Changes in Global Recyclables Market
Households across California – including in Contra Costa County – are feeling the effects of a recent seismic shift in the way recyclables are bought and sold in the international recyclables market.
RecycleSmart customers are already doing a great job at recycling and are among the best recyclers in the State! Over 60% of the waste stream is being recycled, but to be better recyclers, we need to keep our recyclables clean.
Due to the changes in the recycling market, we’ve asked customers to take a few extra steps to keep their recycling clean – a challenge when all materials are going into the same blue cart. We’ve started an Empty, Clean and Dry campaign to assist and remind our customers that taking those few extra steps will make a huge difference in helping to ensure a longer life cycle for our materials.
Unfortunately, with these changes there are increasing waste management costs. RecycleSmart is working to minimize rate increases for our customers while continuing to comply with state law.
California law encourages local jurisdictions to divert from landfills at least 75% of the solid waste we generate by 2020. Along with composting and generating less waste to begin with, recycling is a critical component of efforts to meet this mandate. California exports about a third of all recycle materials to foreign markets every year, with more than 60% of recyclables traditionally going to China.
Recent changes in worldwide markets for recyclable materials have increased the cost to process materials and significantly reduced revenue from the sale of recyclables. China - as part of a policy known as "National Sword" - recently cut back on the import of recyclable materials to that country and reduced the amount of contamination allowed in those materials. The global market for most recyclables, which are typically sold for a profit to offset processing costs, is also declining.
RecycleSmart contracts with Mt. Diablo Recycling (MDR) to manage the processing of our community’s recyclables. Because of these recent global shifts in the recycling market, MDR has had to revamp and modernize its entire operation. MDR's increased costs and decreased revenue will ultimately translate to a modest rate adjustment for our community. Households across California will be feeling similar impacts, as other local governments also adjust to changes in the global recycling market.
Q: When will the rate adjustments take effect and how big will they be?
A: The first rate adjustment related to changes in the recycling markets will take effect in March of 2020. There will be a second rate adjustment in March of 2021. No further adjustments related to changes in the markets are anticipated for the remaining term of our agreement with Mt. Diablo Recycling (2025), except for cost-of-living adjustments. Rate adjustments are projected to be modest, likely no more than a total of a few dollars a month per household. These estimates are based on a single-family dwelling using a 32-gallon cart and are in line with adjustments other communities are experiencing.
Q: Why do we need to adjust rates to manage our recycling? Isn't there already a contract that determines the rate structure?
A: We currently have a franchise agreement with Mt. Diablo Recycling (MDR) whereby they pay for each ton of recyclables. This agreement is unique in how favorable it has been for our community. However, the changes in the worldwide markets for recyclable materials have changed the business model for the recycling industry around the country. More than a year ago, MDR explained that it is not viable for the company to fulfill the existing terms of its agreement with RecycleSmart. RecycleSmart's outside independent consultant validated these adverse effects. RecycleSmart - represented by outside special counsel Tamara Galanter at Shute, Mihaly & Weinberger LLP - and MDR engaged in mediation with an outside third party to help come to the settlement.
RecycleSmart believes this is the best outcome for our community as it caps fee increases related to changes in the recycling market at a modest amount for the next five years and allowed us to avoid the cost and uncertainty of litigation. The recycling fees we will be paying are much lower than what most other jurisdictions are paying and less than we would pay if we tried to contract with a new recycling company right now. And the settlement will allow us to continue to comply with state law and its requirement to keep recyclables out of landfills.
Q: How are other local governments around the state responding to these big changes in the recycling landscape?
A: Cities, counties, and special agencies in California are all affected by China's new policy. Given state law requirements, numerous local governments are seeing increases in processing fees and reductions in their share of revenue from the sale of recyclable materials.
Read more from CalRecycle about the specific actions local governments are taking to respond to the challenges presented by China's National Sword policy and other market changes.