What Does China’s Green Fence Mean for the Recycling Industry?

Exporting Recycling & China’s Green Fence

For the past 20 years, the United States has been exporting its raw materials such as metal, paper, plastic and more, instead of recycling the materials here in the U.S. While this is good for the trade deficit with China – scrap is our largest export to that country – it may not be so good in the long run. China is implementing higher standards on imports of recycled material via Operation Green Fence. This could have quite an impact on the recycling industry and the U.S. in a broader context, forcing the U.S. to have higher standards for what they export worldwide.

One reason the United States began exporting to China is because, as a result of the large amount of goods we import from them, the shipping containers that carried those goods were being sent back to the country empty. It made sense to send them back filled with bales of empty cardboard boxes which those goods had been packed in because China does not have the forest resources that the U.S. does. Most of China’s packaging was previously made from recycled fibers which proved quite flimsy. China wanted to import our high quality cardboard to mix in with their low quality fibers to make better packaging. This win-win situation began the exporting of our recyclables.

As the U.S. became a consumer economy with a shrinking manufacturing base, Chinese manufacturing was growing. The U.S. generates more scrap than it is able to consume domestically. Meanwhile Chinese demand for raw materials grew and recyclables are a lower cost raw material compared to virgin raw materials.

The May 2012 issue of ISRI (The Institute of Scrap Recycling Industries) Scrap details that in 2011, the U.S. collected 52.8 million tons of recycling and exported more than 23 million tons—a record. About 15.8 million tons went to China, 23 percent more than in 2010. Half that, 7.9 million tons were exported to the rest of the world.

Beginning in February of 2013 China launched what they’re calling “Operation Green Fence“, a 10-month long initiative that kicked off in February to prevent the importation of solid waste-contaminated shipments. Operation Green Fence has set a limit of 1.5 percent prohibitive, or allowable contaminant, in each bale, in an effort to keep trash out of China. Headed by Wang Jiwei, vice president and secretary-general of the China Nonferrous Metals Industry Association Recycling Metal Branch (CMRA), the new initiative will include random inspection of all forms of “imported waste,” meaning metal, plastic, textiles, rubber and recovered paper materials.

At the ISRI convention, held April 9-13, 2013 in Orlando, Florida, a statement from Wang Jiwei revealed that the initiative is part psychological—to make shippers know China will “strictly examine the import application and [consider whether] to approve the import license” of shippers who are caught sending sub-standard material.

As Operation Green Fence is rolled out and rules and regulations begin to change, it is clear that the amount of materials we export will be reduced. However, as single stream recycling is becoming more widely adopted, we are producing even more contaminated materials. If China and other importers are operating at higher standards, where will all of the new contaminated materials go?

The options for what to do with these recyclable materials are few. Many could end up in landfills and some could be shipped to other Asian countries where they will be sorted in order to meet Chinese specifications.

China’s Green Fence policy could greatly impact the recycling industry both here in the United States and worldwide. Currently the initiative is putting a great pressure on prices as recyclers are not shipping to China for fear of rejections. More material is available domestically so the domestic mills can pay less. When supply goes up, the price comes down. If China maintains Operation Green Fence past its current set timeframe, the cost of exporting our materials could rise as well. These projected views are based, however, on the likelihood of China staying steadfast in their Green Fence policy. Because China’s appetite for scrap as a raw material is voracious, the Chinese manufacturers may put pressure on the government to relax the policy in the coming months.

Operation Green Fence may be a burden to the recycling industry presently, but it could be the perfect time for businesses and municipalities to really evaluate how our current policies are affecting the end result. If the materials we are exporting are so contaminated that they are being rejected by those we sell to, maybe it’s time to take another look at dual stream recycling. Keeping our materials separated allows our domestic recycling industry to recycle the maximum amount of materials, whether here or abroad, which keeps them out of the world’s landfills.

On May 9th 2013 this article was mentioned by Brad Plumer on the Washington Post’s Wonkblog in an article titled, “China doesn’t even want to buy our garbage anymore.”


Image above by merfam on Flickr.