United States
Environmental Protection
Agency
EPA/530-SW-90-071A
Solid Waste and
Emergency Response
(OS-301)
                 December 1992
Policy, Planning
and Evaluation
(PM-221)
Markets for
Recovered Glass

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Contents
Page
       I.  Introduction
       II. Market Overview
        I.  Factors Influencing the Gullet Markets
       IV   Government Intervention in Gullet Markets                  27

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                            I.  Introduction
      Recycling is experiencing a rebirth as the era of abundant, inexpensive
landfills is corning to an end. In some parts of the country, landfill capacity is
becoming strained by shutdowns at existing operations and difficulties in siting
new operations. As a result, recycling, with its recognition of the intrinsic value
of many of the materials that are thrown away, is becoming an economic and
logistical  necessity in many communities.

      Yet the economics of recycling (as opposed to the economics of landfills)
currently makes recycling attractive for only a limited number of materials. Used
materials will be recycled only if they can be collected, processed, and reused at
the same or less cost than substitutes  made from  virgin materials can be
produced. Markets for recovered materials have developed over time to facilitate
the consolidation of material into quantities that are worth handling and that
allow for economies of scale in collection and processing.1

      Because these existing markets are the key to continued and  expanded
recycling  opportunities,  governments contemplating initiatives for  promoting
recycling  should consider the  operation of these markets  and how the markets
would react to policies designed to increase recycling in the United States.
Governments  should understand the operations of the private sector  in  handling
these materials;  otherwise, policies that appear to promote expanded recycling
opportunities  may replace private  ventures with government operations. In
addition,  governments should understand the influences  of policy decisions on the
scrap markets so that incentives designed to encourage reuse and recycling are
targeted  appropriately.

      This study describes the operation of the markets for cullet, or  crushed
scrap glass. It  concentrates on post-consumer cullet in  the  municipal solid
waste stream, although it provides limited information on other glass as well.
The study addresses the  following issues:

           How the markets are structured

           What influences the supply of and demand for materials

           What projections can be made about the markets

           How government policies  to increase recycling might affect  these
            markets
'Recovery refers to the supply to scrap  material from, for example, households.
Material collected from curbside  collection programs is  therefore recovered
material, it is not considered recycled until the material has been processed and
returned to a similar or some other use.

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      The market for glass cullet was chosen as the focus of this study because
glass is an important  component of the municipal solid waste stream, accounting
for  7 percent of waste generation (by weight). The recycling discussion focuses on
container glass, since container glass cullet represents virtually 100 percent of all
glass recovered from the municipal waste stream.2
2u.s. Environmental Protection Agency. Characterization Of  Municipal Solid
Waste in the United States: 1990 Update, June 1990, p. 15.

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                          II.  Market  Overview
      Scrap glass exists in three  forms.  Manufacturing scrap  is a mixture of transition
glass, off-specification glass  generated as glass  producers slowly  change the ingredient
mix in their giant melting vats, and finished glass that breaks at the manufacturing
plant. Pre-consumer cullet is finished glass that breaks at a bottling or distribution
facility.  Both of these types  of scrap are  reused within the glass plants. Finally, post-
consumer cullet consists of the glass bottles or other glass products discarded by
consumers after use.

      Glass is  100 percent recyclable in that it can be melted repeatedly to produce the
same product,  and the technology for recycling glass is  relatively simple and well
established. The reuse of cullet is complicated, however, by the fact that different types
of glass are not always compatible for recycling. The glass produced by different
manufacturers  differs in both form and  chemical composition. Form variations are
familiar: glass  comes flat,  pressed and blown into shapes, or in more complicated
applications, such as fiberglass or fiber optics. Although glass  can be remelted and
changed from one form into  another with ease, a problem arises in separating the glass
from other materials in a product (e.g., separating the glass in a light bulb from other
non-glass  components).  Glass also differs in chemical composition.  Although  all  glass
is composed of  silica and sodium oxide (soda ash), the type and quantity of other
compounds added vary slightly in different types of  glass. These differences frequently
cause problems in recycling  glass, because producers of some types of glass have strict
specifications for the chemical makeup of any cullet they might use.  However,  as
discussed later, there  is evidence  that these requirements maybe more flexible  than is
frequently perceived.
Glass in the Solid Waste Steam: The Source of   Post-Consumer Cullet
      The amount of glass discarded into the municipal solid waste stream (discarded
glass equals  total glass generation minus material recovery) declined from 14.2  million
tons in  1980  to 11.0 million tons in 1988. Virtually all of this glass is post-consumer
glass. The total weight of discarded materials grew 15 percent during that period, and
so the percentage of discarded material represented by glass fell from 10.5 percent in
1980 to 7.1 percent in 1988.3The decline in the percentage of the waste  stream
accounted for by  glass may be explained by several factors. First, in recent years the
packaging  industry has shifted away from the use of glass in packaging to the use of
aluminum and plastic, As glass containers represent a  large component of all glass
3U.S. EPA, characterization of Municipal Solid Waste in the United States: 1990 Update,
June 1990, (USEPA 1990) pp. 12, 15.

