Materials and Energy From Municipal Waste

July 1979

NTIS order #PB-300849
Library of Congress Catalog Card Number 79-600118

For sale by the Superintendent of Documents, U.S. Government Printing Office

Washington, D,C. 20402 Stock No. 052-003 -00692-8
Foreword

The United States annually generates more than 135 million tons of municipal solid waste (MSW). Its disposal is a rapidly growing problem for many areas

of the country, where such traditional methods as open dumping, landfill, uncontrolled incineration, and ocean burial are too expensive or environmentally unacceptable. At the same time, MSW contains over two-thirds of the national consumption of paper and glass, over one-fifth of the aluminum, and nearly oneeighth of the iron and steel, If burned, the combustible portion of MSW would be

equivalent to about 1.9 percent of the Nation’s annual energy use.

Resource recovery and recycling materials and energy from MSW can play

significant roles in helping to solve waste generation and disposal problems. In

addition, resource recovery, recycling, and reuse can contribute to the wise and

efficient use of materials, to conserving materials and energy, to preserving the

environment, and to improving the balance of trade by reducing our dependence

on imported natural resources,

This report addresses important questions that have arisen about the feasibility of various approaches to resource recovery, recycling, and reuse. It presents the results of an examination of important technological, economic, and institutional factors. Federal incentives and other policies that might stimulate resource recovery, recycling, and reuse are identified and their effectiveness and

impacts are assessed.

The study was requested by the Technology Assessment Board on behalf of

the House Committee on Science and Technology and the Senate Committee on

Commerce, Science, and Transportation. We hope that these committees, and

others including the House Committee on Interstate and Foreign Commerce and

the Senate Committee on Environment and Public Works, will find this report

helpful as they confront the continuing problems and opportunities of solid waste

management. resource recovery, recycling, energy supply and conservation. and

product reuse.

JOHN H. GIBBONS

Director

111
Materials and Energy

From Municipal Solid Waste

Advisory Panel

Lois Sharpe, Chairman

League of Women Voters of the United States (retired)

Seymour L. Blum* William J. Harris, Jr. *

Northern Energy Corporation Association of American Railroads

Frank Fernbach

United Steel Workers of America (retired) R, Talbot Page

Resources for the Future, Inc.

Bruce Hannon

University of Illinois at Simon D. Strauss

Urbana-Champaign ASARCO, Inc.

OTA Materials Advisory Committee

James Boyd, Chairman

Materials Associates

Earl H. Beistline

University of Alaska

Seymour L. Blum

Northern Energy Corporation

Lynton K. Caldwell

Indiana University

Robert L. Coble

Massachusetts Institute of Technology

Lloyd M. Cooke

Economic Development Council of

New York City, Inc.

Frank Fernbach

United Steel Workers of America [retired]

James H. Gary

Colorado School of Mines

Edwin A. Gee

International Paper Company

Bruce Hannon

University of Illinois at UrbanaChampaign

*Through May 1977.

Julius Harwood

Ford Motor Company

Franklin P. Huddle

Congressional Research Service

Elburt F, Osborn

Carnegie Institution of Washington

Richard B. Priest

Sears, Roebuck and Company

N. E, Promisel

National Materials Advisory Board

Lois Sharpe

League of Women Voters (retired)

Raymond L. Smith

Michigan Technological University

Simon D. Strauss

ASARCO, Inc.

George A. Watson

Ferroalloys Association

NOTE: The Advisory Panel and the Materials Advisory Committee provided advice and

comment throughout the assessment, but do not necessarily approve, disapprove, or endorse the report for which OTA assumes full responsibility y.

iv
OTA Materials and Energy

From Municipal Solid Waste

Project Staff

Albert E. Paladino, Materials Group Manager [through December 1978)

Audrey Buyrn, Materials Group Manager from January 1979]

Christopher T. Hill, Project Director

Patricia L. Poulton, Materials staff

Charles M. Overby, Materials staff

Renee Ford, consulting editor

OTA Administrative Staff

Carol A. Drohan Jackie S. Robinson Bernadette Balakit

Mary J. Adams Mona M. Chick Joyce E. Robinson

OTA

Publishing

Staff

John C. Holmes, publishing Officer

Kathie S. Boss Joanne Heming
Acknowledgments

This report was prepared by the Office of Technology Assessment Materials

Group staff. The staff wishes to acknowledge the assistance and cooperation of the

following contractors and consultants in the collection of information.

The MITRE Corporation

Moshman Associates

Resource Technology Corporation

The staff also wishes to acknowledge the contributions of the following individuals, on detail to OTA in the early stages of the assessment.

John B. Wachtman, National Bureau of Standards

Robert S. Kaplan, Bureau of Mines -

Harvey Yakowitz, National Bureau of Standards

vi
Table of Contents

Chapter

1,

2.

3.

4.

5.

6.

7.

8.

9.

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Introduction and Framework For Analysis . . . . . . . . . . . . . . . . . . . .

The Marketability of Recovered Resources; Status and Policy

Options , . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . , . . . . . . ....0....

Source Separation For Materials and EnergyRecovery . . . . . . . . . .

Technologies For Centralized Resource Recovery. . . . . . . . . . . . . . .

Economics of Centralized Resource Recovery . . . . . . . . . . . . . . . . . .

Institutional Problems in Centralized Resource Recovery: Issues

and Policy Responses . . . . , . . . . . . . . . . . . . . . . . . . . . , . . . . . . . .

EconomicPolicy, Waste Generation, and Recycling . . . . . . . . . . . . .

Beverage Container Deposit Legislation . . . . . . . . . . . . . . . . . . . . . ,

Page

3

23

41

69

95

119

135

155

175

AppendixA —Selected Federal Laws Related to Resource Recovery,

Recycling, andReuse . . . . . . ..., . . . . . . . . . . . . . . . . . . . . . . . . . . , .245

AppendixB—Legislative Activity in the 95th Congress Related to

Resource Recovery, Recycling, and Reuse . . . . . . .........,......250

Appendix C—Description of Resource Recovery Technologies , . . . . . . . . . . . . ....254

AppendixD —Additional Information on Beverage Container Legislation . . . . . . . . 267

Acronyms, Abbreviations, andGlossary, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..279

vii
Chapter 1

Executive Summary
Contents

Page

The Problems and the Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . 3

The Current Federal Role in the Management of MSW. . . . . . . . . . . . 3

IssuesandFindings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

IssueAreaI:MethodsforResource Recovery. . . . . . . . . . . . . . . 5

IssueArea II:TheMarketabilityofRecovered Resources . . . . . . 9

Issue Area III: Institutional Barriers to ResourceRecovery

and Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Issue Area IV: Incentives for ResourceRecoveryandRecycling. 14

Issue AreaV: BeverageContainer DepositLegislation . . . . . . . . 16

APerspectiveonFurtherFederal Action . . . . . . . . . . . . . . . . . . . . . . 18

Tables

TableNo. Page

l. Typical Prices and Gross Revenues for RecoveredResources

DeliveredtoMarket . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

2. Institutional Problems in Centralized ResourceRecovery. . . . . . . . 12
Chapter 1

Executive Summary

The Problems and the

Opportunities

T

he United States annually generates

more than 135 million tons of municipal

solid waste (MSW). Its disposal is a rapidly

growing problem for many areas of the country, where such traditional methods as open

dumping, landfill, uncontrolled incineration,

and ocean burial are too expensive or environmentally unacceptable. At the same time,

MSW contains over two-thirds of the national

consumption of paper and glass, over onefifth of the aluminum, and nearly one-eighth

of the iron and steel. If burned, the combustible portion of this waste would be equivalent

to about 1.9 percent of the Nation’s annual

energy use.

Resource recovery and recycling materials

and energy from MSW can play significant

roles in helping to solve waste generation and

disposal problems. In addition, resource recovery, recycling, and reuse can contribute to

the wise and efficient use of materials, to conserving energy, to preserving the environment, and to improving the balance of trade

by reducing our dependence on imported

natural resources. By using materials more

than once, virgin resources can be conserved

for ourselves and for future generations.

This report addresses important questions

that have arisen about the feasibility of various approaches to resource recovery, recycling, and reuse. It presents the results of an

examination of influential technological, economic, and institutional factors, Federal

policies that might stimulate resource recovery, recycling, and reuse were identified and

their effectiveness and impacts were assessed, The criteria used for assessing the

policy options include technical and administrative feasibility (effectiveness), economic

efficiency, equity, security, and diversity.

Only those problems and opportunities

associated with the disposal of ordinary

MSW in the United States have been studied.

The management of hazardous wastes, sewage sludges, and other special wastes; remanufacturing, reworking, or refurbishing

products for reuse; recycling industrial

scrap; and recovering materials or energy

from agricultural, forestry, mining, or industrial residues, have all been specifically

excluded.

The Current Federal Role in

the Management of MSW

D

irect Federal involvement in solid waste

disposal, resource recovery, recycling,

and reuse has evolved through three major

Acts:

● The Solid Waste Disposal Act of 1965,

● The Resource Recovery Act of 1970, and

. The Resource Conservation and Recovery Act of 1976 (RCRA),

All of these Acts have been motivated by a

concern for the public health and the environmental impacts of improper disposal, by the

rising costs of disposal by traditional means,

and by the recognition that municipal wastes

contain valuable materials and energy. Each

emphasizes that the primary responsibility

for municipal waste collection and disposal

rests at the local level. All have provided for

Federal roles in research, development, and

demonstration: technical assistance; information dissemination; and grants to State and

local governments for planning for solid

waste management. RCRA makes such grants

3
4 . Materials and Energy From Municipal waste

conditional on the adoption by a State of a

series of programs designed to upgrade land

disposal and facilitate resource recovery. It

also provides for the Federal procurement of

recycled materials and for Federal involvement in developing performance standards

for recovered materials and energy in order

to assist in developing markets for them.

While reaffirming limited Federal involvement in resource recovery and recycling,

RCRA has recognized the possibility of future

Federal policy initiatives by creating the

Cabinet-level interagency Resource Conservation Committee to examine continuing resource conservation issues.

The Federal Government has played a less

direct, although significant role, in influencing the supply and demand for recovered materials and energy through policies on air and

water pollution control, railroad rate regulation, materials taxation, control of ocean

waste disposal, and use of public lands.

Issues and Findings

T

he findings of this study are summarized

in the following pages, grouped under

five major issue areas:

I.

II.

III.

N .

v.

Methods for resource recovery (p. 5).

The marketability of recovered resources (p. 9).

Institutional barriers to resource recovery and recycling (p. 12).

Incentives for resource recovery and

recycling (p. 14).

Beverage container deposit legislation

(p. 16).
Ch. l—Executive Summary ● 5

Issue Area I

Methods for Resource Recovery

Materials may be recovered from MSW for

recycling in two ways: by collecting wastes

that have been kept separate as they are generated (“source separation”), and by separating mixed wastes in a central facility (“centralized resource recovery”). Energy is saved

using either method, since less energy is used

in manufacturing products from recovered

materials than from virgin raw materials. In

addition, with centralized resource recovery

energy can be recovered as fuel from the

organic components of MSW.

A number of technologies for centralized

resource recovery have been brought to various stages of development. Each has different

technical and economic performance characteristics. Source separation, which is designed to recover specific components of the

waste stream, can be organized in several

ways. This report describes both of these

methods and assesses their status and capabilities.

1

What is the status of source separation

in the United States?

Source separation for the recovery of recyclable materials from MSW is widely practiced in the United States today. It is the only

available method with which wastepaper can

be recovered for recycling into new paper

products. It is also used to recover glass, ferrous and nonferrous metals, and yard waste.

Nearly all of the MSW now recovered for recycling is collected in source separation programs.

The types of source separation programs

currently operated by municipalities, industry, and volunteer groups include curbside

separate collection programs, multimaterial

recovery in community recycling centers, industry-sponsored recycling programs, and

commercial and industrial methods of source

separation. According to the Environmental

Protection Agency, about 133 communities

were collecting newspapers in curbside programs in May 1978. Another 40 were collecting other kinds of paper and/or glass and

cans. Industry-sponsored programs collected

25 percent of all aluminum beverage cans

produced in 1977.

Source separation has grown in popularity

in the last decade. However, some programs

have experienced technical or organizational

problems, many others have failed owing to

problems in marketing their products, and

still others have faced indifference or hostility from proponents of alternative approaches. Nevertheless, a great deal of expertise has been developed for designing and

operating such programs. Much of the curbside collection activity has taken place in

small towns and moderate-sized cities. A

residential source separation program encompassing a major urban area has yet to be

demonstrated. (Chapter 4)

2 How effective is source separation?

The success of source separation programs

depends on obtaining and maintaining a high

degree of cooperation and participation on

the part of those who generate the waste.

Source separation can produce sizable revenues and energy savings from MSW, but has

only a limited effect on the total solid waste

stream. For example, at 50-percent participation, a comprehensive residential and commercial program could recover around onefourth of a community’s MSW and earn revenues of $5 to $12 per ton of waste generated.

But, three-fourths of the MSW would remain

for recovery or disposal by other means. With

such a program in place, a community would

still have ample opportunity to install a

centralized system to recover materials

and/or energy. (Chapter 4)
6 ● Materials and Energy From Municipal Waste

3

Would source separation in a community detract from efforts to recover energy and materials in a centralized facilit y?

Source separation removes some MSW components that a centralized resource recovery

plant would rely on for fuel and, depending

on its design, for recoverable materials. Consequently, it has the potential to reduce the

revenues of an existing resource recovery

facility. For this reason, capital-intensive,

centralized systems should be designed to accommodate existing or future separate collection programs, thus reducing the possibility of

revenue problems. Depending on the level of

participation and on market conditions, a

carefully planned combination of source separation and centralized resource recovery

may be the optimal approach from an economic point of view. (Chapters 4 and 6)

4

How should Federal policy toward resource recovery and recycling treat

source separation?

Nearly every potential Federal action discussed below, which encourages resource recovery or recycling, would stimulate source

separation activities unless specific barriers

to it are raised. Therefore, Federal programs,

including assistance to State and local governments for solid waste planning, should be

designed to incorporate source separation as

a local option.

Federal efforts to assist source separation

activities could include funding for research

on collection systems, for innovative program

design, and for improving equipment used in

intermediate processing to upgrade collected

materials for recycling. Federal assistance is

needed to implement and maintain a demonstration program for curbside source separation in a large city. If such a program were

successful, other major urban areas would be

shown what could be done and how to do it.

(Chapter 4)

5

What is the status of technologies for

centralized resource recovery for energy and materials?

A number of technologies for burning the

combustible portion of MSW or for converting it to solid, liquid, or gaseous fuels are at

various stages of development. Techniques

have also been developed, with differing success, for recovery of ferrous and nonferrous

metals, aluminum, glass, and paper fiber.

The only commercially operational methods for recovering energy are waterwall

combustion and small-scale modular incineration to produce steam, and the production

of refuse-derived fuel (RDF) by wet and dry

processes. The only commercially operational technologies for recovering materials

from mixed MSW are the magnetic recovery

of ferrous metals, the recovery of low-grade

fiber by wet separation, and the production

of compost by natural processes. Aluminum

and glass recovery are being actively developed as is energy recovery by both anaerobic digestion and pyrolysis. (Chapter !5)

6

How much does centralized resource

recovery cost?

Processing MSW in centralized resource

recovery plants to recover energy and materials has been estimated to cost between $15

and $32 per ton of waste, depending on the

technology used. Revenues from the sale of

energy and materials can range from $5 to

$17 per ton of waste, with more costly systems generally producing greater revenues.

Most of the revenues come from the sale of

energy.

Because revenues are generally insufficient to cover the costs of centralized resource recovery, plants must charge a price

for waste disposal to make up the difference.

This charge is commonly called a “tipping

fee. ” For technologies now being considered,

including small-scale modular incinerators,
Ch. l—Executive Summary ● 7

tipping fees are estimated to range from $3 to

$21 per ton for plants able to process 1,000

tons of MSW per day. (Tipping fees at existing commercial plants range from $6 to $16

per ton.) Tipping fees for waste disposal at

landfills typically range from $2 to $10 per

ton nationwide. Therefore, in many parts of

the country landfill is still the most economical way to dispose of waste. Consequently, resource recovery has the greatest potential

where both landfill costs and energy prices

are high, such as in the urban Northeast.

[Chapter 6)

7

What is the energy potential of centralized resource recovery?

Energy can be recovered by centralized

resource recovery either as fuel or as heat

and also as the energy savings that accrue

from recycling materials. As an upper limit,

the total recovery of all the energy in MSW

would be equivalent to about 1.9 percent of

the Nation’s current annual energy consumption. Recycling all of the iron and steel,

aluminum, copper, and glass could save

about 0.4 percent more for an upper limit on

total savings of the equivalent of 2.3 percent

of current energy use. Thus, centralized resource recovery could play a small, but not insignificant role in conserving energy. Technical, economic, and institutional factors,

however, will keep the amount of energy

saved by resource recovery in the foreseeable future to a fraction of its potential.

(Chapter 5)

8

Are there environmental problems with

centralized resource recovery?

Relatively little is known about the effluents

from operating centralized resource recovery

plants or about the nature and degree of

workplace hazards they may present. This is

largely because there has been little opportunity to gather data, and because there is

considerable variability in and ignorance

about the composition of both MSW and the

recovered products. A number of studies currently underway should produce information

about air and water emissions, bacteria and

viruses in the plant environment, and toxic

substances in all media including solid residuals. Authority exists for regulating these

workplace and environmental problems, if

needed. Should activity in centralized resource recovery continue, it will be desirable

to step up research and to promulgate regulations needed to control any potentially harmful side effects. (Chapter 5)

9

How large should centralized resource

recovery plants be?

The optimal design of a centralized resource

recovery pIant, or a system of several plants,

represents a tradeoff among three factors: (1)

processing costs per ton, which decrease as

plant size increases; (2) transportation costs

per ton from collection points, which increase

as plant size and haul distances increase; and

(3) energy and materials revenues, the energy

portion of which are site-dependent. For each

service area there is a lowest cost mix of

plant sites and sizes. This is determined

largely by the tradeoff between the cost of

transportation and the economies of scale in

processing costs. Early enthusiasm for very

large plants capable of processing 3,OOO to

6,000 tons of MSW per day has diminished as

such facilities have encountered difficult institutional problems. Moreover, the best

available current information suggests that

plants in the 1,000-to 1,5000-tpd range maybe

the largest economically optimum sizes for

most locations. In some communities plants as

small as 50 to 200 tpd may prove to be the

most satisfactory. (Chapters 5 and 6)

10 How does the nature of energy markets affect the best plant size for

centralized resource recovery?

Only electric powerplants, large factories, or

large complexes of office buildings can consume all the energy output of a l,000-tpd
8 ● Materials and Energy From Municipal Waste

resource recovery facility. These types of

potential customers have proven difficult to

reach by proposed resource recovery projects. Electric utilities, which were once seen

as major potential users of energy from

MSW, have been less than enthusiastic. This

is largely because using refuse-derived

energy presents certain technical difficulties

and also because current approaches to rate

regulation offer no incentive to try it. Furthermore, in a given service area, MSW can provide only a few percent of the fuel needs of an

electric utility. Thus, utilities have been

reluctant to contend with the numerous technical and institutional problems just to obtain

a minor part of their total fuel needs.

On the other hand, there area large number of potential customers such as office

buildings, institutions, and factories for

smaller quantities of refuse-derived energy.

Smaller resource recovery plants in the 25-to

600-tpd range might adequately serve their

energy needs. Furthermore, some of the problems that arise when several communities attempt to regionalize in order to build large

plants would thus be avoided. Smaller resource recovery plants, which are more common in Europe, might feature direct incineration to produce steamer hot water and forego

materials recovery altogether. They might

also permit a more flexible approach by making it possible for a community or region to

adopt resource recovery gradually rather

than all at once.

However, not enough is known about the

environmental and workplace health implications of operating a network of small plants

scattered throughout a region. Also, more

needs to be known about the energy demand

characteristics of potential industrial, commercial, and institutional customers, in order

to learn whether they can indeed become major consumers of energy from waste. (Chapters 5 and 6)

11 How can the Federal Government

most effectively fund additional research on centralized resource recovery technologies?

Over the past 15 years, there have been a

number of federally funded research, development, and demonstration projects concerned with centralized resource recovery.

There has also been vigorous activity in the

private sector. The Federal R&D presence

would be most effective in identifying, evaluating, and controlling environmental and occupational problems; in characterizing materials; in funding basic studies of processes for

size reduction, materials separation, combustion, and chemical reaction; and in exploratory design—particularly of small-scale systems for processing and using recovered

materials and energy. The remaining technical problems can probably be solved most effectively by private firms in the course of

commercial development. (Chapter 5)
Ch. l—Executive Summary ● 9

Issue Area II

The Marketability of Recovered Resources

Substantial amounts of various materials

and types of energy can be recovered from

MSW today using either centralized separation and recovery or source separation. The

quantities of recoverable resources will continue to grow in the future as materials use

grows, barring major Government action or

other events that would restrict the production and use of materials generally. Such

recovered resources compete both with virgin

materials and energy, and with secondary

materials from other sources. Thus, in order

to ascertain whether resource recovery can

be widely implemented, it is necessary to examine factors that affect the marketability of

recovered materials and energy. These include their prices and qualities, the influence

of transportation costs, and the role of Federal policy.

12 Would materials and energy recovered from MSW be marketable?

Productive uses can be made of recovered

iron and steel, aluminum, paper, glass, and

energy with existing technologies and in existing facilities. Potential markets exceed any

anticipated level of recovery today and

through 1995 for iron and steel, aluminum,

and paper. Glass markets are developing

rapidly as the technical feasibility and economic, environmental, and energy advantages of producing containers from waste

glass become evident. Energy markets far exceed the potential level of recovery from

MSW nationwide. However, the prices that

users are willing to pay and the product quality they demand could be barriers to the profitable sale of large amounts of recovered resources, if resource recovery were widely

adopted. Furthermore, certain forms of energy including RDF, steam, and low-Btu gas

must be produced near their customers if

transportation costs are to remain acceptable. (Chapter 3)

13 Would recovered resources from

MSW disrupt existing markets for

secondary materials and energy?

At any foreseeable level, resources recovered

from MSW would be unlikely to affect existing markets for secondary, or scrap, iron

and steel. High levels of additional aluminum

and paper recovery would add substantially

to the current trade and could be disruptive.

Since current trade in scrap glass is quite

limited, glass recovery essentially represents

creation of an entirely new market rather

than disruption of an existing one. In view of

the current energy situation and the relatively small amounts of energy recoverable from

MSW, recovered energy would not pose a

threat to established energy markets. (Chapter 3)

14 What prices can be expected for recovered materials and energy?

Typical prices for recovered materials and

energy are shown in table 1. Since there has

been little or no commercial trade in some of

these commodities, the prices are somewhat

speculative. They are based on the judgments

of informed observers. Prices for recovered

ferrous metal, aluminum, and paper are likely to fluctuate widely over time as do the

prices for these materials today. (Chapter 3)

15 Would a Federal stockpile stabilize

markets for recovered materials?

Established markets for secondary iron and

steel, aluminum, and paper exhibit wide variations over time in both prices and quantities

traded. The prices both for postconsumer aluminum cans and for newspaper obtained

through separate collection programs have

been more stable because primary aluminum

companies have been offering stable prices to

recyclers and because there are established

long-term contracts for delivering waste

48-786 o - 79 - 2
10 ● Materials and Energy From Municipal Waste

newspaper to recycled newsprint mills. Current trade in waste glass is small but growing

rapidly, with relatively stable prices. A brief

anaysis of a Federal stockpile for recovered

resources suggests that this would be an ineffective, unnecessary, or overly expensive

mechanism for stabilizing markets for materials recovered from MSW. (Chapter 3)

16 Can Federal procurement policy improve markets for recovered materials?

Federal procurement policy can strengthen

markets for recovered materials by emphasizing their use and by eliminating arbitrary

barriers to them. Existing General Services

Administration regulations under RCRA, if

followed, represent a useful move in this

direction. (Chapter 3)

17 Is Federal support for R&D on the

uses of recovered materials adequate?

Federal R&D support on the uses of recovered

resources, as opposed to their production, is

limited. Such research might find new uses

and improve old ones, and is easily justifiable

on economic grounds. Under RCRA, only the

Department of Commerce has authority for

such support, and that authority has not been

funded. The Bureau of Mines has done limited work in this area under its basic authority. Additional Federal support for R&D on

the uses of recovered resources appears to be

desirable. (Chapter 3)

18 Is additional Federal action needed

to support the development of specifications for recovered resources?

Specifications for the quality of recovered

resources are needed mainly to facilitate

trade. They are not required for the purpose

of protecting consumers because few recovered resources reach consumers without further industrial processing. (Important exceptions are flammability standards for cellulosic insulation, recently established on an

emergency basis by an Act of Congress, and

health and safety standards for reusable beverage containers.)

Existing specifications promulgated by the

secondary materials industries and based on

the origin of secondary materials appear to

be adequate to support trade in separately

collected iron and steel, aluminum, and

paper. Separately collected glass is currently
Ch, I—Executive Summary ● 11

traded under quality/price negotiations for

each shipment. Composition specifications to

facilitate trade in materials and energy from

centralized resource recovery plants are currently in the final stages of development by a

committee of the American Society for Testing and Materials. In view of the current

state of activities concerned with voluntary

standards there seems to be no need for Government action beyond that authorized under

RCRA. However, funds appropriated for this

purpose have not been adequate. (Chapter 3)

19 How significant are transportation

costs in the economics of resource

recovery?

Freight rates for transporting recovered materials and certain forms of recovered energy

to markets can seriously impair the economics of resource recovery. For example, for

shipments by rail in the 200- to 400-mile

range, railroad freight rates can range as

high as 25 to 80 percent of the gross income

from the sale of waste iron and steel, paper,

and RDF. Even a 50-percent reduction of

freight rates for these resources would still

leave freight charges a substantial cost factor. (Chapter 3)

20 Do railroad freight rates discriminate against secondary materials as

compared with virgin ones?

The question of whether existing railroad

freight rates discriminate against secondary

materials was examined using several models

of transportation ratemaking. Such discrimination was found to be sizable for iron and

steel, aluminum, paper, and glass under costbased rates (both variable and fully allocated

cost approaches) and for paper and glass

under the chemical equivalency approach to

value-of-service rates. Such discrimination

was not found under the value-of-service approach to rates. This examination has shown

that part of the long-standing controversy

over discrimination against secondary materials arises from different assumptions about

how rates ought to be set. (Chapter 3)

21 What effect would adjustment of

freight rates have on shipments of

secondary materials and on railroad

revenues?

The amounts of secondary iron and steel, aluminum, and paper shipped by railroad are

not very sensitive to freight rates, and large

changes in rates would have little effect on

shipments of these materials. Therefore, if

freight rates for secondary iron and steel,

aluminum, glass, and paper were to be adjusted downward (on the order of 30 to 50

percent) to eliminate the greatest degree of

discrimination found using any of the ratemaking models examined, an economic model

projects that increases in rail shipments for

iron and steel, aluminum, and glass would be

small—on the order of only a few percent.

Glass shipments might increase by as much

as 15 to 25 percent. Correspondingly, railroad revenues in each case would decline

substantially since revenue losses from existing traffic would not be offset by revenues

from traffic growth. (Chapter 3)

22 Should railroad freight rates for secondary materials be adjusted?

Regardless of the projected small increases in

shipments and the large decreases in railroad revenues, however, secondary materials

appear to be treated unfairly by existing

freight rates in the case of iron and steel,

aluminum, wastepaper, and glass. Both equity and economic efficiency argue for their adjustment. Railroad revenues, if inadequate,

could be adjusted by general rate increases.

(Chapter 3)
72 ● Materials and Energy From Municipal Waste

Issue Area III

Institutional Barriers to Resource Recovery and Recycling

Institutions are important in establishing

or removing barriers to the emergence of centralized resource recovery, which is a new,

uncertain and, therefore, risky technology for

disposal of MSW. Many institutional barriers

originate in the mixed system of Federal,

State, and local governments. Therefore, policies must be designed to circumvent these

barriers rather than to remove them. This

study examined four classes of institutional

problems: information problems, jurisdictional problems, implementation problems, and

marketing problems. They are listed in table

2.

SOURCE:Office of technology

Resource recovery poses economic risks to

potential investors. These risks arise from

uncertainties in technical performance, in

product marketability, in waste composition,

and in institutional forces. Each party to a

resource recovery effort quite naturally tries

to minimize the risks he faces, yet such risk

avoidance has a price for all the parties involved. Finding ways to share the risks that

derive from the technical and economic uncertainties of resource recovery is a major

source of its institutional problems.

Three broad approaches are available to

the Federal Government to address institutional problems: direct Federal action, Federal incentives to reduce risk and uncertainty, and Federal inducements to State and

local governments. OTA has not attempted to

rank the seriousness of these problems or to

evaluate the effectiveness of various approaches to their solution. All of the problems

are important. A mix of approaches is required to resolve them if resource recovery is

to be widely adopted.

23 Can the Federal Government take direct action to overcome institutional barriers to resource recovery?

Since resource recovery is largely a function

of local government, the power of the Federal

Government to directly effect change is somewhat limited. For example, it can overcome

problems caused by inadequate information

by providing technical assistance to local

governments, if such assistance is competent

and unbiased. Congress could also consider

legislation to ensure that resource recovery

facilities are ruled eligible for pollution control revenue bond financing. Actions discussed in other issue areas would also be constructive, including promulgation of environmental and health standards for resource recovery (issue 8) and adjustment of railroad

freight rates for secondary materials (issues

20 to 22). (Chapter 7)
Ch. I—Executive Summary ● 1 3

24 Is there a role for the Federal Government in overcoming the risks of

resource recovery?

Carefully designed Federal subsidy programs

can help overcome the risk barrier faced by

private entrepreneurs or public agencies

when introducing new resource recovery

technologies. Such a use of subsidies is conceptually different from their use to make

projects appear economically feasible which

otherwise would not be. The first use of subsidy for resource recovery is clearly justified,

the second less so. (See also issue 26.) (Chapters 6, 7, and 8)

Federally funded research and development can also help overcome risks and solve

the institutional problems that risk sharing

creates. (See issues 4, 11, and 17. ) (Chapters

3,4, and 5)

25 How important is Federal action to

induce regional planning for resource recovery?

The Resource Conservation and Recovery Act

of 1976 is strongly based on inducing States

to institute regionalized planning for solid

waste management. This approach makes

sense if large-scale regionalized resource

recovery offers sizable economic advantages

through economies of scale both in processing

wastes and in selling recovered energy. In

view of recent trends toward small-scale resource recovery systems and in view of the

difficulty of marketing large amounts of recovered energy, especially to electric utilities,

the importance of regional planning for disposal of MSW has lessened. Federal efforts

should allow for a great diversity of State and

local approaches to the management of

MSW. (Chapter 6)
14 ● Materials and Energy From Municipal Waste

Issue Area IV

Incentives for Resource

The Federal Government could adopt any

of a number of policies designed to improve

the economics of resource recovery and recycling. These include policies designed to increase the supply of recovered materials,

such as subsidies for building or operating

resource recovery facilities, as well as policies designed to stimulate the demand for

recovered resources by influencing the competition between virgin and secondary materials and energy.

Incentive policies are based on three general rationales. First, they can be designed to

stimulate desired private resource recovery

activity if such activity has been inadequate

due to the fact that its net social benefits exceed its net private ones. Second, incentives

can be designed to offset institutional barriers to resource recovery or to offset incentives already extended to competing virgin resources. Third, incentives can be designed to

help overcome the risks that pioneering

adopters face when trying a new, uncertain

technology.

26 How necessary or desirable is Federal subsidy to increase the supply

of recovered resources?

Subsidizing the capital or operating costs of

centralized resource recovery nationwide

cannot be justified on the basis of the economic value of the recovered energy or materials.

For example, a subsidy of $8 per ton of MSW,

which is designed to make an average $14 per

ton resource recovery tipping fee competitive

with an average $6 per ton landfill tipping

fee, is equivalent to a subsidy for recovered

ferrous metal of several times its market

price or to a subsidy for recovered energy of

nearly $1 per million Btu (about $5 per barrel

of oil equivalent). There is no a priori reason

to subsidize resource recovery, if sound alternative disposal methods, such as landfill with

adequate environmental controls, are available at a lower cost.

Recovery and Recycling

Resource recovery does not generally

need a Federal subsidy if the revenues from

recovered energy and materials plus landfill

credits exceed its costs. A subsidy may be

economically justified, however, in three

specific circumstances: (1) if the environmental and health costs of alternative disposal methods such as landfill or ocean

dumping exceed the subsidy, and it is not

feasible to reduce those costs through regulation and control; (z) if the spread between

the resource recovery and the landfill tipping fees is considerably less than $8 per

ton, and a subsidy is justified by a desirable

but nonmonetary benefit of energy recovery

such as reduced oil imports; or (3) if a subsidy for a small number of demonstration

plants is used to compensate communities

for bearing the risks associated with trying

an uncertain new technology that might benefit the rest of the Nation. Federal subsidy

for the first two purposes can be justified

economically only if local areas cannot afford proper disposal of the wastes they generate. Federal subsidy for the third purpose

is reasonable from an economic point of

view. (Chapter 6)

27 What steps might the Federal Government take to affect the competition between virgin and secondary

materials in order to stimulate demand for recycling?

This study has examined the potential effectiveness of five economic policies for stimulating recycling and reducing the rate of MSW

disposal. They are:

The Product Charge—an excise tax levied

on material goods proportional to their

weight, volume, or other measure of disposal

cost. The tax would be levied on material fabricators or related industries.

The Recycling Allowance—a direct grant

or tax incentive to producers or users of recy-
Ch. I—Executive Summary ● 1 5

cled materials paid in proportion to some

measure of the amount or value of recycled

materials used.

The Severance Tax— a tax on virgin

materials levied at the point of mining or

harvest in proportion to some measure of the

amount or value extracted.

The Percentage Depletion Allowance—existing law allows for deduction from income

before taxes each year of a percentage of

gross income from mining specified minerals.

Repeal of this deduction was examined.

The Capital Gains Treatment of Income

From Standing Timber—existing law allows

for taxing income from the sale of standing

timber at rates appropriate to long-term capital gains, which are lower than rates for ordinary income. Repeal of this tax preference

was examined. (Chapter 8)

28 Which of the incentive programs for

recycling might work best?

From equity, economic efficiency, and administrative perspectives, removing existing

tax preferences for virgin materials is preferable to establishing new ones for recycled

materials. From the perspectives of resource

recovery, recycling, and reduced generation

of waste, the key question, however, is the effectiveness of various proposals in stimulating recycling and decreasing the waste

disposal burden,

Of the five policies considered, the product

charge and the recycling allowance are projected to be the most effective for these purposes if they could be made to work. However, the effectiveness of the product charge

would depend on the successful implementation of the exemption for recycled materials,

but the administrative problems of the exemption may be so great as to render the

charge concept unworkable. The recycling

allowance faces similar administrative problems.

The analyses suggest that repeal of the

percentage depletion allowance on hardrock

minerals or repeal of the capital gains treatment of timber income would increase recycling by only a small amount. Furthermore,

these actions are not expected to significantly

reduce the generation of waste. (See also

issue 29. ) Nevertheless, these tax provisions

do treat secondary materials unfairly in their

competition with primary materials. (Chapter

8)

29 How much confidence is there in

estimates of the effects of Federal

incentives on recycling?

Only a small number of studies have been

published on the response of recycling to economic policies, Further research and analysis

are needed before there can be complete confidence in estimates of the effectiveness of

Federal economic incentives in increasing

either the demand for or the supply of recovered materials and energy. In particular,

studies are needed concerning the influence

of economic policy on plant investment decisions, including plant location, and on vertical integration in the materials industries to

determine whether these effects serve to inhibit the use of recycled materials in the long

run. Additional analyses are also needed to

explore more fully the implications of these

incentive policies for the nature of the competition between primary and secondary

materials, and for the competition between

domestic and foreign producers,

The incentive policies examined in this

study may have side effects in such important

areas as prices, profits, Government revenues, administrative costs, employment, foreign competition, and long-run materials and

energy conservation. Further analysis indepth is needed to arrive at a thorough understanding of the outcomes of each of these

policies. (Chapters 6 and 8)
16 ● Materials and Energy From Municipal Waste

Issue Area V

Beverage Container

During the last 30 years the beer and soft

drink industries have undergone a major shift

from the use of refillable glass bottles to the

use of nonreturnable glass and plastic bottles

and metal cans. During the same period the

sales of both beverages in individual packages have grown dramatically. One result of

these trends has been that discarded beverage containers have become significant components of both litter and MSW. Beverage

delivery has become more energy- and materials-intensive while employing fewer people

and requiring less capital per unit of beverage consumed. Economies of scale in brewing, bottling, and transportation, especially

using lightweight nonreturnable containers,

have favored a trend toward centralization of

bottling and brewing, with fewer producers

and fewer brands available. Packaging has

become a significant part of beverage marketing strategy, with a wide variety of

package sizes and types available. Federal

legislation has been proposed that is intended

to slow the declining market share of beverages in refillable bottles, by imposing a mandatory, uniform, refundable deposit on each

container.

30 Would Beverage Container Deposit

Legislation (BCDL) work?

A review of a number of studies of BCDL

sponsored by proponents, opponents, and

neutral parties finds agreement that it would

accomplish all of its major goals to some

degree. It would lead to a reduction in litter,

in MSW, and in consumption of energy and

raw materials. For its proponents, it would

serve as a symbol of a commitment to resource conservation, even though it would not

save as much energy as such measures as energy efficiency standards for buildings and

automobiles.

However, considerable uncertainty exists

regarding the ultimate effects of BCDL on

container market shares and on return and

Deposit Legislation

recycle rates. No one has devised a method

for predicting these outcomes, which depend

on market decisions by consumers and on the

exercise of at least limited market power by

producers and distributors. Nevertheless, experiences in the several States that have implemented BCDL, as well as the judgment of

many informed observers, indicate that BCDL

would lead to an increased use of refillable

bottles and that containers would be returned at a sufficiently high rate to ensure

that its goals would be achieved. (Chapter 9)

31 How much energy would be saved

by BCDL?

If BCDL were adopted it is estimated that it

would save the energy equivalent of 20,000 to

60,000 barrels of oil per day. However, the

energy saved would be in the forms of naural

gas, coal, nuclear energy, hydropower, and

wood waste. Some studies find a savings of oil

as well. Other studies project an increase in

the actual consumption of oil of as much as

5,000 barrels per day including additional

gasoline and diesel fuel for transportation.

(Chapter 9)

32 How would BCDL affect industry

and labor?

BCDL would have a number of significant

side effects that are not intended by its proponents. It would increase the capital needs

of beverage brewers, bottlers, wholesalers,

and retailers. At the same time, it would

severely disrupt the metal can and glass bottle industries with losses of output and jobs.

Net employment and total compensation to

workers would increase for the industries involved in manufacturing materials and containers, and in producing, delivering, and

selling beverages. However, existing skilled

jobs would be lost in materials and container

production, while relatively unskilled jobs

would be gained in wholesaling, transportation, and retailing of beverages.
Ch. l—Executive Summa/y ● 1 7

The costs of BCDL would be concentrated

in a small number of communities in which

materials and container plants are located,

while the benefits would be distributed

throughout the country. Thus, Federal relocation, retraining, and other assistance should

be considered for both workers and firms

that might be harmed by BCDL. (Chapter 9)

33 How would BCDL affect consumers?

Unlike a ban on nonreturnable containers,

BCDL would preserve the right of producers

and consumers to choose among several

package types, although the total number of

available package types would decline. However, BCDL would ensure that users of nonreturnables pay the full cost of their disposal.

It would also provide an incentive for recycling and against littering.

Under BCDL, the costs of containers per fill

would decline due to the greater use of multitrip refillables, while other costs of delivery

would increase. Available data do not permit

a consensus judgment of the net effect of

BCDL on total costs, or on the shelf prices of

beer and soft drinks. Some authors project a

decrease in costs and prices, others an increase. Data on current prices show that soft

drinks are cheaper in refillables than in nonreturnable bottles and cans. There is some

reason to believe that this might not be the

case under BCDL if producers have to invest

heavily in new equipment to meet an augmented demand for beverages in refillables.

The availability of beverages in refillable

containers is expected to improve under

BCDL, whereas the number of types of containers might decline. Depending on how consumers value the convenience of nonreturnables and refillables as well as on the uncertain price changes, beverage consumption

might decline, but by a few percent at most.

(Chapter 9)

34 What would be the impact of BCDL

on health and the environment?

Refillable containers generally produce less

air and water pollution and less industrial

solid wastes than other container types on a

per-fill basis. Litter-related injury from improperly discarded glass bottles would probably decline under BCDL. It is not possible to

say with available data whether worker and

consumer injury would increase or decrease.

No evidence was found that refillable glass

bottles pose additional health or sanitation

hazards. (Chapter 9)

35 How might BCDL affect, or be affected by, new technology?

If BCDL were passed, new technology might

emerge for managing refillable containers

and for recycling nonreturnables. Government assistance might be needed to spur

development of new, more efficient, standard

refillable containers for use industrywide.

The growing popularity of the plastic soft

drink bottle could drastically alter the soft

drink package mix, whether or not BCDL is

adopted. If made available in smaller sizes

(10 to 16 ounces), plastic containers would

markedly alter the projections of the effectiveness and the impacts of BCDL that are

discussed in this report. (Chapter 9)

36 How would BCDL affect economic

concentration in the soft drink and

beer industries?

Since BCDL would decrease the economic

advantages of centralized brewing, bottling,

and wholesaling, the current trend toward a

small number of large firms in beer and soft

drink production might be slowed.

If upheld by the courts and not modified by

Congress, the recent decision by the Federal

Trade Commission outlawing territorial franchise restrictions for trademarked soft drinks

in nonreturnable containers could lead to

rapid concentration of that industry. The

results would be an industry with only a few

firms having a few large plants, as well as the

rapid disappearance of the refillable bottle

for soft drinks. By making the refillable bottle

more attractive economically, BCDL could

help preserve smaller, local bottlers. Legislation now under consideration to preserve the
18 ● Materials and Energy From Municipal Waste

territorial franchise system could help maintain the refillable bottle’s current market

share.

The beer and soft drink industries are both

complex. They are characterized by a mix of

small and large firms, by regional and national markets, and by an extensive use of

packaging alternatives as marketing and

competitive devices. None of the major analyses of the effects of BCDL examined for this

study has taken these structural complexities

into account. In part, this reflects the limits of

the art of policy analysis. It also contributes

to the inherent uncertainty regarding the

ultimate outcomes either of BCDL or of antitrust action taken against the industries.

(Chapter 9)

37 How would BCDL affect government?

BCDL would cause some shift in tax revenues

at and among the local, State, and Federal

levels. This would happen due to changes in

the mix of capital and labor used in the beverage-related industries and to changes in

profits and wages. While BCDL uses the market approach to regulation and is nearly selfadministering, some additional governmental

resources would be needed to administer and

police the deposit system. (Chapter 9)

38 Would BCDL harm centralized resource recovery or source separation programs?

Successful BCDL would reduce the amount of

aluminum, steel, and glass in the solid waste

stream. Thus, it might reduce the revenue of

an existing centralized resource recovery

plant by as much as 5 percent. There would

be no revenue reduction at all if the recovery

of aluminum and glass do not become technically and economically feasible. Systems such

as waterwall incineration, which do not recover materials, would not experience a loss

in revenues. (Chapters 5, 6, and 9)

Source separation programs are more dependent on revenues from materials recovery

than is centralized resource recovery. Thus,

BCDL might reduce the potential revenues of

a residential source separation program for

newspaper, glass, and cans by as much as 25

percent, or of a comprehensive program including all forms of paper and yard wastes by

as much as 13 percent. (Chapters 4 and 9)

A Perspective on Further

Federal Action

T

he disposal of MSW in an environmentally and economically acceptable manner

is a chronic problem of our modern consumer

society. Recovery, recycling, and reuse of the

materials and energy in MSW can help solve

the disposal problem and provide opportunities to conserve resources and protect the environment.

Like all of man’s activities, resource recovery, recycling, and reuse have costs as

well as benefits. This study of proposed Federal policies for waste management has not

adopted the overly restrictive formalism of

the cost/benefit approach. Nevertheless, it is

reasonable to regard resource recovery, recycling, and reuse from an economic perspective and to urge that such programs make

economic as well as political sense.

In the context of current costs, prices, and

markets for materials, labor, and equipment,

resource recovery is economically sound in

some regions and not in others. In those

regions where the cost of environmentally

sound landfill or the price of energy is high,

or the markets for recovered materials are

strong, resource recovery and recycling make

good economic sense. In other regions, landfill is still the economically and environmentally preferred alternative. Federal policy

should be sufficiently flexible to accommodate different local conditions, and should encourage State and local governments to adopt

the most economic and environmentally

sound approach to waste disposal. The focus

of Federal policy needs to remain on those

areas in which the private market and State

and local governments require the most assistance: protecting public health, preserving
Ch. l—Executive Summary ● 1 9

the natural environment, and supporting research and development on new technology.

This study has identified and examined a

number of Federal policy options, each of

which alone would make only a small difference to the economics of resource recovery

and recycling. Taken all together, however,

they could lead to a large increase in these

activities. Ultimately, the widespread adoption of resource recovery and recycling may

depend not so much on the objective analysis

of small actions taken either together or separately, but on Federal action to create a

climate in which the recovery, recycling, and

reuse of discarded wastes becomes a valued

way of life for all Americans.
Chapter 

Introduction and

Framework for Analysis
—.

Page .

Objectives and Scope ● **. *,** ***e, ***. ,  v** ***,***.*** 23 ‘

Approach . . . . . . ** ********* ● *****O** ● .*.**... .**,..* 24

The Municipal Solid WasteProbIemV * * * * * * * * . * * * * . * * * ***.**.** 24

Backgroun d ● **. ** ***w * * * s * * . * * * * . . * * * . . . . .,**.,.** 24

Federal Involvementin Solid Waste Problems . . . . . . . . . . . . .......25

Rationale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

History. . ● * . . * * . . . * * * * *, * * * * * * * * * * * * *, * *, . * . * *.*....** 27

Framework for the Analysis of Resource Recovery,

Recycling, and Reuse ● .*. *a** *.. ***. **** . *m**.***..******. 28

The Materials System and Policy Options . . . . . . . . . . . . .......28

Technical Characteristics of the Materials System. . . . . .......31

Economic Characteristics of the Materials System. , . . . . . . . . ..32

Institutional Characteristics of the Materials System, . .......,34

Guidelines for the Analysis of Policy Options. . . . . . . . . . . . . . .. .34

References . . . . . . . . . . . . . .*** **** *9 **n******.************.. 37

Tables

Table No. Page

3.

4.

5.

6.

7.

Material Composition of MSW in 1975 . . . . . . . . . . . . . . . . . . . . . . . 25

Product Composition of MSW in 1975 . . . . . . . . . . . . . . . . . .......26

Comparison of Materials and Energy Contents of MSW to Total

U.S. Consumption in 1975 . . . . . . . . . . . . . . . . . . . . . . . . . . . .......27

Selected Subsidies in the Materials System . . . . . . . . . . . . .......33

Selected Institutional Characteristics of the Materials System That

Are Barriers to Resource Recovery. . . . . . . . . . . . . . . . . . . . . . . . ..35

Figures

Figure No. Page

1. A Simple Model of the Materials System With No Reuse or

Recycling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ....29

2. A Complex Model of the Materials System Showing a Variety of

Recycle Loops and Disposal Options . . . . . . . . . . . . . . . . . . . . .. ...30
Chapter 

Introduction and

Framework for Analysis

Objectives and Scope

s

ociety’s primary interest in resource recovery, * recycling, and reuse arises from

the need to dispose of municipal solid waste

(MSW) from residences, institutions, commercial establishments, and light industry.

Resource recovery, recycling, and reuse can

be constructive supplements to less desirable

traditional disposal methods such as open

dumping, landfill, uncontrolled incineration,

and ocean burial. In addition, it can contribute to the wise and efficient use of materials,

to conservation of energy, to preservation of

the environment, and to improvement in the

balance of trade through reduction of the Nation’s dependence on imported natural resources. By using materials more than once,

virgin resources can be conserved for ourselves and for future generations.

The objectives of this study are:

1. To identify the technological, economic,

and institutional factors that influence

the generation, recovery, recycling, and

reuse of MSW.

2. To identify Federal policy options that

could be adopted to reduce the rate of

generation of MSW or to stimulate the

recovery, recycling, and reuse of the resources it contains.

3, To analyze the effectiveness of the policy

options, and to assess their impacts and

the issues that accompany each of them.

The scope of this study is limited to the

generation and disposal of ordinary MSW in

the United States. Specifically excluded from

*See the Glossary at the end of this report for definitions of the terms used.

consideration are the management of hazardous wastes, sewage sludges, or other special

wastes; the remanufacture, reworking, or refurbishing of products for reuse; the recycling of industrial scrap; and the recovery of

materials or energy from agricultural, forestry, mining, or industrial residues.

The following specific issue areas are addressed:

1. Potential markets for recovered materi2

als and energy, including the effects of

railroad freight rates and product quality specifications. (Chapter 3)

The status of technologies and approaches for resource recovery and recycling, including small- and large-scale

centralized processing and separate collection. (Chapters 4 and 5)

3. Economics of the construction and operation of large-scale centralized resource recovery facilities. (Chapter 6)

4. Institutional considerations in implementing resource recovery and waste

reduction programs. (Chapter 7)

5. Education, training, technical assistance, and research and development for

resource recovery, recycling, and reuse.

(Chapters 4,5, and 7)

6. Financial options and incentives for influencing the relative costs of virgin and

secondary materials. [Chapter 8)

7. The effectiveness and impacts of beverage container deposit legislation. (Chapter 9)

8. The nature of the interactions between

programs for centralized resource recovery, source separation, and beverage

container deposit legislation. (Chapters

4,6, and 9)

23
.24 . Materials and Energy From Municipal Waste

Approach

T

he study was carried out during the period from January 1976 to June 1978 by

OTA staff, contractors, and consultants. Contractors and consultants collected and analyzed data, prepared models, and wrote

papers, which have been published in the

Working Papers volume. Several workshops

were held to get the views of interested parties. OTA staff made a number of site visits to

existing facilities and programs, participated

in congressional hearings and briefings, and

benefited greatly from individual contacts

with persons in the field.

The overall framework for the analysis,

discussed further below, consisted of an examination of the technological, economic, and

institutional factors that influence resource

recovery, recycling, and reuse. An attempt

was made to analyze or assess all these factors and all the relevant policy options for addressing them. The emphasis was on the effectiveness of each option or strategy in accomplishing the goals of’ product reuse, reducing waste generation, and recovering and

recycling materials and energy

The Municipal Solid

Problem

Background

from MSW.

Waste

s

olid waste disposal is a growing problem

in many parts of the country for three

reasons: (i) unsanitary disposal in open

dumps or uncontrolled landfills poses health

and safety hazards and esthetic problems

that are no longer deemed acceptable; (ii)

landfill sites are becoming increasingly difficult to obtain as citizens resist their development, as land values increase, and as

higher water quality standards render many

areas geologically unsuitable or too expensive for controlled landfill; and (iii) stricter

air and water pollution standards make uncontrolled incineration, open burning, and

ocean dumping unacceptable disposal alternatives.

In 1976, the national average cost to collect

and dispose of 1 ton of MSW was reported to

be $30.(1) It was as high as $50 per ton in

some areas. In recent years, modern management methods and new technology have

helped to control the cost of collection, which

has typically been 70 to 80 percent of the

total. Disposal costs, however, have increased rapidly as the problems mentioned

above have emerged. The. Nation, concerned

about the growing disposal burden and motivated by the prospect of materials and energy

conservation, has begun to look toward resource recovery, recycling, and reuse as alternatives to disposal of a significant portion

of MSW.

In 1975, an estimated 136 million tons of

MSW was generated nationwide, an average

of nearly 3.5 pounds per capita per day.(2) At

$30 per ton, the cost to manage these wastes

totaled over $4 billion in 197’5. The Environmental Protection Agency (EPA) has projected that waste generation rates will continue to grow, based on current trends and

policies.(3)

One way to consider the potential for resource recovery, recycling, and reuse is to examine the composition of MSW on a nationwide, annual average basis, as shown in table

3.* The content, on a weight basis, of metals

and “garbage” (food wastes) is relatively

small. The content of combustible materials

that can be burned to provide energy is nearly 80 percent of the total wet weight of MSW.

Another way to consider the composition of

MSW is in terms of the product origins of the

materials it contains as shown in table 4.

Over 50 percent of the weight of MSW consists of paper and packaging, which are

largely transitory goods. Over 51 percent of

the aluminum, 46 percent of the glass, and 12

percent of the iron and steel come from

beverage containers (beer and soft drinks).

*ACCurate data on the amount and compOSitiOn ‘f

MSW are not available. EPA’s estimates are based on a

materials flow approach that considers production

rates and lifetimes for each product, rather than on actual measurement of wastes.(3)
Ch. 2—introduction and Framework for Analysis ● 25

Table 3.— Material Composition* of MSW in 1975

Net waste -

Waste content disposed of

as discarded after recycling

Material

Paper . . .

Glass . . . . . . . . . . .

Ferrous . . . . . . . . .

Aluminum .

Other nonferrous

Plastics . . . . . . . . . .

Rubber. . .

Leather ., . .

Textiles . .

Wood . . . . . . . . . . . .

Other .

Total nonfood

product waste. . .

Food waste . ;.

Yard waste. . . . . . . .

Miscellaneous

inorganic wastes .

TOTAL. . . .

Million

tons

44.1

13.7

11.3

1.0

0.4

4.4

2.8

0.7

2.1

4.8

0.1

85.4

22.8

26.0

1.9

136.1

0/0 o f

total

32.4

10.1

8.3

0.7

0.3

3.2

2.1

0.5

1.5

3.5

0.1

Million

tons

37.2

13.3

10.8

0.9

0.4

4.4

2.6

0.7

2.1

4.8

0.1

62.7 77.5

16.8 22.8

19.1 26.0

1.4 1.9

100.0 128.2

0/0 of

total

29.0

10.4

8.4

0.7

0.3

3.4

2.0

0.5

1.6

3.7

0.1

60.4

17.8

20.3

1.5

100.0

‘ The compositton reflects considerable geographic and seasonal variation, es.

pecially for the content of metals and yard wastes Furthermore, accurate

composition data are difficult to obtain due to problems in obtaining representative samples of waste streams 1975 IS the most recent year for which de.

tailed composition estimates have been published by EPA

SOURCE U S Environmental Protect (on Agency Off Ice of Solid Waste Man

agement Programs, Resource Recovery and Waste Reduction, Fourth

Report to Congress, EPA Publicaton SW-600, Washington, D C U S

GPO 1977, p 18

Another perspective on the potential of resource recovery from MSW can be gained by

its contents as generated to total domestic

consumption of its various components as

shown in table 5. These data show that resources recovered from MSW could provide a

substantial source of supply for some materials and could contribute to the Nation’s supply of energy.

Federal Involvement in Solid

Waste Problems

Rationale

Municipal solid waste collection and disposal have traditionally been the responsibility of State and local governments,

with the latter bearing the primary burden.

In the last two decades, however, the Federal

role has expanded considerably, for several

reasons.

First, the Federal Government has helped

to create some of the problems faced by localities. For example, certain tax policies have

encouraged the development and use of virgin

materials. At the same time, increasingly

stringent Federal environmental legislation

has outlawed some disposal options and

made others more expensive.

Second, the environmental problems created by improper disposal of wastes do not

respect State boundaries. Water pollution

from landfills and dumps, and air pollution

from incineration and open burning often

cross State lines, indicating a clear need for

Federal coordination or action.

Third, the Federal Government has available a wider variety of policy tools for avoiding or managing waste disposal than do State

and local governments. For example, most

scrap materials are traded in volatile national markets over which State and local governments can exert little influence, whereas the

Federal Government might undertake stockpile or subsidy programs to stabilize or

strengthen markets. Only the Federal Government oversees railroad freight rates for materials. While State or local governments may

have the power to levy product disposal

charges, most are unlikely to do so because of

the competitive disadvantage created by such

unilateral local actions.

Fourth, the Federal Government can assume responsibility for funding research, development, and demonstration programs for

which the expense or risk would be unreasonably high for a local government or an individual firm, but well worth it for the Nation as a

whole. Likewise, Federal resources can be efficiently brought to bear on education, training, and information dissemination.

Fifth, the Federal Government can best

represent the long-term national interest in

recovering, reusing, and recycling materials

for improving our balance of trade with other

nations and for conserving materials for use

by future generations.

48-786 0 - 79 - 3
26 ● Materials and Energy From Municipal Waste

Table 4.—Product Composition of MSW in 1975

(1,000 tons)

— —. —

Net waste disposed of after recycling

As discarded – 0

/0 of total % of nonfood

Product category Quantity waste product waste - — -—

Durable goods: . . . . . . . . . . . . . . . . . . . . . . . .

Major appliances. . . . . . . . . . . . . . . . . . .

Furniture, furnishings . . . . . . . . . . . . . .

Rubber tires. . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous durables. . . . . . . . . . . . .

Nondurable goods, exe. food: . . . . . . . . . . . .

Newspapers. . . . . . . . . . . . . . . . . . . . . . .

Books, magazines. . . . . . . . . . . . . . . . . .

Office paper. . . . . . . . . . . . . . . . . . . . . . .

Tissue paper, inc. towels . . . . .

Paper plates, cups . . . . . . . . . . . . . . . . .

Other non packaging paper . . . . . . . . . .

Clothing, footwear . . . . . . . . . . . . . . . . .

Other miscellaneous durables. . . . .

Containers and packaging: . . . . . . . . . . . . . .

Glass containers. . . . . . . . . . . . . . . . . . .

Beer, soft drink . . . . . . . . . . . . . . . .

Wine, liquor. . . . . . . . . . . . . . . . . . .

Food and other . . . . . . . . . . . . . . . .

Steel cans:. . . . . . . . . . . . . . . . . . . . . . .

Beer, soft drink . . . . . . . . . . . . . . . .

Food . . . . . . . . . . . . . . . . . . . . . . . . .

Other nonfood cans . . . . . . . . . . . .

Barrels,drums, pails, misc. . . . . . .

Aluminum: . . . . . . . . . . . . . . . . . . . . . . . .

Beer soft drink* . . . . . . . . . . . . . . .

Other cans.... . . . . . . . . . . . . . . . .

Aluminum foil . . . . . . . . . . . . . . . . .

Paper, paperboard: . . . . . . . . . . . . . . . . .

Corrugated. . . . . . . . . . . . . . . . . . . .

Other paperboard . . . . . . . . . . . . . .

Paper packaging . . . . . . . . . . . . . . .

Plastics: . . . . . . . . . . . . . . . . . . . . . . . . . .

Plastic containers. . . . . . . . . . . . . .

Other packaging . . . . . . . . . . . . . . .

Wood packaging: . . . . . . . . . . . . . . . . . .

Other miscellaneous packaging . . . . . .

Total nonfood product waste. . . . . . . . . . . . .

Food waste . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yard waste.... . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous in oraanic wastes. . . . . . . . . .

14,740

2,430

3,370

1,790

7,150

24,140

8,850

3,075

5,210

2,235

485

1,045

1,250

1,990

46,550

12,520

6,345

1,790

4,385

5,525

1,340

3,195

760

230

770

510

25

235

23,135

12,520

5,470

5,145

2,635

420

2,215

1,800

165

85,430

22,785

26,010

1,900

14,350

2,280

3,370

1,600

7,100

21,365

7,020

2,820

4,510

2,235

485

1,045

1,250

1,990

41,740

12,150

6,095

1,760

4,295

5,225

1,275

3,035

720

220

685

430

25

230

19,080

9,745

4,750

4,585

2,635

420

2,215

1,800

165

77,455

22,785

26,010

1,900

11

2

3

1

5

17

5

2

4

2

—

1

1

2

33

10

5

1

3

4

1

2

1 —

1 —

—

—

15

7

4

4

2

—

2

1 —

19

3

4

2

9

27

9

3

6

3

—

1

2

3

54

16

8

2

6

7

2

4

1 —

1

1 —

—

25

13

6

6

3

—

3

2

—

61

18

20

1

100

29

33

2

GRAND TOTAL . . . . . . . . . . . . . . . . . . 136,125 128,150 100 -

164

“Includes all-aluminum and aluminum ends from bimetallic cans

SOURCE US Environmental Protection Agency, Office of Solid Waste Management Programs, Resource Recovery and Waste Reduction, Fourth

Report to Congress, EPA Publication SW-600, Washington, DC, U.S GPO,1977, p 17
Ch. 2—introduction and Framework /or Analysis ● 27

Table 5.—Comparison of Materials and Energy

Content of MSW to Total U.S. Consumption in 1975

MSW component

Ferrous metal . . . . . . . . . . . . . .

Aluminum. . . . . . . . . . . . . . . . . .

Other nonferrous metal . . . . . .

Glass. . . . . . . . . . . . . . . . . . . . .

Paper. . . . . . . . . . . . . . . . . . . . .

Energy b

. . . . . . . . . . . . . . . . . . . .

MSW content –

‘- -

as a percentage

of consumption

12

22

5

69

67

1.9

aMSW as discarded Some portions of each material are recovered for recy

cling before disposal See table 3

Includes fuel value of paper

SOURCE Off Ice of Technology Assessment

Finally, local solid waste management

problems are highly visible and, unlike many

other local problems, may be resolvable by

the application of sufficient money and technical know-how.

History

Three major laws have prescribed the Federal role in solid waste management: the

Solid Waste Disposal Act of 1965, the Resource Recovery Act of 1970, and the Resource Conservation and Recovery Act of

1976. Several other acts have had a lesser influence. *

Federal involvement in the problems of

MSW management was first established under the Solid Waste Disposal Act of 1965,

which is part of the Clean Air Act Amendments (Public Law 89-272, 79 Stat. 992

(1965)). The Act recognized the association of

solid waste disposal, air pollution, and waste

generation rates, and provided for designing

and testing new methods for solid waste disposal and resource recovery. It also provided

technical and financial assistance to States

and to interstate agencies for planning resource recovery and solid waste disposal programs. It was originally administered by the

Department of Health, Education, and Welfare, but in 1970 the responsibility was transferred to the newly formed EPA.

*See appendix A for a more detailed discussion of

existing laws on solid waste management.

The 1965 Act was amended by the Resource Recovery Act of 1970 (Public Law

91-512, 84 Stat. 1227 (1970)). The amendment

recognized the special disposal problems of

hazardous wastes. It established the need to

examine a national materials policy to conserve resources and protect the environment

through Title II, the Materials Policy Act of

1970, which established the National Commission on Materials Policy.(6) The Act, as

amended, required annual reports to the Congress on studies of various waste-generation,

materials recovery, and waste disposal options, practices, and policies. Under the Act,

the EPA Administrator could fund resource

recovery demonstration projects; award

grants for State, interstate, and local planning; and recommend guidelines for solid

waste recovery, collection, separation, and

disposal systems.

The Resource Conservation and Recovery

Act of 1976 (Public Law 94-580, 90 Stat.

2795) was enacted and signed during the last

days of the 94th Congress. This Act is designed to establish broad new programs, including comprehensive regulations for the

management of hazardous wastes; to provide

incentives for regionalized solid waste planning; and to accelerate research, development, and demonstration. The Act provides

that, in order to receive Federal planning

funds, State plans must ban open dumps and

require all sanitary landfills to meet environmental criteria to be set by EPA. Section

8002(j) of the Act established the interagency,

Cabinet-level Resource Conservation Committee charged with investigating a variety of resource conservation measures for possible

future actions.

A number of other recent laws have had

important implications for solid waste management and resource recovery. The Federal

Water Pollution Control Act Amendments of

1972 (Public Law 92-500, 86 Stat. 816), as

amended by the Clean Water Act of 1977

(Public Law 95-217, 91 Stat. 1566) treat solid

waste disposal sites as nonpoint sources of

water pollution. The Federal Ocean Dumping

Act of 1972 (Public Law 92-532, 86 Stat.
28 . Materials and Energy From Municipal Waste

1051) as amended in 1974 (Public Law 93-

254, 88 Stat. 50) prohibits ocean dumping of

hazardous wastes, and requires a carefully

defined permit for ocean disposal of MSW.

This law has nearly eliminated such ocean

disposal.

The Secretary of the Treasury, with the cooperation of EPA, is required by Public Law

94-568 (90 Stat. 2697), which amends the Internal Revenue Code of 1954, to investigate

all provisions of the Internal Revenue Code

that impede or discourage recycling of solid

wastes, and was to report his findings by

April 20, 1977, to the President and Congress

with specific legislative proposals and detailed estimates of their costs. Activities

under this Act, however, have been subsumed under the ongoing interagency Nonfuel Minerals Policy Study* ordered by the

President on December 12, 1977.(7)

The Railroad Revitalization and Regulatory

Reform Act of 1976 (Public Law 94-210, 90

Stat. 30) required the Interstate Commerce

Commission to investigate the structure of

freight rates for recyclable materials. The

Commission’s actions, and subsequent court

actions, are discussed in chapter 3 of this

report.

The Emergency Interim Consumer Product

Safety Standard Act of 1978 (Public Law 95-

319, 92 Stat. 386) established an interim consumer product safety rule relating to the

standards for flame resistance and corrosiveness of cellulose for home insulation. Cellulose insulation is made from recycled newspaper treated with fire retardant. The intent

of the Act was to guard against fire hazards

from insulation treated with inadequate

amounts of fire retardant.

The Energy Tax Act (Public Law 95-618, 92

Stat. 3174) contains two provisions that

should influence recycling. One provides an

*On Feb. 1, 1979, the Department of the Treasury

published the report, Federal Tax Policies: Recycling of

Solid Waste Materials, in response to Public Law 94-

568 and the ongoing interagency Nonfuel Minerals Policy study. The report was also given to the Resource

Conservation Committee which was established under

the Resource Conservation and Recovery Act of 1976.

additional lo-percent investment tax credit

(for a total of 20 percent) for the purchase of

equipment used to recycle ferrous (with certain exceptions) and nonferrous metals, textiles, paper, rubber, and other materials for

energy conservation. The additional credit is

available for a wide range of equipment

placed in service after October 1, 1978. The

other provides for setting recycling targets

for major energy-consuming industries. These

include the metals, paper, textile, and rubber

industries. Specific targets will be set for the

increased use of recycled commodities over

the next 10 years.

For legislation affecting solid waste management, resource recovery, recycling, and

reuse considered by the 95th Congress, see

appendix B.

Framework for the Analysis of

Resource Recovery, Recycling,

and Reuse

T

his section sets forth a general framework for the analysis of issues and options. The materials system concept is used to

illustrate the various ways in which recovered materials can reenter the materials cycle. The roles of technology, economics, and

institutions are explored for the insights they

provide. Finally, guidelines for the analysis of

the available options are discussed.

The Materials System and Policy Options

The traditional view of the materials system as seen by local MSW managers is modeled in figure 1. Those responsible for the

management of MSW have exercised little or

no control over the other parts of the materials system. They have only been involved with

the last two steps, collection and disposal.

The comprehensive materials system model shown in figure 2 displays a wide variety of

opportunities for Government and for the

private sector to affect the flow of materials

toward ultimate disposal through reuse and

recycling. Some of the major public policy op-
Ch. 2—introduction and Framework for Analysis ● 29

Figure 1 .—A Simple Model of the Materials System With No Reuse or Recycling

Acquisition of

raw materials

Primary processing

of raw materials

I

Fabrication, construction, and

production of material goods

Use of material goods

by intermediate and

final consumers

A

Littering Discard of mixed material

wastes as MSW by consumers

Collection of MSW

Collection of

litter
Figure 2.—A Complex Model of the Materials System Showing a Variety of Recycle Loops and Disposal Options

I 1

Recycle of w

Primary processing of home scrap raw materials

I 

Recycle of prompt

,

2 0 Fabrication, construction, and industrial scrap product ion of material goods I

Remanufacture and

renovation of

o3 material goods

●

Reuse of

material goods . 0 :

4 Use of material goods by

intermediate and final consumers Scrap processing

for recycle

I

Littering I o5

Discard of segregated

1 material wastes by

Litter Discard of mixed material

collection wastes by consumers

Collection of

mixed wastes

consumers I

A

o6

I mixed wastes

Energy

production

o

●
duction and Framework for Analysis . 1

ions available for modifying the structure

and functioning of the materials system are

the subject of this report. The nature of many

of these options is revealed by examination of

the technical, economic, and institutional influences on the materials system.

The materials system model in figure 2 contains six pathways or loops by which materials are recycled or reused prior to ultimate

disposal. Loops 4, 5, and 6 are within the

scope of this study; loops 1, 2, and 3 are not.

The six loops are:

1. Home scrap recycle.

2. Prompt industrial scrap recycle.

3. Product remanufacture or renovation.

4. Reuse of material goods.

5. Recycle of segregated wastes.

6. Recovery of energy and materials from

mixed wastes.

Loops and 2 represent the long-established industrial practices of immediately recycling either home scrap within the primary

materials processing facility or rompt nciustrial scrap from fabricators directly back to

such processors. Loop 3 represents a variety

of rework practices. These include the remanufacture of auto parts, the refurbishing

of telephones, the renovation of standing

buildings, and the repair and sale of used

clothing and appliances by handicapped

workers. The characteristics of materials

flows in home and prompt scrap and in product rework are currently under study in

another TA project.(8)

Loop number 4 represents direct reuse of

material goods with little or no change in

form. Typical examples of reuse include return of beverage containers for refilling, reuse of “used cars” by second or third owners,

and reuse of shipping pallets.

Loop number 5 represents recycling discarded material wastes, which are segregated by material type at each stage in the

loop. One example of this approach is separate collection of one or more components of

municipal waste. This is practiced in a number of areas, often by curbside collection of

newspapers, glass, and cans; by collection of

corrugated cardboard at commercial establishments; or by “paper drives” sponsored by

nonprofit organizations. A second example is

“community recycling” in which nonprofit

organizations or local governments provide

facilities at which citizens can drop off onmixed wastes such as paper, cans, bottles,

and waste oil. A third example is aluminum

can recycling centers operated by aluminum

manufacturers or beverage companies. In

each of these examples the segregated

wastes can be easily processed because they

are kept relatively free of contamination.

Loop number 6 represents recycling mixed

wastes, which are separated to recover materials and fuel or burned in mixed form to produce energy. In either case a residue remains

for ultimate disposal. One example of this

kind of recycling is the shredding of automobile hulks to remove nonmetals and to produce one or more recyclable metallic components. Another example, which is of primary

interest in this study, is the separation and/or

combustion of mixed SW in centralized resource recovery plants. This method may be

able to produce various recyclable materials

such as ferrous metals, aluminum, glass, and

mixed nonferrous metals; as well as such energy products as refuse-derived fuel, steam,

electricity, pyrolytic gas or oil, or biologically

produced methane gas.

Finally, figure 2 shows yard waste being

returned to users as compost or mulch. This

can be done by individuals at home, or by collection, comporting, and redistribution of

such waste as compost and mulch, as is practiced in some communities.

Technical Characteristics of the

Materials System

The flow of materials through the materials system obeys certain physical laws.

Matter is neither created nor destroyed. Its

physical and chemical form, however, can

undergo change, and some matter is lost to

the environment as it moves through the system. In addition, energy is needed to drive the

flow of materials through the system.
32 ● Materials and Energy From Municipal Waste

These physical laws imply that (i) some new

materials must be acquired to make up for

any losses; (ii) there will always be some

residuals left as a result of the materials

flow; and (iii) in principle, all materials can

be accounted for as they flow through the system. This means that in either a static or a

growing economy in which there is no technological change, recycled materials can satisfy

only part of the need for materials. Furthermore, regardless of the effectiveness of the

materials and energy recovery system used,

some residual SW will always require disposal.

As materials move through the system from

acquisition to disposal, it becomes increasingly difficult to recover, recycle, or reuse them.

They may become part of manufactured

goods in which they are firmly combined with

other materials and thus not recoverable

unless products are designed to facilitate

reuse and recycling. Materials may also become so widely dispersed that they are essentially irretrievable. Paint pigments, chrome

plating, and copper wire in automobiles, for

example, cannot be recovered economically,

if at all.

The technologies needed to move materials

along each of the six recycle pathways shown

in figure 2 are currently at different stages of

development. This reflects the level of historic interest in each recycling method, the

different states of the scientific knowledge

base necessary to develop such technology,

and the differing levels of technical difficulty

presented by each recycling approach. For

example, the technologies needed to reuse

beverage bottles reached their current stage

of development years ago. Modern engineering and management methods could probably

improve them significantly. Yet economic interest in improving such systems over the last

20 years has not been sufficient to stimulate

the necessary applied research. As another

example, currently large sums of money and

considerable technical talent are being devoted to developing, demonstrating, and improving methods for the challenging task of

separating SW into useful components.

The connections between materials flows

and energy consumption are neither simple

nor obvious. On the one hand, combustion of

SW is often cited as a potential energy

source. On the other hand, recycling or reuse

of some of the combustible components of

SW such as paper or plastic may conserve

more energy than would have been produced

by burning them. Also, while the production

of materials consumes energy, carefully designed energy-conserving structures or machines may use more materials than would be

used in alternative designs that consume

more energy. In these as well as in other

cases, the relationship between materials

and energy must be carefully examined—no

general principle of co-conservation exists.

Some resource recovery, recycling, and

reuse options may employ technologies that

are more sophisticated than others. This is an

insufficient reason to justify orientation of

public policy toward the adoption of either

“high” or “low” technology approaches. The

various technical approaches to resource recovery, recycling, and reuse may be mutually

supportive and compatible. Thus, the wisest

policy may be to allow for the choice of a mix

of approaches based on technical capabilities, economic costs, and political realities.

Economic Characteristics of the

Materials System

The flow of materials in the materials system is influenced by economic forces, as well

as by other factors such as technological possibilities. An overview of the economic nature

of the materials system, including forces created by existing Government policies, can

highlight opportunities for public policy initiatives in the resource recovery, recycling,

and reuse area. An understanding of the economics of the materials system is also useful

in identifying and analyzing the implications

for the various parts of the system of changes

in one or another of its parts.

A fundamental principle of market economics applicable to the materials system is

that there is a tendency in the short run and a
h, 2—introduction and Framework for Analysis ● 3 3

much stronger tendency in the long run for

the buyers and sellers of materials to respond

to prices, costs, and profitability considerations. For example, all other things being

equal, consumers will purchase the cheapest

of two or more products, and producers will

incorporate the lowest priced materials in

their products. The significance of this economic principle is that economic incentives

such as taxes, charges, deposits, subsidies,

depletion allowances, and the like can influence the flow of materials through the system.

A number of specific observations about

the behavior of the materials system follow

from economic principles:

1.

2.

3.

4.

The rates of flow of each material between various stages in the materials

system depend on the material’s price;

the prices of all other materials, goods,

and services in the economy; the level of

technical knowledge; prior capital investments; and consumer demands.

Consumer demands for materials ultimately depend on consumer tastes.

These can change to reflect changing

economic, political, moral, and spiritual

values.

The demand for materials is largely derived from the demand for the goods that

are made from them. Since material

costs are usually a small fraction of the

costs of final goods, the demand for a

material is often relatively insensitive to

a change in its price in the short run.

Over longer periods of time, material demand will change as producers adjust to

changing prices by investing in new capital equipment designed to use less expensive or more available material inputs.

A host of existing Government programs

affect the costs and relative prices of

materials and thus influence their rates

of flow in the materials system. Such

programs as income and property taxes,

environmental regulations, and various

5,

64

subsidies may be intended to accomplish

other social goals and may shift the patterns of materials flow only as side effects.

A variety of direct and indirect subsidies

that tend to reduce material costs are

listed in table 6. Such subsidies, whose

benefits accrue both to the materials industries and to users of materials, are

designed to accomplish various public

purposes. Their consequence, however,

is that not all the costs of the production

and use of materials are reflected in

their market prices.

The primary materials acquisition and

processing industries are capital-intensive with large fixed costs of operation.

At the same time, the demand for basic

materials varies strongly with the general state of the economy. To avoid the

burden of paying high fixed costs in periods of low demand, the basic materials

industries try to meet peak demands by

using more scrap raw materials. As a

result, the demand for secondary materials fluctuates and is highest when

overall materials demand is high. FurTable 6.—Selected Subsidies in the

Materials System

. — .

Direct subsidies

—percentage depletion allowance for virgin minerals

—capital gains treatment of timber income

— accelerated depreciation for capital investments

—tax credits for investment in new capital equipment

—tax deductions for interest payments

Indirect subsidies

— royalty-free access to virgin materials on public lands

—Government funding for highway construction and

support for railroad operations

—differential freight rates for various materials

—free use of domestic waterways

—educational benefits for training of professional and

skilled labor

—Government R&D on materials production and use

— forest product R&D and technical assistance

— low-cost use of clean air and water

—low-cost use of worker health and safety

–Government production of geological and mapping

data

SOURCE Office of Technology Assessment “-
34 . Materials and Energy From Municipal Waste

thermore, in periods of high economic

activity and consequent high secondary

materials demand, prices for secondary

materials rise. Thus, scrap demand appears to increase with its price, when, in

fact, its price increases with demand.

One implication of these observations is

that policies designed to stimulate the

demand for scrap are likely to be more

effective in assisting resource recovery,

recycling, and reuse than are policies

designed to increase the supply of scrap.

7. In most communities, consumers pay

uniform charges for solid waste collection and disposal, or such costs are met

by local property taxes. In either case,

there is less incentive to avoid waste

disposal or to seek recycling or reuse

alternatives than there would be if full

collection and disposal costs were paid

for each discarded item.

8. The social costs of litter (collection, esthetic loss, personal and wildlife injury,

machine damage, law enforcement) are

higher than the cost to the litterer of

proper disposal. Therefore, policies that

provide incentives to avoid littering are

likely to be more cost effective than

those that provide for increased collection activity.

9. The economic system, which discounts

the future costs and benefits of current

actions, does not take into consideration

the long-run exhaustion of high-grade

natural resources as it would if the interests of future generations were taken

into account.

Institutional Characteristics of the

Materials System

In our society, the forces of economics and

the capabilities of technology are often constrained or enhanced by institutional influences arising from geography, historical development, tradition, political action, or other

exercise of power.

Some institutional factors are specific to

the materials system and may be readily susceptible to alteration in pursuit of the goals of

resource recovery, recycling, and reuse. An

example of this kind of institution is a design

specification that requires the use of virgin

materials when recycled materials might perform equally well.

Other institutional factors are parts of the

total cultural framework and are much less

susceptible to manipulation in the interest of

resource recovery, recycling, and reuse. An

example is the fragmented, overlapping system of local, regional, State, and Federal responsibilities for government. This system

tends to inhibit the adoption of efficient

methods for control of waste generation and

for management of wastes. It cannot, however, be significantly altered solely to accomplish these particular social purposes.

Table 7 lists selected institutional characteristics of the materials system. These have

been chosen to illustrate institutional barriers to resource recovery. Some serve important social purposes and should not be

changed to accommodate recycling. In such

cases, it may be better to add new institutions

or to adopt compensatory economic incentives. In other cases, institutional barriers

can be overcome by new legislation or regulation.

Some institutional characteristics of the

materials system could be equally classified

as economic. For example, historic investments in primary processing facilities designed to use virgin ore contribute to the large

size and vertical integration of virgin materials producers. This economic activity has

created an institutional barrier to recycling

postconsumer scrap. Some analysts have argued that many institutional forms, including

Government policies, have economic roots.

While the distinction may be somewhat arbitrary, it provides a useful part of the analytic

framework in later chapters.

Guidelines for the Analysis of

Policy Options

Several guidelines have been used to focus

the analysis of policy options. These guidelines, which reflect the diverse goals of our
Ch. 2—introduction and Framework for Analysis ● 35

Table 7.— Selected Institutional Characteristics

of the Materials System That Are Barriers to

Resource Recovery

— —

Industry structure and practice

—entrenched local interests in collection and outmoded

disposal methods for MSW

—local or national economic concentration in the

materials industries

—vertical integration in the virgin materials industries

— small size of secondary materials firms

—joint ownership of transportation and virgin materials

firms

—declining quality of some rail freight service

—fluctuations in secondary material demand and prices

—use of advertising and packaging as a means of product differential ion

Regulatory practices

— regulation of freight rates

— material design or purchase specifications that require

use of virgin materials

—electric utility rate regulation that discourages risktaking with nontraditional fuels

—limitations on interjurisdictional transfer and disposal

of wastes

—delay in promulgating environmental and occupational

standards for new resource recovery technologies

Government limitations

—limited enforceability of anti litter laws

—limited ability of the political process to respond to

tradeoffs between the loss of existing jobs and the

creation of new ones

—fragmented and overlapping nature of Government responsibiIity for waste problems

—difficulty of local government cooperation

—absence of technical and marketing skills in local governments

—limitations on local government participation in longterm contracts

SOURCE Office of Technology Assessment

society, provide a basis for illuminating the

tradeoffs among society’s goals that are required when a policy for resource recovery,

recycling, and reuse is adopted. The guidelines are:

1.

2.

3.

4.

5.

Technical, administrative, and political

feasibility;

Economic efficiency;

Equity and participation;

Ecological, national, and personal security; and

Diversity and complementarily.

In certain parts of this study these guidelines are used explicitly as criteria for the assessment of options. In other parts, they are

implicit in the discussion. In the following

paragraphs, the application of these guidelines to materials policy is outlined.

The technical, administrative, and political

feasibility guideline concerns the implementation and workability of a proposed policy. Is

the necessary technology available, or can it

be developed within a meaningful time

frame? Are the political interests alined in

such a way as to allow a reasonable chance

of adoption and implementation of the policy?

If adopted, can ways be found to administer a

policy at reasonable costs and without unduly

infringing on constitutional or traditional

freedoms of individuals or institutions? If all

these answers are “yes,” will the proposed

policy be effective in accomplishing its goals?

According to the economic efficiency

guideline, society as a whole is most benefited

when each resource is used in its highest and

best use. In an ideal market economy this is

approached when each activity bears its full

social costs and benefits, including externalities; when all producers and consumers are

completely informed; and when competition

exists. We do not live in such an ideal world,

however, and economic efficiency means that

the costs of a policy should not outweigh its

benefits and that the policy with the highest

benefit-to-cost ratio is most likely to be efficient. In the area of waste management, the

concept of efficiency is exemplified by the

“polluter pays” principle. (9)

The equity guideline requires that the costs

and benefits of using natural resources be

fairly distributed. Equity also extends to the

preservation of natural resources for future

generations. The best way to achieve equity

among generations, however, has yet to be

decided. Participation refers to the right of

citizens and their representatives to influence decisions that affect them and their heritage of nature’s resources. Participation by

affected citizens can help to achieve an equitable and acceptable resolution of conflicts.
36 Materials and Energy From Municipal Waste

To achieve ecological security for the

human species the cycles that underlie life on

this planet must be preserved. While not yet

fully understood, this appears to require

minimal disturbance of the air and water,

control of persistent hazardous materials,

preservation of plant and animal species, and

preservation of unique or genetically rich

ecosystems.

National security means maintenance of

the integrity of the United States as an independent nation-state. There is disagreement over what constitutes independence

and about how this goal is to be accomplished. In a world that features economic,

political, ecological, and spiritual interdependence, the proper design of a materials

policy to preserve national security is by no

means clear.

Personal security, in the context of materials policy, pertains to the preservation of private property and the protection of individuals against undue risk of personal harm

from the functioning of the materials system.

It includes the right to just compensation for

the sale of one’s labor or property as well as

the right to reasonable assurance against

health hazards from improper production,

use, or disposal of materials.

Options that allow for a variety of approaches to be used at the same time or at the

same place are often more desirable than

those that require using a single or uniform

approach. In solid waste management, differing local circumstances may make certain

solutions feasible in some places and unworkable in others. In some circumstances, a combination of approaches may work best. As

issues in resource recovery, recycling, and

reuse are brought to the national level, a

diversity of approaches will allow for adaptation to local situations. This will also increase

the chances that local experimentation may

discover better approaches.
Ch. 2—introduction and Framework for Analysis 37

References

1. U.S. Environmental Protection Agency, Office of Solid Waste Management Programs,

Resource Recovery and Waste Reduction,

Fourth Report to Congress, EPA Publication SW-600, Washington, D. C., U.S.

GPO, 1977, p.4.

Z. Ibid., p. xii.

3. U.S. Environmental Protection Agency,

EPA Activities Under the Resource Conservation and Recovery Act of 1976, Report

SW-663, February 1978, p,2.

4. Ibid., footnote 1, p. 18.

5. Ibid., footnote I, p. 17.

6. National Commission on Materials Policy,

Material Needs and the Environment Today and Tomorrow: Final Report, June

1973,

7. Presidential Proclamation: Administration

of Jimmy Carter, 1977. Nonfuel Minerals

Policy; Announcement of a Cabinet-Level

Interagency Study, Dec. 12, 1977.

8. Office of Technology Assessment, U.S. Congress, forthcoming report on Technical Options for Metals Conservation: Case Studies

of Eight Selected Metals and Seven

Selected Products, to be published in

mid-1979.

9. Organization for Economic Cooperation

and Development, The Polluter Pays Principle, OECD Publication 97-75-02-1, M a y

1975.
Chapter 3

The Marketability of

Recovered Resources:

Status and Policy Options

Contents

Page

Introduction. . . . . . . . . . . . . . . . . . . . . .. ..41

Questions and Issues Addressed in

This Chapter . . . . . . . . . . . . . . . . . . . . .41

Factors That Influence the Marketability

of Recovered Resources . . . . . . . . . . . .41

Quantities and Prices of Potentially

Recoverable Resources. . . . . . . . .......42

Recoverable Quantities Today . .......42

Current Prices of Recovered Resources .43

Future Quantities of Recoverable

Resources . . . . . . . . . . . . . . . . . . . . .. .44

Specifications for Recovered Resources. ..43

Origin Specifications for Source

Separated Materials. . . . . . ., . . . .. ..45

Composition Specifications for Materials

From Centralized Resource Recovery. .46

Page

Government’s Role in Setting Standards. 47

The Nature of Markets for Recovered

Resources , . . . . . . . . . . . . . . . . . .......48

Materials Markets. . . . . . . . . . . .......48

Ferrous Metals . . . . . . . . . . . . . . . .. .48

Ah.uninum. . . . . . . . . . . . . . . . . . . . . ..48

Mixed Nonferrous Metals. . . .......48

Glass . . . . . . . . . . . . . . . . . . . .......48

Paper . . . . . . . . . . . . . . . . . . . . .. ....49

Aggregate . . . . . . . . . . . . . . . . . . . . ..49

Impacts of Recovered Materials on

Established Secondary Materials

Markets .......................................... , , , , , ● 50

Energy Markets. . . . . . . . . . . . . .......51

Refuse-Derived Fuel. . . . . . . . .......51

Steam. . . . . . . . . . . . . . . . . . . . . . . . . 52
Page

Electric Power. . . . . . . . . . . . .......52

Medium-Btu Gas From Pyrolysis. .. ..52

Low-Btu Gas From Pyrolysis . .......52

Liquid Fuel From Pyrolysis . . .......52

Impact of Recovered Energy on

Established Energy Markets. . .......53

Future Markets for Recovered

Materials and Energy . . . . . . . .......53

Government Policy and Market

Development for Recovered Resources. 53

Federal Procurement of Recovered

Resources. ... , . . . . . . . . . . .......53

Federal Stockpile for Recovered

Resources . . . . . . . . . . . . . . . .......54

Federal Support of R&DinUses

of Recovered Resources. . . . .......55

Railroad Freight Rates and Markets

for Recovered Materials. . . . . . . .......55

The Impact of Freight Rates on

Resource Recovery Revenues . .......55

Freight Rates and the Demand for

Recovered Materials. . . . . . . . .......56

A Comparison of FreightRates for

Virgin and Secondary Materials. .....57

Issues and Approach. . . . . . . .......57

Theoretical Bases for Railroad

Freight Rates . . . . . . . . . . . . .......58

Data indiscrimination . . . . . .......59

Impact of Freight Rate Adjustments on

Secondary Material Shipments by Rail.61

Findings on the Marketability of

Recovered Resources . . . . . . . . . .......63

References. . . . . . . . . . . . . . . . . . . .......65

Table No. Page

9.

10.

11.

12.

13.

Alternative Energy FormsRecoverable

From MSW Using Centralized Resource

Recovery . . . . . . . . . . . . . . . . . .......43

Materials RecoverableUsing Separate

Collection . . . . . . . . . . . . . . . . . .......44

Typical Prices and Gross Revenues for

Recovered Resources Delivered to

Market . . . . . . . . . . . . . . . . . . . .......44

Effect of Transportation Costs on

Potential Revenues From Recovered

Resources . . . . . . . . . . . . . . . . ....,..46

Projections of the Future Content

of Recoverable Resources in MSW

Nation wide . . . . . . . . . . . . . . . . . . . . . .46

14. A Comparison of Materials Content of

MSW to Existing Scrap Markets. . . . . . . . . . . . . . . . ...51

15. Estimated Scrap and Transport

Demand Elasticities in the Short Run.

16. National Average Railroad Costs

and Revenues. . . . . . . . . . . . . . . . . . . .

17. Railroad Revenues and Product

Values . . . . . . . . . . . . . . . . . . . . . . . . .

18. Costs of Virgin and SecondaryRaw

Materials Required to Produce 1 Ton

of Equivalent Output—1975 Dollars. .

19. Summary of Findingson Freight Rate

Discrimination. . . . . . . . . . . . . . . . . . .

20. EstimatedImpactofFreight Rate

AdjustmentsonSecondaryMaterial

Shipments and Railroad Revenues ....

Figures

Tables Figure No.

. 57

● 59

● 60

● 61

. 61

.62

Page

Table No. Page

8, Materials Recoverable Using

Centralized Resource Recovery .. ....42

3. Representative Annual Average

Scrap Prices . . . . . . . . . . . . . . .......45

4. Representative Annual Scrap

Consumption . . . . . . . . . . . . . . .......50
Chapter 3

The Marketability of Recovered

Resources: Status and Policy Options

Introduction

Questions and Issues Addressed in

This Chapter

Materials and energy recovered from municipal solid waste (MSW) compete for

markets with secondary materials from other

sources, as well as with primary or virgin materials, The objectives of this chapter are to

determine: (i) whether markets would exist

for recovered materials and energy from

MSW if resource recovery were implemented

widely; (ii) what factors, including governmental policies, influence the marketability of

recovered resources: and (iii) what actions

the Federal Government might reasonably

take to remove barriers to marketing recovered resources or to stimulate their marketing.

This chapter examines markets for resources recovered in both centralized resource recovery plants and separate collection programs. The emphasis is on the current status of markets, but some attention is

given to the marketability of resources over

the next 15 years. Both the role and the status

of specifications for recovered resources are

discussed. The significance of transportation

costs is examined, and the impact of railroad

freight rate adjustments on the shipment and

sale of recycled materials is assessed.

Factors That Influence the Marketability y

of Recovered Resources

The marketability of a material or energy

product recovered from MSW is influenced

by a number of factors. These include: (i) the

demand for such a product; (ii) its quality, including the degree to which it meets established specifications: (iii) the cost of shipping

it to a customer; (iv) the price of an alternative material or energy source: and (v) any additional manufacturing costs due to using a

recovered rather than a virgin product. Inadequacies or uncertainties in any of these

factors can impair the marketability of a recovered resource.

Government policies may modify these influences, One example is that the demand for

recovered materials may be influenced by

Government subsidies to users of recycled

materials or by taxes imposed on virgin materials. (See chapter 8.) Another is that freight

rates for materials shipped by rail, which are

established under ruIes set by the Interstate

Commerce Commission [ICC). affect the net

income available to recyclers.

The newness of many recovered materials

and energy products coupled with the lack of

accumulated experience with them makes potential industrial customers less ready to purchase them. The uncertainty about the technical performance of these products makes

them an economic risk for potential buyers.

This can only be overcome through the establishment of adequate performance or composition standards based on and accompanied

by a history of satisfactory industrial use.

Demonstration of the laboratory or pilot-scale

technical feasibility of using recovered resources is often not sufficient to convince a

plant manager who fears that his plant’s ability to produce might be disrupted by raw materials or fuels of variable or substandard

quality. This kind of concern appears

throughout this study in connection with po41
42 . Materials and Energy From Municipal waste

tential users of recovered paper, glass, ferrous metal, aluminum, and various forms of

energy. The marketability of recovered resources is also uncertain because their prices

and consumption fluctuate widely over time.

This is particularly true for ferrous scrap,

paper, and aluminum. Therefore, the revenues from resource recovery are uncertain.

Contracts between sellers and buyers can be

designed to aid in reducing these fluctuations, and Government actions have been suggested to help stabilize markets.

Quantities and Prices of Potentially

Recoverable Resources

Recoverable Quantities Today

T

ables 3 and 4 show breakdowns of the

average composition of MSW by material and by product for 1975, the most recent

year for which such data are available.

These two breakdowns can be used to estimate the quantities of recoverable materials

and energy in MSW using either the centralized resource recovery or the separate collection approach. Since neither is fully effective

in recovering all the potentially recoverable

waste, the actual amount recoverable per ton

is less than the total content in the waste.

Furthermore, since it is not likely that the entire Nation will adopt resource recovery, the

amounts of materials and energy that are

likely to be recovered nationwide are considerably less than the maximum potential.

Table 8 summarizes data on the materials

recoverable from MSW by separating them

from mixed wastes in centralized resource

recovery plants. From a typical ton of MSW,

as much as 140 pounds of iron and steel, 96

pounds of glass, 8 pounds of aluminum, and 2

pounds of other nonferrous metals are potentially recoverable using technology that has

reached at least the pilot plant stage. Only

the iron and steel are recoverable using commercially available technology. (See chapter

5.) If these materials were recovered from all

the Nation’s wastes, they could have supplied

up to one-third of the Nation’s glass needs

and one-tenth of the aluminum and iron and

steel usages in 1975.

Table 9 shows the amounts of alternative

types of energy that could be recovered from

an average ton of MSW. Dry fuel, or refusederived fuel (RDF), is obtained by separating

raw waste into combustible and noncombustible fractions, as in Milwaukee, Wis., and

Ames, Iowa. Steam is produced by waterwall

incineration as in Saugus, Mass., or by smallscale incineration as in North Little Rock,

Ark. Medium Btu gas is the product of the

Union Carbide Purox process, which has

been pilot tested. Electric power would be

produced by using steam from a waterwall incinerator to drive a turbine-generator, or by

burning RDF or gas in a conventional powerplant. (Factors to be considered in choosing

the technology to be used and the form of

energy produced are discussed in chapters 5

and 6.)

