New Recycling Law Opens Door to Firms Seeing Profit in Trash
Three mountains of discarded bottles glisten in the Central Valley sun as John T. Holzemer, recycling manager of Owens-Illinois’ glass container division, takes a final swig from a bottle of Diet Coke.
His thirst quenched, he casually tosses the bottle onto one of the piles, soon to be fed into a 2,700-degree Fahrenheit furnace at Owens-Illinois’ 2.8-million-bottle-a-day plant here.
“There goes tomorrow’s wine bottle--and hopefully, next year’s pickle jar,” says Holzemer, as the spent vessel crashes down onto the mound of old and broken containers.
Recycling is suddenly hot in California and not just among such longtime champions as environmentalists. Seventeen years after tie-dyed activists celebrated Earth Day, buttoned-down businessmen like Holzemer are becoming born-again recyclers.
The reason is clear: The California Beverage Container Recycling and Litter Reduction Act has unleashed the profit motive in order to reach the law’s goal of recycling 80% of the state’s beer and soda containers--be they aluminum, glass or plastic.
Consumers will also be given an incentive to recycle. Beginning Thursday, they will be guaranteed at least one penny for each soft-drink or beer container they turn in.
That penny might not seem like much. But when multiplied by the 12 billion containers sold in California annually, the resulting sum is $120 million. Add to that the scrap value of the used containers--perhaps another $100 million--and you have the makings of a good-sized industry.
“The law provides an economic climate for recyclers to survive,” says Rod Miller, legislative coordinator for Californians Against Waste. “It creates the infrastructure for a greatly expanded recycling industry.”
A key part of that infrastructure will be the more than 2,000 state-certified recycling centers that must be opened between between Oct. 1 and Jan. 1, 1988. By law, the centers must be located within half a mile of all major supermarkets. As a practical matter, most will be in shopping center parking lots.
The penny-per-container payment to consumers will come from a state-administered fund that is being nourished by the one-cent-per-container levy that beer and soft-drink distributors have been paying since Sept. 1.
Besides the state fund’s penny-a-container payment, recycling centers will have the option of paying consumers some of the scrap value of their used containers. That is about another penny per container for aluminum and less for glass and plastic.
Redeem and Make Money
California’s supermarket operators support the new law because compliance is relatively simple. All they have to do to comply is to contract with a recycling center operator. In states with traditional deposit laws, grocers must hire workers and set aside space to take in, sort and store used containers.
“The supermarket’s job is to sell groceries,” says David F. Little, vice president of 20/20 Recycle Centers, a newly established company that has won contracts with Safeway, Albertson’s, Lucky Stores, Stater Brothers and Hughes Markets. “Our job is to redeem containers and to make money doing so.”
Based in Irvine, 20/20--a unit of a Canadian firm called Agra Industries--is the early leader among companies seeking to establish state-certified recycling centers. As of Aug. 31, according to the state Department of Conservation’s Division of Recycling, 20/20 had won contracts or letters of intent to set up 819 collection centers, and Little says the company expects to eventually operate 1,100.
Next in line comes Envipco California, a Hayward-based unit of Environmental Products Co. of Fairfax, Va. Envipco had contracts for 433 locations on Aug. 31 and expects to operate a total of 600.
Mobile Recycling in Pomona had 376 contracts as of Aug. 31 and will handle the recycling requirements of Alpha Beta stores, state records indicate, while Innovative Recovery of Aurora, Colo., had agreements for 150 locations.
Different recyclers are taking different approaches to the business. The 20/20 Recycle Centers will feature four “igloos,” or bell-shaped containers, one each for aluminum, glass, plastic and newspaper. (Although newspaper isn’t covered by the new law, the company sees potential profit in newspaper recycling.) All together, Agra is investing more than $11 million in the new venture.
The containers are designed for easy emptying by boom-equipped trucks. The 20/20 centers will occupy about 300 square feet and be staffed by workers who will issue scrip redeemable for cash or products from local supermarkets.
“The resource recovery industry is still in its embryonic stages,” says Little, who predicts annual revenue for 20/20 of $40 million. The firm’s name comes from Assembly Bill 2020, the Legislature’s designation of the new law.
Methods Differ
Meanwhile, Envipco and Innovative Recovery plan to install “reverse vending machines” that will take in cans and bottles and distribute coins or scrip. The machines crush the cans and bottles so they can store large volumes.
Reynolds Aluminum Recycling, an Orange-based unit of Reynolds Metals, is taking a hybrid approach. The firm will operate both reverse vending machines and manned installations in supermarket parking lots. Under the new law, Reynolds will begin accepting glass and plastic at its centers, many of which have been operating as aluminum-only collection points.
“As far as we’re concerned, it’s about time that other container manufacturers started doing their share in terms of recycling,” says Peter Whited, regional manager of Reynolds Aluminum Recycling.
“We’ve been recycling cans in California for 20 years,” he says, noting that Californians currently recycle about 55% of aluminum cans sold in the state. However, recycling is much less convenient than it will be under the new law. Many centers refuse to take glass, and they are often located in industrial and other out-of-the-way areas.
Whited fears that the creation of so many new recycling centers under the state law might fragment the market and hurt the profits of recyclers. “That is the million-dollar question: Will there be enough new materials recycled to support over 2,000 new sites?”
16% Unconvinced of Convenience
There is some reassurance from surveys, which indicate that recycling will increase markedly. For example, a July sounding by Research & Decisions Corp., a polling organization, found that 72% of Californians will save and recycle beverage containers because of the one-cent redemption value and the added convenience of the new recycling centers.
Still, 16% of the respondents said they thought recycling was “inconvenient and a waste of time.”
In any case, if the recycling rate of any container type--aluminum, glass or plastic--does not reach 65% by Dec. 31, 1989, the redemption value of that type of container will increase to two cents. And the value will climb to three cents per container if the 65% rate is not achieved by Dec. 31, 1992.
As a result, the aluminum, glass and plastics industries are gearing up to handle a flood of new materials.
“We’re hoping to get 60% of our raw material, or more, from recycled glass, compared to 20% today,” says Chuck N. Elliott, cost control supervisor of the Owens-Illinois plant in Tracy.
Reynolds, which according to industry sources buys more aluminum cans in California than it sells, is bracing for more.
Even the plastics industry, where there has been little recycling because of the low scrap value of spent plastic bottles, will subsidize recycling projects to avoid penalties the new law levies on unrecycled containers.
Old plastic bottles, says Steven Tobia of Sherman Oaks-based Plastic Recycling Corp. of California, will be shredded and used to manufacture of such products as flower pots, paint brush handles and insulation for ski jackets.
