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[GreenYes] Fwd: [AXIS-Advisory] Zero Waste and the Future of the Waste Management Industry

Begin forwarded message:

From: Darcy Hitchcock <darcy@no.address>
Date: April 11, 2007 3:27:52 PM PDT
Subject: [AXIS-Advisory] Zero Waste and the Future of the Waste Management Industry

Spring, 2007                                                                        Vol. 17 No. 2

Copyright 2006 AXIS Performance Advisors. If you use this in any way, please cite the source.

Zero Waste and the Future of the Waste Management Industry: An Interview with Wayne Rifer

By Darcy Hitchcock

Sustainability is a powerful tool for improving business foresight. It helps people foresee emerging threats and take advantage of new opportunities. In the solid waste field, sustainability is often framed as zero waste. What does this trend mean for the waste management sector? Darcy Hitchcock, author of The Business Guide to Sustainability, interviews Wayne Rifer, an expert in solid waste management, zero waste, and product stewardship at the Zero Waste Alliance to find out.

Darcy: Fundamentally, the waste industry has been tied to waste production, the more garbage, the happier the hauler. But if zero waste is the future, what does that mean for the waste management industry?

Wayne: I am presuming that the waste management world includes both haulers and recycling. Years ago, they were separate. There were three types of services, at least for commercial service: 1) some just collected garbage 2) some haulers picked up unsorted garbage from businesses that had a lot of corrugated cardboard and the mixed waste went to dedicated facilities to separate. 3) some picked up source-separated materials.

What’s happened is that the second option, except for construction and demolition, has really gone away. Now hauling and recycling is really an integrated set of services, though using different equipment, in most communities.

Over time what’s happened is the waste industry has had to adapt to more complex choices made by customers. The focus has become how they get most value out of the materials. This is going to be even more important in the future. The waste management industry will have to become very flexible, attending to the needs of the customer and understanding what is in their waste stream.

Darcy: So zero waste doesn’t mean there is nothing to haul around. There still will be materials—call it waste, resources, whatever—that has to go somewhere.

Wayne: Right, and since the waste industry is now more integrated, over time, more can go to recycling and less to landfill.

Increasingly haulers are being asked to be engaged with the customer as partners to figure out the best approaches to handle their waste streams. They help the customer figure out what can be separated, what are all system costs, and then find the optimal approach. Their sales people are getting involved with resource management contracting.

Darcy: Can you give me an example?

Wayne: Sure. Portland State University set up a financial arrangement between the customer and hauler such that the hauler is provided incentives to increase the recycling rate.  Integrating the economics and the environment are key to making this happen. They gain financial advantage by finding better uses, higher value for the material. This is what we want. Otherwise, the hauler has no incentive to reduce waste to landfill.

Part of being flexible is integrating their service with the customer and with the destination (e.g. recyclers) in resource management.

Darcy: Can you give me an example of what you mean by that?

The haulers (there are a bunch) in Portland, Oregon, especially on the east side, formed a recycling company that provide the residential recycling services, called East Side Recycling. The City required that they provide curbside recycling so doing it as a group was much more cost effective.

Darcy: Wait, there’s still the dilemma. To become sustainable, we want to reduce overall waste, not just ship more stuff to recycling. If we reduce waste overall, isn’t that a threat to the industry?

Wayne (sighs): Despite all of our efforts to reduce production of waste, waste is still going up on a per capita basis.  Yes, haulers are tied to generation of waste. And there are some initiatives that are important regarding sustainability that will reduce the amount of waste they haul.

Darcy: So what should they do?

Wayne: Waste reduction efforts could be a threat to waste management. For example trends to make less packaging. I’m not sure there is anything the industry can do. But we are still increasing pounds per capita so I wouldn’t lose any sleep over it.

Darcy: This reminds me of the problem with chemicals where the seller wants you to buy more but the buyer wants less. In that industry, there’s a shift toward service contracts that aligns the interests of both parties. Automakers may buy painted cars instead of paint. Is there some way of rethinking what business they are in or realigning the incentives?

Wayne: That’s a good question. I suppose but I don’t know what that would be. As long as they are being paid just by volume, they’ll see more waste as a good thing. We’ve tried to find ways to have haulers help customers reduce waste, but that’s mostly the benefit to the customer, not to them.

Darcy; That reminds me of the electricity utility. Until we created the Energy Trust in Oregon, our utilities were supposed to sell power but also encourage people not to use it. Maybe we need a ‘Resource Trust’ that is funded by a portion of the hauling fee.

