How China Broke the World's Recycling?

This is the two-page document that change the world. It’s what’s referred to as a “Notificatio to the World Trade Organization Committee on Technical Barriers to Trade”—a typ of document that, to anyone in the know, is thoroughly mundane. In fact, every few hours, another such notificatio enters the WTO system—each signifying that yet another country wants to make yet another change to its rules regarding the import or export of goods or services. This particular notification, though, submitte on July 18th, 2017, managed to send the entire global recycling industry into a tailspin or possibly even…  death spiral. Put simply, this document broke the world’ recycling system. But here’s how it worked before this document let’s say a woman in Littleton, Colorado has yogurt for breakfast. The yogurt is packaged in a thin polypropylen plastic container and so, once finished, she disposes of it into her recycling bin. This is then picked up by a recycling truc a few days later, and brought here to the local recycling company’s materials recover facility.

There, this yogurt container, along with al the rest of the single-stream recycling picked up that day, is dumped out and placed int the semi-automated sorting system. Some products are simple to isolate—mos metals, for example, can be picked up by magnets, while paper and cardboard can be easily sorte by density, as they’re typically lighter than other recyclables. Glass, plastics, and non-magnetic metals ar a little more difficult to sort, but each looks quite distinct so optical scanners operat blowers or other diversion tools that are able to sort these out. With a few more steps, the facility is more-or-les left with just plastic, but that’s where things get difficult. Plastic come in al sorts of shapes, sizes and types, and different shapes, sizes, or types of plastic are recycled in differen ways. Optical sensors start out by at least accomplishin a high-level sort, though. For example, in many US states, plastic bottle are sold with a 5 or 10 cent deposit, meaning that recycling companies put a lot of effor into recovering those from the mix as they can be sold for, at least relative to othe plastics, a lot.

They also put a lot of work into recoverin certain plastic types, such as high density polyethylene, as this both sells for mor and is easier to sort out of the mix since it’s typically used to make larger item like plastic crates, shampoo bottles, and other products where sturdiness matters. The polyethylene and other higher-value plastic are quite accurately sorted and then melted down into bulk raw plastic which is re-sol to manufacturers. Certain other plastics, though, have a negativ value—they can’t be sold and, in fact, it would take so much work to turn them int usable raw material that recycling companies would have to pay someone to take it off thei hands. Typically falling into this category are smalle items like bottle caps, plastic bags, and other scraps below three inches or eight centimeter in width that just can’t be easily sorted by automated systems. These are then aggregated together and, a best, used to generate energy through incineration or, at worst, are just sent to a landfill.

 So, to summarize, there’s high value-plasti that’s recovered immediately, negative-value plastic that is either incinerated or sen to a landfill, but then there’s a third category in between those two, and that’s where things get interesting. Anything that isn’t small and unrecoverabl or large and valuable is typically mixed together and formed into big bales of unsorted, medium-size medium-value plastic that effectively have a neutral value on the free market. The raw materials in these bales, known a MRF Residuals, is not quite valuable enough to pay for the sorting process they woul need for recycling, which leads to their neutral value, at least in the US. After it takes its trip through the Material Recovery Facility, that yogurt container from Littleton, Colorado would, if properly sorted end up in one of these MRF Residuals Bales. These are then loaded into the back of a semi-truc driven 1,000 miles to the Port of Long Beach, California. There, the bales are officially exported fro the US, loaded into a shipping container, and placed on an enormous, yet empty, Hon Kong bound cargo ship. Now, with this knowledge, some might ask  question: how on earth did we end up with this system, theoretically designed to reduc our impact on the world, where our waste is shipped across the world? To that, there’s actually a surprisingl specific answer. Decades ago, in 1969, the first national Conferenc on Packaging Waste convened, and in that room were a number of plastics-industry executives.

Throughout the event, they heard municipal leaders from around the country express their concern about just how permanent plastic was. Back then, the material was becoming cheape and cheaper, and was quickly gaining prominence in the packaging world, but this mountin concern among municipal leaders itself led to mounting concern among plastics executives. They came to believe that this plastic hesitanc would quickly became an existential threat for the industry’s growth, so plastics kne they needed a solution. They needed a way to make plastic sustainable. The problem: there wasn’t one. So, backup option: rather than creating  real solution, they willfully and knowingly created and propagated a system that didn’ work, but looked like a solution—recycling. From a technical standpoint, you can sort melt down, and reuse plastic, thereby reducing its impact on the world, but that’s no why it doesn’t work. From a social perspective, people do ofte do their part and, at least somewhat, separate their trash from recycling, but that’s als not why it doesn’t work. Why recycling doesn’t work is because, overall it’s not profitable. It’s very simple: oil is cheap, at leas now, and when oil is cheap, making new plastic is cheap. Meanwhile, sorting, transporting, and meltin down existing plastic is expensive.

 In 2017, virgin PET plastic cost about 54 cents per pound, while recycled PET cost about 63 cents per pound, and was lower qualit than the alternative. Therefore, demand for recycled PET was low so waste management companies couldn’t turn a profit turning used PET into raw, recycle PET at scale. When companies can’t make a profit recycling it doesn’t happen—or at least not at the rates needed to make the plastics industr sustainable. For the plastics industry, though, all the needed was the perception of sustainability and, even though a big chunk of what wen into a recycling bin ended up not recycled, consumers and municipal leaders were happ because they believed that the plastic they consumed was guilt-free. That’s how that yogurt container tosse in Littleton, Colorado ended up on a boat to Hong Kong. Now, the rule just mentioned is still valid—plasti is only recycled when it’s profitable—but for a brief moment in time, it was, all thank to a trifecta of economic conditions in China. First, shipping was incredibly cheap. Western nations like the US have long ha a significant trade deficit with China—essentially, America buys far more from China than Chindoes from America. That means that cargo ships from greater Chin travel to the US almost completely full, but then return with plenty of extra capacity meaning shipping rates to China are far lower than shipping rates from China. Thanks to that, you could get one of thos MRF Residual Bales across the Pacific for next to nothing. In addition to this, since the 1980s, Chin has been riding its way through an unprecedented phase of economic growth. This was so dramatic that the country’ industries quite literally could not find nough raw materials, including plastic, t fulfill their demand.

