Minnesota recyclers scrambling in wake of Chinese restrictions

China no longer wants to buy the wastepaper, plastic and other material that's tossed into recycling bins in the United States, and the effect of that ban is rippling across Minnesota.

Deprived of the biggest overseas customer for American recyclables, local haulers are raising rates and sorting facilities are scrambling to sell material in a market flooded with mountains of excess waste.

Some of them huddled with state regulators last week in St. Paul to discuss what to do if sorting plants cannot sell the truckloads of material arriving at their doors. State law prohibits burning recyclables or dumping them in landfills without permission, which has never been granted.

"This is an unprecedented space," said Kate Davenport, co-president of Eureka Recycling, which handles recycling for Minneapolis and St. Paul.

The United States typically exports about 30 percent of its recyclables, with the largest portion headed to China, according to an industry group. The loss of China as a major customer has both exposed and upset the fragile economics of the recycling industry.

Recycling sorting facilities sell the recycled goods picked up from businesses, homeowners and renters to subsidize the cost of processing them. Mixed paper, for example, used to fetch $70 a ton. Now it's worth nothing.

Minnesota is feeling a delayed impact, compared to coastal states that ship more of their waste overseas.

Republic Services recently sent educational fliers to local customers with the word "crisis" emblazoned on a large yellow traffic sign beneath recycling arrow symbols. Eureka had to lay off six education and advocacy staffers amid slipping revenue. Waste Management's northeast Minneapolis sorting facility is now checking inbound trucks and charging extra for particularly dirty loads, which sell for less.

Aspen Waste, a major hauler, once received money back for bringing in commingled loads of recycling. Chief Operating Officer Thor Nelson said it now has to pay to drop it off, and revenue has been cut in half over the past year — after factoring pure cardboard, which still brings a profit. He has seen competitors raising rates between 20 and 50 percent around the metro.

"That swing from a rebate to a fee to us has to get built into the pricing," Nelson said. Price hikes may take longer to hit pocketbooks in cities that contract directly for recycling, however.

The area's recyclables are still "moving," an industry term meaning they are being sold. But Dem-Con Cos. President Bill Keegan said one local processor, which he would not name, has had to begin storing mixed paper in trailers.

"The million-dollar question is how do we keep recycling economically sustainable? How do we keep going?" Julie Ketchum, a local spokeswoman for Waste Management, asked a room of recycling professionals at the Minnesota Pollution Control Agency on Wednesday.

'Wish cycling'

Industry leaders say residents can help by ensuring what they toss is actually recyclable, rather than "wish cycling" something that is not, contaminating loads and costing recyclers money. That's grown more problematic in recent years as the switch to single-sort recycling and pressure on haulers to accept more materials — including some with no viable reuse markets — has raised contamination rates.

"I see education being one of the things that's going to greatly help us out with single stream," Keegan said. "They're putting baby diapers, they're putting garden hoses, they're putting electronics [in the bin]. You can't put those in there."

Getting recycling right is also a growing challenge as packaging grows more complex. Granola and other products come in plastic pouches, which get mistaken for paper in the sorting process. An increasingly common message, included on the Republic Services flier, is "when in doubt, throw it out."

"Recycling is part of how we address some of the impacts of consumption, but we really need to start looking at reduction," said Davenport of Eureka, a nonprofit company. "I think this is an example of where recycling is not going to fully solve our consumption of plastics and paper and all those kinds of things."

About 7 percent of the waste Eureka receives is "residual," meaning it cannot be recycled. That is better than many parts of the country, though Davenport said it has risen from less than 1 percent before implementation of single-sort and the switch from bins to larger carts.

To ensure it has a clean product to sell, Dem-Con has slowed down its sorting facility, added staff, and will be spending $2 million this fall to upgrade paper-sorting equipment.

"I don't think this is doomsday. I don't think what China is doing is bad," Keegan said. "The recycling industry has to adapt. I think we need to make cleaner product. That's going to cost money. And I think that cost is borne by — and must be borne by — the generator: the consumer."

'Seems to find a way'

China once happily accepted dirty loads of America's mixed paper, commingled plastics and other recyclables. But since 2012 the country has tightened its standards for acceptable contamination in recycling shipments.

Adam Minter, a Minnesota native and authority on waste whose 2013 book "Junkyard Planet" chronicled the worldwide recycling market, cited a number of reasons for the Chinese shift, including environmental concerns, less use of mixed recyclables in manufacturing, favoritism toward state-owned companies and the public relations benefits of rejecting foreign trash.

The short-term impacts are likely to be higher rates for residents, he said. Minter expects entrepreneurs will eventually build facilities in America that help turn the recycled materials into new products.

"The recycling world always seems to find a way through this," Minter said, highlighting the announcement last month of a new $500 million mixed paper recycling plant opening in Green Bay, Wis.

Governments in other states, like Oregon, Massachusetts and Washington, have granted recyclers permission to landfill or burn materials in response to the China restrictions. Minnesota law bars landfills and incinerators from accepting recyclables unless "the [MPCA] commissioner determines that no other person is willing to accept the recyclable materials."

"One of the questions people have been asking is, 'The law doesn't say anything about if the market is more expensive,'" said Mark Rust, supervisor of the MPCA's Sustainable Materials Management Unit. He said the agency has been talking with industry leaders about other options, such as stockpiling materials, that state officials would want to discuss before granting an exemption to the law.