Wayne: But what drove the creation of the Energy Trust was a public demand and public law to do this. That’s one lever.

The waste management business is not a private sector business any more. They are really an arm of government, providing a service chosen by local community. They are heavily controlled by regulations (e.g., being environmentally responsible, driving safe trucks), and they are providing services that government tells them to, and in some cases they are told how much they can charge. There are still some areas the country that are open and competitive, predominately commercial. But they are increasingly the exception.

Darcy: So do we have the right tools to make waste management (or actually I prefer the term resource management) sustainable?

Wayne (chuckles): What’s lacking is what we don’t know yet. However, we have figured out a lot of things we haven’t implemented fully yet, product stewardship, waste to energy among them.

Darcy: Waste to energy is a controversial area. It makes sense to me to recapture the energy from materials that have no better use, if there aren’t harmful environmental impacts.

Wayne: That’s right. Some people seem to be using ‘zero waste’ as a cover for anti-incineration positions. I don’t see it that way. Granted, the old incinerators had problems; there wasn’t enough control on what went in, and one-third of the cost went into environmental controls. However, if you can reclaim that energy value in an environmentally friendly way, it offsets other energy sources, mostly fossil fuels.  Europe uses a lot of waste-to-energy, typically anaerobic digestion systems. 

In this country [US] we don’t have flow control, the ability of government to say to haulers you must take your waste to this particular facility and pay the associated fees. The Supreme Court severely restricted that. This has been one of the main reasons that no new waste-to-energy facility has been built in over 10 years here. The primary reason is that they generally cost more than a landfill and the community must decide they want to do it and have it built. And then if the waste doesn’t arrive, it goes bust.  If we can’t insist that that’s where the waste should go, the haulers will take it to the most cost-effective place. Also, in the US we have lots of land and sometimes the rural communities want the income from landfills. So it’s tough to get waste-to-energy systems viable here until something changes, namely public pressure. Rising energy costs might provide an opportunity.

Darcy: So what would need to happen to make waste-to-energy viable?

Wayne: We need intelligent planning on how people generate waste, how they are mixed and what happens to them. Right now, some communities recycle very little, some have wet and dry streams separated. Portland seems to be moving slowly in the direction of organic, trash and recyclables. We need to treat waste not as homogenous muck but as separate materials with intelligent mixing. This is a function of what you do with those materials. Let’s talk about a couple big categories.

First, products. End-of-life issues for products and their packaging increasingly look toward product stewardship /EPR. Electronics is one of the first to do this in the US. But there are a lot more products that have potential for this.

Darcy: Just across the border in British Columbia, they do this for paints, pesticides, pharmaceuticals and other products.

Wayne: The second category is materials that have value embedded in them—typically energy value— and the value is greater than the net material value if you separated it.  For example, think about low grade mixed paper. Some separate out junk mail but this only works if they have a source separated stream of fiber. Some separate the mixed paper so they can pull out, for example, the high-grade white paper. Or some of the low grade paper is sent to Asia.  But paper also has energy value. Mixed waste paper, even food-contaminated containers, can go into waste to energy, along with other organic material.

Darcy: With rise in oil prices, does that shift the economics? Will it become less viable to ship waste hundreds of miles to a landfill and more attractive to turn it into energy near where the waste is generated?

Wayne: Actually, the cost of moving something, both environmental and financial, is very small. David Alloway at the Oregon Dept of Environmental Quality has done some wonderful life cycle studies, showing how far you can haul a recyclable material until the energy used in transporting it exceeds the savings from recycling the material. It’s one hell of a long way! For most, it’s a few times around the planet. Of course, this varies by mode. You can’t ship stuff by air.

But still, we know there are tremendous unrealized opportunities for waste to energy because we haven’t been able to build them. We need to work on technologies, especially for organics.

Darcy: Why do we have to work on new technologies if there are already things that are working successfully in Europe and Japan? Why can’t we just put them in here?

Wayne (laughing): It never works that way. We have different regulations, different things in our waste stream.

Darcy: OK, let’s talk about products and product stewardship, then.

Wayne: The whole concept of product stewardship (or EPR) is to involve the manufacturer in the end-of life management of their products. Beyond that, different products will differ substantially. Most of my work has been with electronics.

Darcy: So what have you learned with electronics that might be transferable to other products?

Wayne: Haulers can either fight this, which isn’t a good strategy because it makes too much sense and there is too much momentum; or they can figure out how they can contribute. In the case of the National Electronics Product Stewardship Initiative, the haulers as a group didn’t really engage; most of the decisions and problem solving was being done by the other stakeholders.