Table 8.—Materials Recoverable Using Centralized Resource Recovery

.— — — —

Maximum

Maximum amount recoverable

Typical amount recoverable as a percent

MSW contenta recoverable nationwidec of total material

Material type — (weight 0/~) —— (Ibslton of MSW) (millions tons/yr) use in 1975d —. — — —— — — -. —

Iron and steel . . . . . . . . . . . . . . . . . . . . 8.3 140 9.5 10

Glass. . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 96 33

Aluminum . . . . . . . . . . . . . . . . . . . . . . . 0.7 8 $ ; 11

Other nonferrous metal. . . . . . . . . . . . 0.3 2 0.1 1.3

a

Fror n table 3

— -. — -. — — — —

bFrom RTC working paper One (l), considering typical recovery efflClenCles

cBased on 136 I million tons of MSW In 1975 and typical amOuflt S recoverable Per ton

dBased on total materials use {n IS17Ei In milllon tons as follows Iron and steel, 951, glass, 200, alumtnum, 46, and other nOnferrOLIS metal S, 80
—

Ch. 3—The Marketability of Recovered Resources: Status and Policy Options ● 43

Table 9.—Alternative Energy Forms Recoverable

From MSW Using Centralized Resource Recovery

Typical amount recoverable —

Energy form per ton of MSW’

Dry fuel (RDF) . . . . . . 9.0 million Btub

Steam. . . . . . . . . . . . . 5,700 poundsc

Medium-Btu gas . . . . 6 million Btud

Electricity. . . . . . . . . . 400 kWhC

‘En~~gy forms are mU!LIa/ly excluslve.

bl,450 pounds of RDF at 6,200 Btu per pound Source RTC (1)

cSource RTC (1)

ds ource Black and Veatch. and Franklin Associates, Lt’d (2)

The energy forms in table 9 represent

alternative uses of the same MSW. If all the

MSW were used to produce RDF, approximately 1.2 x 10’5 Btu or 1.2 Quads* of energy

would be produced annually. This is equivalent to about 1.7 percent of the total annual

use of energy in recent years in the United

States.

Separate collection programs could potentially recover a different fraction of the

materials in MSW. Table 10 illustrates the

MSW content of major source separable materials, along with estimates of the amounts

recoverable per ton of waste and per year, if

50 percent of each material were recovered.

This table also shows for each material the

percentage of its total use nationwide that

might be met by separately collected waste.

Current Prices of Recovered Resources

Table 11 summarizes OTA estimates of the

ranges of delivered prices for recovered resources, based on various industry and Government sources. Since experience is limited,

these prices, which are based for the most

part on the judgment of informed persons,

must be considered somewhat speculative.

As shown in figure 3, the annually averaged

prices for recovered paper, iron and steel,

and aluminum fluctuate widely over time.

Monthly swings are also dramatic from time

to time. (The metallic commodities for which

prices are shown in figure 3 are similar, but

not identical, to those recoverable from

MSW.)

*One Quad equals 10 Btu or 1.055 exajoules.

Table 11 also shows estimates of the potential revenues from each component of waste,

based on recovery of the “typical amounts

recoverable” taken from tables 8, 9, and 10.

The reader is cautioned that prices and revenues at any particular plant and time may differ considerably from these. They are intended only to be illustrative of average conditions nationwide. The waste stream composition, which determines the amounts recoverable, depends on such local conditions as

the amount and type of economic activity in a

region, the economic status of its residents,

the climate, seasonal changes in population,

the nature of the beverage market, and the

existence of source separation activities or

beverage container deposit requirements.

Usually, long-term contracts with product

purchasers are needed to sell recovered

products and to obtain financing for centralized resource recovery plants. The prices

of energy products may be set to follow the

price of the fuel being displaced; as prices for

such fuels as coal or oil rise, waste-derived

energy becomes increasingly valuable. For

certain kinds of energy products, assurance

of uninterrupted supply to a purchaser may

require installation of multiple processing

lines, substantial fuel storage, or backup conventional energy systems. (See chapter 5.) In

the absence of long-term contracts, material

product revenues will generally parallel

scrap prices, which fluctuate with short-term

market requirements. Consequently, longterm contracts for the sale of recovered materials from MSW may be difficult to obtain. It

is a common practice to arrange contracts to

sell at no lower than a floor price, with a

price above the floor set as a fraction of the

prevailing market price of scrap,

Costs of shipping recovered products to

market must be deducted from potential revenue estimates. Table 12 shows the impact of

railroad freight charges on potential revenues from the sale of recovered materials.

For ferrous metals, glass, newspapers, and

solid aggregate, freight charges can be of the

same order as the price that users are willing

to pay for the recovered materials, even for
44 ● Materials and Energy From Municipal Waste

Table. 11.-Typical Prices and Gross Revenues for Recovered Resoumaa Delivered to Market

Potential gross revenueb

Resource type Delivered Price (Won of MSW

From centralized resource recovery

iron and steel . . . . . . . . . . . . . . . . . . . . 15-40 $/ton 1.05-2.80

Glass . . . . . . . . . . . . . . . . . . . . . . . . . . . 1020 $/ton 0.48-0.98

Aluminurn ..................... $/ton

Other nonferous metal . . . . . . . . . . . . I0000O $/ton 0.10-020

Dry fuel (RDF) . . . . . . . . . . . . . . . . . . . . 0.501.00 $ 4.50-9.00

Steam . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50-3,00 8.55-17.10

Medium-Btu gas.............. .,.. 1.50=3.00 9.00=18.00

Electricity . . . . . . . . . . . . . . . . . . . . . . 1.6=3.5 6.00=14.00

From source separation

Newspaper . . . . . . . . . . . . . . . . . . . . . . 20=45 $/ton 0.88-1.46

Books and magazines . . . . . . . . . . . . . 8-20 $/ton 0.08-0.23

Corrugated paper . . . . . . . . . . . . . . . . . 15=45 $/ton 0.702.07

Office paper . . . . . . . . . . . . . . . . . . . . . 75-120 $/ton 1.43-2.28

Steel containers . . . . . . . . . . . . . . . . . . 2040 $/ton 0.40-0.80

Glass containers . . . . . . . . . . . . . . . . . 20-30 $/ton 0.92-1.38

Aluminum containers . . . . . . . . . . . . . 300 $/ton 0.80

%ource: OTAeatlmat@a trom vartowhw%atry eouroa%

b~~ on !y~cal a~unta reeovarable. Wet be reduced to amount for W@Coato.

cWhofeaafe price%

‘Color sortad.

short hauls. Thus, the level at which freight

rates are set influences whether some lowvalued recovered products such as glass can

be marketed at all.

Future Quantities of Recoverable

Resources

By making a few simple assumptions about

future population growth, per capita rates of

waste generation, and the future composition

of MSW, it is possible to project the total

amounts of potentially recoverable materials

and fuels in MSW on a nationwide basis. Resource Technology Corporation (RTC) made

such projections for OTA in a report completed in 1976.(1)

RTC projected waste quantities for 1980

and 1995 using Bureau of the Census population projections, projections by the Environmental Protection Agency (EPA) of waste generation rates, and MSW composition the

same as that in 1973. These gave total MSW
Ch. 3— The Marketability of Recovered Resources: Status and Policy Options ● 45

3.0

2.0

10

0

Figure 3.— Representative Annual Average

Scrap Prices

Cast Aluminum Scrap ($IOO/ton)

SOURCE Metal Statistics (3)

No 1 News (price Index, 1967 = 100)

SOURCE: Bureau of Labor Statistics (4)

’

I

Composite Steel Scrap ($100/ton)

SOURCE: Metal Statistics (3)

I I 1 I I

1950 1955 1960 1965 1970 1975

generation rates of 175 million and 250 million tons per year in 1980 and 1995 respectively. These projections are summarized in

table 13. In each case estimates of recoverable resources take into account the anticipated technical recovery efficiencies and

assume that recovery is implemented

throughout the Nation, The technology used

in each case is centralized resource recovery,

except that paper is assumed to be recovered

by source separation.

Clearly, these estimates are sensitive to the

assumptions used in making them. In particular, they are based on EPA estimates of per

capita MSW generation rates of 4,28 pounds

per day in 1980 and 5.27 in 1995 (as compared with 3.5 pounds per person per day in

1975). Many observers believe that these

figures are too high in view of the recent

rapid increases in the prices of materials

generally, which will cause adoption of less

materials-intensive products and lower discards. Furthermore, since it is unlikely that

resource recovery will be implemented nationwide, the actual recovery of materials

will be much lower than the potential shown

in table 13.

Specifications for Recovered

Resources

s

pacifications describe the origin, performance, or composition of a product. From

a policy perspective specifications serve

three important purposes. First, they serve as

an accepted, uniform basis for claims of performance or quality of products. Such a basis

helps the buyers and sellers of those products

transact business with adequate knowledge

of their characteristics. Second, they serve as

a uniform basis for Government oversight of

such transactions for the purpose of achieving certain policy goals, such as protection of

consumer health and safety or protection of

consumers against fraudulent claims of product quality. Third, specifications can be designed to inhibit the adoption of new or substitute products and to protect markets for

existing ones. This section reviews the status

of private and public efforts to establish

specifications to guide the sale of recovered

materials and energy.

Origin Specifications for Source

Separated Materials*

As noted by Alter,(6) specifications for recycled materials have existed for many

years. They have been developed by trade

associations such as the National Association

of Recycling Industries (NARI) and the Institute of Scrap Iron and Steel (ISIS). These

standards reflect long established practices

in the secondary materials industries and are

based largely on the origin of each grade of

recycled material.

Established origin specifications are generally appropriate and adequate to cover trade

in paper products and metals recovered in

*This section draws heavily on a paper by Alter.(6)
—.. ——

46 ● Materia/s and Energy From Municipal waste

Table 12.—Effect of Transportation Costs on Potential Revenues From Recovered Resources

($/input ton)

——— ———— —-. —————.—————

Average railroad freight

——— —

Potential Potential net revenues at

rates for various revenue from average prices for various

transport distances recovered resources transport distances

($/ton) at the marketb

——— ($/ton of MSW)

Under 200 200-400 -

- 400-600 Under 200 200-400 400-600

Product miIes miles miles –– ($/ton of MSW) miIes miles miles

Iron and-steel .:. 6.67- 10.39 ‘

- 75.9 3 1.93 –

1.46 ‘- ‘

- 1.20 ‘- 0.81

Aluminum . . . . . 8.91 14.35 19.07 1.20 1.16 1.14 1.12

Glass . . . . . . . . . 9.19 11.82 14.29 0.72 0.28 0.15 0.03

Wastepaper . . . . 6.27 9.45 11.58 1 .00c 0.84 0.76 0.71

Nonferrous . . . . — — — 0.15 o.14d o.14d o.13~

Aggregate . . . . . — — — 0.05 0 0 0

Total . . . . . . . . ~ – – — --‘- —-- 5.25- - – - ‘

-

‘ - 4.08 -

3.59 ‘-

3.00

—— ~SOuic’e- MOs~m~n-AsSOclates~ WorkIn-g Paper Two (5) (Rates for Octobe~1975-) — — – ‘

– —

— -— —

bBased on dellvered prices In table 11 for materials recovered in centralized facilities

cBased on 50 percent recovery of newsprint only fOr sale at $40/tOn

dAssumes freight rate same as for scraP alumlnum

Table 13.— Projections of the Future Content of

Recoverable Resources in MSW Nationwide

Materials

. .

Total amount-recoverable-

(million tons)

-.

Waste component 1980 - ‘

- 1995 –

— — —

Iron and steel . . . . . . . . . . . . . . . . . . . . 12 -

18

Glass. . . . . . . . . . . . . . . . . . . . . . . . . . 8 12

Aluminum. . . . . . . . . . . . . . . . . . . . . 0.7 1.0

Paper (all types) . . . . . . . .

{

1 1 a

. . . . . . . . . 1 6 a

Energy Alternatives

. — - .

ota[amount recoverable

Energy form 1980 ‘1995 ‘-

Dry fuel (RDF) (million tons) . . . . . . . 130 ‘-

180

Steam (billion pounds) . . . . . . . . . . . 1,000 1,400

Medium-Btu gas (trillion Btu) . . . . . . 1,100 1,600

Electric power (billion kWh) . . . . . . . 70 100

— —.

a-At a 16 5.p~rc~n[re~o~ery rate using sour;e ZeParatlon

bAt a zs.percerlt recovery rate using source Separation

SOURCE RTC(l) Based on recovery In centralized resource recovery plants

and on the amounts and composition of future waste noted In text

separate collection programs. For example,

NARI has established standards for several

grades of paper including “#2 Mixed Paper, ”

“#I News,” “Corrugated Containers,” “#I

Sorted White Ledger, ” and “Manilla Tabulating Cards,’’(7) as well as for “Old Can Stock”

(used aluminum cans).(8) ISIS maintains

standards for “Shredded Tin Cans for Remelting.’’(9)

There are no similar origin specifications

for separately collected glass. Instead, glass

manufacturers set standards for acceptance

of glass cullet based on color (usually requiring color sorting) and on low levels of contamination by metals, organic matter, and refractory particles that do not melt in the glass

furnace. Since stones can weaken a container considerably, it is quite reasonable

that the bottle industries should wish to avoid

them.

Composition Specifications for Materials

From Centralized Resource Recovery

Origin specifications are unlikely to be satisfactory for materials recovered from mixed

MSW in centralized resource recovery plants

owing to the variability in the composition of

waste and in the performance of the various

recovery methods. * Committee E-38 of the

American Society for Testing and Materials

(ASTM) was established in 1974 to set con-

*The National Association of Recycling IndUStries

(NARI) has published a special origin specification for

“Mixed Nonferrous Metals From Resource Recovery

Facilities.’’(8) However, there has been no commercial

trade in such a product to date. The Institute of Scrap

iron and Steel (ISIS) has published an origin specification for “Incinerator Bundles” made up of tin can scrap

that has been processed through a recognized garbage

incinerator.(9)
Ch. 3—The Marketability of Recovered Resources: Status and Policy Options . 47

sensus standards for products recovered

from mixed MSW based on chemical composition rather than on origin. It is in the

process of developing standards for the following products from mixed MSW: paper,

steel, aluminum, glass, and RDF, Specifications are expected to be completed during

1979 for ferrous metal, aluminum, and glass

“fines” recovered in the froth flotation process.(11)

ASTM Committee E-38 involves both potential producers and users of covered resources

as well as those having a general interest in

them. Through an elaborate process of discussion, analysis, and consensus-building,

proposals for specifications will eventually

be adopted. The intent is that specifications

should be realistic in terms both of what can

be recovered using available technology and

of what purchasers can effectively use, One

way to arrive at an effective compromise between producers and users that is being examined by the Committee is to define several

grades for each recovered product.

In the absence of established specifications, the prices and specifications for products from a particular resource recovery

project are adjusted to account for differences in product contamination and for quantities available for purchase. These prices

are normally adjusted further as sufficient

quantities of products are tested in commercial applications. Specifications are unlikely

to be necessary for plants recovering steam

or hot water. Specifications for medium-Btu

gas or electric power will probably be negotiated among producers and users, based on

established specifications for those products

from conventional sources,

Government’s Role in Setting Standards

Traditionally, development and adoption of

product specifications in the United States

have been largely voluntary activities of commercial interests. Consumers have played a

small, or negligible, role in this process. The

Government has been involved in several

ways including: 1) participation by Government employees in voluntary standards organizations, 2) adoption by regulatory agencies

of certain voluntary standards as mandatory,

3) support of research on testing methods and

procedures, 4) development, promulgation,

and enforcement of mandatory standards for

specific purposes such as weights and measures, 5) establishment of unilateral standards

for its own purchases of products, and 6)

coordination of U.S. participation in international standard-setting bodies.

Under current programs and plans, most

material and energy products recovered from

MSW by source separation or by centralized

resource recovery are destined first for sale

to commercial firms for further processing.

Thus, consumer protection goals of product

specifications are of little direct interest in

this context. Attention has been addressed

therefore, to the role of specifications in facilitating commercial transactions. *

Pursuant to section 5002 of the Resource

Conservation and Recovery Act of 1976, the

National Bureau of Standards (NBS) was

made responsible for publication by October

21, 1978, of guidelines for the development of

specifications for the classification of recovered materials. The Bureau is to work in conjunction with the national voluntary standards organizations. However, no funds have

been appropriated to NBS for this work.

EPA has supported the development of consensus standards through a contract to

ASTM for the activities of Committee E-38 on

Resource Recovery.

In view of the current existence or development of specifications for recovered products, there appears to be no need for additional Federal involvement in supporting,

establishing, or enforcing specifications for

recovered resources. Activities currently

underway in the private and public sectors

appear to be addressing those areas in which

current specifications or their absence are

*Products recovered for reuse, such as beverage

containers, and newspapers recovered to produce celIulosic thermal insulation do present issues of consumer protection.
48 . Material and Energy From Municipal Waste

barriers to recycling. Until further experience with centralized resource recovery is

accumulated, Government efforts to accelerate standards development are probably

unnecessary.

The Nature of Markets for

Recovered Resources

Materials Markets

FERROUS METALS

F

errous metals include iron and steel scrap

recovered as tin cans in separate collection programs, as magnetic materials from

front-end separation in resource recovery

plants producing RDF or pyrolysis gas, or as

magnetic materials recovered from incinerator ash, Principal markets for these products are tin recovery, copper precipitation,

the ferroalloy and steel remelt industries, and

foundries producing gray and ductile iron.

Tin cans, if not crushed, contain sufficient

tin to be of economic interest to detinning

plants for tin recovery. They can also be sacrificed to recover copper in copper precipitation. The steel industry will use cans and

other nonincinerated ferrous metals if they

are clean, crushed, and baled to sufficient

density. This requirement, however, is incompatible with the needs of detinners. Contamination by nonferrous metals and organic

substances must be low for uses requiring

remelting.

Markets for incinerated ferrous metals are

limited both because incineration alloys tin

and copper with the steel and because it oxidizes and contaminates it with ash and

molten glass. This contamination renders incinerated ferrous metal unacceptable to

detinners. The ferroalloy industry can use

clean, shredded incinerated ferrous. Foundries are also potential users. Incinerated ferrous recovered from mixed MSW has not

been commercially processed for recycling in

the United States.

ALUMINUM

Historically, the primary aluminum industry has used scrap generated within the plant

and has used scrap ingots purchased from

the secondary aluminum industry. More recently, the primary aluminum industry has

been purchasing clean aluminum beverage

containers from separate collection programs. These are remelted and used in the

production of various aluminum products.

Contaminants in aluminum recovered from

mixed MSW such as copper, magnesium, silicon, glass, and iron may limit its use for beverage containers, but it may be possible to

use such waste aluminum in lower grade

products such as castings. There has not as

yet been any commercial experience using

aluminum recovered from mixed MSW. It is

anticipated that the aluminum industry will

have sufficient capacity to use all of the aluminum reclaimable from MSW in the foreseeable future.

MIXED NONFERROUS METALS

Mixed nonferrous metals recoverable

through front-end separation in RDF or pyrolysis plants would include copper, zinc, lead,

and nonmagnetic stainless steel. This waste

portion may be of interest to the scrap processors who currently process similar material reclaimed in some automobile shredders. If

it can be cleaned and separated at reasonable cost, it would bring a price of perhaps

$100 to $200 per ton. Since such material has

only been reclaimed in very small quantities

in research facilities, its marketability cannot

be assessed.

GLASS

Nearly all of the glass in MSW comes from

containers, including beverage bottles. It can

be recovered in several forms: as color-mixed

or color-sorted glass from separate collection

programs or from nonreturnable bottles recovered through beverage container deposit

programs: as color-sorted broken glass, or

“cullet,” recovered using optical sorting techniques in centralized resource recovery

plants; or as color-mixed broken glass, or
Ch. 3—The Marketability of Recovered Resources: Status and Po/icy Options 49

“fines,” recovered using the froth flotation

process in centralized plants,

Recovered glass can be used to make new

bottles if it is clean and free of refractory

particles, or “stones. ” Color-sorting is required to make new clear or “flint” glass.

Color-mixed recovered glass can be used as

part of the raw materials in the manufacture

of green or brown bottles,

Lower quality uses for waste glass have

been tried, such as for floor paving, for highway and construction aggregate, for wallboard, and for insulation. While these are all

technically successful uses for recovered

glass, it must compete with very inexpensive

alternatives such as sand and gravel, Therefore, its marketability is expected to be

limited,

Recently, bottle manufacturers have developed greater interest in using recovered glass

for three reasons.(12) First, in glass manufacture less energy is required to use waste glass

than to use virgin raw materials because the

melting temperature of the waste glass is

lower, This has proven of interest to the industry, which uses a large amount of natural

gas as a fuel. Second, air pollution from glassmaking is considerably reduced when waste

glass is used as a raw material, allowing

some plants to meet particulate emission

standards without costly controls. Third, experience has begun to accumulate in using

over 50 percent cullet as raw material without operating problems, whereas previous experience had suggested an upper limit of 15

to zo percent. The biggest problem in using

recovered glass remains keeping metallic and

refractory contamination very low,

only a very small portion of the potentially

recoverable glass is currently being recycled

nationwide, but activity is rapidly growing,

especially in the Northeast. The Northeast

region has a large number of bottle production plants, great interest in air pollution control and energy conservation, three States

with beverage container deposit laws (Vermont, Maine, and Connecticut), and a considerable number of municipal separate collection programs. All of these factors work to

the advantage of glass recycling. Data in a recent EPA report suggest that in the Northeast

on the order of 50,000 to 100,000 tons of glass

is being recycled each year from postconsumer sources.

PAPER

For many years the United States has recycled a significant part of all postconsumer

wastepaper. For 1978 the American Paper

Institute estimates that the equivalent of 24

percent of all paper and paperboard products were collected—a total of 16.7 million

tons.(14) Of this amount, 1.6 million tons were

exported, and 14.8 million tons were used to

produce new paper and paperboard products. The widely discussed insulation market

used only 0.15 million tons, and other uses

were 0.14 million tons. *

Relatively recently commercial processes

have been developed that are capable of producing new newsprint from 100 percent recycled newspapers. This makes it possible to recycle to a higher order of use than the older,

established uses of waste newspaper for construction paper, paperboard, and boxes. The

newsprint market is more stable than the

older markets, which tend to fluctuate with

the business cycle. As the recycled newsprint

market grows, therefore, it should serve to

stabilize the overall markets for recovered

paper. The Garden State Paper Company of

Richmond, Va., currently operates newsprint

recycling mills in Garfield, N. J.; Pomona,

Calif.; Alsip, Ill.; and Dublin, Ga. These have

a combined capacity to consume an average

of 700,000 tons of waste newspaper per

year.(15) Two other firms use lesser amounts

as part of their raw material inputs, totaling

about 100,000 tons per year.

Separate collection programs (commercial,

industrial, and residential) are the only sig-

*See chapter 2 regarding the Emergency Interim

Consumer Product Safety Standard Act of 1978 that

was passed in response to concern for the fire hazards

of inadequately treated cellulosic insulation made from

old newspapers.
50 ● Materials and Energy From Municipal Waste

nificant source of postconsumer recovered

paper today. No commercially available centralized resource recovery process can recover paper fiber suitable for recycling as paper.

All existing methods treat the paper in waste

as a part of its fuel content, except for a small

amount of handpicking of bundled paper for

recycling from the feed conveyors at the Milwaukee and New Orleans resource recovery

plants. (See chapter 5.)

The fact that centralized resource recovery plants view wastepaper as fuel and that

paper recyclers view it as a raw material is a

potential source of conflict among these interests. The energy and economic implications of

this tradeoff are discussed in chapter 4, and

the local institutional problems it creates for

implementing resource recovery are discussed in chapter 7.

AGGREGATE

Aggregate derived from solid wastes consists primarily of small particles of glass,

stones, bones, metal, ceramics, and plastics.

It might be used as a sand or gravel substitute

in road construction as well as in other concrete applications, and as a construction

material in wall panels, terrazzo flooring, and

insulation. However, aggregate from MSW

has not been used on a commercial basis in

the United States. If a resource recovery

facility operator could sell this material at

cost or even give it away, he could at least

save the cost of its disposal.

Impacts of Recovered Materials on

Established Secondary Materials

Markets

Widespread adoption of resource recovery

and recycling programs may affect the

already volatile markets in which secondary

materials are traded. The prices and quantities of secondary materials traded, particularly of postconsumer and other obsolete

scrap, vary widely and change frequently.

Figures 3 and 4 support this fact with historical data on annual average prices and annual

quantities traded for scrap paper, aluminum,

and iron and steel.

Resource recovery and recycling, if successful, will provide a steady stream of prodFigure 4.—Representative Annual Scrap

Consumption

a)

5 12 Total Waste Paper

c SOURCE: Bureau of Census (16)

:

c

.-o

\ ~

: 10 1

1950 1955 1960 1965 1970 1975

100

c

.—o

.-

:

60

Total Iron and Steel Scrap

SOURCE: Metal Statistics (3)

+#’” J

1 I

v

I 1 I 1 1950 1955 1960 1965 1970 1975

Total Scrap Aluminum

SOURCE: Metal Statistics (3)

\

Old Scrap Aluminum 4 —

SOURCE: Metal Statistics (3)

~-J—--— ~

1950 1955 1960 1965 1970 1975
Ch. 3—The Marketability of Recovered Resources: Status and Po/icy Options ● 51

ucts that producers will need to sell immediately and that might undercut the sales and

prices of similar secondary materials from

other sources. Table 14 compares the total

materials content of MSW to historical levels

of trade in recent years in the most nearly

comparable established scrap markets. The

ferrous metal content of MSW is small compared to existing trade levels and would be

unlikely to seriously disturb the established

market on a nationwide basis. For aluminum

and paper, on the other hand, significant activity in scrap recovery from MSW would be

a large addition to existing trade levels. Current trade in recovered glass is so small that

the glass content of MSW is nearly 500 times

larger. In this case, however, the outcome is

development of a new market rather than disruption of an old one.

In examining the potential impact on established markets it is necessary to distinguish

between short-run and long-run phenomena.

The short-run prices of secondary materials

are largely independent of their supply and

are heavily dependent on the demand for finished materials such as boxboard and steel,

In times of high economic activity, materials

producers will pay high prices for scrap in

order to meet customer demands. Under such

Table 14.—A Comparison of Materials Content of

MSW to Existing Scrap Markets

Secondary material type MSW content as

percent of

MSW Counterpart scrap counterpart scrap

componen t material tradedb material traded

Ferrous metal Total iron & steel (17) 11

Purchased iron & 21

steel (17)

Aluminum Total aluminum (3) 104

Old scrap aluminum (3) 435

Total paper Total paper (16) 380

Newspaper Newspaper (16) 425

Glass Glass cullet 50,000C

aBased on 1975 gross discards In (18)

bBased on average of trade In 1973, 1974, and 1975 Data from Sources In.

dicated

cEstimate based on data in (5)

conditions, secondary materials suppliers,

receiving high prices, can afford both to dip

more deeply into scrap inventories and to

bear shipping charges over longer distances.

In the long run, however, secondary materials prices follow a more steady trend.

Widespread adoption of centralized resource recovery would require construction

of capital equipment over a period of several

years. It can only make a large contribution to

the supply of recovered materials in the long

run. The resulting steady flow of secondary

materials from MSW will be likely to find entirely new uses or to replace virgin raw materials rather than other secondary materials.

Energy Markets

REFUSE-DERIVED FUEL

Refuse-derived fuel can be consumed as a

supplementary fuel in coal-fired electric powerplants and industrial boilers, in Portland

cement plants, in sludge incinerators, and in

new and existing boilers designed or modified

to use RDF exclusively. Not all the potentially

available RDF is likely to be consumed by utilities because (i) most of the coal-burning electric powerplants are located in the eastern

part of the country, (ii) long distance transportation is prohibitively expensive, and (iii)

utilities have been reluctant to use RDF for

reasons discussed in chapter 7. However,

current national energy policy expressed in

the Powerplant and Industrial Fuel Use Act of

1978, which emphasizes coal use, may provide a strong boost to the combustion of

mixed RDF and coal and of RDF alone.

Industrial solid-fuel-fired boilers might

consume RDF alone or as a supplemental fuel

to coal, wood waste, bagasse, industrial

waste, paper, or agricultural wastes to produce steam for onsite industrial processing

and heating. However, many industrial boilers have significant daily and seasonal variations in fuel demand that may be a problem

for large-scale RDF use. RDF has been used

experimentally to provide part of the heat to

produce cement, The allowable ratio of RDF
52 . Materials and Energy From Municipal Waste

to primary fuel depends on the kiln temperature, RDF ash chemistry, and method of injection of RDF into the cement kiln. Experiments

are also underway on RDF as auxiliary fuel in

sewage sludge incinerators.

Refined dry solid fuel produced by Combustion Equipment Associates is made by drying,

chemical treatment, and milling of coarse

RDF to produce a powdered fuel called ECOFUEL 11’. Larger quantities of this fuel than

of RDF can be used as supplementary fuel because of its lower ash and moisture content

and its greater heating value.

Theoretically, utility and industrial boilers

could use all the RDF that could be produced

from MSW in the United States. However,

economic and institutional barriers discussed

in chapters 5 and 6 will keep use well below

the total potential.

STEAM

Steam produced in waterwall and modular

incinerators can be used for space heating

and cooling, process heating, and power-producing applications. It is an established commodity that can be bought and sold with minimal risk to buyers and sellers. However,

steam cannot be stored in large quantities or

shipped economically much further than

about 1 mile. Thus, careful attention must be

paid to matching steam producers and consumers.

ELECTRIC POWER

Electric power can be produced by incineration of waste to produce steam and then

electric power in resource recovery plants.

Since electricity is used universally and can

be transmitted easily over long distances, it is

a highly marketable product. The sale of electric power from solid waste facilities is not

expected to be limited by the size of the potential market, but by external constraints such

as reliability and regulatory requirements,

prices of competing sources of electric power, price-setting considerations, and other

legal and institutional constraints.

MEDIUM-BTU GAS FROM PYROLYSIS

With a heating value above 300 Btu per

standard cubic foot, medium-Btu gas is

usable in virtually any boiler or furnace

equipped for natural gas, fuel oil, diesel oil,

or solid fuel. The capacity to consume medium-Btu gas, therefore, is estimated to be

many times greater than the maximum quantity of gas that could be derived from the total

solid waste produced nationwide. For example, if all the Nation’s MSW could be converted to medium-Btu gas, it would produce

1.1 Quads compared with a total energy use

of about 70 Quads. Because this gas is not

economically storable or transportable over

long distances, it has its maximum potential

where resource recovery plants are located

near consumers. Also. it is limited to nonresidential users (two-thirds of the total gas market) because it contains large amounts of hazardous carbon monoxide.

LOW-BTU GAS FROM PYROLYSIS

Low-Btu gas has a heating value below 200

Btu per standard cubic foot and, like mediumBtu gas, contains significant quantities of

carbon monoxide. Furthermore, a considerable portion of the total energy content of hot

low-Btu gas from pyrolysis is represented by

its high temperature, which dissipates in

transmission. Thus, it may be suitable only

for onsite production of steam or electric

power.

LIQUID FUEL FROM PYROLYSIS

Based on experiments, this fuel can be

used in furnaces designed to burn No. 6 fuel

oil, with minor modifications. It may also be

used as a supplement to coal, wood waste, or

other solid fuel provided that modifications

are made to store, handle, and transfer the

liquid fuel to the combustion zone. The total

potential pyrolysis oil from MSW would be

only a small fraction of current oil imports, so

its marketability y is very great.
Ch. 3—The Marketability of Recovered Resources: Status and Policy Options 53

Impact of Recovered Energy on

Established Energy Markets

Recovered energy has the potential to contribute a maximum of 1.9 percent of the Nation’s current energy use. (See chapter 5.)

This energy can be recovered as solid fuel,

steam, electric power, gas, or liquid fuel,

depending on local markets. Because of the

Nation’s continued demand for energy in the

face of supply problems, recovered energy

cannot have an adverse effect on markets for

established energy sources in the foreseeable

future.

Future Markets for Recovered Materials

and Energy

Earlier in this chapter, RTC’S projections of

the maximum resources recoverable from

MSW in the years 1980 and 1995 were reported. RTC also projected the size of the

potential future markets for these resources

on both the national and multistate regional

levels. [See Working Paper No. 1.[1))

Potential consumers were identified for

1980 on an individual plant basis in each

State for each product. Both existing capacity

and anticipated plant expansions as of the

summer of 1976 were included. No attempt

was made to determine whether the identified customers would be willing or able to use

the potentially available resources at their

anticipated prices and qualities. RTC also did

not examine whether future events might

stimulate building additional capacity to use

recovered resources,

RTC’S analysis indicates that in 1980 there

would be markets for essentially all of the

following potentially recoverable resources:

iron and steel, aluminum, other mixed nonferrous metals, medium-Btu gas, and electric

power. There will also be good future markets for substantial percentages of other potentially recoverable products such as: glass,

53 percent: paper, 81 percent: RDF and

steam, 64 percent: low-Btu gas. 81 percent;

and liquid fuel, 90 percent. Potential markets

will exist for the small fraction of the available resources that will actually be recovered

in 1980, However, it is not possible with the

available data to estimate what fraction of

the potential markets could become actual

markets at expected product prices and qualities. Neither can one say how much the construction of additional capacity to use recovered resources might be stimulated by their

future availability.

Government Policy and Market

Development for Recovered Resources

The Federal Government could consider

several policies that would help convert potential markets for recovered resources to actual markets, or that would create new markets altogether. In this section three such

policies are briefly considered: Federal procurement, Federal stockpiling, and Federal

support of research and development (R&D)

on potential uses of recovered resources.

(Policies that directly stimulate the supply of

recovered resources are discussed in chapters 4, 5, and 6: and policies that directly affect the competition between virgin and recovered resources are discussed in chapter

8.)

FEDERAL PROCUREMENT OF RECOVERED

RESOURCES

Mandated Federal procurement of recovered resources or of products made from

them is intended to develop markets by creating at least one large and willing customer,

the Federal Government. This policy would

stimulate resource recovery by helping to ensure revenues. Mandated procurement would

also speed the development of performance

specifications, which would be needed as a

basis for Government purchasing. At a minimum, Federal procurement policy should remove explicit barriers in existing specifications that hamper the use of recovered resources.

However, Federal procurement is a popular tool for implementing a host of other policy goals such as preservation of competition,

strengthening small business, preserving re-
54 ● Materials and Energy From Municipal Waste

gional economic balance, encouraging minority business, and protecting worker health and

safety. Thus, the real potential of the procurement approach to stimulate recycling

may be limited.

Section 6002 of the Resource Conservation

and Recovery Act of 1976 (RCRA) provides

for Federal procurement of “. . . items composed of the highest percentage of recovered

materials practicable consistent with maintaining a satisfactory level of competition. ” In

November 1978 the General Services Administration revised its procurement regulations

to comply with this part of RCRA. (41 CFR

1-1.25) It is interesting that this part of RCRA

explicitly recognizes only the preservation of

competition as an alternative goal of Federal

procurement. Kovacs and Klucsik (19) have

argued that the intent of this clause was only

to recognize the importance of competition

among various purveyors of recycled materials. But, this appears to be a narrow interpretation of the intent to acknowledge the

other goals of existing procurement policy.

FEDERAL STOCKPILE FOR RECOVERED

RESOURCES

In view of the uncertain nature of markets

for secondary materials, reflected in the

price and quantity swings of figures 3 and 4,

the Federal Government could consider establishing an economic stockpile to stabilize

these markets. A stockpile would purchase

recovered materials from resource recovery

projects when prices and quantities purchased are low and sell when prices and

quantities are high. By acting in such a countercyclical manner, the Government would

help raise low prices and reduce high ones. *

Stockpiled products could include recovered iron and steel, aluminum, and paper.

Early experience with recovered glass markets does not suggest that this material will

*In an earlier report, OTA examined alternative economic stockpiling policies for materials in the United

States. Resource recovery and recycling were not

among the objectives of that report, but it provides a

broad view of issues, problems, and opportunities associated with economic stockpiles in general.

face the same swings that the metals and

paper face. This is largely because the demand for glass containers is not nearly as

sensitive to general economic conditions as it

is for metals and paper.

For recovered iron and steel, a stockpile

would have to cope with the existing trade in

scrap iron and steel, which is considerably

greater than any potential trade in these commodities from MSW. (See table 14. ) Therefore, such a stockpile could be very costly and

it would have greater impacts on the established ferrous scrap industry than on the resource recovery industry.

A stockpile for aluminum recovered from

MSW might be reasonably effective in stabilizing its market, because a good portion of all

old scrap aluminum already comes from

MSW. Furthermore, scrap aluminum has a

high value per ton and the physical costs of

handling it would be relatively low. On the

other hand, a stable market for aluminum,

per se, would be insufficient to stimulate

resource recovery because aluminum provides only a small portion of the potential

revenues (See table 11. ) In addition, prices

paid by the aluminum companies to collectors

of postconsumer aluminum cans have steadily grown from 15 to 20 cents per pound over

the last several years. Thus aluminum recovered by source separation does not appear to

be affected by market variations.

A stockpile for recovered paper faces yet

another set of problems. First, recovered

paper has a relatively low value both per ton

and per cubic foot. It must be kept dry and is

susceptible to rot and fire. Therefore, the

costs of storing wastepaper are very high

relative to the costs of storing metals. Furthermore, the fluctuation in the price of

wastepaper tends to occur over fairly long

periods, with 6 or 7 years between major

peaks. (See figure 3,) The combination of high

storage costs and storage times as long as 3

or 4 years makes a wastepaper stockpile economically unattractive.

This brief and nonquantitative analysis

suggests that stockpiles for recovered re-
Ch. 3— The Marketability of Recovered Resources: Status and Policy Options ● 55

sources are unnecessary, overly expensive,

or inadequate. Further research on the performance of economic stockpiles for recovered resources is needed to clarify the issues

raised here.

FEDERAL SUPPORT OF R&D IN USES

OF RECOVERED RESOURCES

Federal funds have supported R&D to find

new uses or to improve old uses for recovered

resources and such support could be continued, Federal R&D support is probably not

necessary for materials recovered by source

separation, nor for such energy products as

steam, electric power, and gas; all of which

can enter established markets. Likewise ferrous metals and aluminum recovered in centralized systems should be readily usable.

However, additional R&D may be necessary

to find or improve uses for RDF, glass, mixed

nonferrous metals, solid aggregate, and incinerated ferrous metals from centralized resource recovery.

The need for additional R&D, however, is

insufficient by itself to justify Federal support

for it; there also should be a demonstration of

market failures that lead to inadequate

private support, (See chapters 5 and 7 for

elaboration of this point. ) In the case of

resource recovery, such market failures include: (i) the lack of a capability to carry out

R&D on the part of resource recovery operators who are largely public agencies or contractors, (ii) the lack of market incentives for

potential users of RDF, especially electric

utilities, to research its performance, and (iii)

the disaggregated nature of potential users of

small amounts of recovered nonferrous

metals, glass, and incinerated ferrous metals.

Subtitle H of RCRA, which authorizes research, development, demonstration, and information activities does not include R&D on

the uses of recovered resources. However,

the Bureau of Mines has supported such work

in the past, and EPA has supported demonstration projects that have examined the use,

as well as the production, of RDF, Also, under

section 5003 of RCRA the Secretary of Commerce has broad authority to “encourage the

development of new uses for recovered materials, ’ presumably including R&D funding.

Railroad Freight Rates and

Markets for Recovered Materials*

The Impact of Freight Rates on Resource

Recovery Revenues

s

hipping charges to market can substantially affect the potential revenues from

resource recovery projects as well as the

competition between virgin and recovered

materials. Table 12 shows estimates of the

impact of railroad freight charges on potential revenues from recovered resources for

*There is an extensive history of debate and analysis

on the freight rates for secondary materials, and on the

equity and efficiency of regulated freight rates in general. Under section 204[a )(1) of the Railroad Revitalization and Reform Act of 1976, the Interstate Commerce

Commission (ICC) was ordered by Congress to: “conduct an investigation of (A) the rate structure for the

transportation, by common carriers by railroad subject

to part I of the Interstate Commerce Act, of recyclable

or recycled materials and competing virgin natural

resource materials, and (B) the manner in which such

rate structure has been affected by successive general

rate increases approved by the Commission for such

common carriers by railroad. ” The Commission’s findings and decisions in this matter were rendered on February 1, 1977, in Ex Parte 319, “Investigations of

Freight Rates for the Transportation of Recyclable or

Recycled Commodities.”’ It found discrimination in only

a few minor cases. The Commission’s procedures and

decisions were challenged in the U.S, Court of Appeals

for the District of Columbia by the National Association

of Recycling Industries and the Institute of Scrap Iron

and Steel. [No. 77-1187, 77-1192, 77-1 193. ] The Court

found the ICC’s procedures unacceptable in view’ of the

Act’s requirements and on August 2, 1978, ordered the

ICC to carry out a new investigation. On April 16, 1979,

the ICC rendered its decision under the new investigation, Ex Parte 319 (Sub-No. 1), “Further Investigation of

Freight Rates for the Transportation of Recyclable or

Recycled Materials. ” The ICC found discrimination

against a number of scrap commodities, although not in

all areas of the country. It ordered that such discrimination be eliminated within 90 days. In various regions

discrimination was found to be significant against ferrous scrap, aluminum scrap, and wastepaper, among

others. No findings with respect to waste glass were

presented.
—

56 ● Materials and Energy From Municipal Waste

various shipping distances. For transport

distances of 200 to 400 miles, freight rates in

effect in 1975 (the latest year for which comprehensive data are available) would have

reduced revenues from iron and steel by 38

percent, for aluminum by 5 percent, for glass

by 79 percent, and for paper by 24 percent.

Thus, the revenue reduction for all but aluminum is significant and for glass it is prohibitive.

Two fundamental economic facts are reflected in these data. First, typical freight

charges for shipping a ton of waste material

over a distance of 200 to 400 miles in October

1975 ranged from $9.45 for paper to $14.35

for aluminum. (See table 12.) (At a typical 7-

percent increase per year this range would

be about $12 to $18 per ton in 1979.) The second fact is that the prices users are willing to

pay for these materials are generally in the

range of $20 to $45 per ton, except for $300

per ton for aluminum. (See table 11.) It would

appear, therefore, that there is little room to

absorb shipping costs in these prices, except

for aluminum. Thus, resource recovery plants

must be located close to both producers of

waste and consumers of their outputs.

The same is true for recovered energy in

solid form, such as RDF, that must be shipped

by rail or truck. Typically, RDF has a fuel

value equivalent to $5 to $10 per ton. Clearly,

it cannot bear a freight charge of the order of

$10 Per ton or more and must be consumed

near the point of production. Oil, gas, and

electric energy from MSW could be shipped

further than RDF due to the better economics

of pipelines and electricity transmission.

Steam can only be shipped a mile or so by

pipeline and still retain appreciable economic

value.

Proponents of recycling have asserted that

freight rates for recovered resources are too

high. Even if they are double what they

should be (an unlikely possibility—see the

following section) however, and were cut in

half, they would still place an important limitation on the location of resource recovery

with respect to product markets.

Freight Rates and the Demand for

Recovered Materials

The demand for transportation services for

any commodity is a function of the demand

for the commodity and of the contribution of

transportation costs to the price of the commodity. It is instructive to consider the elasticity of demand (a measure of the sensitivity

of demand to price) for transportation services for a commodity. It can be shown (21)

that Et, which is defined as the percentage

change in the demand for transportation of a

commodity caused by a l-percent change in

the price of transportation, is related to the

elasticity of demand for the commodity, EC;

the price of transportation, Pt

; and the delivered price of the commodity,

the following equation:

In this equation, Ec represen

PC, according to

s the percentage

change in demand for the commodity caused

by a l-percent change in its price. Note that

in general a higher priced commodity has a

lower elasticity of transportation demand for

a given transportation price Pt and a given

commodity elasticity of demand. That is, an

increase in freight rates causes less drop in

demand for an expensive commodity than for

a cheap one. Hence, an expensive commodity

can “bear” a higher freight rate, In the short

run, EC is small for scrap commodities; that is,

their demand is not very sensitive to their

price. *

Literature estimates of the price elasticity

of demand for scrap were collected by Moshman Associates.** These are summarized in

table 15 along with data on prices and with

*The analyses in this section are based on short-run

elasticities of demand for scrap. Short-run elasticities

of scrap demand are low; that is, demand is not very

sensitive to price. While not much information is available on long-run elasticities of demand for scrap, it appears that scrap demand may be more responsive to

price over long periods of time.(22)

**Elasticities of scrap demand are difficult to

estimate and are subject to considerable error. The

data and methods available for estimating such

elasticities are not of good quality.
Ch. 3—The Marketability of Recovered Resources: Status and Policy Options ● 57

Table 15.-Estimated Scrap and Transport Demand Elasticities in the Short Run*

Demand Freight Delivered Transport

elasticity rate Pt price Pc demand

Material Ec

($/ton) (Wton) elasticity

Ferrous scrap. . . . . . . . . . . . . . . -0.12 to -0.59 8.65 64.04 -0.016 to -0.08

Aluminum scrap . . . . . . . . . . . . -0.03 23.82 345.60 -0.002

Glass cullet . . . . . . . . . . . . . . . . -0.5 to -0.75 18.60 30.00 -0.31 to -0.47

Wastepaper . . . . . . . . . . . . . . . . -0.16 12.91 28.73 -0.07

“SOURCE: Moshman Associates(5).

elasticities of transport demand derived from

them. The elasticity of transport demand is

extremely small for ferrous scrap (iron and

steel), for aluminum scrap, and for wastepaper. It is larger for glass cullet.

The change in freight shipments in response to a change in freight rates can be

estimated using the following equation, based

on the definition of elasticity of demand:

( )( percent change elasticity of

) ( )

 percent change

in shipments =

transport demand In freight rates

With this equation, one can estimate the impact of freight rate adjustments on shipments

of scrap materials by rail, once a determination of the appropriate adjustment has been

made. This equation cannot be used to assess

the effect of railroad freight rate changes on

shifts to or from other modes of transportation.

Railroad revenues from shipment of a commodity are also affected by a change in

freight rate. Suppose that a rate change were

to occur for a commodity. Railroads would experience revenue changes due not only to the

gain or loss of traffic, but also to the gain or

loss of revenue per unit of unaffected traffic.

Since all the scrap transport demand elasticities lie between O and –I, it can be shown

that freight rate reductions would lead to

revenue decreases, despite increased traffic.

Similarly, rate increases would lead to increased revenues despite traffic losses.

A Comparison of Freight Rates for

Virgin and Secondary Materials

ISSUES AND APPROACH

Shipping most secondary materials from

processors to consumers represents a significant fraction of the total cost to the consumer. Thus they affect the consumer’s decision about whether to purchase secondary or

virgin materials. Some observers have

argued that not only are these shipping costs

high, but they are excessively high when compared to freight rates charged for other commodities; in particular for the corresponding

virgin materials. If it were true that freight

rates discriminate against secondary materials, then such rates might be adjusted by Congress as a matter of policy. To illuminate this

issue, three major questions were examined:

(1) the basis for railroad freight rates, (2)

whether railroad freight rates discriminate

against secondary materials, and (3) how adjustment of railroad freight rates might affect

the marketability of secondary materials and

the railroad revenues.

Moshman Associates, under contract to

OTA, examined four pairs of corresponding

virgin and secondary materials used in four

different industries: iron ore/iron and steel

scrap to make steel; bauxite/aluminum scrap

to make aluminum ingot; pulpwood/wastepaper to make paperboard; and glass sand/

cullet to make glass containers. Freight rates

for MSW and RDF were also examined, although they have no virgin counterparts. Em48-786 0 - 79 - 5
58 . Materials and Energy From Municipal waste

phasis was placed on rates for shipment by

rail. The estimates of the impact of freight

rate adjustments on materiaI shipments were

based on short-run elasticities of demand. No

attempt was made to account for long-run

shifts as new kinds of capital equipment are

installed by potential secondary material consumers. The data for the analysis were based

on submissions by the railroads in Ex Parte

319.(23) The detailed results are in Working

Paper Number Two.(5)

THEORETICAL BASES FOR RAILROAD

FREIGHT RATES

Freight rates for common carrier, interstate shipment of goods by railroad are overseen by ICC under the Interstate Commerce

Act of 1887, as amended. Rates are set in

order to achieve several goals, including (i) a

reasonable rate of return on a railroad’s investments, (ii) avoidance of undue discrimination among locations and among individual

shippers of the same commodity, and (iii)

other goals in the national interest such as

support of depressed essential industries,

One fundamental problem in ratemaking is to

cover both the variable costs and the large

fixed costs of operation. A major policy question is how to allocate the fixed costs among

various freight services,

The Interstate Commerce Act prohibits discrimination among locations and shippers;

i.e., charging different rates for shipping the

same product for different customers or

charging grossly different rates for shipments of the same product between two sets

of locations by different routes. However, the

Act does allow discrimination among products on a value-of-service basis, *

The goals of ratesetting for secondary materials can be approached by any of five rationales for ratemaking including: (i] marginal

cost, (ii) variable cost, (iii) fully allocated cost,

(iv) value of service, and (v) equivalency. Marginal cost pricing requires that each rate be

set equal to the additional, or marginal, cost

of providing the transportation service, adjusted as necessary to ensure railroads a reasonable rate of return in the face of declining

average costs. According to the marginal cost

pricing model, if rates are fair, the ratios of

freight rates to marginal costs should be approximately equal. Actual implementation of

this principle requires far more detailed cost

information than railroad accounting systems

can provide and is further complicated by the

fact that many costs cannot be unambiguously assigned to particular services.

Fully allocated costing requires fair rates

to be set equal to long-run average costs, including a return on investment. Like marginal

cost pricing, however, this approach requires

more data than are usually available, as well

as arbitrary allocations of costs among services. Friedlaender notes other technical problems with ratesetting in this model.(27)

Variable costing allows fair rates to be set

equal to the short-run average variable costs

associated with accepting an additional unit

of traffic, This method is based on cost factors that are reasonably well-defined as compared with marginal or allocated costs.

Rates based on value-of-service recognize

that higher valued commodities can bear a

higher freight rate than those of lesser value.

The value-of-service concept tends toward a

system of rates that are directly proportional

*As in other established areas of economic regulation, railroad freight rate regulation is beset with a

complex mix of legal and economic rationales and definitions, based heavily on an obsolete framework developed when railroads faced lit tle competition from other

transportation modes and when rate wars threatened

both the industry and its customers, (24,25,26) The

analysiss i n this report does not take t ha t framework as

fixed, but assumes that Congress could make policy

decisions to cause fundamental changes. In particular,

then, this discussion is not concerned with legal definitions of “’discrimination’” as applied under the Act

since discrimination has different meanings under different ratemaking models. Nor is it concerned with the

importance of so-called “transportation characteristics” beyond their impact on costs of service, since

transportation characteristics such as length of haul,

loading weight, and gondola maintenance can all be

reflected in railroad costs.
Ch. 3—The Marketability of Recovered Resources: Status and Policy Options 59

to prices and inversely proportional to elasticities of demand for the products being

shipped. A corollary of this approach is that

if two commodities are perfect substitutes

(equal prices and price elasticities) then they

should bear equal rates for the same shipment. The pure value-of-service approach is

not concerned with the cost of service, except

to ensure that all of a railroad’s costs, including a reasonable return on investment

are covered.

Under the equivalency variant of the valueof-service approach to ratemaking it is argued that, while virgin and secondary materials are not perfect substitutes on an equal

weight basis, chemically equivalent batches

of virgin raw materials and of secondary

materials required to produce a unit of processed material output are substitutes and

should bear the same rate for the same shipment. For example, production of 1 ton of raw

steel requires just over 1 ton of ferrous scrap

or a batch of iron ore, limestone, and coal

weighing several tons. It is argued that the

ton of scrap and the batch of raw materials

compete and that under the value-of-service

approach they should both bear the same aggregate freight rate. According to this argument, failure to achieve such equality of rates

for equivalents is evidence of discrimination.

On the other hand, if the fact that such competition is real cannot be established, then

there would be no basis for a charge of discrimination.

DATA ON DISCRIMINATION

Cost-Based Rates.—Using the detailed cost

and revenue evidence submitted by the railroads in Ex Parte 319, Moshman Associates

developed data on comparisons of railroad

revenues to variable costs and to fully allocated costs for the eight commodities of interest, as shown in table 16. (It should be noted

that the Ex Parte 319 data have been criticized because they are not based on a statistical sample of all shipments.)

Table 16 shows that for all four pairs of

scrap and virgin materials, the scrap material pays significantly higher revenues in comparison to both variable and fully allocated

costs. Thus, for all four pairs, there is discrimination against secondary materials on

these two bases.

The data in table 16 suggest that shippers

of iron ore and pulpwood fail to pay the fully

allocated costs of their shipment, and that

pulpwood does not even fully cover the variable cost. Glass cullet, on the other hand, appears to contribute an inordinately high

amount to costs of either type.

The apparent discrimination between the

pairs of commodities could be removed by reducing the freight rates for the secondary materials or by increasing them for the corresponding primary ones. In either case, some

target ratio, based, for example, on an average for all commodities, might provide a reasonable basis for adjustment.

Table 16.-National Average Railroad Costs and Revenues

Fully allocated Ratio of revenue to:

Variable cost cost Revenue Fully allocated

($/car) ($/car (S/car) Variable cost cost

Iron ore . . . . . . . . . . 242 329 1.36 .93

Ferrous scrap . . . . . 1.71 1.46

Bauxite . . . . . . . . . . 645 1.47 1.07

Aluminum scrap. . . 4 4 3 811 1.83 1.50,

Glass sand. . . . . . . . 361 1.55 1.14

Glass cullet. . . . . . 621 816 1 , % 2.42 1.84

Pulpwood . . . . . . . . 241 307 218 .71

Paperwaste. . . . . . . 322 423 439 1 :: 1.04

SOURCE: Moshman Associates, Working Paper Two (5). Based on railroad submissions in Ex Parte 319.(23)
60 . Materials and Energy From Municipal Waste

Value-of-Service-Basis. -Under the valueof-service approach to ratemaking, actual or

estimated costs of service are of little concern; except insofar as total revenues must

meet total costs. Using data from the 1974

One Percent Waybill sample of the ICC, and

updating to 1975 by applying ex parte rate increases, Moshman Associates estimated the

ratios of rail revenue to product value for

each of the eight commodities, as shown in

table 17.

On the basis of value-of-service rates, discrimination between noncompeting commodities is allowable and of little interest. Thus,

no conclusions can be drawn about discrimination from the wide range of ratios of rail

rates to product values among the four commodity pairs. However, the differences in

ratios within pairs are significant.

Value-of-service rates allow higher valued,

competing commodities to bear higher rates.

Table 17 shows that this is the case for all

four pairs of materials of interest. In each

case the scrap material, which has a higher

value per ton, also bears a higher freight

rate. The value-of-service approach also

allows for the competing product whose demand is more sensitive to price to bear a rate

that is a lower fraction of product value.

Since demand for scrap is less sensitive to its

price than is demand for virgin materials,

scrap might reasonably bear a rate that is an

even higher fraction of price without being

discriminatory. For the iron ore/ferrous scrap

and glass sand/glass cullet pairs, the ratios of

rail rates to product values are nearly the

same for both virgin and scrap. This result

suggests some discrimination against virgin

materials for these pairs, assuming that they

compete. Furthermore, a higher fractional

freight rate for wastepaper would not appear

to be discriminatory, per se. However, the

respective ratios for pulpwood and wastepaper are 0.34 and 0.82, and this large difference suggests some degree of discrimination against wastepaper under the value-ofservice approach.

The situation with bauxite and aluminum

scrap illustrates the pitfalls of value-of-service ratemaking. If aluminum scrap were to

bear a fractional rate per ton greater than

that for bauxite, it would have to pay a minimum rate of 0.93 x ($322) or $300 per ton,

(see table 17) an unreasonable amount compared with costs incurred by the railroads.

Thus, while aluminum scrap bears an abnormally low fractional freight rate, suggesting

discrimination against bauxite, it also bears

the highest rate per ton of any commodity

studied.

Equivalency Basis.—To test the arguments

on discrimination under the value-of-servicefor-equivalents approach, Moshman Associates first calculated typical amounts of various raw materials required to produce equivalent final products from either virgin or

scrap inputs. They used a variety of data

sources detailed in appendix B of their working paper.(5) The total raw materials costs,

total transportation costs, and ratios of transportation costs to total costs were then calculated using freight rates from the 1974 CarTable 17.— Railroad Revenues and Product Values

Ratio of average

Average freight Product value freight rate to

Commodity rate ($/ton) (FOB $/ton) product value

Iron ore . . . . . . . . . . . . . . 3.0 9 18.12 0.17

Ferrous scrap . . . 8.65 55.39 0.16

Bauxite . . . . . . . . . . . . . . 10.20 11.01 0.93

Aluminum scrap . . 23.82 321.78 0.074

Glass sand. . . . . . . . . . . . 6.67 4.64 1.44

Glass cutlet . . . . . . . . . . . 18.60 11.40 1.63

Pulpwood . . . . . . . . . . . . 3.59 10.56 0.34

Paperwaste . . . . . . . . 12.91 15.82 0.82

SOURCE Moshman Associates from one Percent Waybill sample from 1974 updated to 1975 (5)
Ch. 3— The Marketability of Recovered Resources: Status and Policy Options ● 61

load Waybill sample updated to 1975 by application of ex parte increases. These results

are shown in table 18. According to the chemical equivalency argument, substitutable

batches of virgin and raw materials should

bear the same total freight rates for the same

shipment: if they do not, discrimination exists. Under this standard, data in table 18

show no discrimination against virgin steel

(14.8 percent versus 13.5 percent of total

costs attributed to transportation); substantial discrimination against virgin aluminum

(34 percent versus 7.4 percent); and distinct

discrimination against secondary glass (62

percent versus 44.8 percent) and secondary

paper (44.9 percent versus 28.2 percent).

Summary of Evidence on Discrimination.—The determination of discrimination

between virgin and secondary materials depends on both the particular material pair

and, more importantly, the basis chosen for

the definition of discrimination. The evidence

from OTA’S study is summarized in table 19.

(Data were not available for making a determination of discrimination on a marginal cost

basis.)

The finding under the value-of-service approach for bauxite and aluminum scrap is

questioned in table 19. Strict application of

this approach shows gross discrimination

against bauxite, but full correction of this

situation would require unreasonably high

rates for aluminum scrap.

Impact of Freight Rate Adjustments on

Secondary Material Shipments by Rail

Using the analyses presented above, OTA

has estimated changes in rail shipments of

secondary materials that might occur if rates

were adjusted to eliminate discrimination. In

order to give the greatest advantage to secondary materials, rates for each of them are

assumed to be reduced enough to eliminate

the greatest level of discrimination against

scrap found by any of the four methods. Then,

changes in shipments are calculated using

the elasticities of transport demand in table

Table 18.—Costs of Virgin and Secondary Raw Materials Required to Produce 1 Ton

of Equivalent Output—1975 Dollars

Tons required to Cost to produce 1 ton of output

produce 1 ton Total Transportation Transportation

Output product Raw material input of output $ $ as 0/0 of total

Steel Virgin . . . . . . . 2.87 76.76 11.37 14.8

Secondary ... . 1.05 67.24 9.08 13.5

Secondary Virgin . . . . . . . . . . . 7.57 209.53 71,17 34.0

alumlnum Secondary . . . . . . . . . 1.09 376.70 25.96 7.4

Glass containers Virgin . . . . . . . . . . . 1.15 23.14 10.38 44.8

Secondary . . . . . . . . . 1,00 30.00 18.60 62.0

Paperboard Virgin . . . . . . . . . . . . 3.47 53.04 14.97 28.2

Secondary . . . . . . . 1.12 32.18 14.46 44.9

SOURCE Moshman Associates (5)

Table 19.—Summary of Findings on Freight Rate Discrimination

Bas= for ratemaking-

—

Commodity pair Variable cost Fully allocated cost Value of service Equivalency — — -- .-

Iron ore/ferrous scrap . . . . . . + + — o

Bauxite/aluminum scrap. . + + _(7) —

Glass sand/cullet. . + + — +

Pulpwood/wastepape r + + + +

aDeffnltlons of discrimination are different for each ratemaking basis basis

Key. + discrimination against scrap

- discrimination against virgin

O no discrimination

SOURCE Off Ice of Technology Assessment
62 ● Materials and Energy From Municipal Waste

15 and the equation on page 57. The results

are shown in table 20.

Table 20 shows that even though substantial rail rate reductions are justified under

various ratemaking approaches, the resultant changes in scrap shipments are estimated

to be quite low, except for glass. Furthermore, losses of railroad revenues from existing shipments would be large since rates

would drop considerably but would not be

made up by revenues from the increased traffic.

For example, a 36-percent decrease in rail

rate for iron and steel scrap would increase

rail shipments by an estimated 0.2 million to 1

million tons (about 0.5 to 2.9 percent), but

would cause a reduction in rail revenues of

$100 million to $110 million per year. This

loss is equivalent to about $100 to $550 per

ton of additional scrap moved, and is not

economically justifiable from the railroad’s

perspective when iron and steel scrap is selling in the neighborhood of $50 to $100 per

ton. On the other hand, the revenue loss for

glass per incremental ton is comparable with

the current price of recovered glass, although

even in this case the railroads’ loss of revenue on existing shipments is not made up by

the gain in revenues from additional scrap

shipments. However, regardless of its impacts on railroad revenues, discrimination

among materials of the extent indicated by

this anlysis should be eliminated.

The conclusion of this analysis is that substantial discrimination against secondary materials is found, if one adopts cost-based or

equivalency-based railroad ratemaking.

However, even using maximum estimates of

discrimination as rationales for rate adjustment, an economic model projects increases

in shipments in the short run of only a few

percent for iron and steel, aluminum, and

paper. Increases for glass might be as large

as 15 to 25 percent. Railroad revenues would

be substantially reduced by such actions.

Smaller freight rate reductions would have

less impact on railroad revenues, but would

also stimulate smaller increases in scrap

shipments. In addition, only a fraction of the

increased shipments under rate reductions

might originate as resources recovered from

MSW. No estimates have been made of the

possible long-run effects of freight rate adjustment on recycling. As new manufacturing

facilities are built in the future, lower freight

rates for secondary materials could provide

an inducement to increase the amounts of recovered materials used.

Table 20.—Estimated Impact of Freight Rate Adjustments

on Secondary Material Shipments and Railroad Revenues

- —

Material —.

Iron and steel Aluminum Glass PaDer — — ———-— — — . —

Percent reduction of freight rate required to

eliminate discrimination . . . . . . . . . . .

Indicator of maximum discrimination. . . . . .

Estimated percent change in shipments . . .

1974 rail shipments of scrap” (million tons)

Estimated increase in 1974 shipments

(thousand tons). . . . . . . . . . . . . . . . . . . . . . .

Estimated loss in 1974 railroad revenues

(million $) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Revenue loss per extra ton shipped ($/ton)

—. a Moshman Associates (5)

SOURCE Office of Technology Assessment

36

fully

allocated

cost

0.5 to 2.9

36

200 to 1.000

100 to 110

100 to 550

29

fully

allocated

cost

0.06

0.46

0.3

3.2

11.000

50

equivalency

15 to 25

0.28

45 to 67

1.4 to 1.8

20 to 40

—

52

equivalency

3.6

5.2

190

32

170
Ch. 3— The Marketability of Recovered Resources: Status and Policy Options w 63

Findings on the Marketability of

Recovered Resources

s

ubstantial amounts of various materials

and energy types can be recovered from

MSW today using either centralized separation and recovery or separate collection. The

quantities of potentially recoverable resources in MSW are expected to grow in the

future as the total use of materials grows.

Productive uses can be made of recovered

iron and steel, aluminum, paper, glass, and

energy using existing technologies and in existing facilities. However, the prices users

are willing to pay and the product quality

they demand could be barriers to the profitable sale of large amounts of recovered resources if resource recovery were widely

adopted. Potential markets exceed any anticipated level of recovery today and through

1995 for iron and steel, aluminum, and paper.

Glass markets are developing rapidly as the

economic, environmental, and energy advantages of container production from waste

glass become apparent. Energy markets far

exceed the potential level of recovery from

MSW nationwide. Certain forms of energy,

however, including RDF, steam, and low-Btu

gas, must be produced near potential users if

transportation costs are to remain acceptable.

Established markets for secondary iron

and steel, aluminum, and paper exhibit wide

variations over time in both prices and quantities traded. However, prices for postconsumer aluminum from separate collection

programs have been more stable because primary aluminum companies have been offering stable prices to recyclers, Newsprint recycling mills have begun to stabilize markets

for waste newspapers in some areas. Current

trade in waste glass is small but growing

rapidly, with relatively stable prices, A brief

analysis of a Federal stockpile for recovered

resources suggests that this would be unnecessary, ineffective, or overly expensive for

stabilizing markets for materials recovered

from MSW.

At any forseeable level of recovery, iron

and steel from MSW would be un]kely to disrupt existing secondary markets for this commodity. High levels of additional aluminum

and paper recovery would add substantially

to the current trade. Glass recovery essentially represents creation of an entirely new

market rather than disruption of an existing

one. In view of the current energy situation

and the relatively small amounts recoverable

from MSW, energy from waste represents no

threat to established energy markets.

Federal procurement policy can strengthen

markets for recovered materials by emphasizing their use and by eliminating arbitrary

barriers to them. Existing General Services

Administration regulations under RCRA, if

followed, represent a substantial move in this

direction.

Federal R&D support on uses of recovered

resources, as opposed to their production, is

limited, even though such research might find

new uses and improve old ones and is easily

justifiable on economic grounds. Under RCRA

only the Department of Commerce has authority in this area, and that authority has not

been funded. The Bureau of Mines has done

limited work in this area under its basic

authority. Additional Federal support for

R&D on uses of recovered resources appears

to be desirable,

Specifications for the quality of recovered

resources are necessary largely to facilitate

trade, rather than for consumer protection

purposes, since few recovered resources

reach consumers without further industrial

processing. (Important exceptions are flammability standards for cellulosic insulation,

recently established on an emergency basis

by act of Congress, and health and safety

standards for reusable beverage containers. )

Existing specifications based on the origin of

secondary materials, promulgated by the

secondary materials industries, appear to be

adequate to support trade in separately collected iron and steel, aluminum, and paper,

but not for trade in materials and energy
64 ● Materials and Energy From Municipal Waste

from centralized resource recovery plants.

Composition specifications for the latter

kinds of products are currently in the final

stages of development by a committee of the

American Society for Testing and Materials.

Separately collected glass is currently traded

under quality/price negotiations for each

shipment. In view of the current state of voluntary standards activity, there seems to be

no need for Government action beyond that

authorized under RCRA.

Freight rates for transportation of recovered materials and certain forms of recovered energy to markets can seriously impair

the economics of resource recovery. For shipments by rail in the 200- to 400-mile range,

railroad freight rates can range as high as 25

to 80 percent of the gross income from the

sale of waste iron and steel, paper, glass, and

RDF. Even a 50-percent reduction of freight

rates for these resources, for example, would

still leave freight charges a substantial cost

factor.

Demand for railroad freight services is not

very sensitive in the short run to rates for

secondary iron and steel, aluminum, and

paper, but is more sensitive for glass. For the

insensitive materials, large freight rate

changes would have little effect on shipments.

Whether existing railroad freight rates discriminate against secondary materials was

examined in the frameworks of several theoretical models of ratemaking. Such discrimination is substantial for iron and steel,

aluminum, paper, and glass under cost-based

rates (both variable and fully allocated costs],

and for paper and glass under the chemical

equivalency approach to value-of-service

rates. Such discrimination was not found

under the value-of-service approach to rates.

Clearly, then, part of the long-standing controversy over discrimination against secondary materials arises from different assumptions about how rates ought to be set.

Assuming that freight rates were adjusted

downward for secondary materials (iron and

steel, aluminum, glass, and paper) to eliminate the greatest level of discrimination indicated by any of the models examined (reductions on the order of 30 to 50 percent), increases in shipments by rail are estimated to

be on the order of a few percent or less for

waste iron and steel, aluminum and paper.

Glass shipment might increase by as much as

15 to 25 percent. Correspondingly, railroad

revenues in each case would decline substantially since revenue losses from existing traffic would not be offset sufficiently by traffic

growth. Somewhat larger increases in shipments might occur in the long run.

Regardless of the small increases in shipments and the large decreases in railroad

revenues, however, under cost-based rates

these secondary materials are treated unfairly by existing freight rates. Both equity and

efficiency argue for their adjustment. Railroad revenues, if inadequate. can be adjusted

by general rate increases.
Ch 3— The Marketability of Recovered Resources. Status and Policy Options 65

1

References

Resource Technology Corporation, “Market Prognosis: Recyclable Goods Available

From Municipal Solid Waste.’” in Working

Papers on Materials and Energy From Municipal Waste, Congress of the United

States, Office of Technology Assessment,

OTA-M-69, July 1978.

2. Black and Veatch, and Franklin Associates, Lt”d., Detailed Technical and Economic Analyses of Selected Resource Recovery systems, report for the Mid America Regional Council, Kansas City, Mo.

(1978).

3. American Metal Market, Metal Statistics

1977; Fairchild Publications, New York:

1977.

4. U.S. Department of Labor, Bureau of

Labor Statistics, Wholesale Price Indexes.

5. Moshman Associates, Inc., “Effect of

Freight Rates on the Movement and Sale

of Selected Recyclable Commodities, ” in

Working Papers on Materials and Energy

From Municipal Waste, Congress of the

United States, office of Technology Assessment, OTA-M-69, July 1978.

6. Alter, Harvey, “Development of SpecifiCations for Recycled Products, Conservation and Recycling, 2 (1979).

7. Paper Stock Institute of America, National Association of Recycling Industries,

Paper Stock Standards and Practices, Circular PS-77, Jan. 1, 1977.

8. National Association of Recycling Industries. Standard Classifications for Nonferrous Scrap Metals, Circular NF-77, May 1,

1977.

9. Institute of Scrap Iron and Steel, Specifications ,for Iron and Steel Scrap, 1975.

10. Glass Packaging Institute, Washington, D. C., telephone conversation, Mar.

26, 1979.

11. Duckett, Joseph, National Center for Resource Recovery, telephone conversation,

Mar. 26, 1979.

12. Kramer, Larry. “Bottle Maker Cuts Costs,

Pollution with Old Glass, ” Washington

post. July 2, 1978.

13. Howard. Stephen E., “Status of Glass Recovery and Marketing Through Source

Separation in the Northeast Corridor, ”

unpublished report, U.S. Environmental

Protection Agency, July 26, 1978.

14. Solid Waste Report, Mar. 12, 1979, p. 47.

15. Davis, Robert, Garden State Paper Company, telephone conversation, Mar. 30.

1979.

16. U.S. Department of Commerce, Bureau of

the Census, Current Industrial Report:

Pulp Paper and Board Summary, Series

M26A 1969-1976.

17. U.S. Department of the Interior, Bureau of

Mines, (Commodity Data Summaries 1977.

18. U.S. Environmental Protection Agency,

Office of Solid Waste Management Programs, Resource Recovery and Waste Reduction. Fourth Report to Congress, EPA

Publication SW-600, (Washington, D. C.:

U.S. Government Printing office, 1977),

pp. 17-18.

19. Kovacs, William L., and John F. Klucsik,

“The New Federal Role in Solid Waste

Management: The Resource Conservation

and Recovery Act of 1976,’” Columbia

Journal of Environmental Law, 3:2, 205-

261 (1977).

20. Office of Technology Assessment, An Assessment of Alternative Economic Stockpiling? policies, 1976,

21. Moshman Associates, op. cit., p. 272.

22. Anderson, Robert C., and Richard D.

Spiegelman, Impact of the Federal Tax

Code on Resource Recovery, prepared for

the U.S. Environmental Protection Agency. EPA Report 600 5-76-009, December

1976,

23, Interstate Commerce Commission, Ex

Parte No. 319.

24. Page, R. Talbot, Conservation and Economic Efficiency: An Approach to Materials Policy; published for Resources for the

Future by the Johns Hopkins University

Press, Baltimore, 1977.

25, Friedlaender, Ann F., The Dilemma of

Freight Transport Regulation, the Brook-
66 ● Materials and Energy From Municipal Waste

ings Institution, Washington, D. C., 1969. gistics, Business Publications, Inc., Dallas,

26. Fair, Marvin L., and Ernest W. Williams, Tex., 1975.

Jr., Economics of Transportation and Lo- 27, Friedlaender, op. cit., pp. 132-135.
Chapter 4

Source Separation for

Materials and Energy Recovery
Contents

Page

Introduction. . . . . . . . . . . . . . . . . . . . . .. ..69

Definitions and Issues Addressed. .. ...69

Advantages, Disadvantages, and

Impedimentsto Source Separation. ...69

TheTechnicalandRevenue,Potentials

of Source Separation. . . . . . . . . . .......70

MaterialsRecovery. . . . . . . . . . .......71

EnergySavings . . . . . . . . . . . . . . . .....7I

Revenue PotentialofSource Separation

programs . . . . . . . . . . . . . . . . . .......72

Status of Source Separation Programs in

the United States. . . . . . . . . . . . . .......72

Source Separation Methods and

Approaches. . . . . . . . . . . . . . . .......72

Curbside Separate Collection Programs.73

Status . . . . . . . . . . . . . . . . . . . .......73

Participation . . . . . . . . . . . . . .......74

Inconvenience and Aspectsof

Householder Cost . . . . . . . . . .......75

Separate Collection ofOneRecyclable

at Curbside. . . . . . . . . . . . . . . . . ....76

Multimaterial Programs . . . . .......77

Multimaterial Recoveryin Community

Recycling/Reclamation Centers, .. ....79

Multimaterial RecoveryinIndustry

Sponsored RecyclingPrograms. .. ....80

Wastepaper RecoveryThrough Office

Recycling Programs. . . . . . . . ., ......81

Commercial and IndustrialMethods

of source separation. . . . . . . . . .........81

Marketing Recovered Materials . . .......81

Interaction of Source Separation and

Other Policies . . . . . . . . . . . . . . . .....82

Source Separation and Beverage

Container Deposits . . . . . . . . . .......82

Source Separation and Centralized

Resource Recovery . ..............,83

Source Separation and Economic

Incentives . . . . . . . . . . . . . . ., .......85

Federal Policy and Source Separation ....86

Page

No Additional Federal Action . . .......86

Direct Federal Action . . . . . . . . .......86

Mandated Source Separation of

Materials by FederalAgencies .....86

Incentives for Investment in

Recycling Facilities . . . . . . . .......86

Labor Tax Credits for Recycling

Programs . . . . . . . . . . . . . . . .......86

Federal Support for Research,

Development, and Designfor Source

Separation . . . . . . . . . . . . . . . . . . . .

Federal Funding of Demonstration

Projects . . . . . . . . . . . . . . . . . . . . . .

Indirect Federal Action, . . . . . . . . . . . .

Federal Procurement. . . . . . . . . . . . .

Other Indirect Federal Actions . . . . .

Findings on Source Separation . . . . . . . . .

References . . . . . . . . . . . . . . . . . . . . . . . . .

Tables

Table No.

21. Major Source-Separable Components

22.

23.

24.

25.

26.

27.

of MSW,1975 . . . . . . . . . . . . . . . . . . .

Estimated Potential nergy Savings

From Source SeparationPrograms. . .

Estimated Potential Gross Revenues

From Source Separation Programs. . .

Separate Collection Programs . . . . . .

Waste Components Recovered in

Multimaterial Curbside Separate

Collection Programs . . . . . . . . . . . . . .

Impact of Beverage Container Deposit

Legislationon Potential Source

Separation Revenues for Five BCDL

Scenarios . . . . . . . . . . . ... ..........

Recovery Rates and Revenues for

. 86

. 87

. 87

. 87

● 88

. 88

● 90

Page

. 72

● 73

● 74

. 74

. 78

, 84

Three Resource Recovery Options ....85
Chapter 4

Source Separation for

Materials and Energy Recovery

Introduction

Definitions and Issues Addressed

s

ource separation* is “the setting aside of

recyclable materials at their point of

generation (e.g., the home, or places of business) by the generator. Once recyclable materials are separated, they may be transported

to a secondary materials dealer or manufacturer by the generator, municipal collection

crews, private haulers, or community organizations.’”(l) Some familiar approaches to

source separation are curbside collection of

newspapers, cans, and glass; commercial recycling of waste office paper, corrugated

cardboard, and computer cards; and communit y dropoff centers,

By comparison with mechanical separation

of collected mixed wastes in centralized resource recovery plants, source separation is

labor intensive, produces relatively uncontaminated materials for recycling from a portion of the waste stream, and requires greater cooperation by waste generators. Centralized resource recovery, on the other hand, is

capital intensive, and can accept most kinds

of collected waste thus reducing the need for

cooperation. Because source separation can

put a greater burden on collection, the most

costly part of municipal solid waste (MSW)

management, successful source separation

programs require considerable attention to

design and implementation strategies.**

*’*Source separation” is a misnomer, Rather than

separation, householders and other generators of

waste simply avoid mixing waste prior to collection.

**Design and implementation strategies for centralized resource recovery plants, are discussed in detail in

chapters 6, 7, and 8.

Four principal questions are addressed in

this chapter:

●

●

●

●

Is source separation an economically

and technically feasible approach to

resource recovery, and what are its

potentials for materials recovery and

energy savings?

What issues and problems arise in connection with source separation?

How does source separation interact

with other approaches to resource recovery, recycling, and reuse?

What Federal policy options are available or necessary to facilitate, stimulate,

or regulate source separation?

Advantages, Disadvantages, and

Impediments to Source Separation

The advantages and benefits of the source

separation approach to recovery and recycling of materials are that it:

●

●

●

●

produces high-quality waste products*** that can bring a premium price

if markets are available and if recovered

products meet market specifications;

is the only method currently available

for the recovery from MSW of recyclable newspaper, office paper, corrugated

cardboard, color-sorted glass, plastics,

and rubber;

conserves energy by recovering materials whose production from virgin

sources is energy intensive;

requires very little capital investment as

compared with centralized resource

recovery;

***Curbside collected materials may need to be upgraded to meet market specifications.

69
70 ● Materials and Energy From Municipal Waste

. can be implemented with little delay in

comparison with centralized resource

recovery facilities; and

● may be the only way a small or remote

community could recycle materials if the

population is too small to support a centralized resource recovery plant.

Some local independent trash haulers,

scrap dealers, and scavengers might find

source separation more attractive than centralized resource recovery because it protects the part of their income derived from

sales of high-grade waste materials.

The possible indirect advantages of source

separation include:

Decrease air and water pollution from

landfill activity.

Net savings from avoiding negative impacts on the environment, on worker

health, on energy, and on resources from

the production of virgin materials.

Improved balance of trade from substituting recycled for imported virgin materials.

Communities with source separation

programs are seen to be forward-looking,

Benefits from a sense of personal involvement in conservation activities.

Some of these benefits such as the reduced

use of virgin materials and of landfill space

are also true for centralized resource recovery.

The disadvantages of source separation

are:

●

●

●

●

Only a portion of the waste generated

can be recovered.

It leaves a mixed waste residue that has

a somewhat lower fuel content than unseparated mixed waste.

It strongly depends on individual participation and cooperation.

It requires modification of the costly collection equipment used by both municipal and private haulers.

The chief impediments to implementing

source separation are:

●

●

●

●

●

Uncertainty about cooperation in the

short- and long-term by householders,

businesses, and others who generate

waste.

The uncertainty of markets for recovered materials along with the reluctance

of consumers of recycled goods to sign

long-term purchase contracts (in view of

uncertain community participation and

the problems associated with recycled

materials meeting market specifications).

The costs of transporting recovered materials from remote communities to the

fabricating plants of potential purchasers.

Inadequate attention by the Federal Government to the innovative design of programs, incentives, and contaminant control research so that source separated

materials can meet market specifications.

The belief that low-income and urban

householders will not cooperate with

source separation programs.

The rest of this chapter examines these advantages, disadvantages, and impediments to

source separation and discusses possible policies for dealing with them. -

The Technical and Revenue

Potentials of Source Separation

F

ive kinds of programs for source separating materials are: (i) separate curbside collection of materials from residences—

newspapers only or multimaterials (paper,

cans, glass); (ii) multimaterial recovery in

community recycling/reclamation centers;

(iii) industry sponsored recycling programs;

(iv) office paper recovery programs; and (v)

commercial and industrial source separation

activities. These types of programs make

possible the recovery from the waste stream

of such materials as: newspapers, books and

magazines, corrugated paper, office paper,
Ch. 4—Source Separation for Materials and Energy Recovery ● 71

glass containers and other glass, steel containers, aluminum containers, and yard

waste. The following sections examine source

separation’s potential for recovering materials, saving energy, and earning revenue.

Materials Recovery

The potential of source separation to

achieve its main goals of reducing the flow of

solid waste to disposal and of conserving

natural resources has been estimated by

OTA. This estimate only attempts to convey

the sense of what might be accomplished. It

does not purport to forecast the actual future

levels of source separation activities.

Table 21 shows the amounts of major

source separable materials in MSW along

with estimates of the amounts recoverable at

each of two national average levels of participation. * These estimates suggest that at

50-percent participation as much as 37.4 million tons, or 27 percent by weight, of the gross

discards of MSW might be recovered. According to estimates by the Environmental

Protection Agency (EPA), only 6.3 million tons

of MSW were actually recycled in 1975.

The potential of source separation may be

underestimated in table 21 because products

such as plastics, paper packaging, and other

paperboard might be added to the list. In addition, wastes such as miscellaneous glass,

noncontainer iron and steel, and aluminum

foil could be recovered with the basic components. It should be noted, however, that the

most successful source separation programs

recover only 2 or 3 categories of materials at

a time from the waste stream. A total of 26,1

*Participation is used here to mean the fraction of

each waste component that is recovered. Thus, 25-percent participation would occur if one-fourth of the population recovered all of the recoverable components of

its waste or if half of the population recovered half of

the recoverable components of their waste on the average. Since the major recoverable components make up

55 percent of total waste (see table 21), 25-percent participation in a comprehensive program would result in

recovery of one-fourth of this 55 percent, or about 14

percent of total waste. Likewise, 50-percent participation would recover about 28 percent of total waste.

million tons of yard wastes have been included in table 21. Much of this waste

(leaves, grass clippings, garden waste, etc.)

can be separately recovered for conversion to

compost and mulch, providing both a soil conditioner and a partial substitute for chemical

fertilizer. At even 25-percent participation in

the separate collection of yard waste, the

MSW total could be reduced by 6,5 million

tons (about 5 percent).

From the estimates for recoverable materials in table 21 it can be seen that while

source separation can substantially reduce a

community’s total wastes, more than half will

still have to be disposed of by other methods.

Thus, source separation can only serve as

part of of a community’s waste management

program,

Energy Savings

In order to produce basic materials (from

virgin or secondary materials) energy is

needed to process and transport fuels, to

mine and process raw materials, to operate

waste collection and separation plants, to

heat and light operating facilities, etc.

Recovering materials for recycling by means

of source separation can save energy. The

energy saved would come from the difference

between the energy needed to produce a

given amount (e.g., 1 ton) of a basic raw

material (e. g., steel) from virgin raw materials and the energy needed to produce an

equal quantity of the same basic material

from recycled raw materials. Estimates of the

potential savings in million 13tu per ton of

recovered materials are summarized in column 2 of table 22. From the data, it can be

seen that a large amount of energy is saved in

recycling aluminum, somewhat less with steel

and paper, and considerably less with glass.

Table 22 also shows the energy that could be

saved per ton of waste generated for both 25-

and 50-percent participation in source separation programs. Energy savings compared

with landfilling range from 0.7 million to 1.4

million Btu per ton of generated waste. (The

interaction of centralized resource recovery

and source separation is discussed later in
72 . Materials and Energy From Municipal Waste

Table 21.-Major Source-Separable Components of MSW, 1975

Amount recoverable

by source separation Recycling experience in

Amount in MSWa (million tons) 1975 (All methods)a

25% 50%

Material Percent Million tons participation participation Million tons ‘%recycle d

Newspaper . . . . . . . . . . . . . . $.5 8.9 2.2 4.5 20

Books and magazines...., 2.3 3.1 0.78 6 8

Corrugated paper . . . . . . . . . 9.2 12.5 3.1 , ::: 22

Office paper . . . . . . . . . . ., . . ::; 13

Glass containers . . . . . . . . . ; :: 1::: ;:: H

Steel containers . . . . . . . . . . 4.0 1.4 2.8 ::; :

Aluminum containers. . . . 0.4 0.14 0.27 0.08 15

Yard waste . . . . . . . . . . . . . . 26.0 6.5 13.0

Total major sourceseparable materials . . . . . 55.1% 74.2 18.5 37.4 6 . 3

d

source; Table 4 .Latest year for which data are available.

Includes all aluminum cans and aluminum parts of bimetallicp cans

An unknown amount of yard waste is collectedseparatly and used as compost or mulch

an additional 1.7 million tons of other materials from MSW wererecycled in 1975

NOTE: These estimates assume no action to institute product disposal charges, madatory cotainer deposits, or centralized resource recovery plants.

this chapter. ) For the entire Nation these savings are equivalent to 0.1 to 0.2 Quad* annually or to 0.14 to 0.28 percent of the Nation’s energy use.

Revenue Potential of Source

Separation Programs

The chief direct economic benefits of

source separation programs are the proceeds

from selling the recovered materials and the

credits for avoiding part of the cost of disposal by landfill or other means. In this analysis, disposal credits are assumed to be proportional to the weight of waste removed;

that is, average landfill costs are used in their

estimation.

The potential gross revenues from source

separation programs can be estimated by

multiplying the estimates of recoverable

quantities of materials in table 21 by estimates of scrap prices. Table 23, which summarizes such revenue estimates for 25- and

5C)-percent program participation, shows that

these are highly dependent both on realizable

scrap prices and on participation. It further

shows that no single waste component produces a large share of the total revenues,

although various paper types together account for well over half of them. Depending

*One Quad equals 1015 Btu = 1.055 EJ.

on local landfill costs, credits for avoided

disposal costs can be significant.

A complete economic analysis of source

separation must take into consideration all of

the following factors: the direct costs of promotion and collection and the direct benefits

of revenues from recovered materials and

avoided disposal fees; also the indirect costs

of consumer inconvenience and the indirect

benefits of energy and materials savings and

environmental protection. The economic implications of the interactions among source

separation, centralized resource recovery,

and beverage container deposit legislation

must also be considered. No direct cost data

are available for constructing a cost table

analogous to table 23. Cost data for specific

recovery programs are discussed in subsequent sections of this chapter.

Status of Source Separation

programs in the United States

Source Separation Methods and

Approaches

s

ource separation programs vary depending on the sponsorship, the types of materials collected, the frequency of collection,

and whether materials are collected at curb-
Ch. 4—Source Separation for Materials and Energy Recovery “ 73

Table 22.—Estimated Potentiai Energy savings From Source Separation Programs

Potential energy Potential energy savings per ton of MSW

savingsa generated (million Btu/ton)

Material (million Btu/ton) 25% participation 50% participation

Newspaper . . . . . . . . . . . . . . 5.2 0.08 0.17

Books and magazines . . . . . 5.2 0.08 0.17

Corrugated paper.. . . . . . . . 5.2 0.08 0.17

Office paper . . . . . . . . . . . . . 5.2 0.08 0.17

Glass containersfJ . . . . . . . . 1.2 0.03 0.06

Steel containers. . . . . . . . . . 7.8 0.08 0.16

Aluminum containers . . . . . 259.4 0.26 0.52

Yard waste . . . . . . . . . . . . . . 0

c Oc w

Total energy savings. . . . 0.69 1.42

OTA estimates based on data in reference(2),(3), and(4).

In this report recovery of yard waste in source separation programs Is assumed to produce only landfill Credits and neither

energy savings norr net revenues. This choice is made becauae yard waste is quite varied seasonally and geographically and

because experts disagree widely about the viability of yard waste utilization or sale. The effects of this choice are to underestimate by a small amount the economic and energy potentials of source separation.

side or delivered to a recycling center. Five

methods of source separation are discussed

below: (i) curbside separate collection programs; (ii) multimaterial recovery in community recycling/reclamation centers; (iii) industry sponsored recycling programs; (iv) office

paper recovery; and (v) commercial and industrial methods of source separation.

Curbside Separate Collection Programs

STATUS

In curbside separate collection programs*

recyclable materials are conveniently collected at curbside, rather than having to be

transported by householders, businesses, or

other generators of waste to a recycling

center. Such programs fall into two categories, those that collect only one recyclable

material, in most cases some form of wastepaper; and those that collect two or more. In

a recent survey, EPA estimated that as of

May 1978, there were 218 curbside separate

collection programs in the United States. (See

*This section discusses only curbside collection programs sponsored by municipalities or private collectors

on a regular basis, There is a significant amount of activity, primarily for newspaper, in occasional curbside

collection by voluntary organizations and in house-tohouse collection by private entrepreneurs. No statistics

are available on the extent of this activity, although

total newspaper collection statistics suggest it is large.

table 24.) Of the programs surveyed,** 99

percent collected some form of paper (76 percent collected newspaper and 23 percent collected mixed wastepaper), glass was collected by 16 percent, and metal by 14 percent. Collection was the responsibility of

municipalities in 57 percent of the programs

and of private collection firms and community organizations in 29 and 12 percent of the

programs, respectively.(5)

In most communities, collection programs

divided household waste into two, three, or

four segments. Division into two segments

separates newspapers from the remaining

waste. (Some cities collect a mixed flat paper

segment instead of newspapers alone. ) Division into three segments separates cans and

bottles as well as newspaper from the remaining waste; and into four segments separates newspapers, clear glass and cans, and

green and brown glass and cans from the remaining waste.

The factors a community must weigh in deciding the number of segments to collect include: anticipated participation, the comparative cost of centralized separation, the

A*AS of September 1977, the EPA had identified ZOS

separate collection programs, Only 177 of these contained enough information to be included in the sample.

Since this date, the EPA has located an additional 13

programs. These were not included in the survey,

48-786 0 - 79 - 6
—. -.

74 ● Materials and Energy From Municipal Waste

Table 23- Estimated Potential Gross Revenues From Servirce

Separtation Programs

Potential Unit Potential revenue per ton

revemie of MSW generated ($)

Material ($/ton) 25% participation 50% participation

Newspaper . . . . . . . . . . . . . . 0.3390.73 0.88-1.48

Booksand magazines . . . . . 0.0%0.12 0.08-0.23

Corrugated paper . . . . . . . . . I L ? 0.35=1.04 0.702.07

Office paper. . . . . . . . . . . . . 75-120 0.71 -1.14 1.43-2.28

Glass containers . . . . . . . . 0.48-0.89 0.92=1.38

Steel containers. . . . ● . . . . . 0.200.40 0.404.80

Aluminum containers. . . . . 0.30 0.80

Yard waste . . . . . . . . . . . . .

Total revenues . . . . . . . . . 2.384.42 4.77-8.82

Credits for disposal

avoidance. . . . . . . . . . . . 2-10 0.28-1.38 0.55-2.76

Grand total

revenues and

credits . . . . . . . . . . . . . . . 2.88-5.80 5.32-11.58

Revenues must be reduced to account for freight.

OTA esto,ates based on various industry sources. Ranges indicate

j~; c

m % -W of y~w~ }n H W ~ ~n ~wrama IS aaaumed to produoa only Iandfill oredlts and n@thW

energy aavinga nor net revenues. mm choke is nmda boouJaa Yard waata la ~tto vmOd 8gia00m Iy @ gaograptucauymt

bacauae experts dlaagrae wldaty about the vlabttlty of yard waate utllkatkn or aala. The effects of this choke m to under.

estimate by ● amall mount the economic and energy potentials of aouroe aapafation.

United States Numbers of programs

Rqionl•...•‘ . . . . . ● .,.. 48

Region | | 74

Region IIIf ~w,v’”“• ● 

12

. . . . . . . . . . . . . .

Region V. ● . . . . . . . ● . . . ;

-~.**** *J•*•• o ● * 9

4

Re@%t-w...•• ● ● . . ..* ● . $

Raf#qnv&. . * * ,, ● . ?-,, $ ●

@3@@n#f* ● .-* . . ● . . . ..* .’ * 2

9

~fh .; -- ~~•

SOUftOE: W on OaWt M. OOIW, SW&MQ CWaotkn PrWW?WA-iVetiO/W $Umy, Us. Em, w%, aw5ndlx B.

value of the materials, and the product demand. Tradeoffs are involved in the decision.

On the one hand, as the number of segments

to be separated is increased there is a drop-,

off in participation and an increase in the

complexity and thus cost of the equipment.

On the other hand, however, the cost of subsequent processing is reduced and the quality

and value of the products improve.

PARTICIPATION

Communities need to be sensitive to tradeoffs between material quality specifications

on the one hand and household convenience

and participation on the other. For example,

programs that require the removal of labels

and metal rings from glass containers, or

residual organic matter from all containers

may seriously deter cooperation. Reduced

participation is traded against the fact that

contaminated materials bring lower prices.

Some communities have designed special

containers for newspaper disposal that are

distributed to each household. Such containers reduce the time needed by each household, protect the papers in case of rain, and

help remind each household of the separate

collection program’s objectives. Some programs, which separate waste into three or

four segments, use a trash receptacle with

several compartments. One such container

was developed by a recycler in New Hampshire and marketed briefly by Sears, Roebuck

& Company.
Ch, 4—Source Separation for Materials and Energy Recovery ● 75

Various approaches have been suggested

for increasing the participation in separate

collection programs. One is to provide colorcoded plastic bags for different waste segments, Another is to charge lower fees for

collection of separated wastes, This latter approach was tested in an experimental l-year

study by the Seattle Recycling Project under a

grant from the Washington State Department

of Ecology. In one of the project’s test groups

a monetary rebate was offered which was approximately equal to the estimated reduction

in collection and disposal costs from separated wastes. One of the study’s conclusions

indicated that while the monetary incentive

was most effective with respect to voluntary

participation at the project’s inception, it did

not have a continuing effect through the entire test period.(6)

To stimulate participation, communities

have also tried a variety of advertising and

public awareness campaigns, Typical methods include development of a recycling program logotype to help citizens identify with

the program, placing information in newspapers and community newsletters, utilizing

neighborhood organizations to distribute program information, buying time on radio and

television to announce the start of programs

or changes in the pickup schedule, posters

featuring program information, community

calendars containing pickup schedules, and/

or a letter to each household from the mayor

or leading city official endorsing the source

separation program. Leadership by elected

officials is important, and personal contact

by community volunteers can help explain

programs and encourage participation,(7)

Another method for increasing public participation in separate collection programs is

to pass ordinances that require participation

and levy fines for noncompliance. EPA’s national survey of separate collection programs

found that 24 percent of the programs surveyed had ordinances mandating that residents separate recyclable materials from

mixed refuse. It was found that with residents of similar socioeconomic characteristics, and using the same collection frequency

and publicity campaigns, the likelihood of

participation is greater in mandatory programs, At the same time, however, most communities indicated that separate collection

ordinances are not strictly enforced owing to

the difficult y of apprehending violators.

Scavengers— unauthorized persons who

pick up recyclable material before the municipal or private collector arrives—also create

problems for many separate collection programs, Their impact is the greatest when

scrap material prices are high. Some communities have enacted antiscavenging ordinances, These usually state that it is unlawful

for any unauthorized person or firm to collect

the separated material or materials. Fines for

noncompliance range between $25 and $250.

Such ordinances need not necessarily prevent service, charitable, or religious organizations from collecting such items as newspapers in volunteer drives.

