CREJ - Property Management Quarterly - August 2015
Recycling is broken. That was the consensus earlier this month at the U.S. Waste Expo in Las Vegas, voiced at the “Heavy Hitters Roundtable,” a public discussion among the CEOs of some of the largest waste companies in the world. “This is a crisis,” said David Steiner, Waste Management CEO. “We’ve invested zero (in recycling) the last two and a half years.” On some levels, Steiner’s frustration is understandable, as recycled commodity values have been depressed for several years. However, some property managers in Colorado may disagree with this statement based on the waste diversion requests they’re receiving. Another reason for the panic is that the recycling stream has changed. Plastic and aluminum container manufacturers are creating thinner, lighter containers, which are worth less. Newspaper, which once made up the greatest percentage of the recycled stream and represents a higher value by weight than many recyclables, has all but evaporated from the stream. Finally, plastics, which are petroleum-based products, have seen their value deteriorate in lock step with oil prices. As a commodity, recycling definitely has seen better days. The disconnect here, however, is that Steiner and his peers see the waste and recycling industry as a commoditized one. I’ve always maintained that our industry is customer driven, not commodity driven. Having been in the industry for almost 20 years, the one constant I observe is the customers’ continued growing demand for waste diversion. If you believe sustainability trends are going to continue in our country, it seems inevitable that demand for waste diversion will as well. In Colorado the appetite for waste diversion is most evident with the recent dramatic growth in organics waste collection. Organics, or food and green waste, currently is used to create compost, a beneficial rich, soil-like product. Grocery stores, restaurants, food manufacturers and office buildings with cafeterias aggressively added organics collection to their waste services. For our company, organics is by far the fastest-growing segment, doubling in volume since February. By this fall, we anticipate that organics will make up approximately 12 percent of our total collection operations, up from about 3 percent a year ago. Additionally, this dramatic growth is occurring despite the fact that organics collection often is more expensive than waste removal services. That type of growth, in spite of a great cost, is a great argument in favor of continued consumer support of waste diversion. Perhaps the most exciting thing on the horizon for advancing organics diversion and, in fact, waste diversion in Colorado as a whole, is the development of the Heartland Biogas Project in LaSalle. This facility is under construction and is billed as the largest anaerobic digester facility in North America. The facility will convert organic feedstock into biogas, which will then be sold under a 20-year agreement to the city of Sacramento, California. This “higher” use for organic material over composting should increase the value of the feedstock, which, in theory, may reduce the cost of organics collection, making it more cost competitive versus waste collection and therefore driving its appeal even further. For our part, we have aggressively invested in organics and recycling technologies over the past 10 years. This year alone, we have invested over $5 million in doubling the capacity of our recycling facility and, as noted, more than doubled our organics collection operations. In addition, by early fall the company will be only the second single-stream recycling facility in the nation to add polystyrene (Styrofoam) to our list of recyclable items. As a result of evolving technologies, the opportunity exists today to divert a greater percentage of the waste stream than ever before, at very minimal effort to the end user. The catch here, given the deterioration of recycled commodity values and greater current cost of organics collection, is that a bet on recycling is a bet that the customer is willing to pay incrementally more to divert waste to sustainable uses. Is recycling a commoditized business or a customer-driven business? You, the customer, will ultimately decide the answer to that debate.