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This is the two-page document that changed the world.

It’s what’s referred to as a “Notification to the World Trade Organization Committee

on Technical Barriers to Trade”—a type of document that, to anyone in the know, is

thoroughly mundane.

In fact, every few hours, another such notification enters the WTO system—each signifying that

yet another country wants to make yet another change to its rules regarding the import or

export of goods or services.

This particular notification, though, submitted on July 18th, 2017, managed to send the entire

global recycling industry into a tailspin, or possibly even… a death spiral.

Put simply, this document broke the world’s recycling system.

But here’s how it worked before this document: let’s say a woman in Littleton, Colorado

The yogurt is packaged in a thin polypropylene plastic container and so, once finished, she

disposes of it into her recycling bin.

This is then picked up by a recycling truck a few days later, and brought here to the

local recycling company’s materials recovery facility.

There, this yogurt container, along with all the rest of the single-stream recycling picked

up that day, is dumped out and placed into the semi-automated sorting system.

Some products are simple to isolate—most metals, for example, can be picked up by magnets,

while paper and cardboard can be easily sorted by density, as they’re typically lighter

than other recyclables.

Glass, plastics, and non-magnetic metals are a little more difficult to sort, but each

looks quite distinct so optical scanners operate blowers or other diversion tools that are

able to sort these out.

With a few more steps, the facility is more-or-less left with just plastic, but that’s where

things get difficult.

Plastic come in all sorts of shapes, sizes, and types, and different shapes, sizes, or

types of plastic are recycled in different ways.

Optical sensors start out by at least accomplishing a high-level sort, though.

For example, in many US states, plastic bottles are sold with a 5 or 10 cent deposit, meaning

that recycling companies put a lot of effort into recovering those from the mix as they

can be sold for, at least relative to other plastics, a lot.

They also put a lot of work into recovering certain plastic types, such as high density

polyethylene, as this both sells for more and is easier to sort out of the mix since

it’s typically used to make larger items like plastic crates, shampoo bottles, and

other products where sturdiness matters.

The polyethylene and other higher-value plastics are quite accurately sorted and then melted

down into bulk raw plastic which is re-sold to manufacturers.

Certain other plastics, though, have a negative value—they can’t be sold and, in fact,

it would take so much work to turn them into usable raw material that recycling companies

would have to pay someone to take it off their hands.

Typically falling into this category are smaller items like bottle caps, plastic bags, and

other scraps below three inches or eight centimeters in width that just can’t be easily sorted

by automated systems.

These are then aggregated together and, at best, used to generate energy through incineration

or, at worst, are just sent to a landfill.

So, to summarize, there’s high value-plastic that’s recovered immediately, negative-value

plastic that is either incinerated or sent to a landfill, but then there’s a third

category in between those two, and that’s where things get interesting.

Anything that isn’t small and unrecoverable or large and valuable is typically mixed together

and formed into big bales of unsorted, medium-size, medium-value plastic that effectively have

a neutral value on the free market.

The raw materials in these bales, known as MRF Residuals, is not quite valuable enough

to pay for the sorting process they would need for recycling, which leads to their neutral

value, at least in the US.

After it takes its trip through the Materials Recovery Facility, that yogurt container from

Littleton, Colorado would, if properly sorted, end up in one of these MRF Residuals Bales.

These are then loaded into the back of a semi-truck driven 1,000 miles to the Port of Long Beach,

California.

There, the bales are officially exported from the US, loaded into a shipping container,

and placed on an enormous, yet empty, Hong Kong bound cargo ship.

Now, with this knowledge, some might ask a question: how on earth did we end up with

this system, theoretically designed to reduce our impact on the world, where our waste is

shipped across the world?

To that, there’s actually a surprisingly specific answer.

Decades ago, in 1969, the first national Conference on Packaging Waste convened, and in that room

were a number of plastics-industry executives.

Throughout the event, they heard municipal leaders from around the country express their

concern about just how permanent plastic was.

Back then, the material was becoming cheaper and cheaper, and was quickly gaining prominence

in the packaging world, but this mounting concern among municipal leaders itself led

to mounting concern among plastics executives.

They came to believe that this plastic hesitancy would quickly became an existential threat

for the industry’s growth, so plastics knew they needed a solution.

They needed a way to make plastic sustainable.

The problem: there wasn’t one.

