China's Recyclable Materials Policy Could Lead To Loss Of Revenue For San Diego

China has been buying boatloads of recycled materials from California and perhaps the only thing more remarkable than that is that now China doesn't want as much of it anymore. China is cracking down on the quality of the recycled paper plastics and metals it's getting. The upshot is today the city of San Diego is looking at an updated recycling contract which will effectively and recycling as a source of revenue for this city. Joining me is Ken Prue recycling program manager for the city of San Diego. And Ken welcome to the program. Good morning. Thank you for having me. Tell us more about China's new policy on what recyclable materials it accepts. They've basically drastically reduced what they're willing to accept. And before over 60 percent of the recycled materials from California were going to China as well as about the same from our kerbside recycling program. And over concerns of over contamination have basically banned 24 different products primarily including mixed waste paper which is all your newspaper and magazines and junk mail that isn't actually separated as as a specific newspaper commodity and plastics. And a lot of the mixed metals and so you know they've they've stopped allowing that and then they've placed unprecedented thresholds on contamination allowance so the longstanding international standard was about 2 percent contamination in a specific category of product say cardboard. Now they've imposed a half percent zero point five percent threshold on it. So it's very very difficult to meet. And that contamination is the kind of thing you get when somebody puts let's say greasy pizza box into the recycling bin. Is that right. Yeah exactly. Or with cardboard it could be wax paper that made wax cardboard that made it through say from produce or it could be even a bottle or a can or something else that doesn't fit that specification for that particular great product. Does this have anything to do with retaliation for new tariffs. I'm not sure of that. That being said one thing related to this China National sword policy that they've implemented is on August 8th the Chinese government said that they would begin imposing tariffs on the recycled materials effective August 2013. Thankfully our contractors have not been charged a tariff. They were able to start shipping cardboard to China again in late August and have not had to pay tariffs on it at this point so we'll we'll hope that those are not imposed. So OK so once we put our recyclables in the blue bin the city picks them up and it takes them to one of two companies IMX recycling services and the Allen Company. That's the way things are set up now. How have those companies been affected by China's new policy. Both of these companies and also other processors of recyclables throughout the U.S. and beyond even there are impacted in that to meet this new unprecedented spec which has actually affected beyond just sending it to China. It's basically created a higher standard for everyone like our contractors have always done a good job producing material that meets spec but to do this new spec they've had to slow down their sorting equipment their lines are basically series or conveyor belts. They've had to slow them down so that they can have staff they actually have to have additional staff there as well but the staff can then try to pick out any unacceptable items from the specific material types and then also by slowing down the line they lose production capacity so they have to run the lines longer. And so there's costs associated with that and then they also have additional inspection on the materials and potential rejection of the material. So every which way you go it results in additional costs for them and so they are not making as much money and so they can't pass on as much money as the contract wants them to to the city of San Diego is that right. Yes. And even more so because of this huge supply of material because China had taken up so much of the capacity and the demand for the material. These other markets are getting saturated by the available materials so the markets are able to basically buy the material for lower prices and also impose higher standard. So at the same time they're having to do all this additional work and expense. They're actually getting less for the commodities as well. So what's the bottom line for the city of San Diego what's the city on the line to lose here. Well with our current contract we potentially could lose all of the revenue that we were getting in NY 17 we had gotten about 4 million dollars that was one of our best years. And then in fiscal year 18 we got about 3 million. We know with this amendment which will go back to May of 2018 and be for the last year of our contract that expires at the end of June of 2019. We're forecasting zero revenue for that to be conservative but we know that it will reduce our revenue by at least one point five million. And like likely more but the big thing is that it won't result in us being charged where we know of other situations other jurisdictions. Even in Los Angeles where there they went from getting paid for the material to now they're paying feed to drop the material off at these recovery facilities. The Voice of San Diego is reported some cities are already putting recyclables into their landfills because of this change in compensation and having to pay has San Diego been doing that. No no thankfully we've continued to many jurisdictions are really you try to hold the line and continue to accept the same materials because it's very important both on the diversion side and also on the public messaging and public education side. So we've been able to continue accepting the same materials and the materials are being recycled. So we're very fortunate in that regard. Is there a need for a new long term strategy on what we're going to do with recyclable material at this point. No. We have to consider the impacts of China. But in the meantime we still have requirements from the state level both for overall diversion and also for mandatory recycling of commodities and from businesses and multi-family complexes. And so while the state has identified that this is a big issue. At the same time we still have those mandates to comply with. And then also on the local level for City of San Diego we have our Climate Action Plan and zero waste plan. And those have goals with 75 percent diversion by 2020 90 percent by 2035 and then striving for zero waste by 2040 at this point. We're continuing to have that still be our continued goal but we've acknowledged that in the event that the markets don't start to improve soon they may impact our ability to reach those goals on those timeframes. So what can people do to improve the amount that gets recycled. Well definitely we always say with their bloomin materials and whether it's you know. So those are those commodities whether it's at home or at work. It's really putting the right things in the bin. So all of your cardboard and paper and magazines office paper junk mail things like that in your bottles and your cans and your plastic and glass bottles and jars and other plastic containers things like that. It's really putting them in the container so you're making sure you're putting them in but also put them in especially for the containers empty clean and dry. And we asked you not to bag them so if you keep it loose it just makes it much better for the processing and also ensuring that the materials the highest quality possible. I've been speaking with Ken Piru recycling program manager for the city of San Diego. Ken thank you very much. Oh thank you.