of news has significantly reduced newspaper circulation and recycling Daily & Sunday paper circulation to U.S. households fell from 70% to 32% from 1990 to 2013

TON

S R

ECYC

LED

CAGR

-6.6%

TONS OF RECYCLED ONP 2003-2013

Source: EPA, American Forest and Paper Association, Communications Management Inc.

The amount of recycled newspaper has fallen dramatically…

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THE AMOUNT OF RECYCLED NEWSPAPER HAS FALLEN DRAMATICALLY

3,000

5,000

7,000

9,000

11,000

13,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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2005 SUNDAY NEWSPAPER

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2015 SUNDAY NEWSPAPER

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IMPACT OF LESS NEWSPRINT • MRFs have big investment in paper screens

o Most efficient with high volumes of larger sheets

o Screens are a sizing tool – smaller materials don’t sort as well as larger

o Screens clog and jam with flexible materials like film plastic, textiles, rope and wire

•  Throughput often based on paper content

o With less paper, harder to maintain throughput levels, as screens don’t have material to sort

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WHAT REPLACES NEWSPRINT?

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CHANGING PARADIGM – CARDBOARD IS NOT ALWAYS LARGE AND FLAT

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CHANGING PARADIGM – PAPER IS NOT ALWAYS LARGE FLAT SHEETS

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•  Lighter, more efficient consumer packaging is changing recycling stream composition challenges the methods of recovery at the MRF

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CONTAINERS

6.3% CAGR from 2000 to 2012, compared to

1.0% for paper and paperboard

over the same period

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The amount of plastic recycled by weight has increased at a 6.3% CAGR from 2000 to 2012, compared to 1.0% for paper and paperboard over the same period

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ONGOING PLASTIC CONTAINER SOURCE REDUCTION (LIGHTWEIGHTING) BY THE LARGEST CONSUMER PRODUCT COMPANIES REDUCE PLASTIC AVAILABLE FOR RECOVERY

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RECYCLABLES WEIGH LESS •  Many packaging types are thinner and

lighter than in the past

o  Newspapers reduce paper sheet 10-15% in 2000s

o  2 liter soda bottle weighs 25% less than in 1970s

o  PET water bottle weights down 32% 2000-2008

o  Aluminum Cans 17% lighter than in 1990

o  Milk jugs (HDPE) 30% lighter than 1980

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30% Eco-Shape® bottle uses an average of

Less plastic versus comparable sized carbonated and non-

carbonated beverages

over the past 22 years

Reduced the amount of materials used to make PET

bottles by

60%

Coca-Cola has reduced its PET bottle materials by

25%

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THIS MEANS FAR MORE UNITS TO SORT TO MAINTAIN SAME WEIGHT OF RECYCLING

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Todayittakes

10,460more16ouncebo7lesto

makeonetonofrecycledPETthanin

1980

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ALUMINUM AND METAL CONTAINERS ARE UNDERGOING SIMILAR PACKAGE SOURCE REDUCTION TRENDS, REQUIRING MORE UNITS AND LABOR TO ACHIEVE THE SAME OUTPUT

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Source: Aluminum.org, As You Sow “Waste and Opportunity Report 2015”

AVE

RA

GE

CA

N W

EIG

HT

(GR

AM

S)

10

11

12

13

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1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2013

18.2% overall reduction

ALUMINUM CONTENT OF CANS

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SHIFT TOWARD BIO-BASED PACKAGING • PLA Plastics on the rise

•  Plastic-like material made from plants not oil

•  Looks and behaves like PET in recycling stream

•  Optical sorters recognize PLA as PET

• Reduces value of PET – contaminant

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FLEXIBLE PACKAGING IS GAINING POPULARITY WITH CONSUMERS, BUT THESE CONTAINERS ARE NON-RECYCLABLE AND MUST BE SORTED OUT TO LANDFILL WHEN THEY REACH THE MRF

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INCREASE IN FLEXIBLE PACKAGING •  Fast growing packaging trend is flexible plastics o Multiple resins combined in single product

o Very light weight – 1.5 lbs flex plastic replaces:

- 50 Lbs of Glass

- 6 Lbs rigid PET

- 3 Lbs aluminum

o When empty, is flat and behaves like paper

•  These contaminate Recycling Streams

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Product Weight

Package Weight Ratio

Glass Bottle/ Metal Cap 236g 198.4g ~1:1

Plastic PET Bottle + Cap 236g 22.7g 10:1

Aluminum Can 236g 11.3g 21:1

Stand-up Flexible Pouch 199g 5.7g 35:1

PACKAGING CONTENT OF TYPICAL CONTAINERS

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“VIRTUALLY NONE OF THESE FLEXIBLE