So, backup option: rather than creating a real solution, they willfully and knowingly

created and propagated a system that didn’t work, but looked like a solution—recycling.

From a technical standpoint, you can sort, melt down, and reuse plastic, thereby reducing

its impact on the world, but that’s not why it doesn’t work.

From a social perspective, people do often do their part and, at least somewhat, separate

their trash from recycling, but that’s also not why it doesn’t work.

Why recycling doesn’t work is because, overall, it’s not profitable.

It’s very simple: oil is cheap, at least now, and when oil is cheap, making new plastic

is cheap.

Meanwhile, sorting, transporting, and melting down existing plastic is expensive.

In 2017, virgin PET plastic cost about 54 cents per pound, while recycled PET cost about

63 cents per pound, and was lower quality than the alternative.

Therefore, demand for recycled PET was low, so waste management companies couldn’t turn

a profit turning used PET into raw, recycled PET at scale.

When companies can’t make a profit recycling, it doesn’t happen—or at least not at the

rates needed to make the plastics industry sustainable.

For the plastics industry, though, all they needed was the perception of sustainability

and, even though a big chunk of what went into a recycling bin ended up not recycled,

consumers and municipal leaders were happy because they believed that the plastic they

consumed was guilt-free.

That’s how that yogurt container tossed in Littleton, Colorado ended up on a boat

to Hong Kong.

Now, the rule just mentioned is still valid—plastic is only recycled when it’s profitable—but

for a brief moment in time, it was, all thanks to a trifecta of economic conditions in China.

First, shipping was incredibly cheap.

Western nations like the US have long had a significant trade deficit with China—essentially,

America buys far more from China than China does from America.

That means that cargo ships from greater China travel to the US almost completely full, but

then return with plenty of extra capacity, meaning shipping rates to China are far lower

than shipping rates from China.

Thanks to that, you could get one of those MRF Residual Bales across the Pacific for

next to nothing.

In addition to this, since the 1980s, China has been riding its way through an unprecedented

phase of economic growth.

This was so dramatic that the country’s industries quite literally could not find

enough raw materials, including plastic, to fulfill their demand.

Therefore, with constrained supply and high demand, even recycled plastic prices went

up, giving the recyclers in the country more room to cover costs.

In addition, especially in more rural areas, wages were low in China.

Those MRF Residual Bales are composed of those difficult-to-sort plastics, but humans can

sort just about anything profitably, as long as their wages are low enough.

So, all in all, considering shipping to China was effectively free, and raw material prices

were higher, and wages were low, the equation just happened to work out so that in the late

90’s, 2000’s, and early 2010’s, sorting and recycling MRF Residual Bales in China

was just ever so slightly profitable.

That’s why, upon arrival into Hong Kong, the plastic yogurt container disposed of in

Littleton, along with everything else in these bales, is immediately transferred onto a smaller

barge and reexported out of Hong Kong for a short journey across the Pearl River Delta

to the Guangdong Province, in mainland China.

Then, after an 8,000 mile, 13,000 kilometer journey to the other side of the world, it

ends up at its final destination: the Wellpine Plastic Industrial Company just outside Guangzhou.

There, the bales are unloaded, spread out, and low-wage workers manually sift through

the contents, eventually finding that yogurt container, and putting it in a pile along

with the rest of the polypropylene plastics.

From there, the polypropylenes are melted down, purified, and reformed into pellets

which then, eventually, are sold in bulk to another manufacturer, somewhere else in China,

for a very, very slight profit.

Now, this whole system of taking effectively valueless MRF Residual Bales and shipping

them across the world to a place where they did have a very slight positive value worked.

It wasn’t elegant, it wasn’t clean, but it worked, and that’s how, for a few decades,

the western world’s recycling system functioned.

The most valuable stuff was sorted and sold domestically, the valueless stuff was exported

to where it had value in China, and the stuff with a negative value was sent to the landfill

or incinerated.

But then came that document—the notification to the World Trade Organization Committee

on Technical Barriers to Trade.

All this said was that China would, starting at the end of 2017, ban the import of 24 products

covered under these HS codes—the numerical classifications used to simplify international

trade.

These particular five, though, were the ones that created the big problem for the plastics

industry.

They translate to “Waste, Parings And Scrap, Of Polymers of Ethylene,” “ Of Polymers

Of Styrene,” “Of Polymers Of Vinyl Chloride,” “Of Polyethylene Glycol Terephthalate,”

and “Other Waste, Pairings And Scrap, Of Plastics.”

