Public And Private Sector Work Together To Build Recycling Markets
By Donna Gordon Blankinship
The tremendous success of recycling programs across the country has been a mixed blessing for states and municipalities struggling to find markets for the cans, bottles, newspapers and other products they collect.
As recyclable materials pile up, government agencies and private groups are searching for creative ways to build strong markets and close the recycling loop.
Last summer, the National Recycling Coalition funded a study of market development efforts across the country. The information researched by the King County, Washington, Solid Waste Division is compiled in a useful document called the 1992 Market Development Directory.
The directory, which compares programs from every state, is a good jump-off point for setting up a marketing program. It includes state reports on incentives and other programs they offer, but the directory does not have any analytical information comparing the different programs.
That would be a gargantuan task, according to Bill Reed, a program analyst with the King County Solid Waste Division.
"When we were working on the directory, we talked about doing some program analysis but quickly decided that would be biting off more than we could chew," Reed said.
Some marketing programs do stand out as being especially well organized or on the cutting edge. We've selected a number of those programs to highlight in this update on recycling market development. Anyone planning to do additional research on their own should note of a warning voiced by Reed: "It's difficult to tell who's talking the talk and who's walking the walk."
The programs discussed here can be divided into three categories: state or local "buy recycled" campaigns, municipal grant and loan programs, and national efforts to encourage market development.
"Buy Recycled"
Richard Keller of the Northeast Maryland Waste Disposal Authority publishes a regularly updated tally of state and local "buy recycled" programs. According to Keller, all 50 states and the District of Columbia now favor recycled products. In the fall of 1986, when a similar analysis was first completed, only 13 states (representing about 46 percent of the population) made the list.
The tally makes special note of a few innovative programs, including Kentucky which has minimum recycled content requirements for 46 categories of products.
Seattle, Wash., has joined the list of municipalities taking a more aggressive stance toward market development with a new ordinance that went into effect
Dec. 1. The Seattle ordinance is the city's response to a new state of Washington recycling law, which requires municipalities to act to create markets for recycled products.
Seattle's law requires the city, when possible, to buy only products containing 25 percent "post-consumer" recycled materials. The new law allows Seattle to pay up to 10 percent above the going rate, if necessary, to get a product with recycled content.
The law goes beyond paper to recycled motor oil, plastic park benches, plastic sign posts, retread tires and glasphalt for roadways. Other Washington cities, counties and business associations have joined the effort to comply with similar, strict new ordinances. An innovative King County program offers a directory of companies that recycle construction waste to help businesses comply with the county's restrictions on landfill dumping.
The Clean Washington Center is a unique public-private partnership operated by the Washington Department of Trade and Economic Development. The Center works with local governments and the private sector to develop and expand markets for recycled products. Among the Center's programs is a business-to-business Recycling Products Directory, which is also available on paper or through the Center's electronic bulletin board.
The state of Illinois publishes a Recycled Materials Market Directory to help municipalities and companies find a home for their recyclables. The Illinois Department of Energy and Natural Resources also operates a Solid Waste Clearinghouse with a toll-free number.
Similar efforts, at varying levels of enthusiasm, are in progress across the country and help is on the way for government agencies just starting a "buy recycled" program. According to Keller, the Northeast Maryland Waste Disposal Authority is working on an intensive training manual for local government purchasing agents.
Keller says enough work has been done in this area that it is now possible to write some comprehensive guidelines for setting up a program so no one has to start from scratch.
"You have to focus on establishing a program, setting a policy, changing your specifications ... looking at waste reduction," Keller said. "The basic techniques of buying recycling products really don't change that much."
With the first draft currently in the review process, the manual should be ready sometime later in 1993.
Another useful resource is a book called "Capuring The Local Economic Benefit of Recycling: A Strategy Manual for Local Governments," which is published by the Local Government Commission in Sacramento, Calif. The handbook offers everything from sample ordinances to details about successful programs. Two useful sister publications are a booklet called "Local Government Procurement and Market Development" and a collection of success stories called "California Buys Recycled."
Grants and Loans
Many successful state and local programs include both "buy recycled" efforts and some form of grants and loans. Wisconsin, for example, uses grants, loans and rebates to enhance markets and help companies respond to strict landfill rules.
