We previously outlined the potential pros and cons of recycling in a separate guide.
However, in the guide below, we specifically consider whether recycling is profitable and economically viable.
We’ve also outlined some of the factors that may impact the economics of recycling.
Summary – Is Recycling Profitable & Economically Viable?
Indicators Of The Economic Viability Of Recycling
Assessing the economic viability of recycling may involve examining some of the following indicators:
– Revenue generation
– Net profit
– Job creation and employment
– Subsidies (and other forms of public funding or concessions), and other economic tools used by governments and the public sector
The above indicators can also be assessed to get an idea of economic viability right now, and also what the outlook might be for the future.
Markets and also technology changing over time may also change different indicators.
Is Recycling Profitable & Economically Viable?
In some instances it can be, but in other instances it isn’t.
There’s a different answer for each type of waste, and each individual city or town (as each place has a different waste management system)
There’s a range of factors and variables that can impact profitability and economic viability
Factors & Variables That Impact The Profitability & Economic Viability Of Recycling
We outline the different factors and variables in the guide below.
Some factors and variables might have an impact on a local level, whilst others might have an impact on the national or international levels.
How To Achieve More Profitable & Economically Feasible Recycling
Changes could be made based on the factors and variables that impact recycling in general, but also based on the factors and variables that impact recycling in each individual city or town.
Any changes made though will have tradeoffs, and obviously have to be weighed up with other goals such as sustainability in the areas of resource depletion, environmental impact, and so on.
Factors & Variables That Impact The Profitability & Economic Viability Of Recycling
Differences Between Different Countries, Cities & Towns
– Different recycling systems and recycling features in each geographic location
Different cities and towns will have different recycling programs/streams, facilities and overall systems in place.
They will each have different challenges and capabilities to deal with too.
These systems and features impact the waste that can be recycled, how it can be recycled, and other factors that have an impact on economics.
– Different standards and expectations for recycling
Different countries have different standards in place around recycling.
For example, some countries have standards for the quality of recycled materials that recycling facilities will accept, or suppliers or manufacturers will buy or use.
This impacts the price that recycled material is sold at by suppliers.
Some countries import recycled material rather than recycle it locally because their local recycled material standards are higher, and they can’t recycle material at the low prices that recycled material can be recycled for – glass is imported to some countries for example because it’s cheaper to import than recycle locally.
… the UK’s market is geared towards shipping plastic scrap abroad. It is often more profitable to sell to Asia than Europe … because “European recyclers demand a standard of basic materials which is higher than the standard of things that can at the moment be exported (unearthed.greenpeace.org)
… recycling processes can often lead to products of lower quality and economic value — often termed ‘downcycling’ [and] This [can be an issue with trying to find a market for recycled goods and materials in some countries] (ourworldindata.org)
The Different Types Of Waste Material Or Different Waste Items Being Recycled
– Effectiveness of recycling
Different waste materials and items have different traits, features and factors that impact how effectively they can be recycled (which impacts what can be recycled, but also at what cost and time investment)
The material chemistry, the items and products the material is used in (how the material is used, and the design of the product are both relevant factors), and other factors can impact recyclability.
– Value of different materials
Some specific materials such as some types of metals might be more valuable than others, and therefore might make more economic sense to recycle.
Additionally, some specific items/products such as aluminum cans might be more profitable to recycle.
Some recycled materials on the other hand either have low value, or the value of that recycled material can fluctuate with the price of commodities like oil (in the case of some plastics)
[In some places] cans and corrugated cardboard [has value] … but, mixed plastic isn’t worth processing (plasticstoday.com)
– Overall profitability and feasibility of recycling different materials
The factors that impact the profitability and feasibility of recycling different materials can include but aren’t limited to:
How costly and effectively virgin materials can be made vs recycling materials (paper for example is hard to make from scratch or more expensive to make new compared to recycling it. Some plastics on the other hand may be cheaper to make new compared to recycling them, and oil price changes can be a long term risk in recycling plastics. The cost of raw and virgin material plays a part here.)
Whether the material can be recycled continuously without losing shape or quality (aluminum for example may keep it’s shape and quality after being recycled over and over. Some plastics on the other hand may only be able to be recycled a limited number of times)
… there’s a life cycle associated with the recycling process and there’s a separate life cycle that’s associated with the landfill or disposing process [and both the financial and environmental costs and benefits have to be looked at for each]
… for recycling, it does take energy to collect that material, to process it, to transport it to recycling facilities, and then to finally put it back into production.
