What Happened to Recycling?

Yet another China supply chain post

Ranjan here, and this week I'll be talking about how those items you’re recycling probably aren’t getting recycled.

Next time you order off of Seamless/UberEats/Ele.me/Just Eat or whatever your platform of choice, take a long look at all the plastic containers. Tell yourself that there is safely a 92% chance that every piece of plastic in front of you will spend the next 400 years sitting in a landfill or slipping into the ocean.

I usually write these Margins newsletters to force myself to synthesize disorganized thoughts, but this week I'm using it as an opportunity to allow myself to research a topic that I've been curious about for a while: What happened to recycling?

I'll be the first to say I've never been particularly eco-conscious. I grew up in a place where you, at the least, made half-hearted attempts at recycling and believed in global warming, but that was enough. I try to try. In the past couple of years, I've sporadically seen headlines about some Chinese policy completely breaking recycling. I wanted to learn more.

I want to start with the idea that even after just a few hours of reading I can't look at plastic the same. Hopefully, that's a good thing. Every piece of plastic I've been interacting with today, will most likely be around for centuries, just sitting in a landfill. A small percentage will be incinerated, a process that creates usable energy, but also releases toxins into the air. Just imagine the act of burning plastic. Finally, a smaller percentage will be recycled into pellets that can be re-used. That last portion has gotten a lot smaller, and a lot more complicated ever since a 2017 change in Chinese policy.

Operation National Sword

"I'm not against globalization. I'm for smart globalization".

It starts in July 2017, when China announced the (incredibly named) initiative: Operation National Sword. For the past 30 years, most of the world's recyclable plastic was sent to China to be processed and sold. It's one of those stories that would've been an MBA case study in the beauty of globalization just a few years ago.

It began with China's 2001 entrance into the WTO (something I mentioned in last week's Amazon piece). "The West" began to buy a lot more 'stuff' from China, which meant fully-stocked ships were regularly coming to the U.S.. They'd empty their cargo, and they would have been returning home empty, except for some enterprising waste managers who realized they could get them to transport plastic waste back to China, very cheaply. China had huge demand for the unprocessed waste, as they were manufacturing more and more products for the entire world, as well as experiencing their own resource-intensive economic boom.

China gets American plastic waste and turns it into new plastic to sell us more stuff and send more plastic waste on the ship back. Globalization for the win!

The above sequence would make the Amazon Flywheel jealous, it's so damn efficient. But of course, there were plenty of problems. Lax environmental standards meant a good deal of the plastic ended up in rivers, or burned near "cancer villages" or any other number of horrible consequences that, in hindsight, don't seem that unexpected.

So a couple of years ago, China announced that add severe restrictions on the type of waste it would accept. Chinese plastic imports are down 99%. Paper waste imports (which include your Amazon box) are down by 1/3rd. China apparently:

  • began to recognize the adverse environmental impacts of their waste importing

  • no longer wanted to be seen as the world's dumping ground.

  • with a rising middle class, they now had more than enough of their own waste to deal with.

It all fits very neatly into most other Chinese 2019 geopolitical stories, but there was one other kind of crazy reason.

Single-Streaming

Single-stream recycling is where you put all your recycled items into one bin, and then people and robots at a Materials Recovery Facility (MRF) sort it out. More than 100 million Americans use single-stream systems, and it's been a critical part of increasing the culture of recycling (which, admittedly, is still far worse than Europe).

This might qualify for the adverse consequences hall of fame. Apparently, the practice, created to encourage recycling across a wider population, was a major contributor to the Chinese ban. It led to "aspirational recycling", or where people, eager to recycle, regularly added unrecyclable materials to bins. Even contamination from food can make even the good stuff unrecyclable.

As I started this newsletter, I'm not the most eco-conscious and usually would get stressed by trying to decipher what object goes in which bin (especially when visiting SF), but after this week, I'm definitely going to make much more of an effort. 

Oh, but it probably won't matter anyways.

Privatization

If Operation National Sword made me question globalization, the way we recycle in the U.S. reminds me to question privatization. But it is crazy how perfectly the story of recycling captures touches on so many of the issues we face around privatization.

All of our recycling is privately managed:

Waste Management rapidly expanded beginning in the 1970s, privatizing waste services that were formerly run by cities and now serves more than 21 million municipal and business customers. But the largest part of its business is trash, not recycling. (In 2018, its collection and disposal business made $693 million on a year-over-year basis, while its recycling business fell by $197 million.)

Since it makes money when materials end up in a landfill or waste-to-energy plant, but loses it when people recycle, the company has no financial incentive to help increase recycling rates. “Big Waste” companies now run the majority of landfills in the country.

But in the days of the China Recycling Flywheel, everyone was a winner. As an example, the city of Philadelphia couldsell a ton of plastic waste to a contractor, Republic Services, for $67in 2012. But after the China ban, things changed. In January 2018, the contractor started asking to be paid $20 a ton to take the recycling of Philly's hands. By September, that price had jumped to $170!

If we started to doubt the China Recycling Flywheel, the Philly Waste Management Flywheel is a stark reminder of the dangers of privatizing what is assumed to be a public good. Circa 2012, everyone's happy. Philly was making money, the contractor (Republic Services) was making money, and the Chinese recycler making usable recycled plastic pellets was making money. But that's the thing about the flywheel idea: If one part breaks, the entire thing collapses.

Republic Services had no interest in recycling any more because it no longer financially viable. They start quoting fuck-you prices to the city of Philadelphia, because they'd rather just engage in standard, profitable waste management, not recycling. Which is what a rational, private business should do. Philadelphia residents are still putting things they think they should recycle into blue bins, and most of that stuff is getting incinerated or put into landfills.

Privatization <<shakes fist>>!!!

The good old days: A 2015 video from the Philly MRF proudly talking about single-stream.

Where I am now

Most readers of this newsletter are probably somewhat familiar with the idea of externalities; where a market price does not properly reflect the true costs of a product. Pollution has always been the most widely recognized externality, and the more I read about the topic, the more frustrated I got.

It perfectly captures so many glaring issues that we face. Manufacturers use plastic because it’s cheaper. Things get cheaper so we buy more, so they use more plastic. That stuff is more portable, has a longer shelf life, and gets to us faster, all thanks to more plastic. But neither us, nor the producer, pay for the eventual cost of dealing with that plastic. The negative externalities from the manufacturer's production and our consumption had been borne by villagers in far-away countries, animals in the ocean, or the air all around us. We could even feel good about ourselves by recycling more, even though we do it worse.

For 30 years this all seemed to work. All the puzzle pieces fit into place. Until it didn't.

Note #1: This past summer during cold brew season, when NYC coffee shops for the most part got rid of plastic straws, I was a bit annoyed. I no longer am.

Note #2: My co-host Can told me after reading this that Uber Eats got rid of plastic utensils as a default. That’s such a perfect tiny behavioral and economic decision. We need more and more of those little things done.

If you want to watch something super depressing on the topic, this one from the UN is pretty intense:

If you want a good 9 minute video on the China angle, this one from Quartz, featuring an Indian-American guy who speaks Mandarin very impressively (#jealous), watch this:

and finally, as we’re getting rid of plastic straws, here is a hot dog straw (via Garbage Day):


AND FINALLY

I got the Airpods Pro last week, and it could be the most incredible gadget I’ve purchased in a while (I’d previously written once before on the v1 Airpods but this is next level).

All I can say for now is: