Understanding Strenuously debated for 30 yas, the effectiveness

and costs of recycling beverage containe~ -

in deposit and nondepit systems - beverage container are illuminated in a landmark report.

by Edward Boisson, et al.

This article was prepared by Edward Boisson, principal, Boisson & Associ-

Who participated in the project? ates (Pittsboro, North Carolina), Chuck McLendon of R.W. Beck (Orlando,

Resource Recycling February 2002

ronmental and social benefits of recycling, and recovery program costs and effectiveness. Beverage containers are defined broadly as the primasy container types used to package beverages for shipment to consumers. Aluminum, glass, PET and HDPE plastic containers are specifically covered. The report is a first step towards a collabo- rative understanding of the beverage container recycling issue. It is important to note that, although discussed at length during the proj- ect, the report does not recommend any particular program, analyze end-use markets, project the costs and impacts of replicating or expand- ing existing programs, nor address program implementation con- cerns. Also, the report focuses on recycling, rather than use of refill- ables or other strategies.

Generation and recovery trends The report documents what both industry and environmental sources already have acknowledged - beverage container recycling rates are declining. In 1999, approximately 192 billion beverages were sold in the US., with about 78 billion beverage containers recycled, for a 41 percent recycling rate (or about 30 percent measured in tons). Rates for each material type have been slipping in recent years.

Benefits of recycling Using statistics from the U.S. Enviro111nental Protection Agency (Wash- ington), the team estimated environmental benefits associated with overall beverage container recycling in 1999. For example, recycling saved 147 trillion Btu of energy (equivalent to over 32 million barrels of oil) and avoided over four million metric tons carbon equivalent in greenhouse gas emissions. Reduced air and water emissions also were documented, based on the Municipal Solid Waste Decision Support Tool developed by Research Triangle Institute for EPA. The study also estimated litter reduction (at neasly 800 million containers litter avoid- ed) and noted important economic benefits associated with recycling.

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Basis for comparing effectiveness and cost Much of the report compares recovery programs in terms of costs and effectiveness. Comparing effectiveness is complicated because of significant differences in programs, such as the types of contain- ers accepted, the impact of deposit prograrns in reducing the number of containers available, participation rates, and the yield loss during collection and intermediate processing. The study accounts for these factors by using a single measure, the overall secovery rate typically achieved by each program. The overall recovery rate, as presented in Figure 1, measures the percentage of all containers generated in a given area that typically are recovered by a program, allowing for apples-to-apples comparisons.

Figure 2 shows three distinct measures for comparing costs, each 1 presented in cents per container recovered. Gross cost refers to the total operational costs associated with collecting, processing and

I shipping containers to market. (Consumers' costs to deliver con- I

I tainers to drop-off or redemption centers are not included.) Net cost refers to gross cost minus revenue from material sales, using two- I

I

year average values. And, finally, net cost r~tinusf~inrls front urzre- 1 clee~lzed deposits is calculated for deposit systems (using typical deposit amounts and redemption rates representative of existing deposit systems). Transfer payments, such as the handling and proc- essing fees assessed in some deposit states, are discussed in the report but do not affect bottom-line operational costs used to com- pare programs, since they are a cost to one party and a benefit to another.

Although recovery programs can vary tremendously from one location to another, the consulting team determined the results repost- ed are representative and typical and can reasonably be used to com- pare programs. It is important to note that participants did not reach consensus on the most appropriate basis for comparing programs. Some argued strongly for or against using gross, net or net-minus- unsedeemed-funds in cost comparisons. And, some argued that the most appropriate measure would incorporate the monetaly value of social and environmental benefits, or the costs of not recycling, nei- ther of which was calculated in the report.

Traditional deposit systems Traditional deposit systems ase the "bottle bills" adopted in nine states that rely primarily on return-to-retail and require sorting containers by brand. Traditional deposit systems result in the highest overall recovery rate. In 1999, they typically targeted beer and carbonated soft drinks (about 79 percent of all beverage containers) and achieved an average redemption rate of 78 percent for these container types, resulting in an overall recovery rate of 61.6 percent.

On average, traditional deposit systems have the highest gross and net costs at 3.61 and 2.21 cents per containel; respectively. How- ever, in 1999, about 30 percent of all containers redeemed through traditional deposit systems involved use of reverse vending machines, with the remaining 70 percent involving "manual" systems operated by staff at retail stores or redemption centers. Reverse vending machines, with gross costs of 2.53 cents and net costs of 1.13 cents per container, ase less expensive than manual systems, with gross and net costs per container of 4.07 and 2.67 cents, respectively.

Some argue that deposit systems should be evaluated based on net costs minus funds from unredeemed containers, since these funds are an inherent by-product of any deposit system. Others argue that this is an unfair comparison since unredeemed deposits represent payments from consumers and are therefore a form of transfer payment. If unredeemed deposit revenue is "counted," the hierarchy of costs changes with traditional deposit systems' cost reduced to 0.80 cents, lower than the net costs for curbside recy- cling. On average, deposit systems based on reverse vending machines show a net surplus when unredeemed deposit revenue is counted. Deposit systems typically yield the highest material qual- ity, with cosrespondingly high value.

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~esource Recycling February 2002

California's redemption system Adopted in 1986, the California redemption system is a unique deposit program in which return to retail is de-emphasized in favor of exist- ing buy-backs and "convenience zone" recycling centers established near retail stores. Unlike traditional deposit systems, the California program is administered by a state agency and does not require sort- ing by brand or return to beverage distributors. In 1999, the Califor- nia program targeted approximately 79 percent of all container types and achieved a redemption rate of 69 percent of these container types, for an overall recovery rate of 54.5 percent. Gross unit costs were 1.62 cents and net costs were 0.55 cents per container recovered. ~f unredeemed deposit revenue is included, California shows a net sur- plus of 0.42 cents per container recovered.

Project participants scrutinized the surprisingly low California sys- tem costs. Reasons for the low cost include the reliance on so called "old-line recyclers" (buy-back centers that existed prior to the 1987 redemption law) and other independent recycling collectors estab- lished since the program's inception. These facilities, presumably profitable before the law, have extremely low operating costs. Fur- thermore, unlike traditional deposit systems, the program does not require sorting by brand or distributor.

The California cost results indicate some possible avenues for sig- nificantly reducing the costs of deposit systems. However, anticipat- ing that some will respond to the reported low California costs by advocating for adopting the California system in other states, critics have cautioned strongly that three important facts about the Califor- nia system must be considered. First, many businesses in California have voiced concern about the program's complexity and fairness, as reflected in a Constant stream of litigation and legislation since the program's founding. Second, some believe no other state has an exist- ing network of buy-back centers as California does (though this is undocumented). Finally, the California system was expanded sig- nificantly in 2000 to include virtually all beverage containers, and this has caused a reduction in the percentage of containers redeemed and an increase in unit costs. Since the study year is 1999, these fac- tors are not captured in the report's program compa~<sons (although they are discussed).

Curbside programs Curbside programs often accept nearly all beverage container types, but are limited almost entirely to containers generated in residences

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(estimated at 75.7 percent of all containers in this study). The percent of population with access to curbside recycling collection varies from 76 percent in the deposit states to 61 per- cent in nondeposit states, and the typical par- ticipation and capture rate is about 50 per- cent. Yield loss during intermediate process- ing is assumed to be 13 percent across the board for beverage containers. In deposit states, on average, 61.6 percent of containers are unavailable to curbside programs because they already have been redeemed. Adjusting for these variables, curbside programs have an overall recovery rate of 9.5 percent in deposit states and 18.5 percent in nondeposit states. Qpical curbside programs collecting commingled beverage containers have a gross cost of 2.48 cents, and a net cost of 1.72 cents per container. Curbside costs were calculat- ed for nondeposit states, and the report does not include separate cost estimates indicating the impact of deposit systems on curbside operations.

Drop-off programs Residential drop-off programs result in the third highest level of recovery, though far less than deposit and curbside programs. Like curbside, drop-off programs typically accept all types of plastics, glass and alu- minum beverage containers and are limited almost entirely to containers generated in residences. About 60 percent of the popu- lation in deposit states and nearly 65 percent in nondeposit states have access to residen- tial drop-off programs. They recover 5 to 10 percent of the beverage containers gen- erated in targeted residences. The yield loss assumed in this study is 5 percent during intermediate processing. And, in deposit states, approximately 61.6 percent of all con- tainers are unavailable because they already have been redeemed. Adjusting for these factors, drop-off programs achieve overall recovery rates of 1.6 percent in deposit states and 4.5 percent in nondeposit states. Resi- dential drop-off programs typically have the lowest gross cost at 1.10 cents per contain- er, and the net costs including material sales revenue are about 0.3 cents per container. The net cost of drop-off programs is partic- ularly sensitive to the quality of materials, which is extremely variable.