And the benefit … is that for some materials, the ability to use those recycled materials offset the need to use virgin or raw materials for the same production processes.
So that turns out to be a great benefit for some materials, but for others it doesn’t [in terms of cost and environmental benefit]
… [tin cans and aluminum] are very hard to make using virgin materials and it’s best to recycle them
… Bimetal tin cans (soup cans) … have a very, very positive life cycle signature
… paper as well has a very positive life cycle signature mainly, again, because it’s difficult and arduous to produce paper from scratch.
… [but, for materials like] glass and plastic, if you take into account the cost of hauling the recycling to recycling centers (which can sometimes be further away than landfills), and how easy it is to make plastic and glass from virgin materials, it may not make sense to recycle them as much as we are now.
… glass bottles, plastic bottles, other forms of plastic … [generally aren’t good to recycle when considering the] environment and the economy … [in terms of cost and environmental benefit]. [The reasons for this are] it’s fairly comparatively easy to make plastic and glass from scratch, and the transportation cost because of the space bottles take up
[So, recycling might work better for some types of waste, but not others, but – you probably have to look at the landfill and recycling technology being used, and the life cycle for different individual materials and items of waste]
[The near term and historical average price for recycled materials vs processing costs can be compared]
… the near-term and historical average price for recycled cardboard, paper, aluminum and rigid plastics is above the processing cost and therefore profitable to recycle.
… recycled glass, on the other hand, currently lacks a robust end-market
Recycling has been great for the paper and corrugated industry.
While it still takes a number of resources (including fossil fuels and water) to collect and reprocess paper, that commodity is not nearly as labor intensive as plastics.
With the value of post-consumer plastic scrap being mostly in the BTUs that plastic can deliver in the form of energy, it makes little sense to recycle most plastic.
PET, which seems to be the most widely recycled material with the most benefits, will likely end up being the best bet for recyclers and reprocessors that need to be profitable
With the price of recycled plastics declining, recycling is becoming a less profitable business (plasticstoday.com)
It is possible to make new PET bottles from recycled stock, but the process is currently more expensive than making them from petroleum (popularmechanics.com)
… the relative profitability between recycling and the production of new plastic is strongly determined by oil prices.
When oil prices are low, it can be cheaper to make raw plastics than to recycle.
According to createdigital.org.au, recycling some metals may be cheaper than producing metals from virgin resources:
… recovering ingots of pure copper and gold from used CRT television sets was 13 times cheaper than obtaining the same metals by mining and processing virgin ore [when offset by government subsidies and sale of the extracted metals and recycled components]
– Market supply and demand of different materials
Some materials are more scarce than other others, and some materials are in greater demand than others
These factors can impact the price of the material.
… Supply and demand also come into play [when considering economic impact] (popularmechanics.com)
[Glass is made in part by sand, and plastic by oil – so the markets of these raw resources can tip the market for certain materials higher or lower in demand] (popularmechanics.com)
– Other market forces that impact each material
Plastic for example is usually made with petroleum feedstock.
When the price of oil rises or falls, this can impact the price of plastic.
The Economics Of Recycling The Product vs Making It New Or Importing It
There’s a range of factors that can impact whether it’s more feasible to recycle the product vs make it new or import it.
For example, sometimes it might be the processes of recycling or making it new that have certain costs involved.
Other times it might be the supply, demand and price in the local market vs the international market in recycling, producing new, or importing a material or product.
The Different Costs Involved In Recycling
Costs need to be considered throughout the entire lifecycle of the recycling process.
According to plasticstoday.com: ‘[The recycling process involves] collecting, sorting, cleaning, bailing, shipping, reprocessing and repelletizing’
The different costs associated with recycling might include but aren’t limited to:
– Collection costs/fees (for curbside recycling, and business/industrial recycling streams)
Collection costs may be a major cost component for recycling.
The costs of single stream recycling vs dual stream recycling collection should be considered, including not only collection fees, but efficiency and return on each type of stream at facilities and in the end market for recycled materials.
… collection costs [of recycling] typically eat up 50 to 60 percent of the budget … (popularmechanics.com)
– Gate sorting fees
Can be impacted by international bans on the importation/exportation of plastic.
The Chinese recycling ban impacted the export of plastics and gate fees in the UK
[Because of the Chinese recycling export/import ban … the gate fee at a sorting plant in the UK] the council pays may increase because the sorting will have to be done to a better standard for new markets, or the price they get for any materials may decrease.
[The ban] could mean a double whammy for council tax payers if the price of our exported waste falls and the cost of UK disposal rises.