PACKAGING MATERIALS ARE

RECYCLABLE ANYWHERE IN THE

WORLD” – Natural Resources Defense Council

Show combined examples of these types of packages

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CONTAMINATION

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CONTAMINATION INCREASING • Contamination is on the rise in MRFs

•  “Wishful” Recycling – hoping materials can be recycled, even if not officially acceptable o New/different packaging

• More packaging types being put in recycling bin, regardless if acceptable, sortable, or marketable o Smaller sizes, flexible, multi-material

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DANGEROUS CONTAMINATION •  Lack of care in households for what goes in

the recycling container o More food waste, other household trash

- Compost doesn’t belong in recycling

o Yard waste, wood, hoses, etc. on the rise

o Increase incidence of bio-waste materials

- Medical wastes made from plastics

- Used personal hygiene products like diapers

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RESIDUE RATES ON THE RISE • Quantity of non-recyclables on the increase o Residue rates in MRFs up 2-3 percentage points

• Quality of non-recyclables getting worse o More true trash and bio-waste materials

• Disposal costs going up o Lowers ability of recyclers to share revenue

•  Lost revenue opportunity o Reduced sellables cuts into available revenue

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THE PARADIGM SHIFT 37 37

WE RECEIVE MORE NON-RECYCLABLE PLASTICS, LIQUIDS AND FOOD CONTAMINATED CONTAINERS THAN EVER BEFORE – WASTE MANAGEMENT SUSTAINABILITY REPORT (2014)

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THE PARADIGM SHIFT 38 38

THE LOADS COMING IN NOW AVERAGE 16% CONTAMINATION

– WASTE MANAGEMENT SUSTAINABILITY REPORT (2014)

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MOST CONTAMINENTS MUST BE REMOVED BY HAND THAT’S THE CURRENT STATE OF THE ART

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QUALITY

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THE PARADIGM SHIFT 41 41

MARKETS FOR SUB-STANDARD QUALITY HAVE DRIED UP OPERATION GREEN FENCE ISRI PAPER STANDARDS UNDER REVISION

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SUMMARY CHANGING INBOUND STREAM

•  Commodity stream controlled by consumer product packaging and consumer media

•  Decline of Paper in the mix o  Less newsprint overall

o  Increased variety of paper types – junk mail, office paper, catalogues & magazines

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SUMMARY CHANGING INBOUND STREAM

•  Lightweighting of Packaging

•  Many more plastic types and grades in the packaging stream over the last 10 years o  Move away from metals and glass

o  Increased diversity in packaging – rigid and flexible

o  Flexible plastics behave like paper products

o  Rigid materials thinner, flatten easier – paperlike

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SUMMARY INCREASING CONTAMINATION

•  Wishful recycling •  Carelessness

•  Education and communication

•  Variety of new packaging

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SUMMARY INCREASING QUALITY DEMANDS

•  Purity requirements •  Increased inspections

•  Downgrades and Rejections

•  Additional QC steps

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THE OLD PARADIGM Recycling is source separated from trash OCC is large and flat Fiber is 2 dimensional, mostly newspaper Containers are 3 dimensional Containers are bottles and cans made of one material MRFs are sources of net revenue Markets accept what MRF’s produce

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THE NEW PARADIGM Recycling is increasing less separated from trash OCC is sometimes large and flat, but also 3D and small 25% of Fiber is now 3 dimensional, much less newspaper Containers are thinner, lighter, flatter, less rigid, and more diverse in materials MRFs are sources of cost Markets have strict quality requirements

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SUMMARY NEW PARADIGM = PROCESS IMPACT •  MRF Design based on stream when built

•  Most existing MRFs built for paper recovery

•  No technology for contamination removal

•  2D versus 3D separation is increasingly less reliable

•  Sizing- as paper is smaller, travels with containers

•  Many more plastic types and grades in the packaging stream over the last 10 years o  Move away from metals and glass

o  Increased diversity in packaging –rigid and flexible

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SUMMARY NEW PARADIGM DEMANDS CHANGES

• MRF Design and Operation

• Packaging design for recyclability

• Reduce contamination in inbound

• Recognize the new economic realities

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THANK YOU