Dive Brief:

• California’s 2,100 certified beverage container recycling centers took a $20 million hit in 2015 due to reduced processing payments from the state. Now, CalRecycle has increased those payments, and the Container Recycling Institute (CRI) has released a report explaining why the current funding system is failing and what reforms are needed.

• The report examined several “cracks” in the system. Payments are based on outdated scrap prices, for instance. Also, prolonged short falls pose financial risk to centers and many centers’ financial security is too reliant on aluminum. Small centers are especially vulnerable.

• One key CRI recommendation is to re-evaluate the way payments are allocated for processing. For example, payments should be correlated with real-time price tracking, rather than by the current system based on averages from the previous year. The second recommendation is to evaluate the program moving forward and provide structural reform, such as tiered payments, to ensure reasonable resources and to support smaller centers.

Dive Insight

An outdated payment system, based on old commodities prices, is believed to be largely responsible for the forced closure of 269 redemption centers this year and a $42.7 million loss for PET and glass in the past three and a half years.

The payments were first established not only to cover the center’s expenses, but ensure a profit as these facilities play a key role in diverting from landfill, providing jobs, and generating state revenue. But a persistent trend is that recycling centers are paying out more to a throng of consumers while dealing with reduced commodities values, consequently taking a loss. Current conditions have led to the closure of all but 1,800 centers in California, meaning many residents no longer have a convenient, close to home place to drop off their bottles.

The program "creates a boon to the state’s economy, directly employing at least 3,000 people, generating $8 million to $9 million annually in state tax revenues, and channeling a million tons of premium-quality scrap material away from landfills and into the products of US manufacturers," says CRI president Susan Collins as reported in the Environmental Leader.