Other types of recovery programs All other programs not covered above com- bine to recover slightly more containers than residential drop-off programs. Other pro- grams include nonresidential and buy-backs. Nonresidential is a catchall category for recov- ery programs operated in commercial busi- nesses, schools, universities, work places and public venues. Buy-back centers typically are privately operated facilities that pass on a portion of a material's market value to those taking materials to their facility. (Many buy-

promising lessons learned hat individuals with strong- s can work cooperatively ch of the data describing r important lesson is that

g these individuals and their organiza- to agree on how to interpret and act on facts is extremely challenging. Because

ly established and pas- organizations of all political

e reticent to accept language romise their adopted position t expressly lend it support. sought-after "value shift" cling policy logjam must be

Ily. Notwithstanding the ulti-stakeholder agreement involv-

ing (see "Carpet Recycling e), this dilemma may haunt

product stewardship efforts in the US., as those targeting electronics, paint and

Following are some additional lessons rned through this project that may be use- in other product stewardship dialogues, seen by the project manager: Chart the course and stick to it. Before initiating the dialogue, ask participants to agree to a project charter defining clear objectives, participation ground rules and

principles. Hold each participant account- able to his or her commitments, and adjust the charter as appropriate before each sub- sequent stage.

+ Air dirty laundry and move on. Ask par- ticipants to identify their biases and assumptions early on, in terms that every- body can understand. Ask them to con- sider what they can learn from opposing viewpoints.

+ Relentlessly keep to the facts. Ground the discussion firmly on a fact-based foun- dation. Ask participants to back up con- troversial positions with data.

+ Focus a l l eyes on the bal l . Avoid nonessential debate by structuring multi- stakeholder discussions solely around desired outcomes, relying on an accept- ed team to research and present facts in an unbiased way.

+ Keep the door open to new information. Product stewardship is controversial and complex, and new data are likely to appear even after interim agreements are achieved. Hold firm on research results and interim agreements, but use inevitable disputes over facts as an opportunity to refine the analysis and broaden con- sensus.

I -Edward Boisson

back centers in California operate as certified redemption centers and are covered in this report under that program.). Due to a lack of data and high variability, these programs could not be compared based on costs or on many of the effectiveness variables.

Observations on deposit and nondeposit-based systems Many participants noted that recovery pro- grams do not operate in isolation. Rather, they combine to form a system in any given geographic area. The most important dis- tinction in systems is between deposit states and nondeposit states, since deposit systems have a high overall recovery rate that reduces the availability of containers to other recy- cling programs (see Figure 1). In 1999, deposit states, with about 29 percent of U.S. population, had a combined overall recovery rate of about 71.6 percent, compared to 27.9 percent in nondeposit states, which have 7 1 percent of U.S. population. Another impor- tant observation is that funding responsibili- ty varies significantly. Funding for deposit systems comes largely from industry (through handling fees, processing fees or direct oper- ations), consumers (through unredeemed deposits) or retailers (through operations). Curbside and drop-off program funding is largely from tax assessments, solid waste and

recycling fees, and other local government funding mechanisms.

Next steps - need for continued dialogue Project participants view the report as an important first step, but not the last step, in the effort to collaboratively identify an "opti- mal" beverage container recycling policy. Interest in continuing discussions remains strong, and the report can serve as an effec- tive starting point. Future efforts will need to address markets, concerns over implementa- tion and the projected costs and impacts of new or expanded future programs. Perhaps most fundamentally, the question of how to allocate funding and other responsibility must be solved, ensuring that future dialogues will remain lively and vigorous.

The project has shown that if stakehold- ers agree to work through issues in good faith, they can agree on the facts. The challenge is in converting facts into action, and in over- coming the inertia of 30 years of hard battle.

RR

Understanding Beverage Container Recycling: A Value Chain Assessment Prepared for the Multi- Stakeholder Recovery Project, Stage One, is avail- able on the Global Green USA Web site at www.globalgreen.org/bear.

~esource Recycling February 2002