Wisconsin state law bans a number of waste products from state landfill sites, ranging from aluminum and glass containers to corrugated paper, newspapers, magazines and office paper. To close the recycling loop, the Wisconsin law also creates financial programs to stimulate the growth of markets for industrial and commercial use of these materials.
The Wisconsin Department of Development offers loans and grants to companies that will help the state meet its recycling priorities, build employment, contribute to economic growth and meet other goals such as benefiting minority group members. Loans of up to $750,000 or 75 percent of project cost and grants of up to $250,000 are available.
The state also offers a rebate program to help companies that must purchase machinery or equipment to manufacture a product out of waste materials. Rebates of between 5 percent and 10 percent of the costs of the machinery or equipment are available. Rebates are also available to businesses that make products from post-consumer waste and are at a competitive disadvantage to companies making similar products from virgin material.
The state of Minnesota has an innovative program based outside its Office of Waste Management. The Minnesota Department of Revenue provides sales tax exemptions for equipment that will be used for recycling related projects, including both processing and manufacturing equipment. The state also spends millions of dollars a year on financial and technical assistance for recycling market development.
When the Minnesota Office of Waste Management awarded its first series of market development grants and loans in 1991, it received 56 applications for $2 million in assistance. Awards were made to 14 counties, private companies and research institutions. The projects supported ranged from buying plastics sorting equipment to installing a wash line for HDPE and PETE plastics. The state also funded research projects including a Department of Transportation study on using shingle scrap as an ingredient in asphalt pavement.
Other states and municipalities that stretch their recycling development programs beyond Waste Management include New York State, which houses its efforts within its economic development agency, and the city of Seattle, which operates a Business and Industry Recycling Venture in partnership with the Chamber of Commerce.

National Programs
The next level of market development programs involve national efforts, both in the public and private sectors. Business and industry partnerships and initiatives by environmental organizations lead the way.
"The federal government has been a follower in these areas rather than a leader. That's the kindest way I can say it," Keller said. "The state and local governments have been way out in front of the federal government in market development issues."
One of the most innovative national programs is the Buy Recycled Business Alliance coordinated by the National Recycling Coalition. Twenty-five national companies — ranging from Anheuser-Busch to McDonald's — are working together to help the recycling market through education and promotion.
A story about the group made the front page of the Wall Street Journal this past fall. According to Phil Bailey of the National Recycling Coalition, the Alliance is an example of businesses not waiting for government mandates, and instead designing a program that meets recycling goals and their companies' needs.
The 25 core companies want to be identified as being part of the solid waste solution, instead of the problem. One of the first efforts of the Alliance was to publish a report on how much the Alliance companies have spent in the past year on products with recycled content. The total of both internal purchases such as office supplies and external purchases such as manufacturing materials came to $2.7 billion.
Future marketing ideas include hands-on training workshops and a business-to-business video on recycling.
One of the most forward-looking projects on building recycling markets is an effort by the Chicago Board of Trade.
Although the project is only in the exploration stage, the potential is great for the Board of Trade to some day run a commodities exchange for recyclable products, according to Mike Walsh, advisory economist in the Economic Analysis and Planning Department of the Chicago Board of Trade.
Walsh said the Board of Trade has met with representatives of industry and the public sector to discuss the needs and interests of the recycling markets.
"There is a lot of interest but we need to further explore whether that interest can be turned into participation in a market," Walsh said.
The Board of Trade was formed in 1848 as a centralized marketplace for grain. Today its largest volume market is in financial futures and options on such commodities as government treasury bonds.
If the Board of Trade decides to add recyclable goods to its product list, the first step might be to set up a cash market. The Board of Trade would bring buyers and sellers together to buy quantities of used newspapers or glass, for example.
Walsh said that some day the Board of Trade might offer a futures market for recyclable products, where buyers could lock in future transaction prices. The advantages of a futures market would be standardized contracts and stabilized prices. Right now the emphasis is on exploring a cash market.
Recycling experts agree that the future of the industry will depend on the success of such innovative marketing programs because increased and stable demand is the only way to meet the challenges of increased supply.