Low Commodity Prices Cause Recycling Facilities Closures : ISWA Blog: Oil Price Collapse Taking Toll on US Recyclers

David Newman ISWA recycling commodity prices

ISWA President David Newman looks at the sad reality that the continued low oil and commodity prices are, as he predicted last year, leading to the closure of recycling facilities…

I think a year or more ago, when I was writing that recycling was in danger of falling commodity and energy prices undercutting its markets, many readers thought I was either being a catastrophist or simply a contrarian.

Well, sadly, having some basic schooling in economics, I was being neither but was trying to warn our industry that the theories we have developed around closed loops, circular economy, cradle to cradle, are all based upon financial subsidies.

Where those subsidies are not underwriting the falling markets, recycling was bound to suffer. In fact we know that in developing and middle income countries, recycling represents often less than 10% of all waste treatment, the rest destined to landfill or open dumps, or into the environment directly.

As the New York Times recently reported, the oil price slump is taking the recycling industry with it.

US landfills are again receiving volumes of waste destined, just a year ago, to recycling. This re-opens questions which I asked last October in WMW:

With falling energy and commodity values, are landfills destined for a revival even in some of the more developed countries?

Can waste to energy or anaerobic digestion plants compete supplying energy at rates requiring subsidies to remain in the energy market place?

Will landfill owners start thinking about extending the life and volumes of their plants?

Will Governments react with greater subsidies (waste taxes and EPR contributions) to underwrite the lower value of recycled materials?

And what is the value today of a circular economy model? Will linear return to fashion?

In the US these questions are finding answers in the closure of recycling plants opened just a few years ago.

Confusing and hard times are ahead for those in our industry who have invested in the recycling model and are not supported by subsidies sufficiently to ride out the storm. And the storm is going to be a long one, as I wrote last summer.

David Newman, ISWA President.

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