A number of communities have passed ordinances requiring that all collected MSW be

delivered to a specified location as a means of

assuring a steady flow of waste to a centralized resource recovery facility, This has been

done, not to protect public health, but to guarantee the economic viability of centralized

resource recovery plants in the face of competition from separate collection programs or

lower cost landfill. According to the information presented above, it appears that such ordinances are unnecessary if adequate attention is paid in advance to the complementary

roles of various disposal options. Furthermore, such requirements may act as a barrier to adoption of economically preferred

recovery and disposal methods, (See chapter

8 for a discussion of current legal challenges

to such ordinances.)

INCONVENIENCE AND ASPECTS OF

HOUSEHOLDER COST

To participate in sepa’rate collection programs, residents must devote time, equipment, and storage space, whose costs are

largely unknown and controversial. One

problem is to differentiate clearly between
76 ● Materials and Energy From Municipal waste

the costs of handling mixed waste and separated waste. Another is to put a value on both

the time and the residential space required

for waste segregation, since it is difficult to

determine the value of alternative uses of

such time and space.

Under an EPA grant, the League of Women

Voters of Newton, Mass., kept a record of the

time required to separate recycled materials,

above the time normally required to dispose

of waste. They found that it took an average

of 15 minutes per week per family (range 1 to

20 minutes).(7) It has been argued, however,

that the time spent in waste separation

should be given a positive value since it may

be associated with good feelings about contributing to conservation of resources, or it

may be done by children and have some educational value. There is no agreement on the

analysis or interpretation of these costs.

The inconvenience of storing recyclable

materials depends on the frequency of collection. A biweekly collection program would

create a smaller storage problem than one

that collected on a monthly basis. EPA’s

survey of separate collection programs indicates that approximately 70 percent of the

177 programs surveyed collected recyclable

at least twice a month, with the majority of

programs collecting once a week.(8)

The value per square foot of the additional

residential storage space that might be

needed for the wastebaskets to be used for

separate collection programs has been raised

as a potential cost. For example, if separate

collection of recyclable requires two extra

containers that each occupy one square foot,

the cost of extra waste container space for a

family of four who pay $400 per month for a

dwelling space of 1,200 square feet ($4 per

square foot per year), would be $3.13 per ton

of generated waste. (It should be noted that it

would take this family approximately onehalf year to generate a ton of waste.) It can be

argued, however, that this cost is not real because there is a question about whether such

wastebaskets would actually require additional residential space.

The cost of extra containers for separate

collection programs can also be estimated.

Two extra permanent containers might cost

$4 each and last for 3 years. For a family of

four, this would be equivalent to $1.04 per ton

of generated waste. Separate collection programs might also require additional consumer expenditures for plastic trash bags, depending on the design of the system and the

frequency of collection.

According to these estimates, the total additional consumer costs would be approximately $4 per ton. But the out-of-pocket costs

would be much less, perhaps as little as $1.00

per ton for extra containers.

SEPARATE COLLECTION OF ONE

RECYCI.ABLE AT CURBSIDE

The majority of separate collection programs in the United States collect just one

recyclable material. EPA’s data from its national survey on separate collection programs

indicate that approximately 99 percent of the

177 programs surveyed collected some type

of wastepaper.(9) Twenty-three percent of

the programs surveyed collected some form

of mixed wastepaper. Of the 133 programs

that collected newspapers, 110 collected no

other recyclable but newspapers. In addition, 32 of the 41 programs that collected

mixed wastepaper collected only this one

recyclable component. Apparently, a

large number of communities only recycle

newspapers because wastepaper markets

are more readily available than markets for

other recyclable, and because newspapers

constitute a large and easily separable part

of the waste stream. By removing them the

lifetime of a community’s landfill is increased. It should be noted that EPA’s survey

indicated that only three of the programs surveyed collected just glass or metals.

Various methods are used by municipalities and private haulers when collecting one

material separately. These include using:

separate trucks, racks attached to packer

trucks, and trailers attached to the rear of a

refuse collection vehicle.
Ch, 4—Source Separation for Materials and Energy Recovery ● 77

The majority of programs (72 percent) use

separate trucks, usually on a different day

than the one for regular waste collection.

This method has the advantage of low startup

costs. Some of its disadvantages are: (a) recyclable must be collected on a separate day

from regular waste collection—perhaps confusing residents about the waste collection

schedule: (b) high operating costs—the revenue obtained from the collected recyclable

material must offset the costs of collecting it:

(c) trucks can be used for the collection of

only one material at a time unless they are

modified for the purpose: and the material

must be unloaded by hand if noncompacting

trucks are used.

A second method, referred to as the piggyback system, is used by 22 percent of the programs. One recyclable—usually newspaper— is collected in a rack attached to a

packer truck. Startup costs for racks range

from $80 to $250,(11) and operating costs are

lower than for other collection methods.

A third method, used by 5 percent of the

separate collection programs, is the use of

trailers that have sufficient storage space (4

to 6 cubic yards) and can be unloaded mechanically, which are attached to the rear of

a refuse collection vehicle. This method also

permits the recyclable and the mixed refuse

to be collected at the same time. Its operating

costs are relatively low, but startup costs

tend to be quite high, ranging from $3,000 to

$3,500 for each trailer. There may also be a

problem with maneuverability.

Madison, Wis,, has been recycling newspaper since 1968 when it initiated a pilot

separate collection program involving half

the city, The rest of the city joined the program in 1gi’o. At the start, the city made

separate collection trips for newspapers. But

collection costs were too high, so the piggyback method was adopted. Even though Madison does not mandate separation, in 1977

about 13 percent of the population participated. In that year 1,365 tons of newspaper

were collected for which the gross revenues

were $43,982. The cost of collecting the

newspaper was $4.36 per ton, and the “profit” from its sale was $27.86 per ton.(12)

MULTIMATERIAL PROGRAMS

In May 1978, about 40 multimaterial programs collected two or more recyclable materials at curbside. (The programs are listed in

table 25.)(10) These included some combination of newspapers, magazines, corrugated

paper, glass, and aluminum and steel cans.

The majority of the multimaterial collection

programs are located in the northeastern and

western sections of the United States because

of both the unusually high landfill costs ancl

the availability of markets for the recovered

materials in these regions.

Most of the programs that collect both

color-mixed glass and cans handle either a

stream combining the mixed glass and the

cans or a stream of the mixed glass and a

stream of the ferrous and nonferrous cans.

Programs that collect both color-separated

glass and cans collect at least two streams of

glass; one clear and the other colored (amber

and green). Both glass streams are usually

mixed with cans. A third stream consisting

only of cans may also be handled. Most

multimaterial curbside programs use compartmentalized trucks, others use trailers attached to the rear of a refuse collection vehicle. An advantage of using compartmentalized trucks is that their operating cost is

relatively low because recyclable materials

are collected at the same time as mixed refuse. A disadvantage is that the startup cost is

relatively high. In 1976, a compartmentalized

truck cost approximately $20,000.

Two of the best known of the 40 multimaterial curbside collection programs are those in

Somerville and Marblehead, Mass. In 1976,

these communities were assisted by EPA

grants to recover glass, cans, and paper from

households. Marblehead is a relatively affluent suburban community that has been involved with recycling activities for some time.

Somerville is a less affluent, densely populated urban community with no previous recycling experience. Marblehead passed an

Ch. 4—Source Separation for Mater/a/s and Energy Recovery ● 79

ordinance requiring source separation of recyclable, while Somerville’s program was

voluntary. A full-scale public education program was undertaken in both areas. Both

communities obtained contracts for sale of

the materials through competitive bidding.

In the first 9 months of operation, Marblehead recovered 23 to 33 percent of its residential waste each month, while Somerville

recovered 7 to 9 percent.(12) In 1977, recovery rates for the residential waste stream

averaged 25 percent in Marblehead and 5

percent in Somerville. These results imply

participation rates considerably greater than

these fractions, since only portions of the

waste streams were to be recovered.

Overall costs for solid waste management

were reduced in Marblehead as a result of

the separate collection program. Before the

program was initiated Marblehead used four

vehicles to collect waste twice per week. A

contractor’s report prepared for EPA found

that because of the reduction in the amount of

waste to be collected as a result of the separate collection program, Marblehead was

able to change its collection frequency to

once a week in May 1977 and to eliminate one

of its four crews and one of its refuse-collection vehicles .

During 1977 Somerville received a total of

$10,938 for the sale of its recycled materials

and saved $14,456 by avoided landfill costs.

Marblehead obtained $25,540 for its recycled

materials and saved $41,084 through avoided

disposal costs. (14)

Program costs and savings for both Somerville and Marblehead in 1977 were as follows:*

Somerville: Spent $146,470 for recycling

program. However, some of the

costs of personnel and equipment

from the refuse-collection program

could be transferred. Thus actual

costs to the city were $80,122.

Somerville’s program showed a

net loss of$12 1,076 on a ‘‘full-cost”

basis (full cost of labor, equipment,

*The cost figures are based on reference (17).

Marblehead:

and consumables used in recycling

service: reflects recycling budget),

and a loss of $54,728 on an “actualcost” basis (additional costs actually incurred by community due to

recycling program).

Spent $90,394 for its multimaterial

program, Actual costs, however,

were $49,836.

Marblehead’s program showed a

net loss of $23,760 on a full-cost

basis, but a net gain of $16,788 on

an actual-cost basis.

The multimaterial program in Andover,

Mass., which collects residential newspaper,

glass, and cans, showed a net additional cost

of $3.22 per ton recovered by source separation ($0.56 per ton of waste managed).

However, the cost analysis was based on

newspaper revenues of $15 per ton, and an

increase to $20 per ton would have allowed

the program to break even. The Andover program covers a population of 26,000 that generates 57’9 tons per month of solid waste. A

total of 101 tons per month of glass, cans, and

newspapers were separately collected, for a

recovery rate of 17.4 percent based on residential waste only. (Participation rates are

much greater than 17 percent. )

Multimaterial Recovery in Community

Recycling/Reclamation Centers

Another approach to source separation is

through multimaterial community recycling

centers. These differ from separate collection

programs in that the participant is required

to deliver waste materials to a central collection point. During the late 1960’s, as environmental awareness spread, thousands of collection centers for recyclable were set up in

the United States.

Just as with other source separation approaches, however, there must be an awareness of the interplay between adequate markets, the high cost of transporting recycled

materials, the level of participation, and the

program’s success. Startup and operating

costs are relatively low for recycling centers

compared with those for high-technology re-
80 ● Materials and Energy From Municipal Waste

source recovery plants, and the quality of the

materials recovered can be high because they

are handsorted by residents, (Supervision

may be needed to assure that components are

not contaminated both when they ar e

dropped off and during their processing.)

A community recycling center can be sponsored by a municipality or by a private contractor, and can be run on either a mandatory or a voluntary basis. While most centers

give local residents the opportunity to recycle

a portion of their mixed refuse, they do not

pay for recycled materials. Many of the centers, particularly those in rural areas, recover material in the solid waste stream that

would otherwise be lost. The closing of open

dumps, as required by the Resource Conservation Recovery Act, may increase the value

to a community of a recycling center because

the amount of mixed waste headed for its

landfill or incinerator is reduced.

In New Hampshire, the towns of Plymouth,

Nottingham, and Meredith, have multimaterial community recycling centers that combine

recycling with incineration of nonrecovered

mixed refuse. Recycling newspapers ,

clean mixed paper, glass, metal, and other

rubbish is mandatory in both Plymouth and

Nottingham. Plymouth also recovers corrugated paper. Meredith only requires separating glass from the rest of the waste

stream.

Each of the towns sorts and processes its

recycled materials differently. In Nottingham, glass is color sorted and the caps and

rings are removed from glass bottles. Once

sorted, the glass is mechanically crushed and

transported to market. Both Plymouth, which

color sorts some of its glass, and Meredith,

which does no sorting, have their recycled

glass picked up at the centers by its purchasers. Plymouth and Nottingham mechanically flatten recovered cans, and in all the

systems the recovered corrugated paper and

newspapers are baled.

The participation of residents ranges from

about 95 percent in Nottingham and Plymouth, which have mandatory programs, to

25 to 50 percent in Meredith. Town officials

feel that when a “substantial” portion of the

waste stream is recovered through recycling,

net costs are lower than they would be for

any other environmentally acceptable system

that does not involve recycling.

Multirnaterial Recovery in Industry

Sponsored Recycling Programs

Source-separated materials are also recovered by industry-sponsored recycling centers

in programs that vary from recovering only

one material such as aluminum to multimaterial recycling. Unlike community-sponsored

recycling programs, industry programs pay

participants for recycled materials.

One multimaterial recycling program, the

Beverage Industry Recycling Program (BIRP),

has been operated throughout Arizona by the

beverage industry since 1971. It has 10 recycling centers (3 more are in the planning

stage) that accept aluminum and steel cans,

newspapers, and corrugated paper. During

1977, 15,227 tons of materials were recovered, an increase of 70 percent, over 1976.

(This is about I percent of Arizona’s total

waste load. ) Participants were paid

$2,390,000, an increase of 82 percent.

BIRP also has a number of recycling centers

in various stages of development in New Mexico.

Recycling centers that recover one material, aluminum, are operated by aluminum and

beverage companies, which pay 15 to 17

cents per pound (about 23 cans). The first

aluminum can recycling centers were opened

in 1967. As of May 1978 there were 2,300 collection points. The cans are collected at

both mobile and stationary centers and are

shipped to secondary smelters.

The Aluminum Association estimated that

in 1977 about 6.4 billion cans weighing

140,000 tons were returned for recycling.

(In 1976, 1,312,006 tons of aluminum were recycled from all sources. ) Reynolds Metal Company representatives forecast that in the

absence of beverage container deposit legis-
Ch. 4—Source Separation for Materials and Energy Recovery ● 81

lation from 30 to 50 percent of the aluminum

cans produced will be recycled by 1980 and

from 50 to 70 percent by 1985.(22) With a national beverage container deposit law, higher

recycling percentages would be anticipated,

but containers would be recovered through

the deposit system, (See chapter 9.)

Wastepaper Recovery Through Office

Recycling Programs

Many companies and Government agencies

separately collect high-grade wastepaper

from offices. This wastepaper, called “white

ledger, ” consists of letterhead, dry copy

paper, business forms, stationery, typing

paper, tablet sheets, and computer tab cards

and printout papers. Computer tab cards,

which have a very high value, are usually

boxed separately at computer centers and

recycled.

The most successful method used in recycling wastepaper from offices is called the

“desktop” program. A container is placed at

each desk for high-grade wastepaper, which

is periodically collected and taken to a central location to be baled and shipped to

market. The EPA reports that in 1976, 450

organizations were participating in one recycling company’s desktop office paper collection program—60 percent more than in

1975.(23) Approximately 100 Federal Government buildings, housing 125,000 employees

were participating in such programs by October 2, 1978.(24) In addition, some 20 State

governments, numerous cities, and the Canadian Government have all adopted this program.

An EPA-funded study of 12 private office

wastepaper collection programs found a 12-

percent average reduction in net solid waste

management costs. Cost savings were greatest in programs that only recover white, highgrade paper. Costs included publicity, equipment, and labor. Participation averaged 80

percent for the programs studied, and ranged

as high as 95 percent.

Commercial and Industrial Methods of

Source Separation

Over the past few years, supermarkets,

shopping malls, airports, hospitals, private

businesses, and industrial facilities, such as

auto assembly plants, have source separated

such products as corrugated paper. The

method used depends on the amount of paper

generated, the space available for storage,

and the investment required.

Data being prepared under contract for

EPA indicate that most corrugated paper recovery takes place locally through neighborhood supermarket chains. For example,

Safeway Stores, Inc., a national chain of

supermarkets, is source separating the corrugated portion of its waste stream at most of

its stores. One regional division, with 165

stores in Pennsylvania, Delaware, Maryland,

northern Virginia, and Washington, D. C.,

source separated 23,000 tons of corrugated

paper in 1977. This material was baled on

site and sold to private haulers.

The same study found that large airports;

shopping malls, hospitals, and commercial establishments were beginning to source separate their waste. Airports recover ferrous

metals, while hospitals and shopping malls

mainly recover corrugated paper. Most of the

material recovered by commercial establishments was found to be high-grade paper.

Marketing Recovered Materials

T

he marketability of recovered materials

must be taken into account by communities that undertake recycling programs. Both

cans and glass, as well as some wastepaper,

need to be upgraded by cleaning, sorting, and

other processing in order to meet market

specifications. Local communities that sponsor curbside recycling programs are faced

with the decision of processing the materials

themselves or selling their recycled materials

to intermediate processors, which are firms
82 . Mater/a/s and Energy From Municipal waste

that purchase glass and cans from local communities and prepare them for the final market. Most communities are not doing the processing themselves.

The EPA’s national survey of separate collection programs found that 39 percent of the

programs surveyed had contracts with materials dealers or manufacturers to sell their

recycled materials. Most of these contracts

were for newspapers and mixed wastepaper

and covered a period of 1 (75 percent) to 3 or

more years. Other contract stipulations

varied from those with both a floor price and

a floating price above the floor price to those

having only fixed-price provisions.

The price for recycled newspapers and

mixed wastepaper has fluctuated throughout

the history of separate collection programs.

EPA found that during the 1974-75 recession,

separate collection programs were seriously

affected. Many were discontinued. Those

communities that continued the programs reported that the price for recycled materials

had been reduced.

A detailed discussion of the issues and

problems related to marketing recycled materials can be found in the marketing section of

chapter 3.

Interaction of Source Separation

and Other Policies

Source Separation and Beverage

Container Deposits

s

ource separation and beverage container

deposits are both designed to reduce the

amount of high-quality used products that get

thrown away. An interesting consideration is

whether establishing both approaches in the

same region might detract from the attractiveness of either of them. Put another way,

should source separation and beverage container deposits be viewed as competing or

complementary?

Source separation and mandatory beverage container deposits might interact in several ways. A successful beverage container

deposit law would reduce the glass and metal

content of the solid waste stream and consequently the potential revenues from source

separation would be reduced. A successful

beverage container deposit law, however,

would recover largely green and amber glass,

leaving clear glass from food containers to be

recovered by other means. Thus, a source

separation program might recover only clear

glass, which would have a higher market value than would a mixed-glass fraction containing green and amber glass as well.

If a residential source separation program

is established, consumers who have returned

beverage containers for environmental and

conservation reasons may become less likely

to do so. They may decide that separate collection is an acceptable alternative to landfill, even though glass bottles recovered in a

curbside source separation program are likely to be broken and not reusable. Consumers

who are motivated to return containers in response to the financial incentive of a deposit

system are likely to continue to do so even if a

source separation program is established.

In this analysis, it is assumed that, on balance, a source separation program will not

affect the return rates and market shares for

containers. Therefore, the focus is on the reduction in potential revenues from source

separation if beverage container legislation is

implemented.

The effect that beverage container deposit

legislation (BCDL) might have on potential

source separation revenues is estimated in

the following way. In chapter 9, five scenarios are presented for the performance of the

beverage delivery system under mandatory

deposit legislation. Scenario I represents the

actual situation in 1975. Changes in MSW

composition are estimated for four other sets

of return and recycle rates and market

shares for containers, assuming that BCDL

had been fully implemented in 1975. These
Ch. 4—Source Separation for Materials and Energy Recovery “ 83

estimates are used here to evaluate the impact of BCDL on potential source separation

program revenues in 1975 for each of the

four scenarios, assuming a 50-percent participation in source separation for each component of the waste, and assuming average revenues per ton of the recovered material. *

Table 26 summarizes the calculation of potential revenues and credits from source separation using the five BCDL scenarios. (This

table presents only revenues and not the effects of BCDL on the cost of separate collection, which would be small). For the base case

without BCDL, the potential revenues and

credits total $8,36 per ton of waste generated. Each of the four other scenarios shows

a reduction in revenues and credits. The revenues and credits with BCDL range from

$7.58 to $7.81 per ton, for a reduction of 7 to

9 percent in revenues and credits per ton of

waste generated. Since total waste tonnage

decreased by as much as 3.6 percent, total

revenues and credits might decrease by as

much as 13 percent.

These reductions in source separation revenue with BcDL are relatively small because

the contribution of container materials to

revenues is, at most, only $2.29 per ton of

generated waste. Beverage containers represent only a fraction of this, and BCDL is not

expected to remove all beverage containers

from MSW under any circumstances. ln fact,

container revenue drops no lower than $1.41

per ton under any scenario.

Finally, it should be noted that the four

BCDL scenarios span a wide range of system

response from an all-glass-refillables system

*For all the scenarios it is assumed that the components of MSW other than beverage containers are

the gross discards (waste as discarded before recycling) presented in table 4. For Scenario I, the actual situation in 1975, beverage container waste components

available for source separation are assumed to be included in the gross discards. For the four scenarios

under BCDL, the beverage container waste components

available are assumed to be the “net waste disposed

of” because the remainder are returned through the

deposit channel for reuse or direct recycling. In each

case, the percentage composition of the waste is adjusted to reflect the new totals.

to a system with a high can-market share.

Should BCDL be ineffective and return rates

be very low, potential source separation revenues might remain the same or actually increase.

The preceding analysis is based on the

adoption of a comprehensive residential and

commercial source separation program. For

a program limited to residential source separation, the impact of deposit legislation on

source separation revenue would be more significant. Based on the data in table 24, a program picking up only newspapers, glass, and

metal cans has a potential revenue of $3.35

per ton of generated waste without a deposit

law and $2.51 to $2.75 per ton with a law.

The maximum difference of 84 cents per ton

of MSW generated corresponds to a drop in

the potential gross revenue of 25 percent.

Source Separation and Centralized

Resource Recovery

Source separation removes a fraction of

materials from the waste stream. It may

therefore reduce the potential revenue of an

existing resource recovery plant. On the

other hand, an effective source separation

program can reduce the volume of waste to

be disposed of and thus allow a smaller resource recovery plant to be built, while simultaneously reclaiming some resources of

higher quality and value (particularly paper

fiber, which, in many cases, has a higher

value as a raw material than as a fuel).

The local economics of source separation

and centralized resource recovery should be

carefully investigated in order to judge

whether either approach alone, or some combination of both, would be the most attractive. ** Nevertheless, some insight into the

revenue and resource recovery implications

of a dual system can be gained by examining

the following example.

**The question of Compatibility between source separation and centralized resource recovery systems is

currently being examined in detail by EPA in response

to section 8002(e) of the Resource Conservation and

Recovery Act of 1976.
84 ● Materials and Energy From Municipal Waste

Suppose that each person in a city with a

population of 500,000 discards 3.5 pounds

per day of MSW which has the national average composition. The city is considering three

resource recovery options:

1. Construction of a centralized resource

recovery plant to recover materials and

refuse-derived fuel (RDF).

2. A multimaterial residential and commercial source separation program that recovers each of the materials included in

table 21.

3. A combination of 1 and 2.

Estimates of materials and energy recovery

and of revenues are summarized for each option in table 27. (It should be noted that this

table only presents gross revenues and does

not present the effects of various options on

collection costs. )

Under option (l), an RDF plant with an

average daily capacity of 875 tons is required. It would produce average daily revenues and disposal credits totaling $14,085.

Under option (2), if 50-percent participation occurs, a source separation program recovers 239 tons per day of materials and produces daily revenues and credits of $7,381.

Under option (3), if 50-percent participation in source separation occurs, an RDF

plant with a daily capacity of 636 tons is

needed. This option will produce combined

revenues and disposal credits of $17,116, or

$3,031 more than for option 1. At a processing cost of $15 per ton (see table 46), daily

RDF processing costs are $3,585 less for the

combined system than for the RDF system

alone. If the additional costs for operating the

source separation program are less than

$6,616 per day ($3,031 plus $3,585) the combination in Option 3 is economically preferable to centralized resource recovery alone.

Note that $6,616 per day is equivalent to

$7.56 per ton of MSW collected and that

source separation is generally thought to cost

less than this to implement.

The input data for these comparisons are

estimates and the results are by no means

definitive. In addition, table 27 assumes that

the technologies listed work, that the participation rate needed in Options 2 and 3 is

achieved, and that there are markets for the
Ch. 4—Source Separation for Materials and Energy Recovery ● 85

Table 27.—Recovery Rates and Revenues for Three Resource Recovery Option

option 1 Option 2 Option 3

Impact measure RDF & materials source separation combination

RDF facility size (tpd). . . . . . . . . . . . . . 875 636

Ferrous recovery (tpd) . . . . . . . . . . . . . 18 67

Aluminum recovery. . . . . . . . . . . : ; 1.8 4.1

Glass recovery (tpd). . . . . . . . . . . . . . . 40

Nonferrous recovery (tpd). . . . . . . . . . 0

4

;6 O.766

Paper recovery (tpd). . . . . . . . . . . . . . . : 96

Yard waste recovery (tpd) . . . . . . . . . . : 84 84

RDF productionc(tpd) . . . . . . . . . . . . . 834 0

RDF production (10* Btu\d). . . . . . . . . 7.88 0 4 5 4

Materials revenues ($/day). . . . . . . . . . 3,693 5,947~ 8,603e —

Energy revenues ($/day). . . . . . . . . . . . 5,910 0 3,893

Landfill credits ($/day @ $6/ton) . . . . . 4,482 1,434 4,620

Total revenue & credits ($/day) . . . . . . 14,085 7,381 17,116

materials recovered, Nevertheless, the table

suggests that a combination of source separation and centralized resource recovery is on

an almost equal, if not better, economic

footing than centralized resource recovery

alone. If this is true, there is no reason for a

community to reject the possibility of a wellintegrated source separation and resource

recovery program on economic grounds, Furthermore, the joint program will require a

lower total capital investment, and will produce revenues from the source separation

program and reduce landfill costs almost immediately while construction of the resource

recovery plant proceeds. In addition, source

separation material revenues may grow more

rapidly than those from centralized resource

recovery owing to their higher quality. Of

course, the success of resource recovery,

either through centralized resource recovery

or through source separation is highly dependent on the availability of existing

markets for the recovered materials.

The analysis also makes clear that the

resource recovery plant revenues would be

smaller with source separation in place and

that part of the revenues from the source

separation program would have to pay for the

higher net unit cost of resource recovery. A

preexisting resource recovery plant designed

to process the entire city’s waste would experience a sharp decline in revenue if a source

separation program were successfully introduced after the plant was built. For example,

an RDF plant that depends on a large amount

of burnable wastepaper might be severely affected by a source separation program that

recovered newspapers and/or mixed wastepaper.

Source Separation and

Economic Incentives

Source separation would be stimulated if

the Federal Government implemented economic incentives to encourage recycling.

Such incentives might include the establishment of a “product charge” on all products

entering the municipal waste stream, modification or repeal of the percentage depletion

allowance, and/or the institution of a Federal

income tax credit for the purchase of recycled materials. These options are mechanisms to increase the demand for recycled

materials by the producers of primary materials. As a consequence, a wide range of recycling activities, including source separation,

would be encouraged. (See chapter 8 for a

discussion of these economic incentives and

their effectiveness in stimulating recycling

and reducing the rate of waste disposal.)
86 . Materials and Energy From Municipal Waste

Federal Policy and

Source Separation

s

ource separation can be a desirable local

or regional approach to recovering a portion of the solid waste stream. It is, therefore,

of interest to consider the policy options

available to the Federal Government for implementing or improving this approach. Such

options should permit a range of responses at

the State and local levels so that the different

roles that source separation could play under

various circumstances would be recognized.

No Additional Federal Action

ln the limited number of cases for which

data are available, source separation appears to be self-sustaining, or nearly so, on an

economic basis. Thus, there may be little need

for Federal action, other than assuring that

Federal agencies consider source separation,

along with centralized resource recovery, as

a viable component of solid waste management systems. In designing general policies

toward solid waste management and materials conservation, Federal agencies should not

arbitrarily rule out source separation approaches. For example, planning, demonstration, or financial incentive programs should

include source separation along with centralized resource recovery.

Direct Federal Action

MANDATED SOURCE SEPARATION OF

MATERIALS BY FEDERAL AGENCIES

The EPA issued guidelines in 1976 requiring separate collection of paper at any Federal agency that generates recoverable paper

wastes, under the authority of section

209(a) of the Solid Waste Disposal Act, as

amended by the Resource Recovery Act of

1970. The guidelines are recommended to

State and local governments as well as to private organizations. They require that Federal

office buildings with a minimum staff of 100,

source-separate and recycle high-grade paper; that Federal facilities (such as military

bases) housing 500 or more families recycle

newspapers; and that corrugated containers

from Federal facilities that generate 10 or

more tons per month must be recycled.

INCENTIVES FOR INVESTMENT IN

RECYCLING FACILITIES

Another option is to provide interest rate

subsidies, cash grants, or other incentives to

public agencies or to private firms for investment in recycling facilities. (See chapter 2 for

a discussion of the additional 10-percent investment tax credit for recycling facilities

passed into law in late 1978. ) Intermediate

processing industries for source-separated

material would be included as candidates for

such incentives. Proposals have been made

for a bank that would lend funds for recycling

facilities at 1 percent above the cost to the

Government of lending the money. Such a proposal would help reduce interest rates on

such loans thereby making investments in recycling facilities more attractive.

LABOR TAX CREDITS FOR RECYCLING

PROGRAMS

A corporate income tax credit for some

portion of the wages of additional employees

hired to carry out recycling activities might

stimulate all types of recycling. Such a program would tend to favor private sector

source separation over centralized resource

recovery because separate collection is more

labor-intensive than other kinds of recycling.

FEDERAL SUPPORT FOR RESEARCH,

DEVELOPMENT, AND DESIGN FOR

SOURCE SEPARATION

Another option is to fund research, development, and design for source separation. Examples of possible project areas are: (a) developing well-documented educational material to be used in informing communities

about source separation, (b) designing manuals to be used by communities or offices in

setting up source-separation recycling programs, (c) developing mechanisms for motivating high participation rates for source separation, and (d) devising ways to improve the
Ch. 4—Source Separation for Materials and Energy Recovery ● 87

removal of contaminants from wastepaper,

glass, and cans.

FEDERAL FUNDING OF DEMONSTRATION

PROJECTS

Funding for demonstration projects is

another option available to the Federal Government. Such grants can be used to: (a) learn

more about a particular new program, product, or process— “policy-formulating demonstrations;” (b) promote the use of a program,

product, or process— “policy-implementing

demonstrations;’ and (c) provide a political

compromise between those groups that prefer large-scale operating programs and those

that prefer nothing.

Demonstration grants could improve a

number of areas in the field of source separation. A major demonstration program is

needed in a large eastern city, which would

focus on collection, public awareness, processing/marketing, and waste utilization techniques. The purposes of such a program

would be to test both the viability of source

separation in a major metropolitan area and

its interaction with other solid waste management options. Demonstration grants might

also be provided to the intermediate processing industries in order to develop improved

methods for removing contaminants from

wastepaper, glass, and cans.

Currently EPA is sponsoring a demonstration grant to the Denver Regional Council of

Governments for implementing a source separation program in Boulder, Colo. Other implementation grants previously sponsored by

EPA included programs in Somerville and

Marblehead, Mass., in Nez Pez County,

Idaho, in Duluth, Minn., and in San Luis

Obispo and Modesto, Calif,

Indirect Federal Action

FEDERAL PROCUREMENT

The Federal Government’s expenditures on

paper and other goods, while large, are small

in comparison to those of the private sector.

However, many procurement practices of the

Federal Government are widely adopted by

States, local municipalities, and industry.

Consequently, a modification of Federal procurement specifications and procurement

practices to require recycled paper or other

goods will have a positive effect on the use of

these recycled materials. Specifications that

encourage greater use of recycled paper

would stimulate demand for source separation programs, since recyclable paper can be

produced from wastepaper only if it is kept

separate from mixed MSW.

Section 6002 of the Resource Conservation

and Recovery Act (RCRA) specifies that Federal agencies will be required to choose products that are composed of the highest percentage of recycled materials practicable,

consistent with maintaining a satisfactory

level of competition, after October 21, 1978.

However, in developing guidelines in response to the Act, EPA has had difficulty in

precisely defining a “recycled” material. The

RCRA only defines a “recovered” material. It

does not explicitly define the term “recycled. ” As a result EPA is working to develop

guidelines that will define, in some detail, the

Act’s intent with respect to the use of home

scrap, prompt scrap, and postconsumer

scrap in the recycling process.

At present, EPA is trying to tie the date for

compliance by the Federal agencies to the issuance of its guidelines. This action requires

that an amendment to RCRA changing the October 21, 1978 compliance date be passed, or

that an oral agreement be reached between

the affected Federal agencies and Congress.

EPA’s proposed guidelines are expected to be

phased-in during FY 1978 and FY 1979. Four

sets of guidelines will be issued so that industry’s specific questions about what constitutes a “recycled” material can be answered

in detail. The guidelines will be broken down

into the following categories: (i) paper products, sanitary paper, computer paper, etc.;

(ii) fly ash used in the manufacture of cement;

(iii) other construction materials; and (iv)

composted sewage sludge.
88 . Materia/s and Energy From Municipal Waste

OTHER INDIRECT FEDERAL ACTIONS

A number of other incentives that could be

adopted by the Federal Government to encourage recycling would stimulate source

separation. These include: (i) establishment

of “product charges” on all products entering

the municipal waste stream; (ii) elimination of

the capital gains tax treatment of income

from timber sales; (iii) equalization of freight

rates for virgin and secondary materials; (iv)

modification or repeal of the percentage depletion allowance; (v) placement of a tax on

virgin materials levied at the point of mining

or harvest in proportion to some measure of

the amount or value extracted, i.e., a severance tax; and (vi) a Federal income tax credit

for the purchase of recycled materials. None

of these options is unique to source separation. However, they are all possible ways to

stimulate a wide range of recycling activities,

including source separation, by increasing

the demand for recycled materials by the producers of primary materials. These options

are discussed in detail in chapters 3 and 8.

Findings on Source Separation

s

ource separation for the recovery of recyclable materials from MSW is widely

practiced in the United States today. It is the

only available method with which wastepaper can be recovered for recycling into new

paper products. It is also used to recover

glass, ferrous and nonferrous metals, and

yard waste for recycling. Nearly all of the

MSW that is currently recovered for recycling is collected in source separation programs.

Source separation can produce sizable revenues and energy savings from MSW, but has

only a limited effect on the total solid waste

stream. For example, at 50-percent participation, a comprehensive residential and commercial program could recover around onefourth of a community’s MSW, leaving threefourths for recovery or disposal by other

means. With such a program in place, a community would still have ample opportunity to

install a centralized system for materials

and/or energy. Depending on the level of participation and on market conditions, a carefully planned combination of source separation and centralized resource recovery may

be the optimal approach from an economic

point of view.

Source separation programs currently

operated by municipalities, industry, and volunteer groups include curbside separate collection programs, multimaterial recovery in

community recycling centers, industry-sponsored recycling programs, and commercial

and industrial methods of source separation.

According to EPA, about 133 communities

were collecting newspapers in curbside programs in May 1978. Another 40 were collecting other kinds of paper and/or glass and

cans. Industry-sponsored programs collected

24.8 percent of all-aluminum beverage cans

produced in 1977.

Although source separation has grown in

popularity in the last decade, some programs

have experienced technical or organizational

problems. Many others, however, have failed

owing to problems in marketing their products, and still others have faced indifference

or hostility from proponents of alternative approaches. Nevertheless, a great deal of expertise has been developed for designing and

operating such programs. Much of the activity has occurred in small towns and in moderate-sized cities. A residential source separation program encompassing a major urban

area has yet to be demonstrated.

Nearly every potential Federal action to

encourage recycling would stimulate source

separation activities, unless specific barriers

to its inclusion are raised. Specific Federal

efforts to assist source separation activities

would include funding of systems research,

innovative program design, and improvement

of equipment for intermediate processing or

materials upgrading. One important option

would be for Federal assistance to demonstrate curbside source separation in a major

urban area in order to learn how to implement such a program, and, presuming success, to show other cities what might be done.
Ch 4–-Source Separation for Material and Energy Recovery ● 8 9

Finally, there are no major inherent con- ble revenue problems, capital-intensive, cenflicts among source separation. centralized tralized systems must usually be designed to

resource recovery. and beverage container accommodate existing or future separate coldeposit legislation. However, to avoid possi- lection programs.
90 “ Materials and Energy From Municipal Waste

References

I. Cohen, David M., Separate Collection Programs: A National Survey, U.S. Environmental Protection Agency, 1978, p. 8.

2. Gordian Associates Incorporated, Environmental Impacts of Production of Virgin and Secondary Paper, Glass, and Rubber Products, Final Report (SW-128C) for

the U.S. Environmental Protection AgenCy, 1976,

3. Ziegler, R. C., S.M. Yaksich, R.P. Leonard,

and M. VanLier, Environmental lm pacts

of Virgin and Recycled Steel and A]uminum, Final Report (SW-I17c) done by

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

Calspan Corporation for the U.S. Environmental Protection Agency, 1976.

Bravard, J. L., H. B. Flora, and C Portal,

Energy Expenditures Associated With the

Production and Recycle of Metals, Oak

Ridge National Laboratory Report ORNLNSF-EP-24, November 1972.

Cohen, David M., op. cit., pp.1 and 3.

Fremont Public Association and Fremont

Recycling Station No. 1, Seattle Recycling

Project Final Report 1977: A Pilot Study of

Voluntary Source Separation Home Collection Recycling, performed for the City

of Seattle, Department of Human Resources, pp. 3-22.

League of Women Voters Education Fund,

Final Report on Training Grant T900604-

01-0 Between the Office of Solid Waste,

U.S. Environmental Protection Agency

and the League of Women Voters Education Fund, 1977.

Cohen, David M., op. cit., p. 47

Ibid., p. 1.

Ibid., p. 16.

Ibid., p. 47.

Conversation with T. Jagelski, Division of

Engineering, Department of Public

Works, Madison, Wis., Jan. 3, 1978.

Cohen, David M., op. cit., p. I,

Unpublished memorandum from Stephen

E. Howard to Penny Hansen, Status of

Glass Recovery and Marketing Through

Source Separation in the Northeast Corridor, U.S. Environmental Protection Agency, Washington, D. C., July 26, 1978, p. 2.

154

16,

17.

18,

19.

20.

21

22(

23.

U.S. Environmental Protection Agency,

Office of Solid Waste Management Programs, Resource Recovery and Waste

Reduction, Fourth Report to Congress,

EPA Publication SW600, Washington,

D. C., U.S. Government Printing Office,

1977, pp. 35-37.

Resource Planning Associates, Inc., SolidWaste Recovery Programs in Somerville

and Marblehead, Massachusetts, Monthly Reports: January 1977 Through December 1977, Draft Report prepared for the

U.S. Environmental Protection Agency,

Jan. 20, 1978, p. 1.

Ibid., p. 2.

Monthly Solid Waste Management Costs,

Andover, Mass., oct. 27, 1977. Researched by Steve Howard, Office of

Solid Waste Management Programs, U.S.

Environmental Protection Agency, presented at a Source Separation Conference

in Newton, Mass., October 1977.

Jansen, Edmund F., Jr., and Richard

Tichenor, Recycling as an Approach to

Solid Waste Management in New Hampshire: An Overview of Five Systems, New

Hampshire Agricultural Experiment Station, University of New Hampshire, Durham, N. H., in cooperation with Recycling

and Conservation, Inc., Kittery, Maine.

Data based on conversation with Jane

Gallagher, staff member of Beverage Industry Recycling Programs (BIRP) in

Phoenix, Ariz., October 1978; and Resource Recovery Report, vol. 2, No. 4,

March 1978, p. 3.

Data provided through conversation with

Diane Simmons, Aluminum Association,

Washington, D. C., October 1978.

Conversation with G. Bourcier, Manager

of Resource Recovery Programs, Reynolds

Metals Company, October 1977.

U.S. Environmental Protection AEencv,

Office of Solid Waste Managemen~ Pr;

grams, op. cit., p, 38.

24. Data based on conversation with Chas.

Miller, U.S. Environmental Protection

Agency, Office of Solid Waste Manage-
Ch. 4—Source Separation for Materials and Energy Recovery . 91

25.

26.

27,

28,

ment Programs, Washington, D. C., Oct. 5,

1978.

U.S. Environmental Protection Agency,

Resource, Recovery, and Waste Reduction, op. cit., p. 39.

Data obtained through conversation with

Ester Bowering, SCS Engineers, October

1978.

Data obtained through conversation with

Ernest Moore, Public Relations Manager,

Washington Division, Safeway Stores,

Inc., October 1978.

F.R. 41, No. 80, 16950-16956, Apr. 23,

1976.

29, Office of Technology Assessment, R&D

Program, The Role of Demonstrations in

Federal R&D Policy, U.S. Congress,

Washington, D. C., U.S. Government Printing Office, 052-003-00557-3, OTA-R-70,

pp. ix-x.

30. Data based on conversation with John

Heffelfinger, U.S. Environmental Protection Agency, Office of Solid Waste Management Programs, Washington, D. C.,

January 1979.
Chapter 15

Technologies for Centralized

Resource Recovery
Page

h@wh@iwandIssue sAd dressed . . . . . 95

~WusOfth8Techno}o@es . . . . . . . . . . . . 96

Inventory of Centralized Resource

Reoovery Facilities in the United

~tates. . . . . . . . . . . . . . . . . . . . . . . . . . 96

Comparative Performance of Various

“f’Qcllrlologies * . ● ● ., ● ,., , ● ..,6 ● ● ● ● 9 7

DagreeofProven Commercialization 97

Waste Reduction Efficiencies . . . . . . 99

Material Recovery Efficiencies. . . . . 99

Ilnergy Recovery Efficiencies .. ....100

PotentiaMlnergy Savings From

CentralkmdR esourceRecovery .. ...101

Resource Recovery Experience in

Western Europe . ..................101

Environmental and Workplace Health

and Safety. . . . . . . . . . . . . . . . . . . . . . . . IOZ

. Environmental Factors . ............103

Air Emissions. . .................103

Li dM$skns ..*. ..*. .*. IM. *.lM

s Residuals..•• , a ● ., * ● . ● ● ● * ● ● ,105

occupational klealth and Safety

Factors ● *99* ****   ** . *.. ***. *O 105

IWtiae ● Q , ● . ● ● . ● ● . . . ● ,. .., ● . ● ● ● , 105

Fathogans ,, + . ● ● ● , ● . . ● . . ● . . ● ● . ● .105

Dusts snd~oxic Substances . ......106

lixpl~ions and Fires . ............106

Mechanical and Ektrical Hazards. 107

Cm@ueions ● , ● , ● . ● ● . s . ● ● . . ● . ● ,.. ● , 107

Mant W#3and System Design: The

~Qf*@~e*•• ● ● b ● ● * ● ● ● ● ● 9 ● o ● ● ~~

Overview ● , a ● ● ● ● ● ● ● ● ., ● . . . ● ● * * * * ● 106

MMcl@gProducers With Consumers .108

“l%18r@%l@lners ● c ● c * ● ● ● ● ● ● ● Q * ● 108

Wt@O-PrOducers. . . . . . . . . . . ● . . . . 109

AdvamWges arid Disa*antages of

@@l& Large Plants.... ........ 110

Research and ~~lq~~~t in Resource

h“ovwy: The Federal Role.. . ........111

Page

Background * * ● ● 6 ● . ● ● ● ● . s ● ● ● o ● ● ● ● ● 111

R&Dhleeds. . . . . . . . . . . . . . . . . . . . . .. 111

Findings on Technologies for Centralized

Resource Recovery . ................112

References. . . . . . . . . . . . . . . . . . . . , ... , 115

Table No, Page

28. Municipal Solid Waste Energy and

Materials Recovery Systems, . . . . . . . 95

29. Resource Recovery Facilities in the

United States. ... , . . . . . . . . . . . . . ., 97

30. Degree of Proven Commercialization of

Energy Recovery Technologies . . . . . . 98

31. Degree of Proven Commercialization of

MateridsRecoveryT echnologies. . . . 98

32. Estimated Waste Reduction Efficiencies

of Resource Recovery Technologies . . 99

33. Materials Recovery Efficiencies. .. ..100

34. Energy Recovery Efficiencies of

Resource Recovery Processes. ... ...100

35. Potential Amual Energy Savings From

Recovery and Recycling of 100 Percent

of Various Materials From MSW .. ..101

36. Waste-to-Energy Systems in Western

Europe . . . . . . . . . . . . . . . . . . . . . . . . .102

37. Distribution of Waste-to-Energy

Furnaces, by Capacity and Country in

Western Europe. . ....,.........,.103

38. U.S. City Size, Population, and Waste

Production in 1975*•• . ● . ● ,,, ● ,0 ● ● ● 109

39. U.S. Standard Metropolitan Statistical

Areas (SMSAs)Size, Population,

and Waste production in 1975 .. ....110

40. Selected Research, JMvelopmenL and

~em@Wr@ionNeeds for Resource

Recovery Technologies .. .....,.,., 112
CHAPTER 5

Technologies for Centralized

Resource Recovery

Introduction and Issues Addressed

c

entralized resource recovery includes

any process that can recover energy

and/or recyclable materials from collected,

mixed municipal solid waste (MSW). These

processes are listed in table 28. In complexity

they range from simple recovery of ferrous

materials using magnets to complex systems

that include the production of liquid or

gaseous fuels by pyrolysis and the recovery of

ferrous metals, aluminum, glass, and other

Table 28.—Municipal Solid Waste Energy and

Materials Recovery Systems

. — — ———

Energy recovery systems

Mass combustion of raw MSW

Waterwall incineration

Small-scale modular incineration with heat

recovery

Refuse derived fuel (RDF)

Dry processes

Fluff RDF

Dust or powdered RDF

Densified RDF

Wet processes

Pyrolysis systems

Low Btu gas

Medium Btu gas

Liquid fuel

Biological systems

Landfill methane recovery

Anaerobic digestion

Hydrolysis

Materials recovery systems

Comporting

Ferrous metals

Aluminum

Glass

Fiber

Wet separation

Dry separation

Nonferrous metals

SOURCE Off Ice of Tecnology Assessment

nonferrous metals. While centralized resource recovery is sometimes viewed as being

in the class of high-technology aerospace

spinoffs, it includes small-scale modular incineration, simple mechanical processes such

as shredding, and such biological processes

as comporting and anaerobic digestion.

In this chapter the following questions and

issues are addressed:

●

●

●

●

●

What centralized resource recovery

technologies are available?

What is the status of these technologies

and how well do they perform the tasks

of waste disposal and resource recovery?

What environmental, health, and safety

problems may exist or emerge with centralized resource recovery?

H OW does the question of plant size or ,

scale affect decisions about centralized

resource recovery systems?

What should be the Federal role in

meeting research, development, and

demonstration needs?

In this chapter, the status of the technologies and their effectiveness in resource

recovery and waste reduction are examined.

Issues related to environmental and workplace health and safety, the question of scale

in resource recovery systems, and the Federal role in research, development, and demonstration are addressed. Other issue-oriented questions regarding markets, economics, institutional problems, and selection

of overall waste management

discussed in other chapters.

The technologies listed in

described briefly in appendix

strategies are

table 28 are

C. More tech95
96 ● Materials and Energy From Municipal Waste

nical detail is available in the additional

readings listed at the end of appendix C.

The problem of technology selection and

system design to serve a particular community is a difficult one, It requires consideration

indepth of local conditions and of technological capabilities. The purpose of this report is

not to provide sufficient detail to make such

local decisions but only to assist in making the

policy decisions associated with resource recovery programs.

Status of the Technologies

T

his section includes an inventory of

resource recovery facilities in the United

States. The various technologies are then

compared in terms of (i) degree of proven

commercialization, (ii) waste reduction efficiency, (iii) material recovery efficiency, and

(iv) energy recovery efficiency. Estimates are

presented of the maximum potential energy

savings from the recovery of energy and

materials from MSW. Finally, information on

the status of European systems is reviewed.

Inventory of Centralized Resource

Recovery Facilities in the United States

Table 29, which lists centralized resource

recovery facilities now operating or under

construction in the United States based on a

recent Environmental Protection Agency

(EPA) publication,(l) is an update of an

earlier table published by EPA in 1976 in its

Fourth Report to Congress.(2) It lists 17 plants

in operation (down from 21 in 1976) with a

total capacity of 6,730 tons per day (tpd)

(down from 9,880 in 1976). The main differences between table 29 and the earlier EPA

table are the addition of Baltimore and

Baltimore County, Md., and Milwaukee, Wis.,

to the operational list; the deletion of experimental facilities in St. Louis, Me., and

Washington, D, C.; and the deletion of five

waste incinerators in Chicago, Ill., (two

plants), Harrisburg, Pa., Merrick, N. Y., and

Miami, Fla.

Table 29 also lists 12 facilities in startup or

under construction (up from 10 in 1976] with

a total capacity of 11,860 tpd (down from

12,560 in 1976). The major differences in this

category include shifting Baltimore, Baltimore County, and Milwaukee to the operational list; adding Akron, Ohio,; Bridgeport,

Corm.; Lane County, Oreg.: Monroe County

and Niagara Falls, N. Y.; and North Little

Rock, Ark.; and deleting the 6,000-tpd proposal for St. Louis.

In the Fourth Report to Congress,(2) EPA

listed a number of communities engaged in

various stages of planning for centralized

resource recovery. Since 1976, neither EPA

nor OTA has updated this list. Subsequent

events suggest that it is not a reliable guide to

the current situation nationwide.

In October 1978, the Department of Energy

(DOE) announced that 20 communities would

receive grants to conduct studies for demonstrating the feasibility of recovering energy

from waste.(3) None of these grants is to be

used for construction purposes.

It is difficult to classify the operational

status of the facilities in table 29 because

many of them are experimental or demonstration facilities whose status can change quickly. The term “operational” does not necessarily mean “commercial. ” Several of the

facilities in the operational phase have been

based on significant public or private subsidy. Others are similarly subsidized demonstration plants. The San Diego County pyrolysis facility is shut down for major modification.(4)

Table 29 shows a trend toward large-scale

plants among those under construction or in

startup. Over half have a capacity of 1,000

tpd or more. A possible shift away from this

early trend toward building large plants is

discussed in this chapter. The table also

shows that the most popular systems are

waterwall incineration and refuse-derived

fuel (RDF), but that there is interest in small

modular combustion units such as those in
Ch. 5— Technologies /or Centralized Resource Recovery ● 97

Table 29.– Resource Recovery Facilities in the United States

Location

In operation:

Altoona, Pa. . . . . . . . . . . . . . . . . . . . . .

Ames, lowa. . . . . . . . . . . .

Baltimore, Md. (D) . . . . . . . . . . . . . . . .

Baltimore County, Md. (D). . . . . . . . . .

Blytheville, Ark. ... . . . . . . . . . . . .

Braintree, Mass.. . .

E. Bridgewater, Mass. (D) . . . . . . . .

Franklin, Ohio (D). . . . . . . . . . . . . . . . .

Groveton, N.H. ., . . ... . . . . . . . . . .

Milwaukee, Was. . . . . . . .

Nashville, Term. . . . . . . . . . . . . . . . . .

Norfolk. Va. . . . . . . . . . . . .

Oceanside. N.Y. . . . . . . . . . . . . . . .

Pales Verdes, Cal if. . . . . . . . ... . . . .

Saugus. Mass. . . . . . . . . . . . . . . . . .

Siloam Springs, Ark. . . . . . . . . . . . . . .

South Charleston, W. Va.(D) . . . . . . .

Under construction; startup:

Akron, Ohio . . . . . . .

Bridgeport.Corm. . . ., ., . . . . . .

Chicago, ill. . .

Hempstead, N.Y. . . . . . . . . . . . . . . .

LaneCounty, Ore. ..., . . . . . . . . . . . .

Monroe County, N.Y., . . . . . . . . . . . . .

Mountain View.Calif (D). . . . . . . . . . .

NewOrleans, La.(D) . . . . . . . . . . . . . . .

Niagara Falls, N.Y... . . . . . . . . . . . .

North Little Rock, Ark.,. . . . . . . . . . . . .

Portsmouth, Va.. . .

San Deigo, Calif (D).... . . . . . . . . . .

Type’

Compost

RDF

Pyrolysis

RDF

MCU

WWC

RDF

Wet pulp

MCU

RDF

WWC

WWC

RWI/WWC

Methane recovery

WWC

MCU

Pyrolysis

RDF/WWC

RDF

RDF

Wet pulp/WWC

RDF/WWC

RDF

Methane recovery

Materials

RDF/WWC

MCU

WWC

Pyrolysis

Capacity

(tons/day)

200

400

700

550

50

240

160

150

30

1,000

720

360

750

1,200

20

200

1,000

1.800

1,000

2,000

750

2.000

650

2,200

100

160

200

a-RDF= refuse derived fuel WWC= waterfall combustion, RWl= refractory wall incinerator

RDF/WWC= Waterfall combustion using processed waste D= Pilot demonstration facility

SOURCE H Freeman of EPA(l)

Products/markets

Humus

RDF-utility, Fe,Al

Steam heating&cooling. Fe

RDF,Fe,ALglass

Steam process

Steam process

RDF-utility

Fiber, Fe. glass, Al

Steam process

RDF-utility, paper Fe, Al

Steam heating & cooling

Steam (Navy base)

Steam

Gas-utility & Fe

Steam process

Steam process

Gas. Fe

Steam heating & cooling

RDF utility. Fe, Al, glass

RDF-utility, Fe

Electricity, Fe. Al, glass

RDF-institution, Fe

RDF-utility. Fe, Al, glass

Gas/utility

Nonferrous, Fe, glass, paper

Steam industry, Fe

Steam process

Steam loop

Liquid fuel/utility, Fe, Al, glass

Startup

date

1963

1975

1975

1976

1975

1971

1974

1971

1975

1977

1974

1967

1965/74

1975

1976

1975

1974

1978

1978

1976

1978

1978

1978

1977

1976

—

1977

1976

1977

with waste heat boiler MCU = modular combustion unit

operation at Blytheville, Ark,; Groveton, N. H.;

and Siloam Springs, Ark. Industrial and institutional interest in these same small waste

heat recovery incinerators appears to be

strong and growing. A late-1976 survey identified 1 municipal, I school, 19 hospital, and

22 industrial incinerators not listed in table

29.(5)

Comparative Performance of

Various Technologies

In order to gain some insight into how well

these systems work, they are compared here

in terms of four performance measures: (i)

degree of proven commercialization, (ii)

waste reduction efficiency, (iii) material

recovery efficiency, and (iv) energy recovery

efficiency. It should be noted at the outset

that in many instances because of the emerging nature or proprietary status of these technologies, it is difficult to obtain adequate data

for these comparisons.

DEGREE OF PROVEN COMMERCIALIZATION

EPA has assessed the “degree of proven

commercialization” of each of the materials

and energy recovery technologies.(6) Such

classification is necessarily judgmental and

is useful only as a general guide to commercialization status. Their classification scheme

is augmented here with an additional category, “Research Technologies, ” which includes processes that have not yet reached

the pilot plant or demonstration stage, EPA’s

assessments have been reevaluated by 0TA

and a few differences have emerged. The

four categories are defined as follows:
98 ● Materials and Energy From Municipal Waste

●

●

●

●

Commercially Operational Technologies.—Existing full-scale commercial

plants that operate continuously. Consequently, there are some operating data

available from communities and engineers already involved in the use of the

process. Although such systems are being commercially utilized, they may be

technically complex. To operate properly, they will require maximum use of

available information leading to careful

design and operation by knowledgeable

professionals. There may be only limited

operating experience with some parts of

these plants. Thus, technological uncertainties may still exist.

Developmental Technologies.—These

are technologies that have been proven

in pilot operations or in related but different applications (for example, using

raw materials other than mixed MSW).

There is sufficient experience to predict

full-scale system performance, but such

performance has not been confirmed.

System design requires considerable engineering judgment about scale-up parameters and performance projections;

consequently, the level of technical and

economic uncertainty is generally

greater than with commercially operational technologies.

Experimental Technologies.—These include new technologies still being tested

in laboratories and pilot plants. Because

there is not sufficient information to predict technical or economic feasibility,

such technologies should not be considered by cities contemplating immediate

construction.

Research Technologies.—These technologies, which are only in the laboratory testing stages with no pilot plant activity underway, are most technologically and commercially uncertain.

Tables 30 and 31 show OTA’S version of

the EPA assessment of the degree of proven

commercialization for energy and material

recovery technologies. The only commercially

proven technologies for energy recovery are

waterwall combustion, modular incineration

Table 30.—Degree of Proven Commercialization of

Energy Recovery Technologies

Commercially operational technologies

Waterwall combustion

Small-scale modular incineration with heat

recovery

Solid fuel RDF (wet and dry processes)

Developmental technologies

Low Btu gas pyrolysis

Medium Btu gas pyrolysis

Liquid pyrolysis

Biological landfill conversion

Experimental technologies

Biological anaerobic digestion

Waste-fired gas turbine

Research technologies

Hydrolysis systems

SOURCE Office of Technology Assessment -- —

Table 31 .— Degree of Proven Commercialization of

Materials Recovery Technologies

Commercially Operational Technologies

Comporting

Magnet ic recovery of ferrous metals

Fiber recovery by wet separation

Developmental technologies

Aluminum recovery

Glass recovery

Experiment/ technologies

Nonferrous recovery

Paper recovery by dry processes

SOURCE Off Ice of Technology Assessment

—— —

with heat recovery, and solid fuel RDF (wet

and dry processes). Table 30 includes the

waste-fired gas turbine concept. Considerable Federal research funds have been expended on this system which uses waste combustion gases to drive a gas turbine. It has not

been included in this assessment because of

serious corrosion and other problems.(6)

The only commercially proven material

recovery technologies are humus production

by comporting, magnetic recovery of ferrous

metals, and low-grade fiber recovery by wet

pulping. Other approaches have yet to be

proven in an operational, economically sound

project.

Aluminum recovery is classed as developmental because no plants are currently producing a steady stream of recovered alu-
Ch. 5— Technologies for Centralized Resource Recovery . 99

minum. The New Orleans facility recovered

its first aluminum cans in March 1978.

Samples were sent to Reynolds Metals Corporation for testing. Additional tests will be

necessary before large quantities of aluminum can be recovered.(4) The Ames, Iowa,

aluminum magnet was damaged in a winter

freeze and only returned to operational

status in mid-April 1978. The plant management had not yet (spring 1978) concluded the

purchase agreement because the system had

not been accepted from its manufacturer as

operating satisfactorily. The Baltimore County facility aluminum magnet does not run on a

continuous basis, but only when small

amounts of RDF are being produced for an

EPA contract calling for 3,000 tons for experimental cement kiln firing. Normally the

shredded waste is used for landfill after the

recovery of ferrous material, and aluminum

is not recovered when the plant is running in

this configuration. The Americology plant in

Milwaukee, after correcting several problems, is in roughly the same situation as the

New Orleans plant. Thus, none of these

plants has yet demonstrated the sustained

recovery of aluminum that is necessary

before such recovery can be considered a

commercially operational technology.

The status of glass recovery technology is

similar to that of aluminum. It is, therefore,

also considered to be in the developmental

stage.

WASTE REDUCTION EFFICIENCIES

Reducing the amount of waste that must be

landfilled is a major concern of municipal

decisionmakers. Table 32 shows literature

estimates of the residual fraction of MSW

that must be disposed of by landfill or other

means following resource recovery by the

various technologies. As can be seen from

this table, all of the systems reduce the landfill burden. Recovering both materials and

energy helps reduce the disposal load. It is

generally believed that residues that have

been subjected to high temperatures in incineration or pyrolysis will be less hazardous

in landfill because most pathogens cannot

Table 32.—Estimated Waste Reduction Efficiencies

of Resource Recovery Technologies

— —

Residue as percent

of input waste

Weight Volume

Technology percent percent

Reference —.

Waterwall combusion . . . . . 25-30a 10 (6)

20-35a 5-15 (7)

25-30a — (8)

Small-scale incineration . . . 30a 10 (9)

Dry fluff RDF. . . . . . . . . . . . l0-15 b — (8)

20C — (lo)

Low Btu pyrolysis . . . . . . . . 15-20a 3-5 (lo)

Medium Btu pyrolysis . . . . . 17C 2 (lo)

Liquid pyrolysis . . . . . . . . . . 27b — (lo)

7b, d 1-2 (11)

Anaerobic digestion . . . . . . 17b — (11)

awith metals not recovered

b with metal recovery

cWith ferrous recovery

dAssumes the char would have economic value and would not be Iandfilled

survive the high temperature and because

cinerator residue should be less subject

into

subsidence. However, the products of combustion and pyrolysis must be examined to

determine whether they create new kinds of

toxic landfill effluents.

MATERIAL RECOVERY EFFICIENCIES

Table 33 shows the materials recovery efficiencies of various processes based on data

from the literature. The National Center for

Resource Recovery [NCRR) reports efficiencies of up to 99 percent when the aluminum

magnet is run at extremely slow (not commercially feasible) speeds. Product contamination is a problem with aluminum recovery.

To reduce contamination an “air knife” can

be installed following the aluminum separator. As mentioned earlier, the quality of

paper fiber and glass recovered by the technologies listed in table 33 is low. Ferrous

recovery is the most commercially feasible of

all the systems reviewed here. [Additional attention is given to the quality of recovered

materials in chapter 3.] Other dry paper recovery processes such as the Flakt process

are being explored in Europe where wood

stock for paper is not as abundant as in the

United States.
100 ● Materials and Energy From Municipal Waste

Table 33.—Materials Recovery Efficiencies

——

Percent of the

waste stream

content of each

material

Technology recovered Reference — —

Ferrous-magnetic . . . . . . . . 90-97 (6)

Paper fiber—drya. . . . . . . . . 23 (6)

Paper fiber—wet . . . . . . . . . 50 (12)

Aluminum magnetb . . . . . . . 65 (15)

Glass-froth flotation . . . . . . 65-70 (11)

Glass-optical sorting. . . . . . 50 (12)

aCECCHINl Process in Italy

b

shredded cans at a 1 ton per hour feedstock rate

ENERGY RECOVERY EFFICIENCIES

There is currently no standard accepted

way to evaluate the energy recovery efficiency of resource recovery systems. This problem is illustrated by one study that cites seven

different efficiency figures from the literature, ranging from 29 to 49 percent, for the

Occidental liquid pyrolysis process. Different efficiencies result from alternative

ways of treating energy used by the process

itself, from the choice of system boundaries

for which the calculation is made, from the

choice of higher or lower heating value of the

waste, and from including or excluding the

energy content of nonfuel materials. As the

situation presently stands, it is possible to

produce energy recovery efficiency figures to

either enhance or detract from the apparent

attractiveness of a particular system. The

American Society for Testing and Materials

(ASTM) Committee E-38 on Resource Recovery is examining energy efficiency calculations, but because of more pressing matters it

has a low priority according to the committee

chairman.(17)

Table 34 shows system energy efficiencies

in terms of the energy content of the fuel produced, and in terms of the output energy

available as steam. While comparison on the

basis of available steam makes thermodynamic sense in terms of standard system

boundaries, it ignores such important economic characteristics of the various wasteTable 34.—Energy Recovery Efficiencies of

Resource Recovery Processes

Efficiency basis

Energy in Energy

fuel available

Process produceda as steamb

Fluff RDF. . . . . . . . . . . . . . . . . . . . . . . . 70C 49C

Dust RDF. . . . . . . . . . . . . . . . . . . . . . . . 80 63

Wet RDF . . . . . . . . . . . . . . . . . . . . . . . . 76 48

Waterwall combustion furnace. . . . . . — 59

Modular incinerators. . . . . . . . . . . . . . — 25-50

Purox gasifier. . . . . . . . . . . . . . . . . . . . 64 58

Monsanto gasifier . . . . . . . . . . . . . . . . 78 42

Torrax gasifier ., . . . . . . . . . . . . . . . . . 84c 58 c

Occidental Petroleum Co. pyrolysis. . 26 23

Biological gasification. . . . . . . . . . . . 33c 29c

.—.——.— — a Higher heating value of the fuel product, less the heating value of the energy

used to operate the system expressed as a percent of the heating value of the

input solid waste It was assumed that electricity IS produced onsite using the

system’s fuel product

b

in order t. compare all the processes on an equivalent thermodynamic basis,

the energy available as steam was calculated using an appropriate boiler efficiency for each fuel product

corrected figures are based on communications with EPA and an EPA contractor (18,23).

d

includes energy recovered from sewage sludge which also goes into the

digester. This calculation also assumes that the filter cake residue from the

digester IS burned to recover heat

SOURCE EPA Fourth Report to Congress, p 59, with corrections by OTA as

noted All calculations are based on higher heating value of

Input solid waste of 5,000 Btu per pound, with some i-n.

organic materials removed

derived fuels as the quality of the fuel product and its transportability. The temperature

of the steam produced by various technologies may differ considerably.

The basis for table 34 is a similar table in

EPA’s Fourth Report to Congress. However,

several typographical errors in EPA’s report

have been corrected. In addition, data for

small-scale incinerators have been added

based on conversations with an EPA contractor, The energy savings from materials

recovery have not been included. EPA’s use

of the term “net energy” in their version of

table 34 differs from best practice in such

calculations because of arbitrary limits on

the system boundary.

The energy efficiency figures in table 34

are not based on tests from actual working

systems. Rather, they were calculated from

data available in the literature and from contacts with vendors. Therefore, care should be

exercised in drawing inferences from this

table, particularly where efficiency differences are relatively small.
Ch. 5— Technologies for Centralized Resource Recovery ● 101

Potential Energy Savings From

Centralized Resource Recovery

Resource recovery can save energy in two

ways: by substituting fuels or heat recovered

from waste for nonrenewable energy

sources: and by substituting recovered materials for their counterpart virgin materials.

Less energy is required to produce most industrial materials from scrap than from

virgin sources. Therefore, recovering materials from MSW for recycling represents an

energy savings. Using data from the literature(19,20,21 ,22) the potential energy savings

were calculated assuming that in 1975 all the

iron and steel, aluminum, copper, and glass

were recovered from the MSW stream. The

results of this calculation are summarized in

table 35. Complete recovery of these materials would have saved 0.3 x 10’5 Btu or 0.3

Quad. * This is equivalent to about 0,4 percent of the Nation’s energy use in 1975.

To calculate the amount of nonrenewable

energy that could be saved by recovery of fuel

or energy from MSW it was assumed: (i) that

100 percent of the combustible waste (including paper) could either be recovered as fuel

or burned, (ii) that the substitution would be

on a Btu for Btu basis, and (iii) that raw MSW

has an energy content as fuel of 5,000 Btu per

pound. Thus, for the base year selected,

1975, the energy content of the 136.1 million

tons of MSW generated would have been 1.36

x 10’5 Btu or 1.36 Quads. This is equivalent

to about 1.9 percent of the Nation’s energy

use in that year.

Thus, the maximum energy that could have

been saved by centralized recovery of both

energy and materials in 1975 is 1.66 x 1 0

15

Btu or 2,3 percent of the energy used by the

Nation in that year. In actual practice, however, the maximum amount of energy saved

would be considerably less than calculated in

these estimates. Technical, economic, and institutional barriers would act to limit the contribution of resources recoverable from

MSW to the Nation’s energy pool,

Table 35.—Potential Annual Energy Savings From

Recovery and Recycling of 100 Percent of Various

Materials From MSW

Material - Energy savings

(1015 Btu/year)

Iron and steel ... ... . . . . . . . . . . . . . . . 0.08

Aluminum. ... ... . . . . . . . . . . . . . . . . 0.19

Copper . . . . . . . . . . . . . . . . . . . . . . . . . . 0.01

Glass. . . . . . . . . . . . . ... ... ... . . . . 0.02

Total . . . . . . . . . . . . . . . . . . . . . . . . . 0.30

SOURCE- Off Ice of Technology Assessment

Resource Recovery Experience in

Western Europe

R

esource recovery, especially for energy

production, is more widespread in Western Europe than in the United States. A recent study for DOE of 14 countries identified

181 plants containing 243 separate units. The

181 plants include a total of 413 furnaces.** Most of these units recover

steam in waterwall or fire-tube boilers.

Typical applications are electricity generation, steam for district heating and industrial

use, and sewage sludge drying. Several

plants preshred the refuse and recover ferrous metals before burning, and many have

pollution control devices. Tables 36 and 37

show the geographic distribution of units,

both furnaces and plants. (Furnace sizes are

given in metric tons, which are equivalent to

2,205 pounds. The U.S. short ton is 2,000

pounds.)

In comparison with Western Europe, EPA

identified seven waterwall combustion plants

and three small-scale modular combustion

units for MSW completed and operational in

the United States in 1976. Not all of these

seven large waterwall systems were able to

market their steam. Thus, in terms of numbers of units, Western Europe is considerably

ahead of the United States.

Individual furnaces in Europe are smaller

than the large-sized units being installed in

the United States. Thirty-four percent of the

European furnaces are smaller than 5 metric

*One Quad = 1O15 Btu = 1.055 exajoule.

**EPA is currently examining European systems in a

detailed study.
102 ● Materials and Energy From Municipal Waste

Table 36.— Waste-to-Energy Systems

in Western Europe

—

Number Number

Country of unitsa of plantsb

Austria. . . . . . . . . . . . . . . = . . . . . . ‘- 2 2

Belgium . . . . . . . . . . . . . . . . . . . . . . 3 3

Denmark . . . . . . . . . . . . . . . . . . . . . 45 31

Finland. . . . . . . . . . . . . . . . . . . . . . . 2 2

France . . . . . . . . . . . . . . . . . . . . . . . 29 20

Italy . . . . . . . . . . . . . . . . . . . . . . . . . 16 14

Luxembourg . . . . . . . . . . . . . . . . . . 1 1

Netherlands. . . . . . . . . . . . . . . . . . . 7 6

Norway. . . . . . . . . . . . . . . . . . . . . . . 13 8

Spain . . . . . . . . . . . . . . . . . . . . . . . . 3 2

Sweden . . . . . . . . . . . . . . . . . . . . . . 22 16

Switzerland . . . . . . . . . . . . . . . . . . . 33 29

United Kingdom . . . . . . . . . . . . . . . 9 9

WestGermany. . . . . . . . . . . . . . . . . 58 38

Total . . . . . . . . . . . . . . . . . . . 2 4 3

- - ‘-” 18 1

aAUnit os a facility built at one time in a single locaton

bA plant is building which one or more waste-to-engery units is installed

SOURCE (24)

tons per hour, and 60 percent are smaller

than 10 metric per hour. In contrast, for

example, the Resco plant at Saugus, Mass.,

uses two waterwall combustion furnaces,

each rated at682 metric tpd or 28 metrictons

per hour. The only units larger than these

operating in Western Europe are two 50-

metric-ton per hour furnaces in the Paris,

France IVRYII plant and a few 40-metric-ton

per hour furnaces installed in West Germany.*

With the exception of the large furnaces in

France and West Germany, other European

plants use a modular approach to achieve

large plant capacity. The French plant at

Lyon Zeme achieves a daily capacityof 960

metric tons with four, l0-ton per hour furnaces. The Sorain Cecchini plant in Rome,

Italy reaches 576 metric tpd with six, 4-ton

perhourunits.

Most of the incineration units in Europe

are in large cities that often have more than

one facility. However, several small towns in

Denmark have small units with capacities

*One DOE official believes that the French will not

again build and try to operate systems with large furnace units but would achieve large scale by using a

modular approach with several smaller furnace

units,(25)

less than 5 metric tons per hour. Almost all

these plants are used for hot water and district heating. In Switzerland, centrally located facilities serve rural areas. The plant

at Monthey, for example, generates electricity from the solid waste of 57 villages.

There are institutional differences between European and U.S. society that affect

resource recovery systems. Denmark has a

law requiring source separation that removes

a large portion of the organic combustibles

from MSW and thus discourages certain

kinds of centralized waste-to-energy systems.

Comporting is successful in the Netherlands,

whereas it usually fails in the United States.

The Netherlands subsidizes comporting operations. Markets for the composted product,

humus, are good in the flower and bulb industries.

Some of the factors that might explain

European adoption of energy recovery incinerators are: (i) relatively high population

densities with less land available for dumping, (ii) high fossil-fuel prices, (iii) cold

climates in which district heating systems

have long flourished, (iv) strong manufacturing firms including several furnace grate

manufacturers, and (v) localized electricity

production, which makes the sale of electricity easier (except in France and Italy, which

have state monopolies) .(24)

Environmental and Workplace

Health and Safety

T

his section examines the environmental

and workplace health and safety aspects

of resource recovery systems in order to

determine whether problems exist that might

require attention by Congress, the regulatory

agencies, or the R&D community. The topics

addressed include air, liquid, and solid emissions from resource recovery facilities, and

workplace conditions such as noise, pathogens, dust, toxic substances, explosion and

fire hazards, and the safety of mechanical

and electrical equipment. Few, if any, of the

problems discussed appear to be insoluble,
Ch. 5—Technologies for Centralized Resource Recovery ● 103

but they could add to the cost of building and

operating resource recovery plants and constrain the range of practical technologies.

Environmental Factors

Questions have been raised about potential

air and water pollution from resource recovery plants. Emission standards exist for

such air emissions as particulate matter,

sulfur dioxide, nitrous oxides, carbon monoxide, and hydrocarbons. Because MSW contains larger concentrations of some heavy

metals and other hazardous substances than

coal and oil, there is increasing interest in

assessing the potential health and environmental hazards of these substances. However, very little good data are available for

this purpose. A report by the Midwest Research Institute (MRI) for EPA lists 84 substances known to be in MSW; many of which

are known to be hazardous. Research is

cited which indicates that a number of hazardous inorganic substances are found in

higher concentrations in RDF than in coal.

EPA has recently initiated research to

build a data base on the environmental aspects of resource recovery systems. This

should enable development of control technology, if necessary. The consequences of

hazardous substances in resource recovery

systems are currently not understood and

there are no regulatory standards applicable

to their emission into the air or water, or as

solid waste. EPA has proposed an ambient air

quality standard for lead and is considering

regulation of other hazardous materials.

AIR EMISSIONS

Some data exist on emissions of the five

“criteria pollutants” (particulate, sulfur oxides, nitrogen dioxide, carbon monoxide, and

photochemical oxidants) from incineration

and from combined RDF/coal-fired systems.

Little data on the emission of these pollutants

from pyrolysis or biological systems are available. Air emissions from pyrolysis plants can

contain particulate matter as well as hydrocarbons and such gases as hydrogen chloride, hydrogen sulfide, and nitrous oxides. Air

pollution from biological systems can result

from the incineration of digester filter cake

residues. Other air emissions can result from

cleaning methane digester gas. The characteristics of these potential pollutants are

unknown.
104 Materials and Energy from Municipal Waste

Air pollution control equipment is necessary for incineration systems. * Average

uncontrolled particulate emissions from a

modern waterwall incinerator were found to

be 1.24 grains per standard cubic foot (SCF)

(2.84 grams per standard cubic meter, g per

SCM) compared to the EPA standard of 0.08

grains per SCF (O. 18 g per SCM).(7) However,

air pollution control technology, when properly selected, installed, and operated appears

to bring particulate emissions within EPA

standards.(7) Since waste has a higher ash

content than fossil fuels, burning RDF with

coal may increase the load on air pollution

control equipment. The efficiency of electrostatic precipitators may be reduced when

MSW is burned with coal at high boiler

utilization rates.(10)

Research indicates that sulfur dioxide, oxides of nitrogen, carbon monoxide, and hydrocarbons are not likely to cause problems

when MSW is burned. Since MSW has a

much lower sulfur content than most coals,

cofiring RDF and coal could reduce sulfur

dioxide emissions per unit of electric energy

produced. In cofiring RDF and coal, for which

there are more data than for waterwall incineration, there is evidence of increased air

emissions of such heavy metals as beryllium,

copper, lead, cadmium, and mercury.

Based on very limited tests, researchers at

Iowa State University reported increases in

copper and lead air emissions from the powerplant at Ames when RDF was added to the

coal.* *

*Incinerators of less than so tpd are excluded from

Federal air quality standards.(28) There is great variability among States and between State and Federal

standards for incinerators. For example, in the

Baltimore and Washington metropolitan areas of

Maryland, single-stage incinerators with a capacity of

less than 5 tons per hour are prohibited. (29l) It is not

clear whether this ban would apply to small, two-stage

incinerators of the kind under discussion here.

**A furor was caused in the fall of 1977 when researchers erroneously reported very high concentrations of toxic substances in the RDF from the Ames,

Iowa RDF plant. The error was subsequently corrected .

Hydrogen chloride gas produced by burning plastics in MSW can combine with water

to form hydrochloric acid and may create

potential health and corrosion problems. Hydrochloric acid, if it is found to be a significant health problem, should not be difficult to

control with scrubber technology.

Little is known about air pollution from cofiring liquid pyrolysis fuel with oil, since the

Occidental pyrolysis plant in California is not

in operation.

Dry process refuse-derived-fuel plants may

emit dust, odor, and noise to the plant environment, but these can be confined to the

plantsite with proper design. (See the following section for a discussion of these substances in the workplace environment. )

LIQUID EMISSIONS

Important characteristics of waste water

from resource recovery systems, some of

which could require control, are: high

temperature, dissolved oxygen (DO), biochemical oxygen demand (BOD), chemical oxygen

demand (COD), hydrogen ion concentration

(pH), alkalinity, hardness, total solids, total

dissolved solids, suspended solids, settleable

solids, phosphates, nitrates, chlorides,

fluorides, heavy metals, odor, and color.(8)

Not much is known about the characteristics of water pollutants from incineration

processes, in which one potential source of

waste water is from ash slurrying. Studies at

the St. Louis RDF/coal-fired plant indicate increased levels of BOD, COD, and total dissolved solids. Characteristics of waste

water from pyrolysis plants are not well

known, but it may be high in BOD, COD,

alcohols, phenols, and other organic compounds. Biological systems present waste

water pollution problems because the process requires large quantities of water in the

digesters, part of which is recycled, but part

of which must be discharged. Little information is available on these emissions since the

demonstration plant at Pompano Beach is still

under construction.
Ch. 5—Technologies for Centralized Resource Recovery ● 105

SOLID RESIDUALS

Solid wastes from resource recovery

plants include combustion ash, pyrolysis

residues, and particulate matter recovered

by air pollution control devices, all of which

can produce undesirable leachates when

used as landfill. Although data are scarce, fly

ash particulate from waste incineration may

contain trace elements such as cadmium,

lead, beryllium, and mercury (30)) The solid

sludge from biological processes may contain

bacteria that could create leachate problems

if landfill is chosen for its disposal.

Occupational Health and Safety Factors

Persons working in and around resource

recovery plants may be subjected to potential

health and safety hazards such as bacteriological and virological pathogens, dust, toxic

substances, noise, explosions and fires, and

mechanical and electrical equipment. Since

these systems are new, little is known about

the characteristics of the hazards they pose,

This section describes these hazards and reviews some of the ongoing research and regulatory activity associated with them.

NOISE

Resource recovery processes such as

shredders, air classifiers, trommels, and

cyclones can produce noise in excess of present Occupational Safety and Health Administration (OSHA) standards. A study of a small,

3-ton per hour resource recovery system reported noise levels in excess of 90 dBA* near

these devices. Control of noise in such

equipment by engineering design will probably be costly. Consequently, administrative

controls (limiting the time exposure of employees in high noise areas) and personal protective equipment may be needed to control

exposure. Noise levels in larger commercialized shredders will undoubtedly exacerbate

the problem. Current OSHA regulatory activi-

*Ninety decibels on the A scale (90 dBA) is the maximum noise level permitted for an 8-hour day by present

OSHA standards. This level is thought to be too high by

some organizations who prefer an 85 dBA standard.

ty should be adequate to control noise exposure unless the plant is operated by a

municipality in a State in which municipal

employees are not covered by OSHA.

PATHOGENS

As MSW is shredded, air-classified, and

transported within resource recovery facilities, workers are exposed to bacterial,

fungal, and virological pathogens contained

in the waste stream. Air sampling indicates

that total bacterial counts in the Ames plant

are around 100 times greater than in normal

nonplant environments.(34) MSW contains

human and animal fecal matter due, for example, to the use of disposable diapers and

the disposal of animal litter. Fecal coliforms

and fecal staphylococci at the Ames facility

are about 5 percent of total bacteria. Good

data on the impact of these pathogens on the

health of workers are not available. No standards exist for microbiological contaminants

in the workplace except for hospital operating rooms—a standard not applicable to resource recovery plants.

The data base for viral contaminants in

resource recovery plants is even less adequate. Even though viruses would be expected in such plants, air sampling studies

done by MRI for EPA have not detected any.

The sampling method may be inadequate, and

further tests are underway at Ames .(34)

Epidemiological studies of persons with

long-term exposures to environments typical

of resource recovery plants do not exist. One

study of New York City uniformed sanitationmen found no evidence of an increased

amount of chronic pulmonary disease when

compared to other job titles in the department.(35) The same author reported that

these sanitationmen have a rate of coronary

heart disease almost twice that of other

groups of males in similar age categories. He

is unable to explain this finding, and urges

that epidemiological studies are needed to

identify causes.

Some research is underway on pathogens

in resource recovery plants. EPA is funding a
106 ● Materials and Energy From Municipal Waste

study in this area by MRI. The National Institute of Occupational Safety and Health

(NIOSH) is presently funding research at the

Stanford Research Institute on occupational

health and safety (emphasis on health) in

emerging energy industries. One of the tasks

being carried out is an assessment of health

and safety problems in resource recovery facilities. This limited preliminary study is expected to produce a qualitative assessment of

potential problems with pathogens and to

suggest what needs to be done. Related work

is being done at the Ames Laboratories of

DOE. ASTM has formed a subcommittee on

health and safety of its Committee E-38 on Resource Recovery. One of this subcommittee’s

tasks is to develop standardized methods for

sampling microbiological aerosols. Some

researchers in this field indicate that if information on bacteriological and virological

experiments done by the military could be

declassified, research on resource recovery

plants might be expedited.

DUSTS AND TOXIC SUBSTANCES

Processing MSW produces considerable

dust—another potential health hazard.

OSHA standards for dust specify maximum

permissible concentrations of dirt or nuisance dust. However, because of the variety of

materials in MSW there is additional concern

about specific substances such as asbestos,

metal dusts, and other toxic substances. In

one test at a resource recovery plant asbestos

fibers were not found in the air, and a single

test for aluminum and cadmium dust gave

negative results. Roughly half the dust on

a particle count basis at the Ames plant is

composed of particles less than 4 microns in

diameter. Similar results are reported

elsewhere.(33) Retention of dust in the lungs

is highest for particles of about 2 microns,

so it appears that MSW dust retention may

present a problem. The National Center for

Resource Recovery reports that an average of

dust samples in their experimental test facility showed only 12 percent of the dust to be in

the respirable range.(37) Their dust measurements were made on a weight basis, rather

than the particle count basis used at Ames.

Dust particles too large to enter the lungs can

be captured in mucous membranes and ultimately carried into the digestive tract. This is

another source of infectious potential of unknown significance.

Obviously, dust control measures and personal protective equipment for workers in

resource recovery plants need considerable

attention on the part of workers, managers,

and regulators. In the long term more work

needs to be done to characterize the nature of

dust in resource recovery plants and to

assess the health effects of long-term exposure to this kind of dust.

EXPLOSIONS AND FIRES

MSW occasionally contains dynamite; gunpowder; flammable liquids and gases; aerosol

cans; propane, butane, and gasoline fuel containers; and other explosive substances.

When such substances are shredded an explosion can occur. A 1976 study of explosion

hazards in refuse shredders reported 95 explosions in the 45 MSW-shredding plants included in the survey. Thirty-four of the

shredding operations had experienced at

least one explosion. Injuries were reported in

only three incidents. No fatalities occurred.

Only five of the explosions produced more

than $25,000 property damage or put the

shredder out of operation for more than 1

week. Because shredders are designed to

withstand mild explosions, shredder explosions usually damage peripheral equipment

such as ducts and conveyors.

Protection from shredder explosions can

be achieved by manual or automated surveillance of input material, explosion venting, explosion suppression/extinguishing systems,

water spray, or equipment isolation. Manual

screening to remove explosive material is

already being practiced, but cannot be expected to remove all explosive substances.

The feasibility of automatic detection of such

materials is questionable. Shredders can be

designed with hinged walls and tops to allow

rapid venting of exploding gases. This method

can minimize shredder damage, but requires
Ch. 5—Technoligies for Centralized Resource Recovery ● 107

careful attention to the protection of personnel and adjacent equipment. Explosion extinguishing systems detect the pressure increase at the beginning of an explosion and

trigger the release of chemical explosionsuppressing agents into the shredder. When

operating properly these devices can control

shredder explosions and extinguish flames.

However, such devices cannot control explosions of self-oxidizing explosives such as ordnance. Continuous water sprays in the shredding operation can reduce explosion and fire

hazard, but water in the shredded refuse reduces its heating value, reduces the efficiency of ferrous separation, and can cause

shredder corrosion. Finally, personal injury

from shredder explosions can be controlled

by isolating the shredder and keeping employees away from it while in operation.

It appears possible to reduce the incidence

of shredder explosions by substituting a rotary drum air classifier for the shredder as

the first step in waste processing. Using this

approach, only the light fraction of the waste

is shredded while most of the potentially explosive components become part of the heavy

fraction, which is not shredded. Such a system has been tested at the waste shredding

facility in New Castle, Del.

Dust from MSW shredding does not appear

to be a great explosion hazard. However,

mixtures of combustible dust and flammable

gas or vapor may explode even though

neither the dust nor the gas by itself is in an

explosive concentration range. In addition,

dust can be a contributing factor in fires

caused by explosions.

Dust explosions may be more likely where

fine powder RDF is produced. An explosion

with a fatality occurred at the ECOFUEL II”

plant in East Bridgewater, Mass., in the fall

of 1977. According to the plant owners, Combustion Equipment Associates (CEA), the

cause of this explosion is still undetermined.

(39) CEA claims that their powdered RDF is

less explosive than grain or starch dust or

pulverized coal.

MECHANICAL AND ELECTRICAL HAZARDS

Resource recovery systems contain an array of mechanical and electrical devices

ranging from equipment for handling materials (front-end loaders, cranes, and conveyors) to the separation and combustion

processes discussed earlier. This environment exposes employees to a variety of potential accidents. However, most of these devices fall under existing OSHA safety regulations. Assuming that these regulations are enforced and that workers are covered, control

of these hazards maybe adequate.

Conclusions

Several potential environmental and occupational health and safety problem areas

in resource recovery need further investigation. Many questions about the environmental

impacts of waste-to-energy systems remain

unanswered. EPA is now monitoring and

studying control of pollution from resource

recovery facilities as they come online. If construction of resource recovery facilities continues, this activity may need to be accelerated to ensure against the emergence of environmental problems in the future. Exploration of control technologies for heavy

metals in air emissions and for toxic leachates from solid residuals of resource recovery

in landfill, is particularly important.

Some of the occupational health and safety

problems such as noise and mechanical and

electrical hazards can probably be controlled

by OSHA’S existing regulatory apparatus.

However, work on pathogens as health hazards should be accelerated. NIOSH has recently announced an interest in developing a

criteria document on occupational safety and

health standards for incineration sys -

tems. Under this procedure, 1982 is the

earliest date for promulgation of a health and

safety standard for incinerators. NIOSH

should consider issuing a criteria document

for all the resource recovery technologies, not

just incineration, on an accelerated time

schedule. Finally, relevant military research

on pathogenic agents should be made available.
108 ● Materials and Energy From Municipal Waste

Plant Size and System Design:

The Question of Scale

Overview

Most of the resource recovery technologies in the United States examined in

this chapter are currently being designed and

built as large-scale plants, with capacities in

the 1,000- to 3,000-tpd range. The exceptions

are small-scale modular incinerators and biological conversion processes. Such large

plants are attractive because they promise

significant economies of scale in processing

(average costs decline as plant size grows—

see chapter 6) and because they can include

economical systems for the recovery of materials as well as energy.

Recently, however, strong interest has

emerged in small-scale, modular incinerators

with heat recovery. This interest is stimulated by the realization that the institutional, financial, and technological barriers

to large-scale systems discussed in chapters 6

and 7 are real, especially in view of the uncertainty about the capability and reliability

of available technologies.

Interest in small-scale systems has also

paralleled the attention being given to the

concepts of “decentralized,” “appropriate,”

or “soft” technology. These concepts are

being examined for many technologies such

as energy supply, sewage treatment, and provision of government services. For resource

recovery systems these concepts suggest that

the scale of a technology should match the

scale of its users.

In the remainder of this section, the implications of scale matching are explored for

resource recovery system design. The sizes of

potential producers and consumers of recovered energy are examined, and some of

the advantages and disadvantages of smalland large-scale systems are addressed.

Matching producers With Consumers

ENERGY CUSTOMERS

Resource recovery plants can be viewed as

factories that produce energy from a raw material—MSW. The larger such a plant, the

more waste it can process from more people,

and the larger the energy customer it requires. For example, a plant with 1,000-tpd

average capacity can process the waste of

approximately 570,000 people. The energy

content of that waste as fuel is about 9 billion

Btu per day, or the equivalent of the energy

required to support a 37-megawatt electric

(MWe) powerplant. * Such a powerplant

would, in turn, serve about 3 percent of the

electric power needs of the 570,000 people;

who would use a total of about 1,200 MWe.

Electric powerplants are often considerably larger than 37 MWe; in fact, plants of

1,000 MWe are not unusual. Because electric

powerplants are large consumers of fuel,

they have been suggested as major potential

customers for the fuel or energy output of resource recovery projects. However, to date

utilities have been reluctant to use fuel from

these sources, in part for the financial and institutional reasons discussed in chapter 7. In

addition, however, utilities may be less than

enthusiastic because solid waste as a fuel

source is just too small. The potential financial, regulatory, technical, and political problems of burning solid waste may not be worth

the effort for only 3 percent of a utility’s fuel

needs.

On the other hand, the energy output from

a l,000-tpd” plant is much too large for most

alternative customers for energy as steam or

hot water. For example, the space heating

and cooling energy demand of office buildings

is estimated to be on the order of 850 Btu per

ft

2 per day.(42) Thus, a 1,000-tpd plant might

*This calculation is based on an MSW heating value

of 9 million Btu per ton, a per capita waste generation

rate of 3.5 pounds per day, and an electrical generation

efficiency of one-third.
Ch. 5— Technologies for Centralized Resource Recovery ● 109

serve up to 5 million ft2, * an area corresponding to a very large office building or multibuilding complex, such as the Pentagon,

which has 6.55 million ft 2 of space. (43) One

alternative is for a large, centrally located

facility to serve a number of surrounding customers, This approach has been taken in

Nashville, Term., and in a plant under construction in Akron, Ohio.

Another alternative is to build a number of

small resource recovery plants that produce

steam or hot water. These modular combustion units (MCUS) would serve such customers as small- to medium-sized manufacturing plants and office buildings, and large

institutions. The number of such potential

customers greatly exceeds the number of

potential industrial customers for the output

of the larger 1,000- to 3,000-tpd plants.

The large number of potential industrial,

institutional, and commercial users of heat

from MCUS is suggested by the following information from DOEO(44) Several institutions

are already using MCUS to recover energy

from their own wastes, and in 1972, about

25,000 small boilers comparable in size to

MCUS were producing heat for industrial

processes. This indicates considerable potential industrial interest in MCU heat, especially as energy costs rise. There are also some

7,200 hospitals, 3,026 public and private colleges and universities, and 108,676 public

and privat e elementary and secondary

schools, Although many of these institutions

are too small to use the entire output of even a

small MCU, only 2 percent of them would be

2,400 potential users. For commercial buildings, Friedricks(43) thinks there might be a

“realistic potential” for 1,000 to 2,000 MCUS.

The possibility of matching the output of

small-scale modular incinerators for MSW to

the many potential users of heat warrants

more extensive examination.

WASTE PRODUCERS

Experience to date suggests that in the

United States resource recovery plants can

*Assumes roduction of 4 million Btu of steam or hot

water energy per ton of MSW.

be implemented more easily to serve a single

community, or part of a community, than to

serve a multicommunity region. As noted in

chapter 7, the institutional, political, and

economic barriers to multicommunity projects are difficult to overcome.

The potential market for resource recovery

plants of various sizes can be estimated by

considering the size distribution either of individual communities or of Standard Metropolitan Statistical Areas (SMSAS). A bigger

market is predicted for small plants when the

first approach is used and for large plants

using the second approach.

Table 38 shows the size distribution of

American cities along with estimated waste

generation rates, neglecting any change in

per capita waste generation with a change in

city size. Only 23 cities are large enough to

support a 1,000 + tpd plant on their own.

Another 34 cities fall in the 500- to 1,000-tpd

range. On the other hand, over 800 cities

might use resource recovery plants in the 50-

to 500-tpd range, and an additional 1,200

cities are in the 15- to 50-tpd group. These

numbers suggest that there may be a large

potential market fo r “small” resource

recovery plants.

A somewhat different view of the potential

for large plants is suggested by table 39,

which shows the distribution of U.S. population in the SMSAS. These areas typically inTable 38.—U.S. City Size, Population, and

Waste Production in 1975

— - — .

Average –

Average municipal

City Number Popula- population solid waste

size range of lationa

per city per city

(thousands) cities a

(million) (thousands) (tons/day)b

5-10 . . . .: . ; ‘1,463 10.3 – -7.1 12

10-20 .., . . . . . 977 13.8 14.1 25

20-25 . . . . . . . . . 238 5.3 22.0 39

25-50 . . . . . . . . . 514 17.9 34.9 61

50-100 . . . . . . . . 230 16.1 70.0 122

100-250 . . . . . . . . 105 14.9 142,0 248

250-500 . . . . . . . . 34 11.8 348.0 609

500-1,000 . . . . . . 17 11.3 664.0 1,160

over 1,000. . . . 6 17.8 2,970.0 5,200

— a SOURCE (45)

bEstimated by OTA based on 3.5 pounds, of MSW per capita Per day
110 ● Materials and Energy From Municipal Waste

Table 39.—U.S. Standard Metropolitan

Statistical Areas (SMSAS) Size, Population, and

Waste Production in 1975

———— —

Average

Average municipal

SMSA size Number Popula- population solid waste

(thousands) of SMSAS’ tiona per SMSA per SMSAb

(m!llion) (thousands) (tOns/rjay)

un-der-l OO .-. . – 27 – - 2.5 92 160 –

100-250 . . . . . 97 16.6 171 300

250-500 . . . . . 63 22.7 361 630

500-1,000. . . . 37 27.1 733 1,280

1,000 -2,000.. 20 28.3 1,417 2,480

2,000-3,000. . 8 19.0 2,373 4,150

over 3,000 . . . 7 40.0 5,693 9,960

aSORCE (46).

bEstimated by OTA based on 3.5 pounds of MSW per capita Per day

elude several cities and contiguous unincorporated areas. Table 39 shows that seven

SMSAS produce around 10,000 tpd of MSW,

28 more are in the 3,000-tpd range, and

another 37 are in the 1,200-tpd” range.

Advantages and Disadvantages of

Small and Large Plants

Large resource recovery plants can

achieve significant economies of scale and

can include economical systems for recovery

of both materials and energy. They represent

large financial investments and may thus

serve as a dramatic focus for the attention of

citizens, industry, and government officials.

