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“Trash That Recycling Plan”
by Dr. J. Winston Porter
(As published in The Wall Street Journal, 6/28/93)

This summer, the chairman of the Senate Environment Committee, Max Baucus (D. Mont.) plans to make good on a promise he made to the Conference of Mayors in April. It was there that he said he would press for bold new recycling legislation. Such a bill, modeled after a plan being tried in Germany, could require manufacturers to absorb the disposal costs of their product’s packages. But before Sen. Baucus gets too excited about foisting a version of this on American businesses and consumers, it would be wise to take a closer look: Germany’s recycling system is rapidly unraveling.

The company in charge of recycling Germany’s trash, Duales System Deutschland (DSD), announced recently that it is $180 million to $300 million in the red, and the news has unleashed some harsh official criticism. “The ‘green dot’ has run aground," was the judgment of one staffer on the Bundestag’s environment committee, referring to the symbol on German packaging that signifies it is recyclable through the DSD system. “Industry has bitten off more than it can chew.” A state senator from Hamburg called the program “foolish,” adding that in its present form the plan “leads to new environmental burdens.”

How Germany got to this point is an instructive tale for Sen. Baucus and the American recycling lobby. In 1991, bowing to heavy green pressure, Germany passed a law requiring its businesses to take back and recycle all forms of packaging—bottles, cans, containers, cartons, and sacks. Such packaging amounts to about one-third of Germany’s municipal trash. To prove it meant business, the government set ambitious recycling rates: By 1995, 72% of all German glass, steel, and aluminum packaging is to be recycled; for paper, paperboard, plastics and composites, the target is a slightly more modest 64%.

Retailers quickly lobbied for and won an amendment exempting them from accepting wastes at their stores--leaving it to the manufacturers and distributors alone to guarantee (and pay for) the collection and recycling of all packaging wastes. Left holding the bag, some 600 producers responded by creating the DSD, a nonprofit company, to collect and sort the stuff.
Until now the DSD has funded itself through a system of license fees on each type of packaging material. Upon payment of the fee, a producer is entitled to place a “green dot” on its packaging, which tells consumers that recycling is “guaranteed.” DSD fees are currently based on volume, but this approach has not proven cost-effective.

Beginning this October, DSD aims to cover expenses by charging member companies license fees that more closely reflect its costs for collecting and separating trash: 4.5 cents per pound for glass packaging; 9.5 cents for paper; 16 cents for steel; 28.5 cents for aluminum; 47 cents for composites; and 74 cents for plastics. Most of these fees, it should be noted, greatly exceed the market value of the recycled material. DSD’s revenues from these fees are expected to range from $60 million a year for aluminum to $1.3 billion for plastics. The company expects to take in $2.5 billion in 1994. But whether this will be enough to keep the system going seems less and less certain.

DSD services 96% of German households. In many areas, consumers must bring their glass bottles and sometimes paper to community drop-off points. At a growing number of residences and commercial establishments, a blue or green bin is provided for paper packaging, and a yellow bin for all other packaging. In other words, the contents of the yellow bins look like, well, regular trash. The mélange must first go to one of about 200 sorting centers, where steel is pulled out magnetically, and the rest is separated by hand—a slow and costly process.

While the extraordinary expense of Germany’s system is clear, the real environmental benefit—except perhaps for a modest reduction in packaging to lower recycling costs—is not. This is especially true when it comes to plastic, a very large component of the German packaging market. “The Achilles’ Heel of the Duales System is made of plastic,” wrote Wolfgang Roth is the Sueddeutsche Zeilung. “The question that is becoming increasingly obvious is: Is intensive reprocessing in this sector even desirable on ecological grounds?” In Sweden, Switzerland, France, parts of the US and other countries, trash, including plastic, is safely incinerated to make heat or electricity—arguably a form of recycling incidentally, plastics are certainly a cleaner fuel than coal, one of Germany’s major energy sources.

Germany’s recycling costs per ton range from about $100 for glass to more than $2,000 for plastics. Overall cost is about $500 per ton for all German recyclables. In the US, by comparison, trash is collected and sent to landfills or waste-to-energy incinerators for costs of about $75 to $50 per ton; per-ton collection and sorting costs for recyclables are about $150 to $250. And Americans recycle some 22% of their trash—which compares favorably with Germans, whose high recycling rates apply only to packaging wastes. The overall German recycling rate appears also to be in the low 20% range.

In today’s Germany, “recycling at any cost” has overwhelmed common sense and economics, with international repercussions. The main flaw of the German “green dot” system is that is goes way overboard in collecting all types of packaging at rigidly mandated rates. This introduces enormous market inefficiencies: Huge costs are being incurred for separating a lot of packaging that has almost no market value. And a dearth of domestic buyers has led to the dumping of cheap German recyclables on foreign markets—depressing prices in neighboring countries.

In 1988, as an assistant administrator with the Environmental Protection Agency, I set a national goal in the U.S. of a 25% recycling rate. Some state legislatures have set their own targets that average about 30%. But these are mostly aimed at the total waste stream, not specific components. In the U.S. the free market has been allowed to work, so those items with the most value and least cost to collect and reprocess tend to be the ones recycled. Today half of all recycling tonnage in the U.S. is comprised of corrugated boxes and newspapers. Most of the rest is made up of a few types of cans and bottles.

In the brave new world of environmental correctness it is time to subject green ideologies to serious number crunching regarding real economic and environmental impact. We can start with debunking the idea that Germany’s floundering recycling system would work here.

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Dr. J. Winston Porter is president of the Waste Policy Center in Leesburg, Virginia. Formerly, he was an assistant administrator of the Environmental Protection Agency with national responsibility for solid and hazardous waste programs.