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California’s recycling system gets huge infusion of funds in overhaul after a brutal decade

By TCCRI Staff, May 8, 2024

At an April ceremony in Dallas, EarthX lauded the achievements California has made in the area of beverage container recycling, with the date of the event coinciding with the recycling of the 500 billionth beverage containers in California since its bottle bill went into effect in 1987. But despite that gaudy milestone, California’s recycling system has had more than its share of warts.

 

California is one of ten states that has a “bottle deposit” (BD) law, which effectively imposes a fee on consumers when they purchase recyclable beverage containers. Customers can recover this “deposit” if they return the used containers to redemption centers. Due to this economic incentive to recycle, BD states tend to have relatively high recycling rates.  

 

So what’s the problem with California? The state was recently forced to overhaul its program after a disappointing decade. From 2013 to 2022, half of the redemption centers in the state- more than 1,300- closed, and the consumer redemption rate fell by 20 percent. When prices of recyclable commodities declined, the redemption centers couldn’t turn a profit. A state subsidy was supposed to address that, but the subsidy turned out to be woefully inadequate because it was based on outdated recyclable commodity prices. As the Container Recycling Institute (CRI) noted in 2022, “Of the dozens of container deposit programs worldwide, only California’s employs a structure that imparts such high levels of financial risks, plus uncertain and inadequate payments, to redemption centers.”

 

California law generally required retailers to accept recyclables if nearby redemption centers closed, or pay an opt-out fine every day (opting out will no longer be an option starting in 2025). But many retailers simply ignored the law, despite some of them owing the state massive fines.

 

With fewer redemption centers, people began to recycle less. Consequently, the state refunded fewer deposits to consumers; by 2023 it had accumulated $672 million in unrefunded deposits. But the state bureaucracy makes good use of the unrefunded money- it is used to pay the 400 state employees overseeing the recycling program. Even better, the state’s recycling agency has struggled with basic accounting for years, including multiple understatements of its budget surplus by $100 million or more. Better still, the state allows curbside haulers to get paid twice; once by cities for curbside collection, and then again when the haulers redeem the (often contaminated) beverage containers they collected. Meanwhile, redemption centers- which handle vastly more beverage containers than curbside haulers- were left to twist in the wind.

 

To be fair, California enacted legislation in 2022 and 2023 that aims to improve the system by shortening the lag time in the data used to calculate subsidies to redemption centers, generally requiring retailers to accept recyclables when no redemption center is nearby (or forming a cooperative of retailers to address the issue), and increasing fines for non-compliance. But hold the celebration: CRI estimates that recent changes to the law will cost $1.3 billion over six years, an amount that will drain the current fund and likely require new revenue streams, such as higher deposits.

 

The Texas Conservative Coalition Research Institute has been working on approaches to increase Texas’ recycling rates by harnessing demand for recyclables. Some companies, such as Indorama Ventures and Knauf Insulation, currently import recyclables from California to feed their Texas facilities. The Can Manufacturers Institute, which represents aluminum can makers, estimates that Texans annually throw away more than $100 million of aluminum beverage cans, more than any other state. A successful recycling program must create incentives to recycle and create the infrastructure to ensure that the recyclables are being directed to parties that need it.

 

BD laws can be structured in sensible ways, as states such as Oregon and Maine demonstrate. But honoring California for its recycling system is questionable, given the recent expensive overhaul to correct egregious flaws in the system’s design. Texas needs a system that is industry-led and market driven. Getting recyclable materials in Texas to the state’s manufacturers will let California keep its empty bottles and its expensive way of collecting them.

 

 

1 Comment


Mark Murray
Mark Murray
May 10

What a grossly misleading and fact devoid article. In 2023, 7 of 10 Beverage Containers sold in California were returned for recycling. California recycles more beverage containers per capita than any other state. The program is 100% funded by beverage producers and beverage consumers. Zero government funds are used.

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