The disadvantages of large plants include:

(i) their high first cost; (ii) the inflexibility they

create by their requirements for future utilization in order to meet debt obligations, (iii)

the difficulty of identifying a suitable energy

customer; (iv) the problems of regionalization;

(v) their vulnerability to strikes, sabotage,

and mechanical failure; and (vi) the logistics

and cost of delivering such large amounts of

waste to a single site.

The advantages of small-scale systems include: (i) the fact that a large community or

region can start small and add units or facilities incrementally; (ii) their compatibility

with smaller waste producers and energy

consumers; (iii) the system reliability inherent

in operating several dispersed units; (iv) the

fact that they can help avoid the political

problems of regionalization; (v) their potential

for reducing siting problems by locating them

on customer property; and (vi) the fact that

they can be produced in relatively large

numbers with factory technology according

to standard plans and installed relatively

quickly with greater use of local skills.

The disadvantages of small-scale systems

include: (i) potentially higher direct costs per

unit of waste processed, (ii) the need to control a large number of relatively small air

pollution sources, (iii) the requirements of

small waste incinerators for auxiliary oil or

gas fuel, and (iv) the fact that materials recovery in small-scale systems may be uneconomic since shredding and classifying

would be very expensive at small scale. However, little or no thought has been given to

small-scale materials recovery systems, or

for that matter to small-scale cogeneration of

electric power from MSW.

In comparing the advantages and disadvantages of small and large resource recovery plants, two characteristics warrant

further elaboration: reliability and redundancy considerations, and implications for

technological innovation.

The consequences of system failure are

potentially more serious with one large plant

than with several small plants. This fact

creates the need in large plants to build in

costly storage space, backup landfill, or

equipment redundancy. To illustrate, consider two alternative ways of providing for

resource recovery in a given city: one 1,000-

tpd facility without storage or landfill, or five

dispersed 200-tpd plants. If the waste that

goes to any one of the 200-tpd plants could be

temporarily redistributed to the others in the

event of failure in any one plant, then the

system of five plants possesses a kind of builtin redundancy. It can be shown with reliability theory that the reliability [probability of

successful operation) of a single 1,000-tpd

plant would have to be 0.9997’ to equal the

reliability of the five plant system if the

reliability of the individual 200-tpd” plants

were only 0.80.
Ch. 5—Technologies for Centralized Resource Recovery ● 111

Factory production of a larger number of

smaller incinerators may also have implications for incremental technological innovation and for system performance standards,

both of which relate to aspects of potential

Federal involvement. With several producers

of small systems competing for sales to numerous municipalities and other buyers,

market forces might stimulate technological

improvements with minimal Federal involvement. In the case of construction of a smaller

number of large, custom-designed systems,

however, which take a relatively long time to

plan and construct, market forces may not be

adequate to induce technological innovation,

and there may thus be greater pressure for

Federal assistance. But the presence of a

large number of competing systems may tend

to complicate the technology/vendor selection

process for local officials. Under these conditions, Federal technical assistance to local

governments might be as important as if

larger systems were involved.

Research and Development in

Resource Recovery:

The Federal Role

Background

T

he Federal Government has sponsored

research, development, and demonstration programs in resource recovery for the

last 15 years; first in the Public Health Service and later in EPA, in the Energy Research

and Development Administration (ERDA)

(now DOE), in the National Bureau of Standards, in the Bureau of Mines, and in the National Science Foundation. A good part of the

funds has been spent on several large-scale

demonstration plants. Other work has been

done on innovative separation technologies,

environmental impacts of resource recovery,

and characterization of recovered resources.

The Federal Government has also funded a

variety of economic evaluations and state-ofthe-art review studies.

Federally funded demonstrations have

limited usefulness as a means for promoting

the diffusion of technology. A recent study by

OTA on the role of demonstrations in Federal

R&D policy(47) found that only a low rate of

success can be expected. Furthermore, the

evaluation of the success or failure of a

demonstration will be difficult and subjective. In part, this is because there is frequent

confusion over the goals of a demonstration

project, and in part because the information

received from a project is likely to be unclear

and imperfect.

In the last decade there have been several

vigorous private sector R&D programs, demonstrations, and commercial ventures, sometimes jointly with Federal agencies. A privately funded R&D center has been in operation at the National Center for Resource

Recovery, which has also received Federal

grant and contract funds.

The following discussion of Federal R&D

needs for resource recovery is set within this

context of vigorous private sector activity

and an important but limited Federal role in

technology demonstration.

R&D Needs

The technical problems that have occurred

at many of the operational or demonstration

plants are sufficient evidence that more R&D

is needed to make the technologies work reliably and economically. Much of this work

might be accomplished most effectively by

private firms in the normal process of commercial development. In view of the considerable existing private activity, the need

for a Federal role to further support pilot

plant and large-scale demonstration activity

is limited.

However, Federal R&D programs concerned with potential environmental and occupational problems of resource recovery are

needed because the private sector usually

underinvests in such research, and because it

is unlikely to be done by State and local

governments or labor organizations. Such

research should be focused on identifying
— —

112 ● Materials and Energy From Municipal Waste

and clarifying hazards to health, and on

developing methods for their control. At the

same time, a vigorous program to enforce

health, safety, and environmental standards

would help to stimulate this kind of R&D in

the private sector. A Federal R&D program

for occupational and environmental problems

is also needed in order to develop and maintain a reservoir of knowledgeable government personnel who can participate in the

regulatory process.

R&D needs and problem areas in resource

recovery technology have been presented in

the literature. (10,48) The list in table 40 illustrates their range. It is beyond the scope of

this assessment either to develop a comprehensive list or to set priorities.

Many of the problems listed in table 40

could be dealt with best in the process of comTable 40.—Selected Research, Development,

and Demonstration Needs for Resource

Recovery Technologies

——.—.—————

 HanLing and storage of RDF; fluff, densified, anD powdered.

—Material handling processes to cope with the abrasive,

corrosive, and mixed nature of MSW.

—Ferrous, aluminum, nonferrous (nonaluminum), and glass

recovery improvement and optilmization.

—Shredder optimization.

—Air classifier optimization.

— Resource recovery with mixed wastes such as: MSW with

sewage, commercial waste, industrial waste, agricultural waste, forestry waste, etc.

—Fundamental parameters in MSW pyrolysis processes.

— Fundamental combustion parameters in firing all classes

of RDF and raw MSW with traditional fuels.

— Fundamental MSW bioconversion parameters.

—Fundamental hydrolysis processes for MSW.

—CofiMing of MSW with sewage sludge.

—Corrosion in the combustion of MSW.

—New uses for glass aggregate, pyrolysis char, etc.

—Upgrading of fiber recovered from MSW.

—Improved recovery of materials from incinerated waste.

—Use of magnetic fraction from MSW in foundries.

—Systems optimization problems such as cost effectiveness of trammeling prior to shredding, particle size interaction with grate and boiler design, etc.

—Resource recovery processes in synergy with other nonwaste developments such as biomass energy conversion, cogeneration, industrial hydrolysis, etc.

—Small-scale materials recovery processes.

—Small-scale cogenerat ion.

—Small-scale combustion processes.

— Markets for small-scale energy output.

SOURCE - Office of Technology-Assessment -

mercial development by private firms. However, there may be a tendency to neglect the

more fundamental research questions, such

as: (i) materials characterization; (ii) processes of size reduction, separation, combustion, and chemical reaction; and (iii) exploratory design work on innovative systems for

purifying and utilizing recovered materials,

and for utilizing energy products, particularly at small scale. Consequently, there may

also be a useful Federal role in dealing with

these problems.

Findings on Technologies for

Centralized Resource Recovery

widespread interest in the systematic

recovery of materials and energy from

MSW in the United States is just a decade

old. The construction of centralized facilities

for separating MSW into useful components

has only recently been considered as one

potentially important approach to the problems of waste management. The rationale for

centralized resource recovery has been

threefold: (i) effective and safe disposal of

solid waste, (ii) recovery of materials for

recycling, and (iii) production of energy from

the combustible portion of the waste. These

are also the major components of the potential revenues from resource recovery.

A number of technologies for burning the

combustible portion of MSW or for converting it to solid, liquid, or gaseous fuels are at

various stages of development. Techniques

have also been developed, with differing success, for recovery of ferrous metals, aluminum, glass, nonferrous metals, and paper

fiber. Waterwall combustion and small-scale

modular incineration to produce steam, and

the production of refuse-derived fuel (RDF) by

wet and dry processes are currently the only

commercially operational methods for recovering energy. The only commercially operational technologies for recovering materials

from mixed MSW are the magnetic recovery

of ferrous metals, the recovery of low-grade

fiber by wet separation, and the production
Ch. 5— Technologies for Centralized Resource Recovery 113

of compost by natural processes. Aluminum

and glass recovery are being actively explored as is energy recovery by bot h

anaerobic digestion and pyrolysis.

Energy can be recovered by centralized

resource recovery either as fuel or as heat,

and also as the savings that accrue from

recycling materials. As an upper limit, the

total recovery of all energy in MSW could

supply about 1.9 percent of the Nation’s current annual energy consumption. Recycling

all of the iron and steel, aluminum, copper,

and glass could save about 0.4 percent more

for a total savings of 2.3 percent of current

energy use, or the equivalent of about

800,000 barrels of oil or 200,000 tons of coal

per day, Thus, centralized resource recovery

might play a small, but not insignificant role

in conserving energy. Technical, economic,

and institutional factors, however, will keep

the energy saved by resource recovery in the

foreseeable future to a fraction of it s

potential.

Relatively little is known about the effluents from operating centralized resource

recovery plants or about the nature and

degree of workplace hazards they may present. This is largely because there has been

little opportunity to gather data and because

there is considerable variability in and ignorance about the composition of both MSW

and the recovered products. A number of

studies currently underway should produce

some information and data about air and

water emissions, bacteria and viruses in the

plant environment, and toxic substances in

all media including solid residuals. Authority

exists for regulating these workplace and environmental problems, if needed. Should activity in centralized resource recovery accelerate, it will be desirable to step up

research and to promulgate regulations to

control any potentially harmful side effects.

Over the past 15 years, there have been a

number of federally funded research, development, and demonstration projects concerned with centralized resource recovery,

There has also been vigorous activity in the

private sector. The Federal R&D presence

would be most effective in identifying, evaluating, and controlling environmental and occupational problems: in characterizing materials; in basic studies of processes for size

reduction, materials separation, combustion,

and chemical reaction: and in exploratory designing—particularly of small-scale systems

for processing and using recovered materials

and energy, The remaining technical problems would probably be best solved in the

course of commercial development by private

firms.

Recently, there has been a substantial shift

from materials recovery to energy production

as a more significant driving force. This shift,

which has taken place because energy prices

have risen more rapidly and steadily than

scrap materials prices over the last several

years, may have important implications for

resource recovery system planning, design,

and operation:

●

●

●

●

●

●

●

It creates the need to consider more

carefully matching resource recovery

plants with the potential customers for

the energy produced.

Attention to such matching may induce a

shift from large, centralized to small,

dispersed resource recovery plants.

With smaller plants there may be less

need to consider regionalization of solid

waste disposal, with its attendant problems,

There may be increased attention to

direct incineration and to cofiring of

waste with coal, as opposed to more exotic approaches.

There may be less recovery of materials

from waste than had been envisioned

earlier since materials recovery may be

less feasible in small plants.

There may be an increased urgency to

assess, regulate, and control potential

environmental and workplace problems.

There may be less concern that beverage container deposit legislation might

impair resource recovery development,

if material revenues become relatively

less important.
114 . Materials and Energy From Municipal Waste

● There may be increased flexibility for

designing resource recovery systems

that include source separation activities,

and that can respond more readily to

changing patterns of waste generation

in the future.

Only electric powerplants, large factories,

or large complexes of office buildings can

consume all the energy output of a 1,000-tpd

resource recovery facility. These kinds of

potential customers have proven to be difficult for proposed resource recovery projects to reach. Electric utilities have been less

than enthusiastic because it presents technical difficulties and because they have essentially no incentive to use refuse-derived

energy and, if they do, face many problems.

In a given service area, MSW can provide

only a few percent of the fuel needs of an

electric utility. Thus, a’ utility must contend

with numerous difficulties to obtain just a

minor part of its total fuel supply.

On the other hand, for smaller quantities of

refuse-derived energy there are a large number of potential customers such as office

buildings, institutions, and smaller factories.

Smaller resource recovery plants, say in the

25- to 200-tpd range, might adequately serve

their energy needs. These would help to avoid

some of the problems that arise when several

communities attempt to regionalize in order

to build large plants. Smaller resource recovery plants, which are more common in

Europe, may feature direct incineration to

produce steam or hot water and may forego

materials recovery altogether. They may also

allow for a more flexible approach in a community or region by making it possible to

adopt resource recovery gradually rather

than all at once.

However, a few cautionary words about

smaller energy recovery systems are in order.

Not enough is known about their reliability,

or about the environmental and workplace

health implications of operating a network of

dispersed, small plants. Also, more needs to

be known about the energy demand characteristics of the small customers mentioned

above, in order to learn whether they can indeed become consumers of energy from

waste.
Ch. 5— Technologies for Centralized Resource Recovery . 115

1.

2,

3.

4.

5.

6

7,

8

9

104

11

12

References

Freeman, H., “Pollutants from Waste-toEnergy Conversion Systems,” Environmental Science and Technology, 12, 1252-

1256, November 1978.

EPA, “Office of Solid Waste Management, Fourth Report to the Congress, ” Resource Recovery and Waste Reduction,

Publication SW-600, Aug. 1, 1977.

Solid Waste Report, Oct. 9, 1978, pp.

165-166.

NCRR Update, March 1978, vol. VII, no. 3.

Ross Hofmann Associates “Summary of

Controlled Air Incinerator Waste Heat

Recovery Systems, ” Coral Gables, Fla.,

1976. Made available to OTA by DOE.

EPA, “Resource Recovery Plant Implementation: Guides for Municipal Officials: Technologies, ” Report no. SW157.2, 1977.

Weinstein, N., and R. Toro, Thermal

Processing oj Municipal Solid Waste for

Resource and Energy Recovery, Ann

Arbor Science Publishers, Ann Arbor,

Mich., 1976.

Pavoni, J. L., J. E. Heer, and D. J. Hagerty,

Handbook of Solid Waste Disposal, Van

Nostrand, 1977.

“Evaluation of Small Modular Incinerators in Municipal Plants,” EPA Report

SW-l13c, by Ross Hofmann Associates,

Coral Gables, Fla., 1976.

Wilson, E. M., J. M. Leavens, N. W.

Snyder, J. J. Brehany, R. F. Whitman, Engineering and Economic Analysis of Waste

to Energy Systems, a report prepared by

Ralph M. Parsons Co. for the EPA Industrial Environmental Research Laboratory,

Cincinnati, Ohio, June 1977.

Schulz, H., J. Benziger, B. Bortz, M.

Neamatalla, G. Tong, and R. Westerhoff,

Resource Recovery Technology for Urban

Decision Makers, a report to the National

Science Foundation by the Urban Technology Center, Columbia University, January 1976.

Marsh, Paul, Black Clawson Co., Hamilton, Ohio, telephone communications,

February and March 1978.

13.

14.

15.

16.

17.

18.

19.

20.

21.

*

22.

23.

24.

Abert, James C., “Aluminum Recovery . . .

A Status Report, ” NCRR Bulletin, Spring

and Summer 1977.

Alter, H., “European Materials Recovery

Systems, ” Environmental Science and

Technology, vol. II, no.5, May 1977.

Alter, H., National Center for Resource

Recovery, Inc., telephone communication,

August 1978.

Bailie, R. C., and D. M. Doner, “Evaluation of the Efficiency of Energy Resource Recovery Systems, ” Resource Recovery and Conservation, vol. 1, no. 2, October 1975, pp. 177-187.

Alter, H., National Center for Resource

Recovery, Inc., telephone communication,

December 1977.

Rigo, H., Systems Technology Corporation, Xenia, Ohio, telephone communications, January and April 1978.

Gordian Associates Incorporated, Environmental Impacts of Production of Virgin

and Secondary Paper, Glass, and Rubber

Products, Report no. SW-128C U.S. Environmental Protection Agency, 1976.

Ziegler, R. C., S. M. Yaksich, R. P.

Leonard, and M. VanLier, Environmental

Impacts of Virgin and Recycled Steel and

Aluminum, Final Report (SW-117C) done

by Calspan Corporation for the U.S. Environmental Protection Agency, 1976.

Bravard, J. L., H. B. Flora, and C. Portal,

Energy Expenditures Associated with the

Production and Recycle of Metals, Oak

Ridge National Laboratory Report ORNLNSF-EP-24, November 1972.

Williams, Robert, H., (editor), The Energy

Conservation Papers, ch. 5, “Potential

Energy Conservation from Recycling

Metals in Urban Solid Wastes,” authors,

W. E. Franklin, D. Benersky, W. R. Park,

and R. G. Hunt, Ballinger Publishing Co.,

1975.

Levy, S., EPA, and H. Rigo, Systems Technology Corporation, telephone communications, January 1978.

European Waste-to-Energy Systems, An

Overview, Department of Energy Report
—— — .

116 ● Materials and Energy From Municipal Waste

25.

26.

27.

28,

29.

30.

31,

32,

33.

34.

35.

36.

37,

No. CONS-2103-6 by Resource Planning

Associates, Inc., June 1977.

Walter, D., Department of Energy, telephone communication, February 1978.

EPA, Environmental Assessment of

Waste-to-Energy Processes: Source Assessment Document, EPA 600/7-77-091,

August 1977.

Burch, William, EPA, telephone communication, April 1978.

40 CFR, subpart E, 60.50, Standards of

Performance for Incinerators, 1977.

Willey, Cliff, Maryland Environmental

Service, telephone communication, January 1978.

Freeman, H. M., and R. ~. Olexsey, “Energy from Waste: An Environmental Solution that Isn’t Problem Free, ” News of Environmental Research in Cincinnati, EPA,

July 1977.

EPA, “Evaluation of the Ames Solid

Waste Recovery System, Part 1, Summary

of Environmental Emissions: Equipment,

Facilities, and Economic Evaluations, ”

EPA-600/2-77-205, November 1977.

Solid Waste Report, Nov. 21, 1977 and

Dec. 19, 1977, Silver Spring, Md.

Diaz, L, F., C. Riley, G. Savage, and G.

Trezek, “Health Aspect Considerations

Associated with Resource Recovery”

Compost Science, summer 1976, vol. 17,

no. 3.

Kniseley, R., DOE Ames Laboratory, telephone communications, January and April

1978.

Cimino, J. A. “Health and Safety in the

Solid Waste Industry, ” American Journal

of Public Health, January 1975, vol. 65,

no. 1.

Duckett, J., National Center for Resource

Recovery, Inc., personal communication,

December 1977.

Duckett, E, J. , “Physical/Chemical Anal38.

39(

400

41,

42.

43.

44.

45.

46.

47.

48,

yses of Dusts at the Equipment Test and

Evaluation Facility, ” Technical Report

No. TR 78-1, National Center for Resource

Recovery, Inc., Washington, D. C., March

1978.

ERDA, “Assessment of Explosion Hazards

in Refuse Shredders, ” Factory Mutual Research Corporation, ERDA-76-71, June

1976.

Rogers, K., Vice President for Resource

Recovery, Combustion Equipment Associates, N. Y,, telephone communications,

January and August 1978.

Federal Register, vol. 42, no. 213, Friday,

NOV. 4, 1977, pp. 57747-57748.

Lovins, A. B., Soft Energy Paths: Toward a

Durable Peace, Ballinger Publishing

Company, 1977.

Jackson, J. R., and W. S. Johnson, Commercial Energy Use: A Disaggregation by

Fuel, Building Type, and End Use, Oak

Ridge National Laboratories, ORNL/CON14, February 1978,

Friedricks, M., DOE telephone communications, March 1978.

Coyle, W., J. Osborne, and M, Friedricks,

DOE, personal communication, February

1978.

Current Population Reports, Population

Estimates and Projections, series P-25,

Nos. 649-698, U.S. Bureau of the Census,

May 1977.

Current Population Reports, Population

Estimates and Projections, series P-25, no.

709, September 1977.

The Role of Demonstrations in Federal

l?&D Policy, OTA, Program on R&D

Policies and Priorities, Washington, D. C.,

July 1978.

Alter, H., and B. Crawford, Materials Recovery Processing Research, A Summary

oj Investigations, U.S. EPA Conlract 67-

01-2944, October 1976.
Chapter 6

Economics of

Centralized Resource Recovery
Page

Introduction ✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎✎ ✎ 119

Costs and Benefits of Resource Recovery Systems . ..............119

Processing Costs for Various Technologies. . . . . . . . . . . . . . . , .. ...121

Capital Investment Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . ., ..121

Scale Economies in Investment Costs. . . . ... , . .............121

Capital Costs Per Unit of Waste Processed . . . . . . . . . . . . . .. ..122

Impact of Financing Methods and Ownership on Capital Costs .123

Operating Costs . . . . ● , *.******************.*.**.****** 123

Total Costs of Resource Recovery Processing . . . . . . . . . . . . . . .123

Materials and Energy Revenues From Various Resource Recovery

Technologies. . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . .........125

Optimum Resource Recovery Systems. . . . . . . . . . . . . . . . . . . . . . 126

Subsidies for Costs of Resource Recovery. . . . . . . . . . . . . . . . . . . . . .127

Rationale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......127

Magnitudes of Subsidies 9*** .*. ****8***..*************** 127

Discussion of Subsidies. , . . . . . . . . . . . . . . . . . . . . , . .........128

The Interactions of Centralized Resource Recovery With Beverage

Container Deposit Legislation and With Source Separation. .. ...128

Beverage Container Deposit Legislation . ..................128

Source Separation . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . ● .. ..130

Findings on the Economics of Centralized Resource Recovery .. ....130

References . . . . . . . . ● .********.************.***.********** 132

Tables

Table No. Page

41.

42.

43.

44.

45.

46.

47.

48.

Costs and Benefits of Centralized Resource Recovery, . .......119

Factors That Influence the Costs and Benefits of

Centralized Resource Recovery ●   .** * *9 ********0****** 120

Capital Cost of Centralized Resource Recovery. . . . . . . . . . . . .122

Operating Costs of Centralized Resource Recovery. . .........124

Total Costs of Processing 1 Ton of MSW Using Various

Resource Recovery Techncdogies. . . . . . . . . . . . . . . . . . . . . .. ..124

Estimated Revenues and Minimum Tipping Fees for

Various Resource Recovery Technologies. . ................126

Composition of MSW Under Five Beverage Container Deposit

Scenarios for 1975 * ****9***********************.*****. 129

Impact of Beverage Container Deposit Legislation on

Potential Resource Recovery Revenues and Credits for

Five Scenarios in 1975 ......, . . . . . . . . . . . . . . . . . . . . .. ....129

Figures

Figure No. Page

5. Optimum Resource Recovery Plant Capacity. . . . . . . . . . .. ...,127
Chapter 6

Economics of

Centralized Resource Recovery

Introduction

F

acilities for the recovery of materials and

energy from municipal solid waste

(MSW) are both capital intensive and costly.

They use complex technologies whose performance is still uncertain and their products

are difficult to market. Consequently, there

has been considerable interest in various

types of financial assistance by the Federal

Government for constructing and operating

such facilities. Proposals for financial assistance programs have included construction

grants, loan guarantees, low-interest loans,

operating subsidies, and price supports for

products.

This chapter lays the groundwork for

analyses of these financial assistance proposals by examining the factors that influence the economics of a resource recovery

system. It also evaluates the costs and effectiveness of such proposals. Among the topics

addressed are:

The capital and operating costs of

various resource recovery technologies.

The influence of financing methods on

the costs of various systems.

The revenue potential of materials and

energy from the various resource recovery technologies.

The tradeoff between economies of scale

in processing and transportation costs

for large resource recovery systems.

The effects of construction and operating subsidies on resource recovery

system costs.

● The interaction of centralized resource

recovery with source separation programs and beverage container deposit

legislation.

Costs and Benefits of Resource

Recovery Systems

T

he economics of centralized resource

recovery for a community or a region

represent a balance of the systemwide costs

and benefits listed in table 41. Some costs and

Table 41 .—Costs and Benefits of

Centralized Resource Recovery

Direct costs - ‘

- – -

Planning and design

Investment in plant and equipment

Site purchase and preparation

Transportation and transfer

Operating labor, maintenance. supervision

Residue disposal

Auxiliary fuels

Direct benefits

Revenues from sale of materials and energy

Indirect costs

Interjurisdictional coordinat ion

Loss of flexibility to respond to changed waste

characteristics

Air and water pollution from facility operation including

residue disposal

Health and safety hazards to workers and adjacent

population

Indirect benefits

Avoided cost of landfill or other disposal costs

Avoided water pollution from landfill or dumping

Reduced health and safety hazards to workers and

population adjacent to landfills or dumps

Reduced costs to collectors of dumping in controlled

surroundings

Public relations benefits for participating

communities and firms

SOURCE O; Ice of Technology Assessment

119
120 ● Materials and Energy From Municipal Waste

benefits are direct and appear on the balance

sheet for the system. Others are indirect and

may not appear but should be considered by

public decisionmakers. If the direct costs exceed the direct benefits, the resource recovery plant must charge a price for its service,

called a “tipping fee, ” to make up the difference. From the public point of view, the tipping fee might be adjusted to account for indirect costs and benefits.

These costs and benefits depend on the factors shown in table 42. Among the more important factors are the quantity and composition of waste in the service area; geographic

features of the area to be serviced; the population density, the transportation network,

Table 42.—Factors That Influence the Costs and

Benefits of Centralized Resource Recovery

Geographic factors

—.

Population density

Total regional population

Transportation networks

Subsurface geology and terrain

Regional weather and climate

Local construction costs and labor rates

Political factors

Number and size of political subdivisions in the service

area

Strength of regional planning or Government agencies

Organization and ownership patterns of waste collection

and disposal

Waste stream characteristics

Quantity

Composition

Seasonal variation

Existence of source separation programs or beverage

container deposits

Nature of commercial, institutional, and industrial

activity

Revenue and credit characteristics

Prices obtainable for products

Distance to materials markets

Availability of energy markets

Local landfill prices

Technological factors

Technology used

Plant size

Energy product choice

Redundancy or backup equipment required to process

waste and to satisfy energy markets

Financial factors

Ownership mode (public or private)

Financing method

Government incentives or disincentives

SOURCE Off Ice of Technology”Assesment

and the weather: the availability of markets

for recovered products; the prices of those

products; and the number and size of the

local governments involved.

Among the many economic considerations

that affect system design, the three most important are the revenues from the sale of

products, the costs of processing, and the

costs of transportation. A significant consideration is that some energy products from

MSW cost more to produce but can be sold at

a higher price. For example, it costs more to

produce steam than refuse-derived fuel

(RDF), but steam can be sold at a higher price.

Thus, a community will not necessarily find

the system with the lowest gross processing

costs to be the optimal one.

A tradeoff must be considered between

transporation costs and the economies of

scale of processing in large plants. As larger

plants are built, they can process wastes at a

lower cost per ton, but the cost per ton for

transportation from distant collection points

goes up. Since unit revenues from the sale of

energy and materials do not depend very

much on plant size, the economic optimum

plant size depends on the scale versus transportation tradeoff.

In addition to these considerations, the

translation of capital investment into capital

costs per unit of waste processed depends on

the modes of ownership and financing because they influence the effective tax rates

and the required return on investment.

In the rest of this chapter, the economic

factors that have the greatest implications

for Federal policy are examined more thoroughly. However, the following discussion

has several noteworthy limitations. First, the

economics of centralized resource recovery

are sensitive to the conditions that prevail in

a region. Thus, the data in this chapter should

not be used as a basis for design, analysis, or

critique of any particular project. Second, the

data base for the analysis is not very firm.

Most cost and revenue projections are based

on plans for proposed systems in specific

regions, and confirmation based on actual ex-
Ch. 6—Economics of Centralized Resource Recovery ● 121

perience is very limited. Third, the incomparability among various sources of cost information creates serious problems. Finally,

potential revenues are subject to wide variation depending on the strength of scrap material markets and the location of a facility

relative to those markets, as well as on the

nature of local energy markets.

Processing Costs for Various

Technologies

T

he processing costs for centralized resource recovery include capital and

operating costs. They depend on the technology selected, the plant size, the financing

method, the ownership mode, local construction costs, and labor rates. The costs per unit

of waste processed further depend on the operating ratio, or capacity utilization factor;

that is, on the fraction of maximum plant capacity that is actually used on a daily or annual basis.

Capital Investment Costs

Table 43 shows estimates of the capital investment required to construct typical largescale resource recovery plants with capacity

to process a maximum of 1,000 tons per day

(tpd) of MSW. The wide variation in investment estimates for each technology reflects

the diversity of data sources used, the uncertain nature of preconstruction cost estimates,

local conditions underlying each estimate,

differences in the way site preparation and

other costs are treated by different estimators, and differences in the detailed technical

characteristics of each plant. The data in

table 43 have been adjusted by OTA to a common basis: plants of 1,000-tpd capacity and

early 1979 costs. Costs were updated using

the Engineering News Record Construction

Cost Index.(1)

Table 43 shows that much different levels

of investment are required by the various

kinds of resource recovery plants. For example, the two most popular types, waterwall incineration and RDF, differ by a factor of two

in capital cost. However, their operating

costs also differ and their products have different market values. Thus capital costs

alone are not sufficient for selecting the

technology with the lowest net cost.

Table 43 also shows that estimates of investment costs in constant dollars for resource recovery plants have increased over

time, just as they have for other systems that

supply energy or process materials. In part,

this reflects the better understanding of full

costs as real systems are built and operated;

note that waterwall incineration cost estimates, which are based on actual experience,

have not increased as have the others.

Scale Economies in Investment Costs

It is characteristic of processing technologies that capital costs per unit of material

processed decrease with increasing plant capacity. (Operating costs do so as well. See

below.) Some analysts have estimated that

economies of scale in resource recovery

would be very great. In work done for this

study, for example, the MITRE Corporation

assumed that economies of scale would exist

for plants as large as 10,000 tpd. (See reference 13.) More recent studies by other

analysts, however, have found that economies of scale in the capital costs of resource

recovery are much less significant than had

been anticipated earlier. Gordian Associates

found that capital costs per ton processed

were nearly constant in the range of 200- to

1,500-tpd capacity for waterwall incineration

and in the range of 600 to 3,50O tpd for

RDF.(14) Similarly, Black and Veatch, and

Franklin Associates found capital costs per

ton to be nearly constant above a capacity of

about 1,000 to 1,500 tpd.(15)

The capital costs of small-scale modular incinerators also depend on plant size. The

Siloam Springs plant is reported to have cost

$17,700 per daily ton.(16)

l0.5-tpd units. Recently,

and Franklin Associates

capital cost for modular

It is made up of two

Black and Veatch,

estimated that the

incinerators would

48-786 0 - 79 - 9
122 . Materials and Energy From Municipal Waste

Table 43.—Capital Costs of Centralized Resource Recovery

(literature estimates and averages for 1,000”tpd plants)

Total capital investment (million dollars)

Technology Reference Year Original year $ 1979$ Average in 1979

Waterwall incineration to steam 2 1975 $30.8 $39.3

6 1975 3 2 40.8

4 1975 23 29.4 $37.2

3 1976 32 38.2

5 1977 36 39.1

Refuse-derived fuel with materials recovery 6 1975 13.2 16.9

2 1975 10.4 13.3

8 1975 9 11.5 16.7

7 1976 14 16.7

9 b 1976 10.4 12.4.

5 1977 27 29.3 —

Refined refuse-derived fuel with 2 1975 17.7 22.6

materials recovery (ECOFUEL-I1° ) 6 1975 28.2 36.5 29.6

Wet process refuse-derived fuel

—

2 1975 13.5 17.2 17.2

with materials recovery —

Gas pyrolysis

● Puro x

@

6 1975 20.8 26.6

2 1975 22.9 29.2

11 1975 31 39.6 38.3

10 1976 37 44.1

5 1977 48 52.1

. Torrax @ 2 1975 16.5 21.1

10 1976 37 44.1 37.3

5 1977 43 46.7

Modular incineration with heat recoveryc 5 1977 21.4 23.3

12 1978 27.8 28.3 25.8

aLlter~ture ~StimateS inflated to 1979 dollars using Engineering News Record Construction COSt Index.

bcost for 750 tpd reported in (9) adjusted to 1,000” tpd using scale factor in reference (8).

Cco5ts for modular incinerators reported as five times the cOSt Of a 200-tpd faCility

range from $33,100 per daily ton at 25 tpd to

$21,400 per daily ton at 200 tpd.(17) The city

of Auburn, Maine, reported estimated capital

costs of $35,000 per daily ton at 100 tpd and

$27,800 per daily ton at 220-tpd capacity.

Economies of scale in capital cost are not expected for this technology above 200 tpd.

Capital Costs Per Unit of

Waste Processed

The cost of capital per ton of waste processed is obtained by dividing the annual cost

of capital by the tons of waste processed annually. The annual cost of capital can be calculated by multiplying the plant investment

cost by a capital recovery factor. The capital

recovery factor is a decimal fraction that

depends on the rate of return, the amortization period, and the tax rate. (See following

section.) Typical values of the capital recovery factor for resource recovery plants

range from 0.08 to 0.11. For example, a capital recovery factor of 0.10 corresponds to a

payment of 8-percent interest on an investment amortized over 20 years.

The amual tons of waste processable in a

facility over a full year is usually only a fraction of 365 times the maximum daily capacity,

since the plant will not always operate at full

capacity. This fraction, the capacity utilization factor, ranges from 0.40 to 0.90. It is,

however, usually taken to be 0.70 to 0.80 for

resource recovery plants.

The translation of total plant investment

into a capital cost per ton of waste processed
Ch. 6—Economics of Centralized Resource Recovery ● 123

can be summarized using the following formula:

total plant investment capital recovery factor

For example, a 1,000-tpd plant that costs $30

million, which is used 70 percent of the time,

and is financed with an effective capital

recovery factor of 0.10 would bear an average capita] charge of $11.74 per ton, calculated as follows:

capital cost [$30 0000001 #11.74/ton

(365 days] x [1. 000 tons dayl 0.-

701

OTA has estimated the capital costs per ton

processed for various resource recovery

technologies using averages of the investment

data in table 43, an assumed capital recovery

factor of 0.1, and an assumed capacity

utilization factor of 0.70. The results are

shown in table 45.

Impact of Financing Methods and

Ownership on Capital Costs

The financial terms available to a resource

recovery venture depend on the ownership

mode, the risk implied by the uncertainty

about the performan~e of the technology, and

the risk implied by the uncertainty in scrap

revenues. For public ownership, the required

rate-of-return is higher if a community

chooses to use project revenue bonds rather

than general obligation bonds to finance the

project. For private ownership, the rate of

return is influenced by the ratio of debt to

equity of the company in the venture and by

the rating of its bonds.

The effective property and income tax

rates are significant factors in the capital

charge for private ownership. Private owners

may be able to take advantage of investment

tax credits or property tax abatements unavailable to public owners, who on the other

hand, pay no taxes. These tax advantages reduce the capital cost of resource recovery on

a balance sheet basis, but do so by transferring part of the cost to the public treasury.

A combination of public financing and private ownership may be particularly attractive for resource recovery systems. It combines the low interest rates available through

municipal financing with the tax deductions

available to private firms. In this approach, a

community may be able to issue pollution control revenue bonds and use the proceeds to

help finance a private venture. The private

firm then takes advantage of tax credits or

other incentives to reduce its effective costs.

However, the Internal Revenue Service (IRS)

has been reluctant to allow such financing for

resource recovery plants, since they do not

process “valueless” wastes as required by

IRS rules. (See chapter 7.)

Operating Costs

Operating costs include labor, maintenance, supplies, insurance, and utilities. Estimates of operating costs for various resource recovery technologies are shown in table 44. The labor component of average operating costs declines rapidly as the plant capacity increases; other components are more

nearly proportional to capacity. Since operating costs are very sensitive to local wage

rates and utility prices, the figures in table 44

should be considered as very rough estimates.

Total Costs of Resource Recovery

Processing

Table 45 shows estimates of the total costs

of resource recovery for plants of 1,000-tpd

capacity. (Modular incinerator costs are

shown for a 200-tpd plant.) These total cost

estimates are based on average capital costs

from table 43 (capital recovery factor = 0.1;

capacity utilization factor = 0.70) and average operating costs from table 44.

Two points should be kept in mind when reviewing table 45. First, different technologies

have different costs and produce different

revenues. Second, the actual costs for any

particular project may differ markedly from

those shown.
124 . Materials and Energy From Municipal Waste

Table 44.—Operating Costs of Centralized Resource Recovery

(literature estimates and averages for 1,000-tpd plants)

Operating cost’ ($/ton)

Technology Reference Year Original year $ 1979$ Average in 1979$

Waterwall incineration to steam 2 1975 $11.13 $13.36

18 1977 8.00 8.63 $11.00

Refuse-derived fuel with materials 2 1975 6.36 7.63 8.90

recovery 19 1977 9.33 10.07

Refined refuse-derived fuel with 2 1975 8.69 10.43 10.40

materials recovery (ECOFUEL-ll@ )

Wet process refuse-derived fuel 2 1975 12.11 14.53 14.50

with materials recovery

Gas pyrolysis

● Puro x

m

2 1975 11.92 14.30

20 1977 18.00 19.42 16.90

—

● Torrax @

2 1975 10.91 13.09

21 1977 15.00 16.19 14.60

Modular incineration with heat recovery 17 1977 9.91 10.14b 10.69-10.94

22 1978 9.57C 9.57 10.40

aLiterature estimates inflated t. 1979 dollars using implicit mice deflater. Averages–rounded to nearest 10 cents

b

200-tpd plant.

-. .

c

220-tpd plant.

Table 45.—Total Costs of Processing 1 Ton of

MSW Using Various Resource Recovery

Technologies

(1,000.tpd pIants in 1979 dollars)

Estimated costs ($/ton)

Technology Capital’ Operating TotalC

Waterwall incineration to

steam . . . . . . . . . . . . . . . . . . .$14.60 $11.00 $25.60

Refuse-derived fuel with

materials recovery. . . . . . . . . 6.50 8.90 15.40

Refined refuse-derived fuel

with materials recovery

(ECOFUEL-11* ). . . . . . . . . . . . 11.60 10.40 22.00

Wet process refuse-derived

fuel with materials

recovery . . . . . . . . . . . . 6.70 14.50 21.20

Gas pyrolysis

● Purox . . . . . . . . . . . . 15.00 16.90 31.90

. Torrax . . . . . . . . . . . . . 14.60 14.60 29.20

Modular incineration with

heat recoveryd . . . . . . . . . . . . 10.10 10.40 20.50

a Based on average investment from table 43. capital recovery factor 0.1.

capacity utilization factor O 70

based on average operating costs from table 44.

c Actual cost of any particular project may differ markedly from these

estimates

‘200-tpd plant.

The figures in table 45 suggest that total

processing costs for resource recovery plants

range from $15 to $30 per ton of MSW. In

general, the systems with higher processing

costs produce higher valued products. Therefore, data such as that in table 45 cannot be

used to select a system with lowest net cost.

In the next section it is shown that under

average conditions, no system can produce

sufficient revenues from recovered energy

and materials to be economic without charging a substantial tipping fee. *

Figure C-2 of Working Paper No. 3 shows

the MITRE Corporation’s estimates of the dependence of total costs on plant size.(23)

While more recent evidence suggests that

MITRE has overstated the economies of

scale,(14) it is nevertheless true that plant

size is an important factor in total cost per

ton. This suggests that in order to achieve

lower processing costs, a number of communities might want to operate one large plant

together rather than several small ones. However, these cost savings, if achievable, must

be balanced against the increased cost of

transportation to a central facility, the difficulty of locating an appropriate plant site, the

challenge of finding a sufficiently large

energy customer, and the costs of planning

and operating a multi jurisdictional facility.

The direct economics of this tradeoff are considered later in this chapter, and the institutional problems are discussed in chapter 7.

*A tipping fee is the charge, generally in $ per ton,

for dumping waste at a landfill or a resource recovery

plant.
Ch. 6—Economics of Centralized Resource Recovery 125

Chapter 5 contains a discussion of the tradeoffs between large- and small-scale plant concepts.

Materials and Energy Revenues

From Various Resource

Recovery Technologies

T

here is very little information on which

to base estimates of potential revenues

from most resource recovery technologies.

Most of these estimates are speculative and

do not represent actual marketing experience. Furthermore, revenues can be expected

to depend on such local factors as the prices

of alternative fuel supplies and the distance

to markets. Prices for the recovered materials are known to vary widely over time. (In

chapter 3, the marketability of various energy

and materials products from resource recovery is discussed, and the impact of costs of

transportation by rail is analyzed.)

Little information is available from which

to determine whether the size of a facility affects product revenues per ton. Presumably,

there would be economies of scale in marketing products, and larger amounts might

bring higher net unit revenues. On the other

hand, large customers would expect to share

in these reduced marketing costs by paying

lower average unit prices. Thus, the assumption is made in this analysis that revenues per

ton of product are constant.

A resource recovery facility can reduce

the weight of waste to be landfilled or otherwise disposed of by up to 80 or 90 percent,

with equivalent reductions in the costs of

such disposal. Typically, landfill or other

disposal costs from $2 to $10 per ton. Thus,

landfill costs may be reduced by $0.50 to as

much as $9 per collected ton if resource recovery is used. (In this analysis, residue disposal fees are included in operating costs, so

the full savings from avoiding landfill of $2 to

$10 per ton are used.) Waste collectors may

even be willing to pay a somewhat higher tipping fee to a resource recovery plant than to

a landfill because they can save the lost time

and the costs of repairing the damage to

trucks that often occurs on rough landfill

sites.

Table 46 recapitulates estimates of potential resource recovery revenues from table

11. These revenues have not been adjusted to

account for the cost of transporting products

to market. Such transportation charges could

reduce them substantially, as noted in table

12. Revenues are included only for energy

and ferrous metals, since aluminum, glass,

and paper recovery technologies are still

somewhat speculative. Recovery of both

aluminum and glass might add $2 to $3 per

ton of waste to revenues. (See table 11.)

The last column of table 46 shows estimates of minimum tipping fees for the various

technologies. Here, the minimum tipping fee

has been set equal to the net cost for waste

disposal after credits are taken for energy

and materials revenues. The tipping fee provides a basis for direct comparison with landfill costs since it is the price a resource

recovery plant must charge to accept MSW

from collectors. It is essentially the economic

bottom-line for resource recovery. Table 46

also shows that centralized resource recovery is economically feasible today in areas

where either the cost of transportation to distant disposal sites or the cost of landfill is

high.

An indication of the plausibility of the estimates in table 46 can be gotten from examining actual tipping fees charged by the current

generation of resource recovery plants. A

compilation of tipping fees by the National

Center for Resource Recovery (NCRR) shows

that they are in the range of $5.60 to $16.00

per ton for plants now operating. Six of eight

plants for which data are presented have tipping fees above $10 per ton.(24)
126 ● Materials and Energy From Municipal Waste

Table 46.—Estimated Revenues and Minimum Tipping Fees for Various Resource Recovery Technologies

(1,000-tpd pIants in 1979–all rounded to nearest whole dollar)

Total processing Minimum tipping

Costa Energy revenuesb Ferrous revenues b feec

Technology ($/ton )

($/ton)_ ($/ton) ($lton)

Waterwall incineration to steam. . . . . . . . . $26

Refuse-derived fuel with materials

recovery. . . . . . . . . . . . . . . . . . . . . . . . . 15

Refined refuse-derived fuel with

materials recovery (ECOFUEL-11~ ). . . . . 22

Wet process refuse-derived fuel

with materials recovery . . . . . . . . . . . . . . 21

Gas pyrolysis

● Purox . . . . . . . . . . . . . . . . . . . 32

● Torrax @ . . . . . . . . . . . . . . . . . . 29

Modular incineration with heat

recovery. . . . . . . . . . . . . . . . . . . . 21

aSource Table 45

— —

bSource Table 11

cTotal costs minus revenues

dAssumed equal to highest RDF Price

Optimum Resource Recovery

Systems

T

he design of an optimum resource recovery system for a region requires

balancing a number of factors. These include:

economies of scale in processing; costs o f

transportation; sales of recovered products;

credits for avoiding landfill; costs and problems of multi jurisdictional planning and operation; and other less-tangible factors such as

facility siting, delays in constructing large

plants, and concentration versus dispersion

of air and water emissions.

From an economic point of view, an optimum resource recovery system is the one that

handles a region’s wastes at lowest net cost

per ton. (The net cost is the difference between processing and transportation costs on

the one hand and product revenues on the

other.) If unit revenue is independent of plant

size, then the optimum system is the one for

which the sum of processing and transportation costs is the smallest.

Figure 5 illustrates the determination of

optimum plant size for a situation in which a

single plant is to be designed to consume only

part of an area’s waste. As the plant capacity

is made larger, the average processing cost

$9-17 — $ 9-17

5-9 1-3 4-1o

9

d

1-3 10-12

5-9 1-3 9-16

11 1-3 18-20

9-17 — 12-21

9-17 — 3-12

-—

per ton of MSW decreases, but at a decreasing rate. At the same time, average transportation costs per ton increase as waste must

be hauled from further away. The result is

that a minimum total cost is reached at a certain plant size. If the plant is made larger,

economies of scale in processing are more

than offset by increasing transportation

costs, Similarly, transportation savings for a

smaller than optimum plant are more than

offset by the loss of economies of scale.

Some of the debate about resource recovery economics in recent years has been

concerned with the optimum size for such

plants. This, in turn, has centered on just how

important the economies of scale are for

larger sized plants. A perspective at one extreme is represented by the work done by

MITRE Corporation for this study in 1976, reported as Working Paper No. 3.(6) By assuming that economies of scale persist for plants

up to 10,000- tpd capacity, MITRE found optimum plants in the neighborhood of 4,000 to

10,000 tpd for two study regions (Eastern

Massachusetts and “INOKY,” see (6)).

At the other extreme, Black and Veatch,

and Franklin Associates, in a study completed in 1978, found that economies of scale

in processing were exhausted at 1,000- to

l,500)-tpd capacity for all technologies, with
Ch. 6—Economics of Centralized Resource Recovery . 127

I

Figure 5.—Optimum Resource Recovery

Plant Capacity

Total

I

I

i

I

Plant capacity

SOURCE Off Ice of Technology Assessment

the possible exception of Purox

@

. In fact,

they found that for the Kansas City region

200-tpd modular incinerators and 1,000-tpd

waterwall incinerators have the lowest net

costs and are roughly equal in economic performance .

In view of the more recent findings that

economies of scale in processing are exhausted above 1,000- to 1,500-tpd capacity,

plants of this size are likely to be the largest

that are economically optimum. Since a

l,000o-tpd plant can dispose of the MSW generated by about half-a-million people, plants

that would serve regions with a population of

1 million or higher are unlikely to be of interest in the near future.

Subsidies for Costs of Resource

Recovery

Rationale

s

ubsidies might be offered for resource recovery activities for two purposes. One

is to offset high tipping fees (illustrated in

table 46) in areas in which it is desired to implement resource recovery and where the resource recovery tipping fee exceeds the cost

of landfill. The other is to overcome the risks

faced by operators who are unwilling to invest in new resource recovery techniques in

view of their uncertain technology and economics. (These two purposes are explained

more fully in chapter 7.) This chapter considers the implications and the costs of various

subsidies used for the first purpose. The second purpose is discussed in chapter 7.

Magnitudes of Subsidies

Table 46 suggests that the net cost of

resource recovery can range from $3 to $20

per ton, with an average of about $10 per ton

for systems under serious consideration.

With landfill costs in the range of $2 to $10

per ton, a subsidy ranging from $1 to $18 per

ton would be necessary to make resource recovery generally competitive.

The costs and implications of a national

subsidy of $8 per ton are examined here as a

reasonable proposal for a uniform national

program. What might a subsidy of $8 per ton

of MSW cost on a national basis, and how

would it translate to capital or operating subsidies? For the 136 million tons of MSW collected each year, an $8 per ton subsidy is

equivalent to approximately $1 billion per

year.

Put another way, as can be seen from table

45, $8 per ton is equivalent to a capital subsidy of one-half to more than all of the capital

cost of resource recovery. It is also equivalent

to about one-half to nearly all of the operating

costs of a plant.

Proposals have been made to devise an operating subsidy that would be proportional to

the energy or materials revenues. For example, a subsidy of $8 per ton of MSW could be

pegged to the ferrous scrap revenues, which

would typically be $1.00 to $2.80 per ton of

waste processed. Assuming that 140 pounds

of ferrous scrap were recovered per ton of

MSW (see table 8), a subsidy of $8 per ton of

MSW is equivalent to a subsidy of $114 per

ton of ferrous scrap. This is a very large sub-
128 ● Materials and Energy From Municipal Waste

sidy in comparison to typical prices of $20 to

$40 per ton for such ferrous scrap.

Alternatively, an operating subsidy could

be pegged to energy revenues. Since MSW

typically contains about 9 million Btu per ton

as fuel value, a subsidy of $8 per ton is

equivalent to a subsidy of approximately $1

per million Btu, over and above a marke t

price for the recovered energy. This, too, is a

large subsidy in comparison to current wholesale energy prices of $1 to $4 per million Btu.

Discussion of Subsidies

The rough estimates presented above suggest that on a national average basis sub -

sidies for resource recovery are not justified

by the value of the potentially recoverable

materials and energy; the subsidy required is

simply too large in comparison to the value of

the recovered resources. Thus, a Federal program to subsidize resource recovery from

MSW for the entire Nation is not justifiable

on resource supply grounds.

Three other perspectives may justify a

limited subsidy for resource recovery, however. First, if environmental costs of existing

disposal methods (landfill, ocean dumping)

exceed $8 per ton of MSW, then a subsidy of

$8 per ton might be justified if it were the only

way to avoid those costs. Second, resource

recovery may be much more nearly economic

now in certain locations than the national

average. In this case, subsidies much lower

than $8 per ton might be adequate to stimulate its adoption. These are largely local o r

State circumstances for which Federal subsidy can be justified only on the grounds that

those who generate MSW cannot afford t o

dispose of it properly. Third, subsidies c a n

also be used to overcome the technical and

economic risks of a new technology, as discussed in chapter 7. Federal subsidy limited

to a few plants is justified to help develop

technology that may subsequently become

economically feasible in many other locations.

The Interactions of Centralized

Resource Recovery With Beverage

Container Deposit Legislation and

With Source Separation

A

source separation program or beverage

container deposit legislation (BCDL)

could change the composition of MSW and reduce the amount available for resource re -

covery. This could make an existing plant less

economical to operate or require an existing

plant to reach out to a larger service area.

For the same reason, a smaller plant could be

constructed if it were designed with these

programs in mind. This section analyzes the

interactions of such programs. (See chapter 4

for details of source separation approaches

and chapter 9 for BCDL.)

Beverage Container Deposit Legislation

BCDL, if successful, would remove some

aluminum, glass, and steel from the wast e

stream. But none of the other waste components would be affected. The effect of

removing these materials on resourc e

recovery revenues is an important question.

In chapter 9, five scenarios are presented

for the impact of BCDL on the composition

and amount of MSW, had BCDL been fully effective in 1975. Various assumptions a r e

made about beverage market shares by container type and about return and recycle

rates for containers. These scenarios include

the actual 1975 situation (scenario I) and four

projections, ranging from an all-glass refillable situation to a situation with a high can

market share. Table 47 shows the composition and the total amount of MSW for each

scenario.

The example developed in chapter 4 to illustrate the interaction of resource recovery

and source separation can be used to show

how BCDL might affect resource recovery

revenues under the estimates of changes in

waste composition for the five scenarios.
Ch. 6—Eccmomics of Centralized Resource Recovery . | 29

Table 47.—Composition of MSW Under Five

Beverage Container Deposit Scenarios for 1975’

Composition (o/o by weight) —

Scenario

Component I II Ill Iv v

Ferrous metal . . . . . 8.3 7.4 7.6 7.9 7.6

Glass . . . . . . . . . . . . 10.0 10.3 8.1 6.8 9.0

Aluminum . . . . . . . . 0.70 0.37 0.38 0.49 0.47

RDF . . . . . . . . . . . . . 72.5 —73.4 75.2 76.0 74.4

Total waste Ioad b

(tons/day). . . . . 875 865 844 835 853

a see chapter 9 for definition of five scenarios

b waste load for a city of 500,000 people, reflecting material removal by BCDL

SOURCE Off Ice of Technology Assessment

That example concerns a city of 500,000 people, each of which generates an average of

3.5 pounds per day of MSW with a national

average composition. To serve this community without deposit legislation, a resource

recovery plant of 875-tpd average capacity

would be needed. (With a capacity utilization

factor of 80 percent, the plant would have to

be rated at 1,100 tpd.) In each scenario, the

plant is assumed to produce RDF and to recover ferrous metals, aluminum, and glass. It

is assumed that an optimal resource recovery

plant is built for each scenario.

Table 48 summarizes the results of the

analysis of resource recovery revenues and

credits under the five scenarios. Without

BCDL, daily average revenues and credits

are $15.73 per ton. * Under the four scenarios, revenues and credits are in the range of

$15.20 to $15.72 per ton. Thus, for plants

whose design takes into account the removal

of materials by BCDL only small changes are

anticipated in revenue per ton.

If BCDL were implemented after the resource recovery plant were built, revenue

would decline from $15.73 to a range of

$14.89 to $15.08 per ton of original capacity;

i.e., the decline would be in the range of $0.65

to $0.84 per ton of waste processed. Even in

*Estimates of revenue and credits cannot be calculated so that they are accurate to four or five significant figures as shown here. In this analysis the extra

figures are carried solely for the purpose of indicating

small differences from a base line case.

Table 48.—impact of Beverage Container Deposit

Legislation on Potential Resource Recovery

Revenues and Credits for Five Scenarios in 1975

Revenue or credita ($/day)

Component Scenario

— .

of revenue — I II Ill Iv v

Ferrous metal . . . . . . 1,788 1,595 1,595 1,623 1,595

Glass . . . . . . . . . . . . . 660 675 510 420 570

Aluminum . . . . . . . . . 930 480 480 600 600

Total materials

revenues . . . . . . 3,378 2,750 2,585 2,643 2,765

Energy revenues. . . . 5,906 5,906 5,906 5,906 5,906

Landfill credits b for

RR. . . . . . . . . . . . . . 4,476 4,434 4,368 4,338 4,392

Landfill credits b for

BCDLC . . . . . . . . . . — 60 174 240 132 ———.—— —

Total revenues

and credits. . . . . 13,760 13,150 13,033 13,127 13,195

———- — —————.-—.—— —

Credits and

revenues

($/ton). . . . . . . . . . 15.73 15.20 15.44 15.72 15.47

Credits and

revenues for

original capacity

($/ton). . . . . . . . . . . . 15.73 15.03 14.89 15.00 15.08

— ———— ——. —

a unit revenues and credits are averages of values in table 11

b At a tipping fee of $6 Per ton

c Reflects removal of material from waste stream by BCDL

the worst case, however, (scenario III) total

resource recovery revenues would decline by

only $727 per day or by about 5 percent.

The estimated revenue changes presented

here are intended to serve only as approximate indicators of the probable impact of

BCDL on resource recovery revenues and

credits. They are sensitive to the assumed efficiency of materials recovery, to recovered

product prices, to the change in waste composition, and to the assumption that the same

kind of plant is used in each case. Nevertheless, it can be concluded from this analysis

that BCDL would have only a small impact on

resource recovery economics. This is true

largely because the material revenues are a

relatively small fraction of total revenues and

credits, and because they are not markedly

affected by removal of a portion of the container wastes by BCDL.

It is noteworthy that most of the revenue

loss under BCDL is from aluminum and glass.

However, technologies for recovery of these
130 ● Materials and Energy From Municipal Waste

materials are still in the developmental stage,

and they may not be able to produce any revenues at all in the open market. (See chapters

3 and 5.) If a mass burning process such as

waterwall incineration is used, materials are

not usually recovered at all. In both of these

cases, metals and glass would be a drag on

the performance of resource recovery and

would increase the fee for ash disposal. Their

removal by BCDL would be an operational advantage.

Source Separation

Chapter 4 contains an analysis of the

economic interaction of source separation

and centralized resource recovery similar to

the one presented above for BCDL. The major

findings of the analysis are: a) if source

separation and centralized resource recovery

are planned and implemented together, the

economics of the combination are equal to or

better than those of either option alone; and

b) if source separation is implemented after

an optimal resource recovery plant is built

and the plant cannot expand its service territory to make up the decrease in waste load,

its economic performance would be seriously

hurt.

Findings on the Economics of

Centralized Resource Recovery

T

his chapter discusses the costs and benefits of centralized resource recovery,

with a focus on the direct costs and revenues

of such systems as seen by the owner, operator, or investor. Data from a number of

sources are compiled and summarized to provide estimates of capital and operating costs,

and of revenues for several technologies of interest. Many factors specific for a given project can influence these numbers. The reader,

therefore, is cautioned that these estimates

cannot be used to plan, design, or evaluate

any particular project proposal.

Processing MSW in centralized resource

recovery plants to recover energy and materials has been estimated to cost between $15

and $32 per ton of waste depending on the

technology used. Revenues from the sale of

energy and materials can range from $5 to

$17 per ton of waste, with more costly systems generally producing greater revenues.

Net costs, equivalent to the minimum tipping

fees, are expected to range from $3 to $21

per ton. (A range of $6 to $16 per ton is typical of tipping fees at plants currently in operation. )

Larger plants may be able to charge somewhat lower tipping fees, although economies

of scale seem to largely disappear above

1,000 to 1,500 tpd. Small-scale modular incinerators can apparently charge tipping

fees in the range of $3 to $12 per ton at a 200-

tpd size.

All of these costs and revenues are based

on very limited commercial experience, or in

some cases only on engineering designs.

Thus, they contain a high degree of uncertainty. Additional experience is, therefore, necessary before reliable conclusions about

them can be drawn. However, in areas of

high landfill costs or where lack of landfill

space causes high costs for transportation to

distant landfill sites, centralized resource

recovery can be economically feasible today.

The optimal design of a centralized resource recovery plant, or a system of several

plants, represents a tradeoff among three

factors: 1) processing costs per ton, which

decrease as plant size increases; 2) transportation costs per ton from collection points,

which increase as plant size and haul distances increase; and 3) energy and materials

revenues, the energy portion of which are

site-dependent. For each service area, there

is a lowest cost mix of plant sites and sizes

that is determined largely by the tradeoff between the cost of transportation and the

economies of scale in processing costs. The

best available current information suggests

that plants in the 1,000- to 1,500-tpd” range

may be the largest economically optimum

sizes for most locations.
Ch. 6—Economics of Centralized Resource Recovery 131

Subsidizing the capital or operating costs

of centralized resource recovery nationwide

cannot be justified on the basis of the value of

the recovered energy or materials. For example, a subsidy of $8 per ton, which is designed

to make an average $14 per ton resource recovery tipping fee competitive with an average $6 per ton landfill fee is equivalent to a

subsidy for recovered ferrous metal of several times its market price or to a subsidy for

recovered energy of nearly $1 per million Btu

(about $5 per barrel of oil equivalent). There

is no a priori reason to subsidize resource

recovery if sound alternative disposal methods, such as landfill with adequate environmental controls, are available at lower cost.

Resource recovery does not generally need

a Federal subsidy if the revenues from recovered energy and materials plus landfill

credits exceed its costs. A subsidy may be

economically justified, however, in three

specific circumstances: 1) if the environmental or health costs of alternative disposal

methods such as landfill or ocean dumping

exceed the subsidy, and it is not feasible to

reduce those costs through regulation and

control; 2) if the spread between the resource

recovery and the landfill tipping fees is considerably less than $8 per ton, and a subsidy

is justified by a desirable but non-monetary

benefit of energy recovery such as reduced

oil imports; 3) when used for a small number

of demonstration plants to compensate communities for bearing the risks associated with

trying an uncertain new technology on behalf

of the rest of the Nation. Federal subsidy for

the first two purposes can be justified economically only if local areas cannot afford

proper disposal of the wastes they generate.

Federal subsidy for the third purpose is reasonable from an economic point of view.

Beverage container deposit legislation

might reduce the revenue of an existing

resource recovery plant by 5 percent at most.

There would be no revenue reduction if the

recovery of aluminum and glass do not become technically and economically feasible.

Systems, such as waterwall incineration,

which do not recover materials, will not suffer a loss in revenues. Thus, there is no

serious conflict between resource recovery

and beverage container deposits.

Source separation would resourc e

recovery plant revenues from both materials

and energy. A comprehensive source separation program could seriously reduce the

revenues from an existing resource recovery

plant. However, effective source separation

implemented either before or when a centralized facility is planned would allow a smaller

resource recovery plant to be built. A combination of resource recovery and source

separation may be more effective economically than either program alone. It may be

the ideal approach for some communities.
132 ● Materials and Energy From Municipal Waste

References

1. Engineering News Record, various issues.

2. Schulz, Helmut W., et al., Resource Recovery Technology for Urban Decisionmakers. Prepared for the National Science Foundation by the Urban Technology

Center, Columbia University, January

1976, p. 14.

3. Ralph M. Parsons Company, Engineering

4,

5.

6.

7.

8.

and Economic Analysis of Waste to Energy Systems, prepared for Industrial Environmental Research Laboratory, U.S. Environmental Protection Agency, Cincinnati, Ohio, Report no. EPA-600/7-78-086,

May 1978, p. 251.

Gordian Associates Incorporated, Overcoming Institutional Barriers to Solid

Waste Utilization as an Energy Source:

Final Report. Report to the U.S. Department of Energy, HCP/L-50172-01, November 1977, p. 39.

Black and Veatch, and Franklin Associates, Lt’d, Detailed Technical and Economic Analysis of Selected Resource Recovery Systems. Report to the Mid-America Regional Council, Kansas City, Me.,

1978, p. 3.

The MITRE Corporation, Evaluation of

Policy Issues in Resource Recovery: An

Application of Recovery and Market PIanning (RAMP), published as Working Paper

no. 3 in vol. II of this report, July 1978.

Schultz, Helmut W., et al., op. cit., p. 246.

Gordian Associates Incorporated, op. cit.,

p. 67.

9,

10.

11.

12.

13.

14.

150

16.

17.

18.

19.

20.

21.

22.

National Center for Resource Recovery

Inc., New Orleans Resource Recovery Facility Implementation Study, Washington,

D. C., September 1977.

Ralph M. Parsons Company, op. cit., p.

252.

Gordian Associates Incorporated, op. cit.,

p. 100.

Auburn Solid Waste Review Committee,

Auburn Solid Waste to Energy Project

Proposal Evaluation, Auburn, Maine, July

1978, p, 68.

The MITRE Corporation, op. cit., p. 512.

Gordian Associates Incorporated, op. cit.

Black and Veatch, and Franklin Associates, Lt’d., op. cit.

Ross Hofmann Associates, Evaluation of

Small Modular Incinerators in Municipal

Plants. Prepared for the U.S. Environmental Protection Agency under contract no.

68-01-3171, EPA Publication SW-1 13c,

1976.

Black and Veatch, and Franklin Associates, Lt’d., op. cit., p. 6.

Ibid,, p. 15.

Ibid., p. 21.

Ibid., p. 32.

Ibid., p. 26.

Auburn Solid Waste Review Committee,

op. cit., p. 66.

23. The MITRE Corporation, op. cit., p. 515

24. “Resource Recovery Activities, ” NCl?R

Elu]letin: The Journal of Resource Recovery, 9:1, March 1979, p. 18.
Chapter 7

Institutional problems in

Centralized Resource Recovery:

Issues and Policy Responses
Contents

Introduction. . . . . . . . . . . . . . . . . . . . . . . .

The Nature of Institutional Problems . .

Risk as a Source of Institutional

Problems . . . . . . . . . . . . . . . . . . . . . .

Some Approaches to Risk Management

Institutional Problems in Centralized

Resource Recovery . . . . . . . . . . . . . .

Information Problems . . . . . . . . . . . . . .

1. Underinvestment in Research

and Development . . . . . . . . . . . .

2. Inadequate Information at the

Local Level. . . . . . . . . . . . . . . . .

Jurisdictional Problems. . . . . . . . . . . . .

Page

135

135

135

136

136

137

137

137

138

3.

4.

5.

6.

7.

8.

Fragmented and Overlapping State

and Local Jurisdictions . . . . . . . 138

Cost Sharing. . ...............138

Mixture of Private and Public

Roles in Managing MSW .. ....139

Responsibility for and Ownerhip

of Waste After Discard

(“Flow Control”). . ...........139

Limitations on Interjurisdictional

Waste Shipment or Disposal .. .139

Overlapping Federal Agency

Jurisdictions ● . . . . ● ● . . . . . . ● , ● 140

Implementation problems . ..........140

9. Limited Capability of Local

Governments to Issue Bonds . . . 140

10. Cooperation of Local Waste

Collectors and Haulers . . . . . .. 140

11. Creation Of Local Monopolies , .. 140

12. Insufficient Definition of Health,

Safety, and Environmental

Standards for Resource

Recovery Plants . ............141

13. Siting Facilities , . . . . . . .......141

Marketing Problems . ..............141

15. Limited Authority of Local

Gove rnments to Enter Into LongTerm Sales Contracts. . ● .. ....142

16. Electric Utility Rate Regulation

That Discourages Use of New

Fuel Sources. . ..............142

Federal Options for the Institutional

Problems . . . . . . . . . . . . . . . . . . . . .. 142

Effectiveness of the Federal Policy

Options ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● .... ● ● 1 4 3

Page

Direct Federal Actions . . . . . . . . . . . . .143

Fund Research, Development, and

Demonstration Projects. . .......143

Education and Training. ... , .. ....145

Technical Assistance to State and

Local Governments . ...........145

Require Federal Agency Coordination or Consolidation for

Resource Recovery. . ...........146

Make Resource Recovery Plants

Eligible for Pollution Control

Bond Financing . . . . . . . . . . . . . .. 146

Promulgate Regulations for

Environmental, Health, and Safety

Performance of Resource

Recovery Facilities. . ...........146

Assist or Mandate the Development

of Product Performance Standards 14?

Require Utility Rate Reform. . . . . . .. 147

Freight Rate Adjustment. . . . . . . . . , 147

Federal Financial Assistance to Reduce

Risk and Uncertainty. . .........147

Overview of Subsidies for Static and

Dynamic Purposes . ............147

Construction Subsidies . ..........148

Operating Subsidies ... ... ... ... .14$

Federal Inducements to State and Local

Governments . ................150

Findings on Overcoming Institutional

Barriers to Resource Recovery. .. ....151

References. . . . . . . . . . . . . . . . . . . . . ., .. 152

Tables

Table No.

49. Institutional Problems in Centralized

Resource Recovery ... . ● ● ● ● ... ● ● . . ● 137

SO. Available Federal Options Applicable

to Institutional Problems in Centralized

Resource Recovery 143

51. Relationship of Federal Options

to Reducing Institutional Barriers to

Centralized Recovery ● ● ● 144
Chapter 7

Institutional Problems in

Centralized Resource Recovery:

Issues and Policy Responses

Introduction

The Nature of

Institutional Problems

c

hange in a society is often measured by

changes in the number and character of

its institutions. Yet, because institutions reflect and define the way things are done,

their very existence can be a barrier to technological change. Institutions such as government agencies, trade associations, and

citizen groups that operate outside market arrangements often constrain actions that are

desirable from an economic or technical perspective. Others, such as research institutions, support technological change by providing new ideas and people trained to accept

and implement them. This chapter focuses on

those institutions that can act as barriers to

resource recovery, particularly centralized

resource recovery where institutional barriers are highest.

Problems caused by institutions are not

unique to resource recovery. They arise

whenever a new technology is adopted, especially when the user is in the public sector

or must work closely with the public sector,

as is the case with law enforcement, education, information processing, mass transit,

and also resource recovery.

Existing institutional barriers pose problems for initiating or improving resource recovery, recycling, and reuse. Some of these

may be more difficult to solve than the technological and economic problems discussed

elsewhere in this report. Some may even be

insurmountable; the only approaches may be

to circumvent them by adapting technology to

them, by adopting new economic incentives or

disincentives, or by establishing entirely new

institutions.

This chapter addresses these specific

questions:

●

●

●

●

What is the importance of risk as an institutional issue in resource recovery?

What are the major institutional problems for resource recovery?

What is the origin or nature of each of

these problems?

What Federal policv options are available for addressing ‘these problems and

how well might they work?

Risk as a Source of Institutional

Problems

Centralized resource recovery is an uncertain activity that poses risks to those involved

in it. * The large capital investments required

make it a particularly risky venture. Managing this risk is at the heart of a number of its

institutional problems.

A potential investor in centralized resource recovery, whether public or private,

faces at least five separate sources of uncer-

*An uncertain activity is one Whose outcome Cannot

be predicted exactly. The risk is a measure of the loss

that would occur if the outcome is a failure—the

greater the investment at a given level of uncertainty,

the greater is the risk.

135
136 . Materials and Energy From Municipal Waste

tainty which put that investment at risk. Public officials face political risks that arise in

part, from these same uncertainties.

●

●

●

●

●

Technical uncertainty—will the technology perform reliably and yield products

with expected quality while keeping

effluents at acceptable levels?

Cost uncertainty—can the facility be

built and operated for the projected

costs?

Revenue uncertain y—will potential

customers purchase the available quantities of recovered materials and energy

at expected prices?

Waste uncertainty—will municipal solid

waste (MSW) be delivered to the facility

in expected quantity and with expected

composition?

Environmental uncertainty—will environmental standards change as a result

of political action or if new hazards are

identified?

Each of the parties to a resource recovery

decision would like to reduce his risk either

by reducing the overall level or by transferring it to the other parties. While institutions

can provide the means to do both, they can

also be barriers to effective risk reduction or

risk sharing.

Some Approaches to Risk Management

A resource recovery investor can reduce financial risk in several ways:

● Diversify by means of spreading the risk

by building several, perhaps smaller,

facilities using different technologies

with different technical uncertainties,

thus reducing the overall economic risk

but not the technical uncertainties of

each facility.

● Use only proven technologies, thus

reducing the technical and cost uncertainties.

● Seek long-term contracts for fixed quantities of inputs and for products of

specified quality or composition, thus

reducing the waste and revenue uncertainties.

●

●

●

Use technologies with advanced environmental controls or that produce “zerodischarge, ” thus reducing the environmental uncertainties.

Seek a Government subsidy, thus reducing the economic risk, but not the

economic uncertain y.

Delay while performing research and

development (R&D) or waiting for better

technology to be developed by someone

else, thus reducing the technical uncertainty.

Each of these approaches affects the balance

sheet cost* of resource recovery, its total cost

to society, and the distribution of risk among

the parties-at-interest. For example, using

only proven technologies reduces the economic and technical uncertainties for all the parties involved. This approach, however, could

carry a high price if proven technologies are

expensive. Using the approach of Government subsidy, the risk of loss to the investor is

decreased by transferring it to the Government. Thus, the owner’s balance sheet cost of

resource recovery declines, even though the

total cost to society remains the same. Similarly, long-term contracts for delivering

waste of a guaranteed quantity and composition can probably be made with a community

only at a lower tipping fee than it would

otherwise be willing to pay. The community

would want to pay less because it would forego the ability to adapt to future circumstances by offering such a guarantee. Each of

these examples shows that reducing risk has

a real price that someone or some other institution must be willing to pay. This is the

reason that risk is an institutional problem.

Institutional Problems in

Centralized Resource Recovery

T

able 49 lists 17 institutional problems

that frequently arise in the establish-

*A balance sheet cost is the cost of resource

recovery calculated as the difference between a plant’s

income and its expenses. Subsidies or externalities

paid by or to other parties are not included in its

calculation,
Ch. 7—institutional Problems in Centralized Resource Recovery: Issues and Policy Responses ● 137

Table 49.—lnstitutional Problems in Centralized

Resource Recovery

———

information Problems – -

1. Underinvestment in research and development.

2. Inadequate information at the local level.

Jurisdictional Problems

3. Fragmented and overlapping State and local jurisdictions.

4. Cost sharing among communities.

5. Mixture of private and public roles in managing MSW.

6. Responsibility for and ownership of waste after

discard (“flow control”).

7. Limitations on interjurisdictional waste shipment or

disposal.

8. Overlapping Federal agency jurisdictions.

Implementation Problems

9. Limited capability of local governments to issue

bonds.

10. Cooperation of local waste collectors and haulers.

11. Creation of local monopolies.

12. Insufficient definition of health, safety, and environmental standards for resource recovery plants.

13. Siting of facilities.

Marketing Problems

14. Inadequate or nonexisting standards of performance

for recovered products.

15. Limited authority of local governments to enter into

long-term sales contracts,

16. Electric utility rate regulation that discourages use of

new fuel sources.

17. High freight rates for shipping MSW and recovered

materials.

SOURCE Office of Technology Assessment

ment of centralized resource recovery. These

problems are grouped under four main topics: information, jurisdictional, implementation, and marketing. Each is discussed in the

following section. Subsequent sections discuss policies that could be used to address

these problems.

Information Problems

1. UNDERINVESTMENT IN RESEARCH AND

DEVELOPMENT

Although a number of demonstration facilities and a few commercial resource recovery

plants are now in operation, considerable

uncertainty remains concerning their technical and economic performance. Subsystems

for recovery of aluminum, glass, and mixed

nonferrous metals have not been operated

commercially, and recovery of fiber suitable

for papermaking has yet to be accomplished.

Advanced energy recovery systems such as

pyrolysis remain at the demonstration stage.

Much still needs to be learned about the environmental and occupational health aspects

of resource recovery plant operation. (See

chapter 5.)

Studies of the process of technological innovation have shown that from a social point

of view private firms tend to underinvest in

R&D, especially for technologies that are intended for sale in the disaggregated market

made up of local governments. Because

knowledge can be used by anyone, once it is

obtained, firms cannot usually gain all the returns on an investment in R&D. Thus, one outcome of a market economy is that not all technological opportunities are taken advantage

of, nor all technical problems solved, without

some level of Government participation.

2. INADEQUATE INFORMATION AT THE

LOCAL LEVEL

From State or local points of view, the

problems of technical and economic uncertainty are compounded by the complexity of

what needs to be known to plan and operate

resource recovery systems. Specialized and

sophisticated engineering, marketing, legal,

and operating skills are all required. State or

local governments cannot be expected to

have this expertise in-house, or even to be

able to interact knowledgeably with consultants, vendors, Government agencies, or

special interest groups. Furthermore, local

citizens and interest groups generally do not

have effective access to expertise about complex technologies such as resource recovery.

The problem of inadequate information is

further complicated by the tendency to oversell sophisticated new resource recovery

technologies. This can be done both by some

of a technology’s proponents and by groups

that advocate resource recovery as an alternative to legislation which would discourage

waste generation such as mandatory beverage container deposits or the product charge.

The financial stakes in resource recovery are

high—much higher than the cost of plant con48-786 0 - 79 - 10
138 . Materials and Energy From Municipal Waste

struction alone. Local officials are in a vulnerable position. On the one hand they are

subjected to technology oversell and on the

other to opposition by some local trash haulers, to skepticism by some environmentalists,

and to resistance to landfills and resource

recovery plants by some citizens. An unbiased and objective source of information

would be helpful.

Jurisdictional Problems

3. FRAGMENTED AND OVERLAPPING STATE

AND LOCAL JURISDICTIONS

Responsibility for solid waste collection

and disposal has traditionally been at the

local government level, often provided competitively by the private sector or through a

franchise system. Except for large cities,

however, adequate environmental regulation

and effective resource recovery programs

often require cooperation among several

local government units as well as between

State and local governments. For example, in

the absence of statewide or regional solid

waste environmental control programs, open

dumping in unincorporated areas may not be

subject to any control.

Furthermore, in the metropolitan areas in

which the waste disposal problem is often

most serious, it is not uncommon for towns

and cities, counties, regional planning councils, and special waste or water management

districts to all be involved in some aspect of

operating or regulating the collection and disposal of MSW. Frequently, these different

jurisdictions are in conflict on many fronts;

cooperation to accomplish resource recovery

is only one of many problems they face. These

conflicts can rarely be resolved by assigning

full responsibility to any one group. Consequently, accomplishing resource recovery requires expensive, time-consuming, and complicated planning and coordination.

4. COST SHARING

Perhaps the most difficult local jurisdictional problem is to devise an equitable and

effective method for sharing the costs of

transportation, transfer, and processing in a

centralized resource recovery system that involves several communities. As noted in chapter 6, an economically optimal system for a

region would process all of its wastes at the

lowest net cost. Some communities, however,

may incur higher costs under the regionally

optimal system than they would under some

alternative. The result is that it may be

necessary for those communities whose costs

are reduced by resource recovery to appear

to be subsidizing those that would otherwise

face higher costs, if the region as a whole is to

be served at lowest cost.

An example may help clarify the cost-sharing problem. Suppose that two equal-sized

communities, A and B, could form a region for

the purposes of centralized resource recovery. Suppose further that waste disposal

using landfill costs $5 per ton in A and $10

per ton in B, and that a joint resource

recovery system costs $7 per ton (net cost).

Only B would benefit economically from resource recovery at $7 per ton. Therefore, A,

which would not benefit, would probably be

disinclined to join in. One approach would be

for B to pay an additional $2 per ton to A as

an inducement to join the system. Thus, the

final net cost to B would be $9 and to A $5 per

ton: B would save $1 per ton and A would pay

the same as for landfill. Another approach

would be for B to pay $2,50 per ton to A. This

would result in a net cost of $9.5o per ton to B

and of $4.5o per ton to A. With this alternative, both A and B end up with a net savings of

$0.50 per ton using resource recovery. The

problem with these monetary inducements is

that B appears to subsidize A. Even though

this is not actually the case, it is likely to be a

politically unacceptable solution, particularly

if B is an old, crowded city and A is its affluent suburban neighbor.

It is possible that two communities could

come to an agreement of the kind discussed

above. A real region, however, which can be

made up of 100 or more independent communities, will face great difficulties in attempting to devise an acceptable cost-sharing
Ch. 7—/nstitutional Problems in Centralized Resource Recovery: Issues and Policy Responses ● 139

formula that would enable it to use its optimal

(lowest net cost) system. Yet, failure to adopt

the lowest cost system may price resource recovery out of the market, (See chapter 6.)

5. MIXTURE OF PRIVATE AND PUBLIC ROLES

IN MANAGING MSW

In most communities both public agencies

and private firms have operating responsibilities for collecting, processing, and disposal

of MSW. Frequently, private firms are given

franchises to collect waste, while landfills

may be operated by public agencies, sometimes in competition with private firms. Resource recovery plants may operate as private ventures, as public ventures, or as public ventures operated by private firms under

contract.

In regions where resource recovery would

be economically attractive, different communities may have different mixes of public/private activities, which may greatly complicate agreeing on the arrangements for resource recovery. Existing private operators

are often concerned about losing the opportunity to compete for waste business, while

existing public agencies resist losing public

jobs to private firms. Private landfill operators are wary of competition from a new

public or private resource recovery plant,

especially if it enjoys a subsidy unavailable to

them.

6. RESPONSIBILITY FOR AND OWNERSHIP OF

WASTE AFTER DISCARD (“FLOW

CONTROL”)

Some resource recovery project owners

have sought local ordinances or exclusive

contracts that would mandate delivery of all

of a community’s solid waste to a designated

resource recovery plant in order to ensure

the economic solvency of the plant. For example, in Wisconsin the law authorizes the Wisconsin Recycling Authority to require municipalities to deliver all MSW to its facilities.(l)

Such requirements, called “flow control,”

prohibit licensed private collectors from

skimming off the high-value wastes for sale to

scrap processors or from seeking the most

economic means of disposal, including landfill. Flow control laws are different in intent

from ordinances that prohibit unlicensed collectors from scavenging waste placed at the

curb for collection.

The purposes of flow control requirements

are often to forestall establishing separate

collection programs after a plant is built or to

eliminate competition by landfills for disposal. Thus, attempts to mandate flow control

are usually opposed by private collectors,

landfill operators, and private firms as well

as by citizens groups who support separate

collection programs. (See chapter 4.)

A new separate collection program, if successful, can seriously reduce the revenues of

existing resource recovery plants. As shown

in chapter 4, however, if a separate collection

program is in place or properly planned for, it

need not harm centralized resource recovery

economically. Likewise, environmentally

sound, economically competitive landfill

should always be considered in waste management plans. Thus, flow control requirements, which effectively shift risk from the

resource recovery plant owner to other private and public parties, appear to serve no

public purpose.

In a recent case in Minnesota, a court

ruled that such an ordinance requiring use of

a particular landfill was an unreasonable exercise of State power since its purpose was to

secure the economic health of a particular

project rather than to protect health and

safety.(2) An ordinance requiring delivery of

all wastes to a resource recovery facility in

Akron, Ohio, is under court chaIIenge by the

National Solid Wastes Management Association.(3)

7. LIMITATIONS ON INTERJURISDICTIONAL

WASTE SHIPMENT OR DISPOSAL

Some State and local governments have

prohibited transfer of waste into or across

their jurisdictions. While such laws have
140 ● Materials and Energy From Municipal Waste

been oriented toward limiting the use of land

in one jurisdiction for disposal of another

jurisdiction’s wastes, they also serve as a

barrier to regionalized resource recovery.

New Jersey’s law prohibiting importation of

waste into the State was upheld by the New

Jersey Supreme Court against a challenge

that it poses an unconstitutional interference

with interstate commerce,(4) but was overturned by the U.S. Supreme Court under a

challenge by the City of Philadelphia on the

same grounds.(5) The essence of the Court’s

ruling is that a restriction on waste shipment

could be justified to protect public health and

safety but that it would be constitutional only

if it were applied to wastes from all sources.

Application only to out-of-State waste is unconstitutional restraint.

8. OVERLAPPING FEDERAL AGENCY

JURISDICTIONS

Concern has been expressed that too many

agencies are involved and that the Government fails to speak with a single or coherent

voice regarding resource recovery. Federal

responsibility for various aspects of MSW

management, including resource recovery, is

vested in several agencies whose objectives

overlap and are sometimes in conflict. These

include the Environmental Protection Agency

(EPA), the Department of Energy (DOE), the

Bureau of Mines (BOM), the National Bureau

of Standards (NBS) and other branches of the

Department of Commerce (DOC), and the Department of Housing and Urban Development

(HUD). Several other Federal agencies have

indirect influence over resource recovery, including the Departments of the Treasury and

of Defense, the Occupational Safety and

Health Administration (OSHA), the Federal

Trade Commission (FTC), and the Interstate

Commerce Commission (ICC). Advisory or

policy roles are also played by the Office of

Management and Budget, the Council of

Economic Advisors, and the Councils on Environmental Quality and on Wage and Price

Stability.

Implementation Problems

9. LIMITED CAPABILITY OF LOCAL

GOVERNMENTS TO ISSUE BONDS

Financing capital improvements has become a major problem for many American

cities that are at or near their statutory limits

on bonded indebtedness or that have poor

credit ratings that limit sales. The presence

of such communities in a region can be a

serious barrier to resource recovery. Furthermore, the Internal Revenue Service (IRS)

has been reluctant to certify pollution control

revenue bonds for the construction of resource recovery plants. Favorable rulings on

such certification could save several percent

on the cost of capital for resource recovery.

10. COOPERATION OF LOCAL WASTE

COLLECTORS AND HAULERS

Local private waste collectors and haulers

tend to view resource recovery skeptically.

Many private collectors are also in the landfill business and view resource recovery as a

direct competitor. Others fear a squeeze between the sum of higher disposal fees and increased transportation costs to distant resource recovery plants on the one hand, and

unwillingness of customers to pay higher

rates on the other. Still others are concerned

about flow control measures that may accompany resource recovery. (See discussion

above on flow control.)

11. CREATION OF LOCAL MONOPOLIES

The private approach to financing, ownership, and operation of resource recovery facilities poses another kind of institutional

problem: creation of a local monopoly over

solid waste disposal services. The problem is

compounded because this monopoly would

control an activity that has an essential

public health objective. In this event, it may

be necessary to consider extending public

utility regulation to resource recovery in
Ch. 7—institutional Problems in Centralized Resource Recovery: Issues and Policy Responses ● 141

order to limit monopolistic behavior in pricing

and services.

12. INSUFFICIENT DEFINITION OF HEALTH,

SAFETY, AND ENVIRONMENTAL

STANDARDS FOR RESOURCE RECOVERY

PLANTS

Currently, the status of resource recovery

plants as generators of air, water, and noise

pollution; bacterial and viral disease vectors;

and safety hazards to workers and the community is unclear, (See chapter 5.) Recent experiments suggest that air pollution from

some systems may be significant unless controlled carefully. Disease problems, if any,

are not well understood. From the institutional perspective, however, the most significant point is that health and environmental

performance standards for resource recovery facilities of various types and sizes have

not yet been established. The absence of air

quality standards for heavy metals and pathogens, for example, combined with the possibility that such emissions from resource recovery may be regulated in the future, is a

source of economic uncertainty for potential

investors in such systems. Presumably

OSHA’S General Duty Clause(6) provides a

basis for maintaining a healthy environment

in such plants, but it also leaves room for

uncertainty about the appropriate levels of

control. Until all the relevant standards are

defined, investment in resource recovery will

be unduly uncertain.

13. SITING FACILITIES

Attitudes toward resource recovery vary

considerably among environmentalists, conservationists, and other interested citizens.

Some view resource recovery skeptically as a

high-technology approach to waste disposal

that would foreclose opportunities to reduce

waste, to conserve materials, or to adopt

source separation programs. Others view it

as an environmentally sound solution to the

waste disposal problem. Still others, perhaps

most, have come to view resource recovery as

one option among several that may play a role

in a well-designed program.

Nevertheless, citizens rarely want to have

such a plant in their neighborhood. Thus,

siting facilities such as transfer stations,

primary and secondary processing plants,

and residue disposal landfills pose problems

for resource recovery systems. A project in

St. Louis foundered, in part, on its inability to

site one of four proposed transfer stations.

Resource recovery plants are industrial complexes that require utiIities; access by truck

and, in some cases, rail; parking and storage

space; and space for landfill of residuals or of

wastes in the event of an emergency shutdown. They are restricted to industrially

zoned parcels and must meet various environmental requirements. Often this includes an

environmental impact statement. Even in the

absence of substantive legal barriers to the

selection of a site, objectors may be able to

delay or stop site selection or facility construction by litigating over the procedures

used.

In multicommunity projects, siting is further complicated by the conflict between the

wishes of some interests to attract resource

recovery to their area as a tax-paying industrial development and of others to avoid establishment of a project nearby that would

bring in waste from distant communities.

Problems of this type have emerged with a

variety of public projects in which the costs

are incurred at the local level but the benefits

are regional.(7)

Marketing Problems

Marketing recovered materials and energy

requires that customers be found for them at

satisfactory prices. Nevertheless, various institutional barriers may make recovered

products less marketable than would be the

case if only price mattered, Two of the problems listed in table 49; inadequate or nonexisting standards of performance for recovered products (table 49, No. 14); and high
142 . Materials and Energy From Municipal Waste

freight rates for shipping MSW and recovered materials (table 49, No. 17) are discussed in chapter 3, to which the reader is

referred for details. Two other marketing

problems are discussed here.

15. LIMITED AUTHORITY OF LOCAL

GOVeRNMENTS TO ENTER INTO LONG

TERM SALES CONTRACTS

Communities in some States are forbidden

to enter into long-term contracts for the sale

of waste or for the disposition of products

from resource recovery plants. For example,

contracting authority may be limited to 1 year

or to the term of the city council or the mayor.

Economically sound resource recovery plants

require much longer contracts, often for 10

years or more. If the limits on contracting

authority were removed, the interests of a

community could be preserved by providing

for floor prices, escalation clauses, profitsharing, or renegotiation options. Such limits

imposed by State law or city charter are major barriers to resource recovery.

16. ELECTRIC UTILITY RATE REGULATION

THAT DISCOURAGES USE OF NEW

FUEL SOURCES

Traditionally, electric rates are set to permit a reasonable rate of return on invested

capital. As operating costs change, especially

upward, the delay between increased costs

and the approval of rate increases can reduce the effective rate of return below that

allowable. This “regulatory lag” can cause

utilities to avoid taking risks that might result

in unanticipated costs. Furthermore, in recent years many States have granted fuel adjustment clauses, which permit automatic

rate increases whenever utility fuel costs increase. This has weakened the incentive for

utilities to seek lower cost fuels. In addition,

many utilities are faced with a shortage of

capital caused by the higher costs of new

generating equipment coupled with inadequate financial performance. Thus, they are

reluctant to enter into any program thr

would put the productivity of existing equipment at risk. Finally, the fact that utilities are

required by law to provide reliable service

also makes them less willing to try new approaches.

All of these utility rate considerations have

combined to make utilities, one of the prime

potential markets for recovered energy, very

hesitant to use refuse-derived fuel (RDF) or

other solid waste fuel forms. Even if RDF combustion technology were well understood,

some of these factors would continue to operate to the disadvantage of resource recovery.

This assessment of the situation is similar to

that of a DOE contractor(8) and of an Electric

Power Research Institute conference.(9)

Federal Options for the

Institutional Problems

T

hree overall considerations should guide

Federal action to solve institutional

problems in resource recovery. First, Federal

programs should recognize that there are

wide differences in local conditions across

the Nation. Therefore a wide range of local

responses and arrangements should be accommodated,

Second, Federal programs should recognize that centralized resource recovery is

only one of a variety of legitimate approaches

to management of MSW, and that such programs should not be designed to promote one

approach to the exclusion of others. The

paramount concern should remain protection

of public health and safety through costeffective waste disposal.

Third, the nature of Federal programs to

overcome institutional barriers should

change as centralized resource recovery

matures from an experimental to a fully

developed technology. As local government

experience with resource recovery accumulates, the need for a Federal presence will

decline.

The Federal Government has only limited

authority to directly address most of the institutional problems discussed above. In some
Ch. 7—institutional Problems in Centralized Resource Recovery: Issues and Policy Responses ● 143

cases it can offer inducements to do so to the

State and local governments, which do have

the necessary authority. In other cases, it can

offer direct financial assistance to help reduce the uncertainties and risks that underlie

some of the issues. In a few instances, the

Federal Government can act directly to

remove institutional barriers.

Since the Federal Government does not

have a role in the implementation of resource

recovery per se, its impact can be felt principally through Federal inducements to State

and local governments. The Resource Conservation and Recovery Act of 1976 (RCRA) reflects this approach, coupled with a program

to close open dumps and regulate landfills,

again through inducements to States to act.

Table 50 lists three categories of policy options available to the Federal Government for

helping overcome institutional barriers to

centralized resource recovery. Some of these

policy options have been discussed in other

chapters as ways to overcome technical and

economic uncertainties or to deal with limitations on resource recovery; here they are discussed only in connection with institutional

barriers.

Effectiveness of the Federal

Policy Options

T

able 51 shows the primary relationships

among the policy options and problems.

Note that several options may be used to address one problem, and that some address

several problems simultaneously. Table 51

also references

various options

graphs explain

tions.

Direct Federal

the parts of RCRA in which

appear. The following parathe roles of the various opActions

FUND RESEARCH, DEVELOPMENT, AND

DEMONSTRATION PROJECTS

Federal R&D funds primarily serve to fill

gaps in private funding. They help to reduce

Table 50.—Available Federal Options Applicable to

Institutional Problems in Centralized Resource

Recovery

Direct Federal Actions to Remove Barriers

●

●

●

●

●

●

●

●

●

Fund research, development, and demonstration projects.

Education and training.

Technical assistance to State and local governments.

Coordinate or consolidate Federal programs.

Certify resource recovery plants as eligible for pollution control revenue bond financing.

Promulgate health and environmental standards for

resource recovery plants.

Assist in, or mandate, development of performance

standards for recovered materials and energy.

Require utility rate regulation favorable to use of

energy from waste.

Adjust railroad freight rates for recovered resources.

Federal Financial Assistance to Reduce Uncertainty and

Risk

● Construction subsidies: e.g., grants, tax credits, low-interest loans, loan guarantees.

● Operating subsidies: e.g., recycling allowance, product

subsidy, tax credit for wages paid.

Federal Inducements to States and Local Governments

(Federal funds for statewide solid waste planning

contingent on various State actions)

●

●

●

●

●

●

●

●

●

Regionalization of planning.

Citizen participation in planning.

Adoption of siting procedures.

Change utility regulation.

Elimination of barriers to long-term contracts.

Prohibit waste shipment barriers.

Mandate cost-sharing formulas.

Eminent domain for resource recovery facilities.

Regulate prices and conditions of service for recovery

monopolies. ——..

SOURCE Office of Technology Assessment

technical uncertainty and thus may reduce

economic risk. Demonstration project funds

may also reduce technical uncertainty and

economic risk, and in addition may help show

State and local people that resource recovery

can work, if it does.

There is currently, however, a significant

amount of privately funded R&D in new resource recovery processes, as well as several

privately funded demonstration and commercial plants. Furthermore, much of the

research that needs to be done in commercializing resource recovery requires a kind of

“learning by doing. ” This is best accomplished by building and operating a series of

similar facilities, rather than by R&D programs. These observations both suggest that
144 ● Materials and Energy From Municipal Waste

Table 51 .— Relationship of Federal Options to Reducing Institutional Barriers to

Centralized Resource Recovery

Policy

options

*

Problem RCRA ~

area reference

/

1. Underinvestment in R&D. . . . . . . . . . . . . . . . . .

2. Inadequate information. . . . . . . . . . . . . . . . . . .

3. Fragmented State and local jurisdictions. . . .

I 4. Cost-sharing. . . . . . . . . . . . . . . . . . . . . . . . . . . .

I 5. Private/public mix . . . . . . . . . . . . . . . . . . . . . . .

[ 6. Flow control. . . . . . . . . . . . . . . . . . . . . . . . . . . .

I 7. Limits on waste shipment. . . . . . . . . . . . . . . . . \

8. Overlapping Federal jurisdictions . . . . . . . . . .

9. Limited bondina capability. . . . . . . . . . . . . . . .

10. Cooperation of collectorsihaulers. . . . . . . . . .

11. Resource recovery monopoly. . . . . . . . . . . . . .

12. Insufficient health & environmental regulation

13. Facility sitina . . . . . . . . . . . . . . . . . . . . . . . . . . .

114. Inadequate performance standards. . . . . . . . .

15. Limits on long-term contracts . . . . . . . . . . . . .

16. Risk avoidance by utilities . . . . . . . . . . . . . . . .

17. High freight rates. . . . . . . . . . . . . . . . . . . . . . . .

SOURCE Office of Technology Assessment

Direct Federal

action

c

.-0

5

.-a

Federal action to

reduce uncertainty and risk

c

.0-

Z

3

Federal inducements to

State and local

governments
Ch. 7—institutional Problems in Centralized Resource Recovery: Issues and Policy Responses ● 145

the Federal role in R&D might be limited to

fundamental investigations into the underlying science and technology of mechanical

separations and size reduction, to measurement of properties of recovered materials

and fuels, and to R&D on health, safety, and

environmental problems. (See chapters 4 and

5 for discussion of R&D needs and activities

in resource recovery. )

Under the Resource Conservation and Recovery Act (RCRA), EPA, DOE, and DOC are

given responsibilities for research, development, and demonstration in resource recovery. EPA and DOE have requested and received appropriations for this activity. Funds

authorized by RCRA have not been appropriated to support the research on the properties of recovered materials and energy at

NBS. In addition to these activities under

RCRA, the Bureau of Mines in the Department of the Interior has done research on resource recovery under the authority of its

organic act.

