Getting the Max out of your MRF: Strategies for Increasing Revenues from Materials Recovery Facilities

Contracts

2012 County Forum on Innovative Waste Management, May 25th 2012

Phil Bresee, Broward County Recycling Program Manager

Recent MSW and Recycling Trends in Broward County

* WTE = Gross amount combusted

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Broward County’s Recycling Services: MRF Contract• Cities provide for “municipal solid

waste” (MSW) and recycling collection services

– All 31 Broward cities provide some level of residential recycling service

• County assists 26 partner cities’ curbside recycling through management of Materials Recovery Facility (MRF) contract

• Single-Stream since 2009

• 75,000 tons in FY 2012

• 1.2 million tons of County recyclables since FY 1994

• County rebates cities

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Pre-1980s Late 1980s 1990s ~2000 2012

Birth of modern MRF…state legislative actions and local government initiatives…

Managed source-separated material streams...Scrap dealers & vertically integrated companies (Weyerhauser, Alcoa, Anheuser Bush)…

Limited involvement from MSW industry…

A History of MRFs…

Transitions to dual-stream…driven by collections efficiencies, need for more through-put

Single-stream MRFs begin to emerge…China becomes major buyer…

The Evolution of Curbside Recycling…

Photo courtesy City of Minneapolis

Single-Stream Recycling: Keep it Simple...

• Single-stream invariably results in increased recyclables collections…

• Increased participation through resident / customer convenience; no sorting of program recyclables required.

• Cart and added capacity• Outreach and promotion• Initially driven by:

– Improvements in MRF processing systems and technology.

– Movement towards automated MSW and recycling collections.

– Demand for recovered paper by Asian markets in last 10-years.

Single-Stream Tonnage Increases from Select Cities / Counties (in %)*

0%

20%

40%

60%

80%

100%

120%

140%

Single-Stream MRF Technology

• MRFs use a wide range of technologies

• Recyclables processed using screens, trommels, optical sorting, air knifes, eddy currents, etc.

• Speed and angles of processing lines calibrated…

• Residue rates decreasing (<10%)…

Recyclables are Commodities…

Broward County’s Recyclables Average Market Value

MRF Services Contracting Evolution…• “All-in”, included with recyclables

collections (part of per HH fee)

• Mid 1990s MRF services split from collections

• Processing fees along with revenue share becomes more common

• Contracts adjusted pricing/revenue annually (one-year lags)

• Multiple variables:

– Processing price paid to vendor

– Residue allowance

– Revenue share

• Increasing private sector dominance (~70%);“DBO” contracts less frequent…

• Public ownership-private ownership?

– Public ownership/private operations

Revenue Sharing 101 More risk generally equals greater revenue share…

Advantages Disadvantages

Allows for jurisdiction to realize benefits of strong markets

Volatile recyclables commodity markets (2008-09)

Financial incentives to increase quantity

Unpredictable; more challenging to budget for

Financial incentives to increase quality

Increased administration costs

Revenues can help offset program costs

Enhances avoided disposal fee benefit

Revenue Share Mechanisms• Fixed $ per ton• Revenues based on contractor’s

sales (vendor must open books…)• Market index approach based on

% of average market value (AMV) of program recyclables– Waste & Recycling News

(containers)– Official Board Markets –

“Yellow Sheet” (paper and cardboard)

• Threshold-based (x% share at x tons)

• Host fees…

What are Your Recyclables Worth?

= $128.79 per ton

Know Your Recyclables Stream• Packaging trends need to be

monitored…

• MRFs of the future will manage a different recyclables stream

• New materials will be targeted for diversion (mixed plastics, film, scrap metals, etc.)

• Some commodities may morph into one (ONP, mixed paper)

• Materials can be culled from residue

Know What’s in Your Garbage

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Also know what’s in your MRF residue…

Carts are Key…• Wheels make it easier to recycle

• New carts have RFID tags for future recycling rewards program (e.g. RecycleBank™)

• Carts (64 or 96 gal.) hold 2-3 x more recyclables than two 18 gallon recycling bins

• Footprint of carts similar to two 18 gallon bins

• Lids keep materials dry and prevent litter

• More than 200,000 homes with carts by 2013

• Broward cities with carts are collecting an average of 35% more recyclables

Other MRF Contracting Strategies for Consideration…• Consider long-term contracts (10

years +)

– MRF price tags can be ~$20 million

– Longer contract allows vendor to depreciate equipment

– “Mega-MRFs” way of the future

• Allow for options, including transfer sites

• Establish residue % thresholds

• Be realistic – revenue share must be attractive to MRF operator too…

• Allow contractor to accept 3rd party tons

• Structure contract terms that help weather storms (floor prices)

• Be assertive at negotiations table – big MRF players typically receive more $ per ton than indexed prices…

• …but be flexible (e.g. fuel prices)

Thank you and Q & A

philbresee@broward.org