While several end markets for scrap wood have solidified or remained stable, potential setbacks loom in boiler fuel markets.
Recycling business owners and managers are often quick to point out that collecting and diverting materials is not recycling unless there is an end market for the material diverted.
It is a message that many C&D recyclers find themselves again emphasizing to the United States Environmental Protection Agency (EPA). The agency's new rules on what designates a solid waste when combusted, many recyclers fear, will create significant barriers to a large-volume scrap wood end market.
"Wood is the largest product we recover out of the waste stream," says Jason Haus of DemCon, Shakopee, Minn. "If they come down hard on that rule, all processors are going to have to either not recover that wood anymore (because it doesn't fit under EPA's acceptable parameters), or we have to go through their process and testing procedures to have it accepted as an acceptable fuel. It's going to be a pretty cumbersome process, I think," says Haus, who in addition to being co-owner of a recycling company is a board or committee member of both the Construction Materials Recycling Association (CMRA) and the National Demolition Association (NDA).
Of particular concern to recyclers is a final rule released in late March 2011 that identifies what can be considered a solid waste when combusted. Language on the EPA website regarding this final rule states, "Under the final rule, examples of non-hazardous secondary materials designated as solid wastes when burned include contaminated construction and demolition material."
Bill Turley, executive director of the CMRA, says a coalition of some 20 trade organizations has met several times with the EPA and has successfully communicated the negative effects the rule would have on several scrap-to-fuel applications, including scrap wood's use as boiler fuel. "It was an ill-considered move, but EPA now gets it – all the way to the top," says Turley.
He notes that environmental groups such as the Sierra Club and Earthjustice are likely to push back should the EPA reverse course. "I don't know how it will come out," Turley says.
A FIGURATIVE CLOUD
Rules and regulations affecting the operation of boilers and other emission sources are nothing new. To a great extent, operators of such boilers and recyclers (as feedstock providers) can point with a certain amount of pride to the fact that boiler plants that have made it through several previous rounds of emissions regulations are now providing energy with dramatically reduced detrimental effects on air quality.
According to Haus, the newest EPA rule on what is solid waste seems to disregard all this progress by prohibiting some forms of scrap and recycled feedstock despite the fact that it is currently being used well within acceptable emissions standards.
"It's unfortunate, because they're meeting the emissions controls," Haus says of many of the affected boiler operators. "But regulators look at it as they want to scrutinize what's coming in to the boiler and what's coming out."
The pending enforcement of the EPA rule has become a dark cloud hanging over wood boiler fuel markets.
A potential silver lining is the reaction of some legislators. House Majority Leader Eric Cantor (R-Va.), has included the Boiler MACT rule among his "Top 10 Job-Destroying Regulations" in a memo sent to colleagues in late August.
"From hospitals to factories to colleges, thousands of major American employers use boilers that will be impacted by the EPA's new 'boiler MACT' rules," Cantor writes in his memo, also referring to "200,000 jobs at risk."
Some of those jobs would likely be within the C&D recycling sector, according to Haus. "If we lose the ability to recover that material, it puts the recycling effort into jeopardy. People need to understand that there has been a lot of investment in this, and it's one of the largest parts of the stream," Haus adds.
According to Turley, legislation introduced in both the House and the Senate would have the effect of overturning the current EPA rule.
BEYOND THE BURNING QUESTION
Should the stricter regulations not take effect, or for as long as they remain contested, the boiler fuel market should remain an important one to wood recyclers.
In Haus's market in Minnesota, one of the more consistent buyers of boiler fuel produced by Dem-Con has been the FibroMinn facility in Benson, Minn. The Benson facility is described on the FibroMinn website as "the United States' first operating poultry litter plant, [coming online] in October 2007."
RAISING THE C&D DIVERSION ROOF
In addition to the economics of construction and demolition (C&D) materials recycling having improved, state legislation and local ordinances also have driven more C&D recycling. That was part of the message from panelists at a session on C&D recycling at Wastecon, the annual convention of SWANA (the Solid Waste Association of North America).
Speaker Richard Ludt of Interior Removal Specialist Inc. (IRS), South Gate, Calif., noted how a number of ordinances enacted in Southern California have affected C&D scrap diversion flows in his market region.
Reacting to California Assembly Bill 939, which was passed in 1989 with the goal of increasing landfill diversion to 50 percent, municipalities enacted a variety of ordinances affecting C&D materials, Ludt said.
Ludt said some communities have required contractors to pay a deposit that will not be returned until their project is finished and they can prove they reached a specified landfill diversion or recycling rate. Such arrangements were not always well received by contractors and also tended to create extensive recordkeeping and accounting systems for the municipalities.
Ludt praised the city of Los Angeles for creating "possibly the simplest C&D ordinance I have seen." C&D materials there must be taken to certified facilities audited and approved by the city. "They reach their desired recycling percentage by permitting [facilities] carefully," said Ludt. "Builders like it because there is no deposit and city staff like it because there is no tracking of deposit payments."
Speaker Miriam Zimms of Kessler Consulting Inc., Tampa, Fla., provided an overview of C&D recycling in several regions where municipalities or solid waste districts have tried different approaches to spur recycling.
