Thursday, July 31, 2008

Your Garbage, My Money

While many of my regular readers may think that I am opposed to all things green, allow me to disabuse you of that notion. I believe in doing things that are cost efficient and effective, like green roofs. You can read my blog, Clean Air through Green Roofs .

I am a big fan of recycling, particularly those things that make sense to recycle, like steel and aluminum. However, when it takes more resources to recycle than it takes to make the product from scratch, I am skeptical.

In the July 24th edition of Business Week, there is an article titled, "Cash for Trash." It discusses how not only are traditional waste management companies making money from recyclying, but venture capital money is going to firms, "...which includes everything from materials recovery to sewage biotechnology..."

There is a simple "why" to the question of increased recycling.

"The calculus is simple: As the prices of oil and other raw materials rise, recycled products become more attractive. Consider that 8% of global oil production is siphoned off to make plastic each year. Recycled plastic, however, requires 80% less energy to produce. Recycled aluminum burns up 95% less energy. Recycled iron and steel use 74% less, while paper requires 64% less."

So there you have it. Recycling now is worth it! Is anybody surprised? They shouldn't be. In a world of ever shifting commodity prices and consumer tastes, new markets show up to take advantage of any disequilibrium. When the cost of oil and metals goes down, don't be surprised to see recycling businesses fade away, just like in 2002, when "Mayor Michael Bloomberg, ...suspended the city's glass- and plastic-recycling services in 2002..." Things change, markets change, tastes change and generally that's good, because that's how markets are made.

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