EDUCATION AND TRAINING

Education and training in resource recovery should have positive impacts, whether

directed at technical and operating professionals and workers, citizens, competitors,

or potential objectors. Not only will decisions

be more well-informed, and therefore improved; but cooperation of waste collectors

and haulers, citizens, environmentalists, and

neighbors of facilities will also be improved.

Better understanding should help avoid construction delays and technical oversell. Costsharing arrangements can be worked out

more easily if decisionmakers understand the

benefits to be gained.

Under section 7007(c) of RCRA, EPA is to

make an investigation of employment needs,

opportunities, and barriers in solid waste

disposal and resource recovery. This survey

could help determine part of the national

need for specialized training programs in

resource recovery.

TECHNICAL ASSISTANCE TO STATE AND

LOCAL GOVERNMENTS

One approach to dealing with the problem

of inadequate information and understanding

of resource recovery at the State and local

levels is for the Federal Government to provide direct technical assistance, especially

through knowledgeable people. RCRA section

5004 provides for DOC “ . . . to evaluate the

commercial feasibility of resource recovery

facilities . . . and to develop a data base for

purposes of assisting persons in choosing

such a system. ”

RCRA section 2003 provides for EPA to

establish Resource Conservation and Recovery Panels. “ . . . The Administrator shall

provide teams of personnel, including Federal, State, and local employees or contractors (hereinafter referred to as Resource Conservation and Recovery Panels) to provide

States and local governments upon request

with technical assistance on solid waste

management, resource recovery, and resource conservation. Such teams shall include technical, marketing, financial, and institutional specialists, and the services of

such teams shall be provided without charge

to States or local government. ” EPA has recently published a handbook to guide the implementation of this program.

The provision of technical assistance is

based on the beliefs that State and local

governments are not well enough informed to

make sound decisions about resource recovery and that they lack the necessary personnel to do so. Recent research on technological innovation in the public sector (in

areas other than resource recovery) suggests

that public officials and staff are often well

informed about the existence of new technology but that they lack credible sources of

evaluated information.(11) If this is true in

the resource recovery area, the Resource

Conservation and Recovery Panels can have a

major impact on the future adoption of resource recovery if they remain scrupulously

objective and responsive to State and local
146 ● Materials and Energy From Municipal Waste

concerns. In particular, they must avoid bias

toward or against various approaches and

technologies. At the same time, it is important

that they not compete with private parties

willing and able to provide the same

assistance.

Technical assistance might help to improve

the general information base and thus aid

State and local governments to make sounder

decisions about resource recovery systems.

In addition, State and local governments

might be helped to understand the importance of resolving related problems at the

local level, including supervision of waste disposal monopolies, ensuring local collector/

hauler cooperation, lowering barriers to shipment of waste across boundaries, overcoming

citizen opposition and multi jurisdictional conflicts, and avoiding construction delays.

REQUIRE FEDERAL AGENCY COORDINATION

OR CONSOLIDATION FOR

RESOURCE RECOVERY

The problem of interagency coordination

for resource recovery has been a major concern of Federal agencies. However, diverse

Federal responsibilities for resource recovery appear to contribute to healthy competition. If a single agency had full responsibility

at the Federal level, an orthodox view of

resource recovery might develop. Currently,

the perspectives of EPA, DOE, DOC, and

other agencies appear to be different. Thus,

they encourage critical review of each

other’s policies and programs.

Under RCRA, responsibility for Federal interaction with State and local governments is

centered in EPA. Therefore, individual State

and local governments should be able to locate the most appropriate Federal agency to

meet their needs through EPA, while a wider

access to the Federal Government for various

interests is preserved at the national level by

the involvement of several Federal agencies.

EPA and DOE are expected to complete a

memorandum of understanding regarding

their respective roles in planning, demonstrations, and financial assistance for commercializing the recovery of energy and materials

from solid waste.(12)

MAKE RESOURCE RECOVERY PLANTS

ELIGIBLE FOR POLLUTION CONTROL

BOND FINANCING

If IRS were to allow resource recovery facilities to be financed by industrial development bonds, it would help to overcome both

the bonded indebtedness limits of cities and

the capital shortage faced by electric utilities. Section 103(b)(4)(E) of the Internal Revenue Code provides for an exemption from

Federal income taxation for gross income

from industrial development bonds issued by

States, territories, possessions or any of their

subdivisions, or by the District of Columbia

for the purpose of financing “solid waste

disposal facilities. ” Apparently, IRS is reluctant to certify resource recovery plants for

financing with tax free bonds under this provision since such plants recover valuable

products including fuels and materials. An

act of Congress may be needed to clarify the

status of resource recovery for purposes of

section 103.

PROMULGATE REGULATIONS FOR

ENVIRONMENTAL, HEALTH, AND SAFETY

PERFORMANCE OF RESOURCE RECOVERY

FACILITIES

The absence of clear regulatory standards

of performance for resource recovery plants

may serve to deter both private and public investment in them, since subsequent modification of existing plants to meet new standards

may be costly. Therefore, the Federal agencies involved should carry out the necessary

research and monitoring. The results should

then be used to promulgate the standards

needed for occupational health and safety,

air quality, and water quality.

In addition, the status of resource recovery

plants under existing air quality regulations

is not clear, especially at the State level. In

some jurisdictions, some types of small incinerators are effectively banned under State

air quality regulations. This is the case in
Ch. 7—institutional problems in Centralized Resource Recovery: Issues and Policy Responses ● 147

parts of Maryland, for example. Recently,

EPA has exempted new recovery facilities

from its emission offset policy under the

Clean Air Act.(14) This action removes one

barrier to their construction in nonattainment areas. *

Setting such standards might help to remove the barriers to shipments of waste for

resource recovery across jurisdictional

boundaries by providing assurance to communities that their environments would be

protected. Citizen acceptance of facilities

might be eased, siting limitations lowered,

and construction delays averted, if wellenforced, broadly accepted standards were

established. Waiver of such standards for resource recovery plants may prove to be counterproductive if it acts to stimulate opposition

to new facilities. However, temporary variances for environmental emissions on a caseby-case basis may prove useful to assist in

easing the new technologies through the uncertain period of early commercialization.

ASSIST OR MANDATE THE DEVELOPMENT

OF PRODUCT PERFORMANCE STANDARDS

If activities in the private sector to develop

performance standards for recovered materials and energy were inadequate, the Government might consider promulgation of such

standards directly. However, as noted in

chapter 3, the development of standards is

progressing, and direct Federal involvement

is probably unnecessary.

Under section 5002 of RCRA, NBS is to

publish guidelines for the development of

specifications for recovered materials. DOC

is to cooperate with national standards-setting organizations as necessary to encourage

the publication, promulgation, and updating

of standards for recovered materials.

REQUIRE UTILITY RATE REFORM

Current electric rate regulation provides

no incentive to utilities to use energy from

*Under the Clean Air Act, a nonattainment area is

one that is not in compliance with the National Ambient

Air Quality Standards.

waste. The Federal Government could offer

direct financial incentives to utilities for this

purpose based on, for example, a cash payment for every unit of recovered energy used.

Alternatively, the Federal Government could

intervene directly in the traditional State

province of rate regulation and require

States to remove such disincentives as the

fuel adjustment clause or to offer such incentives as a higher allowable rate of return on

capital required to use energy from waste.

(Inducements to the States to do the same

thing are discussed below.)

FREIGHT RATE ADJUSTMENT

Adjustment of freight rates for recovered

resources is designed to improve their marketability and thus stimulate implementation

of resource recovery. However, as the investigations reported in chapter 3 have shown,

the potential of reasonable freight rate adjustment to improve markets for scrap is

limited, at least in the short run. Thus, this

policy cannot be viewed as a major factor in

overcoming barriers to resource recovery.

Federal Financial Assistance to Reduce

Risk and Uncertainty

OVERVIEW OF SUBSIDIES FOR STATIC AND

DYNAMIC PURPOSES

The approach of one class of options is for

the Federal Government to offer direct financial assistance to public or private investors

in resource recovery in order to reduce the

uncertainties and risks they face. These options involve various subsidies of the costs of

constructing or operating a resource recovery facility.

There is a subtle but important distinction

between: i) a subsidy designed to make a project economically feasible that would otherwise surely not be, and ii) a subsidy designed

to reduce the economic risk associated with

investing in an uncertain project. In the first

case, the technical and economic performances of a proposed project are well known,

the costs exceed the benefits, and a subsidy
148 ● Materials and Energy From Municipal Waste

simply makes it possible to go ahead despite

the unfavorable economics. In the second

case the technical performance, the costs, or

the revenues are not predictable with certainty, although there is reason to expect that

the project has a good chance of being successful. In this case, a subsidy can be designed to reduce the potential loss to an investor who takes the risk caused by the uncertainty.

Both kinds of subsidy may be appropriate

Federal Government actions depending on

the circumstances. For example, subsidizing

a project known to be uneconomic may be desirable if significant costs or benefits might

accrue to the public that are not reflected on

the project balance sheet. This is the case for

example with the Federal subsidy of the operating budgets of existing urban mass transit

systems. On the other hand, the subsidy of an

uncertain project is more likely to occur when

a new technology is being tried, which, if successful, could be economically self-supporting, but which, if unsuccessful, could

leave the investor facing such a considerable

loss that no private investor would be willing

to take the risk. This argument was used to

justify proposals for American, and later

British and French, Government subsidies for

the development of the supersonic transport.

Arguments for subsidy of uncertain or

risky projects can easily be overstated. Often,

the fact that a private investor willing to take

the risk cannot be found is a signal that the investment community has judged a project unlikely to succeed. The major exceptions to this

rule are: i) cases when government rules or

other circumstances prohibit effective risk

pooling (say, prohibitions on certain kinds of

joint ventures) or set limits on allowable rates

of return from risky investments; ii) cases

when even if the project were successful and

the risk were reduced to zero, it would still

justify continuing subsidy in the public interest; and iii) cases when expenditures to

reduce technical uncertainty, if successful,

produce new knowledge that risk-taking investors cannot effectively capitalize on, i.e.,

when successful investors might significantly

subsidize their own potential competitors.

This last case is essentially a restatement of

the rationale presented earlier for governmental support of R&D, but extended to recognize that such support is not the only tactic

available to the Government to support technological development.

Resource recovery technologies currently

fit, to varying degrees, the criteria set forth

above, which would justify Federal subsidy

for risky projects. First, individual communities, as investors in resource recovery, are

unlikely to be able to pool their efforts to invest in risky new technology. Second, communities that might pay private firms for

resource recovery are unlikely to consider

paying the price for the risk premiums those

firms would require in order to justify investing in a risky new technology. Third, some

general subsidy of resource recovery may be

justified on the grounds of public benefit even

when risks are small. Finally, risk-taking communities or private investors, if successful,

are likely to find themselves subsidizing both

risk-avoiding communities and those firms

that would prefer to wait for someone else to

take the initial risks. If all parties view the

situation this way, no one is likely to undertake the risk.

It is appropriate, then, to consider two

kinds of subsidy programs designed to reduce

the economic risk of investing in an uncertain

resource recovery project: construction and

operating subsidies. (Subsidy to enhance the

attractiveness of uneconomic but certain investments was analyzed in chapter 6.)

CONSTRUCTION SUBSIDIES

Construction subsidies might be offered as

tax credits, cash grants, low-interest loans,

or loan guarantees. Each form is appropriate

to different circumstances. Construction subsidies would accelerate implementation of resource recovery by communities and/or firms.

Increased resource recovery activity should

reduce the uncertainty about the technical

and economic performance of such plants as

experience is gained in building and oper-
Ch. 7—institutional Problems in Centralized Resource Recovery: Issues and Policy Responses ● 149

ating them. This is not to say that such plants

will necessarily be proven technically and

economically workable, but only that the

uncertainty would be reduced.

The availability of construction subsidies

should help local communities overcome some

of their jurisdictional conflicts and cooperate

on cost sharing in order to qualify for the subsidies. At the same time, these subsidies can

distort the tradeoffs among various approaches. For example, their availability

would tend to make smaller plants more attractive and thus would enable communities

to avoid such conflicts by going it alone. Local

citizens might be more inclined to accept

resource recovery if the Federal Government

were paying part of the cost. This might help

avoid litigation-related construction delays.

Subsidies would help communities afford

plants otherwise out of reach due to debt

limits.

Tax credits are of no use to public owners

who pay no taxes and are of little interest to

resource recovery firms unless they have taxable income from other areas of business as

well. Thus, tax credits favor established, diversified firms. Loan guarantees require no

immediate expenditure of public funds, and if

a project is successful may involve no outlays

at all. However, loan guarantees are designed to spread economic and technical risk

by insuring the financial backers of a project

against its failure and subsequent default.

Thus, one undesirable effect of loan guarantees is to reduce the discipline imposed by the

financial community and, in a sense, to insure

the resource recovery plant builder against

his own mistakes.

Low-interest loans are more effective in

offsetting market uncertainty than technical

uncertainty. If a project fails to work technically, the holder of a low-interest loan still

has to pay off his loan, albeit at a somewhat

lower cost, with the risk of having no revenues at all with which to pay. Cash grants

are more effective in addressing technical

uncertainty than are low-interest loans, since

the investor/operator faces a lesser risk if he

has to pay off a smaller principal in the event

that the project is a technical failure and produces no revenues. Beyond these technical

considerations, the selection of a subsidy

mode is often a political choice as well as an

analytic matter.

OPERATING SUBSIDIES

Operating subsidies can include the recycling allowance (see chapter 8), the product

subsidy, and tax credits for wages paid. They

would have some of the same impacts as construction subsidies. They are, however, probably a weaker inducement to implement resource recovery because they do not overcome the municipal indebtedness barrier and

because their impact is felt in the future

rather than as a present reduction in initial

investment. If operating subsidies are pegged

to revenues, a plant operator will find them

less certain than construction grants or lowinterest loans. However, as a supplement to

revenues when scrap prices are low, they

could be a partial substitute for the long-term

contracts that otherwise would be required

to ensure the economic viability of a project.

A tax credit for wages paid new employees

hired to do recycling work would tend to

stimulate the hiring of resource-recovery

workers by the private sector, and would

tend to favor labor-intensive approaches

(small-scale incinerators, source separation)

over capital-intensive large-scale resource

recovery.

The Federal Government might attempt to

reduce the economic uncertainty around

resource recovery by operating a stockpile

for various recovered resources in order to

stabilize their prices. This option would not

be applicable to paper or RDF, which have

limited storage life. Such an option maybe attractive in view of the great fluctuations in

price and demand for scrap noted in chapter

3. Like all counter-cyclical economic stockpiles this one would face heavy political

pressure. Resistance would be offered by

scrap dealers to sales from the stockpile in

periods of high prices and resistance to purchases for the stockpile would be offered by

scrap users in periods of low prices. (See
150 . Materials and Energy From Municipal Waste

chapter 3 for additional discussion of

stockpiles for recovered resources.)

Federal Inducements to State and Local

Governments

The previous sections have presented a

number of direct Federal alternatives for addressing institutional problems in resource

recovery. A number of other approaches can

be taken indirectly by requiring State and

local governments to take various steps in

order to be eligible for federally funded

assistance programs.

Several direct policies might serve as

vehicles for the conditional implementation of

indirect policies. These include subsidies,

education and training programs, technical

assistance, and planning grants. In each case

the approach is the same: State and local participation in a direct Federal program is conditioned on implementation of certain policies

at the State and local level. Failure to do so

renders the jurisdiction ineligible for Federal

funds.

Available conditional programs are related

to the various institutional problems listed in

table 51. On the whole, each of these indirect

or conditional programs implemented at the

State or local level affects a larger number of

institutional problems than do the direct

Federal options. This is because the main

arenas for creating and resolving institutional problems in resource recovery are

State and local governments.

It should be noted that none of the conditional policies is likely to reduce the technical

or economic uncertainty of resource recovery. Rather, such policies act largely to

remove specific institutional impediments to

them. Even if all the local obstructions were

to be removed, resource recovery might still

not be economic or technically feasible in

some areas.

Planning grants for State and local solid

waste management provide the most convenient inducement to State and local governments to overcome the difficulties posed by

multi jurisdictional organization for resource

recovery. If administered through the States

to local governments, such Federal funds can

provide a double incentive for action beyond

direct Federal control.

At the local/regional level, planning grants

can work in two ways. First, most of the Nation today is served by multi jurisdictional

regional planning agencies required by a host

of Federal programs such as the OMB A-95

review procedure or the HUD “701” planning grant program. These agencies,

which are often on the lookout for sources of

funds, provide a potential constituency for

participation in federally funded planning

programs. Second, in the absence of regional

agency involvement, the availability of planning funds may stimulate one community to

become the advocate for multi jurisdictional

planning; a course that might otherwise have

been unaffordable.

RCRA strongly emphasizes regional planning in State-designated regions as a means

to encourage resource recovery implementation. As noted in table 51, this approach is

directed at overcoming a number of problems, including jurisdictional overlap and

fragmentation, cost-sharing among communities, mixed private and public responsibilities

for waste management, and facility siting

problems. Each of these problems is exacerbated under the large-scale, regionalized approach to centralized resource recovery.

However, as discussed in chapter 5, in the

last few years emphasis on the regionalized

approach has declined as interest has grown

in small-scale resource recovery systems

featuring heat recovery. Thus, the need has

also decreased for a regionalized planning

and management approach to overcome the

institutional barriers to regional systems.

Furthermore, it now appears just as reasonable to select such regions on administrative and political/jurisdictional bases as on

the basis of optimum technical and economic

design of large-scale systems.
Ch. 7—institutional Problems in Centralized Resource Recovery: Issues and Policy Responses . 151

Findings on Overcoming

Institutional Barriers to

Resource Recovery

I

Institutions play key roles in the development and implementation of resource recovery. They are especially important in establishing or removing barriers to the emergence of centralized resource recovery as a

new, uncertain and, therefore, risky technology for disposing of MSW. Many such institutional barriers are permanent features of

society, so ways must be found to offset,

rather than to remove them.

This chapter has discussed 17 types of institutional problems, in four classes, and has

suggested three kinds of approaches to their

solution.

The four classes of problems are: information problems, jurisdictional problems, implementation problems, and marketing problems. In general, three broad approaches are

available to the Federal Government to address them: direct Federal action, Federal incentives to reduce risk and uncertainty, and

Federal inducements to State and local governments. OTA has not attempted to rank the

seriousness of these problems or the relative

effectiveness of various approaches to their

solution. All of the problems are important,

and a mix of approaches is required to resolve enough of them to give resource recovery an opportunity to progress.

Each party to a resource recovery effort

quite naturally tries to minimize the risks he

faces, yet such risk avoidance has a price for

all the parties involved. Finding ways to

share the risks that derive from the technical

and economic uncertainties of resource recovery is a major source of its institutional

problems. Carefully designed Federal subsidy

programs, among other approaches, can help

overcome the risk barrier confronted by private entrepreneurs or public agencies in introducing new resource recovery technologies. Such a use of subsidies is conceptually

different from their use to make projects appear economically feasible when they otherwise would not be. The first use of subsidy for

resource recovery is clearly justified, the second less so.

A basic strategy of RCRA is to induce

States to institute regionalized planning for

solid waste management. This approach

makes sense if large-scale regionalized

resource recovery offers great economic advantages through economies of scale in processing wastes and selling recovered energy.

In view of both recent trends toward smallscale systems and of the difficulty of

marketing large amounts of recovered energy, especially to electric utilities, the importance of regional planning for disposal of

ordinary MSW has lessened.
152 ● Materials and Energy From Municipal Waste

References

1. Wisconsin State Law, Chapter 305, Laws

of 1973.

2. Thompson v. County of Blue Earth, 233

N.W. 2d 770 (Minn. 1975).

3. Glenwillow Lancf~ill Inc. et al. v. City of

Akron et a~, (U.S. District Court, Northeastern District of Ohio, Eastern Division

docket no. C78-65a). Oral argument is

scheduled for May 1979.

4. “Note, Constitutional Law—Commerce

Clause: Local Discrimination in Environmental Protection Regulation, ” vol. 55,

North Carolina Law Review, 461-473,

March 1977.

5. City of Philadelphia v. New Jersey, 437

U.S. 617 (1978).

6. Occupational Safety and Health Act of

1970 5(a) (l), 29 U.S.C. 654(a)(1) (1970).

7. O’Hare, Michael, “Not on My Block You

Don’t—Facility Siting and the Strategic

Importance of Composition, ” Public Policy, vol. XXV, no. 4, fall 1977, pp. 407-458.

8. Gordian Associates, Overcoming Institutional Barriers to Solid Waste Utilization

as an Energy Source. Final Report to the

U.S. Department of Energy, report HCP/L50172-01, November 1977.

9. Electric Power Research Institute and

Edison Electric Institute, Invited Papers:

Conference on Utilization of Refuse Derived Fuels by Electric Utilities, San Diego,

Calif., Nov. 16-18, 1977.

10. U.S. Environmental Protection Agency,

“Handbook for the Technical Assistance

Panel Program. ” This document was issued as an Environmental Protection

Agency memorandum to its regional offices, Jan. 1, 1978.

11. Feller, Irwin, and Donald Menzel, Dif~usion of Innovations in Municipal Governments; Final Report to the National Science Foundation, Grant DA-44350, June

1976. Available from NTIS as PB-257-

069/AS.

12. “Memorandum of Understanding Between the United States Environmental

Protection Agency and the United States

Department of Energy on Energy Recovery From Municipal Solid Waste, ” signed

for EPA on Mar. 21, 1979.

13. Willey, C. R., Chief, Technical Services,

Maryland Environmental Service, personal communication, Jan. 26, 1978.

14.44 F.R. 3274-3285 (Jan. 16, 1976).

15. Office of Management and Budget, A-95

—Evaluation Review and Coordination of

Federal and Federally Assisted Programs

and Projects, Jan. 13, 1976.

16,1954 HUD Comprehensive Planning Assistance Program amended in 1974 under

Public Law 93-383.
Chapter8

Economic Policy, Waste

Generation, and Recycling
Tables

●●●

● ☛☛ 188

. . . 169

● *.

Page

● *. 159

● ., 162

● ,. 163
Chapter 8

Economic Policy, Waste Generation,

and Recycling

Background

Issues and Scope

A

s noted in the introductory chapter, economic forces strongly influence the flow

of materials through our society from resource extraction to waste disposal. This

chapter examines how existing or proposed

Government economic policies affect these

forces. It also examines the effectiveness of

such policies in reducing the rate at which

wastes are generated or increasing the rate

at which they are recycled. The specific

policy instruments examined are:

● product disposal charge,

● financial incentives to industrial users of

recycled materials,

● severance tax on virgin materials,

● percentage depletion allowance for minerals, and

● capital gains treatment of income from

standing timber.

The analysis of the options in this chapter,

which reviews their effectiveness in accomplishing the goals of waste reduction and recycling, is both partial and preliminary. It is

partial because these policies could have important implications beyond the scope of this

study. These include impacts on recycling materials from other sources such as junked

automobiles and industry, as well as impacts

on the industries, workers, and other parties

involved. It is preliminary in that it reports on

a review of a small number of studies carried

out by organizations other than OTA, which

itself has not done independent quantitative

analyses of the effectiveness, costs, or impacts of the existing or proposed policies.

Furthermore, for reasons outlined in chapter

2 and elaborated below, it is extremely difficult to do good econometric analyses of the

impacts of economic policies on scrap materials markets, and predictions of such impacts are necessarily quite uncertain. (Economic policies directed at stimulating the supply of recycled materials through source separation and centralized resource recovery

are discussed in chapters 4 and 7.)

Related Studies

Two major efforts are currently underway

in the executive branch to analyze and recommend economic policy initiatives for materials. The Cabinet-level, interagency Resource Conservation Committee (RCC), mandated by the 1976 Resource Conservation and

Recovery Act, expects to report on the following seven areas;

1. subsidies for resource recovery,

2,

34

4,

5.

6,

7,

litter taxes,

severance taxes,

percentage depletion allowances for extractive resources,

capital gains tax treatment of timber income,

freight regulations, and

deposit and bounty proposals.(l)

In a closely related effort, President Carter

has directed executive branch agencies to

carry out a Domestic Policy Review of Nonfuel Minerals Policy under the chairmanship

of the Secretary of the Interior and the

Presidential Science Advisor.(2) Economic

policies are expected to be a major focus.

Furthermore, the Secretary of the Treasury

was directed by an amendment to the Inter155
156 . Materials and Energy From Municipal Waste

nal Revenue Code to investigate and report on

all provisions of the Internal Revenue Code

that have an impact on recycling.(3) Their

study has been delayed in the expectation of

working through the Domestic Policy Review.(4)

Responses to Economic Policies

Toward Materials

I

n this section, the responses of the materials system to economic policies are discussed as a basis for understanding the subsequent discussion of specific policy options.

In addition, the most important side effects of

these policies are presented.

For convenience, the responses of the materials system to economic policies are divided into primary responses, or effects on

“materials flows, ” and secondary responses,

or “side effects. ” The distinction rests on the

intent of the policies, rather than the importance of their effects. In other words, since

the goals of the policies are to reduce waste

generation and increase recycling, these material flow responses are of primary concern.

Any side effects of the policies could be

equally or even more important but because

they were unintended they are denoted as

secondary responses.

Primary Responses: Materials Flows

Evaluation of the response of materials

flows to economic policies is based on the

principle that the rate of a material’s consumption is influenced by its price, by the

costs associated with its use, and by the

prices and costs of using alternatives. (This is

not to imply that prices and costs alone determine consumption. Institutional factors, for

example, are also important. However,

changes in consumption can be related quantitatively to small changes in costs and prices,

at least in the short run. )

Five general responses might follow a

change in the relative prices of materials.

Suppose that there were a drop in the price of

a recycled material relative to that of its

virgin material counterpart. Furthermore,

assume that all other prices and costs in the

economy remain the same. The outcome

might be any or all of the following:

1. Increased output from some industries

2

3

4

5

that use the recycled material.

Substitution of the recycled material for

the virgin material in certain applications.

Substitution of the recycled material for

other materials in certain applications.

Substitution of the recycled material for

other factors of production such as labor

or capital in certain applications.

Development of new technologies or the

emergence of new industries that use

the recycled material.

In each of these cases, a different period of

time would elapse before the response to the

change in material price would take place.

The above list is in order of increasing

elapsed time. Responses that may take place

over a period of several days to 1 or 2 years

(the first three listed above), are said to occur

in the “short run. ” For example: (i) if the cost

savings from using a recycled material are

passed onto customers, an increase in output

might occur within a few weeks because of a

step-up in purchases; (ii) if existing equipment can be used, a recycled material can be

substituted for a virgin material fairly quickly; and similarly, (iii) in the manufacture of

certain products a recycled material can

often be easily substituted for some other material. Responses that may take place over

several months to several years (those of the

fourth type) are said to occur in the “long

run. ” They usually involve making changes in

capital equipment and in the work force in

order to use more recycled material and less

capital and labor. The fifth type of response

to price change, technological innovation,

usually occurs only in the “very long run. ” It

may take anywhere from 1 or 2 years up to 10

or more years to occur.

Analysts are best able to predict the responses of materials flows to price changes
Ch. 8—Economic Policy, Waste Generation, and Recycling ● 157

for the “short run. ” In fact, responses of the

first type are the basis for most of the theoretical models on which analytical studies

are founded. For example, input-output analysis, a widely used methodology, is based on

the assumptions that both the technologies

and the ratios of capital, labor, and materials

use are constant over time. It is only applicable to responses of the first type. Analyses

of “short run” responses of the second and

third types are difficult to carry out because

the nature of the available data does not permit making statistically reliable estimates

that fit the theoretical models. This is also

true for long-run responses of the fourth type.

In the case of studies of technological innovation in response to materials prices (very

long-run responses of the fifth type) at present good theoretical models, on which studies

could be based aren’t even available. (5,6) As

a consequence of these analytical shortcomings, most of the studies that have been done

probably underestimate the changes in demand that would ultimately occur in response

to price changes.

Perception is often unreliable for anticipating the response of material demand to

changes in the prices of recycled materials.

As has been previously discussed (see chapter Z) the short-run demand for a secondary

material actually increases at the same time

as its price is increasing. This is a consequence of the higher prices that scrap dealers can charge when the short-run demand

for all materials is high. The resulting variation in short-run scrap prices tends to be

greater than the price changes that take

place in the long run thus it acts to impede understanding long-run scrap market behavior.

The “availability” of materials also tends

to influence their relative flows in the economy, since users have a preference for materials that are more available. Availability is

related to price response, but is less welldefined. In the short run, a material is perceived to be “available” if the supply is highly

responsive to price; that is, if purchasers can

buy all they need at or slightly above the normal price. If this is not the case, or is perceived not to be the case, the material is said

to be less available. Such short-run availability is closely related to the ability of productive capacity to be easily and quickly expanded. In the long run, availability is related

to the potential for actual exhaustion of the

resource base, or, in the case of scrap, to exhaustion of the available scrap inventory. Political factors also affect perceived availability. For example, the existence or possibility of new environmental restrictions,

labor actions, or international market disruption may adversely affect availability.

Secondary Responses: Side Effects

This section presents an overview of the

less specific, broader side effects or secondary responses that might be expected from

changing economic policies toward materials

use. For the purpose of this analysis, the five

primary, or materials flow, responses discussed in the previous section as well as the

materials system model in figure 2 (see page

30) should be kept in mind.

In this general discussion of side effects, it

is assumed that a policy is adopted that has

the effect of reducing the cost of using recycled materials relative to using virgin ones.

Adopting such a policy would have side effects in the following areas.

Prices—Material prices may change by

less than the changes in cost caused by economic policies. For example, producers may

be unable to pass through all of the cost increases, or may be unwilling to pass through

all of the cost decreases, a policy might

create. For example, a new tax on a virgin

material might raise its costs of production by

a certain amount, X. But, if the demand for

that material is elastic, only a portion of the

cost increase could be passed on. Thus prices

might increase by less than X.

Profits—In the price change example just

discussed, an industry’s profits would decrease if all of its cost increases could not be

passed through. On the other hand, if the policy decreased costs and prices, profits might
158 ● Materials and Energy From Municipal Waste

increase based on the increased sales. Similarly, a subsidy program, if not carefully

designed, can provide extra profits on those

sales that would have occurred without the

subsidy. Such profits are commonly called

windfall profits.

Government Revenues—If economic policies stimulate additional net economic activity, additional revenues may be generated that

offset direct losses or augment direct gains.

When new policies are adopted, the burden

of taxation and the benefits of subsidies will

shift among firms, industries, locations,

points in time, and levels of government. The

net effect of any particular policy on government revenues may be very difficult to predict and impossible to measure.

Government and Private Administrative

Costs—The governmental and private sector

administrative costs may be strongly dependent on the policy tool chosen. Taxation is a

convenient way to administer incentives and

disincentives, since they can piggyback on a

preexisting system of recordkeeping, reporting, auditing, and enforcement. Using the tax

system to implement incentives or disincentives may create the lowest private sector

overhead costs. While taxation, as a policy,

minimizes the need to make administrative

decisions, it uses a system of considerable

complexity. However, programs such as direct regulation, grants, loans, loan guarantees, and direct charges may require a more

costly and cumbersome administrative structure. They may also be more prone to arbitrary decisions, error, court challenges, and

bureaucratic inertia. But, incentive or

disincentive policies implemented through the

tax code are not subject to annual budget

review, authorization, and appropriation.

Therefore, they may be harder to amend or

eliminate than are specific programs.

Foreign Competition-Policies designed to

raise the costs of virgin materials might place

domestic producers at a cost-price disadvantage compared with foreign suppliers of the

same materials. Conversely, policies to reduce the costs of materials might open the

United States to charges of unfair competition from foreign nations concerned that domestic policy might be used as a substitute for

import duties.

Long-Run Materials and Energy Conservation—Depending on its nature and point of

application, a policy may tend, over the long

run, to increase or decrease the rate of extraction of virgin raw materials and the rate

of consumption of energy. In the long run, any

policy that reduces the apparent cost of recovering or using secondary materials and

that does not affect the costs of virgin materials can be expected to increase the use of

recycled materials and to have little effect on

the use of virgin materials. In the short run,

such a policy would tend to favor secondary

materials. Over the longer run, however, it

would make the use of all materials less expensive, on the average. Consequently, on

balance, such a policy might even cause a

small increase in the rates of extraction and

ultimate disposal of materials. Conversely,

policies that raise the relative costs and

prices of virgin materials and that do not affect the costs and prices of secondary

materials are likely to cause a reduction in

the rates at which materials are extracted

and ultimately disposed of. Such policies are

also likely to encourage the recovery and recycling of materials from waste.

The energy required to process most virgin

materials is greater than that required to

process secondary materials. The exception

is paper, for which energy use is sensitive to

raw material choice and to whether energy

from wood residues is counted as an energy

input in virgin papermaking. The effect of

each economic policy on energy consumption

must be evaluated for the mix of virgin and

recycled materials use that results.

Employment—The primary effect on

employment of adopting policies to make secondary materials cheaper would be to stimulate employment both in recycling industries

and in those that use materials. Policies to

make virgin materials more expensive would

increase employment in recycling industries
Ch. 8—Economic Policy, Waste Generation, and Recycling . 159

and decrease it in those using virgin materials. The net impact on these and all other

industries would have to be evaluated for

each policy.

Available Policy Options

A

large number of options are available for

changing the relative costs and prices of

virgin and secondary materials. There are

three major considerations in selecting a policy: (i) the policy instrument, (ii) the point of

application of the instrument, and (iii) the factor of production to which the instrument

would apply. The ultimate selection is, of

course, a political judgment reserved to Congress. (Analytic guidelines for evaluating policies are discussed at the end of chapter z.)

Table 52 lists feasible policy instruments,

points of application, and factors of production that might be considered in designing

economic policy to stimulate materials recycling and reduce waste. If the strategy is to

stimulate materials recycling by making secondary materials cost relatively less than

virgin materials, only certain combinations of

instruments, points of application, and factors of production are reasonable. For example, an income tax credit for the use of recycled materials by material fabricators is a

reasonable choice. However, not all instruments apply to all factors. For example,

neither construction grants nor accelerated

depreciation can be tied to materials or labor

inputs. They only apply to capital investment.

Finally, since recycling is usually more labor

intensive than producing virgin materials, tax

credits for wages paid to the formerly unemployed might stimulate recycling.

The Effectiveness of Selected

Policy Options

T

he effectiveness of five policy options in

achieving the goals of (i) enhanced recovery and recycling of materials, and (ii] reduced rate of disposal of municipal solid

Table 52.—Options in the Design of

Economic Policy Toward Materials

Feasible policy instruments

Severance tax

Excise tax

Ad valorem tax

Income tax credit

Income tax deduction

Special tax treatment of income

Construction grant

Loan guarantee

Low interest loan

Accelerated depreciation

Output material subsidies

ad valorem

per unit of output (recycling allowance)

Input material subsidies

ad valorem

per unit of input (recycling allowance)

Product charge

Disposal fee

Landfill tax

Litter tax

Deposit

Bounty

Feasible points of application

Virgin material extraction

Basic material processing

Material fabrication

Product fabrication

Wholesaling

Retailing

Waste discard and collect ion

Waste processor/ recycler

Secondary material processor

Ultimate waste disposal

Feasible factors of production

Virgin materials

Recycled materials

Capital

Labor

Energy

waste (MSW) is discussed in this section.

Each policy and its rationale are described,

followed by a review of the expected impact

of the policy on costs or prices, and by estimates of its effectiveness. The following five

options are considered in detail:

● The Product Charge—An excise tax

levied on material goods proportional to

their weight, volume, or other measure

of disposal cost. The tax would be Ievied

on material fabricators or related industries.
160 ● Materials and Energy From Municipal Waste

●

●

●

●

Financial Incentives to Processors or

Users of Recycled Materials—Direct

grants or tax incentives to processors or

users of recycled materials paid in proportion to the amount or value of recycled materials used, or in proportion

to the cost of capital goods used for recycling.

The Severance Tax—A tax on virgin materials levied at the point of mining or

harvest in proportion to some measure

of the amount or value extracted.

The Percentage Depletion Allowance—Existing law allows for the deduction of a percentage of gross income

from mining specified minerals from the

income before taxes each year. In this

analysis, modification or repeal is examined.

Capital Gains Treatment of Income

From Standing Timber—Existing law

allows for taxing income from the sale of

standing timber at rates appropriate to

long-term capital gains, which are lower

than rates for ordinary income. In this

analysis modification or repeal of this

tax preference is examined.

The product charge and user incentives

are specifically designed to encourage recycling and discourage wasting materials. The

severance tax has traditionally been used by

States as a revenue measure, rather than as

a recycling incentive. The percentage depletion allowance and capital gains treatment of

income from standing timber are tax preferences designed to aid specific industries.

Recycling was not originally a factor in establishing either of these policies.

The Product Charge

DESCRIPTION AND RATIONALE

The product charge is an excise tax or fee

that would be levied on products destined to

enter the waste stream after use. The rationale for this charge is that the user of a product should be aware of, and pay for, the cost

of its proper disposal. Since product users do

not pay directly for disposal, they have no incentive to recycle used products or to purchase goods that create less waste. The result is that users do not pay the full social

costs of using products. The goal of the product charge is to include the cost of disposal in

the original product price so that private

costs will cover social costs. The intended

outcomes are to stimulate recycling of used

materials and to reduce the rate at which all

materials are used.

A complete description of the product

charge option requires specifying (i) the point

of application, (ii) the amount and basis for

the charge, (iii) the products to be covered,

and (iv) the disposition of the revenues. The

design of a product charge system would require considerable compromise between the

ideal rationale and a working program. (See

references 7 and 8 for extensive discussion of

design issues.)

In principle, the disposal charge should be

levied at the point of discard. In practice,

however, solid waste management costs are

paid as a flat fee or through general revenues. It is difficult to imagine how a system

of direct charges proportional to the cost of

disposal could be economically administered.

For maximum effectiveness, the charge

should be applied either at the point of production or of purchase. However, this approach would require collecting it from a

large number of producers or sellers. As a

compromise the charge could be collected

from bulk material producers. This would

greatly reduce the number of collection

points. It could, however, result in applying

the charge to products not destined for

waste, and could lead to charges on final

products that are not related to the cost of

their disposal.

The amount and basis for the charge is

closely related to its point of application.

Most proposals call for a charge that is proportional to product weight, as a measure of

the cost of disposal. They also feature a separate charge by volume or by item for specific

low-density items such as bottles and cans.

The RCC staff analysis(7,8) suggests that such
Ch. 8—Economic Policy, Waste Generation, and Recycling . 161

a charge structure would result in some products bearing charges that are grossly out of

proportion to their costs of disposal.

The selection of products to be covered is

an additional question. In principle, all goods

destined for waste should bear the charge.

Studies for the Environmental Protection

Agency (EPA) have focused on paper and

packaging because (i) most of these products

end up as MSW, (ii) they make up a considerable fraction of all MSW, and (iii) they lend

themselves both to analysis of the effectiveness and to administration of a charge program.

Some groups have argued that other manufactured products as well as food and yard

wastes should also be covered. Many manufactured products, however, do not become

solid waste, and charging for food and yard

wastes would be difficult.

An important feature of the product

charge proposal is that recycled materials

would be exempt from the charge. The rationale for the exemption is that discarded

products that are recycled do not create a

disposal cost. In the same sense that the product charge compensates for direct disposal

charges, an exemption to the product charge

for recycled raw materials compensates for

their not creating a disposal cost.

The final question is what to do with the

charge revenues, which could amount to several billion dollars annually. They could be

treated as (i) general Federal revenue, (ii)

returned to States and cities under general

revenue sharing, (iii) returned to localities to

support solid waste recycling activities, or

(iv) returned to individuals as a tax credit or

as a reduction in the personal income tax

rates. There is no compelling theoretical reason to favor any of these approaches. The

most prevalent suggestion is to support local

recycling activities such as source separation

or centralized resource recovery. Many private firms engaged in waste management are

concerned that such funds may be used to

compete with them unfairly.

EFFECTIVENESS OF THE PRODUCT CHARGE

The product charge might have two principal impacts on materials use and recycling.

The first is that consumers would buy fewer

products containing materials that will become waste, since such products would be

relatively more expensive. The second effect

would be to cause producers to substitute

some recycled materials for some virgin materials, assuming that the exemption feature

is retained. This would be done because the

relative price of virgin materials would be

raised by the amount of the charge, say $26 to

$30 Per ton of material. Furthermore, this increased demand for recycled materials by

producers would serve to stimulate recycling

activities at the local level. On balance, then,

virgin material consumption would decline,

recycling activity would increase, and the

rate of ultimate waste disposal would decrease. The likely magnitude of these changes

is addressed in the following discussion.

Two analyses of the effectiveness of a

product charge were carried out by Research

Triangle Institute (RTI) for EPA (9,10,11).

Both studies were designed to test the shortrun impacts of the product charge; one on all

packaging materials and the other on all

paper products. In the packaging study, the

charge was assumed to be $0.05 per container for nonpaper rigid packages and $26 per

ton for all other packaging. In the paper

study, the charge was assumed to be a uniform $26 per ton. Each study estimated the

decline in the rate of waste generation due to

consumer price increases as well as the increase in the rate of recycling due to improved markets for secondary materials. The

sum of these two effects is the overall decline

in the rate of ultimate disposal of waste.

Very recently, a study of the effectiveness

of the product charge on paper products was

performed by Franklin Associates, Ltd. (FAL)

and by the International Research and Technology Corporation (IRTC) for the American

Paper Institute (API). It was assumed that a

charge of $30 per ton would be phased-in

over a 10-year period beginning in 1980. They

estimated the effects of the charge on de-
162 ● Materials and Energy From Municipal Waste

mand for paper, on recycling of paper, on

solid waste generation, and on revenues in

1984, 1989, and 1999.(12)

The findings of the three studies are summarized in tables 53 and 54. RTI estimated

that the product charge on packaging materials would have reduced the total MSW to be

disposed of by 7.2 percent, and the charge on

paper would have reduced MSW by 9.2 percent. Since these two categories overlap and

the two studies were done somewhat differently, one cannot simply add these two results to get a more comprehensive estimate.

However, they suggest that at least 10 percent, and probably more, of the waste stream

would disappear as a result of the product

charge. Since these are short-run analyses

that cover only selected materials, the

changes over a longer period of time could be

considerably greater, but are more uncertain. These studies predict that the level of

recycling from MSW might double if the product charge were adopted, in part because the

current level is quite low.

In contrast, the study by FAL and IRTC

found that a product charge on paper products would be much less effective than estimated by RTI, as shown in table 54. FAL’s results suggest that the RTI estimates for a comTable 53.—Reductions in Postconsumer Solid

Waste Resulting From a Product Charge on

Packaging Materials in Base Year 1970

(thousand tons per year)

Waste Resource

reduction recovery Total

Packaging material effect a

effect b

reduction

Paper and boar d 232 1,078 1,310

Plastic s 40 0 40

Glass . . . . . . . . . . . 216 4,078 4,294

Steel . . . . . . . . . . . 238 2,532 2,770

Aluminum. . . . . . . . 8 244 252

Total materials. . . 734 7,932 8,666

Percentage reduction in solid

waste disposalc 0.60/0 6.60/0 7.20/.

SOURCE: RTI for EPA. (11)

aThe estimated reduction in material waste generation resulting from reduction

of consumer purchases due to increased product prices.

b the reduction in solid waste disposal attributable to increased material

recycling.

C Based on estimated 120 million tons of municipal solid Waste disposed Of in

1970,

prehensive product charge may be too high.

Since the report for API was released shortly

before the completion of this OTA study, it

was not possible to make a careful comparison with the methods used by FAL/IRTC and

RTI to explain the differences in their results.

One important implication of the three

studies is that the product charge would have

only a small effect, apparently on the order of

0.5 to 3 percent, on consumer purchases of

materials (the “waste reduction” effect). The

major impact of the product charge would be

to stimulate resource recovery and recycling

in order to meet the new demand from manufacturers for recycled materials. Therefore,

if it proves infeasible to exempt the use of recycled materials from the product charge,

this charge would not be effective in reducing

waste loads or in reducing the rate of virgin

materials use.

D1SCUSS1ON OF THE PRODUCT CHARGE

Consumer Price and Income Effects—RTI

analyzed other implications of the product

charge proposals. These are discussed in

their original reports (9, Io) as well as in the

EPA Fourth Report to Congress.(n) They

found that consumer product price increases

might range from a fraction of 1 percent up to

several percent. The charge on packaging

had a greater effect on price than the charge

on paper, especially for goods in rigid containers, which bear a much higher charge per

ton. The weighted average consumer price increase for products affected by the packaging charge was estimated at 0.3 percent. The

largest price increases due to the charge on

paper were 1.4 percent for newspaper and

1.7 percent for paper napkins and facial

tissues.

According to the RTI analysis, annual

charges would range from $8 for families in

the lowest income group to $59 for those in

the highest income group, with an average

around $30. Depending on how the charge

revenues are distributed, the product charge

could be designed to be regressive or progressive on balance.
Ch. 8—Economic Policy, Waste Generation, and Recycling . 163

Table 54.—Reductions in Total Postconsumer Solid Waste Resulting From a

Product Charge on Paper Products

—

Waste Resource Reduction

Year of reduction recovery in MSW

full charge effect a

effectb for disposalc

Study phase-in (percent) — — — (percent) (percent)

RTI for EPA(11) . . ‘- 1975 1.4 7.9 9.2

FAL and IRTC

for API (12) . . . . 1989 0.84 0.9 1.3

a The estimated reduction materials waste generation resulting from reduction of consumer purchases due tO increased

— —

product prices

b

The reduction in solid waste disposal attribution to increased material recycling

cBased on estimated 1282 million tons of net waste disposed of in 1975 and 1758 million tons in 1989

Feasibility of the Exemption for Recovered

Materials—As noted above, the exemption

for charges on recycled materials is the key to

successful operation of the product charge.

Without it the product charge would reduce

waste generation and the use of virgin materials by only a few percent, and would have

little or no effect on recycling.

Identifying and certifying secondary materials that qualify as recycled postconsumer

wastes is a major difficulty in administering

this exemption. A charge system would provide an incentive for producers to try to include prompt and home scrap as well as virgin material in the exempt classification.

Beyond the clear possibility of fraud, however, technical problems exist. These include:

(i) defining postconsumer wastes, (ii) following them through the secondary materials

processing system, (iii) deciding whether

wastes recovered in processing postconsumer wastes are themselves postconsumer

wastes or home scrap, and (iv) treating imports and exports. The administrative burden

of dealing with these issues for both Government and the private sector may outweigh

any gains due to the charge.

Compatibility of the Product Charge and

Other Approaches—A product charge would

stimulate and support resource recovery and

recycling options such as source separation

and centralized resource recovery by

stimulating demand for the kinds of materials

these programs would produce. Furthermore,

some proposals call for distributing the product charge revenues in order to pay for local

resource recovery and recycling activities.

This could be a problem, since extra costs for

source separation arise mainly in collection

rather than in recycling activities. The impact of the product charge on the generation

of waste, as noted in tables 53 and 54, is not

large enough to significantly affect the

economics of resource recovery or source

separation.

The product charge would be compatible

with beverage container deposit legislation.

(See chapter 9.) Since refillable bottles would

bear the product charge only at the point of

manufacture, a charge, of say $0.05, would

be spread out over the trip life of the bottle.

Cans and nonreturnable bottles made from

recycled materials would likewise have to

bear only a fraction of the $0.05 product

charge per fill, on average, since they could

receive the postconsumer waste exemption.

The average product charge revenues would

continue to pay the disposal cost for discarded containers, while the mandatory

deposit would provide the disincentive to litter and the incentive to return containers.

Financial Incentives to Industrial Users

of Materials Recovered From MSW

DESCRIPTION, RATIONALE, AND

ADMINISTRATIVE OPTIONS

A variety of financial incentives could be

offered to processors and other users of

materials to induce them to select recycled

rather than virgin materials as production in-
164 ● Materials and Energy From Municipal Waste

puts. * The economic rationales for such incentives are that they offset the tax and other

incentives given to producers of virgin raw

materials, and that they help to overcome existing institutional barriers to recycling.

These incentives could be in the form of investment tax credits, direct grants, low- interest loans, or loan guarantees. Users of

recycled materials could also be given incentives to employ persons to work with recycled

materials. Recycling incentives could be offered to recycling firms, scrap processors,

scrap dealers, or product fabricators. The

selection of a policy would be based on effectiveness, administrative feasibility, and costs

as well as on economic principles.

The administrative difficulties of identifying and certifying eligible postconsumer

waste materials, which were previously

noted to cause problems for the product

charge, also present problems for recycling

incentives. Eligible materials could be most

easily identified at the recycling firm level

(separate collector or resource recovery

operator). There are a number of such firms,

however, many of which are very small. The

administrative burden of certifying eligible

materials for these firms could be high. There

are fewer scrap processors or dealers. However, the problems of distinguishing postconsumer from other scrap are highest at this

level. Directing the allowance at product fabricators would require a detailed manifest

system to ensure its proper allocation to

postconsumer recycled materials, which at

this point might be indistinguishable from,

and mixed with, other recycled and virgin

materials. There appears to be no way to

avoid the cost of administering recycling incentives. Even with voluntary compliance the

private sector would have the expense of

keeping track of recovered materials.

*In the closing days of the 95th congress, the Energy

Tax Act (Public Law 95-618 Stat. 3174) was passed, It

contains a provision for an additional 10-percent investment tax credit (for a total of 20 percent) for the

purchase of equipment used to recycle ferrous (with

certain exceptions) and nonferrous metals, textiles,

paper, rubber, and other materials for energy conservation.

THE EFFECTIVENESS OF THE

RECYCLING INCENTIVES

Resource Planning Associates (RPA), under

contract to EPA, analyzed the effectiveness of

five specific programs of incentives to users

of materials recovered from MSW. They estimated the impact that each would have on the

extent of recycling from MSW, if these incentives were implemented in 1975.

Table 55 shows RPA’s results for incremental waste recycling over the lo-year

period from 1975 to 1985 for each of the op

tions, along with the cost of their implementation. It also shows the results for 1975, the

first year of the model programs. An incentive option’s effectiveness would depend on

its level, but RPA did not analyze this dependence. As can be seen from table 55, the most

effective of the five options over the 10-year

period is the 30-percent purchase price subsidy. But it is also the most costly to the

Government. On the other hand, the most

cost-effective option, 5-year accelerated depreciation, has the smallest impact on recycling.

RPA considered some of the long-run shifts

in industrial practices that the incentives

would encourage. By comparing the 1- and

lo-year cumulative effects, it can be seen

how short-run (first year) analyses can underestimate the long-run (lo-year) impacts of

such policies.

Table 56 shows OTA’S calculations of the

impact of each of the five options on the

amount of solid waste to be disposed of,

based on the ratio of RPA’s estimates of additional recycling to EPA’s projections of solid

waste disposal. In 1975, the programs would

have reduced the solid waste to be disposed

of by around 1 percent, increasing to around

2 percent in 1980, and to 3 percent in 1985.

The most effective policy in reducing waste

disposal is a subsidy of 30 percent of the purchase price paid to users of recycled materials (4.7-percent reduction in waste disposed

of in 1985). (See table 56.)

The RPA study shows that user subsidies

would reduce the total burden of solid waste
Ch. 8—Economic Policy, Waste Generation, and Recycling “ 165

Table 55.— Effectiveness of Various Subsidies to Industrial Users of Materials Recovered From MSW

Policy option

30 percent of purchase

price . . . . . . . .

$6 per ton of output.

25-percent investment tax

credi t

5-year accelerated

depreciation. . . .

75-percent tax credit on

interest cost. . . . . . . . . . . . . .

SOURCE RPA (13)

Incremental waste recycling

1975

(million

tons)

1.7

1 2

1.1

0.6

1.3

(percent

Increase )

19

13

13

6

14

Table 56.— Effectiveness of User Subsidies in

Reducing the Amount of Solid Waste to be

Disposed of

Percent reduction in

sol id waste disposed of ●

Policy 1975 1980 1985

30 percent of purchase

pric e 1.3 3.1 4.7

$6 per ton of outpu t 0.9 2.0 2.9

25-percent Investment tax

credit 0.9 2.0 2.9

5-year accelerated ”

depreciation 0.4 1.0 1,5

75-percent tax credit on

interest cost. . . . . . . . . . . . . . 1.0 2.3 3.4

“ Based on net solid waste disposal without subsidy of 128, 156, and 166 million

tons per year in 1975, 1980, and 1985(14) and on Incremental recycling

estimates from RPA(l 5)

to be disposed of by only 1.5 to 4.7 percent

after 10 years. Such subsidies would be more

successful in inducing additional recycling of

materials from postconsumer wastes since

they would cause a 15-to 48-percent increase

over the recycling level projected in the absence of subsidies. Administering a subsidy

program, to ensure that participants use subsidized capital equipment for the intended

purpose or that subsidized materials are in

fact recovered from postconsumer wastes,

might be a significant problem.

10-year total (1976-86)

(million

tons)

51

32

32

16

37

(percent

increase)

48

30

30

15

35

10-year cost

-to Federal

Government

(billion

dollars)

1.38

0.84

0.35

0.10

0.81

1 O-year costeffectiveness

($/ton)

2700

2610

1084

658

21.90

The Severance Tax

DESCRIPTION AND RATIONALE

The severance tax is a tax on virgin materials levied at the point of extraction, mining,

or harvest in proportion to the physical

amount or economic value produced.

Severance taxes have historically been imposed by States to generate revenues or to

pay for environmental programs or land restoration. They have typically been levied as a

percentage of net income or gross dollar

sales, or based on a physical measure of production such as weight or volume. Table 57

shows typical State severance tax levies.

The severance tax can be viewed as a

mechanism to offset the cost advantages

other policies extend to virgin materials.

These include tax preferences (percentage

depletion, capital gains on timber income)

and indirect subsidies (royalty-free use of

public lands for minerals and timber, the inland waterway system, R&D funding, mapping and exploration programs). Programs

that give virgin materials a cost advantage do

so to accomplish social and political goals or

as a spillover from other program objectives.

Thus, the severance tax is an alternative to
166 ● Materials and Energy From Municipal Waste

Table 57.—Typical State Severance Taxes

State Tax basis

Arkansa s 15C per ton of bauxite mined

Idah o 2 percent of value of ores mined

Kentucky . 4 percent of value of coal mined

Minnesota, 15 percent of value of taconites mined

Minnesota. . .....15.5 percent of value of iron ore mined

Montana ., . 30 percent of market value of coal mined

SOURCE (16)

the modification or elimination of such programs.

Another rationale for imposing this tax is

to induce long-run resource conservation. It

could be designed to correct resource prices

for the bias against future generations that

results when current decisionmakers discount the future.(17) Taxes on net income are

more desirable if resource conservation is the

goal, since severance taxes levied on gross

sales or on the physical amount extracted encourage the waste of low-grade deposits

when they are co-mingled with high-grade

ones.

EFFECTIVENESS OF THE SEVERANCE TAX

Under the severance tax, recycling would

be stimulated in response to higher relative

prices of virgin materials. Unfortunately, no

studies have been made of the impacts of a

severance tax on the production of virgin

materials or on recycling. Since such an

analysis was not performed by OTA, no quantitative judgment can be made on its short-or

long-run impacts. Clearly, a key determining

factor would be the level of the tax relative to

total production costs. If the severance tax

were set at a few percent of production costs,

it might have recycling impacts roughly equivalent to those of repeal of the percentage depletion allowance, which would also increase

costs by a few percent (see below).

DISCUSSION OF THE SEVERANCE TAX

The severance tax would be easier to administer than either the product charge or

user incentives because first, the number of

primary materials producers is considerably

smaller than the. number of users: second,

since the tax would be applied to virgin material producers there would not be a problem in distinguishing among virgin materials

and various kinds of scrap materials; third,

there would be no need to be concerned with

an exemption for recycled materials; and

fourth, firms already report the production

and/or sales information required to administer the tax.

The severance tax would apply to all

materials, not only to those destined for

MSW. For paper and glass, this difference is

not great, since about two-thirds of their production becomes MSW. (See chapter 2.) However, only one-fourth of aluminum, one-eighth

of ferrous metal, and one-twentieth of other

nonferrous metals produced are used in products that become MSW. Thus, this tax would

help recycled materials compete with all

virgin materials, not just those destined for

MSW. On the other hand, if recycling from

MSW is the only objective of this tax, the cost

to the virgin materials industries could be excessive. Furthermore, unless the severance

tax were also applied to imports, a cost advantage would be given to foreign producers

of virgin ores and primary metals.

Percentage Depletion Allowance

[Modification or Repeal)

DESCRIPTION AND RATIONALE

Existing law allows for deducting various

percentages of gross income from mining

specified minerals from the income before

taxes each year. The effect of this special

provision of the tax code is to reduce the tax

cost of producing virgin hardrock minerals

compared with what it would be if producers

had to adjust taxable income on some less

favorable basis. The percentage depletion

allowance provision has been the subject of a

long and sometimes bitter debate. (Its history

can be reviewed in a number of sources

(16-24 ).) Supporters of the percentage depletion allowance argue that it is a necessary

subsidy to the domestic minerals industries,

especially in the face of competition from im-
Ch. 8—Economic Policyj Waste Generation, and Recycling . 167

ported materials. Opponents argue that it is

inefficient, because it stimulates overuse of

scarce resources and exacerbates some associated environmental problems, and that it is

inequitable because competing industries,

especially the secondary materials industries, do not receive an equivalent subsidy. It

is beyond the scope of this analysis to attempt

to resolve these arguments.

From the perspective of resource recovery,

recycling, and reduced waste disposal, the

key question is whether the economic advantage that percentage depletion gives virgin

materials over secondary materials is sufficient to be a major barrier to increasing

recycling and reducing waste. Such economic

advantage could take the form of lower relative prices for virgin materials than would

otherwise be the case. Virgin materials could

receive a further advantage if the percentage

depletion provision encourages vertical integration of industries from extraction through

material fabrication. This would create a

barrier to free competition between primary

and secondary materials if vertically integrated firms were to set artificially low

transfer prices for their own virgin raw materials even though scrap material prices

might be lower than virgin-based raw material prices on the open market.

EFFECTIVENESS OF REPEAL OF

PERCENTAGE DEPLETION

Since percentage depletion gives an advantage to virgin materials, it is of interest to

know whether its modification or repeal

would stimulate significant resource recovery, recycling, and waste reduction.

Two major studies, one for EPA by the Environmental Law Institute (ELI)(16) and one

for the Bureau of Mines by the JACA Corporation, have recently examined the impact

of Federal taxes on the competition between

virgin materials and the kinds of secondary

materials that are recoverable from MSW.

Both studies estimated the impact of percentage depletion on the cost of producing

virgin materials. Table 58 summarizes the

Table 58.—impact of the Percentage

Depletion Allowance on the Costs

of Production of Primary Metals

cost

reduction ●

Material Year (percent) Source

Aluminum ingot . 1973 0.6 JACA (18)

1974 0.8 JACA (18)

1975 0.7 JACA (18)

Aluminum. . . . . . 1973-75 2.2 ELI (16)

(maximum)

Pig iron. ... 1973 1,7 JACA (18)

1974 2.1 JACA (18)

1975 2.1 JACA (18)

Steel . . . . . . . 1973-75 3.0 ELI (16)

(maximum)

Steel . . . . . . . . . 1973-75 2.0 ELI (16)

(likely)

“ For JACA cost reduction IS lax savings as a percent of market price for

alumium and of transfer price for pig iron For ELI cost reduction Is the per

cent shift in industry out put at any price I e the shift in the supply curve

results of these analyses. Percentage depletion was found to reduce the cost of producing aluminum by about 1 percent and of steel

by about 2 percent. However, the repeal of

the depletion allowance would not necessarily lead to price rises equivalent to these

percentages. Firms might not be able to pass

through all increased costs due to market resistance and to competition from imports.

Thus, price increases of less than 1 percent

for aluminum and 2 percent for steel would

be expected.

Anderson and Spiegelman of ELI estimated

the effects of the repeal of the percentage

depletion allowance on the recycling of waste

materials due only to the shift in relative

prices of primary and secondary materials.

They estimated short-run increases in recycling from all sources of only 0.42 percent for

obsolete steel scrap and 1.7 percent for old

scrap aluminum. In the unlikely event that

all of the short-run increases in recycling

would be from materials in MSW, percentage

increases in recycling from MSW would be

somewhat greater than the short-run estimates. They point out that the long-run investment related impacts of repeaI of percentage

depletion on materials recycling may be

larger than these estimates, and estimated a
.

168 ● Materials and Energy From Municipal Waste

6.4-percent increase in recycling of obsolete

steel scrap in the long run.

None of the studies reviewed by OTA examined whether percentage depletion has

stimulated vertical integration in the materials industries or whether such integration is

a significant barrier to recycling. Further

analysis of this topic would be desirable.

DISCUSSION OF REPEAL OF

PERCENTAGE DEPLETION

The ultimate impact of repeal of the percentage depletion allowance on materials

recycling and on reduction of MSW is still

uncertain. The ELI and JACA studies suggest

that the direct effect of cost and price

changes on recycling would be small. However, further analysis of this action would be

necessary before predictions could be made

with confidence. The impact of percentage

depletion on the structure of the materials industries and thus on the nature of the competition between virgin and recycled materials should be investigated. Careful consideration would also need to be given to the

impact of repeal of the percentage depletion

allowance on costs, profits, performance, employment, and foreign competition in the affected domestic metals industries such as

steel, aluminum, and copper. Issues of effectiveness aside, the percentage depletion

allowance does appear to give an inequitable

advantage to primary materials producers.

Capital Gains Treatment of Income From

Standing Timber

DESCRIPTION AND RATIONALE

Existing law allows for taxing of income

from the sale of standing timber at rates appropriate to long-term capital gains. These

are lower than rates for ordinary income.

This provision of the tax code is said to reduce the costs and therefore the price of

virgin paper and wood products. It also has

the effect of stimulating greater investment in

timber production, compared with what it

might be without this advantage.

The history and operation of the special

tax treatment of timber income along with

analyses of arguments in support and in opposition, are presented in an extensive review article by Sunley.(25) Both Sunley and

Anderson and Spiegelman(16) note that preferential tax treatment for timber income is

not based on economic theory, but on a long

history of attempts to provide special tax

treatment to various industry sectors, and on

a series of compromises with those who have

tried to eliminate such treatment.

EFFECTIVENESS OF MODIFICATION OF

CAPITAL GAINS TREATMENT OF

STANDING TIMBER INCOME

From the point of view of waste generation

and materials recycling, the question of

whether capital gains treatment of timber income has stimulated overproduction of timber or inhibited recycling of wastepaper

should be raised. In a recent analysis, Anderson and Spiegelman estimated that woodpulp

market prices are reduced by a maximum of

4.2 percent by the capital gains provision, but

that the actual value may lie closer to 1.0 percent than to 4.2 percent. Using several economic models, they estimated that the capital gains treatment of timber income depresses wastepaper recycling by between

0.04 percent and 1.5 percent. A repeal of

the tax provision would increase recycling by

the same percentages. Accordingly, there

would be a short-run increase in recycling of

0.04 percent that would further increase over

a longer period of time to 1.5 percent as new

plant investment decisions were made. These

results suggest that repeal of the capital

gains treatment of timber income would be ineffective in increasing postconsumer wastepaper recycling.

Regardless of its effects on the level of

recycling, however, the current treatment for

tax purposes of income from standing timber

gives an advantage to producers of paper

from virgin wood not enjoyed by recyclers.

Equity considerations would call for removal

of this inequity.
Ch, 8—Economic Policy, Waste Generation, and Recycling “ 169

Findings on Economic Policy

Options

Table 59.—Generalized Summary of a Preliminary

Assessment of the Impacts of Selected Economic

Policies on Waste Disposal and Recycling

T

his chapter has been concerned with the

potential effectiveness five economic

policies would have in stimulating recycling

and reducing the rate of MSW disposal. By

drawing on previously published literature, it

has been possible to present preliminary and

partial data for some impacts of certain policies. These findings are summarized in table

59. The entries in the table represent generalizations from the more detailed information

presented in the chapter. No entries are

shown for the severance tax. However, if it

were limited to rates similar to those in current State programs, its effects would probably be on the order of only a few percent.

From equity, economic efficiency, and administrative perspectives, removing existing

tax preferences for virgin materials is preferable to establishing new ones for recycled

materials. From the perspectives of resource

recovery, recycling, and reduced generation

of waste, the key question, however, is the effectiveness of various proposals in stimulating recycling and decreasing the waste

disposal burden.

Of the five policies considered, the product

charge and the recycling allowance appear to

be the most effective for these purposes if

they could be made to work. However, the effectiveness of the product charge would depend on the successful implementation of the

exemption for recycled materials, and the administrative problems of the exemption may

be so great as to render the charge concept

unworkable. The recycling allowance faces

similar administrative problems.

Table 59 suggests that repeal of the percentage depletion allowance on hardrock

minerals or repeal of the capital gains treatment of timber income would increase recycling very little. Furthermore, these actions

are not expected to significantly reduce the

generation of waste, although quantitative

estimates of this impact have not been made.

Nevertheless, these tax provisions do treat

Increase in

Decrease in materials

disposal of recycling

MSW from MSW

Policy (percent) (percent)

Product charge . . . . . . . . . . . . 7 to 10+ 100 or more

Recycling allowance*. . . . . . 1.3 to 4.7 19 to 48

Severance tax . . . . . . . . . . . . . ? 7

Repeal of percentage depletion allowance. . . . . . . . . . . . ? 0.4 to 1.7

Repeal of capital gains treatment of standing timber

income . . . . . . . . . . . . . . . . . . ? 0.04 to 0.7

“Financial Incentives to users of recycled materials

secondary materials unfairly in their competition with primary materials.

However, indirect effects on recycling may

be larger than indicated by table 59. Additional analyses are needed to explore more

fully the implications of these provisions of

the tax code for the nature of the competition

between primary and secondary materials

and for the competition between domestic

and foreign producers.

OTA has not systematically assessed the

side effects of the five policies examined in

such important areas as prices, profits, Government revenues, administrative costs,

employment, foreign competition, or long-run

materials and energy conservation. Each of

these need to be analyzed indepth to get a

complete picture of the outcomes of such

policies.

Each of’ the five options considered would

be supportive of or compatible with resource

recovery programs and beverage container

deposit legislation, because each would

strengthen the market for recycled materials.

Other economic policy options might be

considered for adjusting the short- or longrun competition among primary and secondary materials. The five discussed here, while

the most widely considered, do not exhaust

the possibilities outlined in table 52.

48-786 0 - 79 - 12
170 ● Materials and Energy From Municipal Waste

Only a small number of studies of the

response of materials flows to economic

policies have been published. Further research and analysis are needed to help clarify this important area of resources policy.

Studies are needed on the influence of economic policy on plant investment decisions,

including plant location, and on vertical integration in the materials industries to determine whether these effects serve to inhibit

the use of recycled materials in the long run.

Finally, this chapter has examined a

number of Federal policy options, each of

which would have only a limited effect on

resource recovery and recycling. Adopting

several such policies together might serve to

create a climate in which activities would

grow beyond those predicted by the economic

models.
Ch. 8—Economic Policy, Waste Generation, and Recycling ● 171

References

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

Committee Findings and Sta~~ Papers on

National Beverage Container Deposits.

Second Report of the Resource Conservation Committee, January 1978.

Presidential Proclamation, Administration of Jimmy Carter, 1977. IVon~uel Minerals Policy: Announcement of CabinetLevel Interagency Study, Dec. 12, 1977.

Public Law 94-568 (90 Stat. 2697) amending the Internal Revenue Code of 1954.

Personal communication, Seymour Fiekowsky, U.S. Department of the Treasury.

Gander, James P., “The Relationship of

Technological Change and the Demand

for and Supply of Raw Materials, ” Department of Economics, University of

Utah, report to the National Science Foundation under grant number RDA 74-20198

A04, 1976.

Greenberg, Edward, Christopher T. Hill,

and David J. Newburger, “Regulation,

Market Prices, and Process Innovation:

The Case of the Ammonia Industry, ”

Westview Press, Boulder, Colo., 1979.

“Rationale for National Solid Waste Disposal Charge Legislation,” Resource Conservation Committee Staff Background

Paper No. 8, Apr. 17, 1978.

“Solid Waste Disposal Charge Design Issues,” Resource Conservation Committee

Staff Background Paper No. 9, Apr. 17,

1978.

Miedema, A. K., T. H. Bingham, and J.

Daber, “Preliminary Analysis of a Product Charge on Major Components of PostConsumer Solid Wastes,” report by Research Triangle Institute for EPA, June 7,

1976.

Miedema, A. K., et al., “The Case for

Virgin Material Charges: A Theoretical

and Empirical Evaluation in the Paper Industry, ” report by Research Triangle Institute for EPA, January 1976.

Environmental Protection Agency, Fourth

Report to Congress on Resource Recovery

and Waste Reduction, EPA Report

SW-600, 1977, pp. 88-99.

12.

13.

14.

15.

16,

17.

18.

19.

20.

21.

220

Franklin Associates, Ltd. and International Research and Technology Corporation, Solid Waste Management and the

paper Industry, prepared for the Solid

Waste Council of the Paper Industry,

March 1979, p. v-3.

Research Planning Associates, “A Study

of Federal Subsidies to Stimulate Resource Recovery, ” report for EPA, 1974,

pp. 17-46. Available from NTIS as PB239-736.

Environmental Protection Agency, op. cit.,

p. 20.

Resource Planning Associates, op. cit., p.

95a.

Anderson, Robert C. and Richard D.

Spiegelman, “Impact of the Federal Tax

Code on Resource Recovery,” report to

EPA by the Environmental Law Institute,

December 1976. Report EPA-600/5-

76-009. Available from NTIS as PB-264

886.

Page, R. Talbot, Conservation and Economic Efficiency, Johns Hopkins Univ.

Press, Baltimore, Md., 1977.

Commins, James A., et al., “Barriers to

the Use of Secondary Metals, ” report to

the U.S. Bureau of Mines by JACA Corp.,

Fort Washington, Pa., August 1977.

Anderson, R. C., A. S. Miller, and R. D.

Spiegelman, “U.S. Federal Tax Policy:

The Evaluation of Percentage Depletion

for Minerals, ” Resources Policy, 3,

165-178, September 1977.

Tannenwald, Robert, “Analysis and Evaluation of Arguments For and Against Percentage Depletion, ” Congressional Research Service report 78-68E, Mar. 11,

1978.

“Copper, Percentage Depletion and The

Public Interest,” prepared by AMAX Inc.

and 10 other copper companies, undated,

mimeo (1978).

Letter to W. M. Blumenthal, Secretary of

the Treasury, from J. Allen Overton, Jr.,

President, American Mining Congress,
172 . Materials and Energy From Municipal Waste

Aug. 23, 1977. Publically available from Supplies and Shortages, December 1976,

AMC. pp. 160-166.

23. Material Needs and the Environment 25. Sunley, Emil M., Jr., “The Federal Tax

Today and Tomorrow. Final Report of the Subsidy of the Timber Industry,” The EcoNational Commission on Materials Policy, nomics of Federal Subsidy Programs, U.S.

June 1973, pp. 4D-14 to 4d-17. Congress Joint Economic Committee,

24. Government and the Nation’s Resources. 1972, pp. 317-342.

Report of the National Commission on
Chapter 9

Beverage Container Deposit

Legislation

Contents

Page

Introduction. . . . . . . . . . . . . . . . . . . . . .. .175

Objectives and Questions Addressed. .175

Rationales For and Against

Government Action . ..............176

Sources of Uncertainty in BCDL .. ....176

Beverage Container Policy Options. .. ...178

Description of Options. ., . ..........178

Design Considerations for the Beverage

Container Deposit Option . .........181

Dimensions and History of Beverage

Container Use . . . . . . . . . . . . . . . . . . . . .184

Containers, Resources, and Waste. .. .184

Beer and Soft Drink Consumption. .. ..185

Historical Shifts in Container Types,

Materials, and Market Shares .. ....186

The History of Return Rates . ........189

The Determinants of Market Shares and

Return Rates . . . . . . . . . . . . . . . . . . . . 190

Effectiveness of Beverage Container

Deposit Legislation . ................191

Litter Reduction. . .................191

Materials and Energy . .............194

Page

Solid Waste Reduction . ............207

Unintended Effects of BCDL: Impacts,

Issues, and Options . ................211

Introduction. . . . . . . . . . . . . . . . . . . . . .211

Capital Costs of Beverage Delivery

Under BCDL. . . . . . . . . . . . . . . . . . . . . 212

Impacts on Employment and Labor

Costs. . . . . . . . . . . . . . . . . . . . . .. ....216

Impacts of BCDL on Beverage Costs

and Prices . . . . . . . . . . . . . . . . . . . . . . 221

Beverage Availability and Consumption 226

Impacts on the Environment . ........227

Health and Safety Impacts . .........228

Impacts on New Technology . ........231

Government Impacts. . .............231

Emerging Influences on Beverage Container

Choice . . . . . . . . . . . . . . . . . . . . . ......232

The Plastic Soft Drink Bottle. . .......232

The FTC Decision on Soft Drink

Territorial Franchises. . ...........233

Findings on BCDL . ..................234

References. . . . . . . . . . . . . . . . . . . . . .. ..237
Tables

Table No. Page

60. Selected Federal Options for Achieving the

Goals of Beverage Container Control . ........178

61. Beverage Container Production, Materials,

and Wastes in 1977 . . . . . . . . . . . . . . . . . . .. ...186

62. Relationship Between Return Rate

and Trippage . . . . * . . . * . * . . * . . . . . .,***..*. 190

63. Elements of Scenarios Used in Published

Evaluations of BCDL . .,.,........,,.,0.,.. 196

64. Typical Beverage Container Weights in 1975...197

65. Materials Consumed for Beverage Container

Production in 1977 . . . . . . . . . . . . . . . . . .......197

66.1977 Container Market Shares and

Return Rates . . . . . . . . . . . . . . . . . . . . . .......198

67. Gross Materials Required to Deliver 1

Million Ounces of Beverage in Each

Type of Container . . . . . . . . . . . . . . . . . . . . .. ..198

68. “Break-Even” Return Rates and Trippages

for Equal Energy Use in Refillable vs.

Nonreturnable Bottles. . . . . . . . . . . . . . . . . . . . . 203

69. Typical Tradeoffs of Total Energy Use

Between Refillable Bottles and Recyclable Cans

Using 1974-76 Technology. . ................204

70. Total System Energy Use for Beverage

Delivery: Literature Estimates of Deposit Impact

Under Various Scenarios . .................205

71. Beverage Containers in Solid Waste:

Literature Estimates . . . . . . . . . . . . . . . . . . . . .. 208

72. Non-Beverage Container Contents of

MSW in 1975, . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

73. OTA Scenarios for Estimation of the

Impact of Deposits on Solid Waste

Composition in 1975 . . . . . . . . . . . . . . . . . ......210

74. Beverage Containers in MSW Under

Five Scenarios in 1975. . ...................210

75. Composition of MSW in 1975 Under Five

Scenarios Net Waste Disposed Of]. ... ....2lO

76. Capital Stock Required to Deliverl Miliion

Ounces of BeveragePerYear in1982. . . . . . . . . 213

77. EstimatedAdditionalCapital CostsDue

toBCDL: LiteratureValues . ................215

78. AverageUnitLaborRequirements inthe

BeverageDeliverySystemin 1982 . ..........217

79. TotalJobShiftsDuetoBCDL: Summary

ofLiteratureEstimates . ...................218

80. JobGainsinBeverageDistribution: Summary

ofLiteratureEstimates . ...................219

81. JobLossesinContainer Production

UnderBCDL:SummaryofLiterature Estimates. 219

82. Total Employee CompensationImpacts of

BCDL:SummaryofLiterature Estimates .. ....220

83. Beverage ShelfPricesUnderBCDL: Summary

ofLiteratureEstirnates Basedon

AnalyticalMethods. . .....................225

84. FeaturePricesofSoftDrinksinVarious

ContainerTypes. . ........................225

85, EnvironmentalImpactsofDelivering

1,000GallonsofBeerinVarious Containers ...228

of the Impact of BCDL on Industrial

Pollution in 1985 ● ● ● ● ● ● ● ● ● * ● * * ● ● ● ● * * . * ● ● ✒✒✙

Figures

Figure No. Page

6. Annual Beverage Consumption in the

United States ., ..*,..*.*..*...,.....,,,.* 186

7. Annual Per Capita Beverage Consumption

in the United States . . . . . . . . . . . ............166

8. The Dual Beer Market . . . . . . ...............187

9. Packaged Beverage Market Shares . .........187

10. Beverage Market Shares in

Returnable Containers . . . . . . . . . . . . . . . , ... , 187

11. Beverage Market Shares in

Nonreturnable Containers . ................188

12. Soft Drink Bottlers in the United States . ......189

13. Historical Beverage Container Trippage

in the United States , . . . . . . . .........,.....190

14. Steel Required to Deliver a Total of 1

Million Ounces of Beer or Soft Drink Without

Recycle for Various Market Shares for

AU Cans and Aluminum Cans . ..............199

15. Aluminum Required to Deliver a Total of 1

Million Ounces of Beer or Soft Drink Without

Recycle for Various Market Shares for All

Cans and Steel Cans . . . . . . . . . . . . . . . . . . . . .. 19$

16. Impact of Can Recycle Rate on Metal

Consumption for Beverage Containers. Recycle

Rate for Aluminum is Limited to 87 Percent

by Metal Losses in Recycling Operations. ... , .199

17. Glass Required to Deliver a Total of 1 Million

Ounces of Beer if the Can Market Share Is

Zero and No Glass Is RecycIed ,. ...., . ......200

18. Glass Required to Deliver a Total of 1 Million

Ounces of Beer if the Nonreturnable

Glass Market Share is Zero and No

Glass Is Recycled. . . . . . . . . . . . . . . . . . . . . .. ..200

19. Glass Required to Deliver a Total of 1

Million Ounces of Soft Drinks in a Mix of

Refillable and Nonreturnable Bottles

if the Can Market Share Is Zero and

No Glass Is Recycled . . . . . . . . . . . . . . . . . . . . .. 201

20. Glass Required to Deliver a Total of 1

Million Ounces of Soft Drinks in a Mix of

Refillable Bottles and Cans if the

Nonreturnable Glass Market Share is Zero and

No Glass Is Recycled . . . . . . . . . . . . . . . . . . . . .. 201

21. Comparison of Total Energy Requirements by

Container for Off-Premise Package Beer as

Presented by Various Investigations. . ........202

22. Dependence of Total Energy Use Per Fill

on Container Return Rate . .................203

23. Total Energy Use for Beverage Delivery in

12-Ounce Aluminum and Steel Cans. . .........203

24. Total Energy Use for Beverage Delivery in

12-Ounce Refillable Bottles for Beer. . . .......203

25. Total Energy Use for Beverage Delivery in

16-ounce Refillable Soft Drink Bottles. . ......204
Chapter 9

Beverage Container Deposit

Legislation

Introduction

Objectives and Questions Addressed

L

egislation that mandates a minimum, refundable deposit for all containers used

in the sale of carbonated malt beverages

(beer) and soft drinks is one policy option for

reducing the rate of solid waste generation.

In its simplest form such legislation requires

that all parties in the distribution train from

brewers and bottlers to retailers charge a

minimum deposit, say 5 cents per container,

which must be refunded on presentation of an

empty equivalent container. Such legislation

neither mandates the use of refillable containers nor bans the use of nonreturnable

ones. * The intent of such proposals, however,

is that containers be used that are either

refillable on cleaning or recyclable into new

containers or other goods. If enacted, such

legislation would require that the voluntary

deposit system employed by industry for

many years for refillable bottles be extended

to all types of beverage containers.

The objectives of mandatory beverage container deposit legislation (BCDL) are:

*Containers designed to be used for beverage delivery only one time are denoted by a variety of adjectives

including nonreturnable: nonrefillable: one-way: singleservice: throwaway: no-deposit/no-return; recyclable;

disposable: and convenience. In this study, the term

‘‘nonreturnable” is used to describe such containers.

Containers designed to be collected, cleaned, and refilled are called “refillable.” Currently, all refillable

beverage containers in commercial use are made of

glass. “Recyclable” is used to denote containers whose

materials can be reprocessed to make new containers

or other useful objects.

1.

2.

3,

To reduce the number of beverage containers that become littered.

To reduce the amount of natural resources, both materials and energy, devoted to beverage delivery.

To reduce the amount of beverage container materials that enter the solid

waste stream.

4. To establish a public symbol of materials

conservation.

Mandatory deposits have been considered

for such other goods as automobiles, tires,

electrical machinery, consumer durables,

and food packaging; some of which could be

reused and others of which would require

some level of remanufacture. AX This study,

however, is limited to beverage container

deposit proposals for several reasons: they

are now on the public agenda, a body of analytical work has been done on them, and the

congressional request for this study asked for

investigation of this option. The major points

addressed in this chapter are:

1. Options for addressing the beverage

container issue.

2. The uncertainties in assessing the effectiveness and impacts of BCDL.

3. The history and background of the existing beverage container system.

4. The effectiveness of BCDL in achieving

its goals.

5. The positive and negative side effects of

BCDL.

**Figure 2 (see chapter 2) shows how reuse and

remanufacture approaches (loops 3 and 4) differ from

recycling and resource recovery options. Remanufacturing is one of the subjects covered in an OTA report

on materials conservation.(1)

175
176 ● Materials and Energy From Municipal Waste

6. Current trends that may influence the

future of the beverage delivery system,

with or without BCDL.

Rationales For and Against

Government Action

The economic rationale for mandatory beverage container deposits is that certain costs

of the production, use, and disposal of beverage containers are not paid by the participants in those actions but by society at large.

This happens because the market system

does not provide incentives to the participants to pay for all of the costs they create.

(In other words, there is a case of what analysts call “market failure.”) These include litter costs (esthetic loss; pickup costs; injuries

to people, livestock, and wildlife; and damage

to vehicles and other machinery), pollution

costs (some of the air and water pollution

from producing materials and manufacturing

containers), and solid waste management

costs (collection, disposal, and landfill pollution). Both equity and economic efficiency

might be served by Government action to ensure that the participants pay these costs,

providing that such Government action does

not create even greater problems.

Seven States and a number of local governments have passed beverage container laws.

The provisions of the existing laws are detailed in appendix D for the States of Connecticut, Delaware, Iowa, Maine, Michigan, Oregon, and Vermont. Several other States have

defeated beverage container deposit proposals in recent years, including four that have

done so by popular referendum: Alaska, Colorado, Massachusetts, and Nebraska. Virginia has passed a law prohibiting local ordinances that require beverage container deposits, with an exception for ordinances previously on the books.

Proponents of BCDL argue that market

forces, which exclude external costs, have

led to adoption of a beverage container system that is wasteful of raw materials and

energy and that provides little incentive to

consumers to avoid littering or to reduce solid

waste. As a result, industry produces billions

of beverage containers each year that from a

technical point of view are nearly but not

quite reusable. Deposit laws would provide

incentives to consumers to avoid littering and

to avoid adding containers to the solid waste

stream. At the same time they would provide

an incentive to producers to consume less

energy and materials by using containers

that, while only marginally different from

nonreturnable ones, can be collected and

refilled a number of times. To BCDL proponents, the demise of the disposable beverage container, which has become symbolic of

a wasteful society, would symbolize a new

spirit of conservation.

Opponents of mandatory deposit laws

argue that the current beverage delivery system is the most economical one and that consumers have chosen it by expressing their

preferences in the marketplace. They argue

that imposition of a deposit law would be

costly for industry, would disrupt existing

employment patterns causing a loss of skilled

jobs in can and bottle production, and would

place a hidden cost on consumers in the form

of additional time and storage space requirements. They doubt that a deposit system

would actually “work, “ in the sense that the

container return rates and refillable bottle

market shares required to achieve the intended benefits would not be reached if producers, sellers, and consumers do not cooperate. (Market share is defined as the percent

by volume of packaged beverages sold in each

container type. ) Opponents also argue that

beverage delivery costs would increase and

would be passed on in the form of higher retail prices for beverages or as higher prices

for other consumer products sold with beverages.

Sources of Uncertainty in BCDL

In the last several years, BCDL proposals

have been discussed and analyzed extensively. A great deal of effort has been expended

in making detailed projections of the effec-
Ch. 9—Beverage Container Deposit Legislation ● 177

tiveness and impacts of deposits. * Yet little

agreement appears to have been reached on

the basic “technical facts, ” let alone on the

policy questions. There are a number of possible explanations.

First, the economic and political stakes in

the deposit controversy are high. The direct

economic costs of BCDL to industry, labor,

and certain communities are perceived to be

large. Similarly, there are serious political

concerns about litter, solid waste, and materials and energy conservation. For these reasons, interested parties have worked hard to

support their positions.

Second, proposals to require beverage container deposits are comparatively simple to

understand and their effects are relatively

easy to foresee. Studies have been carried out

by private organizations, Government agencies, academic groups, and environmental

organizations. Thus, a body of literature of

diverse quality has grown up around the

issue. Prior to this study, however, no critical

review and evaluation of this literature has

been made.

Third, certain key aspects of the response

of the beverage container system to imposition of mandatory deposits cannot be accurately predicted either from current understanding of the functioning of markets or by

extrapolation from the historical record.

Return rates and market shares for various

container types are difficult to predict along

with such other factors as: the volume of

sales and the prices of beverages, the additional costs to industry, the nature of

technological innovation in the future, and

the costs or benefits to consumers of changes

in the convenience aspects of the beverage

delivery system.

In appendix two widely quoted major studies are

critically compared. One is a study of a ban on cans

and nonreturnable bottles by the Wharton School of

Business, University of Pennsylvania, for the U.S.

Brewers Association and the other of a mandatory

deposit system by the Research Triangle Institute for

the Federal Energy Administration.

Fourth, various proposals for beverage

container laws have been discussed at the

Federal, State, and local levels. Some are for

mandatory deposits, some for litter control,

and others would ban nonreturnable containers altogether. Mandatory deposit proposals

differ with respect to timing, range of container materials covered, treatment of nonrecovered deposits, and container design. Each

of these proposals can lead to significant differences in their expected effectiveness and

impacts. The specific proposal examined in

this report is the one discussed by the Resource Conservation Committee (RCC) in its

second report to Congress.(2) This choice

does not represent an endorsement of the

RCC model, but provides a basis for the analysis. (The RCC model is very similar to the

Hatfield-Jeffords proposal. See appendix B.)

Fifth, many attempts have been made to

forecast what the effects of a national law

might be based on the experiences of four

States that currently have functioning mandatory deposit laws: Oregon, Vermont, Michigan, and Maine. Widely different claims have

been made in each case. Experience with

these State laws has proven inadequate for

judging a nationwide system for several reasons: there are no good baseline data available for any State on the situation existing

before deposits were required, thus precluding valid comparisons; in the cases of Oregon

and Vermont, producers have been able to influence the outcomes by withdrawing from

the market or manipulating prices (many Vermont consumers can easily purchase beverages in neighboring States without deposit

laws); and finally, many of the effects of these

laws are felt outside the States, especially on

out-of-State container, material, and beverage producers and labor. These limitations

will apply to the performance of any deposit

requirement imposed on a small area such as

a State or a military facility.

Sixth, a number of emerging trends in the

beverage industry may invalidate most of the

analytic work that has been done on BCDL.

These include the rapid acceptance of the

plastic soft drink container and the recent
178 ● Materials and Energy From Municipal Waste

Federal Trade Commission (FTC) decision

outlawing territorial franchises for soft

drinks in nonreturnable containers.

It is unlikely that these uncertainties in the

performance and impacts of a nationwide

beverage container law will be resolved by

further analysis. Wherever possible in this

chapter, uncertainties in the analysis are emphasized, conflicting views are noted, and

their implications for the conclusions examined. Attention is focused on the pivotal roles

played by return rates and container market

shares as determinants of the effectiveness

and impacts of deposit legislation.

Beverage Container Policy Options

Description of Options

T

he current discussion nationwide centers

on the mandatory deposit approach.

However, table 60 lists other approaches,

some of which have been adopted in certain

States and localities. Each option, if adopted,

would have different degrees of effectiveness

in achieving the goals of beverage container

legislation and different impacts. The options

are described and discussed in this section.

NO ACTION

No action means that no change will be

made in current Federal policy toward beverage containers. Such policy is limited to the

health, safety, environmental, fair labeling,

antitrust, and alcoholic beverage regulations.

No other existing policies directly affect container choice and design. If no Federal action

is taken continued beverage container control

activity can be expected at the State and

local levels.

PROHIBITION OF NONRETURNABLE

BEVERAGE CONTAINERS

A ban on the sale in interstate commerce of

beverages in nonreturnable containers would

cause nonreturnables to disappear from the

marketplace (presuming adequate enforcemerit). * It would, however, only achieve its

maximum effectiveness if bottlers and brewers were to establish a voluntary deposit system for all refillables. Otherwise, a ban

would fail to provide any new incentive for

consumers to return containers or to cease

littering.

A ban would have a number of disadvantages. First, it would eliminate the option of

consumers to purchase beverages in lightweight, nonbreakable cans and plastic bottles since only glass containers are currently

refillable. The desirability of cans and plastic

bottles is likely to continue for carrying beverages long distances, for consuming beverages in areas in which broken glass would be

a major hazard (recreation areas, around

small children), or by those who prefer consuming beverages in cans.

A ban might also inhibit the development of

new container systems, types, materials, or

sizes that might otherwise evolve. For example, a nonrefillable but recyclable container

might be developed from a new material and

be less resource-intensive and less expensive

than any currently available refillable or nonTable 60.—Selected Federal Options for Achieving

the Goals of Beverage Container Control

1. No action

2. Prohibitions (bans) on interstate sale o f

nonreturnable containers

3. Expanded litter control efforts including education,

4.

5.

6.

7.

8.

9.

10.

pick-up, and litter law enforcement

Litter taxes on containers

Mandatory labeling of container portion of beverage

price

Excise taxes on nonreturnable containers

Policies to lower the prices of secondary materials

relative to those of virgin materials (product disposal

charge, recycling subsidy, reduction or elimination of

percentage depletion allowance, severance tax)

Solid waste management options such as resource

recovery or source separation

Prohibitions on particular materials of container

construction

Prohibitions on particular container design features

SOURCE Off Ice of Technology Assessment

*The analysis of restrictive packaging legislation b

the Wharton School for USBA is a study of this kind of

prohibition and response, (See appendix D for an analysis of this study, )
Ch. 9—Beverage Container Deposit Legislation ● 179

returnable container. Under a ban, the development of such new technology might not proceed.

Banning nonreturnables would be the most

disruptive of current distribution patterns,

and would require the largest additional industry investment of any of the policy options.

It would also be likely to reduce beverage

sales for the reasons of consumer preferences mentioned above. Therefore, it might

be the most costly option for industry, workers, and consumers.

Finally, the prohibition of an economic activity is a very powerful tool of Government

policy. It is best reserved for circumstances

in which no other acceptable options exist. In

this situation, the deposit option might work

equally well if not better than a ban.

EXPANDED LITTER CONTROL

Expanded efforts both to control the generation of litter and to collect it have been widely proposed as an alternative to BCDL by

Keep America Beautiful, Inc. (KAB), an organization in which representatives of the

container and beverage industries play a central role,(3) KAB developed and promotes the

Clean Community System, an approach to litter control that strongly depends on modifying community norms to reduce or eliminate

sources of litter. It can be tailored to the particular litter problems of each community.

KAB reports (5) that litter accumulations

under the Clean Community System are typically reduced by 20 to 80 percent as measured photometrically. * No data are given on

the effects of the system on beverage container litter.

Litter control programs can include more

frequent and effective pick-ups and better

law enforcement, as well as behavioral approaches. However, people usually litter

items that are of little or no value to them,

Direct litter control programs provide only a

weak economic incentive to overcome this

factor in littering and no incentive for pickup

by scavengers. They also do nothing to reduce

the solid waste disposal problem or to conserve material and energy. Litter laws are

difficult to enforce, since constant surveillance is required. In addition, higher fines

are probably counterproductive; they may

lead to dismissal of charges and/or lax enforcement. The approach adopted by California has been to reduce litter fines to $10 per

violation in the expectation that citations will

become more frequent and enforcement more

effective.(6)

LITTER TAXES ON CONTAINERS AND

OTHER PRODUCTS

A tax on litterable products, including containers, has been proposed as a State-level

alternative to deposit legislation. It has been

adopted by several States, notably Washington and California. Washington State’s Model

Litter Control Act was passed by its legislature in 1971 and ratified by its voters in the

general election of November 7, 1972.(7) The

Act places a gross receipts tax of $150 per $1

million gross sales on manufacturers, wholesalers, and retailers of any product “. . . including packages, wrappings, and containers

thereof . . . reasonably related to the litter

problem . . .“ The proceeds of the tax are

used for educating the public about the provisions of the Act, for purchasing litter receptacles, for funding a full-time litter patrol to

enforce the litter law, and for paying for litter

pickup.

The California Litter Control, Recycling,

and Resource Recovery Act of 1977 was designed to provide funds for a variety of functions associated with these activities. Funds

were to be raised by a surcharge of $0.25 per

ton on certain MSW disposal facilities as well

as by a system of taxes on retailers, wholesalers, and manufacturers.(6) In February

1979, the parts of the Act that imposed a tax

on retailers were repealed and the remaining

taxes were to be imposed gradually.(8)

*See the discussion on p. 192 for a description of this

technique.

If such a tax were placed on both refillable

and nonreturnable beverage containers, a
—

180 ● Materials and Energy From Municipal Waste

very small incentive would be provided to induce beverage producers, retailers, and consumers to favor refillables over nonreturnables. Thus, it would have little effect on the

nonlitter goals of a deposit law because it

would cause little change in container market

shares and return rates.

MANDATORY CONTAINER PRICE LABELING

It has been argued that consumers are

either unwilling or unable to decide whether

beverages are cheaper in refillables or in

nonreturnables under the existing voluntary

system. This is presumably due to the large

number of brands and container types and

sizes; also because it is not always clear

whether posted prices include the deposit.

One approach would be to require labeling

the deposit portion of the posted price so that

consumers might more readily be able to determine the best buy. To the extent that price

labeling would enhance the purchase of

refillables, it might achieve the goals of a

deposit law.

EXCISE TAXES ON NONRETURNABLES

This option, which would levy an excise tax

of several cents per nonreturnable container,

would make refillable containers relatively

less costly than nonreturnables. By so doing it

would serve to make beverages in refillables

more attractive to both producers and consumers, and it might induce producers voluntarily to establish a comprehensive deposit

system to ensure returns. Such a tax would

have to be large to be effective—say 5 cents

per container. Its administration would require making a potentially difficult determination of the types of containers that are

indeed nonreturnable.

