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                                                                                BUSINESS, Page 52

The Recycling Bottleneck


Everybody's doing it. But where do all those cans and bottles
go from here?

By BRUCE VAN VOORST/WASHINGTON -- With reporting by Rhea
Schoenthal/Bonn and Jane Van Tassel/New York


     It's a self-congratulatory ritual, repeated every day,
every week, all over America. Separate the clear glass bottles
from the green and amber ones. Place the newsprint in one
basket, mixed white paper in another, the reams of used computer
paper in a third. Haul the whole lot out to the curb. There.
You've just done your bit for humanity: you've recycled. It's
Miller time.

    Not so fast.

    To be sure, recycling is in vogue. Citizen participation
is at an all-time high; curbside collection programs have
exploded from 600 in 1989 to 4,000 today. But the dirty secret,
and it's not a little one, is that major quantities of the
material being collected never actually get recycled. More than
10,000 tons of old newspapers have piled up in waterfront
warehouses in New Jersey, and a congressional committee has
heard testimony that the nationwide figure tops 100 million
tons. At the Pentagon, employees looking out over the parking
lot can watch paper they've carefully segregated in the office
being tossed into a single Dumpster, destined for an
incinerator. The used-glass market has been so soft that Waste
Management of Seattle, Inc. is stuck with a mini-mountain of
6,000 tons of bottles from neighborhood collections. In the
Minneapolis-St. Paul area, haulers have run out of storage space
and are incinerating some recyclable goods. "It's like having
your suitcase all packed with no place to go," laments Amy
Perry, solid-waste program director for the nonprofit
Massachusetts Public Interest Research Group.

    The problem is that the economics of recycling are out of
whack. Enthusiasm for collecting recyclables has raced ahead of
the capacity in many areas to process and market them. Right
now, says Victor Bell, a veteran Rhode Island recycling expert,
"the market can't keep up with the recycling binge." In recent
years many states and municipalities have passed laws mandating
the collection of newspapers, plastics, glass and paper. But
arranging for processing -- and finding a profit in it -- has
proved tricky. As trucks loaded with recyclable materials arrive
at processors, backlogs develop. Worse, the glut has depressed
already soft prices for used paper and plastics.

    "Long term, our members recognize that if you're not in
recycling, you'll be out of business in 10 years," says Allen
Blakey, public relations director for the National Solid Wastes
Management Association, the nation's trash collectors. Yet
government-mandated recycling laws, by requiring haulers in some
instances to pick up unmarketable items, are actually forcing
some into bankruptcy. The danger in this short-term failure of
recyclonomics, warns William Rathje, author of the recently
published book Rubbish! The Archaeology of Garbage, "is that,
in the interim, recycling enthusiasts will become disillusioned
at reports of difficulties."

    If there's money in trash, entrepreneurs will find it. And
in many instances they have. Processors are turning a profit by
recycling high-value steel and aluminum cans and, in general,
paper cartons and cardboard. A Shearson Lehman analysis
concludes that recycling is now attracting "the attention of the
solid waste industry investor." In two areas in particular,
innovative ideas are cropping up:


    NEWSPRINT

    Paper, especially newspaper, is the biggest component of
landfills -- about 40%. Despite being the most widely recycled
material, newsprint is not at all easy to process or market.
"Often we can't give the stuff away," says James Harvey, owner
of E.L. Harvey & Sons, Inc., a Westboro, Massachusetts, hauler.
Facilities to remove ink from newsprint -- a necessary step
before it can be pulped to make new paper -- are enormously
expensive. To justify the investment, recyclers need the sort
of arrangement just announced between the city of Houston and
Champion Recycling Corp. In return for building an $85 million
de-inking plant, Champion Recycling, a subsidiary of Champion
International Corp., a leading paper manufacturer, was assured
of getting the city's entire collection of old newspapers and
magazines. "Our customers not only want to buy recycled
materials; they are insisting on it," says Champion
International president Andrew Sigler. "This is a market-driven
operation that's great for Houston and gives us the assured
supply we need for economic efficiency."


    PLASTICS

    Though plastics constitute 8.3% of all municipal solid
wastes and are proliferating faster than any other material,
less than 2% of waste plastic gets recycled. Largely this is
because it is cumbersome and expensive to separate the seven
basic types and relatively cheap simply to manufacture virgin
plastics. Wellman Inc., of Shrewsbury, New Jersey, has emerged
as a leader in recycling so-called PET bottles, the most common
clear plastic containers for liquid, turning discarded ones into
furniture textiles, tennis balls, electrical equipment and yarn
for polyester carpet. The Coca-Cola Co. services major markets
nationwide with two-liter bottles made of 25% recycled PET
plastic.

    "It will always cost you money to get rid of garbage,"
asserts Marcia Bystryn, a recycling official in New York City.
The trick is to encourage behavior that minimizes the costs,
allocates them as equitably as possible and creates productive
economic activity wherever possible. In large measure, the
present disequilibrium in recycling is the result of policies
that work at cross-purposes with those goals and with one
another. Environmentalists argue -- correctly -- that recycled
materials suffer in the marketplace against virgin materials
because of government subsidies. Newsprint producers, for
instance, are indirectly subsidized through public-area logging
and logging access roads. The depletion allowance for petroleum
subsidizes producers of oil-based plastics. "If these costs are
taken into consideration," contends Allen Hersh kowitz, senior
scientist at the Natural Resources Defense Council, "recycling
looks economically a lot more competitive."

