The Economics Of Plastic Recycling: Costs And Benefits

Plastic recycling is an expensive process. It requires a $500/ton product price to earn a 10% IRR off of c$1,000/Tpa of up-front capex. The costs of plastic recycling are sensitive to transportation distances. The high costs of recycling, coupled with low oil prices, means that recycling plastic now costs more than manufacturing virgin plastic.

The cost of recycling plastic compared to manufacturing virgin plastic

The cost of recycling plastic is high compared to manufacturing virgin plastic. The price of plastic recycling is currently $500/ton, which is up to 80-90% below the price of virgin plastics. This is due to the low value of scrap and high costs of recycling, coupled with low oil prices. The price of recycling plastic has also been affected by the global restructuring of the scrap market.

The cost of recycling plastic is also dependent on the distance it needs to be transported. The further the distance, the higher the price. The labour intensity of plastic recycling is another factor that affects the cost.

The price of recycled plastic has been increasing, with the national average price for corrugated containers (PS 11) currently at $76 per ton, up from $32 per ton a year ago. Sorted residential papers (PS 56) have also decreased marginally over the last month, falling to $43 per ton.

Despite the high costs of recycling plastic, it is important to note that only 10% of today's end-of-life plastic is recycled, or around 40MTpa, within the global plastics industry.

The price of plastic per ton

The price of recycling plastic varies depending on the location and type of plastic. In 2012, Jerry Powell, editor of the trade publication *Plastics Recycling Update*, stated that fees can run from $10 a ton to over $100. A University of California, Berkeley study estimated that areas like Los Angeles and San Francisco could gain an economic benefit of $200 a ton for recycling instead of dumping.

The price of a ton of plastic can vary from a few hundred to several thousand euros. For example, the national average price for corrugated containers (PS 11) is $76 per ton, while sorted office papers (PS 37) trade at around $93 per ton.

The cost of transporting plastic waste

Mechanical recycling of plastics involves aggregating plastic waste into bales, transporting it to a recycling facility (possibly via truck), and then shredding it. This process requires a $500/ton product price to earn a 10% IRR off of c$1,000/Tpa of up-front capex, at a mechanical recycling facility with 0.3 tons/ton of CO2 intensity.

The high costs of recycling plastic, coupled with low oil prices, mean that recycling plastic now costs more than manufacturing virgin plastic. This has resulted in increased recycling costs and lower recycling rates, as many localities have resorted to incineration or landfill for scrap materials that are less valuable or that simply cannot be processed.

The cost of labour

Mechanical recycling of plastics involves aggregating plastic waste into bales, transporting it to a recycling facility, and then shredding it. The cost of this process can vary depending on the distance the plastic waste needs to be transported. For example, one model allows for plastic waste to be moved up to 50 miles, but higher prices are needed for transport over longer distances.

The type of plastic also plays a role in the cost of labour for recycling. For instance, the highly-recyclable #1 (PETE) or #2 (HDPE) plastics have a higher value and are therefore more costly to recycle. Additionally, these plastics will degrade in quality over time, with processing limits of just two to three cycles before they are no longer usable.

The global restructuring of the scrap market has also impacted the cost of labour for plastic recycling. The low value of scrap and high costs of recycling, coupled with low oil prices, mean that recycling plastic now costs more than manufacturing virgin plastic.

Furthermore, the cost of labour for plastic recycling is influenced by the economics of the recycling process. For example, the mechanical recycling of PET requires a $500/ton product price to earn a 10% IRR off of c$1,000/Tpa of up-front capex. This is significantly more expensive than the cost of recycling corrugated containers (PS 11), which trade at $76 per ton.

Overall, the cost of labour for recycling plastic is a complex issue that is influenced by various factors. The type of plastic, the recycling process, the distance of transport, and the economics of the recycling industry all play a role in determining the cost of labour.

The cost of recycling plastic compared to incineration or landfill

Recycling plastic is expensive, and the cost is rising. Plastic recycling requires a $500/ton product price, to earn a 10% IRR off of c$1,000/Tpa of up-front capex, at a mechanical recycling facility with 0.3 tons/ton of CO2 intensity. The cost of recycling plastic is now higher than the cost of manufacturing virgin plastic. This is due to the low value of scrap, high recycling costs, and low oil prices. The cost of recycling plastic is also sensitive to transportation distances.

In comparison, incineration and landfill are cheaper options for dealing with scrap materials. Incineration is the process of burning waste, while landfill is the process of burying waste. These methods are less expensive because they do not require the same level of sorting, cleaning, and processing as recycling.

However, it is important to consider the environmental impact of these methods. Incineration releases harmful gases and pollutants into the atmosphere, contributing to air pollution and climate change. Landfill, on the other hand, takes up valuable land space and can contaminate soil and water sources.

Recycling, despite its higher cost, offers several benefits. It reduces the need for extracting and processing raw materials, conserving natural resources and energy. It also helps to reduce the amount of waste that ends up in landfills or is incinerated, mitigating the negative environmental impacts associated with these methods.

Overall, while recycling plastic may be more expensive than incineration or landfill, it is a more sustainable option that can help protect the environment and conserve resources for future generations.

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