Why Recycling Could Now Be Bad for Business


Why Recycling Could Now Be Bad for Business

Recent market conditions have hurt the recycling industry and reduced its profitability. Will recycling programs continue if they’re in the red?

June 17, 2015

Many municipalities and recycling companies are at a moral crossroads. Recycling, once a virtuous circle of environmental benefits and profit, now can hurt their bottom lines and environmentally-conscious consumers may be unknowingly contributing to the problem.

The recycling industry faces significant challenges, according to Raymond James experts. For years it was cheaper for manufacturers to turn recycled plastic, glass and fiber into new shampoo bottles, jelly jars and cereal boxes. Those days are gone and the reasons are as varied as the types of material recycled.

Petroleum products like oil are the foundation for many plastics, and when oil prices dropped, new plastic became cheaper. Recycling glass is more challenging and more expensive as debris comingles with glass. Demand for recycled fiber is falling, causing prices to fall. Recycling often now loses money as some municipalities and recyclers pay to haul away certain materials. The new cost reality of recycling is forcing them to reevaluate recycling programs and could force consumers to do more reducing and reusing and less recycling.

Many municipalities and recyclers are now discussing how to make these current conditions work, but many argue that it doesn’t make business sense to recycle certain materials. Recycling still “works” in regions of the country where landfill space is low and disposal costs are high, experts say, but in areas where disposal costs are low, there are fewer financial incentives to recycle. If conditions don’t improve, the list of options is bleak:

  • Charge consumers to recycle
  • Stop collecting certain recyclables
  • Discontinue recycling programs

The resulting economic and environmental impacts could be severe, including closing recycling companies or more recyclable material like plastic bottles, which take 450 years to biodegrade, ending up in landfills.

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