– Capital required to build, operate and maintain different types of recycling facilities
Different types of recycling facilities cost different amounts of money to set up.
There’s also the cost of operation and maintenance to consider.
[Recycling technology isn’t cheap] … a typical single-stream facility costs $8 million to $10 million, more than double the price of a dual-stream facility (where paper is collected separately) (popularmechanics.com)
Recycling plastics can be profitable, but it is also capital intensive and risky [… when oil prices drop, and when recycled plastic becomes uncompetitive price wise] (theguardian.com)
– Transport costs throughout the recycling lifecycle
Collection, sending recycled material to suppliers, and sending recycled material supply to recycled product manufacturers
It may also not make much sense to pay costs for transport for less valuable materials where the cost of transport may be close to the end value of the recycled material
– Costs compared to other waste management options
… it generally costs a little more to recycle waste than it does to dump it (popularmechanics.com)
[Modern lifecycle costs and environmental benefits] look far more favorably on landfill now because of how they have advanced with how effectively they can collect and treat methane and leachate [and the same goes for incineration] (wbur.org)
– Saved fees and costs
Recycling may help save fees and costs on other waste management options when waste doesn’t go to that waste management option and is instead recycled.
In 2014, the [United States] recycling industry … saved municipal budgets over $3 billion in avoided landfill disposal fees (greenbiz.com)
The Impact Of Governments & Public Sector On Recycling
– Overall waste management strategy
There’s several decisions that councils and local governments can make that impact recycling economics.
Just a few examples are how the recycling program runs (the number and types of waste streams), requirements for citizens, businesses and waste collectors in sorting and disposing of their waste, and so on.
– Policies and regulations
Can include policies and regulations that relate to recycling programs, facilities and standards/quality of recycling material, just as a few examples
– Public funding for recycling
Public funding that goes towards recycling (that ultimately comes from the taxes paid by residents) needs to be taken into account when assessing the profitability and bottom line of the economic feasibility of recycling.
This might include funding for new projects (such as public-private partnerships), subsidies, incentives, penalties, fees, taxes, deposit schemes (e.g. deposits schemes for plastic bottles) levees (e.g. levies for certain waste like plastic lined coffee cups), and any other financial tool or initiative implemented by the public sector.
Some citizens may argue that in order to justify subsidising, supporting or scaling up recycling in the future via public support, there needs to be demonstrated economic feasibility to recycling activities.
… it’s difficult to get a clear picture of how much municipal recycling programs cost compared to landfilling or incineration, because of hidden subsidies and long-term price guarantees given to all types of waste disposal (popularmechanics.com)
– Impact on market forces and market conditions
Any action by the government that might impact a free or competitive market
Long term price guarantees for recyclers might be one example of this, and banning certain types materials in certain items such as plastic bags may be another
Economic Risks & Uncertainties Involved In Recycling
– For recyclers
Recyclers have to manage the potential long term risks of recycling.
One example is the way that plastic prices can fluctuate with change in oil prices. If the price of oil significantly drops, virgin plastic may become much cheaper to make, and may be more affordable or profitable compared to recycled plastic for businesses needing plastic.
The Tradeoffs Of Different Recycling Streams
e.g. single stream vs dual stream recycling
Single stream for example might be more efficient and this increase in efficiency might help increase the recycling rate of some materials.
But, dual stream may have lower capital set up costs, and leads to the recycling of more materials.
[There may be tradeoffs in terms of the costs of each type of facility, the potential increased efficiency of single stream recycling, the potential higher recycling rate of single stream due to increased efficiency, and the ability to increase the overall recycling rate of all materials with the ability to collect and recycle paper with dual stream recycling] (popularmechanics.com)
Revenue Generated By The Recycling Industry
In 2014, the [United States] recycling industry … generated over $236 billion in gross annual revenues (greenbiz.com)
Employment In The Recycling Industry
Employment in the recycling industry might be measured by both the total number of jobs it provides, and other measurements such as the number of jobs it provides per ton of waste produced.
It’s probably also worth noting that recycling in developing countries can be profitable for pickers who may earn a higher wage picking recyclable materials, than if they were doing something else
Some reports also indicate that recycling creates more jobs per ton of waste generated compared to landfill.
… a complex recycling and composting operation can be an engine for job growth
… for each ton of material, 20 more jobs are created when you recycle than if you put that material in a landfill
Value Of Recycling Industry To Local Economies
There’s also the economic value that recycling provides to local communities.
