16-05-2014, 02:11 PM
PLASTIC RECYCLING: IS IT WORTH IT?
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ABSTRACT
In November 2008, the general manager of one of the few recycling companies in
British Columbia (BC) lamented that “the whole market has crashed on everything
across the board” (Glave, 2008). It was one of the unexpected consequences of the
economic downturn that started at the end of 2007 and turned into a global recession
one year later.
What seemed like a good business opportunity only two years ago, when demand for
post consumer plastics was continuously growing, may currently not be profitable? This
research project critically analyzes whether recycling plastic – economically,
environmentally and socially – is truly worth it. If indeed, we could turn an obvious good
practice – that of recycling plastic packaging and waste – into a profitable business.
The project explores the recycling concept and its economics, and the theory assessing
our (humans) relationship with the environment. An analysis of the recycling industry in
North America and BC is made, including the strengths, weaknesses, and threats of
industry competitors.
A business plan for a start-up recycling company, Delta
Polygreen Recycling Inc., in Metro Vancouver is crafted. Even though the company
may not be economically viable in the early stages of its life, an example should be set
of balancing the significance of the environment with the significance of profit. By
receiving external support for financial start-up from the government, the company will
have a greater chance to survive and be profitable over time.
INTRODUCTION
Companies that just few months before, all recyclers were still competing for recycled
materials (mostly paper, plastic and glass) due to high demand in China during the
record-high oil prices, are now seeing a negative-priced1 material piling up their
warehouses. The recycling industry is just a domino piece in the global economy. The
stagnation or the danger of collapse of the industry could have two causes. First, it is
the demand. Most of the recycled materials are shipped to China for processing, but as
demand for consumer goods collapsed due to the worst recession in developed
countries since 1929-1933, there is no need for corrugated boxes used for packaging or
plastic used in production of cheap toys. Second, the oil price has seen one of the
steepest declines in price over a short period of time, from $150 per barrel in the
summer to less than $40 per barrel four months later.
The research objective for this project is focused on describing the recycling industry,
identifying current challenges created by the economic downturn of 2007-2008, and
gathering information and data that will help understand the competitive environment
within the industry.
BACKGROUND
Plastics are significant and make a positive contribution with regards to packaging in
various ways. By sorting and processing plastic packaging that is found in
predominantly homogeneous streams, the value and market availability is maximized
for the collected plastic packaging industry. Plastic bottles, plastic tubs, and plastic bags
all have the potential to be recycled; however, what can or cannot be recycled depends
on the municipalities. There are people, who are of the belief that recycling uses more
energy than it saves. This was highlighted by a columnist, John Tierney, who had
posited in a New York Times Magazine an article stating that “recycling is garbage.”
“Mandatory recycling programs,” he wrote, “...offer mainly short-term benefits to a few
groups - politicians, public relations consultants, environmental organizations and waste
handling corporations - while diverting money from genuine social and environmental
problems. Recycling may be the most wasteful activity in modern America...”
Environmental Concerns of Plastic and Biodegradable Products
The effect of plastic on landfills is problematic, as it takes a long time to disintegrate. It
is important to note that despite it being a man made, chemical product it takes just as
long to decompose as any food or paper wastes. Given this, the recycling of plastic is
still vital, as the carrying capacity of landfills is limited. Even though earlier studies
stated that plastic wastes do not create difficulties in landfill operations and do not add
to the toxicity of leachate from the landfills (EPA, 1991; Office of Solid Waste and Office
of Water, 1990), over time these have been discredited. The new concepts of
biodegradation (where starch additives are incorporated to plastic) and photo
degradation (where photo sensitive additives are integrated in the manufacturing of
plastic products) have been controversial towards commercial applications. Light and air
must be available in order for the biodegradable and photodegradable materials to
decompose, along with sufficient moisture and nutrients to sustain microbial action
(Alter, 2003; Boettcher, 1992). Thus, the deeper these plastics are buried in the landfill,
the less likely they are to decompose. “Moreover, making plastics degradable would
lower the quality and performance of the material and therefore would mitigate some of
its major desirable features in various applications” (Siddique et al., 2008, p.1839).
Therefore, it is reasonable to conclude that the market for plastic recycling is not
threatened by biodegradable and photo degradable plastic products. Due to the higher
manufacturing costs of these products compared to regular plastics, and the lack of
environmental benefits, firms will not replace conventional plastic products.
MARKET ANALYSIS
The North America supply of PET (the number one recycled resin in volume) is
estimated at 800 million ponds with an expected growth to reach 1 billion pounds over
the next few years. It was the plastics industry’s effort to develop new markets for
recycled resins from post industrial and post consumer sources that drove the growth of
the recycled plastics.
In 1997, just 16 percent of total PET consumed (3.7 billion
pounds) was from recycled plastics and of the total plastics produced annually (90
billion pounds), only 5 percent comes from recycled sources. Plastics is the second
highest value material in waste after aluminium. Packaging plastics is expected to be
the largest market segment for recycled plastics (the other two significant segments
being sheet and lumber).