Trend: Recycling has become a major industry and will grow larger as the savings in energy consumption become evident and commodity prices rise.
Progressive Investor at SustainableBusiness.com describes why investing in recycling makes sense now. Excerpts below.
The recycling industry is a sterling example of how grassroot initiatives can spur the creation of bonafide industries.
In 1968, the fledgling industry pulled in $4.6 billion in annual sales; today, revenues are roughly $236 billion [National Recycling Coalition]. The industry provides employment for 1.1 million people, up from just 79,000 in the late 1960s, and 56,000 public and private facilities processing recyclables. Our research partners Cannacord Adams estimate the industry accounts for about 2% of the $12.36 trillion U.S. gross domestic product as of last year.
Industrial recycling has gone far beyond municipal recycling and is where the real action is. Over the past decade and the advent of "corporate environmental responsibility," businesses have come to rely on recycling to lower energy costs, use fewer raw materials, minimize waste streams, and reduce pollution. Now, with a global market, very high costs for virgin materials and overwhelming demand, recycling helps companies achieve competitive advantage and profitability.
Just about every kind of product is recycled - paper, all metals, car parts, and carpet. Decks are commonly made completely of recycled materials. The newest category is electronics.
The recycling industry is benefiting from a confluence of trends:
- High energy prices favor increased recycling. With energy costs reaching permanently high levels, recycling is the avenue of choice. It takes much less energy to make a product from recycled than virgin materials. Example: energy accounts for 20-30% of the cost to make metals such as aluminum and zinc.
- Metal prices are rising sharply from strong demand - partly from growth in India and China - creating strong economic incentives to recycle all kinds of metals. Although metal prices fluctuate, strong continued demand is likely to keep prices high, benefiting recycling.
- Recycling benefits from the attention to climate change for its ability to reduce the energy intensity of manufacturing and methane generated by landfill waste.
- Growing recognition that natural resources are scarce, finite, and increasingly expensive to mine. Example: virgin copper and zinc supplies could be completely exhausted within decades.
- Rising concerns about pollution from discarded electronics
Underscoring the importance of resource optimization and sustainability, Waste Management (NYSE: WMI), the largest waste management firm in North America, recently announced it would significantly increase recycling volumes and waste-to-energy production over the next 12 years.
WMI says it will more than double recycling by 2020 - from the current eight million tons a year to 20 million tons - through single stream recycling and e-cycling, and it plans to double waste-to-energy production by 2020, with an emphasis on landfill gas.
The move is further evidence of a paradigm shift in the waste management business where "trash" is viewed as a valuable resource to be mined, rather than as a nuisance to be landfilled.