What the China Ban Means for the Future of the Recycling Industry

26 February 2019 Admin Leave a comment Blog

Until last year, China handled about 1/6th of America’s recyclable waste – a massive flow of global garbage. But as a heavily populated country, China is struggling to manage its own waste products, and it remains the world’s largest marine polluter. Furthermore, the rise of nationalist movements around the globe has not skipped China, where citizens object to the idea of building an industry on the refuse of western nations.

Consequently, in July 2017, Chinese leaders announced a ban on the import of 24 kinds of solid waste by the end of that year. The nation has stuck to its guns on the issue and blocked the recycling industry from using its soil as a global dumping ground, citing concerns about public health, environmental safety, and animal and plant health.  

Since China was importing $5.6 billion a year in scrap commodities, $1.9 billion in scrap paper, and $495 million in scrap plastics, its new policy set the U.S. waste recycling industry scrambling for new ways to manage a rapidly increasing stockpile of literal junk.

What is the China ban?

For decades, China was the world’s largest scrap buyer. Other countries could dump their refuse in China, which paid sellers handsomely to receive it and keep it from fouling the oceans. This system worked until 2017, when China announced it would only accept recycled waste that was 99.5% pure, disqualifying most recyclables. National Geographic described it as “a move that upended a $200 billion global recycling industry with profound consequences on both sides of the world.” Recyclable waste is the U.S.’s sixth largest export to China, so the ban leaves $5.1 billion of product unbought and unsold. The Chinese recycling industry, which had previously absorbed fully half the world’s paper and plastic refuse, has now recused itself from the critical global role it played. 

The results? Mountains of junk. A fouled-up recycling system. Tax revenues down the toilet. Job losses. And repercussions to a decades-long strategy of bilateral trade and transport. According to Felix L. Friedt and Wesley W. Wilson, American economics scholars, “Our estimates suggest that China’s ban on imported waste and the projected 1.5% rise in the U.S.-China trade imbalance will lead not only to a 0.77% permanent reduction of freight rates charged on U.S. exports to China, but also a 0.34% long-run increase in freight rates charged on U.S. imports from China.” In other words, the economic and global trade implications of China’s ban are real, serious, and far reaching.

What does the ban mean for cities and the recycling industry?

China’s new get-tough policy on contamination not only places thousands of American waste management workers’ jobs in jeopardy, but it also leaves cities around the country to cope with an increasing pile of homeless recyclables that instead of paying dividends now need to be rehomed at great expense. For example, NBC Los Angeles said, “San Diego’s recycling program brought in $4 million in revenue last year. Recycling could now cost the city $1.1 million.”

In short, China has put the U.S. and other nations over the proverbial barrel, and while the Chinese government may be posturing on the global stage by using its waste buying program for short-term leverage, the effects of tons of uncollected waste are a real and fast-escalating headache for city managers. No one can assume that China will back down. Right now some recyclables are getting dumped in U.S. landfills, but this solution is unsustainable even in the short term.

Instead, cities have to make improvements in contamination. China will accept recyclables, after all, just not contaminated ones. The obvious solution – and probably the most environmentally advantageous one – is to reduce contamination. 

A second and potentially more lucrative option is to capitalize on the opportunity China has just handed the U.S. Instead of exporting waste to China through single-stream recycling, U.S. companies could begin doing the recycling themselves, and American manufacturers could help create a Chinese-style circular economy in which they build easily recyclable products in order benefit from the affordable recyclables their products eventually create. Marian Chertow, an associate professor at the Yale School of Forestry & Environmental Studies and director of the program on solid waste policy, told NBC Los Angeles that “China’s move to ban recyclables now is an enormous opportunity for the U.S. to see value in its own scrap.”  

How is the China ban affecting the bottom line?

With the present situation, everybody’s losing. Countries like the U.S., Japan, Germany, and the UK are coping with excess garbage. Their recycling companies are paying their employees to twiddle their thumbs. And Chinese manufacturers lack the raw materials to make affordable products to ship to bargain-hunting American shoppers. Recycling industry news says cities are now subsidizing their recycling programs instead of benefitting from them. China’s ban has cost the city of Fort Worth, TX $1,668,000 in 2018, and it has wiped out $4 million in revenue for the city of San Diego. That’s just this year. Waste management companies are pulling back on profitability projections, according to the Wall Street Journal, as they scramble for ideas about how to cope with the developing situation. 

Looking across the Pacific at China, economic forecasters see potential trouble brewing for the manufacturing-dependent economy. Fully 20% of China’s GDP relies on exports. By refusing to accept American imports, China may be imperiling its own economic engine, which would shut down if the U.S. and its allies decided to retaliate with a trade war.

A developing situation

By instituting the waste ban, China picked at several scabs simultaneously – climate change, environmentalism, nationalism, trade structures, global supply chains, and domestic manufacturing. Nevertheless, the nation’s leadership seems undeterred from its current path. In fact, a November 2018 article in the South China Post stated, “After decades of importing most of the world’s trash, China has had enough – something advocates and activists say should come as no surprise, since China, the world’s second-largest economy, has an obligation to consider the health of its own people.”

Apparently, this rhetoric is not just political bluster. According to a November 2018 article in Phys.org, “China will expand its ban on imports of solid waste … almost a year after its first curbs caused havoc in countries that sent their rubbish to the Asian giant. The regulatory action—which expands the prohibition to 32 categories of solid waste from the 24 banned last year—will go into effect from December 31 … Newly banned product types include hardware, ships, auto parts, stainless steel waste and scrap, titanium and wood.”

What can the recycling industry do about the China ban? 

Waste management companies have limited powers over foreign governments’ actions. So what can the recycling industry do about the China ban?

  • Encourage manufacturers to cut down on ecommerce packaging waste. Reducing single-use plastics and paper products by eliminating air-filled plastic bags and bulky designs from packaging may be the single biggest step Western manufacturers can take to reduce the stream of recyclables clogging the nation’s facilities.
  • Experiment with waste-to-energy conversion. Historically, the U.S. has either buried or incinerated trash, but modern advances in biotechnology allow waste management companies to turn trash into energy such as biodiesel. 
  • Optimize waste pick-up routes with remote sensing. Waste management companies and municipalities can slow the flow of products into the recyclable pipeline by using sensors attached to the tops of rubbish bins that inform the home office through wireless technology when a trash bin is full. This system lets companies optimize routes and reduce needless pick ups.

Sensa Network offers solutions that help businesses and cities improve their efficiencies and offset the pressure brought on by the China ban. By harnessing the power of Internet of Things technologies, Sensa Network is helping waste management agencies buy more time for public policy makers to cope with the financial and practical ramifications of China’s new policy. Learn more about Sensa’s waste management technology now.

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