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November 2007

Flood of electronics to hit recycling market

by Irwin Rapoport Write the Author

The United States is already in a deficit position in the recycling of electronic products. When the FCC mandated change from analog to digital signals for televisions occurs on February 17, 2009, the deficit is expected to increase by 80 million television sets that will be scrapped in favor of new models.

While the FCC has mandated the change, there has been no federal legislation enacted to deal with this added pressure on the national waste stream.

John Shegerian

“The Silicon Valley Toxic Waste Coalition has estimated that within the next couple of years, based just on that legislation mandate, over 80 million televisions in the United States will need to be recycled in an environmentally friendly and legally responsible way,” says John S. Shegerian, the chairman and CEO of Fresno, California-based Electronics Recyclers, Inc. “It is going to further flame the e-waste tsunami that is already upon us. That estimate, for just televisions, is a conservative number – it does not include the 128 million cellphones that were thrown into the trash last year in North America or iPods and other equipment still being trashed. We’re behind the eight ball on this.”

Dell and Hewlett Packard take back their products for recycling and Best Buy recently introduced a program that takes back electronic goods for recycling, provided the consumer pays a $10 fee.

In California, the Electronic Waste Recycling Act of 2003 (SB20) forbids the residential and commercial sectors from placing televisions, computers, monitors and other electronic goods in the waste stream, with the key provision of charging (between $6 and $10) an upfront fee for mandated electronic goods, which goes into a fund to pay for the recycling of such products.

“We have so much to do,” says Shegerian, who recently spoke at New York University (NYU). “The students were aghast that we are going to recycle over 200 million pounds of e-waste in 2007 in California.”

In the United States and Canada, electronic goods are placed in landfills, exported to developing countries and China, or recycled at home. When exported to foreign nations, the products are often dismantled in non-environmentally friendly operations, and may employ child laborers who often work in unsafe conditions.

“It’s a human rights violation and environmental harm is done,” says Shegerian. “SB20 has been, by far, the most successful e-waste legislation in the country. It has had three years of tremendous success.”

Seven other states recently passed e-waste legislation in the last legislative session, but these laws are based on the principle of producer responsibility to ensure that products are recycled.

If other states do not follow the California model, Shegerian says that at a minimum, state legislatures should enact two bans – a landfill ban and an export ban. These bans would provide the opportunity for the free market to come up with a solution that would create an e-waste infrastructure that could sustain itself on a long-term basis.

Shegerian says the existing e-waste infrastructure, one that could legally and environmentally recycle these products, is not sufficient to handle the amount of goods that are discarded annually, but with a strong desire to do so, it could be created between 12 and 24 months.

“It could be created on a strategic scale with multiple locations to handle the flow that continues to glut the market,” he says. “Cities and counties should also pass legislation preventing these goods from being landfilled, but state bans are the best method. The free market can handle the stuff wonderfully.”

“The California model is absolutely the best,” he adds. “It creates the most incentives for the appropriate forms of recycling and has created thousands of jobs. You have a system that is accountable and measurable.”

While the state of California pays recyclers 48 cents a pound for approved source documentation, the recyclers have to cover the cost of paying the collectors, freight, packaging and some other items.

The Institute of Scrap Recycling Industries (ISRI) argues that legislation is not needed and that the market can do it cheaper.

“All the guys behind the scenes try to come up with a better model and three years later, they still haven’t done anything,” says Shegerian. “In California, on an industry-wide basis, we recycled over 65 million pounds of electronic waste in 2005 and over 120 million pounds in 2006.”

In California, a profit is made on the recycling itself, with additional income from the sale of materials harvested from the dismantling process.

“There is quite an unquenchable thirst in emerging economies for all the commodity based materials – the metals (precious, ferrous and non-ferrous), plastics and glass,” says Shegerian. “The glass is being used to make new screens for monitors and televisions. We harvest unbelievable amounts of copper, aluminum, steel and gold. We can recycle the vast majority of materials from the products we receive.”

For the past few years, Shegerian has visited legislators across the nation to promote recycling legislation and to Asia, to promote markets for the recyclables.

“Our politicians have their hearts in the right place and they want to do the right thing, but it’s not high enough a priority,” he says. “I’m hoping that other politicians across America will follow Governor Schwarzenegger’s leadership on the issue.”

He adds that setting up an e-cycling plant would cost approximately $5 to $7 million.

A plant would also require a pressurized, hermetically-sealed room to handle the dismantling of the glass to avoid glass particulate from getting into the air supply.

In addition to novices, existing small landfill owners and waste management companies are in excellent positions to establish e-cycling facilities.

The next step is to find purchasers for the recyclables, which can be done by putting in the effort.

“There are huge opportunities in China, Singapore, Vietnam and India,” says Shegerian, who stresses that it makes sense for companies to pool their products to secure better prices. “Right now, our competitors come to us with their commodities because we are getting the higher prices, especially for ABS plastic and #2 copper. As the industry matures, there will be consolidation of the materials.

For every dollar invested in an e-cycling plant, Shegerian estimates that returns should be in the 20 percent range.

Shegerian is convinced that Americans want to play their part in properly dealing with e-waste and would be willing to make sacrifices to ensure that electronic goods are recycled.

“In California, the fee is capped at $10,” he says. “People inherently want to do the right thing. There has been absolutely zero pushback and zero consumer complaints in California, with 38.5 million people. When I speak in other states, people say ‘sign us up now, we are ready to tell our legislators.’”

Shegerian says that the public has to make demands on their politicians and that politicians have to encourage the public to recycle.

“The media has to educate the public and once the public knows how easy it is to recycle electronic goods, they will get more involved and educate their politicians,” he says. “I don’t believe a national plan will happen in the near future. This is going to happen state-by-state and California is the easiest replicable model that is out there today. California has proven once again that in terms of business, green is good!”