Therefore, with constrained supply and hig demand, even recycled plastic prices went up, giving the recyclers in the country mor room to cover costs. In addition, especially in more rural areas wages were low in China. Those MRF Residual Bales are composed of thos difficult-to-sort plastics, but humans can sort just about anything profitably, as lon as their wages are low enough. So, all in all, considering shipping to Chin was effectively free, and raw material prices were higher, and wages were low, the equatio just happened to work out so that in the late 90’s, 2000’s, and early 2010’s, sortin and recycling MRF Residual Bales in China was just ever so slightly profitable. That’s why, upon arrival into Hong Kong the plastic yogurt container disposed of in Littleton, along with everything else in thes bales, is immediately transferred onto a smaller barge and reexported out of Hong Kong fo a short journey across the Pearl River Delt to the Guangdong Province, in mainland China. Then, after an 8,000 mile, 13,000 kilomete journey to the other side of the world, it ends up at its final destination: the Wellpin Plastic Industrial Company just outside Guangzhou. There, the bales are unloaded, spread out and low-wage workers manually sift through the contents, eventually finding that yogur container, and putting it in a pile along with the rest of the polypropylene plastics.

 From there, the polypropylenes are melte down, purified, and reformed into pellets which then, eventually, are sold in bulk  nother manufacturer, somewhere else in China, for a very, very slight profit. Now, this whole system of taking effective valueless MRF Residual Bales and shipping them across the world to a place where the did have a very slight positive value worked.It wasn’t elegant, it wasn’t clean, bu it worked, and that’s how, for a few decades, the western world’s recycling system functioned. The most valuable stuff was sorted and sol domestically, the valueless stuff was exported to where it had value in China, and the stuf with a negative value was sent to the landfill or incinerated.But then came that document—the notificatio to the World Trade Organization Committee on Technical Barriers to Trade. All this said was that China would, startin at the end of 2017, ban the import of 24 products covered under these HS codes—the numerica classifications used to simplify international trade. These particular five, though, were the one that created the big problem for the plastics industry. They translate to “Waste, Parings And Scra Of Polymers of Ethylene,” “ Of Polymers Of Styrene,” “Of Polymers Of Vinyl Chloride, “Of Polyethylene Glycol Terephthalate,” and “Other Waste, Pairings And Scrap, O Plastics.” Effectively, by banning these five HS codes they banned the import of almost all plasti waste. As a result, the country’s 2018 plasti import volume dropped 99.1% compared to 2017—this massive, global industry quite literally ende overnight. Now, while the true reasoning behind any Chines government decision is always elusive, at least according to the document, it was tha the import of these products was creating a serious environmental and public healt problem. his is likely true.

 As MRF Residual Bales are, by their very nature unsorted, they often included hazardous materials that could seriously harm those sorting them and this went on to cost the government since the government runs much of the country’ healthcare system. In addition, the sorting facilities in Chin would often illegally dump the portion of the plastics that even they couldn’t profitabl recover, creating an environmental problem that the government had to pay to clean up. Therefore, while the private companies tha actually sorted and processed these MRF Residual Bales turned a slight profit, China, as  nation, was losing money by processing theworld’s trash. So, essentially, even though it looked lik plastic recycling was profitable, once the externalities were priced in, it once agai became clear that plastic recycling was not, in fact, a viable system. That’s why China issued this document, that’ why they banned plastic waste import, and that’s why the world’s recycling syste broke. Nowadays, when a woman in Littleton, Colorad throws her yogurt container into the recycling bin, the journey that ensues is often far far shorter. First, as before, it’s picked up by a truck brought to a Materials Recovery Facility, sorted down, and packed into one of thos MRF Residuals Bales, but after, there are now three main options. The first is that it’s exported, as before but not to China. In response to the import ban, Malaysia triple their plastic import volume between 2017 and 2018, becoming the largest processor in th world, and some other nearby low-wage countries ramped up as well. Eventually, though, these countries will undoubtabl realize what China did—processing MRF Residual Bales may be profitable to  company, bu not a country. The amount of health and environmental issue it creates in the long-run costs more than the industry makes. Even despite the alternate plastic expor options, the US’ expo volume, which includes more than just MRF residual bales, still droppe by a third between 2017 and 2018. There was just no-one who would take thes bales, even for free, since with the removal of China from the market, very few companie could turn a profit processing them, even outside the US. The global value of one of these bales wen from slightly positive to clearly negative and, remember: recycling only works when it’ profitable.

Therefore, with far fewer buyers, MRF Residua Bales piled up and up until eventually, the waste processors gave up and put them int the same category as bottle caps, scraps, and those other small, unrecoverable, unprofitabl pieces of plastic. Now, when you put something into one of thos big, blue bins that are supposed to lead to a second-life for your waste, it ends up more often that not, in the incinerator or landfill. Plastic recycling, with the exception of thos few, highest value items, is now definitively broken. But here’s the thing: it was always broken. Plastic recycling, with limited exception never generated more money than it cost, and so it was never economically sustainable. The China system was just a blip, thanks t a unique set of economic circumstances, and a government that didn’t yet recognize th cost of the industry’s externalities.

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