[Recycling creates local jobs, builds shareholder value, preserves natural resources and generates revenue locally] (greenbiz.com)
Practical Considerations For The Recycling Systems In Each City Or Town
These practical considerations might include but aren’t limited to:
– The efficiency of the recycling systems
For the lifecycle of the entire recycling process, from picking up the recycling waste, to cleaning and sorting, to eventually selling the recycled material stock or manufacturing products or items made from recycled material.
– Efficiency to recycle different materials and items
Certain types of waste like plastic lined coffee throwaway cups can be difficult and time consuming to sort … (theguardian.com)
– Suitability of material or item to recycle in existing recycling facilities
Some material or items may get stuck in recycling machinery for example, or may not be able to be processed by recycling machinery as another example. There can be other reasons too
Considering That Recycling Economics Have Both A Local Component, & A National Or International Component
There can be a local economy for recycling, but, national policy, and international trade and the status on exported and imported recycling materials and goods, will also impact the economics of recycling.
If looking at a factor like hauling and tipping fees for example, these fees may differ from city to city.
… Recycling economics are fundamentally local, [such as the] hauling and tipping fees [and collecting and processing fees] … paid to trucking operations and processing facilities that handle waste …
[In the US for example, recycling fees can] vary from about $24 per ton in the south central and west central regions of the U.S., to more than $70 in the Northeast
How To Achieve More Profitable & Economically Feasible Recycling
There isn’t one single answer to this question, and it’s worth mentioning that changes may come with tradeoffs.
But, it might be accurate to say that some cities and towns could practically make changes to make recycling more profitable and economically feasible.
Changes might be based upon the variables and factors listed in this guide, but also the variables and factors that are unique to each city or town.
A few examples of potential options might include:
– Using recycling systems to recycle valuable resources, and not material with little economic value or useful end use (recycling materials just to say we are recycling them doesn’t seem conducive to a good recycling strategy)
– Governments and local councils can introduce and implement effective and economically feasible policy and changes to recycling industries
– Redesigning some products to make recycling them more effective or efficient in an economic sense to recycle
– Long term contracts for recyclers and waste collectors may also help smooth the impact of market demand for different materials.
[Long term contracts between recycling companies and a particular market or city can help smooth market fluctuations and add certainty to recycling economics] (popularmechanics.com)
– A good waste management strategy might include recycling, but also the use of other complementary waste management options like incineration and landfill for waste that isn’t feasible or possible to recycle
– Reducing waste in the first place may also help by having less waste to process and manage through waste programs
– There may be potential in realizing the value of wast currently dumped in landfills – either with incineration or recycling. From popularmechanics.com: ‘A recent study showed 90% of what goes to landfill has market value … ‘
Other reports have the following information about improvements to the economic feasibility of recycling …
[Cost efficient recycling takes a large upfront investment in recycling technology, good market forces, and political policy] (popularmechanics.com)
[Recycling can work and be profitable – but it needs re-thinking and the systems and processes re-structured in some cities] (wbur.org)
[To make recycling more economical, collectors might pay a higher price to deposit material, and haulers might pass this cost onto households for trash collection and disposal] (plasticstoday.com)
[The way municipal recycling contracts are structured needs to be changed to factor in market demand drops and increases for certain materials. This will allow recycling companies and the communities more stability in the long term. They should redefine recycling contracts to value each commodity type individually in order to share in the true costs and benefits of the recycling market]
[Profits for different materials in new structured contracts might be] … cardboard at $50 a ton … paper at $5 a ton … PET plastic bottles at $150 a ton … HDPE plastic (laundry detergent, shampoo bottles) at $250 a ton …. and aluminum at $1,325 per ton.
[With materials like glass where the cost to recycle is more than the cost to re-sell … glass manufacturers might need to look at new and alternate uses for recycled glass that make economic sense]
[Overall, when communities and cities are deciding what is recyclable, they should consider that the market value of that commodity pays more than the cost to process it at the recycling facility.]
plasticstoday.com indicates that finding ways to deliver recycling plants clean recycling material, along with finding ways for recycling plants to sort more quickly and efficiently might help make recycling more profitable:
Recycling plants want clean recycling material … much of the post-consumer plastic recyclate is dirty and filled with debris
Sorting the various types of plastics by hand alone is a huge—and costly—job, and if the money isn’t there to make the recycled plastic worth the effort, it will go to the landfill
… Sorting is costly; careful sorting and cleaning of plastics that contain food remnants, labels and other debris to get the quality of plastics needed for reprocessing into pellets is even more costly.
… [The key to a successful recycling plant is to sort waste quickly and efficiently]
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