POLICIES TO RAISE THE RELATIVE PRICES

OF VIRGIN MATERIALS

Broad policies such as the product disposal

charge, recycling subsidies, severance taxes,

and reduction of existing percentage depletion allowances for minerals would all serve

to make virgin raw materials and new products made from them slightly more expensive

in comparison with recycled materials and

reusable products, than they are now. Each

would raise the price of nonreturnables as

compared with refillables. Such policies also

provide direct or indirect incentives to recycling. This might stimulate an increase in voluntary deposit requirements as well as in the

recovery of discarded containers. Some

reduction in litter generation would be expected. However, the price changes and the

effects of these policies on container use

would be relatively small. (See chapter 8.)

SOLID WASTE MANAGEMENT OPTIONS

Both centralized resource recovery and

separate collection (source separation) of

municipal solid waste (MSW) have been offered as alternatives to beverage container

deposit proposals. These approaches have a

wider range of goals and impacts as discussed in chapters 4 through 7. Neither option contributes to solving the litter problem,

which each might worsen by stimulating a

further decline in the use of refillables.

The impacts of BCDL on the economics of

separate collection and centralized resource

recovery are examined in chapters 4 and 6.

PROHIBITIONS ON PARTICULAR CONTAINER

CONSTRUCTION MATERIALS

Another option is a Federal ban on the interstate sale of beverage containers made of

particular materials such as aluminum, steel,

or plastic. Such a ban has many of the undesirable aspects of a ban on nonreturnables

discussed above. It runs the risk of prohibiting the most desirable types of containers,

at least in some regions. Furthermore, a ban

on metal or plastic containers would not affect nonreturnable glass and would stimulate

its use. In one case, a local tax ordinance

directed specifically at plastic packaging was

found to be unreasonably discriminatory by a

State court.(9) It is reasonable that the

Federal Government should exert control

over the materials used in beverage containers in order to protect public health, as

discussed later in this chapter.
Ch. 9—Beverage Container Deposit Legislation ● | 81

PROHIBITIONS ON PARTICULAR CONTAINER

DESIGN FEATURES

Proponents of deposit legislation often

argue for a ban both on aluminum pull-tops

on beverage cans and on plastic six-pack

holders. Neither pull-tops nor plastic carriers

have a significant impact on the use of energy

and materials or on the generation of solid

waste. Due to their small size, however, pulltops are more likely to be littered and remain

as permanent litter than are metal cans, and

are hazardous to people and wildlife. Laws in

12 States currently prohibit the sale of cans

with pull-tops. The beverage industries are

rapidly replacing them with cans having nonremovable opening devices.

The major problems associated with plastic six-pack holders are esthetic blight and

the hazards they pose to wildlife. The use of

the plastic six-pack holder would probably be

reduced if a deposit law were passed, since it

cannot easily be used as a holder for returning empty cans.

Design Considerations for the Beverage

Container Deposit Option

INTRODUCTION AND CRITERIA

Since BCDL would be complex legislation,

a number of design details need to be examined. Some of the details could be specified in

legislation while decisions about others might

be delegated to the department or agency responsible for administering a law. The choice

among design options would have considerable influence on the effectiveness of a deposit law and would affect the extent and incidence of the impacts of a law on various parties. In this section, the design decisions are

identified, and considerations with respect to

their resolution are discussed. A variety of

sources were used including the report on

beverage container deposits by the staff of

the interagency Resource Conservation Committee [11) and a study done by the University

of Michigan.

Economic efficiency, fairness, effectiveness, and minimum Government involvement

are useful criteria for decisions on design

issues. Since correction of market failure is

the rationale for a deposit system, a deposit

law should not introduce additional market

inefficiencies. In particular, the selection of

specific materials, containers, or beverages

to be covered by a deposit law is likely to

create a system that is inefficient, ineffective,

and unfair. One feature of the deposit approach is that it is nearly self-administering

by the market, so that it requires very little

administrative involvement by the Government.

NATURE OF THE DEPOSIT

Deposit or Refund.—BCDL could require

either mandatory deposits or mandatory refunds for containers. Under the deposit approach the law would mandate that someone

(see below) charge a deposit for the use of his

containers and that the containers would remain his property. The parties further along

the distribution chain would act as his agents

in collecting and disbursing deposit funds.

Under the refund approach ownership of the

container would be assumed by each party

that buys it and its contents. The law would

require that parties up the distribution chain

(retailer, wholesaler, producer) buy back

(pay a refund for) containers of a type used or

sold by them. The difference between a deposit and a refund maybe unimportant to the

consumer, but it could influence the tax treatment of monies involved, product liability,

and proprietary rights in container designs.

Under a refund system, the “deposit” monies

are treated the same for tax purposes as any

other income or expense of doing business.

No special levies would be needed for unrefunded deposits.

Amount of Deposit.—A minimum deposit

of 5 cents is at the heart of all proposals. This

sum apparently reflects current industry

practice, since no analyses have been made

of the quantitative response of the beverage

delivery system to other deposit values. Generally, the deposit should be large enough

both to stimulate a high return rate and so

that retained deposits can help offset the pro-
182 ● Materials and Energy From Municipal Waste

ducers’ costs of running a deposit system.

However, it should not be so high that returns

are discouraged. If the sum of the deposit and

the cost of handling refillables exceeded the

price of a new container, producers and distributors would discourage returns.

One or Two-Tiered System.—BCDL might

mandate minimum deposits only for nonreturnables, while allowing traditional market

forces to establish the deposit amount for refillables. However, this approach could cause

technical arguments over whether a particular type of container is, in fact, refillable.

Furthermore, such an approach would have

the effect of favoring glass and discriminating against metal and plastic.

Adjustment of Deposit Amount.—The

amount of the deposit would need to be adjusted to account for inflation. This could be

done by legislation, by administrative decision, or according to a formula indexed to a

measure of inflation, such as the consumer

price index.

Minimum or Maximum Deposit. --Producers might be given the option to set higher

deposits to cover their costs or to cover large

containers. No public purpose would appear

to be served by setting a maximum deposit.

Establish Certified Containers.—The Oregon law sets a lower deposit (Z cents) on containers that the State certifies as standard

and usable by a variety of producers. Standard containers would be easier to use and

return for both producers and consumers.

For this reason, they would probably emerge

as an economic response under a uniform

deposit law. There appears to be no need for

a lower deposit or a governmental certification apparatus.

Beverages Covered.—Most proposals

cover carbonated beverages (soft drinks and

beer) in individual, closed servings. It is

reasonable to expect a marketing shift toward noncarbonated beverages in vending

machines and small retail stores in response

to a national deposit law on carbonated beverage. This shift could result in an undesirable circumvention of the goals of BCDL, and

may ultimately lead to proposals to include

other beverages. Other beverages that might

be included are noncarbonated drinks, juices,

milk, water, mineral water, iced tea, wine,

and spirits. * Before such additions were

made, it would be necessary to analyze their

effectiveness, costs, and impacts.

Materials Covered.— Some proposals

would establish different deposits for containers made of different materials. This approach would appear to be discriminatory

and might inhibit innovation in the development of potentially desirable new containers

such as refillable plastic bottles.

Require a Deposit on Secondary Packaging.—Under a container deposit system producers would be likely to adopt more durable

and versatile secondary packaging (cartons,

cases, and the like) to facilitate returns, obviating the need for a deposit system for secondary packaging. Such a requirement might

be much harder to administer than the container deposit requirement.

ADMINISTRATION OF THE DEPOSIT SYSTEM

Which Agency and What Functions.—

Most proposals call for administration of the

deposit system by the Environmental Protection Agency (EPA). It might also be administered, in whole or in part, by the Department

of Commerce (DOC), the Internal Revenue

Service (IRS), the Federal Trade Commission

(FTC), or a new agency. Federal agency functions could include education and technical

assistance, adjustment of the amount of the

deposit, decisions to require deposits on additional types of beverages, or enforcement of

compliance with the deposit requirement.

However, it should be noted that once established BCDL uses market forces, and would

require little Government participation.

Enforcement Requirements.—A deposit

law must include sanctions for the failure of

producers, distributors, or retailers to charge

*Federal law currently prohibits commercial reuse

of liquor bottles. (CFR-173.43, sec. 27 of the Internal

Revenue Code.)
Ch. 9—Beverage Container Deposit Legislation ● 183

or refund deposits as required by law. It introduces an element of mandatory purchase

into ordinary business transactions, since

used containers must be repurchased. The

refusal to do so would create a problem for

consumers and small firms. A method of

speedy, cheap enforcement is needed, therefore. Such enforcement should be discretionary, however, to avoid creating undue shortterm cash-flow hardship for distributors or

retailers subject to a heavy influx of returns,

One can imagine a “reverse boycott” in

which a retailer or distributor is intentionally

subjected to a very heavy flow of returned

containers as a form of economic harrassment o Similarly, retailers in vacation areas

may experience an excess of returns over

sales from travelers.

Point of Origin of Deposits.—The deposit

could originate at several points: container

manufacturer, bottler/brewer, distributor/wholesaler, or retailer. The logical points

of origin for a national deposit are the bottlers and brewers, since the objective of the

legislation is to create an incentive for these

companies to reuse returned containers. It is

the bottlers and brewers that have sufficient

market power through economies of scale,

advertising, franchising, and market shares

to frustrate the functioning of the deposit system. There is little purpose in requiring distributor/wholesalers or retailers to recover

used containers if bottlers and brewers refuse to take them back for reuse, so the participation of the latter must be assured. However, if deposits originate at the brewer/bottler, there is no need to require containers to be physically transferred back to

particular bottlers or brewers, since these

firms may be able to work out more costeffective approaches based on the establishment of a private market for the exchange of

used containers.

Treatment of Imports.—Special provision

may be required for imported beverages. In

this case the importer rather than the brewer

or bottler might originate the deposit. Importers are unlikely to return containers to

the country of origin, but in order to remain

price competitive with U.S. brands they might

adopt a standard container such as the 12-

ounce beer bottle, which would retain high

value under a deposit system. At any rate,

fairness to domestic producers requires that

imports be included in the deposit system.

Establishment of Redemption Centers.—

Some proposals include Government operated or licensed redemption centers for returned containers, and some would excuse

retailers from accepting returns if a redemption center is nearby. Oregon’s law contains

such a provision, but no centers have been established. Centers may arise independently if they can serve an economic purpose,

Thus there is no evident need for a special

provision for them. Likewise, a policy to excuse retailers near a redemption center

would require an extensive administrative

apparatus to make and police determinations

of compliance.

Treatment of Retained Deposits.—Not all

deposits would be refunded since not all containers would be returned. These retained deposits would accrue in the first instance to

the originator of the deposit, i.e., to the bottier/brewer. It has been proposed by some

that these deposits should be treated as a

windfall profit to be taxed away by a special

tax. Others have proposed treating them as

ordinary business income, subject to income

tax—an approach compatible with a mandatory refund rather than a deposit system. To

the degree that beverage markets are competitive, it would be likely that any “excess”

profit would be shared with distributors, retailers, and consumers through reduced

prices, In this event, a tax on retained deposits would make beverage prices rise under

a deposit system, rather than let potential

cost savings drive prices down. On balance, a

special tax on retained deposits appears to be

unnecessary and to be undesirable from a

consumer point of view.

Compensation of Retailers.—Some proposals would earmark a portion of the deposit, say 1 cent, for compensating retailers for

extra effort in handling returned containers.
184 . Materials and Energy From Municipal Waste

Some State laws have such a provision, If

markets are competitive, such a provision is

unnecessary and undesirable. If need be, retailers can set their prices to recover any extra costs. Furthermore, a l-cent rebate would

reduce a retailer’s incentive to control the

costs of recovery.

IMPLEMENTATION OF THE DEPOSIT

Time-Phasing of Deposit Implementation.—A decision must be made on the time

between the date of passage into law and the

date of implementation, as well as about

whether a law would take effect uniformly on

a particular date or be phased-in gradually.

Generally, time delays of 2 to 3 years are proposed in order to allow for orderly adjustment by the industry to the deposit requirement. While longer delays might allow for a

smoother transition, in fact, during the transition, each producer, wholesaler, and retailer

has an economic incentive to avoid instituting

a deposit earlier than his competitors. As a

result, all may put off necessary adjustments

to the last minute. Thus, a shorter rather than

a longer period may be just as effective.

Preemption of State and Local Laws.—A

Federal law might preempt local laws, grandfather existing laws, or allow for optional

higher State or local deposit requirements.

Higher State or local deposits might be desirable to induce better local performance or as

a testing ground for possible changes in Federal policy. However, State and local governments should probably be discouraged from

retaining or establishing container design requirements that might unnecessarily frustrate the efficient functioning of a nationwide

deposit system by forcing producers to serve

disparate markets.

Special Impact Assistance Programs.—Depending on program design, time-phasing,

and system response (sales, market shares,

recycle/return rates), BCDL may harm particular sectors of labor, manufacturing, or

retail trade. Proposals have been discussed

for special aid, which includes financial

assistance, job retraining, or technical

assistance. Another view is that existing programs for economic assistance are adequate

for this purpose. Special assistance programs

could become a windfall for those who would

otherwise successfully make the transition

under existing assistance programs or with

no assistance at all. Administrative costs

could be high. See pp. 215 & 220 for discussions of impact assistance for industry and

labor.

Dimensions and History of

Beverage Container Use

Containers, Resources, and Waste

I

n 1977, the United States produced nearly

73 billion carbonated beverage containers, manufactured from 8.6 million tons of

materials, as shown in table 61. These containers contributed over 8 million tons to the

municipal solid waste stream; about 6 percent of the total. Beverage containers make

up nearly half of all the glass and aluminum

in MSW.

Table 61 shows that the production of containers for beverages is a large part of the

production of rigid containers for all purposes. Over 95 percent of all aluminum cans,

over so percent of all glass bottles, and over

42 percent of all steel cans are used for beer

and soft drinks. While plastic beverage containers currently hold a small part of the beverage container market their market share is

growing extremely rapidly for soft drinks in

larger sizes (24 to 64 ounces].

The energy required in all phases of the

beverage container delivery system in 1975

has been estimated to be between 358 and

465 trillion Btu, excluding the energy required to produce the beverage itself. (See

table 60.) This energy represents between 0.5

and 0.66 percent of the total U.S. energy consumption for 1975, and is equivalent to 1.2 to

1.5 percent of the total U.S. energy consump

tion for industrial purposes.

The historically increasing demand for

beverage containers reflects: (i) growth in per

capita demand for beer and soft drinks, (ii)
Ch. 9—Beverage Container Deposit Legislation ● 185

Table 61 .—Beverage Container Production, Materials, and Wastes in 1977

TContainer type

Glass bottle

Refillable . . . .

Nonreturnable . . . . . . .

Total glass .

Production

(bill ion)a

1 ,gf

19,3f

21 .2f

Aluminum can . . . 25.8

Steel can

Three pieceg. .

Two piece . . . .

Total steel. .

18.3

7.3

25.6

Plastic. . . . . . . . . .

k--

0.3h

Total beverage

containers . . . . 72.9

alndustry data (15, 16)

bOTA ~stlmates from table 67

Beverage con- I

ainers as a per-l

/

:ent by number

of all contain- Gross materi<

ers of this used (million

materiala tons)b

{

. . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . .

50.4?40 – - 6.52

95.670 I 0.64

. . . . . . . . . . . . . . . . . . . . . .

I

. . . . .—. . . . . . . . . . . . . . . . . . . .

42.4%

.— .—

1.39 -

s.s”/o

--4

0.01 — —

. . . . . . . . . .1 8.56

Sross material

used as a persent by weight

of domestic

consumption

. . . . . . . . . . . .

. . . . . . . . . . . .

30.0%

12.070

. . . . . . . . . . . .

. . . . . . . . . . . .

1 so/o

(). Oi’”\o

. . . . . . . . .

-T .

Beverage con- Beverage containers in solid tainers as a per

waste (million cent by weight

tons)b of solid wasted

---1- .

.

6.52 4.80/.

0.47 0.35%

. . . . . . . . . . . . . . . . . . . . . . . . . . .

I

. . . . . . . . . . . . . . . . . . . . . . . . .

1.26- ‘- – 0.90/o

0.01

:t-

().()OT~o —

8.26

I

6.1 ‘/o

.—

6everage conainers as a percent by weight

of each

material in

solid wastee

.

. . . . . . . . . . . .

. . . . . . . . . . . .

48.00/.

48.00/.

. . . . . . . . . . .

. . . . . . . . . . .

1 2.00/0

0.2% .

. . . . . . . . .

COTA e~tlmates based on table 67, on dome~tl~ ~~n~umPtl~n of alumlnum and steel from LJ S Bureau of Mlnes(l 7), and on OTA estimates for total glaSS COrl Sump.

tlon of 22 mlllton tons and plastic consumption of 141 million tons In 1977

dBased on assumed 135 mllllon tons of net munclpal solld waste disposed of In 1977

eBased on table 3 composition data for 1975, the latC5t Year available

flg76 data from Glass Packaging Institute (15)

gusually made with alumlnum Ild

‘OTA estimate

shifts in the kinds and sizes of containers

used as beverage packages, and (iii) growth

in the population. The first two factors are

undoubtedly connected, in the sense that

availability of convenience-oriented packaging facilitates increased per capita consumption, while increased per capita demand facilitates entry of new package concepts into

the marketplace. This section examines

trends in per capita beverage demand and in

container use patterns, some of the forces

that underlie those trends, and the history of

the resulting demand for containers.

Beer and Soft Drink Consumption

The growth in total consumption of beer

and soft drinks is shown in figure 6. Figure 7

shows the growth in per capita consumption

for each beverage.

In a study for the Federal Energy Administration, Research Triangle Institute (RTI) [20)

found that historical per capita consumption

of beer over the period 1947-73 could be explained statistically by three independent

variables: average personal disposable income, the price of beer relative to other

goods, and the proportion of the population

between ages 20 and 34. They found that consumption of soft drinks was strongly related

to average personal disposable income and to

the proportion of the population between

ages 10 and 29. The relative price of soft

drinks was not an important factor in explaining consumption. *

In a study for the U.S. Brewers Association

(USBA), Weinberg argues that per capita

beer consumption began to increase dramatically after 1958 due to the increased use of

“convenience’ (nonreturnable) packaging

from 1947 through 1970.(21) He further con-

*price elasticities of demand were — o.G for beer

and – 0.13 (not statistically significant) for soft drinks.

Disposable income elasticities were + 0.25 for beer

and + 1.47 for soft drinks. Population group elasticities

of demand were + 0.70 for beer and + 0.79 for soft

drinks,

48-786 0 - 79 - 13
186 . Materials and Energy From Municipal Waste

Figure 6.—Annual Beverage Consumption

in the United States

10 I 1

01 t I t 1 I I I

1950 1955 1960 1965 1970 1975

Figure 7.— Annual Per Capita Beverage

Consumption in the United States

o~ I 1 t ( I I 1

1950 1955 1960 1965 1970 1975

eludes that “. . . the increase in malt

beverage consumption after 1958 cannot be

explained in terms of shift in population (age

distribution).” He also argues against a consistent influence of disposable income on beer

consumption, because per capita consumption decreased linearly with income from

1947 to 1958 and then reversed to increase

linearly from 1959 to 1970. These conclusions

contrast with the RTI findings that the proportion of population between ages 20 and

34, along with disposable income and beer

price relative to other commodities, are very

significant in determining per capita beer

consumption.

The differences between the conclusions

reached by RTI and by Weinberg on the determinants of per capita beer consumption

are important because they lead to different

predictions about the response of beer consumption to a deposit system. If beer consumption has been stimulated by the availability of nonreturnable containers (the

Weinberg argument), then a deposit law that

would make nonreturnable packaging more

expensive would tend to depress beverage

consumption. If, however, beer consumption

is determined by disposable income, price,

and demographics (the RTI finding), then a

deposit law would affect beer consumption

only by having a direct effect on beverage

prices and not by any effect on convenience.

Both arguments are plausible; the RTI finding, however, is based on a statistical test

while the Weinberg argument is more intuitive. In any case, statistical time series

arguments of the sort made by RTI allow for

the possibility that some other untested independent variable might also “explain” the

observations. Weinberg’s argument, on the

other hand, tends to confound total beverage

consumption with market shares by package

type, both of which may be responding to

untested external economic and social variables.

Over the years, the Nation has experienced

a shift in the location of beverage consumption. Figure 8 shows the shift for beer from

the on-premise market (taverns, restaurants)

to the off-premise market (in the home or in

recreational settings). Change in the places of

consumption has stimulated change in container demand. Thus there has been a shift

from bulk packaging to individual servingsized packages for beer, while the trend for

soft drinks has been toward bulk packaging.

(See figure 9.) This difference may reflect the

rapid growth of both “fast food” and institutional settings, where soft drinks are sold in

open cups from bulk packages.

Historical Shifts in Container Types,

Materials, and Market Shares

Until the 1930’s all packaged beer and soft

drinks were marketed in refillable glass bot-
Ch. 9—Beverage Container Deposit Legislation ● 187

100

90

Figure 8. —The Dual Beer Market

Off-premise

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

/

. . . . . . . . . . . . . . On-premise

t

10 t I

o~ : t 4 1 1 1 I

1950 1955 1960 1965 1970 1975

SOURCE (20)

Figure 9.— Packaged Beverage Market Shares

100 ~ .● . . . . . . . . . . . .

90 - Soft drinks (24)~%............

.... $+ -

80 - . . . . . . . . . .

60 -

50 -

40 -

30 -

20 -

10 -

o! 1 I 1 I I I

1950 1955 1960 1965 1970 1975

ties. * The soldered steel can made its debut

in the beer market in 1935.(26) Steel cans entered the soft drink market in 1953.(27) The

all-aluminum can first appeared in the general market in 1964,(28) although it had been

used by Coors a few years earlier. The bi-

*In the early years of the packaged beer and soft

drink industries, refillable bottles were a highly valued

property of the brewers and bottlers. The American

Bottlers’ Protective Association, an organization of bottlers and brewers formed in 1889, proposed passage of

a Federal Bottle Law to protect their property rights in

bottles that were then being diverted with a loss of

several million dollars per year. The proposed law

passed the House of Representatives but not the Senate

in 1896. In 1899, the Association abandoned the Federal approach in favor of seeking individual State controls. In 1901, the Association endorsed a proposal for

industry adoption of bottle deposits. However, adoption

of a deposit system took many years.(25)

metallic aluminum-lid/steel-body/pull-top can

began to be used in 1962.(29) Nonreturnable

beer bottles were used for overseas delivery

during World War II but their substantial

domestic use for beer did not begin until

1959.(30) Having been introduced in 1948,(31)

nonreturnable glass bottles played a small

role in the soft drink market for some years.

They were given considerable impetus by the

twist-off cap, nonreturnable bottle introduced in part to help glass container companies retain their market shares in the face

of inroads by metal cans. More recently, container manufacturers have developed new

beverage container systems such as the twopiece steel can; various plastic bottles (polyacrylonitrile, ** polyester, and polystyrene

foam-over-glass); and a laminated container

made of wood fiber and plastic, None of these

are refillable.

Five container systems now serve the packaged beer and soft drink markets: refillable

glass bottles, nonreturnable glass bottles, allaluminum cans, bimetallic steel body/aluminum lid cans and polyester plastic bottles.

Figure 10 shows the rapid decline in market

share of refillable containers during the last

Figure IO.— Beverage Market Shares in

Returnable Containers

100 —..*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Soft drinks (32)

● .,

 7 0 -

“..

..

% -

●

.

 5 0 - Beer (23)

4 0 -

3 0 -

 2 0 -

( ) ~

1950 1955 1960 1965 1970 1975

**See page 229 for a discussion of the recent FDA

ban on the use of acrylonitrile-based plastics for

beverage containers.
188 ● Materials and Energy From Municipal Waste

20 years. Figure II shows the growth in market share of nonreturnable containers.*

Figure 11 .—Beverage Market Shares in

Nonreturnable Containers

1950 1955 1960 1965 1970 1975

A number of factors have stimulated the

shift from refillable to nonreturnable beverage containers. Some have acted on producers, some on distributors and retailers,

and some on consumers. They include:

Factors Affecting Producers.—

1.

2.

3.

The lower weight of cans and nonreturnable glass and plastic bottles, with lower

transportation costs, lower labor costs,

and less worker injury than with refillables.

The absence of collection and back-haul

costs for nonreturnables.

The increase in the optimum size of

regions serviceable from a single bottler

or brewer as a result of reduced transport costs due both to the lower weights

of nonreturnables and to the improved

highway transportation system.

*The National Soft Drink Association estimates and

reports market shares in two ways: by survey of bottlers and by computation from container shipments. In

recent years, the survey of bottlers has given larger

market shares for refillables and lower shares for nonreturnables than have the calculations based on container shipments. For the present study, the survey of

market shares is used to calculate materials used in

1977, NSDA statistics do not yet account for the market

share of plastic containers, which, although currently

small, is growing rapidly.

4.

5.

6.

7.

8.

9.

The increase in industry concentration

and a focus on nationwide marketing.

Reduced investment in inventories of

bottles and secondary packaging.

The more rapid filling machinery for

cans than for bottles.

The lower cost of the capital equipment

used for filling nonreturnables.

The decline in refillable container

return rates.

Short-term price promotions are more

economical as a marketing tool with nonreturnables, since there is no need to

make a longer term investment in bottle

inventory.

Factors Affecting Distributors and

Retailers.—

1.

2.

3.

4.

Shifts to self-service, high-volume supermarkets as beverage sales points.

Container inventory costs are lower with

nonreturnables, particularly in the case

of modern, low-inventory, supermarkets.

Reduced space and labor costs in handling nonreturnables.

The decline of the local tavern as a

neighborhood center.

Factors Affecting Consumers.—

1 .

2.

3.

4.

5.

The increased acceptance of beer at

home.

The growth in outdoor eating and recreational activities.

The growth in the demand for nonreturnables in response to the increased

value of the time required to make returns, including the increased value of

the time of housewives who are in the

labor force.

The unavailability of refillables at many

places where beverages are sold.

The unavailability of beer in convenient

refillable packages such as six-packs.

The shift to nonreturnable containers has

apparently facilitated the centralization of

bottling facilities; the expansion of the marketing ranges of formerly regional brands,

especially for beer; and a tendency toward a

smaller number of larger companies. Nonreturnables supported these changes because it
Ch. 9—Beverage Container Deposit Legislation ● 189

wasn’t necessary to pay for the costs of returning bottles and because the lighter nonreturnables are cheaper to ship. Furthermore,

larger bottling plants have lower average

production costs than the smaller plants they

replaced. The concentration and centralization of the beverage industries has also been

facilitated by the economies of scale in the

nationwide marketing of beverages on radio

and television.

The centralization of production facilities

was accompanied by a steep decline in the

number of local soft drink bottlers and in the

numbers of brewers and brands of beer. For

example, in 1935 there were 750 beer-brewing plants in the United States. By 1978

only 96 plants remained.(34) Five major brewing companies controlled 68 percent of the

market in 1976, up from 53 percent in 1971.

(35)

In the 1940’s there were over 6,000 soft

drink bottling plants in the United States; by

1975, as shown in figure 12, there were less

than 2,500. (36,37) The four largest brands

accounted for about two-thirds of the market

in 1974.(38) The structure of the soft drink industry may be altered considerably by the recent FTC decision outlawing territorial franchises for soft drinks in nonreturnables. See

page 233.

The History of Return Rates

The effectiveness and impacts of a container deposit system depend on the average

number of trips a refillable container makes

to market; i.e., on the “trippage.” Trippage is

related to “return rate, ” i.e., the fraction of

all refillable containers that are returned and

reused, as shown in the following equation:*

*Not all returned containers are suitable for refilling. Some are broken during the cleaning and filling

operations. The resulting loss of containers, or “shrinkage, ” means that customer return rates are somewhat

higher than the overall return rate, or refill rate, used

here. This difference is small and is ignored in this

study.

Figure 12.—Soft Drink Bottlers in the United States

“ 40 5060 70 80 90 : 10 203040 506070 ~

m m

SOURCE (36, 37) Year

Trippage = 1

1- Return rate

As the return rate approaches 100 percent,

the trippage becomes very large. (See table

62.) To achieve high return rates and therefore high trippages requires both using durable containers and the cooperation of producers, distributors, retailers, and consumers.

Under the industry’s voluntary deposit system, beverage container return rates and

trippage have decreased over time. The available data on return rates are uncertain because they are based on inference from container and beverage sales rather than on direct measurement. They differ for beer and

for soft drinks, by region of the country, and

by segment of the market (for example, for

the on-premise and the off-premise beer markets.)

Trippages for the period 1947 to 1973 for

beer and for soft drinks are shown in figure

13, taken from estimates by RTI (39) and by

Weinberg. Also shown are estimates for

1975 by the General Accounting Office

(GAO) .(41) The RTI estimates are based on an

inventory model that infers trippage from nationwide beverage and container sales. The

basis and scope of the Weinberg data are not

known. Since the beer data include both onpremise and off-premise markets, they over-
—

190 ● Materials and Energy From Municipal Waste

Table 62.—Relationship Between Return Rate

and Trippage

Return rate Trippage ‘

-

————

50 percent. . . . . . . . . . . . . . . . . . . .:. 2.0

60 percent. . . . . . . . . . . . . . . . . . . . . . 2.5

70 percent. . . . . . . . . . . . . . . . . . . . . . 3.3

80percent. . . . . . . . . . . . . . . . . . . . . . 5.0

90 percent. . . . . . . . . . . . . . . . . . . . . . 10.0

95 percent. . . . . . . . . . . . . . . . . . . . . . 20.0

96 percent . . . . . . . . . . . . . . . . . . . . . . 25.0

98percent. . . . . . . . . . . . . . . . . . . . . . 50.0

—. ——— —

Figure 13.— Historical Beverage Container

Trippage in the United States

40

10

0

L Beer wienburg(40)

Softdrinks,RTl(39)

1 & I , I

1950 1960 1970

Year

state current trippage in the off-premise, consumermarkets.

The Determinants ofMarket Shares

and Return Rates

The decisions of consumers to purchase

beverages in refillables and to return the

empties for refund depend on the costs and

benefits and on the availability of refillables

in the marketplace. The consumer benefits include lower shelf prices* for beverages in

refillables and the positive feeling of contributing to conservation. The consumer costs

*prices of beverages in various containers under

BCDLare discussed later in this chapter.

include time used to clean, transport, and

return containers; storage space; and any

forfeited deposits.

Return rates are determined bya number

of factors including container durability, the

convenience of the secondary packaging system, the ease of return, the amount of the

deposit, and consumer choice. Consumers directly control only the last of these factors.

The others are controlled by producers, distributors, and retailers, whose decisions are

influenced by the market preferences shown

byconsumers.

To encourage consumer cooperation the

amount of time it takes to return containers

for redemption must bekept as small as possible. This can be done by ensuring that containerreturn points are conveniently located

and operated; usually at the place where beverages are retailed. The sale and return of

beverages in refillable containers are discouraged by sales practices that include failure to stock beverages in refillables, failure

to offer refillable beer in six packs, and failure to arrange procedures for convenient returns and deposit refunds. Many consumers

may not want to take the time to return containers for deposit. Such consumers probably

would not purchase beverages in refillables

in the first place, being aware that their total

prices, when the forfeited deposits are ineluded, might behigher.

One study found that for stimulating returns the convenience of the return processis

more important than the amoun tofthedeposit.(42) This study also noted that the deposit

must be set such that the sum of the deposit

and the extra costs of handling refillables is

lower than the price of a new container;

otherwise producers and sellers will discourage returns because the gain from retaining

deposits and avoiding return costs would

more than pay for the price of new bottles.

Observed market shares and trippage,

then, are partly the manifestation of a self-reinforcing system in which declining opportunities for the purchase and return of refillables have led to reduced return rates and to
Ch. 9—Beverage Container Deposit Legislation ● 191

reduced refillable market shares. Distributors and retailers have become less likely to

stock and accept refillables, which has further reduced opportunities for return and so

on, until it is reasonable to expect refillables

eventually to disappear from the marketplace.

The near disappearance of refillable bottles is already seen in some urban areas

where they are not available in grocery

stores, a major point of sale for beverages. *

Beer in refillable bottles can only be purchased in certain liquor stores that often sell

only a limited selection of brands and these

only in case quantities. Some soft drink

brands are not packaged in refillables at all,

and the analog to the liquor store in which

customers might purchase soft drinks in refillables does not usually exist.

Trippage is associated with litter. Bottles

are not returned either because they are

damaged and thus no longer redeemable, or

because the consumer chooses to discard or

litter them. Therefore, the greater the

chances that a refillable is actually returned

(high trippage), the lower are the chances

that it will be littered. In addition, there is an

incentive for scavengers to retrieve littered

refillables for their deposit value. There is

very little incentive to recover littered nonreturnables whose scrap value is much less

than a 5-cent deposit.

Effectiveness of Beverage

Container Deposit Legislation

T

he potential effectiveness of BCDL can be

measured by the extent to which it is

expected to achieve its four objectives: reduced litter, reduced use of materials and

energy for beverage delivery, reduced solid

waste, and establishment of a symbol of

*Food stamps can be used to purchase soft drinks,

but until 1978 could not be used to pay refundable

deposits. (43,44) The importance of this factor in stimulating growth of the nonreturnable market share is not

known. Food stamps cannot be used to purchase

alcoholic beverages.

materials conservation. In this section, the

potential achievement of each of these four

objectives is analyzed, based on projections

into the future using various quantitative and

qualitative models.

Previous projections of the effectiveness of

BCDL have been intensively discussed and

debated. In order to assist in clarifying the

arguments, this section is largely based on a

review and comparison of the premises,

methods, and results of several existing

studies. OTA has also performed new analyses to fill gaps in the literature.

Litter Reduction

BCDL is expected to reduce littering by

providing a financial incentive to return

beverage containers along with their packaging (trays, six-pack cartons, paper bags) to

appropriate retail outlets. BCDL would also

provide a financial incentive for retrieving littered containers for their deposit refund. By

using market forces, BCDL would operate

without appeals to volunteerism, continuous

advertising campaigns, or heavy enforcement

of antilitter laws. However, BCDL would attack only the beverage container portion of

litter; the remainder must be dealt with by

other means.

There are two considerations in evaluating

BCDL as a litter-control strategy. One is the

contribution that beverage containers make

to the overall litter problem, and the other is

the effectiveness of a deposit system in reducing that contribution. In order to examine

these questions, methods of litter measurement and their limitations are first reviewed.

LITTER PRODUCTION AND MEASUREMENT

The rate at which litter is produced varies

with the season, with the type of land use

(e.g., urban, suburban, residential, commercial, park, roadside), and by region. Litter

begets litter: the more litter that accumulates

in a place, the more likely are people to litter

there. On the other hand, people tend to Iitter

more if they know that cleanup is frequent.

Thus, surveying litter at one time by collect-
192 ● Materials and Energy From Municipal Waste

ing it may affect the results of a subsequent

followup survey at the same place at a later

time. Not all littering is deliberate; much of it

results from improper handling of waste that

will be or has been collected. Wind, animals,

and uncovered collection and transport vehicles all contribute to the production and redistribution of litter.

There are no agreed upon standard methods for carrying out litter surveys. All are difficult to perform and interpret. Typically,

surveys evaluate physical measures such as

piece count, volume, or weight. Some use a

subjective measure such as esthetic impact.

Photometric techniques have also been used,

which measure the area of ground covered by

the litter. Other approaches weight the

physical measures of litter by the degree of

degradability or the degree of hazardousness

of various items or the cost of collecting them.

In all cases, a discrimination must be made

between actual litter and naturally occurring

objects such as tree branches and stones. For

piece count methods, a lower limit of size

must be set to avoid overcounting extremely

small pieces. In addition to choosing a measurement method, a representative, statistically meaningful sample of the total region

to be surveyed must be chosen. Such a sample

might consist of randomly selected urban

blocks or mile-long highway segments. The

report by Syrek for the California State

Assembly discusses and illustrates a variety

of approaches to litter measurement.(45)

Careful consideration must be given to the

selection of a measurement method. For example, in assessing the relative importance in

litter of an aluminum can and a glass bottle,

each is counted as one item, and they both

have about the same volume, but one weighs

about 10 times more than the other. Both

create the same esthetic blight on the roadside. However, if the bottle is broken, compared with the can or with an unbroken bottle

it has a larger piece count, a smaller volume,

the same weight, less visibility on the roadside, but is more hazardous to people,

animals, and machines. Another example is

the relative importance in litter of a steel can

and an equivalent weight of paper gum wrappers. The wrappers have a much higher piece

count, a greater physical volume, and an

equal weight. At the moment of discard the

wrappers are more esthetically unattractive

than the can, but they degrade quickly and

soon can no longer be seen. The can is much

easier for litter collection crews to pick up,

but if not removed can have a long lifetime in

the environment. Compared with the glass

bottle, both the can and the wrappers pose little hazard to health, safety, and wildlife.

The apparent significance of beverage containers in litter depends on the measurement

technique chosen. Similarly, BCDL can ap

pear as if it would have, or has had, a large or

a small effect on litter. For example, on a

piece-count basis beverage containers are

usually outnumbered by pieces of paper.

Therefore, using this measurement method

even if BCDL were to remove all beverage

containers it would appear to have little effect on the total amount of litter. However,

the hazard from broken glass would be

markedly reduced.

The cost of pickup is not a good measure of

the total cost of litter to society. Esthetic

blight, safety and health hazards, and lowered property values are all costs of litter

that are excluded from pickup costs. Three

cases may illustrate the point. A recreational

beach may be heavily littered, yet cause little

immediate esthetic loss because the people

and their gear mask the litter. At the same

time, collection costs may be high. Only a tiny

fraction of the same litter strewn along a hiking trail may cost little to collect, yet cause

considerable esthetic loss. As a third illustration, it may cost the same to collect empty

paper cups or bottles from a beach, yet the

social cost due to physical injury may be

much higher for the bottles. In fact, there is

probably little or no correlation between the

total costs of litter and the costs of collection.

From these observations, it is clear that

any attempt to evaluate the impact of BCDL

or of any other program on litter must depend

to some extent on subjective judgment. Anal-
Ch. 9—Beverage Container Deposit Legislation ● 193

ysis alone cannot provide an answer. These

observations help explain why such differing

claims can be made for the impact of BCDL on

litter.

BEVERAGE CONTAINERS IN LITTER

Keeping in mind the above noted limitations of surveys and measurement methods,

several published estimates of the importance of beverage containers in litter are

examined here.

The Maryland State Highway Department

surveyed highway litter on seven test sites of

6 miles each in 1974. On September 16 the

sites were cleaned, and then resurveyed one

month later on October 14. On the later date,

an average of 511 beverage containers were

collected per mile, or 28.6 percent of all the

items collected on a piece-count basis.(46)

A report prepared for the Kentucky Legislative Research Commission in 1975 reviewed

11 surveys of highway litter by both Government agencies and private and volunteer organizations.(47) The contribution of beverage

containers to litter by item count ranged from

14 to 51 percent on a “permanent accumulation” basis, and from 15 to 46 percent on

areas recently cleaned. One survey in Vermont found that beverage containers account

for 90 percent of all litter on a volume

basis.(48)

An extensive survey for the California

State Assembly on an item count basis found

that beverage containers and secondary

packaging (excluding pull-tops) comprised 17

percent of all littered items in open highway

areas, 18 percent in agricultural areas, and

10 percent in urbanized areas.(45) These

results are not comparable to the Maryland

and Kentucky findings because the California

survey included small items and broken glass

on a piece-by-piece basis. The California

group found about 200 beverage containers

per week per mile of rural road, compared to

the 128 per week per mile found in Maryland.

A study of highway litter in Oregon found

about 7 beverage containers per mile per

week with the State BCDL in effect, and

about 13 beverage containers per mile per

week in Washington, which has a strong litter

control act.(49) The California survey also examined litter in recreational areas. No data

were given, however, on the portion due to

beverage containers.

The EPA has estimated that a total of 4.1

billion beverage containers were littered in

1975.(50) It has been argued that this number

is far too high, and that to account for it

would require littering the containers for all

of the beverages consumed in locations outside homes and commercial establishments. *

IMPACT OF BCDL ON ROADSIDE LITTER:

OREGON AND VERMONT

The experiences in Oregon and Vermont

provide two, limited data bases on which to

judge the expected effect of BCDL on highway

litter. Data were gathered on the beverage

container content of roadside litter and on

the costs of litter control before and after the

passage of their deposit laws. These data

have been the subject of considerable controversy due in part to sampling errors and to

the lack of adequate baseline data and measurement methods. (49,52)

A survey by the Vermont State Highway

Department just before and after the deposit

law was implemented found a 76-percent reduction in beverage container litter and a 35-

percent reduction in the volume of total litter. The same authors report a 31-percent

decrease in the cost of litter pickup in Vermont from 1973 to 1977 (pro- and post- law).

In Oregon, thirty l-mile segments of State

highways were surveyed by the State Highway Division. Surveys were carried out before the law took effect, during the transition

using the figuer of 150 littered containers Per mile

per week based on the California and Maryland

surveys and a total of 2.4 million miles of hard surfaced

rural road in the United States(51) leads to an estimate

of nearly 19 billion littered containers per year on rural

roads alone. While this estimate is clearly too high and

suggests that the California and Maryland data are not

typical of all rural roads, it also suggests that the EPA

estimate is not wholly unreasonable.
.- —

194 ● Materials and Energy From Municipal Waste

to the deposit system, and about 1 year

after.(54) Litter rates for all items declined by

26 percent from “before” to “transition,”

and by 39 percent from “before” to “after.”*

For beverage containers, litter rates declined

72 percent to “transition” and 83 percent

from “before” to “after.”

Based on these two observations in Oregon

and Vermont, as well as on other information,

GAO projected a reduction in the beverage

container portion of highway litter of 80 percent under BCDL.(56) They further estimated

that total highway litter on an item count

basis would decline by 7 to 37 percent, depending on whether beverage containers

represent a low of 9 percent or a high of 46

percent of all litter. The latter estimate

assumes that littering of other items would be

unaffected by changed patterns of container

littering.

In the analysis of BCDL by RCC, a reduction of total litter volume by 40 percent and a

20-percent reduction in litter item count was

projected. Their 20-percent figure is

roughly the average of GAO’s range of 7 to 37

percent.

EPA projected that under BCDL the number of beverage containers littered in 1980

would decrease by 70 percent to 1.6 billion. Alternatively, using the GAO estimate of an 80-percent drop, and the EPA estimate of total beverage container litter without BCDL, one can estimate that 1.1 billion

beverage containers would be littered in

1980.

SUMMARY OF LITTER IMPACTS

The estimates of the significance of beverage containers in litter and of the impact of

BCDL on litter in Vermont and Oregon vary

widely. Nevertheless, all studies agree that

BCDL does or would lead to some reduction in

the amount of beverage container litter found

on the Nation’s highways. No studies are

*The Oregon data were re-evaluated by the Wharton

School, which calculated declines of 23 and 36 percent

respectively for the two periods.

available of the effects of BCDL on urban or

recreational area litter. In view of the origins

of beverage container litter, it is likely to be

reduced more in urban and recreational

areas than on highways. Neither estimates of

the cost-effectiveness of BCDL as a litter control measure, nor comparisons of the costeffectiveness of BCDL with alternative approaches to litter control can be made from

the available data.(59)

Materials and Energy

BACKGROUND AND SCENARIOS

Several studies have projected the impacts

of BCDL on the consumption of materials and

energy. These results are reviewed, analyzed, and supplemented in this section.

In the overall production of beverages for

market the manufacture of containers consumes the most materials. Lesser quantities

are used for secondary packages (six-packs,

cartons, cases) and labels as well as for constructing and maintaining capital equipment

and buildings.

The use of energy is more diffused throughout the entire beverage delivery system, not

only for manufacturing packaging materials

and containers but also for transportation,

storage, handling, cleaning, and reuse or recycling.

For a given level of beverage sales, the

total consumption of materials and energy

strongly depends on the market share and the

return rate of each container type. In general, producing a refillable bottle requires more

materials and energy than a nonreturnable

glass or plastic bottle or a metal can of the

same size. However, if a refillable bottle is

reused a sufficient number of times, this higher resource use is spread out over several

trips and the total use of materials and

energy per trip is lower, even when the energy required to transport, store, and clean

returned containers is included. If the refillable is not reused a sufficient number of

times, however, the net consumption of

energy and materials would increase under
Ch. 9—Beverage Container Deposit Legislation ● 195

13CDL. Producing new cans from returned

cans rather than from virgin raw materials

takes less energy and raw materials even

when the energy required to store and return

cans is included.

No one has been able to forecast with confidence container return rates and market

shares under BCDL. It is the practice to

estimate the energy and materials impacts

for a reasonable range of these parameters.

Some studies identify the critical market

share and trippage values below which mandatory deposits would cause an increase in

materials and energy use.

Several comprehensive analyses of the impacts of BCDL have been published in the last

5 years. The results of each have been presented in the form of one or more scenarios

that describe the conditions that might exist

after a law had taken effect. 1n these analyses, each scenario is a set of assumptions

about the state of the system under study. (A

scenario, which is neither a forecast nor a

projection, usually describes a situation that

is either extreme, plausible, or typical. )

Significant elements of the 12 scenarios

used in 7 studies are summarized in table 63.

All of the studies, except the one by the

Wharton School, assume that the minimum

deposit on all beverage containers is 5 cents.

The Wharton School study examines a 5-cent

deposit for beer and a 6-cent deposit for soft

drink containers, assuming that all are refillable.

Some of the studies do not identify all the

elements of the scenarios used. In addition,

replication of the results of the studies requires knowledge of the scenarios used to describe the baseline conditions in the absence

of legislation, and some of the reports fail to

state these assumptions.

MATERIALS

Current Materials Use.—The materials

used for containers and closures are glass,

steel, and aluminum, with smaller amounts of

plastic, paper, and wood. The annual consumption of these materials depends on market shares, return rates, recycle rates for

nonreturnable containers, and the weight of

materials used in each type of container.

The weights for typical beverage containers of the major types, reported in two key

studies, are shown in table 64. The differences reflect the variations among containers

used for different brands. Other container

sizes are in use, especially for glass nonreturnables. However, it has been shown that

the weight of glass required per ounce of

beverage delivered is nearly the same for all

container sizes .(67] For this reason, calculations of the use of energy and materials can

be made with good accuracy using an average container size, In this study, each container type is assumed to have a weight equal

to the average of the values in table 64.

OTA estimated the use of glass, aluminum,

and steel for beverage containers and compared these results to estimates interpolated

from an EPA study, as shown in table 65.

Gross tons refer to the weight of all containers produced. Net tons refer to the actual

materials used, assuming that various fractions of glass, aluminum, and steel containers

are recycled to make new containers. It is not

clear why EPA’s estimates are higher than

OTA’S.

The OTA estimates of gross materials consumed for the production of beverage containers in 1977 are equivalent to 30 percent

of the Nation’s total annual consumption of

glass, 1.3 percent of steel, and 12 percent of

aluminum.

The market shares and return rates used

to calculate the OTA estimates of 1977 materials use are shown in table 66. According to

industry sources, the total consumption of

beverages in individual containers in 1977

was 734 billion ounces of soft drinks and 55o

billion ounces of beer. (71,72) The total materials use is based on delivering these amounts

of beverages to customers.

Future Materials Use for Beverage Containers.—Forecasting the future gross

materials use for beverage containers requires forecasting future beverage consump-
196 ● Materials and Energy from Municipal Waste

0 0 0

t -

UI 0 g!ub

H

m -0- 0 m O l n

* N

0 0

a

I
Ch. 9—Beverage Container Deposit Legislation ● 197

Table 64.—Typical Beverage Container Weights

in 1975

Container weight in

grams

Wharton

Container type RTI (68) School (69)

12-ounce aluminum can . . . . . . . . . 20 20

12-ounce steel can (3 piece)

Body and bottom (steel). . . . . . . 45 43

Top (aluminum). . . . . . . . . . . . . . 5 5

Total. . . . . . . . . . . . . . . . . . . . . 50 48

12-ounce glass beer

Refillable . . . . . . . . . . . . . . . . . . . 283 297

Nonreturnable. . . . . . . . . . . . . . . 173 173

16-ounce glass soft drink

Refillable . . . . . . . . . . . . . . . . . . . 481 425*

Nonreturnable. . . . . . . . . . . . . . . 283 283

16-ounce polyester plastic. . . . . . . 37 —

Steel crown for glass bottles. . . . . 2.25 2.17

‘Page 128 of volume II of the Wharton School report is apparently In error. To be

consistent with other calculations on page 64 of that report, the 16-ounce

refillable soft drink container weight should be 15, not 12 ounces

Table 65.—Materials Consumed for Beverage

Container Production in 1977

Annual consumption (million tons) ——

Material EPA 1977’ OTA 1977b OTA 1977c

(net) (gross) (net)

Glass. , . . . . . . 7.37 6.52 6.52

Steel . . . . . . . . 1.59 1 .39d 1.26

Aluminum . . . . . 0.54 0.64e 0.47

as ource OTA interpolation between EPA estimates for 1975 and 1980 (70)

bBased on average container weights in table 64 and 1977 Sales mlx from table

cA~6sumlng recycle rates of I o percent for steel, 25 percent for aluminum O Per”

cent for glass

dlncl

u de s 467 billlon steel crown closures weighing 114,000 tons

elncludes 106,000 tons of aluminum tops on 19.1 bllllon 3-piece blmetal cans

tion, container market shares, return rates,

and container weights. Forecasting net materials use (gross use minus amount recycled)

further requires forecasting recycle rates by

container type for nonreturnable containers.

Several previous studies have addressed

this forecasting problem by investigating

materials use under two or more scenarios

that might be typical of the future. In this

study, a mode of presentation has been

adopted that illustrates the future use of

materials over a full range of system responses.

Table 67 shows the amounts of container

materials required to deliver 1 million ounces

of beer or soft drinks using containers of current design, if return and recycle rates are

both zero. Figures 14 to 20 illustrate how the

amounts of steel, aluminum, and glass required to deliver 1 million ounces of beverages per year depend on the market shares

and on the return and recycle rates. *

Summary of Materials Impacts.—The current manufacture of beverage containers

uses over 8 million tons of materials, mostly

glass. Shifts from nonreturnable to refillable

bottles can greatly reduce glass use. Shifts

from cans to refillable glass would reduce

metal and increase glass use. Since glass refillables weigh from 4 to 10 times more than

steel cans and 8 to 20 times more than aluminum cans, a shift from cans to glass bottles

would increase the total use of materials on a

weight basis. A complete shift to refillable

glass would free 1.3 percent of the Nation’s

steel and 12 percent of its aluminum for other

uses. Similarly, total glass use would decline,

with the amount depending on the trippage

achieved.

ENERGY

Energy use in the beverage delivery system

has been examined in a manner similar to

that used for materials demand. First, detailed computations are made of the amount

of energy required to deliver a certain

amount of beverage, say 1 million ounces, in

each type of container. Next, projections are

made of beverage sales, market shares, return rates, and recycle rates, which together

provide a basis for calculating the number of

containers of each type. Finally, the energy

requirements for each container type are totaled to arrive at the requirement for the

overall system.

*G]ass use for circumstances not included in figures

17 to 20 can be estimated using these equations, which

assume that no glass is recycled.

Gross glass use [tons) [15.!J x [nonreturnable glass market

to deliver 1 million ounces = share)] + [26.6 x ( 1 – return r-ate)

of heer x (refillable market share)]

Gross glass usc [tons) [19.5 x (nonreturnable glass market

10 rfeliver 1 million oonres = share)] + [31.2 x ( 1 – return rate)

of soft drink x (refillable market share)]
198 w Materials and Energy From Municipal Waste

Table 66.—1977 Container Market Shares and Return Rates

Beverage Container type Market sharea Ret urn/recycle rateb

Beer . . . . . . . . . . . . . . . . . Refillable glass 13 0.92 (12.5 trips)

Nonreturnable glass 27 —

Steel 19 0.10

Aluminum 41 0.25

Soft drink. . . . . . . . . . . . . Refillable glass 40 0.90 (10 trips)

Nonreturnable glass 22 —

Steel 27 0.10

Aluminum 11 0.25

apercent by by volume of all packaged beverages sold Source Industry data (71 .72.73)

bOTA estimates based on GAO (41) and RTI (39)

Table 67.—Gross Materials Required to Deliver 1 Million Ounces of Beverage

in Each Type of Container

Container type Material

Refillable glass. . . . . . . . . . . Glass

Steel crowns

Nonreturnable glass . . . . . . Glass

Steel crowns

Steel can (3 piece) . . . . . . . . Steel

Aluminum lids

Aluminum can . . . . . . . . . . . Aluminum

Basis Table 64 Assumes recycle and return rates of zero.

Summary of Previous Findings on Energy

Use By Container Type.—In the study done

by the Wharton School for USBA, the findings

of several studies on energy use for various

container types were conveniently summarized in a figure reproduced here as figure

21. Each of the studies has included energy

required for material production, for container fabrication, for washing, for all forms

of transportation and delivery including truck

fuel, for heating and cooling of storage space

including consumer refrigeration, and energy

required for recycling or reuse. Such total

energy analyses necessitate the synthesis of

data from many sources and are always subject to considerable error. Nevertheless,

figure 21 suggests that most authors are in

reasonable agreement on the basic facts of

beverage container energy use per unit of

beverage delivered.

Gross materials required (tons)

Beer Soft drinks

26.6

0.2

15.9

0.2

4.04

0.46

1.84

12 oz.) 31.2 (16 OZ.)

0.15

12 oz.) 19.5 (16 OZ.)

0.15

4.04

0.46

1.84

Return Rates and Energy Use: An Illustration.—The energy required to deliver 1 million ounces for each container type can be

conveniently divided into two portions: one

portion is fixed, independent of return or

recycle rate; the other declines as return or

recycle rate increases. The fixed portion

represents the energy that must be used in

every filling for container washing, filling

operations, warehousing, shipping, and retailing and storage, as well as the energy

used in transportation, reuse, and recycling.

For refillable bottles, the variable portion

represents the energy required to produce a

bottle, distributed over all its trips or fillings.

For a nonreturnable bottle or can, the variable portion is the energy required to produce

a bottle or can, taking into account that the

average energy used decreases as the recycle

rate for its materials increases. Even if a con-
Ch. 9—Beverage Container Deposit Legislation ● 199

Figure 14.—Steel Required to Deliver a Total of 1

Million Ounces of Beer or Soft Drink Without

Recycle for Various Market Shares for All Cans

n

and Aluminum Cans

(a) 1

.

Aluminum can

markat share

\

. 0

“o .2 .4 .6 .8 1.0

Can market share

Figure 15.— Aluminum Required to Deliver a Total of

1 Million Ounces of Beer or Soft Drink Without

Recycle for Various Market Shares for All Cans and

Steel Cans

2 ) 1

I

(b) I

1 1 1 I !

.2 .4 .6 .8 1.0

Can market share

tainer were reused or recycled an indefinitely large number of times, total energy use per

fill could never drop below the fixed value required in each cycle.

The following equation expresses the relationship of the energy use to the return rate

for beverages in returnable containers:

‘[useperfill ]

+ [

Total energv – Fixed energy

use per fill ‘:e%%%e

l x [’-::::rnl

Figure 16.— Impact of Can Recycle Rate on Metal

Consumption for Beverage Containers. Recycle Rate

for Aluminum is Limited to 87 Percent bv Metal

Losses in Recycling Operation -

1.0

“o 1.0

Can recycle rate

The equation shows that as the return rate

approaches 1.0 or 100 percent, the contribution to total energy use of the energy to make

a container approaches zero. For a glass

refillable bottle, the energy to make a container is typically three times as great as the

fixed energy use per fill. Figure 22 shows how

the total energy use per fill decreases with

return rate, if the fixed energy is 1 unit and

the energy to make a container is 3 units.

Figure 22 can be used to help establish a

rough relationship between energy use in refillable and nonreturnable bottles. According

to table 64, a typical nonreturnable bottle

weighs approximately 60 percent as much as

a typical refillable. It is reasonable to assume

that the energy to make a container is directly

proportional to the weight of a glass bottle,

and that for a nonreturnable it is therefore

about 60 percent of 3 units or 1.8 units. Furthermore, for a nonreturnable, fixed energy

use per fill is less than that for a refillable,

since return, storage, and transportation

energy uses are lower. It is reasonable to

assume that fixed energy use per fill would be

roughly 50 percent of that for a refiIIable, or

0.5 unit. Thus, total energy use per fill for a

nonreturnable might be roughly 1.8 + 0.5 or
200 . Materials and Energy From Municipal Waste

Figure 17.–Glass Required to Deliver a Total of 1

Million Ounces of Beer if the Can Market Share Is

Zero and No Glass Is Recycled

30

0

- o .2 .4 .6 .8 1.0

Return rate

2.3 units per fill. Comparison with figure 22

suggests that in this case refillable and nonreturnable bottles use the same amount of

energy if the return rate is as high as 56 percent (trippage = 2.3). For return rates higher

than 56 percent, refillables use less energy

than nonreturnables.

Return Rates and Energy Use: The Literature.—Several previous studies have calculated the return rates, or trippages, required

for energy use for refillable glass containers

to “break even” with nonreturnable glass.

These results are summarized in table 68. All

authors place the break-even trippage between 1.5 and 3.3. While trippages between

1.5 and 3.3 represent a significant range

(return rates from 33 to 70 percent), they

nevertheless fall below most projections of

return rates under a deposit system. Thus, an

all-refillable bottle system would use less

Figure 18.–Glass Required to Deliver a Total of 1

Million Ounces of Beer if the Nonreturnable Glass

Market Share Is Zero and No Glass Is Recycled

30

20

al

co

3

10

0

-o .2 .4 .6 .8 1.0

Return rate

energy than an all-nonreturnable bottle

system. *

The relative energy use for refillable glass

bottles and for nonreturnable, but recyclable,

aluminum and steel cans must also be considered. Less energy is required to produce a

new can from scrap metal than from virgin

ore even if the energy to return the used cans

is included. Thus, as recycle rates for cans increase, average energy use per new can declines. In addition, each type of can has different values of both fixed energy use and

energy to make a container. To make complete comparisons, therefore, total energy

use per ~ill for refillable bottles at various

*Recycling waste glass to make new bottles saves

only small amounts of energy. These studies have not

taken into account this route to new bottles.
Ch. 9—Beverage Container Deposit Legislation ● 201

Figure 19.—Glass Required to Deliver a Total of 1

Million Ounces of Soft Drinks in a Mix of Refillable

and Nonreturnable Bottles if the Can Market Share Is

Zero and No Glass Is Recycled

M

\ \

~ “

share )

“o .2 .4 .6 .8 1.0

Return rate

return rates must be compared with that for

cans at various recycle rates. Since soft drink

bottles typically contain 16 ounces while cans

contain 12 ounces, the comparison can be

more usefully displayed in terms of total

energy use per ounce of beverage rather than

total energy use per fill.

Several studies have reported the dependence of total energy use on return and recycle

rates. These results are displayed together

for comparison in figure 23 through 25. For

each beer container, the Midwest Research

Institute (MRI) estimates are the highest. The

GAO estimates are consistently lower because they are based on RTI’s projections to

1985, when it is assumed container technology will be improved. The RTI and GAO projections for recycled cans in 1985 differ

Figure 20.—Glass Required to Deliver a Total of 1

Million Ounces of Soft Drinks in a Mix of Refillable

Bottles and Cans if the Nonreturnable Glass Market

30

)

)

10

n

Share Is Zero and No Glass Is Recycled

“ o .2 ,4 .6 .8 1.0

Return rate

somewhat because of GAO’s treatment of a

technical point in recycling. *

Figures 23 through 25 can be used to identify energy tradeoff points between pairs of

containers, for each study. Table 69 shows

the can recycle rates that would have to be

achieved if total energy use per fill were to be

lower than that for refillable bottles, at each

of three bottle return rates. Table 69 means

that generally aluminum-can recycle rates

must be 10 to 20 percent higher than bottle

return rates if cans are to use less energy

than returnable bottles. Steel cans are

unable to compete with glass refillables on an

*GAO assumed that an 80-percent recycle rate

would translate to the production of only 70 percent of

new cans from scrap due to scrap loss on remelting.

45-786-79-01 4
202 . Materials and Energy From Municipal Waste

Figure 21 .—Comparison of Total Energy Requirements by Container for Off-Premise Package Beer

as Presented by Various Investigations*

Refillable glass container

(bottle trippage

Bimetal 3-piece can

Bimetal 2-piece can

Aluminum can

Glass nonrefillable

Plastic coated glass

Plastic

Paper-wood product cans

(can manufacture only)

l

.All containers are 12 fl oz capacity

SOURCE Wharton School (74)
Ch. 9—Beverage Container Deposit Legislation “ 203

Figure 22.— Dependence of Total Energy Use Per Fill

on Container Return Rate

(schematic illustration)

A

8CUI

Figure 23.—Total Energy Use for Beverage Delivery

in 12-Ounce Aluminum (—) and Steel ( –––) Cans

in Years Noted

IOoo [ f

I

I

I

I

i

:

o’ 1 I 1 I t I I 1 1

0 50 100

Return rate (percent)

Table 68.— “Break-Even” Return Rates and

Trippages for Equal Energy Use in Refillable vs.

Nonreturnable Bottles

——

Breakeven point

Return

rate (

0

/0)

60

33

50

70

62

35

50

56

Trip page

-—

2.5

1.5

2

3.3

2.5

1.5

2

2.3

Source

Beverage

type

GAO (75)

RTI (76)

RTI (76)

DOC (77)

Wharton (78)

Wharton (78)

Han non (63)

i I I ustration

on page 199

—

soft drink

beer

beer

soft drink

soft drink

—

SOURCE Office of Technology Assessment

—

energy basis if bottle return rates exceed 65

percent (or 70 percent for soft drinks according to the Battelle study).

Total Energy Use in the Beverage Delivery

System.—Using the background data on perunit energy use described above, along with

projections of beverage consumption, market

shares, and return and recycle rates; seven

of the BCDL studies estimated current energy

use for beverage delivery and/or projected

future use with and without deposit legislation. The various estimates and projections

are compared in this section.

200

BATTELLE (81)

Beer/S.D. 1976 BATTELLE (81)

1 Steel beer/S.D. 1976

WHARTON (78)

Soft drink 1974

----- -

-. -

RTI ‘t2 OZ.

- Steel 1975(76) RTI (76)

1985 GAO (80)

1985

0

I I I 1

0 0.2 0.4 0.6 0.8 1.0

Recycle rate

Figure 24.—Total Energy Use for Beverage Delivery

in 12.Ounce Refillable Bottles for Beer

1000

BATTELLE (81)

1976

:600

j

>m

5400

c

a )

200

o ~ o 0.2 0.4 0.6 0.8 1.0

Return rate

All these systemwide energy use calculations attempt to include all energy used for

beverage delivery, including materials production, container production, washing, filling, transportation, wholesaling, retailing,

and return and recycling. The energy con-
204 . Materials and Energy From Municipal Waste

Figure 25.—Total Energy Use for Beverage Delivery

in 16-Ounce Refillable Soft Drink Bottles

Table 69.-Typical Tradeoffs of Total Energy Use

Between Refillable Bottles and Recyclable Cans

Using 1974-76 Technology

100a

800

n

-o 0.2 0.4 0.6 0.8 1.0

Return rate

sumed by workers and their families in their

nonworking life, the energy used by consumers who make special trips from home to

retail store to return containers, and the

energy consumed by alternative consumer

purchases with money saved by buying lower

priced beverages (the so-called “re-spending” effect, see page 205), are all specifically

excluded.

Table 70 summarizes the findings of seven

studies of system energy use under BCDL for

various scenarios. The scenarios of the Commerce Department, Hannon, and the Wharton School all assume that only refillable bottles are used. The return rates used range

from 80 to 90 percent in these three studies.

The EPA, RTI, GAO, and RCC scenarios

feature mixes of cans and bottles at various

market shares.

The most significant feature of table 70 is

the general agreement regarding potential

energy savings under a deposit system. The

estimates range from 21- to 61-percent savings, clustering around 40-percent savings.

The high estimates of 56- and 61- percent savings by the Wharton School and the ComBottle Can rec cle rate for

ret urn equal nergy use J

Study rate ‘Aluminum Steel

.——— —

Beer

RTI (64) . . . . . . . . . . . .

Wharton (66). . . . . . . .

MRI (79). . . . . . . . . . . .

Battelle (81) . . . . . . . .

RTI (64) . . . . . . . . . . . .

Wharton (66). . . . . . . .

MRI (79). ... , . . . . . . .

Battelle (81) . . . . . . . .

RTI (64) . . . . . . . . . . . .

Wharton (66). . . . . . . .

MRI (79). . . . . . . . . . . .

Battelle (81) . . . . . . . .

Soft drink

RTI (64) . . . . . . . . . . . .

Wharton (66). . . . . . . .

Battelle (81) . . . . . . . .

RTI (64) . . . . . . . . . . . .

Wharton (66). . . . . . . .

Battelle (81) . . . . . . . .

RTI (64) . . . . . . . . . . . .

Wharton (66). . . . . . . .

Battelle (81) . . . . . . . .

Toy .

70°/ 0

i ’ O

O

/ o

70”A

800/0

80%

800/0

80Y0

90%

90Y 0

900/0

90?’fo

70940

700/o

700/0

800/0

80Y0

80Y0

9o”A

90Y0

90~o

80%

72%

!?i4°/o

580/0

920/o

89%

65Y0

85%

100!40

100?40

750/0

non e

89Y0

none*

900/0

100 ”/0

none *

none ●

none ●

none ●

none ●

none ●

—

—

any* ●

none*

—

—

none ●

none ●

—

—

none ●

none ●

—

none*

none*

—

none ●

none ●

—

none ●

“Total energy use for cans at all recycle rates is higher than that for refillable

bottles at this return rate

“ .Total energy use for cans at any recycle rate is less than that for refillable

bottles at this or lower return rates

merce Department reflect the assumption

that a highly efficient, all-glass refillable

system would result from BCDL. The lowest

estimate of 21-percent savings by RCC reflects a scenario based on the retention of significant market shares for cans and nonreturnable bottles, and on low estimates of

return and recycle rates.

The various studies use different baseline

time periods and different baseline values for

beverage consumption, market shares, and

returrdrecycle rates. Thus, one cannot meaningfully compare the future baseline energy

requirements nor the absolute levels of energy use under a deposit law. The estimates for

1975 energy consumption are a more meaningful basis for comparing the various

studies, since they are founded on actual industry data or on 1- or 2-year extrapolations
—

Ch. 9—Beverage Container Deposit Legislation ● 205

Table 70.—Total System Energy Use for Beverage Delivery: Literature Estimates of Deposit Impact Under

-——- —

Source

Commerce Dept. (82) . . .

EPA (70) . . . . . . . . . . . . . .

GAO (83) . . . . . . . . . . . . .

Hannon (63). . . . . . . . . . .

RTI (84). . . . . . . . . . . . . . .

Resource Conservation

Committee (85) . . . . . .

Wharton School (86). . . .

—— a see table 63 for scenario details

-.

1975 energy

use (1012 Btu)

4 6 1

461

465

—

—

—

358

358

—

—

—

—

Year

?

1980

1985

1985

1980

1982

1982

1985

1985

1974

1974

Various Scenarios

“ 7

—

—

Future energy use

No deposit

law baseline

energy use

(10’2 Btu)

461

461

585

363

363

—

383

383

334

334

407

407

—.

7

Energy savings under

deposit law

(10’2 Btu)

280

181

245

116

155

—

168

144

1 ; :

147

226

1

(“/0 of

baseline) Scenarios

61 90 0/0 RR: all refillables

39 80 40 RR: all refillables

42 90% ret. & recyc. rates:

all refillables

32 Mix I

43 Mix II

40 80°/0 RR: all refillables

44 Scenario 1

38 Scenario 2

21 Mix I

39 Mix II

36 87°/0 RR: all export refills.

56 87°/0 RR: all stuby refills.

from such data. The Wharton estimate can be to 0.36 percent of national energy demand, or

included in this group because it is based on

actual 1974 statistics. The differences among

the studies of the total energy use by the

beverage delivery system in 1974/1975 arise

from the different estimates of energy used

per unit of beverage delivered.

The impact of BCDL on national energy demand can be approximated using the data in

table 70. The average of the estimates for

energy use by the beverage delivery system in

1975 is 425 trillion Btu (including Wharton’s

1974 estimate escalated to 1975 by 3 percent). This is about 0.60 percent of the total

national energy use in that year. The studies

suggest that 40 percent of the energy used by

the beverage delivery system would be saved

under BCDL. In 1975, this savings would have

been 170 trillion Btu or 0.24 percent of the

total national energy use. For perspective,

170 trillion Btu per year is equivalent to

80,000 barrels per day (bpd) of petroleum or

to the output of ten 1,000-MWe electric powerplants, or to about one-eighth of the energy

supply potential of the Nation’s MSW. (See

chapter 5.) However, the energy savings estimates range from 20 to 61 percent. This

range translates to an overall savings of O.12

to the equivalent of 40,000 to 120,000 bpd of

petroleum.

Types of Energy Saved Under BCDL.—

Changes in energy use would differ for various fuel types under BCDL; in fact, use of

some forms of energy might actually increase

if there were a strong shift from nonreturnables to refillables. Fuel use by source for

each type of container has been examined by

RTI,(87) Wharton, and Battelle.(81)

RTI estimated that in 1975 the actual beverage delivery system was based on oil (37

percent); coal (29 percent); natural gas (26

percent); and nuclear, hydropower, and wood

wastes (8 percent). RTI did not attempt to project the future distribution of energy use by

fuel type due to the uncertain nature of future

energy markets. However, from data presented on page 27 of the RTI report, the conclusion can be drawn that compared with a

lo-trip refillable bottle more natural gas and

more coal are used to produce nonreturnable

bottles and aluminum and steel cans. Nonreturnable bottles and aluminum cans also require more oil, while bi-metal steel cans require less oil than refillable beer bottles, but
206 . Materials and Energy From Municipal Waste

more than 16-ounce refillable soft drink bottles at 10 trips. Thus, according to RTI a shift

toward a lo-trip refillable system would reduce the use of coal and natural gas, but

would have a small effect on oil use, which

could go up or down.

Battelle’s estimates of the shifts in energy

use by fuel type are based on _ete replacement of all cans used in 1~76 with refillable glass bottles that achieve trippages of 4

for off-premise consumption of beer and 10

for soft drinks. (Beverage sales in nonreturnable bottles were assumed to be unchanged.)

For this shift, Battelle estimated total energy

savings of 67 trillion Btu per year but an increase in oil consumption of 11 trillion Btu,

[~quivalent to about 5,000 bpd].(90) However,

Battel!e’s estimates of energy use are among

the lowest for cans and the highest for refillable bottles. (See figures 23 to 25. ) Thus, their

estimates of fuel shifts may overstate the increase in oil use.

Wharton estimated fuel-specific energy

shifts for complete conversion of all beverage

containers to refillables in 1974.(88) For a

system of 8-trip refillables for both beer and

soft drinks, (an optimistic trippage level) they

estimated savings in all forms of energy, including oil. For a system of 3-trip refillables (a

pessimistic trippage level) they projected savings in all forms of fuel except oil, for which

increases in use ranged from 5 to 26 trillion

Btu per year (i.e., 2,000 to 12,000 bpd), and

natural gas, for which a small increase might

occur under a doubly pessimistic outcome,

These three studies together suggest that

energy use would decrease under BCDL for

each fuel form, with the possible exception of

oil. For the case of oil, some of the estimates

also suggest a savings. However, Wharton’s

pessimistic 3-trip scenario shows an increase

in oil use, as does Battelle’s study. In view of

these findings, as well as the current emphasis on fuel switching toward coal in industry and electric power generation, and of

the current trend toward more energy efficient transportation vehicles and appliances,

the future consumption of energy by fuel type

remains clouded at best. The available estimates do not suggest a heavy increase in oil

use under BCDL, even though increased fuel

use for delivery trucks is included.

Limitations of the Energy Impact Analyses.—Two limitations must be attached to

the energy savings estimates presented

above. First, the uncertainty in the potential

for energy savings of deposit legislation is

large. It is unlikely that further modeling efforts can reduce this uncertainty significantly due to the unpredictable nature of the system response in terms of beverage sales,

market shares, and recycle/return rates.

However, every study has found that energy

use in the beverage delivery system would decrease under a deposit system.

Second, reduced consumer expenditures

under a deposit system might actually increase total national energy consumption.

This might take place if beverage prices

decline under a deposit law. Then consumers

would have additional disposable income that

might be spent on goods and services having a

higher energy intensity per dollar than beverage containers. Suppose, for example, that

average beverage prices were to decline by I

cent per 12-ounce container under a deposit

law and that 40 percent of the energy use

were saved on average, or about 150 Btu per

ounce. The marginal energy savings would

then be 12 ounces multiplied by 150 Btu per

ounce and divided by 1 cent, or 180,000 Btu

per dollar. If prices were to decline by 2.5

cents, the marginal energy savings would be

72,000 Btu per dollar. The average energy intensity of consumer expenditures has been

estimated to be about 68,500 Btu per dollar.

(91) Thus, if prices decline by as much as 2.5

cents per 12-ounce container and if that 2.5

cents is spent on average personal expenditures, the energy savings from a deposit

system might be eliminated. Smaller price

decreases than this, however, would not

eliminate the energy savings. Of course, if

prices of beverages do decline under BCDL,

consumers would gain the benefit of greater

disposable income. Furthermore, the very

idea that beverage prices will decline under a
Ch. 9—Beverage Container Deposit Legislation ● 207

deposit system has been challenged by its opponents. (See page 221.)

Summary of Energy Impacts.—There is

broad agreement in all major studies on the

amount of energy used to deliver soft drinks

and beer. Furthermore, most studies agree on

the break-even point for trippage or return

rates required in order that refillable bottles

use less energy than nonreturnables: generally 1.5 to 3.3 trips. All of these estimates of

break-even trippage are on the low side of expectations for BCDL. Similarly, most studies

agree that aluminum cans must achieve recycle rates that are 10 to 20 percent higher

than bottle return rates in order to break

even on an energy basis. Most studies find

steel cans unable to compete with refillable

bottles on an energy basis at any recycle rate,

if bottle return rates are 70 percent or

higher.

Seven major studies of BCDL estimate energy savings of 20 to 60 percent, clustered

around 40 percent of total system use, or

about 170 trillion Btu per year. This is

equivalent to 0.24 percent of the total national energy use, or to 80,000 bpd of oil, or to

the output of ten 1,000-MWe powerplants, or

to the fuel content of one-eighth of the Nation’s MSW. The uncertainty in this number

is large—it might lie in the range of 20 to as

much as 61-percent savings; i.e., from the

equivalent of 40,000 to 120,000 bpd of oil.

Most estimates suggest that all forms of

fuel would be saved under BCDL, but some

studies suggest a small increase in oil use. In

no case are large increases in oil use expected, even including truck fuel.

If consumer prices of beverages under

BCDL drop by 2.5 cents or more per container, the energy saved by BCDL might be

offset by increased consumer expenditures

for other purposes. Smaller price decreases

would offset only a part of the energy savings.

Finally, all studies project a decrease in

energy use for beverage delivery under

BCDL. It is unlikely that further analyses or

additional studies of experiences in States

having BCDL can reduce the uncertainties in

these estimates.

Solid Waste Reduction

BCDL would affect the generation rate and

the composition of solid waste by changing

the amounts of container and secondary

packaging materials that are discarded.

Eventually, nearly all beverage container

materials are discarded as solid waste or as

permanent litter. A portion of these discards

are recycled into new products. Other parts,

especially refillable bottles retired by bottlers and brewers, become industrial waste

that is not included in the MSW total, but that

may be recycled into new bottles.

In this section, various literature estimates

of the impact of BCDL on solid wastes are

summarized and compared. In addition, detailed estimates are made of the impact of

BCDL on MSW composition and amount

under five scenarios that describe possible

outcomes of BCDL. These estimates serve as

a basis for evaluation of the literature estimates, and as a basis for assessing the interaction of BCDL with source separation and

centralized resource recovery.

BEVERAGE CONTAINERS AND TOTAL SOLID

WASTE: THE LITERATURE

Table 71 summarizes available estimates

from the literature of the impacts of BCDL on

the rate of solid waste generation. Estimates

of reductions in total MSW due to BCDL

range from 1 to 5 percent by weight. Estimates of reductions in weight of beverage

container material discards range from 24 to

78 percent. As is the case with estimates of

energy use, most authors caution that they

present scenarios, rather than predictions of

the most likely outcomes.

By any reasonable standard, a reduction of

total solid waste tonnage by 1 to 5 percent

can be considered as small, but not insignificant. In the near term, this tonnage reduction

would be unlikely to reduce the cost of waste

collection. However, disposal costs are more

likely to be reduced in direct proportion to the
208 ● Materials and Energy From Municipal Waste

Source

Commerce Dept. (92).

EPA (70) . . . . . . . . . . . .

GAO (93) . . . . . . . . . . . .

RTI (94) total. . . . . . . . .

glass. . . . . . . . . . . . .

steel . . . . . . . . . . . . .

aluminum. . . . . . . . .

Resource Conservation

Committee (95). . . . .

Table 71 .—Beverage Containers in Solid Waste: Literature Estimates

Year

?

1975

1980

1985

1985

1982

1982

1982

1982

1985

1985

Beverage containers in solid waste

(million tons) Percent by weight Percent reduction

of MSW due to BCDL

No

BCDL

8.8

10.6

10.5

10.5

9.4

(6.87)

(1.93)

(0.56)

6.3

6.3

With No With Container

BCDL BCDL BCDL materials

(Reduction of 4.8 million tons with deposits)

—

3.4

2.3

3.2

(::;7)

(0.13)

(0.04)

4.8

3.1

—

6

5.2

5.2

(::;)

(1.2)

(0.3)

3.8

3.8

—

2

1.1

1.6

2.6

(2.6)

(0.1)

(0.02)

2.9

1.9

—

69

78

70

(::)

(93)

(93)

24

51

Total

MSW

—

5

4

3.6

3.2

(1 .6)

(1.1)

(0.3)

1

2

—.—-—. —————— .

Comments

$X)70 RR:all refill.

—

90°/0 RR:all refill.

Mix I

Mix II

Scenario I

Scenario I

Scenario I

Scenario I

Mix I

Mix II

SOURCE: Office of Technology Assessment

reduction in waste load. At $6 per ton for dis- waste depend markedly on market shares

posal, a 4-percent reduction in the 135 million

tons of MSW generated nationwide each year

would represent a savings of $32 million annually in disposal costs. At a typical cost of

$30 per ton for both collection and disposal of

MSW, the maximum savings would be $160

million per year. This estimate does not depend on whether collection is done by municipal employees or by private firms.

IMPACT OF MANDATORY DEPOSITS ON

WASTE COMPOSITION

BCDL would change not only the amount

but also the composition of MSW because the

discard rates for glass, steel, and aluminum

would be altered. This alteration in composition might cause the potential revenues from

the recovery of materials from waste by

either source separation or centralized

resource recovery to change. This section

presents estimates of the range of composition changes that might be expected on a nationwide basis.

This analysis has four important limitations. First, the content of glass, steel, and

aluminum in MSW varies widely from place

to place, so nationwide estimates may be inadequate for evaluating local effects. Second,

beverage container contributions to solid

and return rates, even within reasonable

ranges of expectations for the future. Third,

technologies for separating out marketable

aluminum and glass in centralized resource

recovery are still developmental at best, and

the economics of separate collection of cans

and glass are often marginal. For these reasons, it is optimistic to attribute any net revenues to the recovery of container materials,

other than steel from resource recovery.

Finally, as a first approximation, it is assumed in this analysis that all materials used

to produce beverage containers eventually

become solid waste discards that are either

recycled or disposed of. This assumption

overstates the content of each material in

solid waste by a small, unknown amount,

since it includes containers that are littered

or otherwise lost from the system.

In this analysis the impact of BCDL on

waste composition is examined as if such

legislation had been in effect in 1975. Noncontainer waste materials (both “gross discards” and “net disposed of”) are assumed to

be the same as those reported by EPA for

1975 as shown in table 72. Beverage sales in

individual containers in 1975 are assumed to

be unchanged by the deposit law. They are

594 billion ounces of soft drinks and 517 bil-
Ch. 9—Beverage Container Deposit Legislation ● 209

Table 72.—Non.Beverage Container Contents

of MSW in 1975

(million tons)

——

Gross Net waste

Material discards disposed of

Paper. . . . . . . . . . . . . . . . . . . 44.1 37.2

Glass* . . . . . . . . . . . . . . . . . . 7.4 7.2

Ferrous metals* . . . . . . . . . . 10.0 9.5

Aluminum* . . . . . . . . . . . . . . 0.5 0.5

Other metal. . . . . . . . . . . . . . 0.4 0.4

Product organics . . . . . . . . . 14.9 14.7

Food and yard waste . . . . . . 48.8 48.8

Misc. inorganic. . . . . . . . . . 1.9 1.9

Total . . . . . . . . . . . . . . . 128.0 120.2

——

‘Does not-lnlcude beverage container portion of these materials

.

SOURCE Adapted from EPA data (96)

lion ounces of beer. (71,72) Individual container weights are those given in table 67.

(The container portion of MSW calculated in

the following paragraphs is different from

the values reported by EPA.(96))

Several scenarios are examined to illustrate how the effects of deposit legislation depend on return rates and market shares.

These include a baseline case with no BCDL

and four scenarios with BCDL in effect. The

scenarios are described in table 73. Scenario

I is the baseline, designed to represent the actual situation in 1975. Scenarios II and HI,

based on an all-refillable glass system, are

designed to show the effects of the complete

disappearance of aluminum and steel beverage containers. For these two scenarios,

glass waste is estimated for both 80- and 90-

percent return rates. Scenarios IV and V illustrate high and low market shares for cans.

Under the high can share of Scenario IV it is

further assumed that the remaining refillable

bottle purchasers will be more consistent

returners (RR = 90 percent) than they would

be under the low can share situation (RR =

80 percent). In either case, under the deposit

system, can recycle rates are assumed to be

10 percent lower than bottle return rates to

account for material losses in the recycling

process and for the expected tendency of can

customers to make fewer returns.

Using the assumptions of the five scenarios, the beverage sales estimates, and the

methods and data of pages 194 and 195, the

gross discards and net disposal rates for

glass, steel, and aluminum containers were

calculated. These results are presented in

table 74. The calculated percentage decreases in beverage container materials in

MSW are in general agreement with the literature scenarios in table 73.

The composition of MSW under each of the

scenarios was also estimated. These results

are presented in table 75 for the “net disposed of” situation, since it is more likely to

be representative of the composition of curbside MSW than is “gross discards. ”

For the five scenarios, BCDL is estimated

to remove at most ST percent of the aluminum, 11 percent of the ferrous metal, and 36

percent of the glass, although not all three at

the same time. The impact on ferrous metal

content is small because only about 11 percent of all the ferrous metal in MSW comes

from beverage cans. The glass and aluminum

percentages are larger because beverage

containers make up about 47 percent of all

the glass and 40 percent of all the aluminum

in MSW. In Scenario II, for an all-refillables

system with an 80-percent return rate, the

glass content of waste increases by about 2

percent. For an all glass refillables system

with a 70-percent return rate, glass content

of waste would rise by 25 percent to 17 million tons. However, this low return rate is less

likely than the 80 or 90 percent used in Scenarios IV and V.

The impacts of the change in waste composition on both source separation and resource recovery depend on projections of the

efficiencies of materials recovery and on net

unit revenues from materials sales. These impacts are addressed in detail in chapter A for

source separation and in chapter 6 for resource recovery, based on the scenarios in

table 75. It is estimated in these chapters that

successful BCDL might cause a revenue loss

of 4 to 5 percent for a resource recovery

plant optimized before the legislation takes

effect, and a maximum revenue loss of 25

percent for a residential source separation

program.
—

210 ● Materials and Energy From Municipal Waste

Table 73.—OTA Scenarios for Estimation of the Impact of Deposits on Solid Waste Composition in 1975

—

Market shares Returnlrecycle rates

Scenario Scenario

II -

0

-

0

100

0

0

0

100

0

Ill

0

0

100

0

0

0

100

0 .

Iv ‘–v

30 lo –

40 20

30 70

0 0

30 10

20 20

50 70

0 0

II -

—

—

0,80 —

—

—

0.80 —

Ill ——

0.90 —

—

—

0.90 —

-.

‘Iv

0.80

0.80

0.90

—

0.80

0.80

0.90

—

v

0.70

0.70

0.80 —

0.70

0.70

0.80 —

I

28

32

16

24

27

5

47

21

——

I

0.10

0.25

0.927

0

0.10

0.25

0.905

0

Beverage

Beer . . . . . . . . . . . . .

Container type

Steel. . . . . . . . . . . . . . . . .

Aluminum . . . . . . . . . . . .

Refillable glass. . . . . . . .

Nonreturnable glass. . . .

Steel. . . . . . . . . . . . . . . . .

Aluminum . . . . . . . . . . . .

Refillable glass. . . . . . . .

Nonreturnable glass. . . .

0 deposit law

Soft drink . . . . . . . . .

Scenario I Baseline 1975.

Scenario II All refillable glass, 80-percent return rate

Scenario Ill All refillable glass, 90-percent return rate

Scenario IV High can market shares

Scenario V Low can market shares

Table 74.—Beverage Containers in MSW Under Five Scenarios in 1975

(million tons)

–- . —

Gross discards a

— - 1 ——.

Net disposed of b

. — . —

Scenario L — Scenario

–

6.33

0.46

—1.28.

8.07

—

.; .,.._ _

Ill Iv

‘1 .35

0.69

1.33

3.37

58

II -

6.46

0

0

6.46-

17

Ill

3.23-

0

0

– 3.23

59

—.

Material

Glass. . . . . . . . . . . . . . . . . . . . .

Aluminum. . . . . . . . . . . . . . . . . .

Steel . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . .

v I

‘6.33

0.33

1.15

7.81

Iv I v

t

.— . —

6.46 ] 3.23 4.52 1.35 4.52

0.42

0.44

0 1 0 0.13 I 0.12

o 0

6.46- – 1 2 3

20 60

0.27 I 0.13

-— +– — 5.38 1.75 4.77

Percent drop in total from

scenario I . . . . . . . . . . . . . . . .

.

78 39

a No recycle of used glass, aluminum, ors beverage containers

b includes recycle of aluminum and steel cans at the rastes shown in table 73

Table 75.–Composition of MSW in 1975 Under Five Scenarios [“Net Waste Disposed Of”]

Amount (million tons) Weight percent

Scenario- Scenari o

Material I II Ill Iv v I II Ill Iv v

Paper. . . . . . . . . . . . . . . . . . . . . 37.2 n.c. ● n.c. n.c. n.c. 29.0-

29.4 30,1 30.5 29.8

Glass. . . . . . . . . . . . . . . . . . . ~ . 13.5 13.7 10.4 8.6 11.7 10.5 10.8 8.4 7.0 9.4

Ferrous metal . . . . . . . . . . . . . . 10.7 9.5 9.5 9.8 9.6 8.4 7.5 7.7 8.0 7.7

Aluminum. ., . . . . . . . . . . . . . . . 0.8 0.5 0.5 0.6 0.6 0.6 0.4 0.4 0.5 0.5

Other metal . . . . . . . . . . . . . . . . 0.4 n.c. n.c. n.c. n.c. 0.3 0.3 0.3 0.3 0.3

Product organics. . . . . . . . . . . . 14.7 n .c. n.c. n.c. n.c. 11.5 11.6 11.9 12.0 11.8

Food and yard waste. . . . . . . . . 48.8 n.c. n.c. n.c. n.c. 38.1 38.5 39.5 40.0 39.1

Misc. inorganic . . . . . . . . . . . . 1.9 n.c. n.c. n.c. n.c. 1.5 1.5 1.5 1.6 1.5

Total* ● . . . . . . . . . . . . . . . . 128.0 126.7 123,4 122.0 124.9 99.9 100.0 99.8 99.9 100.1

Basis: Tables 72 and 74.

● No change

 “Total percents do not add to 1000 due to rounding
Ch. 9—Beverage Container Deposit Legislation ● 211

BCDL AS A SYMBOL OF CONSERVATION

The fourth objective of BCDL supporters is

to establish such a law as a symbol of natural

resource conservation. The importance of

working towards or achieving such a symbol

cannot be judged objectively. Because the deposit law issue has been argued so widely at

local, State, and national levels, many citizens and decisionmakers have taken strong

positions pro and con.

By any objective measure of materials and

energy conservation, the attention given

BCDL has outweighed its potential for resource savings compared with other conservation approaches. Such measures as auto

gasoline mileage standards, appliance performance labeling, and thermal performance

standards for buildings can save more

energy. By leading to reduced auto weight,

auto mileage standards can also save more

materials than can BCDL.

The symbolic importance of BCDL as a conservation measure has two identifiable subjective bases. Litter is the first of these;

beverage containers make a uniquely visible

and hazardous contribution to litter. The second is that to some people beer or soft drinks

are unnecessary or undesirable products.

For them, not only do containers create litter

and waste resources, but they also symbolize

a waste of money and human resources as

well. Perhaps it is not surprising then, that

deposit laws have received so much attention.

It is, of course, understandable that BCDL

has strong opponents. If such legislation were

passed, various groups expect to lose profits,

income, or jobs. Reductions in the use of

materials and energy mean declines in the

outputs of various industries and thus job

losses in them, even as jobs would be gained

in beverage production and delivery. Costs of

beverage distribution would increase at the

wholesale and retail levels, and decline in

bottling and brewing. The uncertainties

about the extent and incidence of direct

economic losses and gains are perhaps as important as the losses and gains themselves.

Since no one has been able to demonstrate

conclusively whether shelf prices will go up

or down (see page 221), proponents and opponents emphasize decreases and increases

respectively in order to influence voter attitudes in referenda on BCDL. The following

section examines some of the impacts, losses,

and gains in detail.

Unintended Effects of BCDL:

Impacts, Issues, and Options

Introduction

I

t is widely recognized that BCDL may have

unintended impacts in addition to effects

on litter, energy, materials, and solid waste.

1n this section, a number of these impacts are

examined in order to assist in decisions about

whether the benefits of BCDL are worth the

costs, and in order to identify potential actions that might be taken if BCDL were

passed.

These impacts have several salient characteristics. First, since the purpose of BCDL is

in part to internalize some of the external

costs of container production and use, it

follows that some of the impacts are redistributive in character. 1n other words, in comparison with the situation without deposits,

some parties will be better off and some

worse off under BCDL. This is especially true

in the case of labor impacts—some new jobs

are created but others are lost.

Second, assessment of many of the impacts

is highly uncertain, either because their

determination requires making the same

somewhat arbitrary assumptions about system responses to BCDL that were made in assessing its effectiveness, or because the impacts are qualitative and predicting their

nature and degree is necessarily judgmental.

Third, the impacts are largely unintended;

that is, proponents of BCDL do not intend that

they should occur. Thus, proponents and opponents alike presumably have a strong interest in ameliorating those impacts that

adversely affect various groups. Because
212 ● Materials and Energy From Municipal Waste

BCDL represents a change in the rules of the

economic game, there is reason not to

penalize those whose gains under the old

rules may be threatened by the new ones. On

the other hand, the parameters of economic

life change frequently for many reasons. It is,

therefore, important to retain incentives in

the economic system to motivate people to

make effective adjustments to new conditions.

In the subsequent sections, impacts, issues,

and options are discussed in eight areas:

1. capital costs of production and delivery

of beverages,

2. employment and wages,

3. costs and prices,

4. beverage availability and consumption,

5. environment,

6. health and safety,

7. new technology, and

8. government

Existing analyses by various parties are

used, where available, as a basis for the

discussion. Quantitative predictions are compared with respect to assumptions and findings, following the approach used in the previous section on the effectiveness of BCDL.

Six major sources of such information are

studies by RTI,(64) the Wharton School,

the Department of Commerce (DOC),(60)

GA0,(62) EPA,(61) and RCC.(65)

Capital Costs of Beverage Delivery

under BCDL

INTRODUCTION

The delivery of beer or soft drinks in refillable bottles requires a greater capital investment than delivery of the same amounts of

beverage either in nonreturnable bottles or in

cans. This is true for several reasons: (i) canfilling lines are less expensive, more productive, and physically smaller than are bottlefilling lines, (ii) cans and, to a less extent, nonreturnable bottles are lighter and smaller

than refillables, and (iii) nonreturnables

avoid the costs of plant, equipment, and vehicles required for storing and returning used

containers.

Under BCDL, the expected shift toward refillables would thus require a greater capital

stock* than would have been required in the

absence of such a law. Calculation of this difference has proven to be conceptually and

practically difficult, as has its interpretation

in terms of additional annual investment and

production cost per fill. There is disagreement over the correct typical price of various

capital equipment and plant items such as

filling lines, bottle washers, storage space,

and delivery vehicles. Furthermore, the productivity of such plant and equipment is

treated differently by different authors. The

degree to which existing capital stock for

nonreturnables can be converted to use for

refillables has been disputed, as have the

costs of such conversions. In addition, it has

not been shown that firms in the relevant industries use minimum capital investment as a

strategic objective, so calculations based on

optimum utilization of capital may be unrealistic. Finally, there is disagreement over the

proper bounds on the industries and the items

to be included—some authors treat expenditures for refillable bottle inventory, or

“float,” as a capital cost, while others treat

float as a recurring expense. Some authors

include changes in the capital investment required for producing container materials and

for fabricating containers, while others do

not. In analyzing changes in the total costs of

beverage delivery under BCDL, ignoring the

capital requirements of the container and

material producers is equivalent to assuming

that the prices paid by brewers and bottlers

for containers would not be affected by

BCDL. Under any outcome of BCDL, the output and capital requirements of can producers would decline. Bottlemakers would

suffer a large decline in output and would

convert some capacity from making nonreturnables to making refillables.

*Capital stock is the undepreciated dollar value of

all the plant and equipment required to put in place the

capacity to deliver a given amount of products each

year.
— .

Ch. 9—Beverage Container Deposit Legislation ● 213

CAPITAL STOCK NEEDS PER UNIT

OF OUTPUT

RTI presented the data in table 76 on the

capital stock used by various industries and

subindustries in order to deliver I million

ounces per year of beer and soft drinks in

each of three container types.(gT) From table

76 it can be seen that refillable bottles require more capital stock for brewers, bottlers, distributors, and retailers. On the other

hand, container producers require more capital stock for nonreturnables since several

times more nonreturnable containers are

needed than refillables.