In King County, Wash., Zimms said agencies there are providing considerable technical support, have streamlined the permitting process and offer grants tied to "green building" LEED (Leadership in Energy and Environmental Design) projects. These initiatives have been enough to boost the C&D materials landfill diversion rate to 83 percent in King County, according to Zimms.
Metro Portland, Ore., is another region where LEED projects are abundant, and in fact new Metro Portland government buildings are required to seek LEED certification, said Zimms. Builders in the region are mandated to recycle 75 percent of their scrap materials, although Zimms said only 45 percent of projects may be in compliance with this mandate.
Wastecon 2011 was Aug. 23-25 at the Gaylord Opryland Resort in Nashville, Tenn.
The 55 megawatt power plant combusts more than 700,000 tons of scrap materials annually, accepting 500,000 tons of poultry litter from regional turkey and chicken farms as its primary feedstock and biomass materials such as scrap wood as the balance. The plant's operator, Fibrowatt LLC, Langhorne, Pa., says the Benson facility creates "enough renewable energy to provide approximately 40,000 homes with power."
California offers several wood fuel end markets says Michael Gross of Zanker Road Resource Management in San Jose. "We've seen increased demand for fuel, primarily from new facilities that are coming into the market," Gross says.
In addition to serving boiler markets such as FibroMinn, Haus says Dem-Con also turns its scrap wood into landscaping products and animal bedding.
"You have to take the material down by size considerably to get that to work," Haus says of the animal bedding market. He adds, though, that "it's a market that's available and it has sold at a pretty consistent price over the past few years."
The landscape materials market can be a competitive one, says Haus, an opinion that is echoed by Harvey Schneider several states away at Florida Wood Recycling Inc., Medley, Fla.
"Mulch pricing is fairly stable," says Schneider. "The stability of the price is based not only on the [costs of collecting] wood, but on the cost of operations. With fuel costs, you can't operate at $3 or $4 per gallon for fuel and have that finished product price go down."
Gross says that in the California mulch market, "demand has really increased." He says many buyers are gravitating to recycled-content mulch that can cost as much as $20 per cubic yard less than mulch produced from virgin materials.
As a recycler of C&D materials, Haus says Dem-Con runs into competition from companies that process only green waste and who can produce a competitive mulch product. "The mulch market here sometimes gets flooded with green waste, so it's not as economically enticing," says Haus.
Schneider observes that within the past few years an increasing number of people entered the wood recycling and mulch production industries in South Florida, but in his opinion many of these newer operators are having trouble maintaining a profit margin.
"You get [competitors] out there with a lot of debt," says Schneider. "They're working to generate cash flow but operating at a loss. There are people in business who don't have a calculator. You can't work for a negative return," he says of those who will "fall by the wayside."
Schneider says while it can be difficult to retain some customers who still try to sell their scrap wood or chase the lowest tip fee, "You have to politely explain to customers that you need to keep your margin. Then you have to move the material and have enough of a margin to keep running. A lot of the people who were working for nothing are starting to disappear."
Both Schneider and Ray Kvedaras of Cooper Tank & Recycling, Brooklyn, N.Y., say they have not made connections with any local buyers on the boiler or energy sides of the market.
"No one is burning it in our immediate area," says Kvedaras. Two plants in Pennsylvania offer potential markets, he notes, but both are about 200 miles away and neither plant is offering to pay for material. "We haven't come across anything that makes sense," he states.
THE SUPPLY SIDE
On the scrap wood supply side, Schneider says in South Florida, "Because of less construction there is less [scrap] wood, but there's also less demand for the end product. So there seems to be a lot more wood around then there has been for the past few years."
The end market for mulch is fairly strong, he says, but he sees an inventory build-up situation in South Florida. "Everybody that's taking in wood, their yards are full and they're hoping the next season for selling mulch is a good one."
In Brooklyn, Kvedaras says post-storm material generated in New York City by Hurricane Irene was likely heading beyond city limits, since the city's Department of Sanitation considers leaves as an odor-causing putrescent material not welcome at recycling facilities within New York City.
As well, "there is not a lot of dry dimensional lumber out there that we can use for dying mulch into different colors," says Kvedaras. The market is somewhat in balance, though, he says, since demand for mulch is also suppressed.
Gross observes similar conditions in the San Jose area. "[Supply] is really down because of a lack of construction," he says. "We see that across the board, but especially for clean material."
One way Florida Wood Recyclers is trying to keep inventory moving is by offering custom-colored mulch beyond the usual black, red and natural colors. "I'm seeing a a slight uptick in demand for something a little different," says Schneider. "I'll make specialty colors. We've broadened our product line by doing that and pulled in new customers that way."
Regarding overall conditions this year, Schneider says, "I'd say 2011 has shaped up to be about the same as 2010."
Gross reports that "boiler fuel pricing has increased probably 10 to 15 percent" in his region, while mulch has seen only a marginal 1 or 2 percent price increase.
"The market has been good and steady," says Haus, "but now there is a monkey wrench thrown into the process by regulators putting the fuel market into jeopardy, which is unfortunate."
The author is editorial director of Construction & Demolition Recycling and can be contacted at firstname.lastname@example.org.