                                                                                3

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discards (89 percent by weight in 19884), this translates into a measurable decrease in
the total volume of glass discards. Second, an increased effort is being devoted to
recovering glass through state and  local legislation  (e.g., mandatory recycling laws or
deposit laws)  and  through alternative  government  or industry-run recovery
programs.

      According to a recent EPA report, 1.5 million tons of glass, or 12 percent of total
glass waste generation, was recycled in 1988. Glass  cullet from bottles and jars
represents virtually 100 percent of this recycled material.  In  1988, 73 percent of the
recycled glass cullet was derived from beer and soft  drink containers, while  the
remaining 27 percent came from wine,  liquor, food, and other  glass containers5This
mix  represents a change from the historical composition of cullet. In the past, beer and
soft  drink containers accounted for virtually 100 percent  of recycled container glass.6
Since 1985, however, the expansion of curbside and drop-off recovery programs  has
encouraged the recovery of other types of glass containers, resulting in  the present cullet
mix.
Container Glass

      Most glass (89 percent) that is discarded is container glass. The glass container
industry is also the largest segment of the glass industry, shipping $4.5 billion dollars
worth of glass containers in 19897and employing about 43,2008 workers. In 1987, glass
containers represented 44  percent of the value of primary glass shipments in the United
States."Glass containers are used in a variety of product industries, including food and
beverages, medicine and health, toiletries and cosmetics, and chemicals.
Ibid., p. 15.

Tbid., p. 15.

6Ibid., p. 44.

7W.S. Department of Commerce, U.S. Industrial Outlook 1990.

8Predicasts, Inc., Predicasts'Basebook, 1989, p. 500.

"This figure is derived using the sum of the value of product shipments for SIC codes 321
and  322. Other glass products (e.g., SIC 3231, Products of Purchased  Glass) are
manufactured using glass produced by industries with SIC codes 321  and 322.  Source:
U.S. Department of Commerce, Bureau of the Census,  1987 Census of Manufactures,
Industry Series: Glass Products.

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      The decline in the amount of container glass discarded (dropping from 13.2
million tons in 1980 to 9.9 million tons in 19881; is largely attributable to a decrease in
the shipment of new glass containers, from 46.7 billion units in 1980 to 40.5 billion units
in 1988."The  decreased shipments  reflect the industry's loss of market share to other
container types.  (See Chapter III.)  According to the Glass Packaging Institute,  the
trend toward making lighter bottles also contributed to a decrease in the weight of glass
in the solid waste stream.

      In  1989, however, product shipments of glass containers grew slightly for the first
time since 1986, to 40.9 billion units. Growth in 1989 shipments is attributed to various
factors, including the conversion from plastic soft drink bottles back to glass in a few
markets,  increases in sales of beer  and food containers, and deceleration in the
movement to plastic bottles for  liquor products.

      Throughout this  same  time period, the recycling  of glass  containers has
increased. In 1980, 5.7  percent  of glass containers were recycled.  By 1988, this rate had
increased to 13.3 percent of glass containers, representing an  increase of 133 percent.
Materials recovery from the entire solid waste  stream increased at a slower rate, from
9.7 percent in 1980 to 13.4 percent in  1988, or an increase of 38 percent.13

      Some of the impetus for  increased recovery of glass containers has come from
deposit laws or bottle bills. In 1970,  no bottle bills existed; in 1988, nearly 44 million
Americans (18 percent of the  U.S. population) lived in the nine states that required
deposits  on glass beer and soft drink containers. Recycling programs initiated by states,
localities, or industry have also helped boost the recovery rate for glass containers.
Reliable  data  on the source of recovered glass containers are not available, however.

      Recovery of glass in 1988  totaled 1.5 million  tons (12 percent of total glass
generated); most of this was beer and soft drink containers (1.1 million tons). (See Table
II-l.) Growth  in curbside  and other recycling programs in the last several years has
also increased the quantities  of other types  of glass recycled.  In  1988, other container
glass and non-container glass accounted for approximately 27 percent of the total glass
recycled, compared with less  than 1 percent of all glass recycled  in 1986.14
10U.S. EPA 1990, p. 46.

"U.S. Department of Commerce, U.S. Industrial Outlook 1985, 1990.

12I b i d .

"U.S. EPA, pp.  44-45.

"US. EPA, Characterization of Municipal Solid Waste in the United States,  1960 to 2000
(update 1988), March 30,1988,  pp. 21,22.

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                                     Table 11-1
                    Glass  in Municipal Solid  Waste  1988
  Type of Glass
                       Glass Generated
                       Tons
Percentage
 of MSW
            Glass Disposed
Tons
Percentage
    of
Generation
                    Glass Recovered
Tons
Percentage
    of
Generation
  Container Glass       11.3      6.3%     9.8      86%      1.5       14%

   Beer and Soft Drink      5.4      3.0       4.3      80        1.1        20

   Other (e.g.,  food)        5.9      3.3       5.5      93        0.4        7

  Non-Container Glass :L2_     iLZ       :L_2      iIL2     -sQ.1       <8
  All Glass              12.5      7.0%    11.0      88%      1.5       12%
        Note: Tonnage figures are in millions.