Industry sources have criticized RTI’s unit

capital requirements, but have not provided

equivalent data that could be presented

here. * In their review of RTI’s report for

USBA, R. S. Weinberg and Associates suggested that based on a survey of brewers,

$17.50 to $22.50 might be a reasonable

estimate of investment per annual barrel of

capacity needed to convert to delivering beer

in refillables. Twenty dollars per annual

barrel is equivalent to $5,040 per million

ounces per year, as compared with RTI’s

estimate of $5,422 per million ounces per

year required for brewers and wholesalers to

build new refillable capacity. Since it came

*The Wharton School study for USBA is based on

alternative cost data, but the presentation of the data

does not include an equivalent summary nor can it be

easily extracted from their report. The DOC and

RCC studies provide no such data, (60,65) GAO used the

RTI data,(62)

Table 76.—Capital Stock Required to Deliver 1 Million Ounces of Beverage

Per Year in 1982

Capital stock (1974 dollars)

Refillable Nonreturnable Metal

bottle bottle can

— system system system

Beer system

Brewers and wholesalers . . . . . . . . . . . . . . . . $5,422 $3,713 $2,974

Filling lines . . . . . . . . . . . . . . . . . . . . . . . . . . (1 ,519) (1,123) (774)

Production and distribution space. . . . . . . (2,210) (1 ,404) (1,162)

Distribution equipment . . . . . . . . . . . . . . . . (1,200) (848) (768)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (492) (338) (270)

Retailers* . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,325 — 495

Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . (87)

Space. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,238) (195)

Container producers . . . . . . . . . . . . . . . . . . . . 284 2,850 1,089

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,031 –

$6,563 $4,558

—

Soft drink system

Soft drink bottlers and canners . . . . . . . . . . . $5,827

Filling lines . . . . . . . . . . . . . . . . . . . . . . . . . . (2,679)

Distribution space . . . . . . . . . . . . . . . . . . . . (1 ,188)

Distribution equipment . . . . . . . . . . . . . . . . (1 ,200)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (760)

Retailers* . . . . . . . . . . . . . . . . . . . . . . . . . . 1,325

Equipment. . . . . . . . . . . . . . . . . . . . . (87)

Space. . . . . . ... , . . . . . . . . . . . . . . . . . . . . (1 ,238)

Container producers . . . . . . . . . . . . . . . . . . . . 596

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . !$7,748

$4,229 $2,774

(1,993) (940)

(836) (704)

(848) (768)

(552) (362)

— 495 —

. (195)

1,697 1,107

$5.92 6

- - “---- $4,376 -

“ Retail space and equipment required for handling returned containers

SOURCE RTI (97)
214 . Materials and Energy From Municipal Waste

from a survey of brewers who were asked

how much it would cost them to convert

under BCDL, there may be an upward bias in

Weinberg’s estimate.

CAPITAL IMPACTS OF BCDL

Four ways could be used to estimate the impact of BCDL on capital needs and costs in

the beverage delivery system. In each case,

the length of the transition period from the

passage of BCDL to full implementation is an

important parameter. With longer transition

periods there is more opportunity for firms to

replace or to decommission equipment as it

reaches the end of its useful life, rather than

prematurely.

An estimate of the lower bound on the capital costs of conversion to BCDL can be obtained by subtracting the total capital stock

required without BCDL to produce the industry output in some future year from that required with BCDL. The difference is the extra

capital investment required by BCDL. The

total capital stocks required for each of the

two cases are estimated by multiplying the

unit capital stock requirements in table 76 (or

their equivalent from another source) by the

total beverage consumption and by market

shares for each container type; followed by

summing up the requirements for the three

kinds of containers. The problem with this approach is that it assumes that all existing

capital can be converted or liquidated at no

cost. Since this is not the case, this method

gives capital impacts that are too low.

A better estimate of the capital costs of

conversion can be obtained by taking account

of the fact that not all of the capital stock that

would be used without BCDL can be converted for use with BCDL. For example, for

most scenarios, the market shares of cans

will decline under BCDL. Thus, some portion

of capital stock in can-filling equipment will

be retired from service early and be writtenoff as a loss, and it will have to be replaced

with bottle-filling equipment. This shift makes

the investment in new capital larger than the

first estimate.

A third approach to estimating the capital

costs of the transition to BCDL would be to

ask firms what costs they anticipate. Besides

the incentive for firms to overstate such costs

in order to emphasize the negative effects of

BCDL, it would be most difficult to obtain a

clear picture of the future scenarios implicit

in such estimates. The Wharton School used

this approach in cooperation with R. S. Weinberg and USBA.(99) Their task was simplified

by the stated assumption that all cans and

nonreturnable bottles would be banned under

the proposal they studied.

An even better estimate might be made by

taking into account the uncertainties that industrial managers would face during a transition to BCDL. Since they cannot foresee

with confidence what the market shares and

beverage sales will be under BCDL, managers

are unlikely to make perfect investment decisions. To ensure their ability to meet demands, they might overinvest in new equipment. On the other hand, in the face of an

uncertain future they may choose to underinvest, and to meet changed demands by operating with higher utilization of existing

refillable capacity until the nature of the new

sales pattern is clarified. Other factors that

might be taken into account include abnormal

increases in capital equipment prices in the

face of a surge of demand caused by BCDL,

as well as the possibility that less expensive

conversion technologies might be developed

to facilitate the transition. It is not clear

whether this improved estimate would be

higher or lower than any of the first three.

Table 77 presents a summary of estimates

of the capital cost impacts of BCDL from the

literature. This table also shows the length of

the transition period, the year the transition

would be completed, the method used for the

estimate, and indications of the scenarios

used.

The range of estimates in table 77 is so

wide as to preclude any suggestion that there

is a consensus. The Wharton School and Department of Commerce estimates are obviously too high for BCDL because they are based
Ch. 9—Beverage Container Deposit Legislation ● 215

Table 77.—Estimated Additional Capital Costs Due to BCDL: Literature Valuesa

Additional capital costs of BCDL (million dollars)

——— —

——

Transi- Year of

soft Estimating tion time cost esSource Total Beer drinks Other method (years) timates Scenariob

Deparment of 1,970-2,990 1,700-2,610 270-380 15-20f–

{

industry 3-4 1975 all refillables

Commerce (100). . – — 600-1,000’ — testimony — — —

EPA (101) . . . . . . . . . . 1,780d 1,235e 545’ — gross costs several 1975 800/0 refillables

1,915 254 272 1,376 early writeoffs several 1975 800/0 refillables

RTI (102). ... ... . . 824 604 897 -6769 lower bound 4 1974 Scenario I

2,006 1,067 1,314 – 3749 lower bound 4 1974 Scenario II

GAO (103) . . . . . . . . 818 342 476 – 5g9

{

adjusted 3 1974 Mix I

2,448 1,387 1,061 – 1139 lower bound 3 1974 Mix II

Wharton School (104) 3,500 2,252’ 1,248’ —

{

lower bound & 5 1971-73 Export bottle

3,165 1,952’ 1,213e — industry survey 5 1971-73 Stubby bottle

a All estimates exlude cost of assitional refillable Container inventory, or float

—

b

see table 63 for details of scenarios

c

lndustry critique of Department of Commerce estimate (100)

‘Includes “float “

eRetall costs divided equally between beer and soft drinks

‘Vending machines

gContalner producers

on a transition to an all-refillable bottle

system. On the other hand, the RTI and GAO*

estimates are too low since they are “lowerbound” values that overstate the degree to

which existing capita] can be converted to

different uses. More realistic estimates might

be derived from the RTI data by adding the

costs for the beer and soft drink industries

without subtracting the negative capital costs

they attributed to the decrease in output in

the container industries. This calculation

gives total costs of $1,501 million and $2,381

million for RTI’s Scenarios I and 11 respectively,

Table 77 suggests that the capital costs of

BCDL to brewers, bottlers, distributors, and

retailers might range from $2 to $3 billion,

distributed over 3 to 5 years. This implies an

annual rate of additional capital investment

due to BCDL of $0.4 to $1.0 billion per year.

By contrast, EPA reports that these industries were investing in new capital at the rate

of $0.4 to $0.6 billion per year during the

period I970-75.(1o1) Assuming that this rate

would have prevailed without deposit legisla-

*GAO did make some unspecified adjustments to account for limits on the conversion of existing equipment.(105)

tion, then as a rough estimate, BCDL might require a doubling of the rate of capital investment in these industries for a 3- to 5-year

period. Beyond the transition period, capital

costs per unit of output would continue to be

larger due to the higher investment per unit

required to support industry growth.

A further consideration related to capital

stock impacts is the cost of additional refillable container inventory, or float, necessary

to support the system under BCDL. Estimates

of the additional cost of float during the transition to BCDL range from $1.0 to $1.6 billion.

As GAO notes, however, this cost is very

much lower than the savings from not purchasing nonreturnables during the same

period.

The energy saved by BCDL will reduce the

need for new capital equipment for energy

supply, conversion, and distribution. A previous section estimated energy savings under

BCDL in 1975 equivalent to 40,000 to 120,000

bpd of oil. Recent estimates for the capital investment needed to produce a new supply of

energy range up to $3,000 for coal, up to

$10,000 for oil and gas, and up to $100,000

for electric power per bpd of oil equivalent.(106) At $10,000 per bpd, the 40,000- to
216 “ Materials and Energy From Municipal Waste

120,000 bpd” equivalent saved by BCDL translates to capital cost savings in the energy supply industries of $400 million to $1.2 billion.

While this estimate could be carefully refined

to reflect the fuel mixes needed under different scenarios, this approximation suggests

that capital savings in the energy supply industries could be a significant fraction of the

additional capital costs in the beverage

delivery industries.

POLICY OPTIONS FOR CAPITAL IMPACTS

The two major kinds of capital-related impacts that might occur under BCDL require

different kinds of policy responses. The canand bottle-making firms may undergo considerable dislocations; some would cease

growing and some would suffer very large,

and perhaps fatal, sales decreases. Labor

contracts in the container industry could put

a heavy burden on firms for income maintenance in the face of plant shutdowns or

layoffs. At the same time, the beverage

delivery industries may be faced with the

problem of raising large sums for new investment in an uncertain business environment.

For the container-making industries, policy

options include financial assistance through

direct grants, Government purchase of plant

and equipment, accelerated capital depreciation, or assistance for plant modification to

produce new products. (Complementary assistance to employees is discussed in a later

section.)

The problems of the container industries

could also be ameliorated by insuring that the

transition to BCDL is gradual by providing for

an implementation period of 2 to 4 years. This

strategy would allow a more orderly redirection of company effort. However, it maybe ineffective if firms choose to delay the changeover in the hope that BCDL would be repealed

prior to its implementation.

Policy responses to the investment problems of the beverage delivery industries

(brewers, bottlers, wholesalers) would be

somewhat different from those for the container industries. The uncertainties of both

the regulatory environment and the response

of the delivery system to BCDL might make investors wary. For example, if a firm were to

purchase expensive bottle-filling equipment

for refillables under BCDL, and if the new

law were subsequently modified in response

to political pressure, that firm would be left

holding costly, unused equipment. Thus, such

investments might appear to be imprudent if

the political climate seems uncertain.

Under these conditions, some form of risk

sharing by the Federal Government might be

appropriate through, for example, loan guarantees, interest subsidies, or cost sharing.

Such programs must be designed and administered in a way that avoids stimulating overinvestment while remaining fair and not overburdensome for participating firms.

The needs of small retail stores that depend heavily on beverage sales must be given

careful consideration, since they often lack

adequate storage space. Some State laws

have allowed special beverage container redemption centers to be setup to help relieve

the storage problem of small stores. The difficulty with this approach is that it may create a new barrier to the convenience of container return for purchasers, while at the

same time weakening the sales base of small

stores. In view of these drawbacks and the

administrative costs of certifying official

redemption centers, it maybe more desirable

to let such centers emerge, if they will, as

responses to market needs rather than

through legislation.

Impacts on Employment and Labor Costs

BCDL would increase both the size of the

labor force and the labor costs associated

with beverage delivery, while redistributing

jobs away from container manufacture

toward container handling. Jobs would be

shifted geographically from regions where

containers are manufactured to regions

where beverages are produced and sold. This

section summarizes and compares the published evidence of BCDL’S impacts on labor
.

Ch. 9—Beverage Container Deposit Legislation ● 217

and wages, and discusses related policy

issues and options.

UNIT LABOR REQUIREMENTS FOR

BEVERAGE DELIVERY

RTI estimates (107) of labor requirements

to deliver 1 million ounces of beverages in

each of four container systems are reproduced in table 78. Like their unit capital stock

estimates, these labor needs have been challenged; however, equivalent alternative

estimates have not been made available.

The RTI estimates contain some unexplained omissions; in particular no retail

labor is attributed to nonreturnable bottles

and cans. In the RTI study, the retail labor for

refillable bottles is the extra labor required

to manage returns. To be consistent, however, some extra labor should also have been

attributed to the recycling of cans. Because of

these omissions RTI probably underestimated

the number of new jobs that would be created

in the retail sector under BCDL.

Within the limitations noted above, the RTI

estimates suggest that beverage delivery in

refillable containers requires 47 to 86 percent more labor than delivery in nonreturnable bottles and cans. Furthermore, they

show that the increased use of refillables

would lead to a gain in jobs in all phases of

beverage production and distribution. Job

losses would occur in the materials and container manufacturing industries.

JOB SHIFTS, GAINS, AND LOSSES

UNDER BCDL

Several studies have estimated the size of

job shifts, gains, and losses that might occur

under BCDL for various scenarios. It is important to differentiate between a job shift and a

job gain or loss. A job shift represents a net

change in the total number of persons employed in an industry or a sector over a period of time. An estimate of the number of jobs

shifted does not account for the actual number of jobs gained or lost in specific trades or

industries, or for the difference between a

gradual reduction in employment through attrition and retirement, and one that occurs

suddenly through layoffs and termination.

The actual number of persons who might lose

their jobs due to BCDL would be smaller if the

transition period is long enough that the labor

force is reduced through attrition and retirement.

Table 78.—Average Unit Labor Requirements in the Beverage Delivery System in 1982

Container manufacturing

Glass containers. . . . .

Metal cans. . . . . . . . . .

Metal manufacturing . . .

Beverage producers and

distributors . . . . . . .

Production. . . . . . . . . .

Distribution. . . . . . . . .

Retailers . . . . . . . . . . . . .

Total. . . . . . . . . . . . .

SOURCE: Research Triangle Inst

Jobs Der million ounces per year

Refillable

bottle

system

0.010

—

—

0.209

(0.031)

(0.178)

0.108

0.327

te (107)

Nonreturnable

bottle

system

0.094

—

—

0.149

(0.031)

(0.1 18)

—

0.243

Metal can system

Steel

0.062

0.022

0.139

(0.031)

(0.107)

—

0.223

Aluminum

—

0.062

0.025

0.139

(0.031)

(0.107)

—

0.226

Refillable

bottle

system

0.021

—

—

0.197

(0.039)

(0.158)

0.089

0.308

Soft drinks

Nonreturnable

bottIe

system

0.071

—

—

0.095

(0.039)

(0.056)

—

0.166

Metal can system

Steel

—

0.062

0.023

0.146

(0.039)

(0.107)

—

0.231

Aluminum

—

0.062

0.040

0.146

(0.039)

(0.107)

—

0.249

48-786 0 - 79 - 15
218 . Materials and Energy From Municipal Waste

Table 79 summarizes estimates from the

literature on net total job shifts for all industries under BCDL. All the studies project a

net increase in total employment. However,

as in the case of capital investment requirements, it is difficult to discern a consensus

among these studies on anticipated net job

additions. The Wharton School estimates are

the largest by far; if extrapolated to the

1980-85 period they would approach 200,000.

Wharton’s estimates are expected to be high

since they are based on an all-refillable bottle

system. On the other hand, the DOC estimates

were made on the same basis and are the lowest. The GAO and RCC scenarios represent

less change in the total beverage system than

the other studies, and they give generally

lower net job additions.

The six studies summarized in table 79 all

present estimates of job gains and losses in

each of the affected industries. In each case,

job gains would occur in beverage distribution and job losses would occur in metal and

container production. These results are summarized in table 80 (job gains) and table 81

(job losses). Jobs lost are divided among metal

production, canmaking, and bottlemaking.

The highest losses in metal production and in

canmaking would occur for situations in

which bottles capture all or most of the market. Similarly, bottlemaking losses would be

smallest for the all-refillable bottle case; even

then, however, the labor needed for the production of refillable bottles would be somewhat less than that for the production of a

mix of refillables and nonreturnables without

BCDL.

As shown in table 80, estimates of job gains

by sector differ widely. In general, with BCDL

bottlers would need more additional labor

than brewers. However, the combination of

brewers and wholesale beer distributors

would require labor force increases roughly

equivalent to those for bottlers, because the

bottler data include the soft drink distribution labor. Estimates of job gains in retail

trade vary widely, largely because of the poor

quality of the data base on labor requirements in retail trade for handling refillables.

Finally, Wharton’s full simulation of the

economy identified another 93,000 new jobs

in other industries. Inclusion of these jobs

helps to explain why Wharton’s estimates of

net new jobs in table 79 are so much higher

than the others.

Three points stand out in this review of

labor impacts of BCDL. First, there is general

agreement that under BCDL jobs would be

lost in metals production and in container

manufacture and that jobs would be gained in

beverage distribution, especially in retail

trade. Second, studies differ widely on the actual numbers of job gains and losses. Third,

Table 79.—Total Job Shifts Due to BCDL: Summary of Literature Estimates

Net number

Source Scenario a Date of new jobs b

Department of-Commerce (108) . . . All refillable 1980 13,000-33,000

EPA (109). . . . . 800/0 refillable 1980 82,000

GAO (1 10) . . . . . . . . . . . . . . . . . . . . . . . . . Mix I 1981 20,300

Mix II 1981 41,300

Research Triangle Institute (1 11). . . Scenario 1 1982 117,700

Scenario 2 1982 116,900

Resource Conservation Committee (1 12) Mix I 1985 54,000

Mix II 1985 53,300

Wharton School (1 13) . . . . . Export bottle 1974 137,950C

Stubby bottle 1974 131 ,150C

a see table 63 for scenario details

bFull.time job equivalents in materials, container, brewing, bottling, wholesaling, and retalling Industries (total gains minus

total losses)

c Includes job shifts in entire economy
Ch. 9—Beverage Container Deposit Legislation “ 219

Table 80.—Job Gains in Beverage Distribution Under BCDL: Summary of Literature Estimates

Total number of new jobs gained

Beer -

Source Scenario a Date Brewers Bottlers Wholesalers Retailers

Department of Commerce (108) All refillable 1980 ~ 60,000-75,000 “35,000-40,000

EPA (109) . 80% refillable

GAO (1 10) . . . . . . . . . . . . Mix I

Mix II

Research Triangle Institute

(11 1). . . Scenario 1

Scenario 2

Resource Conservation

Committee (1 12). . Mix I

Mix II

Wharton School (1 13) . . . . . . . Export bottle

Stubby bottle

1980

1981

1981

1982

1982

1985

1985

1974

1974

8,300 35,000 23,100

700 11,300 10,400

7,400 28,000 37,500

– 100(loss) 25,800 14,100

– 100( loss) 32,500 26,600

 19,500

 38,300

12,370 30,100 16,750

12,370 30,100 12,870

97,900

27,700

29,700

115,700

100,500

59,200

64,300

33,600

32,740

Other

—

—

—

—

—

—

—

—

93,000b

—

a see table 63 for scenario details

b Based on simulation of the entire economy

Table 81 .—Job Losses in Container Production Under BCDL: Summary of Literature Estimates

Source Scenario*

Department of Commerce (108) . . . . . . . . . . All refillable

EPA (109) . . . . . . . . . . . . . . . . . . . . . . . . . 80°10 refillable

GAO (1 10). ., ... Mix I

Mix II

Research Triangle Institute (1 11). ... Scenario 1

Scenario 2

Resource Conservation Committee (1 12), Mix I

Mix II

Wharton School (1 13) . . . . . . . . . . . . . . . . . . . Export bottle

Stubby bottle

“ See table 63 for scenario details

there would be a shift from high-skill, highwage jobs in the metals and container industries, to low-skill, low-wage jobs in distribution and retailing.

The preceding observations suggest that

BCDL would create entry-level positions at

the expense of established, skilled workers.

Two factors might help to alleviate the job

loss problems in metals production. First,

only a small part (a maximum of 1.3 percent)

of steel production would be affected. Second, automobile companies are currently expressing concern about limited future aluminum supplies and they might absorb any

aluminum output made available by BCDL.

Total number of jobs lost

Metal Can BottIe

Date product ion making making

1980 25,000 35,000 22,000

1980 18,500 34,000 29,700

1981 30,700

1981 61,400

1982 6,500 15,800 15,500

1982 14,300 35,000 – 6,700 (gain)

1985 5.600 14,200 4,900

1985 10,900 28,000 10,400

1974 10,000 33,000 4,870

1974 — 33,000 6,940

The job loss situation in can and bottle production would be considerably more serious.

Beverage containers now account for over 40

percent of all steel cans, 96 percent of all

aluminum cans, and 50 percent of glass bottles. Obviously, large declines in the output of

beverage containers would create serious

problems for both workers and firms in these

industries,

WAGE IMPACTS OF BCDL

It was shown above that under BCDL the

total number of jobs is likely to increase, but

that the average skill level would decline.

Table 82 shows literature estimates of the im-
220 ● Materials and Energy From Municipal Waste

Table 82.—Total Employee Compensation Impacts of BCDL: Summary of Literature Estimates

— . ———

Annual wage changes

(million dollars)

Current Net for all Total Total

Source Scenario a Date dollar year b industries gains losses —. —

EPA-(l 14). . . . . EPA (114). . . . . . . . . . . . . . . . . . . 80°/0 refillable

GAO (115) . . . . . . . . . . . . . . . . . . . . . . . Mix I

Mix II

Research Triangle Institute (1 16) . . . . Scenario 1

Scenario 2

Wharton School (1 13). . . . . . . . . . . . . . Export bottle

Stubby bottle

a — — — see table 63 for scenario detail.

b Base year in which dollars are measured

pact of the job shifts on the total wages paid

annually, as well as on the total gains and the

total losses in wages. In each study, the wage

losses would occur in metal production and

container manufacture and the gains would

occur in the beverage production and delivery industries. All sources agree that the net

wages paid would increase and that total

gains would outweigh total losses by a ratio of

approximately 2 to 1.

OTHER LABOR IMPACTS OF BCDL

This section discusses two additional

aspects of the labor impacts of BCDL. First,

the changes in employee earnings discussed

above following the adoption of BCDL do not

capture all the employee-related costs to

firms. They do not include the costs of employee fringe benefits or of training programs

for new employees. In addition, estimates of

earnings costs do not include costs of

severance pay or income maintenance for

discharged employees in the materials and

container industries. For example, the contracts of the United Steel Workers with

aluminum and steel producers call for extra

unemployment benefits, special pensions for

plant shutdowns, and other income security

provisions. The Steel Workers also represent

workers in can-manufacturing plants, and

such severance benefits have been extended

to that industry .(117) In the event of a layoff

of employees both in metals and in metal can

production, employees would be eligible for

substantial financial assistance. This would

1980 1976(?) + 403 + 1,292 – 889

1981 1974 + 201 + 493 – 292

1981 1974 + 503 + 1,164 – 661

1982 1974 + 879 + 1,285 – 406

1982 1974 + 936 + 1,505 – 569

1974 1974 + 649 + 1,150 – 501

1974 1974 + 559 + 1,082 – 523

— —

aid affected workers but would be an added

expense for firms.

A second important aspect of labor impacts is the fact that job losses in the glass

container industry might be seriously localized. RCC has made a preliminary analysis of

this problem and has identified 10 counties in

the United States in which 14 glass container

plants that might be especially hard hit by

BCDL are located. (118) They were unable,

however, to determine whether the manufacture of beverage containers is a large fraction of the production of each of these plants,

in order to determine whether, in fact,

special problems would be created. RCC is

working with the Glass Packaging Institute to

learn more about the situation in these

plants.

POLICY OPTIONS FOR LABOR IMPACTS

On balance, the creation of more jobs and

higher total earnings as a consequence of

BCDL would contribute in a small way

toward easing the Nation’s unemployment

problem. But, a very serious unemployment

problem would be faced by workers in container manufacturing, and to a lesser extent,

in the metals production industries. As noted

in table 81, various studies have projected

losses of 25,000 to 82,000 existing jobs due to

BCDL. Since these jobs would be lost over a

period of several years, some of them could

be accounted for by normal attrition and retirement. Thus the number of workers now
Ch. 9—Beverage Container Deposit Legislation ● 221

employed who might lose their jobs as a result

of BCDL could be substantially smaller than

25,000 to 82,000. This might be especially

true in metals production, where beveragecontainer related jobs are a small part of the

total.

Nevertheless, while total employment

would increase, a substantial number of

workers with specialized skills would lose

jobs, many in regions where unemployment is

already high or economic growth is slow.

Thus, if BCDL were instituted, some kind of

Federal assistance for affected workers

might be considered. Options include retraining and relocation assistance and direct

grants-in-aid. Reconversion assistance to

firms might also assist workers indirectly, but

it cannot be viewed as a substitute for direct

assistance to workers and their families.

Such assistance efforts need to be designed

and administered so that they would not provide incentives for firms to accelerate or expand their layoff programs. Furthermore,

container firms have been routinely reducing

their labor force over the last several years

by taking advantage of new, more-productive

technology. Thus, it might prove to be difficult

for program administrators to determine

whether layoffs can, in fact, be attributed to

BCDL.

Impacts of BCDL on Beverage Costs

and Prices

BCDL would cause increases in some costs

of beverage delivery (filling, distribution,

transportation, storage, retailing) and decreases in others (principally the cost of containers per fill). Various authors differ as to

whether the net cost change is an increase or

a decrease. They also differ as to whether

prices paid by consumers would go up or

down. This section reviews some of the

analyses of changes in costs and prices, including some empirical observations on the

relative prices of beverages in refillable and

nonreturnable containers.

Unless otherwise noted, in this section as in

the rest of this report, price refers to the shelf

price of a beverage excluding any container

deposit or local sales taxes. A purchaser of

beverages in containers that bear a deposit,

who does not intend to claim that deposit,

pays a price equal to the shelf price plus the

deposit.

REDUCED COSTS OF CONTAINERS UNDER

BCDL

The beverage delivery system includes

three parties for beer (brewer, distributor,

and retailer) and two parties for soft drinks

(bottler and retailer). For distributors and

retailers, the direct costs of doing business

are higher with beverages in refillables than

in nonreturnables. Handling refillables entails a larger number of tasks, and the unit

costs of most of the tasks are higher, because

refillables weigh more and take up more

space than nonreturnables. Sorting refillables adds an additional costly task.

Brewers and bottlers also face higher costs

for washing, filling, and handling refillables

than they do for nonreturnables. However,

their costs for refillable containers per fill

are less than the costs for nonreturnable containers. The costs of producing the beverage

per se are not affected by packaging type.

Thus, the net impact of BCDL on total costs

for brewers and bottlers depends on the net

of the various cost differences in buying and

handling containers.

Typical prices paid by brewers in 1976 for

new 12-ounce containers in large lots were:

refillable bottles, 7 cents; nonreturnable bottles, 4 cents; and metal cans, 6 cents. (119)

Typical prices paid by soft drink bottlers in

late-1978 were about 17 cents for 16-ounce

refillables, 8 to 9 cents for all-aluminum cans,

and 8 cents for 3-piece steel cans with aluminum tops. (120) (These prices vary widely with

container design, quantity purchased, and

special sales arrangements). If a refillable is

used an average of N times (N = trippage),

its cost per fill is its price divided by N.

The total cost per fill of a container is reduced by its net scrap value if it is returned to

the brewer or bottler under a deposit system.
222 ● Materials and Energy From Municipal Waste

Typically, as scrap, aluminum cans are worth

1 cent, steel cans are worth 0.2 to 0.4 cent,

and bottles are worth about I cent each. If a

deposit-bearing container is not returned, the

brewer or bottler can retain its deposit as a

cost offset. For an average return or recycle

rate of R, the retained deposit per fill is equal

to (l-R) multiplied by the deposit. For refillable bottles, the cost per fill is offset by both

retained deposits and a very small scrap income from refillables rejected in the plant.

The following example compares the net

costs of beverage containers per fill under

three hypothetical situations:

Case I:

Case II:

Case III:

Question:

Case 1:

Case II:

A beverage is sold in 12-ounce

nonreturnable containers that

cost 8 cents each and do not carry a deposit. No containers are

recycled.

A beverage is sold in 12-ounce,

nonreturnable containers that

cost 8 cents each, carry a 5-cent

deposit, and have a scrap value

of 1 cent each. Eighty percent of

the containers are recycled.

A beverage is sold in 12-ounce

refillable bottles that cost 12

cents each and carry a 5-cent deposit. The return rate for the container is 80 percent (trippage =

5).

What is the net cost of the

container per fill of beverage in

each case?

Container cost per fill = 8 cents.

Container cost per fill = 6.2

cents. Since for every container

filled, 0.8 container is returned

with a scrap value of I cent each,

a scrap credit of 0.8 x 1 cent or

0.8 cent is earned per fill. For

each container shipped a deposit

of 5 cents is collected but on average only 0.8 container is recycled

requiring an average refund of

0.8 x 5 cents or 4 cents per fill.

Thus, 1 cent of the deposit per fill

is retained by the producer. The

direct container cost is then [8

cents – 0.8 cent – 1 cent] or 6.2

cents per fill.

Case 111: Container cost per fill = 1.4

cents. Since a bottle that costs 12

cents is used an average of 5

times, its cost per fill is 2.4 cents.

Furthermore, for every container

shipped a deposit of 5 cents is collected. However, on average only

0.8 container is returned, so an

average of 20 percent of the deposit, or 1.0 cent is retained by

the producer per fill. Therefore,

the net direct container costs are

(2.4 - 1.0) or 1.4 cents per fill.

In the above cases, the direct container

costs per fill are 8 cents for the nonreturnable, 6.2 cents for the recycled nonreturnable

with deposit, and 1.4 cents for the refillable.

Thus, the refillable system will have the lowest total beverage delivery cost if the additional costs of handling refillable bottles as

compared with nonreturnables are equal to

or less than (8 cents – 1.4 cents) or 6.6 cents;

and if the additional costs of handling refillable bottles as compared with recycled nonreturnables are equal to or less than (6.2

cents – 1.4 cents) or 4.8 cents. In other

words, the production and distribution cost

differential per fill with refillables over

nonreturnables should not exceed 4.8 cents if

BCDL is to result in lower total costs and

prices. Conversely, if the extra costs of producing and distributing beverages in refillables are greater than 4.8 cents per fill, the

total costs and the shelf prices of beverages

can be expected to increase in this hypothetical example.

The container cost data and return/recycle

rates used in this hypothetical comparison

are intended to be reasonably representative

of actual situations. They suggest that direct

container costs are about 5 to 7 cents less for

refillables than for nonreturnables. Only 0.5

cent of this cost advantage arises from retained deposits; the rest comes from differ-
CH. 9—Beverage Container Deposit Legislation ● 223

ences in prices paid for containers per fill

and from scrap income.

INCREASED COSTS OF BOTTLING BREWING,

WHOLESALING, AND RETAILING

UNDER BCDL

Data on the costs of brewing, bottling,

wholesaling and retailing beverages in

various kinds of containers, with or without

BCDL, are scant. Weinberg (121,122) has

given detailed accounts of these costs on a

hypothetical basis for delivery of malt beverages. The Central Investment Corporation,

which has interests in soft drink bottling, has

provided data on the costs of bottling in 12-

ounce cans and in 16-ounce refillable botties.(123) However, neither set of data is adequate for addressing the actual cost differences among the container types. Weinberg’s data, for example, show that off-premise retailers’ margins (costs plus profits) are

lower for beer in refillables, but he gives no

breakdown between costs and profits. Nor

does he explain why these margins are lower

for refillables in view of: (i) the wide agreement that retailers’ costs are higher with refillables, and (ii) the fact that consumer

prices are lower in refillables than in nonreturnables. Also, no basis is given for his

calculations of profits at each stage. (122)

PRICE IMPACTS OF BCDL

Models of Pricing Behavior.-The change

in total costs of beverage production and delivery is the sum of: (i) savings on container

purchase, (ii) earnings from the sale of recycled containers, and (iii) unclaimed deposits;

less the sum of: (i) additional costs of capital

including a reasonable return on investment,

(ii) additional labor costs, and (iii) additional

operating costs for maintenance, utilities,

and insurance. The changes in prices of beer

and soft drinks under BCDL would depend on

the net change in the total cost of beverage

delivery and on the degree to which that cost

change would be passed on to consumers.

Whether cost changes would be passed on

to consumers depends on the competitiveness

of the various industries and on the degree to

which consumer demand for beverages is affected by price and availability.

If the beverage industries are competitive,

market forces will cause them to pass on

changes in total beverage costs due to BCDL

as changes in prices. The amount of the price

change would depend on the sensitivity of

beverage demand to price. If beverage demand is sensitive to price, firms would not be

able to raise prices by the full amount of a

cost increase. If there is a cost decrease they

might take advantage of economies of scale in

production and actually be able to lower

prices by an amount greater than the decrease. * Conversely, if demand is not very

sensitive to price, firms would pass on nearly

the full amount of any cost change as a price

change.

If some parts of the beverage delivery industries are not competitive, that is to say, if

at least some firms or sectors possess a

degree of monopoly power, a different set of

price changes might take place. If BCDL were

adopted, it is clear that brewers and bottlers

(excluding distribution activities) would experience cost decreases, while wholesalers

and retailers would experience operating

cost increases. If brewers or bottlers have a

degree of monopoly power, they would not be

disciplined by market forces to pass their cost

decreases on as lower prices for goods sold to

wholesalers or retailers. Thus, the total costs

of wholesalers and retailers would increase

and they would raise prices to consumers,

with the price increase being greater if consumer demand is not sensitive to price and

vice versa.

Evidence was presented earlier in this

chapter that the demand for beer is fairly

price sensitive while the demand for soft

drinks is not very price sensitive. The

preceding theoretical discussion then leads to

the following projections about the prices of

each product if BCDL were adopted.

*The Wharton School study considered the effect of

changes in beverage sales on container costs and

prices, They found that the second-order price changes

were very small .(1 24)
224 ● Materials and Energy From Municipal Waste

If the soft drink industry is competitive,

any cost changes caused by BCDL would be

passed on to consumers as price changes,

either as increases or decreases depending

on the net cost change. If the soft drink industry is not competitive to some degree,

prices might increase under BCDL regardless

of changes in the total costs of beverage

delivery.

If the beer industry is competitive, cost

changes caused by BCDL would be passed on

to consumers, but prices would increase by

less than a cost increase and might decline by

more than a cost decrease (reflecting price

sensitivity of demand and possible economies

of scale). If the brewing industry possesses a

degree of market power, retail prices to consumers might actually increase even if the

total costs are reduced under BCDL; however, the increase would be less than the

amount of distributor and retailer cost increases and smaller than in the case of soft

drinks, since demand is more sensitive to

price.

Unfortunately, it is not known for certain

whether the beer and soft drink industries

are competitive or possess a degree of market

power. Thus, one cannot make reliable forecasts of the price effects of BCDL, even if unequivocal estimates of its effects on costs in

each industry could be made. Part of the disagreement in the literature about the price effects of BCDL thus stems from a disagreement over the degree to which the industries

are competitive.

Literature Forecasts of Beverage Prices

Under BCDL.—TWO approaches have been

used to forecast changes in future beverage

shelf prices under BCDL. One is based on

analytical cost/price models of the beverage

industries. The other is based on extrapolations from the existing data on the relative

prices of beverages in various kinds of containers and on the behavior of prices in

Oregon and Vermont under BCDL.

Table 83 summarizes forecasts from the literature of changes in prices based on the

analytical model approach. The figures from

RTI and RCC suggest price changes in the

range of –4.o to + 1.6 percent, depending on

beverage, container type, and scenario.

These estimates assume that retained deposits are used to offset increased costs. The

Wharton School estimated increases of 3.1

percent for soft drinks and 4.7 or 13.1 percent for beer, depending on which type of

beer bottle is used. These estimates are

based on an all-refillable system and higher

conversion costs than those of RTI and RCC.

Furthermore, the Wharton School treated retained deposits as a direct consumer cost.

When the shelf prices are adjusted to reflect

the offset of a producer’s costs by retained

deposits, Wharton’s shelf prices in the offpremise market increase by only 0.5 percent

for soft drinks and 0.8 to 9.1 percent for beer.

In all cases, of course, customers who discard deposit containers pay, in effect, 5 cents

over shelf price (Wharton used a 6-cent

deposit for soft drinks).

Evidence on Current Prices of Beverages.—Most reports of the relative prices of

beverages in various types of containers have

been based on informal price surveys. However, a comprehensive set of data gathered

by the Majers Corporation provides information on feature prices* for soft drinks in 106

major U.S. retail markets. (129) For the 12

months ending November 1977, Majers reported the average feature prices for soft

drinks shown in table 84. Table 84 shows that

soft drinks in 16-ounce refillable bottles were

priced 41 percent below 12-ounce cans and

33 percent below 16-ounce nonreturnable

bottles on a price-per-ounce basis. Similar

ratios hold for individual major brands and in

specific marketing areas.

The results of several price surveys are

summarized in the EPA Fourth Report. EPA

summarized these surveys by concluding that

savings are often in the range of 3 to 8 cents

per 12 ounces of beverage in refillable containers.(lol) This is equivalent to a price dif-

*Feature prices are advertised prices in supermarkets, which often offer soft drinks in special promotional campaigns.
Ch. 9—Beverage Container Deposit Legislation ● 225

Table 83.—Beverage Shelf Prices Under BCDL:

Summary of Literature Estimates Based on Analytical Methods

—

Percent change in shelf price

Beer Soft drinks

Bottles Cans Bottles Cans

Source Scenario a Ref. N.R. Alum. Steel Ref. N.R. Alum. Steel

Department of Commerce (125) . . All-reffillable bottles Increase — — — Increase — — —

Research Triangle Institute (126). . . . . . . Scenario 1 – 0.05 – – 1.9 + 1.5 – 0.8 – – 2.0 + 1.6

Scenario 2 – 0.05 – – 3.9 -0.8 + 0.7 — – 4.0 – 0.8

Resource Conservation Committee (127) Mix I 0.0 – 0.7 – 3.1 – 0.7 0.0 – 0.9 – 3.2 + 0.8

Mix II 0.0 + 0.8 – 1.5 + 0.8 0.0 + 0.4 – 2.0 + 0.8

Wharton Schoolb

(l 28). . . . . . . . . . . . . . . . Export + 13.1 — — — + 3.1 — — —

Stubby + 4.7 — — — + 3.1 — — —

Wharton School adjustedc . . . . . . . . . . . . Export + 9.1 — — — + 0.5 — — —

Stubby + 0.8 — — — + 0.5 — — —

a see table 63 for scenario details.

b Baseline prices were not provided. Percentage changes were estamated assuming 1974 baseline prices of $5.00 and $4.00 Per case for beer and Soft drinks in 12”

oz containers respectively Off-premise prices are reflected In these changes COTA adlust~d wharton,s shetf pr(ce lncrea~es by S“btractlng retatned deposits as an offset agalnSt COSt lflCTeaSfX

Table 84.—Feature Prices of Soft Drinks in

Various Container Types

Container size and type Average price a ( ounce)

1202

1602

1602

32 OZ

3202

6402

6402

. .

cans . . .

refillable bottles . . . . .

nonreturnable bottles. . .

refillable bottles . . . .

nonreturnable bottles.

refillable bottle s

nonreturnable bottles. .

- .

1.33-

0.78

1.16

0.73

1.13

0.90

1.12

a for 12 months ending November 1977

SOURCE Majers Corporation (129)

ference per ounce of 0.25 to 0.67 cent which

is consistent with Majers’ findings of a 0.38 to

0.55 cent per ounce difference.

Weinberg’s estimates for typical shelf

prices for 12-ounce containers of beer in 1976

were: metal cans, 25.6 cents; nonreturnable

bottles, 25.5 cents; and refillable bottles, 23.0

cents.(1 22) The price advantage of refillables

of 2.5 cents per serving is equivalent to 0.2

cent per ounce; i.e., to the low end of the EPA

estimate.

There is broad agreement, then, that the

current shelf prices consumers pay for beverages in refillable bottles are lower than for

nonreturnables, generally in the range of 2 to

8 cents lower per 12-ounce container. (This is

equivalent to price differences of about 10 to

30 percent.)

However, there is some disagreement

about whether this difference would persist if

BCDL were implemented. For example, Weinberg has argued that refillables for beer are

currently being subsidized by nonreturnables, and that wholesalers actually lose

money on refillables. (122) If this is true, then

current prices for refillables are too low to

cover all their costs, and under BCDL their

prices would have to increase. What is not

clear from this argument is why this cross

subsidy should persist, since by the same

argument there is a strong incentive for

wholesalers and retailers to raise the prices

of allegedly unprofitable refillables, both to

drive them out of the market and to earn some

profit on those that might remain.

One factor that would tend to reduce shelf

price differences for various container types

as compared with the current situation, is

that under BCDL industries would find it necessary to make rapid changes in their capital

equipment. These changes would add to the

average costs of beverage delivery, at least

during the transition period. Prices of nonreturnables might increase if equipment is

used at a lower capacity than before BCDL,

and the cost of additional equipment to handle increased sales with refillables might add

to their average prices.
226 Materials and Energy From Municipal Waste

Finally, from a long run point of view, it is

argued that the competition among different

types of bottles and cans has served to keep

all container prices low. If the nonreturnable

bottle or can were to disappear from the marketplace under BCDL this competition might

be eroded, and all container prices might rise

over a period of time. None of the analyses of

price/cost behavior has taken this possibility

into account, and there is probably no way to

do so other than by making arbitrary assumptions about relative prices in the future.

Beverage Availability and Consumption

Opponents of BCDL say that it would reduce the availability of beverages to consumers. Some stores would discontinue beverage sales, the number of brands sold in

various market areas would decline, and fewer vending machines would be used due to the

difficulty of refunding deposits. The net effect

would be a drop in beverage sales. Proponents of BCDL argue the opposite—that availability would improve, especially the availability of a variety of brands of both beer and

soft drinks in refillable containers. Both sides

agree that the number of available container

sizes and designs would decrease. *

A related argument is made about the convenience aspects of beverage purchase and

consumption under BCDL. Opponents, who

equate convenience with the availability of

nonreturnable containers without deposits,

say it would decline. Proponents argue that

BCDL does not eliminate nonreturnable containers and would not affect this aspect of

convenience. They further argue that custom-

*The analysis in this chapter is concerned exclusively with containers for beer and soft drinks. However,

the impact of BCDL on availability might be greatest for

other beverages such as iced tea and mineral water.

Since these are currently sold in much smaller volumes,

the adoption of BCDL might make them unmarketable in

many locations due to the relatively high overhead

costs of operating a deposit system for small numbers

of containers, On the other hand, omission of these beverages from BCDL coverage could lead to their rapid

substitution for beer and soft drinks in the kinds of markets where the litter problem is most serious.

ers who value the convenience of discarding

used containers can continue to do so; they

would simply forfeit the deposit. Proponents

also point out that refillables would become

more convenient to purchase and that convenience of return would improve for those who

prefer refillables or find it economically

worthwhile to recover deposits.

Another related argument centers on the

phrase “freedom of choice. ” Opponents have

used this phrase to suggest that BCDL would

infringe on the rights of customers to purchase, use, and discard the containers of

their choice in the manner of their own choosing. Proponents of BCDL argue that these

choices would remain available to those who

wish to exercise them, but that they should

pay the costs associated with those choices

through the deposit system. The “freedom of

choice” argument is relevant in a discussion

of a ban on nonreturnables. It does not apply

to proposals for BCDL.

The consumption of beverages under BCDL

would be affected by the change in shelf

price, by the addition of the deposit on

formerly nondeposit containers, and by a

change in the availability of beverage brands,

sales, and return outlets.

Some analysts have argued that consumption will be affected by the value that former

consumers of nonreturnables attach to the

time and effort required to make returns. If

such customers are, in fact, rational, they

will not make such returns if that value exceeds the potential 5-cent refund. Thus, the

maximum decrease in purchases by these

kinds of customers can be estimated by

assuming that the price they would have to

pay would be equal to the shelf price plus the

deposit. On the other hand, sales to current

purchasers of refillables might increase if the

number and convenience of return points

were to increase under BCDL.

An estimate of the impacts of price

changes on consumption can be obtained by

multiplying projected price changes from

table 83 by the estimated price elasticities of

demand. As noted in an earlier section, RTI
Ch. 9—Beverage Container Deposit Legislation . 227

found price elasticities of demand of 0.6 for

beer and 0.13 for soft drinks. Using & 2 percent as rough estimates of shelf price

changes, one can estimate changes in beer

sales of around & 1 percent, and around

 0.25 percent for soft drinks.

The effective percentage price changes

faced by customers who continue to discard

deposit containers would be higher. A 5-cent

deposit might add 25 percent to the effective

price per container of soft drinks and 20 percent for beer. For these customers, maximum

decreases in consumption might be expected

of 20 percent x 0.6 or 12 percent for beer,

and 25 percent x 0.13 or 3 percent for soft

drinks.

RTI estimated that overall beverage demand would drop by only a fraction of 1 percent under BCDL.(130) For one of its calculations, the Wharton School assumed that beverage consumption would decline by 15 percent, based on their interpretation of events

in Oregon and Vermont. (131) Using an elasticity of demand approach on the other hand,

Wharton estimated maximum consumption

decreases of 7.64 percent for beer and 4.43

percent for soft drinks, assuming that nonreturnable containers were banned. (132) The

discrepancies originate in the different

analyses of the price elasticity of beverage

demand discussed earlier. Neither Wharton

nor RTI was able to account for the quantitative effect of the availability/convenience

argument.

Impacts on the Environment

Every stage of the production, use, reuse,

and recycling of beverage containers creates

air and water pollution and solid waste, over

and above that due to disposal or littering.

Such wastes are a function not only of container material, type, and return/recycle rate

but also of the type and degree of environmental control technology employed at each

stage. Furthermore, the true social cost of

each kind of emission also depends on the

location of the activity in question: air pollution may be more significant in a major urban

area or near a pristine wilderness than in a

small-town manufacturing center.

For these reasons, any estimation of the

pollution impacts of various container systems is necessarily somewhat arbitrary. It

usually reflects the current technology in

place or to be adopted in the near term. It is

also likely to reflect average industrial pollution control practice, rather than a “bestplant, ” ‘‘worst-plant, ” “marginal plant, ” or

“compliance” practice. As such, the results

of the analysis can be expected to change

over time as industrial technology and pollution control methods change.

The standard reference work in this area

is a study done for EPA by MRI in 1974 entitled “Resource and Environmental Profile

Analysis of Nine Beverage Container Alternatives. ’’(133) Environmental impacts were

included for materials extraction and processing, container manufacture, transportation, container cleaning and filling, and

distribution. Impacts of consumer activities

including transportation from point-of-purchase to point-of-consumption were not included.

Table 85 summarizes the air and water

pollution, industrial solid waste, and total

water use impacts for the nine container systems studied by MRI. Each data point represents the impacts of delivering 1,000 gallons

of beer in each type of container. In nearly

every case the 19- and lo-trip refillable glass

bottles rank lowest on these measures of environmental impact. The only major exception

is the all-steel can, which ranks lowest on

waterborne wastes. The five trip glass refillable (return rate = 80 percent) has a

mixed advantage over the other containers. It

ranks better than the others on industrial

solid wastes and on atmospheric emissions

(except for the all-steel can). It has the

greatest amount of waterborne waste of any

system (tied with ABS plastic) and is tied with

several other systems in terms of total water

use. From these data, it is concluded that a

shift to a system featuring refillable bottles

and recycled cans would reduce the environmental impact of beverage delivery.
228 . Materials and Energy From Municipal Waste

Table 85.—Environmental Impacts of Delivering 1,000 Gallons of Beer in Various Containers

— —— —— .- ——-

Air Waterborne – – –‘- Total - - - ‘“lndustrial -- –

emissions wastes water use sol id waste

Container type (pounds) (pounds) (1 ,000 gallons) (cubic feet)

Glass refillable

— —

19 trip . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 27 11 7

10 trip . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 35 15 9

5 trip . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 69 33

Glass nonreturnable . . . . . . . . . . . . . . . . . 261 56 37 15

Three-piece bimetal. . . . . . . . . . . . . . . . . . 222 34 34 93

Aluminum can a . . . . . . . . . . . . . . . . . . . . . 323 59 15 36

All steel can . . . . . . . . . . . . . . . . . . . . . . . . 146

Plastic coated nonreturnable glass. . . . .

108

246 : : 30

Plastic b. . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 69 42 7

——— — ———— —— — a 15 percent of cans recycled

b Acrylonitrile- butaidiene-styrene (ABS) plastic Was used for illustration This material is not now. nor is it Iikely to be used for beverage containers. Soft drink con.

tainers now on the market are made from polyethylene terephthalate (polyester)

, —- ———— - -- - -=- -- .

SOURCE Midwest Research Institute (133)

These results have some important limitations. As noted above, they are based on actual industrial pollution control performance

rather than on a best-practice basis. Perhaps

more importantly, the air, water, and solid

waste measures are in terms of total pounds

of emissions. No attempt was made to rate

the degree of hazard per pound of the waste

components to public health or to the environment. Thus, fluoride emissions from aluminum production and oxides of nitrogen from

gas combustion in glass production are compared on a weight basis, when, in fact, the

former poses a considerably greater hazard

than the latter.

In its recent report, RCC reported estimates of the impact of BCDL on industrial

solid wastes, atmospheric emissions, and

waterborne waste in 1985. As shown in table

86, substantial improvements are forecast

under BCDL for all three waste categories.

Waste loads are reduced by 44 to 52 percent

under Mix I and by 69 to 86 percent under

Mix II. These reductions occur because reusing and recycling containers create much less

pollution than do extracting and processing

materials to make new containers.

Health and Safety Impacts

BCDL might affect health and safety in

such areas as pest and hazard control in unwashed, used containers; worker injury when

handling returned glass containers and when

carrying heavier glass refillables; and injuries due to glass litter and to bottle explosions and breakage. In principle, one could

estimate these impacts for various scenarios

under BCDL. Unfortunately, the necessary

data are not generally available by container

type.

HEALTH IMPACTS

Unwashed empty beer and soft drink containers are favorable environments for the

growth of insects and vermin. However, observers of the long-established voluntary

deposit system have not identified this as a

major problem. Likewise, authorities in both

Oregon (135) and Vermont (136) report that

no special pest control problems have arisen

in the programs of those States. The Vermont

law allows a retailer to refuse to accept dirty

containers for deposit, a provision that can

help to manage potential sanitation problems.

Other types of container contamination

such as gasoline, solvents, or solid materials

can be a problem with refillable containers.

Glass containers can be adequately washed,

but plastics would absorb such foreign materials and be unacceptable for reuse or even

for recycling into new food or beverage containers. Solid contaminants not removed by

washing can be detected prior to refilling in

bottle inspection systems. It is probable,

however, that refillable containers pose a
Ch. 9—Beverage Container Deposit Legislation ● 229

Table 86.—Resource Conservation Committee Estimates of the

Impact of BCDL on Industrial Pollution in 1985*

Mix i “- - ‘

- Mix II -

- reductio n Reduction

from from

Baseline Total baseline Total baseline

Industrial solid wastes . . . . . . . 524 250 52 ”/ 0

- 71 860/0

(million cubic feet)

Atmospheric emissions . . . . . . 1,717 968 44% 521 700/o

(mllllon pounds)

Waterborne wastes. ... . . . . . 308 173 44°/0 94 690/0

(million pounds)

———

‘The numbers in this table represent industrial effluents from the extraction, fabrication, and recycling sectors of beverage

container production See table 63 for definition of the market shares and return rates for MIX I and MIX II

SOURCE RCC staff estimates (134)

higher risk of product contamination—the extent of that risk is unknown.

FDA has jurisdiction over the health

aspects of materials used for food packaging,

including beverage containers, under the

Food, Drug, and Cosmetic Act. In recent

years, beverage containers made of certain

plastics have become a matter of concern and

policy debate.

On March 11, 1977’, the Commissioner of

FDA stayed certain parts of the food additive

regulations that permitted beverage containers to be made of acrylonitrile copolymer

plastics. This action had the effect of prohibiting the sale of such bottles. FDA’s concern

was that residual acrylonitrile monomer from

the plastic container would migrate into the

beverage with toxic effects. The Commissioner’s order was appealed by Monsanto,

the company that developed and began to

market the bottle in 1975, and a Federal appeals court ruled that FDA had to undertake

administrative proceedings on the safety of

the bottle. In September 1977, FDA, after investigating its safety in public hearings and

additional laboratory testing, issued a final

order banning the use of beverage containers

made from acrylonitrile-based plastics. Monsanto was given gO days, to December 22,

1977, to remove the bottles from the market.(13g) The company has since filed an appeal of FDA’s ban on the use of acrylonitrile

copolymer in plastic soft drink bottles in the

U.S. Court of Appeals in Washington,

D.C.(138) A review of the case is expected in

1979. Monsanto has removed bottles made

from acrylonitrile copolymer from the

market, pending review by the U.S. Court.

The Bureau of Alcohol, Tobacco, and Firearms also regulates alcoholic beverage containers. In conjunction with FDA it licensed,

and then terminated, an experiment to market alcoholic beverages in polyvinylchloride

(PVC) containers after potentially hazardous

levels of vinylchloride were found to have

leached into the contents from the containers.(13g) While two companies soon developed bottles with monomer levels below 25

parts per million, authorization for their use

was not granted and PVC liquor bottle development has ceased in the United States.

FDA has approved plastic beverage containers made from polyethylene terephthalate, a polyester. Several companies are using

this polyester as a material for lightweight,

energy-efficient, breakage-resistant containers. The bottles are being aggressively

marketed by soft drink manufacturers in both

32- and 64-ounce sizes.

WORKER INJURY

No statistics are available on the nature,

frequency, or severity of worker injury from

different types of beverage containers. Heavier refillables may be associated with a

higher incidence of skeletomuscular injuries

in delivery and stock workers. However, it is
230 “ Materials and Energy From Municipal Waste

likely that workers move more containers of

nonreturnables at a time and thus the weight

and consequent injury risk remain the same

for both container types. Handling glass refillables might be more hazardous than handling cans. Furthermore, a refillable container

will be handled more times per trip than a

nonreturnable; which should increase the

probability of injury per unit sold, even if the

probability of injury is the same for each

handling operation. However, data are not

available to provide a basis for assessing the

relative frequency of such injuries.

LITTER INJURY

Under BCDL, litter-related injuries due to

broken glass on highways, city streets, and

recreational areas should decline as the

beverage container litter rate declines.

Studies of litter injuries have been made in

California and Kentucky .(140,141) Both the

California and Kentucky litter surveys indicated that the large majority of reported injuries were caused by broken glass and pull

tabs. In California, approximately 25 percent

of the persons interviewed reported that

someone in their immediate family had been

injured by litter, and 5.3 percent knew of

someone who had swallowed, or almost swallowed, a pull tab they had put into a drink.

Both the California and Kentucky studies on

litter indicate that littered soft drink and beer

containers, pull tabs, and plastic six-pack

binders also cause injury to livestock and

wildlife.

OTHER INJURY

Under BCDL the fraction and number of

beverages sold in refillable glass bottles is

likely to increase, while those in nonreturnable bottles would decrease. Under these conditions, it is not clear whether the consumer

and worker injury rate due to broken or exploding beverage containers might increase

or decrease. There are no data on the frequency of such events according to type of

bottle.

The Consumer Product Safety Commission

has jurisdiction over the safety of containers

under the Consumer Product Safety Act. Injuries resulting from metal soft drink and

beer cans, glass soft drink and beer bottles,

and self-contained openers (pull-tops) are collected and categorized in the Commission’s

National Electronic Injury Surveillance System. Information is gathered from a sample of

hospital emergency rooms throughout the

country in order to monitor the occurrence

and seriousness of consumer product safety

problems. From these data, estimates of the

incidence of product-related injuries can be

made for the entire United States.

The Commission categorizes injuries related to carbonated soft drink and beer containers into four classifications: Code 1103—

self-contained openers, pop-top cans, zipopen cans, etc.: Code 1112—containers,

metal (cans); Code 11 20—glass soft drink bottles for carbonated beverages; and Code

1122—glass containers, malt beverages

(beer, ale, malt liquor). Analysis of data for

1974 by the Commission found that more than

32,000 persons were treated in hospital

emergency rooms for injuries related to carbonated soft drink bottles. (142) These injuries

occurred as a result of passive exploding bottles, bottles exploding on impact, propulsion

of bottle caps, breakage resulting from impact, and accidental contact with broken

glass. The available data does not differentiate between refillable and nonreturnable

glass bottles.

The estimate for 1,377 is approximately

34,000 injuries related to glass soft drink bottles. Self-contained openers (pop-tops) caused

around 2,200 injuries. Injuries resulting from

glass beer and related containers were estimated at around 11,000.(143)

Manufacturers and distributors have

taken steps to improve the quality of the production and handling of beverage bottles in

order to reduce the risk of injury. In cooperation with the National Bureau of Standards,

two voluntary product standards (VPS) are
Ch. 9—Beverage Container Deposit Legislation ● 231

being developed. (144) One is completed and

one is in the initial stage. The completed VPS

recommends standards for the manufacturers of carbonated soft drink bottles, while

the second VPS would establish guidelines for

distributors of bottled carbonated soft drinks.

The purpose of these standards is to reduce

the number of injuries resulting from carbonated soft drink bottles. The standards are

concerned only with refillable and nonreturnable glass bottles manufactured from sodalime-silica glass. They are not applicable to

plastic-clad or encapsulated bottles.

Impacts on New Technology

BCDL would provide a stimulus for development of new technologies in such areas as

container materials, designs, and types; new

beverages; and new delivery system elements

including secondary packaging, vehicles,

vending machines with capability to refund

deposits, and container-sorting devices. One

might also expect novel advertising and marketing techniques designed to take advantage

of the new situation with minimum disruption.

The recent history of experience with

Government regulatory programs suggests

that industry is capable of adjusting to new

market conditions with new or redesigned

technologies, often at a lower cost than was

projected prior to the implementation of such

regulation. (145) Furthermore, when major

technical advances are not required on short

notice, firms can adjust best on their own. For

this to happen, however, requires a stable,

well-defined, and relatively certain business

and regulatory environment. Firms from outside the established industries can sometimes

take advantage of the new environment to

provide innovative replacements for older

technologies. Under these conditions, direct

Government involvement in developing new

technologies is not needed.

On the negative side, BCDL might establish

a barrier to the private development and

adoption of improved “standard” refillable

containers that can be used by two or more

bottlers or brewers for different brands. This

would be an undesirable impact of BCDL,

since refillable containers have not changed

in recent years and they could be improved.

Under BCDL the incentive for a firm to incur

the costs of R&D to develop a better standard

container would be weakened, because it

could not take advantage of its competition

through exclusive use of a lower cost container. The situation would be even worse if

the new standard container were one that

cost more to produce but that cost less to fill

and distribute. In this case the innovator

would be directly subsidizing his competitors

if he were to distribute higher cost containers

for general reuse. Because antitrust regulations would probably prevent firms from

agreeing to develop new standard containers,

the administrator of the BCDL program might

be given authority to fund the necessary

research, to set guidelines for standard container design, or to coordinate cooperative industry activity in this area.

Government Impacts

BCDL would affect Government by its requirements for administering the deposit program; by affecting tax revenues from beverage-related industries; and by reducing the

costs of litter control, solid waste management, and materials and energy supply. The

latter cost reductions were discussed earlier

and will not be examined here.

Administrative costs of BCDL would be

small. Fundamentally, BCDL uses a market

mechanism rather than a regulatory approach. Unlike Government regulatory programs with respect to public health and the

environment, BCDL requires no research,

standards-setting, or monitoring programs,

and enforcement would be limited to acting

on violations reported by consumers or by

other parties to the beverage transaction.

Under BCDL, the increased trade in returned

containers might lead to an increase in illegal

activity, such as the fraudulent return for

deposit of containers destined for recycling,

which have already been returned. This prob-
232 Materials and Energy From Municipal Waste

lem is inherent in the fact that the refund value of a nonreturnable is 5 to 10 times its value

for recycling. Some additional law enforcement effort might be required to deal with

this problem.

Jeffords and Webster (146) report that

Government administrative costs for the first

5 years of the Vermont law totaled between

$1,000 and $1,500. Most of this expense was

for duplication of the law and for advertising

to notify the public of proposed regulations.

Given the nature of Federal programs, and in

view of the likelihood of numerous legal challenges to Federal BCDL, it is unrealistic to expect that this $200 to $300 per year cost

could be extrapolated to the national level.

Nevertheless, the Vermont experience suggests that administrative costs would not be

large.

Under BCDL certain Federal, State, and

local tax revenues might be affected. Federal

and State excise taxes on beer would change

in proportion to sales changes. State and

local sales taxes on beer and soft drinks

would change in proportion to sales as well.

Local property tax revenues might increase

as total plant investment increases. Corporate income taxes might decline substantially from the can and bottle industries and

increase from the beverage production and

delivery industries. Personal income taxes on

the higher total earnings would probably increase, although the shift to lower average

wages paid would tend to offset some of this

increase.

Estimates of Government revenue change

are sensitive to several parameters whose

values are not well established, such as sales,

prices, investment, and wages. In their study

of a ban on nonreturnables, the Wharton

School estimated increases in total Government revenues of $273 million to $472 million. (147) Corporate and personal income

taxes accounted for most of the increase,

with corporate tax increases about twice as

large as those for personal income taxes.

Sales tax increases were only about 10 percent of the total. Property tax changes were

not examined. It is likely that these estimates

are on the high side, since the Wharton study

features the greatest increase in investment

and employment of any of the major analyses.

Emerging Influences on Beverage

Container Choice

T

he analysis of BCDL in this chapter uses

a number of assumptions that are based

on a continuation of historic trends in the

structure of the beverage industries and in

beverage container technology. This section

discusses two emerging trends that may

heavily influence the performance of the beverage delivery system for soft drinks: the

plastic softdrink container and the recent

Federal Trade Commission (FTC) decision regarding territorial franchises for soft drinks.

The Plastic Soft Drink Bottle

Recently, plastic soft drink bottles manufactured from a polyester (polyethylene

terephthalate or PET) have made very rapid

gains in market share in the large 1- and 2-

liter sizes (approximately 1 and 2 quarts).

First marketed in 1976, PET bottles appear to

have gained about one-fourth of the market

for 2-liter containers by 1978.*(148) The National Soft Drink Association reports that I.5-

to 2-liter containers held 6.3 percent of the

total market in 1977, up from 2.5 percent in

1974. Securities analysts are projecting rapid

penetration of plastics into soft drink markets

in the next few years. (137, 148) At least four

major firms now produce PET beverage containers.(149)

In an earlier venture, Monsanto had introduced a beverage container based on a

polyacrylonitrile resin that was ordered off

the market by FDA on health grounds. (See

earlier section on health and safety aspects

of containers). PET has not encountered any

health- or safety-related problems.

*Authoritative data on plastic containers for soft

drinks are not yet available in standard industry or

Government sources. Most of such data now come from

business and trade publications,
Ch. 9—Beverage Container Deposit Legislation ● 233

All of the plastic beverage containers currently in use are intended to be nonreturnable. In principle, a plastic container could be

made refillable. However, this would require

much heavier container construction, which

would defeat their major advantage—light

weight. Furthermore, plastics are liable to

partial degradation under heat and light and

can absorb foreign substances, such as solvents or fuels, that might be stored in empties.

These characteristics make refilling plastic

bottles a doubtful possibility. For these reasons, if plastic bottles are returned for

deposit under BCDL, they are more likely to

be recycled into noncontainer plastic articles

than to be reused or made into new beverage

bottles.

On first consideration, nonreturnable

plastic containers made from oil and natural

gas would seem to be very energy intensive.

However, plastics are so much lighter than

glass and require so much less energy for production than do aluminum or steel that the

nonreturnable 2-liter PET bottle uses less

energy per ounce of soft drink delivered than

any other container but the refillable glass

bottle. (150) The PET system also uses less

natural gas than any alternative except refillable glass, but it uses more petroleum than

any container-type except aluminum cans

and nonreturnable glass. When compared to

a 2-liter plastic-coated glass bottle, the 2-liter

PET bottle uses considerably less total

energy, including much less natural gas and

about the same amount of petroleum.

Should the plastic container displace significant numbers of cans or glass bottles in

smaller sizes (10 to 16 ounces), it could have

more serious negative consequences for current container producers than would BCDL.

They would sustain a loss in both production

volume and jobs. In fact, the projected negative consequences of BCDL for the industries and workers now producing containers may occur as a result of the use of

plastic bottles, regardless of whether BCDL is

adopted. In any future analyses of the effectiveness and impacts of the possible adoption

of BCDL the role of the plastic bottle must be

given serious consideration.

The FTC Decision on Soft Drink

Territorial Franchises

BACKGROUND OF THE DECISION

On April 7, 1978, FTC ordered the CocaCola Company and others, and PepsiCo to

cease and desist from enforcing contracts

that allocate or restrict the territories of

franchised bottlers. (151) It ordered the end of

all such marketing agreements, except for

beverages in refillable containers which can

continue to be sold in restricted territories

under exclusive franchises. The FTC’s orders

in these cases have been appealed in the U.S.

Court of Appeals in Washington, D. C., and a

decision of the Court is pending. (152)

Some opponents of the FTC decision, arguing in part by analogy to the evolution of the

beer industry since World War II, say that if

the FTC decision is upheld, small bottlers will

be driven out of the market. (153) National

companies that operate from large, highspeed regional plants using nonreturnable

containers will be responsible for the rapid

demise of the refillable bottle under these circumstances. According to this view, the exclusive franchise agreements protect the

refillable container.

The contrary point of view is that the franchise system has protected small bottlers who

are operating with technology that fails to

take advantage of the enhanced productivity

of larger, more modern equipment. Furthermore, it is argued that franchise bottlers are

not disciplined by intrabrand market forces

to compete on the grounds of price, quality, or

service. According to this view, consumers

are injured by the franchise system, and the

fact that refillables are maintained by it is

evidence of the use of inefficient technology

by franchisees.

48-786 0 - 79 - 16
234 “ Materials and Energy From Municipal Waste

INTERACTION OF BCDL AND

THE FTC DECISION

It is not the purpose of this study to examine the legal arguments regarding the FTC

decision and the status of the territorial franchise system. * However, it is useful to examine how the decision, if it stands, would interact with or affect BCDL.

First, if passed, BCDL could help reduce

any trend to regional bottling stimulated by

the FTC decision. By helping to preserve the

role of the refillable in the marketplace,

BCDL would undercut the economic advantage of centralized bottling, which is limited

to nonreturnable containers. (The heavier

weight of refillables and the need to back

haul empties discourages their centralized

bottling.) Thus, BCDL might slow any trend

toward elimination of local bottlers.

Second, BCDL could continue to discourage

litter, reduce solid waste, and reduce the use

of virgin materials, regardless of whether territorial franchises stand. The deposits under

BCDL would continue to provide an incentive

to return all containers for recycling and/or

reuse rather than to litter them or put them in

the trash.

Third, the energy use for soft drink

delivery would be lower under BCDL if the

FTC decision is upheld, than if it stands

without BCDL. In a recent study, Franklin

Associates has shown that assuming the FTC

decision causes a rapid decline in the use of

refillables for soft drinks, energy use for the

delivery of soft drinks in 1982 could range

from 17 to 36 percent higher than if the decision is overturned and BCDL is not

passed. (154) BCDL would help preserve the

refillable bottle and lessen the impact of the

FTC decision on energy use. The quantitative

effect, however, has not been estimated.

*Several bills have been introduced in the 96th Congress that would permit the maintenance of the territorial franchise system for carbonated soft drinks by exempting soft drinks from the antitrust laws for this purpose. See, for example, H.R, 596, 1512, 1669, 1693, and

1868 and S. 268 and 598.

Finally, it is noteworthy that both the beer

and soft drink industries are complex, and

are characterized by a mix of small and large

firms, regional and national markets, and extensive use of packaging alternatives as

marketing and competitive devices.(155 to

158] None of the major analyses of the effects

of BCDL assessed in this chapter has taken

these structural complexities into account. In

part, this reflects the limits of the art of policy

analysis. But, it also contributes to the inherent uncertainty regarding the ultimate

outcomes of either BCDL or antitrust action

taken against the industries.

Findings on BCDL

D

uring the past 30 years, the beer and soft

drink industries have shifted heavily

from sales in refillable glass bottles to the use

of nonreturnable glass bottles and metal

cans. At the same time, the sales of both

beverages in individual packages have grown

dramatically. One result of these trends has

been that discarded beverage containers

have become important parts both of litter

and of MSW. Beverage delivery has become

more energy- and materials-intensive, while

employing fewer people and using less capital

per unit delivered. Economies of scale in

brewing, bottling, and transportation, especially in lightweight nonreturnables, have

favored a trend toward the centralization of

bottling and brewing with fewer producers

and fewer brands available. Packaging has

become an important part of beverage marketing strategy, with a wide variety of package sizes and types available.

Legislation has been proposed whose purpose is to slow the declining market share of

beverages in refillable bottles by imposing a

mandatory, uniform, refundable deposit on

each individual container. Beverage container deposit legislation, or BCDL, would not ban

any type of container—can or bottle. Unlike a

ban on nonreturnable containers, this legislation would preserve the right of producers

and consumers to use the package of their

choice. Moreover, it would ensure that users
Ch. 9—Beverage Container Deposit legislation ● 235

of nonreturnables pay the full cost of their

disposal, and would provide incentives for

recycling and against littering.

Considerable uncertainty exists regarding

the ultimate effects of BCDL on container

market shares and on return and recycle

rates. No one has devised a method for

predicting these outcomes, which depend on

market decisions by consumers and on the exercise of at least limited market power by

producers and distributors. Nevertheless, experience in the several States that have implemented BCDL, as well as the judgments of

informed observers, indicate that BCDL

would lead to a greater use of refillable bottles and to higher rates of container return

for reuse and recycling.

A review of seven major and several minor

studies of BCDL sponsored by proponents, opponents, and neutral parties finds them all in

agreement that BCDL would accomplish all of

its major goals to some degree. It would lead

to a reduction in litter, in MSW, and in consumption of energy and raw materials. It

would also serve as a symbol of a commitment

to resource conservation, even though it

would not save as much energy or materials

as such measures as energy efficiency standards for buildings and automobiles.

BCDL would have a number of important

side effects that are not intended by its proponents and which should be considered. It

would increase the capital needs of brewers,

bottlers, wholesalers, and retailers. At the

same time, it would severely disrupt the metal

can and glass bottle industries. Overall employment in beverage delivery would increase, along with total compensation to

workers in the affected industries. However,

existing skilled jobs would be lost in materials

and container production, while relatively unskilled jobs would be gained in wholesaling,

transportation, and retailing of beverages.

Under BCDL, the costs of containers per fill

would decline due to the enhanced use of

multitrip refillables, while other costs of

delivery might increase. Available data do

not permit a consensus judgment of the net effect of BCDL on total costs, nor on the shelf

prices of beer and soft drinks. Some authors

project a decrease in costs and prices, others

an increase. Data on current prices show

that beverages are cheaper in refillables, but

there is some reason to believe that this might

not be the case under BCDL.

The availability of beverages in refillable

containers is expected to improve under

BCDL, whereas the number of types of containers might decline. Depending on how consumers value the convenience of refillables

and nonreturnables, as well as on the uncertain price changes, beverage consumption

might decline by at most a few percent under

BCDL.

Refillable containers generally cause less

air and water pollution and less industrial

solid wastes than other container types on a

per-fill basis. Litter-related injury from improperly discarded glass bottles would probably decline under BCDL. It is not possible to

say with the data currently available

whether injuries to workers and consumers

would increase or decrease. No evidence was

found that refillable glass bottles pose additional health or sanitation hazards.

If BCDL were passed, new technology is expected to emerge for managing refillable containers and for recycling nonreturnables.

Government action might be needed to spur

development of new, more efficient standard

refillable containers for use industrywide.

BCDL would cause some shift in tax revenues at and among the local, State, and Federal levels because it would change the mix of

capital, labor, and incomes for the beveragerelated industries and for their employees.

While BCDL uses the market approach to

regulation and is nearly self-administering,

some additional Government resources would

be needed to administer and police a deposit

system.

The growing popularity of the plastic bottle

could drastically alter the soft drink package

mix, whether or not BCDL is adopted. If made

available in smaller sizes (10 to 16 ounces),
236 . Materials and Energy From Municipal Waste

plastic containers would markedly alter the

projections of system performance, effectiveness, and impacts under BCDL that are discussed in this chapter. If upheld by the courts

and not amended by the Congress, the recent

FTC decision, which outlaws territorial franchise restrictions for trademarked soft drinks

in nonreturnable containers, could lead to

rapid concentration of that industry. The outcomes would be an industry with only a few

firms having a few large plants, as well as the

rapid disappearance of the refillable bottle

for soft drinks. BCDL could help retard or

limit these consequences.
Ch. 9—Beverage Container Deposit Legislation ● 237

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

References

“Materials Conservation Through Reduced Wastage,” U.S. Office of Technology Assessment, forthcoming.

Committee Findings and Sta~~ Papers on

National Beverage Container Deposits,

Second Report of the Resource Conservation Committee, January 1978, p. 2

Keep America Beautiful, Inc., 1978

Annual Review, New York, N. Y., Nov.

30, 1978.

Keep America Beautiful, Inc., Final Report Action Research Model, New York,

N. Y., Dec. 3, 1975.

Keep Amercia Beautiful, Inc., Clean

Community System Bulletin, March

1979, p. 3.

Litter Control, Recycling and Resource

Recovery Act of 1977, Chapter 1161,

California Statutes, 1977.

Information supplied by Earl Tower,

Project Director, Model Litter Control

Act, Washington State Department of

Ecology, May 1978.

California State Senate Bill No. 373

amending the Revenue and Taxation

Code. Approved by the Governor, Feb.

27, 1979.

The Society oj the Plastics Industry, Inc.

v. The City of New York, N.Y. State

Supreme Court, Sept. 16, 1971.

Ward, Penny, “Deadly Throwaways—

Plastic Six-Pack Binders and Metal Pull

Tabs Doom Wildlife,” Defenders of Wildlife, June 1975.

Resource Conservation Committee, op.

cit.

Braden, P. L., S. R. Rideout, and J. H.

Leigh, An Evaluation of Deposit-Return

Systems for the Michigan Beer Market,

Report for the U.S. Brewers Association

by the Graduate School of Business Administration, The University of Michigan, August 1977.

Oregon’s Bottle Bill: The 1977 Report,

State of Oregon, Department of Environmental Quality, March 1977.

Young, W. R., and N. Silverstein, “A

Hard Look at the Plastic Soft Drink Bottle: A Bubbly Future?,” Morgan Stanley

and Co., Institutional Researchf July 29,

1977.

15. Glass Packaging Institute, Annual Report, Washington, D. C., 1977.

16. Can Manufacturers Institute, Metal

Cans Shipment Report, 2976, and Year to

Date Metal Cans Shipments Report, Apr.

7, 1978.

17. U.S. Bureau of Mines, Mineral Commodity Summaries, 1978, p. 4, 84.

18. Data for 1947-73 from Brewers Almanac

as reported in reference 20, p. A-7. Data

for 1975-77 personal communication,

Phillip Katz, U.S. Brewers Association,

May 1978.

19. Data for 1947-73 from Statistical Pro~ile

1973, National Soft Drink Association as

reported in reference 20, p. A-11. Data

for 1974-76 from Statistical Pro~ile 1976,

National Soft Drink Association. Data

for 1977, personal communication, Kenneth A. Doyle, National Soft Drink Association.

20. Bingham, Taylor H., et al., Energy and

Economic impacts of Mandatory Deposits, Research Triangle Institute, Research Triangle Park, North Carolina,

for Federal Energy Administration, September 1976. Available as NTIS, PB258-638. Appendix A.

21. Robert S. Weinberg and Associates,

“The Effects of Convenience Packaging

on the Malt Beverage Industry,

1947-1969, ” prepared for the U.S. Brewers Association, Inc., Dec. 1, 1971, p. 4.

22. R. S. Weinberg and Associates as reported in reference 21, p. A-7.

23. Data for 1947-73 from Robert S.

Weinberg and Associates as reported in

reference 20, p. B-5. Data for 1975-77,

personal communication, Phillip Katz,

U.S. Brewers Association, May 1978.

24. Data from 1947-73 from NSDA Statistical Pro~ile as reported in reference

20, p. B-n. Data for 1974-77 personal

communication, Kenneth Doyle, NSDA,

May 1978.
238 . Materials and Energy From Municipal Waste

25.

26.

27.

28.

29.

30.

31.

32.

33.

34.

35.

36.

37.

38.

39.

40.

41.

42.

43,

I

Riley, John J., A History of the American

Soft Drink Industry, American Bottlers

of Carbonated Beverages, Washington,

D. C., 1958. (Reprinted by Arno Press,

New York, N. Y., 1972) p. 206, 207.

American Can Company, “A History of

Packaged Beer and Its Market in the

United States, ” 1969, p. 7.

Riley, op. cit., p. 272.

Bingham, et al., op. cit., p. 23.

American Can, op. cit., p. 9.

American Can, op. cit., p. 8.

Riley, op. cit., p. 271.

Data for 1954-73 from NSDA Statistical

Profile as reported in reference 20, p.

B1l. Data for 1974-75 from NSDA Statistical Pro~ile 1976. Data for 1975-76

from NSDA Sales Survey of the Soft

Drink Industry. Data for 1976-77, personal communication, Kenneth Doyle,

NSDA, May 1978.

American Can, op. cit., p. 113.

Bureau of Alcohol, Tobacco and Firearms, U.S. Department of the Treasury,

Breweries Authorized to Operate, July

1978.

Denver Post, Aug. 8, 1977, p. 28.

Riley, op. cit., p. 275.

NSDA, Statistical Profile 1976.

Lamer, Robert, “The Economics of Territorial Restrictions in the Soft Drink Industry, ” Antitrust Bulletin, 22, 147

(Spring 1977).

Bingham, et al., op. cit., p. B-28, B29.

R. S. Weinberg and Associates, op. cit.,

chart 14.

General Accounting Office, Potential

E~~ects of A National Mandatory Deposit

m Beverage Containers, report no. PAD78-19, Dec. 7, 1977, p. 13.

Organization for Economic Cooperation

and Development, Environment Directorate, Re-Use and Recycling o~ Packaging Materials-Beverage Containers Case

Study, draft final report, report Env/

MPW/77.2, Paris, France, January 1977,

p. 111.

U.S. Department of Agriculture, Food

Stamp Program Regulations, title 7,

44.

45.

46.

47.

48{

494

50.

51!

52(

53.

54.

55.

i

1

chapter 11, subchapter C, part 272.2(b),

June 30, 1976.

Montz, Dwight, U.S. Department of

Agriculture, personal communication,

Jan. 24, 1978.

Syrek, Daniel B., California Litter: A

Comprehensive Analysis and Plan for

Abatement, Institute for Applied Research, Carmichael, Calif., May 1975.

Tawil, Jack J., Social Costs of Beverage

Containers: An Economic Analysis of Six

Legislative Solutions for Maryland,

Maryland Department of Economic and

Community Development, Annapolis,

Md., Mar. 12, 1976, p, 8,

Nelson, John P., J. N. Williams, Jr., T. H.

Reynolds, H, The Impact of Litter, Research Report No. 127, Commonwealth

of Kentucky Legislative Research Commission, Frankfort, Ky., October 1975, p.

8.

Nelson, op. cit., p. 19.

Syrek, Daniel B., Litter Reduction

E~~ectiveness, Volume Two, Washington’s Litter Control Program and

Oregon’s Container Deposit Legislation,

Report by the Institute for Applied Research, Sacramento, Calif., to the Continental Can Company, November 1977.

p. 2.

Environmental Protection Agency,

Resource Recovery and Waste Reduction, Fourth Report to Congress, EPASW-600, August 1977, p, 69.

Statistical Abstract of the United States,

93rd Edition, 1972, p. 538.

Binkley, Clark, and James F. Hudson,

Litter: Cost, Measurement and Control,

~raft report by Urban Systems Research

and Engineering, Inc., Cambridge,

Mass., to EPA, June 1977.

Jeffords, James M., and D. W. Webster,

“Vermont 5 cents Deposit, ” November

1977, p. 10. Available from office of Congressman Jeffords.

Waggoner, Don, “Oregon’s Bottle Bill

Two Years Later,” Oregon Environmental Council, 1974, p. 10.

Ackoff, Russell L., et al., A Study of the
Ch. 9—Beverage Container Deposit Legislation ● 239

Impacts on the USA of a Ban on OneWay Beverage Containers, prepared for

the U.S. Brewers Association by Busch

Center, the Wharton School, University

of Pennsylvania, Philadelphia, Pa., December 1976, vol. I, app. E, p. 61.

56. GAO, op. cit., pp. 22-26.

57. GAO, op. cit., p. 26.

58. Resource Conservation Committee, op.

cit., p. 40.

59. Binkley and Hudson, op. cit., p. 40.

60. Bureau of Domestic Commerce Staff,

The Impacts of National Beverage Container Legislation. U.S. Department of

Commerce, staff study a-C)l-75, October

1975.

61. Environmental Protection Agency, op.

cit.

62. General Accounting Office, op. cit.

63. Hannon, Bruce, “System Energy and

64.

Recycling: A Study of the Beverage Industry,” report number 23, Center for

Advanced Computation, University of 11-

linois, Urbana-Champaign, Mar. 17,

1973.

Bingham, Taylor H., et al., op. cit.

65. Resource Conservation Committee, op.

66,

67,

68.

69,

70

71,

cit.

Ackoff, Russell L., et al., op. cit.

Ackoff, et al., op. cit., vol. II, p. 34.

Bingham, et al., op. cit., pp. D-58, D-84,

D-1 13.

Ackoff, et al., op. cit., vol. II, pp. 64, 128,

(see footnote table 64).

EPA, op. cit., p. 70.

Personal communication, Kenneth Doyle,

National Soft Drink Association, May

1978.

72. Personal communication, Phillip Katz,

U.S. Brewers Association, May 1978.

73. Ernst & Ernst, for Can Manufacturers

Institute, Apr. 7, 1978.

74. Ackoff, et al., op. cit., vol. II, p. 2.

75. GAO, op. cit., p. 14.

76. Bingham, et al., op. cit., pp. 28, 30.

77. Bureau of Domestic Commerce Staff, op.

cit., p. 4.

78. Ackoff, et al., op. cit., vol. II, pp. 9, 10.

79. Midwest Research Institute, Resource

and Environmental Pro~ile Analysis of

Nine Beverage Container Alternatives,

report for the Environmental Protection

Agency, EPA-350-SW-91C, 1974, p. 9.

80. GAO, op. cit., p. 30.

81. Battelle Columbus Division, Evaluation of

Energy Consumed in Using Refillable

Glass Bottles and Cans for Beer and Soft

Drinks, report to Can Manufacturers Institute, June 1978.

82. Bureau of Domestic Commerce Staff, op.

cit., p. 3.

83. GAO, op. cit., p. 28.

84. Bingham, et al., op. cit., p. 3.

85. Resource Conservation Committee, op.

cit., p. 43.

86. Ackoff, et al., op. cit., vol. II, p. 11.

87. Bingham, et al., op. cit., p. D-3.

88. Ackoff, et al., op. cit., p. 12.

89, Bingham, et al., op. cit., p. 34.

90. Battelle Columbus Division, op. cit., p. v.

91. Robert S. Weinberg and Associates,

letter to H. B. King, U.S. Brewers Association, reviewing RTI/FEA study, Energy

and Economic Impacts of Mandatory Deposits, Nov. 28, 1975, p. 13.

92. Bureau of Domestic Commerce staff, op.

cit., p. 18.

93. GAO, op. cit., p. 26, 27.

94. Bingham, et al., op. cit., p. I-5, I-6.

95. Resource Conservation Committee, op.

cit., p. 41.

96. EPA, Resource Recovery and Waste Reduction, op. cit., pp. 17, 18.

97. Bingham, et al., op. cit., p. 36.

98. Robert S. Weinberg and Associates,

letter to H. B. King, op. cit., p. 3.

99. Ackoff, et al., op. cit., app. A, p. A-9. The

questionnaires and results are appended

to ref. 98.

100. Bureau of Domestic Commerce Staff, op.

cit., p. 14.

101. EPA, op. cit., p. 73.

102. Bingham, et al., op. cit., p. 59.

103. GAO op. cit., p. 58.

104. Ackoff, et al., op. cit., p. 29.

105. White, D. Lamar, GAO, personal communication to C. T. Hill, July 25, 1978.

106, Statement of Amory B. Lovins before

Joint Hearings of the Select Committee

on Small Business and the Committee on
240 “ Materials and Energy From Municipal Waste

Interior and Insular Affairs, U.S. Senate,

Dec. 9, 1976.

107. Bingham, et al., op. cit., p. 40.

108. Bureau of Domestic Commerce Staff, op.

109,

110.

111.

112.

113.

114.

115.

116.

117.

1184

119(

120.

121.

122.

123

124,

125,

126{

cit., pp. 2, 3.

EPA, op. cit., p. 71.

GAO, op. cit., pp. 40,65.

Bingham, et al., op. cit., p, 65.

Resource Conservation Committee, op.

cit., p. 38,

Ackoff, et al., op. cit., p. 37.

EPA, op. cit., p. 72.

GAO, op. cit., p. 33.

Bingham, et al., op. cit., p. 68.

Oshinski, John L., United Steelworkers of

America, personal communication, May

1978. Also, “A Hard Line on Lifetime

Security, “ Business Week, Oct. 31, 1977,

p. 33.

Resource Conservation Committee, op.

cit., p. 88.

Robert S. Weinberg and Associates,

“The Impact of a Shift From the Present

Convenience Packaging Malt Beverage

Production Distribution System to a Returnable Bottles-Only System on the

Price the Consumer will Ultimately Have

to Pay for Malt Beverages for Off-Premise Consumption, ” prepared for the U.S.

Brewers Association, Inc., Oct. 15, 1976,

p. 7.

Confidential industry data.

Robert S. Weinberg and Associates,

Papers 1, 7, and 8 in Reference Source

Book, U.S. Brewers Association, Washington, D. C., January 1978.

Weinberg, Robert S., “The Economics of

the Malt Beverage Production/Distribution System 1976, ” Working paper appended to a memorandum for the U.S.

Brewers Association critiquing the June

1978 Final Draft OTA report, Aug. 8,

1978.

Central Investment Corp., Cincinnati,

Ohio, “Cost of Goods,” Aug. 31, 1978.

Ackoff, et al., op. cit., pp. 46-48.

Bureau of Domestic Commerce Staff, op.

cit., p. 40

Bingham, et al., op. cit., p. 50.

127. Resource Conservation Committee, op.

cit., p. 36.

128. Ackoff, et al., op. cit., p. 43 footnote.

129. Majers Market Research Company,

“Carbonated Soft Drinks. 12 Months

Ending November 1977.” Omaha, Nebr.

130, Bingham, et al., op. cit., p. 51.

131. Ackoff, et al., op. cit., p. 24.

132, Letter to A. E. Paladino, OTA, from

Arthur Finnel, The Wharton School,

Aug. 7, 1978, p. 2.

133. Midwest Research Institute, op. cit., p.

21.

134. Resource Conservation Committee, op.

cit., p. 42.

135. “Oregon’s Bottle Bill: The 1977 Report, ”

op. cit., p. 5.

136. Jeffords and Webster, op. cit., p. 1.

137. Young, William R. and Naomi

Silverstein, op. cit.

138. “Fighting Bottle Ban,” Chemical Week,

NOV. 23, 1977, p. 19.

139. U.S. Department of the Treasury,

Bureau of Alcohol, Tobacco, and Firearms, “Alcohol, Tobacco and Firearms’

Industry Circular 73-lo,” May 1973.

140. Syrek, Daniel B., California Litter: A

Comprehensive Analysis and Plan for

Abatement, op. cit., pp. 59-72.

141. Nelson, John P., John N. Williams, Jr.,

and Thurston Howard Reynolds, II, op.

cit., pp. 1-8.

142. U.S. Consumer Product Safety Commission, Bureau of Epidemiology, “Hazard Analysis: Bottles for Carbonated

Soft Drinks,” NIIC-111O-75-HOO4, April

1975.

143. Based on data provided by Nancy

Johnston, Director, National Injury Information Clearinghouse, Hazard Identification and Analysis, U.S. Consumer

Product Safety Commission, May 1978.

144. Chaffee, David, “Bottle Safety Now the

Subject of Two Voluntary Standards,”

Dimensions/NBS, February 1978, p. 17.

145. Ashford, Nicholas A., and George R.

Heaton, “The Effects of Health and Environmental Regulation on Technological

Change in the Chemical Industry: Theory
Ch. 9—Beverage Container Deposit Legislation ● 241

146.

147,

148,

149.

1500

151.

152.

and Evidence, ” in Federal Regulation

and Chemical Innovation, Christopher T.

Hill, editor, American Chemical Society

Symposium Series, no. 109, 1979.

Jeffords and Webster, op. cit., p. 31.

Ackoff, et al., op. cit., p. 63.

Marcial, Gene G.,’ ’Inroads by Plastics in

the Container Market Make Analysts

Wary on Glass, Metal Stocks, ” Wall

Street Journal, July 17, 1978.

Chemical Week, July 26, 1978, p. 37.

Franklin Associates, Lt’d., “Energy and

Environmental Impacts Associated With

A Federal Trade Commission Decision, ”

report to R. G. Gay, Attorney at Law,

Feb. 14, 1979, p. 22.

Docket No. 8855, U.S. Federal Trade

Commission, Final Order and Opinion, in

the Matter of the Coca-Cola Company

(and others), Apr. 7, 1978. Also Docket

No. 8856, In the Matter of Pepsico, Inc.

The Coca-Cola Company et a). v. The

Federal Trade Commission, U.S. Court of

Appeals (Docket No. 78-1364).

153.

154.

1550

156.

157.

158.

The Pepsi-Cola Bottling Companies of

Canton, Ohio, Mansfield, Ohio, Ft. Lauderdale, Fla., and West Palm Beach,

Fla., Competition in the Soft Drink Industry and How It Really Affects the Consumer, November 1978.

Franklin Associates, op. cit., p. 4.

Keithahn, Charles F., The Brewing Industry, Staff Report of the Federal Trade

Commission, December 1978.

Fraundorf, Kenneth, C., The Social Costs

of Packaging Competition in the Beer and

Soft Drink Industries, Ph. D. dissertation,

Cornell University, Ithaca, N. Y., 1971.

Hatten, Kenneth J., and Dan E. Schendel,

“Heterogeneity Within An Industry:

Firm Conduct in the U.S. Brewing Industry, 1952 -71,” J. Industrial Economics, XXVI, 97-113 (December 1977).

“The Battle of the Beers, ” Newsweek,

Sept. 4, 1978.
Appendixes

Contents

Page

Appendix A—Selected Federal Laws

Related to Resource Recovery,

Recycling, and Reuse. . ..............245

The Federal Solid Waste Disposal Act

of 1965, as Amended by the

Resource Recovery Act of 1970.....245

The Resource Conservation and

Recovery Act of 1976.............246

The Federal Ocean Dumping Act .. ...249

The Energy Tax Act. . . . . . . ., . . . . . . .249

The Emergency Interim Consumer

Product Safety Standard Act of 1978249

Appendix B—Legislative Activity in the

95th Congress Related to Resource

Recovery, Recycling, and Reuse . ......250

Materials Policy. . . . . . . . . . . ........250

Beverage Container Deposits . .......250

Ban Nonreturnable Beverage

Containers. . . . . . ., . . . . . . . ......252

Tax Incentives for Recycling Waste

products. . . . . . . . . . . . . . . . . . . . . , .252

Energy Recovery . .................252

Solid Waste Product Charge System. .. 252

Appendix C—Description of Resource

Recovery Technologies . .............254

Energy Recovery Systems . ..........254

Mass Incineration Processes. .. ....254

Waterwall Incineration. . .......254

Small-Scale Modular Incineration 254

Refuse-Derived Fuel Systems .. ....255

pyrolysis Systems . . . . . . . . . . . . . . . 257

Biological Systems. . .............259

Methane Production From

Landfills. . .................260

Anaerobic Digestion . ..........260

Hydrolysis . ..................262

Materials Recovery Systems. . .......263

Aluminum. . . . . . . . . . . . . . . . . . . . . .263

Glass . . . . . . . . . . . . . . . . . . . . .. ...263

Ferrous Metals . ................264

Compost. . . . . . . . . . . ............264

Fiber. . . . . . . . . . . . . . . . . . . . . .. ...264

Other Materials Recovery

Technologies . ................264

Additional Readings on Resource

Recovery Technologies . ..........265
— —

Puge

References . . . . . . .................266

Appendix D—Additional Information on

Beverage ContainerLegislation . ......267

StateBeverageContainerLaws and

Ordinances . ...................26 7

AComparisonandAnalysis ofBeverage

ContainerLegislationStudies

byResearchTriangleInstitute

andTheWhartonSchool. . ......267

BackgroundofAnalysesofBeverage

ContainerLegislation. . .........269

FamilyTreeofExistingAnalyses ...269

Scope, Assumptions,andMethods of

theResearchTriangleInstitute

andWharton School Studies .. ...270

ComparisonofFindingsofResearch

TriangleInstituteandThe

WhartonSchool. . .............271

FederalExperienceWithBeverage

ContainerDeposits. . ...........273

DepartmentofDefenseTest , ......273

YosemiteNationalParkTest. .. ....274

References . . . . . . .................275

Tables

TabJeNo. Page

B-1. BillsRelatedtoResource Recovery,

D-1

D-2

Recycling, andReuseIntroduced -

ButNotPassedDuringthe

95thCongress. . . ................25 1

CharacteristicsofStateBeverage

ContainerDepositLaws. . .........268

Scope, Assumptions, andMethods of

theResearchTriangleInstitute and

TheWhartonSchoolStudies . ......271

—

TabieNo.

D-3.

D-4.

D-5.

FindingsoftheResearchTriangle

InstituteandTheWharton .

SchoolStudies. . . ...............272

FindingsoftheResearchTriangle

InstituteandTheWharton

School Studies PerUnitBeverage

Consumption . ..................273

FederalAgenciesThatAre

ImplementingorHaveImplemented a

DepositRefundSystem . .....,....273

Figures

FigureNo. Page

GI.

C-2.

c-3t C-4t

C-5. C-6.

c-7.

c-8.

TypicalWaterwallFurnace for

UnprocessedSolidWaste . ........255

This SimplifiedFlowDiagram

ShowsHowtheDryProcessing

Approach[NoWaterSlurry)CanBe

Used to Produce Fluff, Densified, or

Dust RDF . . . . . . . . . . . . . . . . , ,....256

Wet Process Energy Recovery System257

The Monsanto Landgard System

Produces a Low-Btu Gas Which is

Immediately Burned Onsite for the

production of Steam. . ............258

Torrax Slagging Pyrolysis System. .. 259

Union Carbide Purox System Produces a

Medium-Btu Gas for Sale to

Offsite Users . . . . . . . . . . . . . .. ....260

Production of Liquid Fuel From Solid

Waste Using the Occidental Process. 26 I

Biological Gasification of Solid

Waste in Reactors . ..............262
Apendix A

Selected Federal Laws Related to

Resource Recovery, Recycling, and Reuse

The Federal Solid Waste Disposal

Act of 1965, as Amended by the

Resource Recovery Act of 1970

T

he Solid Waste Disposal Act of 1965 was

passed as part of the Clean Air Act

amendments of 1965 (Public Law 89-272, 79

Stat. 992 (1965)). * This legislation emphasized the Federal Government’s awareness of

the growing problem of solid waste disposal

and the interrelationship of solid waste disposal with air pollution, generation rates, etc.