Effectively, by banning these five HS codes, they banned the import of almost all plastic

waste.

As a result, the country’s 2018 plastic import volume dropped 99.1% compared to 2017—this

massive, global industry quite literally ended overnight.

Now, while the true reasoning behind any Chinese government decision is always elusive, at

least according to the document, it was that the import of these products was creating

a serious environmental and public health problem.

This is likely true.

As MRF Residual Bales are, by their very nature, unsorted, they often included hazardous materials

that could seriously harm those sorting them, and this went on to cost the government since

the government runs much of the country’s healthcare system.

In addition, the sorting facilities in China would often illegally dump the portion of

the plastics that even they couldn’t profitably recover, creating an environmental problem

that the government had to pay to clean up.

Therefore, while the private companies that actually sorted and processed these MRF Residual

Bales turned a slight profit, China, as a nation, was losing money by processing the

world’s trash.

So, essentially, even though it looked like plastic recycling was profitable, once the

externalities were priced in, it once again became clear that plastic recycling was not,

in fact, a viable system.

That’s why China issued this document, that’s why they banned plastic waste import, and

that’s why the world’s recycling system broke.

Nowadays, when a woman in Littleton, Colorado throws her yogurt container into the recycling

bin, the journey that ensues is often far, far shorter.

First, as before, it’s picked up by a truck, brought to a Materials Recovery Facility,

sorted down, and packed into one of those MRF Residuals Bales, but after, there are

now three main options.

The first is that it’s exported, as before, but not to China.

In response to the import ban, Malaysia tripled their plastic import volume between 2017 and

2018, becoming the largest processor in the world, and some other nearby low-wage countries

ramped up as well.

Eventually, though, these countries will undoubtably realize what China did—processing MRF Residual

Bales may be profitable to a company, but not a country.

The amount of health and environmental issues it creates in the long-run costs more than

the industry makes.

Even despite the alternate plastic export options, the US’ export volume, which includes

more than just MRF residual bales, still dropped by a third between 2017 and 2018.

There was just no-one who would take these bales, even for free, since with the removal

of China from the market, very few companies could turn a profit processing them, even

outside the US.

The global value of one of these bales went from slightly positive to clearly negative

and, remember: recycling only works when it’s profitable.

Therefore, with far fewer buyers, MRF Residual Bales piled up and up until eventually, the

waste processors gave up and put them into the same category as bottle caps, scraps,

and those other small, unrecoverable, unprofitable pieces of plastic.

Now, when you put something into one of those big, blue bins that are supposed to lead to

a second-life for your waste, it ends up, more often that not, in the incinerator or

landfill.

Plastic recycling, with the exception of those few, highest value items, is now definitively

broken.

But here’s the thing: it was always broken.

Plastic recycling, with limited exception, never generated more money than it cost, and

so it was never economically sustainable.

The China system was just a blip, thanks to a unique set of economic circumstances, and

a government that didn’t yet recognize the cost of the industry’s externalities.

That puts the plastics industry back where it was in 1969—people are starting to realize

that there is no way to make plastic sustainable.

There are some half-solutions—some scientists are working to develop an enzyme that can

eat plastic in a matter of days and others are trying using chemical processes to break

it down into its raw components—but the recycling problem is not a technical one.

Actually performing the process of taking what’s disposed of by consumers, sorting

it, and melting it down into new raw materials is easy.

What’s not is the economics.

The recycling problem is an economic one, and you can only solve economic issues with

economics.

The true solution is simple: either the cost of recycling has to come down, or the price

of raw recycled plastic has to go up.

What’s going to fix recycling is when it generates more money than it costs, but making

that happen will take quite a lot.

If enough consumers, for example, buy products that use recycled plastic, rather than a direct

alternative that uses the virgin variant, market forces will work out in a way that,

eventually, once critical mass is attained, what companies lose from customers choosing

more sustainable alternatives is more than what they lose from paying to swap to more

expensive, lower quality recycled plastic.

Plastics recycling, as a system, was never created to make the world a better place.

Rather, it was created by the plastics industry to plug a hole in their system, it was created

to propagate a false belief that consumption could be sustainable, so the only way to stop

plastic from overwhelming our oceans, polluting our land, and making the world a worse place

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