Darcy: What should they do instead?

Wayne: If they want to play, they have to become a logistics company. They probably need to form partnerships with different kinds of logistics companies or recyclers.  UPS developed  their business from pick up and drop off (just like the haulers) to now handling logistics for their customers.  That opportunity is rapidly being seen as relevant to waste. Electronics companies have aging product all over the world. They have to get it back in one way or another. That’s called logistics. The Rechargeable Battery Recycling Corporation did this. They utilize the logistics industry to gather waste products from all communities to a central location. UPS and similar transportation companies are getting into the business of handling waste. A few tons of batteries is no big loss to the waste management industry, but the more that this permeates the way we handle products the more opportunities to integrate those waste streams together, making it easier for haulers to get involved as the volumes increase.

Darcy: This makes me think of the back haul problem in the transportation industry. Trucks or containers still sometimes go out with product and come back empty. I could see the transportation industry taking over the waste haulers’ role so they could fill their containers on the way back.

Wayne: That’s the question. Will the waste management industry cede this business to the UPSs of the world or are they going to take this on? This is especially cogent since these products often have higher value.

Darcy: Assuming the haulers don’t want to give up all this business, what do they do?

Wayne: They need to start thinking in terms of logistics.  They have to realize they have a whole new set of customers: the manufacturers and sales departments of the companies. I’m not talking about the waste that comes out of the manufacturing process. Many electronic firms only have only sales/admin facilities in the US and sell through retailers. These people first think of UPS, not the waste hauler, if they want to transport something.

To do this, waste management will need national networks; waste haulers are usually local. Even national companies are regionally focused.

Darcy: You mean, even if the company is national, they drive around within a region but not across them.

Wayne: Yes, so this requires either partnerships or restructuring.  And they must get engaged in the product stewardship discussions in a constructive way. If they aren’t at the table, decisions will be made about who transports product at the end of its useful life, and haulers are going to lose out.

Darcy: Products exist in a global marketplace but waste typically is handled locally. Merging these two is a real challenge. How is that going to be resolved?

Wayne: The reality is the more we add value to wastes, particularly by the regulatory process, the more they will not be managed locally. The waste streams will enter global commerce.

Darcy: What do you mean ‘by adding value to wastes through the regulatory process’?

Wayne: Value comes in two ways: the inherent economic value of the materials or what citizens value and want to regulate.  Think about carbon trading.  Carbon really has no value other than the world (with the US being an laggard or outlier here) deciding that it makes sense to regulate it. Regulations create scarcity, like through a cap and trade system, and this is what creates value.  This type of value is largely dependent upon political decisions about how we want to handle our waste.

Darcy: So the question is this: Is it okay just to throw things ‘away’ (wherever that is) and go find new raw materials; or does the world demand a more efficient use of resources?

Wayne: So back to the question of global versus local. Pre-1990, perhaps 10% of the waste stream entered global commerce. The reality is it’s a value question. How much does it cost to transport it versus the value inherent in the material.

Darcy: If it doesn’t cost much to transport materials around the world, then the question should be where is the best place to recycle or reclaim these materials to extract the most value.

Wayne: Where are computers made? Asia. Where are they used? US and elsewhere.  If we want to move toward a cradle to cradle design, we need to get the materials back where they started. However, one of the major stumbling blocks is the management of hazardous materials, like those in electronics. We don’t want to be transporting this to undeveloped or developing countries that don’t have a safe way to handle it. We’ve seen the results of that and it’s disastrous.

Darcy: Governments and corporations don’t want to see pictures of their inventory tags on computers in some huge heap, leaching toxins into China’s rivers.

Wayne: We need to create more controlled systems, to have excellent tracking from the point of waste generation to point of recycling and disposal. It’s logistics again.  Governments and recyclers want to know: Does it get to a responsible location? Is there child labor involved? Are the materials being handled appropriately? Is the community being impacted?

In Thomas Friedman’s book, The World is Flat, he talks about how in Wal-Mart’s supply chain, when you buy a TV, almost immediately the manufacturer in China knows they have to make another one. The system adjusts for impending events such as hurricanes and holidays. We need something similar, but probably not to that degree. Haulers will need to become more sophisticated about this.  Will we have RFID tags on waste? Probably not anytime soon. But we will need to track where the monitors of a particular transfer station go, even though they get mixed in with lots of others.

Darcy: So where are the best opportunities for innovation?

Wayne: Logistics. We’ve talked about that a lot.