It should also be noted that along with congressional awareness of the relationship between waste disposal and air pollution was a

concern with the problems of inadequate

space for landfills, and the increasing costs

of waste disposal. As a result of such problems, the Solid Waste Disposal Act of 1965

was amended by the Resource Recovery Act

of 1970, which not only stressed new methods

of solid waste disposal, but emphasized the

importance of recycling and reuse of waste

materials (Public Law 91-512, 84 Stat. 1227

(1970)).

The purposes of the 1965 Act, as expanded

by the 1970 Amendments, were to design and

test solid waste management and resource

recovery systems that would preserve and

enhance the quality of water, air, and land

resources. Also, the 1965 Act provided technical and financial assistance to State governments and interstate agencies in planning

*The relationship between clean air and solid waste

disposal is obvious: waste incineration, poorly managed landfills, and open dumping and burning can contribute to air pollution. While the Clean Air Act is very

complex and covers many sources of pollution, the discussion in this report will be limited to those aspects of

the Act that pertain to the disposal of solid wastes.

and developing solid waste disposal and resource recovery programs. The Act also emphasized the need to improve management

techniques and organizational arrangements

for collecting, separating, recovering, and recycling solid wastes and for disposing of unrecoverable residues.

The 1965 Act was administered originally

by the Department of Health, Education, and

Welfare. In 1970, the Environmental Protection Agency (EPA) was given jurisdiction over

the Act due to a reorganization in the executive branch. The major responsibilities mandated for the EPA Administrator in administering the 1965 Act are as follows.

●

●

●

●

●

To conduct studies and give financial aid

to government and private agencies and

institutions, as well as to individuals, to

undertake research, training, demonstration, and studies regarding the effects of solid waste on the environment.

Make studies of the operation and financing of solid waste disposal programs and of ways of reducing the

amount of such waste and unsalvageable waste materials.

Studies should also concern themselves

with the development of new or improved methods of collection and disposal and with new methods of processing

and recovery of materials and energy

from solid wastes.

Results of all studies supported financially by the Government should be made

available to the public.

Any patents, information, or processes

developed during any federally supported programs or R&D must be made

245
..———

246 . Materials and Energy From Municipal Waste

available on fair and equitable terms to

industries whose activities relate to solid

waste disposal.

● Grants or contracts may be provided to

public or private agencies and institutions and to individuals for research,

training projects, surveys and demonstrations, including the construction of

facilities, which are involved in work related to solid waste disposal.

● Examine the following study areas:

1.

2.

3.

4.

5.

Changes in product characteristics,

packaging and production practices

which would reduce the amount of

solid waste generation;

Methods of collection, separation, and

containerization, which might encourage efficient utilization of facilities

and contribute to more effective progress on reduction, reuse, or disposal

of wastes;

Economic incentives, including Federal grants, loans, or other assistance

which might increase the reclamation

and recycling of materials from solid

wastes;

Existing public policies, including subsidies and economic incentives as well

as disincentives, that have an effect

on the recycling or reuse of materials;

and

Examination of the disposal charge or

other charges if placed on packaging,

containers, vehicles, and other manufactured goods.

● Report to Congress and to the President

at least once a year on the results of the

studies and investigations in this area

carried out by the agencies.

● Demonstration projects may also be carried out by the Administrator in order to

test methods and techniques. Results are

to be made available to industry.

● Grants may be made by the Administrator to aid in State, interstate, and local

planning. The law encourages regional,

intermunicipal, and interstate planning

efforts. The extent to which this type of

●

planning was incorporated into a specific plan determined the amount of Federal funds.

Recommend guidelines for solid waste

recovery, collection, separation, and disposal systems. These guidelines are to be

consistent with public health and welfare, air and water quality standards,

and compatible with land use plans.

These guidelines can be updated if necessary.

Title II of the Resource Recovery Act of

1970 (Public Law 91-512, 84 Stat. 1227), the

Materials Policy Act of 1970, added an

amendment to the 1965 Act that called for the

Administrator of EPA to submit to Congress,

no later than 2 years after enactment of the

Resource Recovery Act of 1970, a report and

plan creating a system of “national disposal

sites for the storage and disposal of hazardous wastes, including radioactive, toxic,

chemical, biologic, and otherwise” which

may endanger public health or welfare. The

plan was to include other data such as costs

of operating and maintaining such sites.

The overall intent of both Acts, as explicitly expressed in the legislative findings of the

1970 Act (Resource Recovery Act of 1970,

title II, 202, 84 Stat. 1234), was to enhance

the quality of the environment and conserve

materials through the development of a national materials policy. Such a policy would

utilize the present resources and technology

more efficiently and would help to anticipate

future materials requirements plus make recommendations on materials use, recovery,

and, of course, disposal.

The Resource Conservation and

Recovery Act of 1976

a

e of the major bills passed during the

94th Congress was the Resource Conservation and Recovery Act of 1976 (Public Law

94-580, 90 Stat. 2795), which establishes

broad new programs to help combat the Nation’s growing solid waste problems. In summary, the law sets up comprehensive hazard-
Appendix A—Selected Federal Laws Related to Resource Recovery, Recycling, and Reuse ● 247

ous waste regulations, provides incentives for

better waste planning, and accelerates solid

waste research, development, and demonstration.

It is divided into four major sections. The

first section simply states the title in full, the

“Resource Conservation and Recovery Act of

1976. ” Section 2 states that the Act amends

the Solid Waste Disposal Act of 1965. This

section, which will be discussed below, contains eight subtitles that define the provisions

of the amendments. Section 3 states that a

study should be conducted to determine the

best procedures for removing solid waste on

Federal lands in Alaska. And, section 4 specifies that in order to demonstrate effective

means of dealing with contamination of public water supplies by leachate from abandoned or other landfills, EPA is authorized to

provide technical and financial assistance for

a research program at the Llangollen Landfill

in New Castle County, Del.

As stated above the substance of the Act is

contained in section 2, which has eight subtitles as follows:

Subtitle A, General Provisions. This subtitle includes sections on findings, objectives,

and definitions. It also contains provisions for

congressional approval of interstate compacts, integration with other laws, and financial disclosure by EPA employees.

Section 1008 of the subtitle gives EPA 1

year to publish guidelines describing the level

of performance that can be attained by various available solid waste management practices which protect the public health and environment. Further guidelines would be required within 2 years, along with minimum

criteria for use by States to define open

dumping.

Subtitle B, Authorities of the Administrator. Section 2001 establishes within EPA

an Office of Solid Waste to be headed by a

Deputy Assistant Administrator of EPA. This

Office would carry out the Administrator’s

responsibilities as mandated by the Act. Section 2002 lists the authorities of the Administrator under the Act, and states that such

regulations promulgated under the Act shall

be reviewed at least every 3 years.

Section 2003 states that EPA shall provide

teams of personnel, including Federal, State,

and local employees or contractors (referred

to as “Resource Conservation and Recovery

Panels”) to provide State and local governments upon request with technical assistance

on solid waste management, resource recovery, and resource conservation.

Section 2004 provides $750,000 in each of

FY 1978-79 for 5-percent grants toward purchase of auto tire shredders, with private

firms given the first opportunity to obtain

grants.

Section 2005 states that EPA shall provide

to Congress an annual report which will provide legislative recommendations regarding

solid waste management, resource recovery,

and resource conservation.

Section 2006 authorizes $35 million in FY

1977, $38 million in FY 1978, and $42 million

in FY 1979 to administer the Act. Of the total,

20 percent must be used to fund the Resource

Conservation and Recovery Panels, and 30

percent must be used to administer hazardous waste management provisions.

Subtitle C, Hazardous Waste Management. Section 3001 gives EPA 18 months to

promulgate criteria for identifying hazardous

wastes and list those wastes which should be

regulated. States may petition EPA to add a

specific waste to the list. Also 18 months

after enactment, EPA must promulgate standards governing generators (sec. 3002), transporters, and owners/operators of treatment,

storage, and disposal facilities (sec. 3004).

Under section 3005, EPA is given 18

months to promulgate regulations requiring

treatment, storage, or disposal facilities to

hold a permit issued by EPA or an authorized

State program. Guidelines to help develop

State programs must be promulgated within

18 months as specified by section 3006.

Section 3007 authorizes Federal and State

inspection of facilities and records, and

makes certain information publicly available.
248 . Materials and Energy From Municipal Waste

Federal enforcement through compliance

orders or civil action, after 30-day notices of

violation are issued, are specified under section 3008. Section 3009 provides that no State

or local government may impose less stringent hazardous waste management regulations.

Section 3010 requires existing generators,

transporters, and facility operators to inform

EPA or authorized States of their operations

within 90 days of promulgation of section

3001 requirements. Section 3011 authorizes

$25 million in each of FY 1978 and FY 1979

for grants to help States develop and implement hazardous waste programs, to be

awarded when needed.

Subtitle D, State or Regional Solid Waste

Plans. Section 4002 gives EPA 6 months to

publish guidelines for identifying areas with

common solid waste problems and 18 months

to publish guidelines to aid in developing

State plans. Section 4003 requires that the

State plans ban new open dumps and close or

upgrade existing ones. EPA would have 1

year after enactment of the Act to publish

criteria for defining open dumps and sanitary

landfills, with the ban on open dumps to take

effect 6 months later or upon approval of

State plans.

Section 4005 gives EPA 1 year after promulgating its criteria to inventory all disposal

facilities classified as open dumps. Governors

are given 6 months after promulgation of section 4002 guidelines to identify regional planning areas (sec. 4006). Section 4007 provides

for approval of State plans by EPA, entitling

States to receive Federal funds. And, section

4009 specifies that $25 million in both FY

1978 and FY 1979 should be spent to assist

rural communities.

Subtitle E, Duties of the Secretary of Commerce. This subtitle encourages the Secretary to encourage greater commercialization

of proven resource recovery technology by

publishing guidelines for the development of

specifications for recovered materials within

2 years (sec. 5002). The Secretary of Commerce is authorized within 2 years to identify

the geographical location of existing or potential markets for recovered materials; identify

economic and technical barriers to the use of

recovered materials; and encourage the development of new uses for recovered materials. Also under section 5004, the Secretary is

authorized to evaluate the commercial

feasibility of resource recovery facilities and

to publish the results of such evaluation.

Subtitle F, Federal Responsibilities. This

subtitle states that all Federal installations

must comply with all State and local laws.

Also under section 6002 the Act ensures that

the Federal procurement of recovered materials be maximized. The remainder of the subtitle requires that the Federal agencies cooperate with EPA and adhere to EPA guidelines

(sees. 6003 and 6004).

Subtitle G, Miscellaneous Provisions. This

subtitle covers employee protection, citizen

suits, petition for public participation and

regulations, labor standards, etc.

Subtitle H, Research, Development, Demonstration and Information. Section 8001 describes EPA’s responsibilities and authorities

for research, development, and demonstration and establishes a management program

to insure cooperation of all RD&D activities.

Section 8002 specifies areas that EPA should

study: composition of waste stream, smallscale and low technology, front-end source

separation, mining wastes, resource recovery

facilities, sludge, and tires.

Section 8004 states that EPA may enter

into contracts with public agencies or authorities or private persons for the construction

and operation of a full-scale demonstration

facility. EPA is authorized to award grants to

any State, municipal, or interstate or intermunicipal agency for the demonstration of resource recovery systems or for the construction of new or improved solid waste disposal

facilities.

Section 8007 authorizes EPA $35 million

for FY 1978 to fund all the above sections except section 8002 which included its own

funding of $8 million to finance specific

studies.
—

Appendix A—Selected Federal Laws Related to Resource Recovery, Recycling, and Reuse ● 249

The Federal Ocean Dumping Act

A

long with the enactment of the Federal

Water Pollution Control Act Amendments of 1972, came the passage by Congress

of the Marine Protection, Research, and

Sanctuaries Act of 1972, commonly known as

the “Federal Ocean Dumping Act” (Public

Law 92-532, 86 Stat. 1051, as amended Public

Law 93-254,88 Stat. 50 (1974)).

While the general intent of the law is the

international protection of the oceans, the

specific discussion of municipal solid waste

disposal is not irrelevant.

The law prohibits the dumping of any

radiological, chemical, or biological warfare

agents, or any high-level radioactive wastes.

The dumping of other types of wastes is prohibited also, but it maybe authorized if a permit is administered under the law. Permits to

dump materials including solid waste, may be

issued by the EPA Administrator after notice

and an opportunity for public hearings. Also

before such permits may be issued, the Administrator must develop criteria by which

such permits, or exceptions, may be granted.

The criteria must include the need for such

dumping, effects of dumping on health, recreational activities, fishing resources, etc. Also

in devising criteria other options for disposing of material must be considered. The permits must designate the type and amount of

material to be dumped, the specific period

when dumping is allowed, and monitoring or

surveillance specifications for dumping, and

any regulations that might apply to the transportation of material to be dumped.

The major effect of the law has been to

almost eliminate disposal of domestic solid

wastes in the ocean.

The Energy Tax Act

T

he Energy Tax Act (Public Law 95-618,

92 Stat. 3174) contains two provisions

that should influence recycling. One provides

an additional 10-percent investment tax

credit (for a total of 20 percent] for the purchase of equipment used to recycle ferrous

(with certain exceptions) and nonferrous

metals, textiles, paper, rubber, and other

materials for energy conservation. The additional credit is available for a wide range of

equipment placed in service after October 1,

1978. The other provision sets recycling targets for major energy-consuming industries.

These include the metals, paper, textile, and

rubber industries. Specific targets will be set

for the increased use of recycled commodities

over the next 10 years.

The Emergency Interim Consumer

Product Safety Standard

Act of 1978

T

he Emergency Interim Consumer Product

Safety Standard Act of 1978 (Public Law

95-319, 92 Stat. 386) establishes an interim

consumer product safety rule relating to the

standards for flame resistance and corrosiveness of cellulosic home insulation. Cellulose

insulation is made from recycled newspaper

treated with fire retardant. The intent of the

Act was to guard against fire hazards from

insulation treated with inadequate amounts

of fire retardants.

The legislation authorizes the Consumer

Product Safety Commission to enforce the

General Services Administration’s (GSA) cellulose insulation safety standards (O-25 flame

spread rating for cellulose insulation to be

used in homes) until the Commission develops

permanent standards. GSA standards previously applied only to Federal buildings. In

addition, the Act includes language to expedite both changes in standards in the future

and judicial review of standards.

48-786 0 - 79 - 17
Appendix B

Legislative Activity in the 95th

Related to Resource Recovery,

and Reuse

Congress

Recycling,

D

uring the 95th Congress a number of bills

were introduced that gave consideration

to resource recovery, recycling, and reuse.

This appendix discusses key features of those

that were not passed. (See chapter 2 and appendix A for discussions of those that became

law.) The bills discussed in this appendix are

identified in table RI.

Materials Policy

T

wo bills introduced during the 95th Congress would establish a materials policy

for the United States by creating a materials

research and development capability. These

bills would encourage private industry to

develop low-cost products and processes to

promote the efficient use and reuse of materials; to minimize processing costs; to minimize the energy required for the processing,

fabrication, and recycling of materials; and

to reduce the dissipation through waste or

pollution of useful materials with particular

attention to those that are irreplaceable or

scarce. H.R. 34 introduced by Representative

Teague on January 4, 1977, and H.R. 10859,

introduced by Representative Thornton with

one cosponsor on February 8, 1978, are similar pieces of legislation. These were both entitled the “National Materials Policy, Research, and Organization Act. ”

Hearings were held on national materials

policy by the House Science and Technology

Committee, Subcommittee on Science, Research, and Technology, during July 1977

with emphasis on H.R. 34, and during March

1978 with emphasis on H.R. 10859. Hearings

were also held by the Senate Committee on

Commerce, Science, and Transportation,

Subcommittee on Science, Technology, and

Space, in July 1977 on the general subject of

national materials policy.

On February 28, 1978, Representative Hollenbeck and one cosponsor introduced H.R.

11203, the “National Materials Technology

Research and Policy Planning Act of 1978.” It

was introduced as a follow-on bill designed to

“place the research and development promoted by H.R. 10859 within the context of

long-range planning and policymaking for the

production, distribution, and consumption of

materials, including fuels. ” Like H.R. 10859

and H.R. 34, one goal of H.R. 11203 is to promote the efficient use and reuse of materials.

Beverage Container Deposits

A

number of bills that would establish mandatory, nationwide, minimum beverage

container deposits were introduced during

the 95th Congress. On January 4, 1977, Representative Jeffords introduced two identical

bills, H.R. 936, with 24 cosponsors, and H.R.

937, with 3 cosponsors, which would require

refund values for certain beverage containers. These bills were reintroduced by Mr. Jeffords as H.R. 5582, H.R. 7155, H.R. 7886, H.R.

8788, H.R. 10047, and H.R. 13393, bringing

the number of cosponsors in the House of

Representatives to around 62 members. In

addition, an identical bill, H.R. 8856, was introduced in the House of Representatives by

250
Appendix B—Legislative Activity in the 95th Congress Related to Resource Recovery, Recycling, and Reuse ● 251

Table B-1 .—Bills Related to Resource Recovery, Recycling, and Reuse

Introduced But Not Passed During the 95th Congress

Identification number

Bill identification House Senate - Sponsor

To establish a materials policy for H.R. 34

the U. S., to create a materials

research and development capability,

and to provide an organizational

structure.

To provide additional assistance to H.R. 36

ERDA for advancement of nonnuclear

energy research, development, and

demonstration, including biomass

conversion.

To provide loan guarantees

through ERDA for biomass

demonstration facilities.

To ban interstate sale of

nonreturnable beverage containers.

To require refund values

for certain beverage containers.

To amend the Internal Revenue Code

of 1954 to provide reasonable and

necessary income tax incentives to

encourage the utilization of recycled

solid waste materials and to offset

income tax advantages which promote depletion of virgin natural

resources.

To Drovide technical and financial asH.R. 37

H.R. 873

H.R. 936

H.R. 937

H.R. 5582

H.R. 7155

H.R. 7886

H.R. 8788

H.R. 10047

H.R. 13393

—

H.R. 8856

H.R. 1077

H.R. 2772

H.R. 1214

sistance for the development of management plans and facilities for the

recovery of energy and other resources from discarded materials.

To establish a program to provide H.R. 10009

assistance to local governments H.R. 10887

for solid waste disposal programs.

To establish a materials policy for H.R. 10859

the U. S., to create a materials

research and development capability,

and to provide an organizational

structure. (Revision of H.R. 34.)

To provide context of long-range plan- H.R. 11203

ning and policymaking for

production, distribution,

and consumption of materials, including fuels.

Follow-on to H.R. 10859.

Section 8 of bill would provide for —

study and investigation of all materials relating to the proper role of

Government in encouraging the

recycling of solid waste materials.

Teague (Tex.)

Teague (Tex.)

— Teague (Tex.)

— Fish (N. Y.)

—

—

—

—

S. 276

—

—

—

—

—

—

—

—

Jeffords (Vt.)

,,

,,

,,

,,

,,

,,

Hatfield (Ore.)

Ichord (Me.)

Murphy (N. Y.)

Broomfield (Miss.)

1/4/77

1/4/77

1/4/77

1/4/77

1/4/77

1/4/77

3/24/77

5/12177

6/20177

8/4/177

1 114/77

7/1O/78

1118177

8/5/77

1/4/77

2/1/77

Status as of November

1978

Referred to Committee.

Hearings held.

Referred to Committee

No further action.

Referred to Committee.

No further action.

Referred to Committee.

No further action.

Referred to Committee.

Referred to Committee.

Hearing held.

Referred to Commitee.

Referred to Committee.

No further action.

Roe (N. J.) 1/4/77 Referred to Committee.

No further action.

Patterson (Calif.) 11/3/77 Referred to Committee.

2/9/78 No further action.

Thornton (Ark.) 2/8/78 Referred to Committee.

Hearings held.

Hollenbeck (N. J.) 2/28/78 Referred to Committee.

s. 17 McIntyre (N. H.) 1/10/77 Referred to Committee.

No further action.
— ——.

252 ● Materials and Energy From Municipal Waste

Congressman Ichord on August 5, 1977. A

companion bill, S. 276, requiring a refund

value for certain beverage containers, was

introduced in the Senate by Senator Mark

Hatfield and nine cosponsors on January 18,

1977.

All of the above mentioned bills were referred to as the “Beverage Container Reuse

and Recycling Act of 1977. ” Hearings were

held on S. 276 by the Senate Committee on

Commerce, Science, and Transportation,

Subcommittee on Consumer Affairs, in January 1978. Testimony was received from

Members of both the House of Representatives and the Senate along with representatives of industry, labor, environmental

groups, State and local governments, and the

executive branch.

In addition, hearings were held in August

1978 by the House Committee on Interstate

and Foreign Commerce, Subcommittee on

Transportation and Commerce, to review several governmental and private studies on

mandatory beverage container deposits.

These hearings did not focus on any particular bill but rather gathered information on

the issue.

Ban Nonreturnable Beverage

Containers

H

R. 873, introduced by Representative

● Fish on January 4, 1977, would ban

the interstate sale of nonreturnable beverage

containers. The bill’s stated purpose is to

reduce pollution caused by litter composed of

soft drink and beer containers, and to eliminate the threat posed by such containers to

the Nation’s health, safety, and welfare.

Tax Incentives for

Recycling Waste Products

T

wo bills would provide tax incentives for

recycling waste products. Both H.R.

1077, introduced by Representative Murphy

on January 4, 1977, and H.R. 2772, introduced by Representative Broomfield on February 1, 1977, would amend the Internal Revenue Code of 1954 to provide reasonable and

necessary tax incentives to encourage utilizing recycled solid waste materials and to offset existing income tax advantages that promote depletion of virgin natural resources.

Both bills were referred to the House Ways

and Means Committee where no further action was taken.

On January 10, 1977, Senator McIntyre

and two cosponsors introduced S. 17, which

would amend the Internal Revenue Code of

1954 to provide income tax incentives for the

conservation of energy used to heat or cool

residences and commercial buildings and for

the utilization of renewable fuel energy

sources. Specifically section 8 of the bill

would provide for a thorough and complete

study and investigation of all materials relating to the proper role of the Government in encouraging the recycling of solid waste materials. This bill, entitled the “Renewable Energy and Energy Conservation Tax Act of

1977, ” was referred to the Senate Committee

on Finance where no further action was

taken.

Energy Recovery

s

everal bills would provide assistance to

the Department of Energy (DOE) for

energy recovery. H.R. 36, introduced by Rep

resentative Teague on January 4, 1977, would

provide additional assistance to DOE for the

advancement of nonnuclear energy research,

development, and demonstration, including

biomass conversion. Teague also introduced

H.R. 37 on January 4, 1977, which would provide loan guarantees through DOE for biomass demonstration facilities not to exceed a

total outstanding indebtedness of $3OO million. No action was taken on either bill.

H,R. 1214, introduced on January 4, 1977,

by Representative Roe, would provide technical and financial assistance for the development of management plans and facilities for

the recovery of energy and other resources
Appendix B—Legislative Activity in the 95th Congress Related to Resource Recovery, Recycling, and Reuse ● 253

from discarded materials. This bill was referred to the House Interstate and Foreign

Commerce Committee.

Solid Waste Product

Charge System

T

wo identical bills introduced by Representative Patterson, H.R. 10009 on November 3, 1977, and H.R. 10887 on February

9, 1978, with five cosponsors, would establish

a program to provide assistance to local governments for solid waste disposal. The purpose of the bills is to establish a national solid

waste product charge system that would: (i)

alleviate the financial burden that the rapid

increase in solid waste management costs

have imposed on local government; (ii) provide incentives for the establishment of markets for materials recovered from solid

waste; (iii) internalize the costs of collecting,

transporting, and disposing of materials by

producers and consumers; and (iv) provide

adequate time for producers and consumers

to adjust their production and consumption

practices. The charge would be placed on the

sale or transfer at the bulk production level of

rigid containers, flexible packaging, and all

paper products with the exception of building, construction, and industrial grades, The

initial base charge would include a charge of

1,3 cents per pound of paper and flexible

packaging ($26 per ton) and a charge of 0,5

cent per container for rigid containers ($5

per thousand containers). The charge would

be implemented over a 10-year period and

would be revised periodically to reflect

changes in solid waste management costs.
Appendix C

Description of Resource

Recovery Technologies

I

n this appendix, the processes for centralized resource recovery are described and

the major unit processes of the technologies

are identified. Although many processes recover both energy and materials, the technologies for each of these purposes are discussed separately here. A list of additional

readings on resource recovery is included.

This appendix is primarily descriptive. It is

based on published literature and on conversations with industry, Government, and other

experts. Not all of the processes described

here are in commercial use. See chapter 5 for

a discussion of the status of the technologies

and chapter 3 for a discussion of marketing of

recovered materials and energy.

Energy Recovery Systems

Mass Incineration Processes

WATERWALL INCINERATION

In waterwall incineration, raw municipal

solid waste (MSW) is burned directly in large

waterwall furnaces, generally without preprocessing the waste. The primary product is

steam, which can be used directly or converted to electric power, hot water, or chilled

water. Figure C-1 shows schematically the

main features of a waterwall furnace for unprocessed MSW.

In some installations shredding to reduce

waste size and/or facilitate recovery of materials takes place. For example, at the Saugus,

Mass. plant, large bulky items have been

shredded before burning. (The shredder is

being removed, however.) At Hamilton, Ontario MSW is shredded before burning. Ferrous metal can be recovered by magnetic sep

aration from ash after incineration, or before

incineration if MSW is pre-shredded.

Waterwall combustion systems nave been

used commercially in Western Europe since

World War II. Data from a recent survey of

their experience indicate that European

plants tend to achieve large scale using

several small modular furnaces. For example, the 634 tons per day (tpd)* Sorain Cecchini facility in Rome, Italy has six, 4.4-tonper-hour units.(2)

This modular approach contrasts with U.S.

practice. The Saugus plant has a design capacity of around 1,500 tpd and uses two European Von Roll furnaces with a capacity of

around 31 tons per hour each.

Even though European societies differ from

ours, comparisons should be helpful in contemplating future technological directions for

U.S. development. The Environmental Protection Agency (EPA) has an intensive, detailed

study of European systems underway.

SMALL-SCALE MODULAR INCINERATION

Small-scale modular incinerators feature

heat recovery as steam or hot water, and

usually forego materials recovery. Most ap

placations to date have been in hospitals,

schools, other institutions, and industry

whose wastes are more homogeneous than

MSW. Thus, application of this technology to

MSW is a relatively recent development.

Three of these systems were reported as

operational in EPA’s Fourth Report to the

*A1l ton units in this appendix are short tons—z,ooo

pounds.

254
Appendix C—Description of Resource Recovery Technologies ● 255

Figure C-1 .—Typical Waterwall Furnace for Unprocessed Solid Waste

Boiler

1

----- - ----- -

\

Unloading

Shed I

Refuse

Pit

Congress: a 50-tpd unit at Blytheville, Ark., a

30-tpd unit at Groveton, N.H. and a 20-tpd facility at Siloam Springs, Ark.(3)

These systems are called modular because

individual furnaces are small and desired

plant size is achieved by installing several

identical units or modules.(4) MSW is incinerated in two stages. First, raw MSW is burned

in insufficient air to achieve complete combustion, producing a combustible gas and a

byproduct residue. The gas from primary

combustion is then burned with an auxiliary

fuel [oil or gas) in a secondary combustion

chamber with excess air. Hot gases from the

secondary combustion chamber are passed

through a waste heat recovery boiler or heat

exchanger to produce steam, hot water, or

hot air. The two-stage combustion process, as

contrasted to traditional single-stage incineration, helps to reduce particulate emission

problems.

Air-Pollution

Control

I

I

I

I

I

I

I

I

I

I

I

I

t

I

I

I

I

L

Stack

Refuse-Derived Fuel Systems

Solid refuse-derived fuel (RDF) is produced

by separating MSW and mechanically removing the organic combustible fraction using

wet or dry processes. The fuel product of dry

processing can be fluff RDF, densified RDF,

or dust or powdered RDF depending on the

subsequent processing used. Most RDF plants

also recover one or more of the following

materials; ferrous, aluminum, glass, or mixed

nonferrous metals. Figure C-2 schematically

portrays the main processes for producing

the different RDF fuels.

In dry mechanical processing of the type

used in the St. Louis, Me.; Ames, Iowa; and

Washington, D.C. facilities, raw waste typically is first shredded to 8 inches or less in

size. This shredded material is next put

through a device called an “air classifier”

that separates the light organic material from
256 Materials and Energy From Municipal Waste

Figure C-2.–This Simplified Flow Diagram Shows How the Dry Processing Approach (No Water Slurry)

Can Be Used to Produce Fluff, Densified, or Dust RDF

metals and other heavy organic and inorganic

materials. The light material then goes

through a rotating screen or “trommel” to

remove abrasive fine sand, glass, and grit.

The heavy materials from the air classifier

and trommel move to a magnetic separating

device that recovers ferrous material. Some

plants also attempt to recover aluminum,

glass, and mixed nonferrous metals, using

processes described in a later section.

Based on experiences with the first generation of dry waste separation systems that

employed shredding and air classification, attention has recently been given to a wider

variety of processing schemes. One includes

a trommel, or screening device, as the first

processing step, to remove whole cans and

bottles prior to waste shredding. In another

variant, the shredder is eliminated and air

classification is used as a first step. This is

based, in part, on the concept that shredding,

which is the locus of most operating explosions (see chapter 5), should be avoided. The

Shredder

Embrittling

Agent

Ball Mill

Fluff

RDF

Densified

RDF

Densifier

Dust

RDF

best arrangement and design of first-stage

dry mechanical separation processes is an

important area of current research on resource recovery.

As shown in figure C-2, the light organic

material from the trommel goes to a secondary shredder that further reduces the particle size to less than 11/z inches. The resultant

material is called “fluff RDF. ” Fluff RDF can

be passed through a pelletizing or briquetting

machine to yield “densified RDF. ” The objective of densification is to improve storage,

handling, and stoker-furnace burning characteristics. Alternatively, the light output from

the trommel can be treated with a chemical

embrittling agent and ground to a fine powder in a ball mill to produce a “dust or powdered RDF” with a particle size of around

0.15 mm. This is the basis of the Combustion

Equipment Associates ECOFUEL-HQ 

process.

Figure C-3 illustrates the wet process RDF

method. With this technology raw refuse is
Appendix C—Description of Resource Recovery Technologies ● 257

Figure C-3.— Wet Process Energy Recovery System

Cone

Barrel Press –

Tipping Floor

Junk Remover &

v

Nonferrous

Materials

Small Ferrous Metals

Glass (by Color)

SOURCE (1} Recovered

Ferrous Metal

fed to a hydropulper (a machine like an oversized kitchen blender] where high-speed rotating cutters chop the waste in a water suspension. Large items are ejected and the remaining slurry is pumped into a liquid cyclone separator where smaller heavy materials are removed. Water is then removed to

leave “wet RDF” with from 20- to 50-percent

water content, which can be burned alone or

as a supplement to coal, depending on its

water content.

The wet pulping method has several advantages and disadvantages relative to the dry

process. Sewage sludge can be mixed with

the wet pulp prior to dewatering and the

resulting mixture can be burned as a method

of codisposal. Dewatering, however, is expensive and energy intensive. The wet process

reduces the likelihood of explosion or fire in

the size reduction phase, as compared to dry

mechanical processing. It is possible to recover some organic fiber by the wet process.

However, the quality of this fiber is insufficient for it to be used to produce paper. The

only domestic application in one small plant

at Franklin, Ohio, has been as a reinforcement in roofing material.

Pyrolysis Systems

Pyrolysis is destructive distillation or decomposition of organic materials in MSW at

elevated temperatures in an oxygen deficient

atmosphere. The product of pyrolysis is a

complex mixture of combustible gases, liquids, and solid residues usable as fuels or

chemical raw materials. The characteristics

of the pyrolysis products depend on such variables as time in the reactor, process temperature and pressure, oxygen content of the gas

in the reactor, particle size of the MSW feed,

and the choices of catalysts and auxiliary

fuels. Differences in these parameters distinguish the several proprietary processes

that have been developed, Four proprietary

systems are presently in some stage of demonstration. Two of these produce low-Btu gas:

Monsanto’s Landgard and the Andco Torrax
258 ● Materials and Energy From Municipal Waste

processes. The Union Carbide Purox system

produces medium-Btu* gas. The Occidental

Research Flash Pyrolysis process produces a

liquid fuel.**

In the Monsanto system, figure C-4, MSW

is shredded before it is pyrolized with a supplementary fuel in a large (20 ft diameter, 100

ft long) horizontal, refractory-lined kiln. Solid

residue from the kiln is water quenched and

separated into ferrous metal, glassy aggregate, and char. The char is dewatered and

landfilled. In the Andco process, figure C-5,

*Low.Btu gas has a heating value of around 100 to

150 Btu per standard cubic foot (scf), the heating value

of medium Btu gas is 300 to 400 Btu per scf. By comparison, natural gas has a heating value of about 1,000

Btu per scf.

**Liquid pyrolysis oil has a heating value of about

10,000 Btu per pound, roughly half that of No. 6 fuel oil.

raw MSW enters a vertical shaft furnace

after large items are removed and is pyrolyzed with auxiliary fuel. As the charge descends it is dried and converted to gases,

char, and ash. The low-Btu gas produced

must be burned onsite to produce steam or

hot water.

The only Monsanto system in operation, a

l,000-tpd plant in the city of Baltimore, is currently undergoing modification to solve air

pollution and other technical problems. Monsanto has withdrawn from the project. Andco

has no plants in the United States. A 200-tpd

plant is in startup in Luxembourg, and two

others are under construction, one in France

and one in West Germany.

In the Union Carbide Purox system, figure

C-6, ferrous material is magnetically sepaFigure C-4.—The Monsanto Landgard System Produces a Low-Btu Gas Which is Immediately

Burned Onsite for the Production of Steam

Afterburner

Air-ollution Control

Waste Heat n

Boiler A H Stack

r

Glassy Aggregate

and Char

ruul U I I

L) 1 =

Magnetics

for Sale

Shredding
Appendix C—Description of Resource Recovery Technologies ● 259

Air

Figure C*5.—Torrax Slagging Pyrolysis System

Solid

Wast e

a

Electrostatic

II 

Compressor Slag- Tap Secondary Combustion Chamber

Inert Residue

ratecl from shredded MSW prior to feeding.

Shredded refuse fed into the top of the vertical shaft furnace descends by gravity into

zones of increasing temperature where drying. then pyrolysis, and finally char combustion and slagging take place. The temperature

in the bottom zone, the slagging zone, is high

enough to reduce the residual to a molten slag

that continuously drains into a water quench

to produce a hard granular aggregate material called frit, The Purox process feeds the

furnace pure oxygen, rather than air as in the

Monsanto and Torrax systems, and produces

medium-Btu gas product. Its smaller volume

and higher Btu content facilitates economic

shipment over reasonably long distances.

Union Carbide has been operating a 200-tpd

demonstration plant at Charleston, W. Va.,

but no commercial facility yet exists.

In the Occidental liquid fuel pyrolysis process, shown in figure C-7, raw MSW is first

shredded and air classified to recover ferrous metal, aluminum, and glass prior to pyrolysis. The light organic fraction is dried,

shredded again in an inert gas atmosphere,

and then introduced to the pyrolysis reactor.

Pyrolysis in the reactor vessel produces an

oil-like fluid somewhat comparable to No. 6

fuel oil* that can be burned in existing oilfired, steam-electric powerplants. A 200-tpd

demonstration plant in San Diego County,

Calif., was reported to be undergoing operational testing in early 1978. A subsequent

report in May 1978 indicated that this system

was not operating and faced major cost increases if it were to be continued.(5)

Biological Systems

This description focuses on three biological

waste-to-energy technologies: recovery of

*Ibid,
—

260 . Materials and Energy From Municipal Waste

Shredder

w

~ 

- I 1 II

)

● ***9*** ● **** *

●

●

Product Gas

to User

:er

methane from landfills, anaerobic digestion,

and hydrolysis.

METHANE PRODUCTION FROM LANDFILLS

Natural decomposition of MSW in landfills

produces a gas composed of roughly 50-percent methane and 50-percent carbon dioxide.

If landfill geological characteristics are satisfactory, gas can be withdrawn through

wells drilled into the landfill and can be

treated to remove moisture, hydrogen sulfide,

and other contaminants. Carbon dioxide can

be removed leaving pipeline quality methane.

Corrosion problems with this technology appear to be under control.(s) Recovery of methane from an old sanitary landfill is being explored at the Pales Verdes landfill at Los

Angeles where approximately 500,000 cubic

feet of purified methane is being recovered

per day. Enough methane is recovered daily

at the Pales Verdes site to meet the energy

needs of some 2,500 homes.(5) EPA is evaluating several landfill gas-producing projects.(3)

ANAEROBIC DIGESTION

Methane can be recovered from anaerobic

digestion of MSW in large tanks or reactors

as shown in figure C-8. Anaerobic digestion of

waste is accomplished by two types of bacteria: (i) acid formers that convert waste to

organic acids, and (ii) methane producers

that convert the acids to carbon dioxide,

methane, and small quantities of other gases.

One of the potential problems with methane
Appendix C—Description of Resource Recovery Technologies ● 261

Figure C“7.—Production of Liquid Fuel From Solid Waste Using the Occidental Process

Primary

Cla

Air

Issifier

Waste

Lights

Dryer

Trommel II

To Aluminum Glass

Recovery

To Steel Company

Froth

Flotation

Residuals

To Landfill

Secondary

Shredder

Pyrolysis

L

Reactor

z

6

1

Product

Liquid Fuel

SOURCE (1) To Glass Company

generation is that MSW sometimes contains

toxic components that can kill the methaneproducing bacteria, Successful methane production from sewage sludge and animal manure can in part be attributed to the homogeneity of these substances and to the absence of bacteria-killing toxic contaminants.

A demonstration project to assess the feasibility of a 100-tpd anaerobic digestion system for MSW is being supported by the Department of Energy (DOE) at Pompano Beach,

Fla., with startup expected in late-1978. At

the Pompano Beach facility, MSW will be preprocessed to produce fluff RDF and recover

ferrous metal, The wet RDF process could

also be used. The RDF will be mixed with raw

sewage sludge and introduced into digester

tanks where it is mixed. The MSW-sludge mix

will stay in the reactor around 10 days to capture the largest portion of the methane;

longer retention times will produce more gas

but at a rapidly decreasing rate. The gas produced by this process will contain approximately 50-percent methane and 50-percent

carbon dioxide with a heating value of 540 to

700 Btu per cubic foot. The gas can be burned

as is, without purification, or with further

processing the carbon dioxide and traces of

hydrogen sulfide can be removed to yield

methane with a heating value of about 1,000

Btu per cubic foot. The digestion process produces large quantities of a liquid effluent, the

majority of which will be recycled to the mix-
262 ● Materials and Energy From Municipal Waste

Figure C-8.—Biological Gasification of Solid Waste in Reactors

Light Fraction

Fracfion

Ferrous Scrap

Market

Sanitary Landfill

ing tanks, with the remainder discharged to a

city sanitary sewer system, The remaining

solids, about 17 percent of the refuse feed,

must be either landfilled or burned in special1y designed boilers. Schulz (6) estimates that

approximately 3,700 cubic feet of methane

will be produced per ton of MSW.

HYDROLYSIS

There are two processes for the production

of ethyl alcohol (ethanol) from the organic

portion of MSW by hydrolysis: (i) acid hydrolysis, which is a welI-developed industrial

technology for nonwaste applications, and (ii)

enzyme hydrolysis, a recent process still in

the research stage. To convert cellulosic maSewage Residue to

Biender ‘Siudg e

Dewatering

and Landfiii

Gas Output

rs

terial to ethanol, it must first be hydrolyzed to

produce sugar which then ferments to yield

dilute ethanol that can be recovered by distillation. The production of ethanol from

MSW by hydrolysis is not currently in the

commercial or demonstration stage to our

knowledge. Wilson (7) reports that Black

Clawson is currently researching this area.

Considerable pioneering research in enzyme hydrolysis has been carried out at the

U.S. Army Natick Development Center in

Massachusetts. Natick’s work in this area

arose out of attempts to prevent biological

decay of textile materials. Since 1972, they

have been authorized to conduct studies of

enzyme hydrolysis processes for converting
Appendix C—Description of Resource Recovery Technologies ● 263

cellulose wastes of military bases into useful

products. The fungus Trichoderrna viride has

been identified as having considerable enzyme productivity, with a potential for commercially feasible conversion processes.(8)

In addition, the Gulf Chemical Company is

presently exploring the feasibility of constructing a demonstration plant (50 tpd of biomass feedstock) for the production of ethanol

from municipal, agricultural, and industrial

waste by enzymatic hydrolysis.(g)

Materials Recovery Systems

s

everal of the energy recovery systems just

described include ferrous metal, aluminum, or glass recovery technologies. Other

materials that can be recovered are paper

fiber, compost, and other nonferrous metals.

Aluminum

The process for aluminum recovery is

based on an eddy current separation system

commonly called an aluminum magnet. With

this technology, nonferrous conducting metals mixed with other wastes are conveyed

through a magnetic field in such a way that

an eddy current is induced in the metals. This

current causes the metallic conductors to be

repelled from the region of the magnetic field

and thus out of the conveyor path. Nonmetallic are unaffected and are carried on. The

device is quite sensitive and can be tuned to

repel various shapes, densities, or materials.

For example, it can be tuned, or optimized, to

recover aluminum cans, the largest part of

the aluminum waste. Eddy current separation

equipment is currently installed at the following locations: National Center for Resource

Recovery (NCRR) experimental test facility in

Washington, D. C.; Ames, Iowa; Baltimore

County, Md.; Occidental pyrolysis plant in

San Diego, Calif.; the Americology plant in

Milwaukee, Wis.; and in New Orleans, La. As

reported in chapter 5, as of April 1978, none

of these facilities was in steady production

with a sustained commercial run.

Electrostatic separation is another method

for separating nonferrous metals from organic materials. Mixed wastes pass between

charged plates and are given an electric

charge. Conducting materials such as aluminum lose their charge on an electrically

grounded drum and fall off. Nonconductors

retain their electrical charge and adhere to

the drum. None of these systems is in use in

full-scale plants. To further assist in cleaning

contaminants from metals, a device called an

“air knife” is sometimes used.

Glass

Two systems are being experimented with

for the recovery of waste glass from MSW.

Research is preceding on froth flotation, a

standard mineral processing technique, for

the recovery of glass. In this process the

“heavy” portion of the waste stream, rich in

finely ground glass, is slurried in water along

with chemicals that cause the glass to become attached to air bubbles on the surface

of the water. The glass floats out of the mix

with the bubbles and is then washed and

dried. Froth flotation is being explored at the

NCRR facility in Washington, D. C.; in New

Orleans, La.; and at the Occidental pyrolysis

plant in San Diego. It is being installed in both

the Monroe County, N. Y., and the Bridgeport,

Corm., plants.

Since glass recovered by froth flotation

produces mixed colored cullet, which has a

limited market, the process of “optical sorting” is being examined. Glass particles

around one-fourth inch in size are sorted, on

the basis of their light transmission properties, into three colors, clear (flint), green, and

amber. This process currently faces problems with high costs and its inability to reject

a sufficiently large fraction of contained ceramics and stones to meet the quality standards required by glass producers. It also cannot recover particles smaller than one-fourth

inch in size. Color sorting is being installed at

the Hempstead plant in New York and has

been used on a pilot plant basis at the Franklin, Ohio, facility.
264 . Materials and Energy From Municipal Waste

Ferrous Metals

Ferrous metals have been removed from

MSW by magnetic separators for a number of

years. A recent study by the American Iron

and Steel Institute identified nearly 40 such

commercial installations in the United

States. (I()) Some experience has been gained

more recently in magnetic recovery of incinerated ferrous metals from the residue or ash

from MSW incinerators. Such a device is currently in regular operation at the Saugus incinerator, but the recovered ferrous material

is not currently being marketed. The U.S.

Bureau of Mines has experimented with a

complex mineral-technology-based process

for “back-end” recovery of a variety of materials from incinerator residue.(11) Incinerated ferrous may be less marketable than the

unincinerated product.

Compost

Comporting permits organic matter to decay to humus, which can be used for fertilizer

or soil conditioner. Generally, comporting has

not been economically successful because of

difficulty in selling the humus product. According to EPA, only one comporting plant

was operating as a commercial facility in

1976, the 50-tpd plant at Altoona, Pa.(3) A

1969 survey identified 18 plants with a total

capacity of 2,250 tpd, indicating a major

decline in U.S. comporting operations in this

7-year period.(12)

Comporting is successful in some European

countries. In the Netherlands where markets

for humus in the flower and bulb industries

are good, the Government runs comporting

operations. A technique for briquetting and

joint comporting of MSW and sewage sludge

has been developed in Germany. Its developers claim that the dried briquets can be

used in food for pigs, as a soil conditioner, as

a stable element in landfills, or as fuel.(2)

Fiber

Not many centralized resource recovery

facilities can reclaim fiber from MSW for

recycling as fiber. A 150-tpd demonstration

fiber recovery facility has been operating

since 1971 at Franklin, Ohio, using the Black

Clawson wet process described earlier. Fiber

recovered with this process is of poor quality,

and it is sold to a nearby manufacturer of

asphalt-impregnated roofing shingles. Two

wet process plants, the Hempstead, .N.Y., facility now under construction, and the plant

in Dade County, Fla., about to begin construction, will recover the fiber for use as a fuel,

not for paper production.

A dry process for recovering paper fiber

and light plastics has been developed by the

Cecchini Company in Rome, Italy. Paper from

this process is used with straw to make a lowgrade paperboard. In general, the quality of

the recovered paper is low and it has limited

marketability. Roughly 23 percent of the

paper in the input waste stream is recovered.(l) Other dry paper recovery processes,

such as the Flakt process, which are being explored on a pilot plant basis in Western

Europe, are described by Alter.(13)

Finally, some of the most recent plants

(Milwaukee and New Orleans) feature limited

paper recovery by hand-packing of bundled

paper from the resource recovery plant input

conveyor. This method has both economic and

quality limitations.

Other Materials Recovery Technologies

There are many other materials recovery

technologies which have not been addressed

in this brief overview. The most important

contemporary processes, however, have been

touched upon. Readers wishing to explore

further might do well to start with a review of

the extensive research in this area carried

out over the years by the U.S. Bureau of

Mines.(11)
Appendix C—Description of Resource Recovery Technologies ● 265

Additional Reading on Resource Recovery Technologies

1. Alter, H., and E. Horowitz, (editors) Resource Recovery and Utilization, (ASTM

Special Technical Publication 592, proceedings of the National Materials Conservation Symposium, 29 April - 1 May

19740

2. Environmental Protection Agency, The

Resource Recovery Industry: A Survey of

the Industry and its Capacity, report SW50/c, 1976.

3. Engineering and Economic Analysis of’Waste to Energy Systems, a report

by the Ralph M. Parsons Company, June

1977.

4. , St. Louis Demonstration Final

Report: Refuse Processing Plant—Assessment of Bacteria and Virus Emissions by

Midwest Research Institute, Kansas City,

Me., draft report August 1977. EPA Contract No. 68-02-1871, MRI Project No.

4033-L.

5. , St. Louis Demonstration Final Report: Refuse Processing Plant Equipment,

Facilities, and Environmental Evaluations,

by Midwest Research Institute, Kansas

city, Mo,, September 1977. EPA-600 /2-77-

155a.

6. Evaluation of the Ames Solid

Waste ’Recovery System, Part 1. Summary

of Environmental Emissions: Equipment,

Facilities, and Economic Evaluations, by

Iowa State University and Midwest Research Institute, November 1977 .

EPA-600/2-77-205.

7 Levy, S. J., and H. G. Rigo, Resource Recovery Plant Implementation Guides for

Municipal Officials, Technologies Report,

U.S. EPA, SW-157.2, 1977.

8. Mantell, C. L., Solid Wastes: Origin, Collection, Processing, and Disposal, John

Wiley, 1975.

9. Schulz, H., J. Benzier, B. Borte, M. Neomatalla, R. Szostax, and R. Westerhoff,

Resource Recovery Technology for Urban

Decision Makers, prepared for the National Science Foundation by the Urban

Technology Center, School of Engineering

and Applied Science, Columbia University, H. W. Schulz, et al., January 1976.

10. Pavoni, J,, J. Heer, and D, Hagerty, Handbook of Solid Waste Disposal, Van

Nostrand, 1977.

11. Resource Recovery From Municipal Solid

Waste, A State of the Art Study, National

Center for Resource Recovery, Inc., Lexington Books, 1974.

12. U.S. Department of the Interior, Bureau of

Mines Research on Resource Recovery

Reclamation, Utilization, Disposal and

Stabilization, Bureau of Mines Information Circular (IC 8750), 1977.

13. Weinstein, N. S., and R, F. Toro, Thermal

Processing of Municipal Solid Waste for

Resource and Energy Recovery, Ann Arbor Science Publishers, Inc., 1976.
266 ● Materia/s and Energy From Municipal Waste

References

1. Environmental Protection Agency, Resource Recovery Plant Implementation:

Guides for Municipal O~~icials, Technologies Report, No. SW-157.2. Second printing 1977.

2. Department of Energy, European Wasteto-Energy Systems, An Overview. Report

No. CONS-2103-6 prepared by Resource

Planning Associates, Inc., June 1977.

3. Environmental Protection Agency, Office

of Solid Waste Management, Fourth Report to the Congress, Resource Recovery

and Waste Reduction, Publication

SW-600, Aug. 1, 1977.

4. Hofmann, Ross, Associates, Evaluation of

Small Modular Incinerators in Municipal

Plants, Report SW-l13c, done for EPA by

Ross Hofmann Associates, Coral Gables,

Fla., 1976.

5. Schwegler, Ron, Division Engineer,

County Sanitation District of Los Angeles

County, Calif., telephone communication,

May 1978.

6. Schulz, H., J. Benziger, B. Bortz, M. Neomatalla, R. Szostak, G. Tong, G., and R.

Westerhoff, Resource Recovery Technology for Urban Decision Makers, a report

produced by the Urban Technology Center, Columbia University, for NSF, January 1976.

7. Wilson, E. M., J. Leavens, N. Snyder, J.

Brehany, and R. Whitman, Engineering

and Economic Analysis of Waste to

Energy Systems, a report prepared by

Ralph M. Parsons Co. for the EPA Industrial Environmental Research Laboratory, Cincinnati, Ohio, June 1977. (Available as EPA- 600/7-78-086, May 1978.)

8. Gaden, E. L., M. H. Mandels, E. T. Reese,

L. A. Spano, (editors) Enzymatic Conversion of CeM.dosic Materials: Technology

and Applications, Symposium Proceedings held at Newton and Natick, Mass.,

Sept. 8-10, 1975. John Wiley and Sons,

. 1976.

9. Solid Waste Report, July 31, 1978, p. 125.

10. American Iron and Steel Institute,

“Summary Report of Solid Waste Processing Facilities” AISI, Washington, D. C.,

1977.

11. U.S. Bureau of Mines, Bureau of Mines

Research on Resource Recovery Reclamation, Utilization, Disposal, and Stabilization, U.S. Dept. of the Interior, Bureau of

Mines Information Circular 8750, 1977.

12. Pavoni, J., J. Heer, and D. Hagerty, Handbook of Solid Waste Disposal, Van Nostrand, 1977.

13. Alter, H., “European Materials Recovery

Systems, ” Environmental Science and

Technology, vol. 11, no. 5, May 1977.
Appendix D

Additional Information on Beverage

Container Legislation

State Beverage Container Laws

and Ordinances

s

even States have enacted mandatory

beverage container deposit legislation:

Connecticut, Delaware, Iowa, Maine,

Michigan, Oregon, and Vermont. * Oregon

and Vermont’s legislation took effect on October 1, 1971, and September 1, 1973, respectively. (Vermont added several amendments

to its original legislation which took effect

July 1, 1975.) Laws in Maine and Michigan

took effect in 1978, while Iowa and Connecticut will follow in 1979 and 1980. Delaware’s

law will become effective on July 11, 1979, or

60 days after Maryland and Pennsylvania

pass similar legislation, whichever is later.

South Dakota has passed a beverage container packaging law specifying that all beverage

containers sold in the State subsequent to

July 1, 1978, must be reusable, recyclable, or

biodegradable. Virginia passed a law in 1978

that prohibited further adoption of deposit

laws by local governments in the State.

While the objectives of each of these laws,

except Virginia’s are similar—to create incentives for manufacturers, distributors, retailers, and consumers of beverage containers to reuse or recycle them, the particular

provisions of each law differ substantially.

Table D-1 shows the major provisions of each

law and illustrates the differences among

them. Refund values vary from 2 cents for

certified containers up to 10 cents for uncertified bottles; some States

‘Referenda that would have

posits on beverage containers

1976 elections in Colorado and

1978 in Nebraska and Alaska.

require special laplaced mandatory dewere defeated in the

Massachusetts and in

beling; and all these States, ban flip tops.**

Connecticut’s law includes a provision to provide compensation for up to 2 years for an

employee dislocated as a result of any provision of the Act.

A Comparison and Analysis of

Beverage Container Legislation

Studies by Research Triangle

Institute and The Wharton School

I

n the last several years a number of analytical studies have appeared on the impacts

and effectiveness of beverage container legislation, such as mandatory deposits or bans on

nonreturnable containers. This appendix is a

comparison of two major studies:

11

2.

Energy and Economic Impacts of Mandatory Deposits prepared for the Federal

Energy Administration (FEA) by Research Triangle Institute (RTI) and

Franklin Associates Limited (FAL), September 1976.(1).

A Study of the Impacts on the U.S.A. of a

Ban on One-Way Beverage Containers

prepared for the U.S. Brewers Association (USBA) by the Wharton School and

the Department of Civil Engineering of

the University of Pennsylvania, December 1976.(2).

The purpose of this appendix is to compare

the scope, assumptions, methods, and findings of these two studies in order to identify

**Flip tops or pull-tabs are also banned in California,

Hawaii, Massachusetts, Minnesota, South Carolina,

and Virginia.

267
268 Materials and Energy From Municipal Waste

Table D-1.—Characteristics of State Beverage Container Deposit Laws

Characteristics

Status of law

Effective date

Refund amount

Handling fee paid by distributer

to dealer

Types of beverages covered

Refund value must be

clearly marked on container?

State name must be clearly

marked on container?

Type of containers banned

if any?

Flip tops banned?

Plastic 6-pack rings banned?

Who must accept returned containers

Allowable reasons for refusal to

accept returned containers?

Are redemption centers per.

mitted?

Penalty for noncompliance

‘Lower deposit provided for certified

Connecticut

Enacted

1/1 /80

5 or more

1 or more

Beer

Malt beverages

Mineral water

Soda water

Carbonated soft

drinks

Yes, embossed,

stamped, or

labeled

Yes, 1\2 inch type

Embossed,

stamped or

labeled

—

Yes

No

Dealer,

Distributor

Labeling not

correct, if

redemption

center

in area, dam

aged/dirty

Yes

—

States which have enacted mandatory beverage container deposit laws

Delaware

Enacted

7/1 1/79 or 60 day:

after Maryland

and Pennsylvania

enact similar

Iegislation

which ever IS

later

5 or more

20°. of refund

Beer

Malt beverages

Ale

Mineral water

Carbonated soft

drinks

Yes on label or 01

top of container.

l/4.inch type re

fillable bottles

exempt

Nonrefillable

glass containers

Yes if not biode.

gradable or photo

degradable

Dealer

Distributor

If redemption cen

ter in area, bottle

damaged, or unclean, more than

120 being re.

turned

within a 1. week

period

Yes

21 VII penalty $250

to $1,000 and/or

Iowa

Enacted

/1 ’79 for all but

liquor provisions

/1/79 for Iiquor

provision

5 or more

Limit to 113 max -

num handiling

Beer

Malt beverages

Mineral water

Soda water

Carbonated soft

drinks

es except for

those which are

aIready labeled

otherwise

10, but expect

Department

which IS

administering Act

to eventually print

on container

es

o

Dealer,

Distributor

bottle

amaged

Yes

Misdemeanor

an injunction or

restraining order

 standard bottles that can be used by a number of firms

Enacted

referendum

/1/78

5 or more

1 or more

leer

Ale

Soda water

Carbonated so

drinks

es

10

es

es

Dealer,

Distnbutor

redemption

center in area

es

Civil penalty

100

Michigan

Enacted

Referendum

11/1/78

5c or more’

10$ or more

Beer, ale

Soda water

Mineral water

Carbonated soft

drinks

Malt beverages

Yes, embossed,

stamped, or

on label

Yes, embossed,

stamped, or

on label

—

Yes

No

Dealer,

Distributor

If refund value

and State name

are not on

bottle

Yes

Fine not less

than $100 nor

more than $1 ,00(

—

Oregon

Enacted

1 0/1/71

2c or more’

5c or more

Beer

Malt beverages

Mineral water

Soda water

Carbonated soft

drinks

Yes, embossed,

stamped, or

on label

No

—

Yes

No

Dealer,

Distributor

Refund value not

stated; redemption center

in area

Yes

Both civil and

criminal penalties:

dependlng on in.

fraction

Vermont

Enacted 4/10/72

Amended 4/30/75

Original Act 9/1/73

Amended 7/1/75

5 or more

20%. of refund

Beer

Malt beverages

Mineral water

Carbonated soft

drinks

Yes, on label

Refillable bottles

exempt

Yes, on label in

1/2 inch type, re

fillable bottles

exempt

Non biodegradable

Glass nonreturnable containers

Yes

Yes

Dealer,

Distributor

Labeling

incorrect

Size/brand;

jamaged/dirty

(es

Fine $1,000

per violation
Appendix D—Additional Information on Beverage Container Legislation ● 269

areas of agreement and disagreement and to

show the origins of any disagreement between them.

Background of Analyses of Beverage

Container Legislation

The proponents of container legislation

usually suggest one or more of the following

goals as the motivation their proposals:

1. reduced litter

2. reduced solid waste

3. energy conservation

4. materials conservation

5. strengthening of the conservation ethic

These goals are the primary objects of analyses of the effectiveness of various proposals.

In addition to the intended goals, it is

realized that container legislation would have

a number of other impacts. While quite a few

such impacts have been discussed, the following have been given the most attention:

1. employment

2. capital investment

3. profits

4. beverage sales

5. consumer costs

6. air and water pollution

No one currently knows how to predict the

complete response of the economy to container legislation from first principles, or with

any certainty. Therefore, most studies are

“partially parametric, “ in the sense that one

or more of the following factors are treated

as parameters whose values partially determine the system response:

1.

2.

3.

4.

trippage or return rate for each beverage and container type

market shares for each container type

and material

litter rate

recycling rate for disposed containers

At the current state of the art, predicting

the values of these parameters is largely

judgmental. Once the values of the parameters are chosen and assumptions made

about future technology, it becomes largely

an engineering accounting task based on material and energy balances to estimate the effectiveness of container legislation in reaching its primary goals, as well as its impact on

air and water pollution. In addition, economic

models of different degrees of sophistication

are used to supplement the parametric analysis in order to estimate the impacts on employment, investment, profits, costs and

prices, and sales.

Family Tree of Existing Analyses

Three main streams of analytical

beverage container legislation can

tified:

1.

2,

3.

A series of reports done for the

work on

be idenEnvironmental Protection Agency (EPA) and

FEA by RTI, Midwest Research Institute

(MRI), and FAL, culminating in the

September 1976 report by RTI.(1) (The

principals of FAL were part of the MRI

staff in this area. Further, a significant

part of the report by RTI was subcontracted to FAL, particularly the energy

impact study.)

Studies done for the USBA by R. S. Weinberg and Associates and by the Wharton

School culminating in the December

1976 report by the Wharton School. The

Wharton School has done work for

Busch Breweries in the past, and

Weinberg was the project officer for

USBA on the Wharton study. Weinberg

has done a series of reports and

analyses of other reports for USBA.(3)

Several additional studies that have

drawn heavily on the analyses of the

RTI/MRI/FAL series. These include:

a. the OECD report (4)

b. the GAO report (5)

c. the Michigan report (6)

d. the EPA 4th Report to Congress chapter on deposit legislation (7)

e. the staff report of the Resource Conservation Committee (RCC).(8)

These studies often contribute additional insight or manipulate the data for specific

48-786 IC - 79 - 19
—

270 ● Materials and Energy From Municipal Waste

needs, but all are heavily dependent on the

RTI/MRI/FAL series.

In addition to these three groups, there exist some early studies in the field, especially

Hannon’s,(9) as well as several studies which

have examined the Oregon and Vermont experiences.(10, 11,12) The latter are often used

in making estimates of parameter values to be

used in nationwide models.

Scope, Assumptions, and Methods of the

Research Triangle Institute and Wharton

School Studies

The RTI study tries to answer the question,

“What might happen if a mandatory beverage container deposit system were initiated

in the late 1970’s?”

The Wharton School study tries to answer

the question, “What might have happened if

nonreturnable containers had been banned

and if a deposit system on the remaining refillable containers had been initiated during

the period 1969 through 1974?”

Table D-2 compares the detailed scope,

assumptions, and methods of the two studies.

The Wharton School did a retrospective analysis of a hypothetical ban on nonreturnable

containers. This approach reduced the number of assumptions to be made about costs,

technology, sales, market shares, and return

rates because the base case of no legislation

could be taken to be the actual historical record. Their assumption of a ban on nonreturnables simplified th~analysis since it included

disappearance of all cans and nonreturnable

bottles and required complete conversion of

the industries involved to refillable glass. The

Wharton economic analysis is based on a

‘ ‘cost-plus’ ‘ model of pricing in each industrial sector in which it is assumed that

each industry maintains the same return on

investment after the ban takes effect as

before. Considerable effort was expended on

estimating investment requirements. Finally,

they use a sophisticated model of the complete U.S. economy to estimate secondary impacts of the ban.

The RTI and FAL performed a prospective

analysis of a hypothetical deposit system

mandated by Federal law in 1978. Forecasts

are made of future beverage sales and future

container technologies; the latter in terms of

unit energy requirements and weights. The

methodology allows for investigation of a full

range of container market shares and return

rates, but to simplify presentation of the

results, two scenarios are selected to illustrate possible system behavior. The

authors emphasize that the scenarios are

neither most probable nor extremes and that

users must evaluate their own scenarios to

use the results effectively. Differences in

capital stock for the no-deposit and with-deposit situations are evaluated based on the

plant and equipment requirements to meet

demand under the two conditions. The

pricing model used assumes that cost

changes are reflected directly in shelf price

changes without mark-up. Increased handling costs tend to raise prices, while the

scrap value of returned containers and the

retained deposits tend to reduce prices. Analysis of secondary impacts was limited to

changes in employment, employee earnings,

and output of primary materials industries.

Neither study evaluated the impact of the

laws on materials consumption, solid waste,

air and water pollution, or the conservation

ethic. Wharton presented a brief estimate of

impacts on costs of litter control. Both presented final results in terms of plausible scenarios as follows:

Wharton School Standard Scenario

no cans or nonreturnable bottles

trippage = 8

no change in beverage demand

RTI Scenario I

no nonreturnable bottles

can sales equal to those for 1976

trippage = 10 for bottles (return rate

0.9)

recycle rate for cans = 0.9

small reduction in beverage demand
Appendix D—Additional Information on Beverage Container Legislation ● 271

Table D-2.—Scope, Assumptions, and Methods of the Research Triangle Institute

and The Wharton School Studies

Characteristic Wharton School Research Triangle Institute

Nature of study. . . . . . . . . . . . .

Deposit level . . . . . . . . . . . . . . .

Date legislation begins . . . . . .

Date legislation fully effective

Cans banned? . . . . . . . . . . . . . .

Nonreturnable bottles? . . . . . .

Bottle return rates in final

scenario(s) . . . . . . . . . . . . . . . . .

Can return rate . . . . . . . . . . . . .

Technological change . . . . . . .

What happens to returned

cans? . . . . . . . . . . . . . . . . . . . . .

Steel/aluminum market share

for cans . . . . . . . . . . . . . . . . . . .

Refillable beer bottle type. . . .

Pricing model . . . . . . . . . . . . . .

What happens to unclaimed deposits?

Industry profits. . . . . . . . . . . . .

Method of estimating

higher order impacts on

the economy . . . . . . . . . . . . . . .

Nonreturnable ban with

supplementary deposit system

Beer, 5cent

soft drinks 6cent

1969

1974

Yes

Banned

0.875 (8 trips)

Irrelevant

None

Irrelevant

Irrelevant

12 oz. export or 12 oz. stubby

“Cost-plus,” dynamic

Partially retained as income by

brewers and bottlers

Return on investment assumed

same for each sector with and

without legislation

Complete simulation on Wharton

model of the economy

Mandatory deposits

5cent

1978

1982

No

Disappear

0.8 and 0.9 (5 and 10 trips)

Same as bottle return rate

All containers improve by 1982

All recyled

Same as projected without deposits

11 OZ. stubby

“Competitive,” static

Reflected in lower consumer

prices and in offsets of additional

costs

Not evaluated

Only done for primary material production

RTI Scenario II

no nonreturnable bottles

can sales equal to one-half of those for

1976

trippage = 5 for bottles (return rate 0.8)

recycle rate for cans = 0.8

small reduction in beverage demand

Because these studies have such different

scope, it is difficult to compare them. The major difference lies in the assumption by the

Wharton School that nonreturnables are

banned by legislation. This assumption creates large impacts on investment and allows

Wharton to draw a number of qualitative

conclusions about barriers to future technological development, loss of intercontainer

competition, increased consumer inconvenience, and restricted freedom of choice

which tend toward a very rigid, noncompetitive system. These findings arise, however,

as a result of the ban, not as a result of a

deposit requirement.

Comparison of Findings of

the Research Triangle Institute and

The Wharton School

Table D-3 compares the findings of the two

studies for their final scenarios with regard

to energy, beverage sales, employment and

earnings, and investment. Because the two

studies present results for time periods 8

years apart, the findings are compared on a

normalized per-ounce of sales basis in table

D-4. This mode of presentation is intended to

correct for large shifts in the overall sizes of

the industries from 1974 to 1982, Wharton

School only provided a “no-ban” base case
—

272 “ Materials and Energy From Municipal Waste

Table D.3.—Findings of the Research Triangle Institute and The Wharton School Studies

Wharton a RTI

Finding Standard scenario 1974 Scenario I 1982 Scenario II 1982

Total annual energy saving for beverage delivery 147 to 226 X 10’2 Btu 168 X 10’2 Btu

Percentage annual energy savings for beverage

delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36% to 56%

Impact on employment in “core + 54,946 (export)

industries”b (jobs). . . . . . . . . . . . . . . . . . . . . . . . . . . + 48,154 (stubby)

+ 50,000 (nominal)

Impact on employment in all industries (jobs) . . . + 133,000 (net) +

+ 176,000 (gained) +

– 38,000 (lost) —

Impact on investment in core industries (billion

dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 4.1 C to 4.5d

Net impact on employee earnings (million

dollarsiyear) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 559 to 648f

Annual beverage consumption (billion ounces) . . 1,139

44?L0

—

18,000 (net)

56,000 (gained)

38,000 (lost)

+ 1 .5e

+ 879

1,890

aTwo subscenarlos were examined for cases In which brewers adopt export (traditional) or stubby returnable bottles

b core industries are brewers, wholesalers, bottlers, retailers, and can and bottle manufacturers ‘

c lncludes $1.0 billion for additional returnable Container inventory Or “float. ”

d Includes $1.1 billion for float.

‘Does not Include float

‘Core industries only

Table D-4.— Findings of the Research Triangle Institute and The

Consumption

144 X 1012 Btu

38%

—

17,000 (net)

66,000 (gained)

49,000 (lost)

+ 2.4e

+ 936

1,890

Wharton School Studies Per Unit Beverage

Wharton RTI

Finding Standard scenario 1974 Scenario I 1982 Scenario II 1982

Energy savings in beverage delivery (Btu/ounce) 129 to 198 88 76

Net change in employment in all industries

(jobslbillion ounces). . . . . . . . . . . . . . . . . . . . . . . . + 104 + 62 + 62

Impact on investment in core industries

($/1,000 ouncelyear). . . . . . . . . . . . . . . . . . . . . . . . + 3.6 to 4.0 + 0.8 + 1.3

Net impact on employee earnings ($/million

ounces). . . . . . . . . . . . . . . . . . . . . ., . . . . . . . . . . . . + 491 to 569 + 465 + 495

that would facilitate comparisons of the

studies on a percent change basis for total

system energy consumption.

The interesting thing about the findings

reported in tables D-3 and D-4 is the agreement between the two studies on potential

energy savings, on employment changes, and

on net employee earnings increases. This

agreement is most surprising in view of the

different assumptions and study perspectives. Nevertheless, within the accuracy

which can be hoped for from any such analysis, the two studies appear to agree, perhaps

fortuitously, in the critical areas of energy,

employment, and employee earnings.

The two studies disagree considerably on

investment requirements. On a normalized

basis, Wharton School projects greater additional investment expense by a factor of 3 to 6

(see table D-4.) the studies disagree for at

least three reasons, the relative importance

of which we have been unable to assess.

First, the Wharton School assumption of a

ban on nonreturnables necessitates a higher

level of investment in bottle handling equipment. Second, Wharton School uses a 3-year

phase-in period, while RTI’s is longer (4

years). This allows a more orderly replacement of capital by RTI. Third, USBA (Weinberg) argues that RTI overestimates the degree to which existing equipment can be con-
Appendix D—Additional Information on Beverage Container Legislation ● 273

verted and thus underestimates additional

expense. In one sense, Wharton School

should have underestimated capital needs,

since in the 1969 base year the beverage system was less committed to nonreturnables

than it was in the RTI base year of 1978. (See

chapter 9 for further discussion of investment impacts of BCDL.)

Federal Experience With Beverage

Container Deposits

o

n September 21, 1976, the EPA promulgated Federal guidelines dealing with

beverage containers for carbonated beverages (soft drinks and beer) .(13) These guidelines require that a 5-cent deposit-refund

system be established for all beer and soft

drinks sold on Federal facilities, such as national parks and Federal agencies, unless

such a system is determined to be infeasible

for certain enumerated reasons. These guidelines, promulgated under authority in the Resource Recovery Act of 1970, which amended

the Solid Waste Disposal Act of 1965, have a

compliance deadline of September 21, 1977.

These guidelines have two primary goals:

(1) a reduction in beverage container solid

waste and litter; and (2) the conservation and

more efficient use of energy and materials

resources.

Approximately 20 Federal agencies have

or are in the process of implementing a refillable beverage container deposit system in all

or part of their properties (there are 27 Federal agencies to which these guidelines do not

apply). See table D-5 for agencies implementing the guidelines.

Several Federal agencies have tested the

implementation of such a deposit system. The

results of two test programs—one by the Department of Defense on 10 military bases.

and a second initiated by Yosemite Park and

Curry Company with support of the National

Park Service and the EPA at Yosemite National Park—are discussed here.

Table D“5.—Federal Agencies That Are

Implementing or Have Implemented

a Deposit Refund System

Civil Aeronautics Board

Commodity Futures Trading Commission

Department of Agriculture

Department of Commerce

Department of Defense

Department of Energy (some facilities will implement and

some will not)

Department of Health, Education, and Welfare (in process

of deciding which facilities will implement)

Department of Interior (in process of deciding which

facilities will implement)

Department of Transportation (some facilities will implement and some will not)

Department of Treasury

Environmental Protection Agency (some facilities will implement and some will not)

Federal Deposit Insurance Corporation

Federal Reserve

General Services Administrate ion

International Trade Commission

National Aeronaut ics and Space Administrate ion

National Science Foundation (some facilities will implement and some will not)

Tennessee Valley Authority

Veterans Administration

SOURCE: (14)

Department of Defense Test

The Department of Defense (DOD), with the

EPA’s support, and a contractor, FAL, undertook a l-year DOD Beverage Container Test

program at 10 military installations. (15) The

objectives of this test program were:

●

●

●

●

To field test the EPA’s guidelines for

mandatory beverage container use,

To determine the effect in a test situation of beverage container deposits on

beverage container use and return patterns,

To test the EPA guidelines at selected

DOD facilities,

To determine the costs and benefits at

DOD facilities of implementing the EPA

guidelines including measurable economic impacts and beverage container

use and return patterns under a 5-cent

deposit system, and
274 “ Materials and Energy From Municipal Waste

● To develop decision criteria for DOD on

the implementation or nonimplementation of the EPA guidelines at military facilities.

The recommendations of the task force

that ran the test program were that EPA

guidelines for beverage containers should not

be implemented fully or selectively on U.S.

military bases. * However, refillable containers should be available in military sales

outlets where economically feasible when

competitive off-base outlets are not similarly

restricted: the test results indicated an

average dollar sales loss of 25.4 percent at

the military installations when competitive

off-base sales outlets were not operating

under a deposit system. However, the task

force stated that DOD installations will continue to actively implement State deposit laws

in those States having such laws.

The recommendations of this task force are

under review by the Deputy Assistant Secretary of Defense for Energy, Environment, and

Safety. The final decision on how DOD will respond to EPA’s Beverage Container Guidelines will be made by the Secretary of

Defense.

Yosemite National Park Test

The Yosemite Park and Curry Company,

with the support of the National Park Service

and EPA, tested a 5-cent deposit on all beer

and soft drink containers sold in Yosemite

National Park.(16) The system was implt+

mented in May 1976 for a 4-month test period. After the test, it was decided that the deposit system should be established on a permanent basis. The findings of the 4-month test

*EPA representatives on the task force believed that it

was both inappropriate and a conflict of interest to participate in a process directed toward the establishment

of a policy on EPA’s Beverage Container Guidelines,

The EPA representative, therefore, did not participate

in the development and final adoption of the task

force’s recommendations.

period, May-August 1976, can be summarized

as follows:

●

●

●

●

Beverage sales and packaging mix. Two

analyses were undertaken regarding the

impacts of initiating a deposit system on

beverage sales—one based on total sales

and one on vending machine sales. Both

analyses showed that the beverage sales

were below the expected sales for 1976.

However, a number of reasons, other

than the initiation of a deposit system,

may have affected the sale of beverages

including the number of visitors to the

park, weather, and beverage price increases.

Throughout the summer consumers

continued to buy beverages in the available containers in the same proportions

as they did before the deposit system (7-

up and Shasta were removed from the

market because they were packaged in

bimetal cans. The reason for this action

was the absence of an adequate market

for recycled bimetal cans). Ninety-eight

percent of beverage sales are in cans.

Return rates for containers. Seven out of

ten beverage containers sold in Yosemite

were returned in the summer of 1976.

Recycling, solid waste, and litter. Cans

marked for a deposit refund were rarely

found as litter in the park. During the

summer approximately 30 tons of beverage containers were recycled. Overall,

there was a solid waste reduction of 30

tons.

Economics. The economics of the deposit

system test were estimated by comparing the revenues (scrap value of the returned containers and the forfeited deposits on containers which are not returned) with the costs (handling, labeling, equipment and supplies, labor, etc.).

It was estimated that for the summer the

system broke about even. However, it

was also estimated that for future summers, the system could anticipate a profit of about $8,000.
Appendix D—Additional Information on Beverage Container legislation . 275

References

1. Bingham, Taylor H., et al., Energy and

Economic Impacts of Mandatory Deposits,

Research Triangle Institute, Research

Triangle Park, N. C., for the Federal Energy Administration, September 1976.

Available as NTIS PB-258-638.

2. Ackoff, Russell L., et al., A Study of the

Impacts on the USA of a Ban on One-Way

Beverage Containers, prepared for the

U.S. Brewers Association by Busch Center, The Wharton School, University of

Pennsylvania, December 1976.

3. U.S. Brewers Association, Inc., l?e~erence

Source Book: Research Materials Supporting The United States Brewers Association’s Arguments Against Restrictive

Packaging Legislation (contains eight

analyses prepared for the USBA on the

subject of mandatory deposit legislation.

These analyses were published by the

USBA between December 1971 and October 1976.), January 1978.

4. Organization for Economic Cooperation

and Development, Environment Directorate, Re-Use and Recycling of Packaging

Materials Beverage Containers Case

Study, Draft Final Report, Env/WMP/

77.2, Paris, France, January 1977.

5. General Accounting Office, Potential

E~~ects of a National Mandatory Deposit

on Beverage Containers, Report # PAD78-19, Dec. 7, 1977.

6. Michigan Public Service Commission, Economic Analysis of Deposit Regulation on

Non-Returnable Beverage Containers in

Michigan, M. P.S.C. Staff Study 1975-3,

State of Michigan, Department of Commerce, Lansing, Mich., October 1975.

7. U.S. Environmental Protection Agency,

Resource Recovery and Waste Reduction,

Fourth Report to Congress, EPA-SW-6OO,

August 1977.

8. Resource Conservation Committee, Committee Findings and Staff Papers on National Beverage Container Deposits, Second Report of the Resource Conservation

Committee, January 1978.

9. Hannon, Bruce, “System Energy and

Recycling: A Study of the Beverage Industry,” Report Number 23, Center for

Advanced Computation, University of 11-

linois, Urbana-Champagn, Mar. 17, 1973.

10. Waggoner, Don, “Oregon’s Bottle Bill Two

Years Later, ” Oregon Environmental

Council, 1974.

11. Jeffords, James M., and D. W. Webster,

“Vermont 50 Deposit, November 1977. ”

12. Nadworny, Milton J., Some Economic

Consequences of the Vermont Beverage

Container Deposit Law, University of Vermont, February 1975.

13. Federal Register, vol. 41, no. 184, Sept.

21, 1976; pt. II, pp. 41202-41205.

14. Thompson, Marian, EPA Solid Waste Program, telephone conversation, May 1979.

15. Department of Defense Test of the Environmental Protection Agency’s Guidelines

on Beverage Containers, Report prepared

by DOD-EPA Joint Executive Agency Task

Force and Franklin Associates, Ltd.,

March 1979.

16. Final Report: Yosemite National Park

Deposit Experiment, prepared for EPA by

Research Triangle Institute under contract 68-01-2981, April 1977.
—.

ACRONYMS,

ABBREVIATIONS,

AND GLOSSARY
LIST OF ACRONYMS AND ABBREVIATIONS

API . . . . . . . . .

ARM . . . . . . . .

ASTM ... , . . .

13CDL. . . . . . . .

BIRP . . . . . . . .

BOD . . . . . . . .

bpd . . . . . . . . .

Btu . . . . . . . . .

LEA. ....,.. .

COD . . . . . . . .

DOC . . . . . . . .

DOE. . . . . . . . .

ECOFUEL-II @ 

.

EPA. . . . . . . . .

ERDA . . . . . . .

FAD. ..,.... .

FDA. . . . . . . . .

FEAR . . . . . . . .

FTC. . . . . . . . .

FE Y . . . . . . . ..

GAO . . . . . . . .

GSA. . . . . . . . .

HUD . . . . . . . .

Icc ● . . . . . . . .

INOKY . . . . . .

IRS . . . . . . . . .

IRTC . . . . . . . .

ISIS. . . . . . . . .

American Paper Institute

action research model

American Society for

Testing and Materials

beverage containerdeposit

legislation

beverage industry recycling

program

biochemical oxygendemand

barrelsperday

British thermal units

CombustionEquipment

Associates

chemical oxygen demand

Department ofCommerce

Department ofEnergy

trade nameforaprocessed

fuel fromwaste

Environmental Protection

Agency

EnergyResearchand

Development Administration

Franklin Associates, L’td.

FoodandDrug

Administration

Federal Energy

Administration

Federal Trade Commission

fiscal year

General Accounting Office

General Services

Administration

Department ofHousingand

Urban Development

Interstate Commerce

Commission

Indiana/Ohio/Kentucky

region

Internal Revenue Service

International Research and

Technology Corporation

Institute of ScrapIronand

Steel

KAB . . . . . . . . Keep America Beautiful,

Inc.

MU. . . . . . . . modular combustion units

MIRE. . . . . . . The MITRECorporation

MRI. . . . . . . . . Midwest Research Institute

MAW. . . . . . . . municipal solid waste

NARY. . . . . . . . National Associationof

Recycling Industries

NCRR . . . . . . . National Center forResource

NIOSH . . . . . .

NSDA . . . . . . .

OECD . . . . . . .

ORB . . . . . . . .

OSHA . . . . . . .

OTA . . . . . . . .

PET . . . . . . . . .

RCC. . . . . . . . .

R&D. . . . . . . . .

PDF. . . . . . . . .

RCRA . . . . . . .

RPA. . . . . . . . .

RR. . . . . . . . . .

RTC. . . . . . . . .

RTI . . . . . . . . .

tad. . . . . . . . . .

USBA . . . . . . .

w%.. . . . . . . .

Recovery

National Instituteof

Occupational Safety and

Health

National SoftDrink

Association

Organisation for Economic

Cooperation and

Development

Office ofManagementand

Budget

Occupational Safety and

Health Administration

Office ofTechnology

Assessment

polyyethylene terephthalate

Resource Conservation

Committee

research and development

refuse-derived fuel

Resource Conservationand

Recovery Actof1976(public

Law94-580)

Resource Planning Associates

return rate

Resource Technology

Corporation

Research Triangle Institute

tonsperday

United States Brewers

Association

voluntary product standard

279
— —

GLOSSARY

Aerosol—A suspension of fine solid or liquid particles in a gas.

Aggregate—A mixture of small solid particles (stones, glass, ceramics, metal) obtained in separation of MSW.

Air classifier—A device that uses a moving

stream of air to separate light waste components (paper, plastic film, textiles, dust,

leaves, foil, etc.) from heavy components

(glass, metal, wood, bulk plastic, etc.).

Air knife-A device that uses a horizontal

blast of air from a thin slit to separate light

from heavy components of a falling solid

waste stream.

Aluminum magnet—A device that use s

eddy-current forces to separate aluminum

and other light nonferrous metals from a solid

waste stream.

Anaerobic digestion—Biological degradation of organic materials by micro-organisms

in the absence of oxygen.

Back end recovery—Separation and recovery of materials from the residue of incinerated MSW.

Balance sheet costs—The direct costs of

operating and owning a facility that reflect on

the facility’s accounts. Subsidies or externalities are excluded in this accounting.

Beverage delivery industries—all industries involved in the production and sale of

beer and soft drinks-brewers, bottlers,

wholesalers, distributors, and retailers.

Capacity utilization factor—The fraction

of total plant capacity actually utilized over a

period of time.

Capital gains tax—A tax levied on net income realized from the sale of a capital asset.

Capital stock—The undepreciated value of

capital plant and equipment in place.

Centralized resource recovery—Centralized separation and recovery for use or recycling of materials and/or energy contained in

mixed MSW. Facilities may range in capacity

from 25 to 3,000 or more tons per day.

Char—A combustible, carbonaceous residue from the pyrolysis of MSW or other organic matter.

Cogeneration—Production of useful heat

and electricity simultaneously in a single facility.

Coliforms-Relating to, resembling, or being colon bacillus.

Competitive—A market situation in which

no producer or consumer alone is able to influence the prices at which goods and services are traded.

Compost—A mixture of decayed organic

matter used for fertilizing land.

Conservation—Use of less resources (materials or energy) than would otherwise occur

at the existing states of technology, prices,

and institutions.

Cullet—Mixed, broken glass.

Decibel—A measure of the loudness of

noise.

Depletion allowance—See percentage de

pletion allowance.

Deposit—A sum of money paid to a lender

of a good by the borrower and refundable to

the borrower upon return of the good.

Discard—An item that an owner no longer

desires to possess, and which is made available for reuse, recycle, or disposal; also, the

making available of such an item.

Discount—The assigning of a value in the

present to the future value of an action or a

good.

Disposal—The ultimate return of an item

or product to the earth, through burial, dumping, combustion, or chemical reaction.

District heating—Provision of heat and/or

cooling water to a number of users from a

central source; usually, to several buildings

in an urban area.

Economy of scale—A situation in which

the average cost of producing a good or service declines as the rate of goods production or

service delivery increases.

Eddy current—An electrical current induced in a material that is moving relative to

a magnetic field.

Effectiveness—The degree to which a

policy or program is expected to accomplish

the objectives to which it is directed.

280
Acronyms, Abbreviations, and Glossary ● 281

Effluents—Air or water pollutants emitted

from a facility.

Elasticity of demand (or supply )—The

percentage change in demand (or supply) that

occurs if the price of a good or service

changes by 1 percent.

Electrostatic precipitator—A device that

uses an induced electrical charge and a magnetic field to recover fine particles from a

flowing gas stream.

Epidemiology—The study of the relationships between the causes, occurrence, and

control of disease in a population.

Equivalency (approach to ratemaking)—

Setting equal rates to transport different

batches of raw materials that are required to

produce an equivalent amount of final product.

Ex parte—A legal proceeding approached

from one side or one point of view only.

Externality-A cost or benefit of an economic activity not borne by a participant in

the activity.

Extraction —Mining or other removal of a

mineral resource from the earth.

Ferroalloy —Alloys of iron with certain

other metals used in the production of steel.

Ferrous metals—Metals containing a high

percentage of iron, including steels.

Fill—The provision of one container-full of

beverage.

Filter cake—The solids collected in filtering a solid/liquid mixture.

Fire tube boiler—A boiler in which combustion gases pass through tubes immersed in

water that becomes steam.

Float—The inventory of beverage containers and secondary packaging in circulation

and storage that is required to support a

refillable container system,

Flow control—Ordinances that require delivery of collected MSW to specific resource

recovery or disposal facilities.

Frit—Partially fused materials of which

glass is made; fused slag from pyrolysis.

Front end recovery —Separation and recovery of materials from mixed MSW prior to

incineration or other thermal processing,

Froth flotation—Process of removing glass

particles from a water slurry of mixed waste

with chemicals that create a froth or foam in

which the particles become entrapped and

with which they can be skimmed off.

General obligation bonds—Municipa l

bonds whose principal and interest payments

are met from and guaranteed by general revenues.

Glass aggregate—See aggregate.

Glass cullet—See cullet.

Heating value—The heat, or energy, released by combustion of a standard amount of

fuel under specified conditions (higher and

lower heating values refer to whether the

water produced by combustion is available as

liquid or vapor, respectively).

Heavy metal—Any of a class of metals of

high atomic weight and density such as mercury, lead, zinc, and cadmium that are known

to be toxic to living organisms.

Home scrap—Scrap material produced

and reused within the same processing facility, such as a steel mill or copper smelter.

Humus—The organic portion of soil

formed from partially decomposed plant or

animal matter.

Hydrolysis —A reaction of an organi c

chemical with water to produce two or more

chemical species that incorporate the elements of the water molecule.

Impact—Any outcome or result of an action, whether direct or indirect.

Incinerator bundle—Tin can scrap, compressed to charging box size and weighing not

less than 75 pounds per cubic foot. Processed

through a recognized garbage incinerator.

(ISIS specification)

Investment tax credit—A deduction from

corporate income taxes otherwise due ,

allowed in proportion to the amount of investment in some specified types of capital goods.

Job gain—Total (but not net) number of

new full-time job equivalents created by

adoption of a policy.

Job loss—Total (but not net) number of existing full-time job equivalents lost due to

adoption of a policy.
.

.

282 . Materials and Energy From Municipal Waste

Job shift—Net number of jobs created or

lost due to adoption of a policy (job shift= job

gains minus job losses).

Leachate—Contaminated ground water resulting from the passage of rain or surface

water through a waste landfill or dump.

Loan guarantees—A program of Government-funded insurance to protect lenders

against failure of a project to obtain sufficient revenues to pay back the principal and

interest on a loan.

Long run—A period, usually of several

years, during which capital equipment expenditures significantly reflect changing

prices, demands, and policies.

Low-interest loans—A Government subsidy to lenders to allow them to offer loans for

specific purposes at below market interest

rates.

Manifest—Written documentation accompanying specific batches of material or of

waste that identifies their origin and composition.

Marginal cost—The cost of producing one

additional unit of output from existing plant

and equipment (short-run marginal cost) or

from additional plant and equipment (longrun marginal cost).

Market failure—Any deviation from an

ideal market economy in which all actors

have perfect information, all costs are internalized, and perfect competition exists.

Market share—The percentage of total

consumption of beverages sold in each container type (consumption measured in physical volume units such as ounces or barrels).

Materials system—An abstract model of

the production, use, and disposal of materials

in society.

Modular incinerators—Small-scale incinerators that recover heat or hot water, often

used in groups of two or more to achieve a desired plant size.

Municipal solid waste (MSW)—regularly

collected solid waste from households, institutions, and commercial establishments.

Nonferrous metals—Metals other than

iron and steel that are found in MSW, such as

aluminum, copper, zinc, lead, and their

alloys. (In analysis of MSW, aluminum is

often treated as a separate component.)

Nonreturnable—Beverage containers designed to be used only one time.

Number 1 Bundle—New black steel sheet

scrap, clippings, or skeleton scrap, compressed or hand bundled, to charging-box

size, and weighing not less than 75 pounds

per cubic foot. (Hand bundles are tightly

secured for handling with a magnet. ) May include Stanley balls or mandrelwound bundles

or skeleton reels, tightly secured. May include a chemically detinned material. May

not include old auto body or fender stock.

Free of metal coated, limed, vitreous enameled, and electrical sheet containing over 0.5

percent silicon. (ISIS specification)

Number 2 Bundle—Old black and galvanized steel sheet scrap, hydraulically compressed to charging-box size and weighing

not less than 75 pounds per cubic foot. May

not include tin or lead-coated material or vitreous-enameled material. (ISIS specification)

Number 3 Bundle—Old sheet steel, compressed to charging-box size and weighing

not less than 75 pounds per cubic foot. May

include all coated ferrous scrap not suitable

for inclusion in Number 2 bundles. (ISIS specification)

Obsolete scrap—Scrap recovered from

used products including postconsumer scrap,

demolition waste, railroad and other transportation scrap, etc.

Pathogens —A specific causative agent of

disease such as a bacterium, virus, or fungus.

Percentage depletion allowance—A deduction from taxable income of a percentage

of annual gross income arising from production and sale of certain minerals.

Pilot plant—A facility of size intermediate

between a laboratory and a commercial plant

used to test and evaluate a new product or

process technology.

Postconsumer waste—Solid waste consisting of products used by final consumers

(MSW, automobiles, but not industrial, demolition, or railroad waste).

Primary material—A bulk material of commerce produced from virgin raw materials.
Acronyms, Abbreviations, and Giossary ● 283

Product charge—A tax or charge levied on

bulk materials or final products designed to

add the cost of their disposal to the purchase

price.

Prompt industrial scrap—Scrap returned

from fabricators of products directly to producers of materials, usually with a known

composition and level of contamination.

Property tax abatement—A reduction in or

exemption from payment of property taxes on

specified classes of property over a specified

time period.

Pyrolysis—Partial decomposition of organic material to gas and/or liquid in insufficient

oxygen to support combustion.

Quad—1 quadrillion or 10’5 Btu or 1.055

exajoule of energy.

Recyclable—A solid waste material or

product capable of being recycled.

Recycle rate—In connection with beverage

containers, the fraction of containers distributed that is actually recycled into new metal

or glass.

Recycling—Reprocessing of used products

into new basic materials of commerce, in

which the identity and utility of the original

product are lost.

Recycling allowance—A direct grant or

tax incentive from the Government to producers or users of recycled materials in proportion to some measure of the amount or

value of recycled materials used.

Refractory particle—a ceramic particle or

stone that does not melt at glass-making temperatures.

Refuse-derived fuel (RDF)—A solid fuel

produced from MSW by removal of recyclable metals and glass and of refractory solids

such as stones, ceramics, and metal particles.

Reliability-The anticipated fraction of

time or fraction of capacity at which an item

of equipment or plant is expected to operate

successfully.

Resource recovery—Procedures and processes for recovery of useful energy and/or recyclable materials from mixed or segregated

MSW. (Often restricted to centralized recovery from mixed waste, but more properly applied to all types of recovery for the purpose

stated.)

Return rate—The fraction of all refillable

beverage containers distributed that are actually refilled and redistributed.

Refillable—A container designed to be

filled and distributed more than once.

Reuse—The use of a product two or more

times without substantial change in form or

function and without substantial repair or

renovation.

Revenue bonds—Bonds sold to help pay

for a project whose principal and interest

payments are met from revenues of that project.

Sanitary landfill—A landfill operation that

meets established standards for ground

water quality; air pollution; site quality; vermin, pathogen, and disease vector control;

and site renovation.

Scenario—A coherent depiction of one possible future development of trends and

events.

Secondary material—A bulk material of

commerce produced by processing postconsumer or other obsolete scrap.

Secondary packaging—A package designed for storage and transport of a number

of individual beverage containers.

Severance tax—A tax on virgin materials

levied at the point of mining or harvest in proportion to some measure of the amount or the

value extracted.

Shelf price—The actual price paid by consumers for beverages, not including any refundable deposit or sales taxes.

Short run—A period of time of economic

adjustment within which plant and equipment are not substantially modified or expanded.

Side effects—The unintended, indirect, or

delayed effects of an action or policy.

Slag—A solid, heterogeneous inorganic

mass formed from melting of materials in an

incinerator or other thermal waste processor.

Source separation—Collection of waste

products that are segregated according to

material type by waste generators (a mis-
— —.. -

284 “ Materials and Energy From Municipal Waste

nomer in that separation of mixed waste is

not required—only maintenance of the original unmixed state).

Subsidence—A drop in the surface level of

a covered landfill or dump that occurs as the

contained waste decomposes and is compacted.

Subsidy—A direct or indirect payment

from the Government to specific classes of

citizens or institutions for the purpose of encouraging some activity which has been

deemed to be necessary or desirable for the

accomplishment of some policy objective.

Substitution—In an economic sense, the

replacement of one factor of production with

another to produce the same output at no

change in total cost; often used more generally to denote the replacement of one raw material by another, at higher or lower total cost

depending on the circumstances.

Tipping fee— the price charged for dumping MSW at a landfill or resource recovery

plant.

Transfer station—A facility at which

MSW is transferred from collection vehicles

to large trucks or rail cars for long distance

shipment.

Trip—One cycle in the utilization and return of a refillable beverage container.

Trippage—The average number of trips

made by a refillable beverage container during its useful life.

Trommel—Rotating screen used in RDF

systems to remove abrasive fine sand, glass,

and frit from MSW; sometimes has larger

holes to allow removal of containers and

other objects of similar size.

Value-of-service —Basis for setting railroad freight rates in proportion to the value

of the good shipped rather than the cost of

providing the transportation service.

Virgin material—A raw material acquired

directly from natural sources.

White ledger—Mixed, high quality waste

paper typically acquired from offices.

Wet pulping—Separation of mixed MSW

by intensive agitation of waste in a water

slurry: organic fiber remains in suspension,

heavy solids sink, and plastic film, string, etc.

float and are skimmed off.

Waterwall incineration—Direct combustion of raw MSW, generally without preprocessing. The primary product is steam.

U. S . GOVERNMENT PRINTING OFFICE : 1979 0 - 48-786