California’s 2,100 certified beverage container recycling centers lost $20 million in 2015 because of “inadequate state payments,” according to the Container Recycling Institute.
Recycling companies across the US have been hit hard by falling commodities prices. In California, recyclers’ financial woes are compounded by low state payments, which the CRI says is an “outdated compensation method” that has cost the beverage container redemption centers a total of $42.7 million since 2012.
The state’s recycling fund collects deposits paid for bottles and other covered containers and then pays out when bottles get redeemed. These “processing payments” — designed to reimburse the recycler when the cost of recycling is not covered by the commodity price of the material being recycled — are based on a 12-month rolling average of scrap values for PET, glass and aluminum. They are mandated by state law and adjusted quarterly.
The payments are intended to cover the recycling centers’ operating costs and ensure a profit. But because bottles are recycled at such a high rate, recycling centers are paying out more redemption money and thus keeping less to support their operations.
With a four-year trend of rapidly declining scrap prices for these commodities, the state payment shortfalls have forced the closure of at least 269 redemption centers so far this year, leaving only about 1,800 centers still standing, CRI says.
CRI’s report, Integrity of California’s Beverage Container Deposit System Threatened by Processing Payment Shortfalls, analyzes the reasons for the payment shortfalls and provides suggested fixes including revising the state statute to allow for adjustments in the timeframes CalRecycle uses to account for changes in scrap material values and thus determine payments to the centers.
On April 1, CalRecycle increased processing payments. Glass rose from $101.07 per ton in the January to March period to $101.77 as of April 1; PET rose from $165.96 per ton to $198.37; and HDPE roses from $183.01 per ton to $220.70. But this still leaves a shortfall for centers, according to CRI.
To address these issues, CRI recommends re-evaluating the processing payment calculation method, perhaps by tying payments more closely to recycling centers’ real-time revenues. CRI also proposes a tiered payment mechanism to distribute the program’s resources more equitably and help smaller centers remain open.
California’s beverage container deposit return program has wider benefits than just those paid to the recycling centers themselves, says CRI president Susan Collins. The program “creates a boon to the state’s economy, directly employing at least 3,000 people, generating $8 million to $9 million annually in state tax revenues, and channeling a million tons of premium-quality scrap material away from landfills and into the products of US manufacturers.”