    Even with such disadvantages, there are profitable
recycling operations. Three years ago, J.J. Hoyt, recycling
manager at the U.S. Naval Base in Norfolk, Virginia, took over
a solid-waste disposal program that had been costing taxpayers
$1 million a year. A shrewd businessman, Hoyt was sensitive to
hauling managers' needs and negotiated lucrative deals. Now,
says one Navy officer, "not a tin can or newspaper falls to the
ground on base." This year Hoyt's program is earning close to
$800,000. "The key is knowing the market," he says.

    New York City's experience is decidedly more mixed. Its
primary landfill, Fresh Kills on Staten Island, already covering
2,200 acres and rising to a height of 155 ft., is rapidly
filling up. And the city, which recycles only about 6% of its
waste, must turn increasingly to recycling or incineration. A
program launched in 1989 to recycle 25% of the city's daily
output of 26,000 tons of solid waste has fallen short. Only 29
of the city's 59 community board districts participate in the
program. Although Mayor David Dinkins hopes to expand this to
39 by the end of the year, officials admit that recycling faces
heavy slogging. "Recycling began with a real naive sort of
optimism," says Bystryn. "I think it is important to come back
somewhere near to reality." The Dinkins administration succeeded
against intense environmentalist opposition in enacting a
waste-disposal plan that includes construction of an incinerator
in Brooklyn.

    Critics of recycling in the U.S. claim that it weakens the
economy, but Germany, one of the world's strongest economies,
is showing that isn't necessarily so. Since last December,
manufacturers and retail stores in Germany have been required
to take back such transport packing materials as cardboard boxes
and Styrofoam. This spring the requirement was extended to
"secondary packaging" such as cardboard boxes for toothpaste or
deodorants. By next year, consumers will be able to return sales
packaging -- from yogurt cups to meat wrappers -- to the point
of purchase for disposal. In mid-1995 German manufacturers will
be responsible for collecting 80% of their packaging waste.
Augmenting the government's program is the Duales System
Deutschland, a private-industry-initiative recycling program
that has already distributed collection bins to more than half
of Germany's 80 million people and expects to reach virtually
100% before the end of the year.

    Japan's recycling rate is almost double that of the U.S.
-- 40% of municipal solid waste, vs. 17%. But the Japanese
program shares some of the problems familiar to American
recyclers. Milk cartons, one of the favorite recycling items,
are piling up high in warehouses. Like America, says Hiroshi
Takatsuki, a professor at Kyoto University, "Japan emphasized
collection before coming up with an appropriate infrastructure
for reuse."

    Americans dispose of far and away more waste than anybody
else on the planet. The EPA estimates the annual cost of this
disposal at more than $30 billion, a figure rising 17% a year
and predicted to reach $75 billion by the end of the century.
On the other hand, despite the dire predictions of some
environmentalists, disposal is less of a problem than in many
other countries. There are still plenty of landfills available,
and they will continue to play an important role. So will new
incinerators, despite their many environmental shortcomings. For
America to catch up in recycling, experts call for action in
four areas:


    ECONOMICS

    Recycled materials deserve at least the same tax and
subsidy treatment that is provided for virgin materials --
especially paper and plastics. Potential investors in recycling
equipment and research should be encouraged with tax incentives.


    PACKAGING

    About 39% of the paper and paperboard going into landfills
and incinerators comes from packaging. The German example shows
how that number can be dramatically reduced. Lever Bros., for
instance, manufactures a superconcen trated powder laundry
detergent in small boxes, saving the equivalent of 13 million
plastic bottles a year. L & F Products sells its Lysol brand and
other liquid cleaners in Smart Packs that take up 65% less
landfill space than the jet-spray containers they are designed
to refill. Imperial Chemical Industries of London has developed a
plastic, soon to be distributed in the U.S., that biodegrades
with or without exposure to air and sunlight.


    RESEARCH AND DEVELOPMENT

    Recycling is a new frontier for technical innovation. New
processes, for instance, are needed to remove contaminants.
Sorted solid wastes often include contaminants that gum up
recycling systems, such as clear plastic tape on envelopes or
sticky yellow Post-its on office paper. A single ceramic cap
from a bottle of the Dutch-brewed Grolsch beer can contaminate
an entire batch of green glass. "We haven't begun to tap the
potential for technical innovation in recycling," says Lloyd
Leonard, legislative director for the League of Women Voters.


    LEGISLATION

    The New Jersey mandatory recycling law -- achieving 34%
recycling, or double the national average -- demonstrates the
virtues of a legal prescript. Minimum-content laws such as those
in Oregon and California, mandating the use of recycled
materials in new products, have proved effective. So have "pay
by bag laws" that increase the price tag for garbage removal
according to volume. Last fall the White House issued an
executive order requiring federal agencies to give preference
to recycled materials when purchasing products. But that's just
a start. "Unless the government mandates more use of recycled
material in products," warns Dan Weiss of the Sierra Club,
"recycling will be discredited."

    For all its promises, recycling remains only part of the
world's waste-disposal solution. Despite the enormous energy and
enthusiasm with which Americans and others collect recyclable
products, the real breakthrough can come only when similar
effort is expended on reducing waste in the first place and in
enticing more markets to absorb recycled materials.