The other area for the US is energy recovery technologies. This is a big area. I believe that there are a lot of elements in the waste stream with low inherent value, where you’d spend more on recycling them that are most wisely dedicated to energy. As we discussed, the technologies are immature in the US; Japan is doing gasification; Europe anaerobic digestion and waste to energy. With increasing energy scarcity and wanting to avoid landfills, we need to test and refine these technologies. Waste management companies need to develop partnerships with technology companies whose systems are being used elsewhere. We need to look at technologies used for homogenous waste streams (like wood chips and hazardous waste) and apply them to heterogeneous and variable streams. Haulers understand materials and have some control over specs; but waste technology firms know the technology.

In traditional waste to energy, we build facilities that are dedicated to burning waste. From a sustainable perspective, this has a negative consequence. We are in a phase of rapid change and how waste is managed is changing. Investing in a facility creates inertia; we have to keep feeding it. This makes it difficult to adapt to changes in technology or the waste stream.

Darcy: So what’s the solution?

Wayne: Increasingly some are managing waste streams in cement kilns. It’s making cement anyway and utilizing the waste as an alternative fuel resource replaces fossil fuel. The more waste you feed in, the more you are substituting for fossil fuels. Cement kilns burn so hot and have such a long residence time that organic pollutants are not a problem if managed correctly. You can eliminate problems by managing the waste stream. For example, in Nike’s footwear factories, they segregate material by waste-type on the shop floor. Specific materials of concern are kept separate from rubber, textiles and other scrap.  Through careful segregation and management of scrap materials, you can control and generate a non-recyclable solid waste mix that can be used safely as an alternative fuel resource while avoiding adverse environmental impact. You essentially substitute otherwise unusable, but energy containing waste in place of fossil fuels for net environmental gain.

Darcy: So it sounds as if zero waste is actually a real opportunity, not a threat, to the waste management industry. But it requires the waste management industry to develop some new skills. How is zero waste being applied in the USA?

Wayne: I think about zero waste as a value proposition, not a mass proposition. Don’t think of waste as a noun; think of it as a verb, to waste. It’s not stuff, it’s the value in the stuff that’s what you don’t waste! Nature ‘wastes’ valueless stuff all the time. In the autumn, the carbon in the leaves falls to the ground, and much of it ends up in rocks. It’s the valuable materials like phosphorous and nitrogen that nature retains. There’s a lot of nitrogen in the air but very expensive to get. So these nutrients are drawn back into the tree.

Darcy: I understand what you’re saying, but there are impacts associated with making big piles of trash. Can nature handle what’s left?

Wayne: We have to realize it’s not ‘away.’ We are responsible for it until it is actually reincorporated into Nature, if ever. There will probably always be a need for landfills in a sustainable world. It would take more energy than the value; there is stuff that is not scarce, and won’t damage environment.

Darcy: Don’t we start to run out of places to dig big holes? Even reclaimed sites have huge ecological impacts like reduced habitat and ecosystem services. A flat ball field doesn’t serve the same function as the woods that were there before.

Wayne: This is an interesting question. I see a sustainable world as one that we manage. For every square inch of the earth we make a decision about what lives there.

Darcy (grimacing): I don’t think we’re qualified for that job.

Wayne: Not that that’s a good thing. We’re doing it now whether we take the responsibility or not. There’s also the question, are we smart enough to do this well? We aren’t yet. But we have to take responsibility and we have to get smarter.

Everything comes down to trade offs. If you must harvest some energy resource to reuse a material, and if it’s more costly to the planet to do that, then you have to deal with it. In some cases, disposal may be the most eco-effective option for some materials. They are still in the industrial system. They are not ‘away.’ We stay responsible.

Darcy: Wayne, this has been a fascinating conversation. Thanks so much for your time.

Wayne Rifer is Principal of Rifer Environmental and the manager of EPEAT, Inc.  For Rifer Environmental he provides environmental consulting with a focus on product stewardship and integrated waste management.  For EPEAT he is a member of the three-person team that manages the Electronic Product Environmental Assessment Tool, an environmental rating system of computer products for use in public and institutional purchasing.  See  Mr. Rifer was a negotiator in the National Electronic Product Stewardship Initiative (NEPSI), a stakeholder negotiation to develop a national system to manage end-of-life electronics. 

© Copyright 2007 AXIS Performance Advisors, Inc. All rights reserved.

-- Darcy

Darcy Hitchcock
AXIS Performance Advisors, Inc.
503 288-7704

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