        Source: EPA, 1990, pp.15, 42-48.
Non-Container Glass

      Details on the composition of the non-container segment of glass in the solid
waste stream are extremely sketchy, as no quantitative data exist to describe it. Non-
container glass amounting to  1.2 million tons were discarded to the municipal solid
waste stream in  1988, although this figure is probably underestimated. "Presumably,
this figure includes disposal of broken windowpanes, windshields,  glassware,  and  other
durable glass products thrown away by residential consumers. Because of the diversity
of non-container glass and the fact that no component of the total is very  large,
"materials flow" methodology does not capture the recovery and disposal trends of this
glass very well.

      It is estimated  that little of the  non-container glass in the municipal  solid waste
stream is recovered.  Non-container glass is recovered  from commercial  and  industrial
waste  streams, but no comprehensive  data exist on  non-container recycling.
15U.S. EPA, p. 15.

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      One major industrial recycler estimates that about 500,000 tons of plate glass are
recovered each year.  This glass comes not only from communities, but also from
industrial and commercial sources. In addition,  in-house recycling  occurs in all  the
glass industries.
Final Consumers of Gullet: The Demand Side of the Market
      Just as the glass container segment is the largest single component of the glass
industry,  glass container manufacturers  are by far  the  largest users of post-consumer
cullet. Although other glassmakers and users of purchased glass use cullet in  their
production processes to some degree, no other market for cullet is as important
currently  as the container market. The extent of cullet use in an industry depends on
transportation costs,  technical  requirements,  and public relations considerations. Each
of these factors will be discussed in more detail in Chapter III.

      Container  manufacturers have a strong interest in buying uncontaminated post-
consumer cullet as a raw material for production. Although little information  is
available  on the cost savings from using cullet instead of virgin materials, we have cited
below savings in energy use and extended furnace life as two benefits. Also, given
increasing public and governmental pressure on the  content of packaging, it is  in the
industry's best interest to use as much recovered material as possible in  its products.


Glass Containers

      According to the Bureau of the Census, glass container  manufacturers  consumed
about 830,000 tons of cullet in 1982.16Recent informal estimates  of cullet usage in the
container  industry put cullet consumption above 1 million tons per year, but the
industry has no official estimate of cullet usage.  Unfortunately, the Census statistics do
not distinguish between pre- and  post-consumer cullet, but the container industry's
830,000 tons is the largest share of total cullet reported.  If we include cullet use in
containers (830,000 tons), pressed and blown glass (96,000 tons), products of purchased
glass (207,000 tons), and flat glass  (506,000 tons using 1977 data), total usage was roughly
1,600,000 tons. This includes pre-consumer  cullet, transition glass routed back into  the
batch, and post-consumer  cullet.

      Even though limited  data makes it impossible to quantify, the container  industry's
stake in glass recycling is substantial. To process cullet before remelting,  container
manufacturers own and operate 27 beneficiation (cleaning and processing) units, which
service the industry's  82 manufacturing  plants. The industry also supplements its
16U.S. Department of Commerce, Bureau of the Census, 1987 Census of Manufactures,
Industry Series:  Glass Products.  Data from the 1987 Census of Manufactures do not
contain revised estimates of cullet use, since a large fraction of the total had to be
estimated.

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 cullet  supply by purchasing  furnace-ready cullet from independent dealers and
 processors.

        The major consideration in recovering cullet for use in the container industry is
 contamination. Contaminants include  containers of a different color (such as a green
 bottle  in a pile of clear glass cullet), metal caps and neckrings, and ceramics. It is
 important for container manufacturers to  remove these contaminants before  the  cullet
 enters the production process.  Since the container industry produces green,  amber
 (brown), and flint (clear)  containers, color sorting at the point of collection is one way in
 which producers minimize contamination.  The technical specifications for each color
 require cullet to be color-sorted if it is to be used in significant quantities, particularly in
 the manufacture of flint containers.

        According  to glass container industry representatives, except as discussed below,
 the container industry  is willing to buy as much cullet as it can get if it is free from
 contamination (e.g.,  ceramics)  and color-sorted. Cullet has several advantages over
 virgin materials in the container industry. Each 10 percent of the batch displaced by
 cullet  saves  1 to 5  percent of the energy used to make virgin glass. 17In  addition, using
 cullet  may extend the life of the glass furnace due to the lower temperatures needed to
 melt the cullet,  and can give a marketing advantage to firms that use it for consumer
 products. Furthermore, although greater effort has been  put into recovering glass,
 recovery rates are still low; as a result, the supply  of flint and amber cullet is short.

        Green cullet is the one color that is not in very short supply, say industry
 representatives.  In  fact, serious gluts of green glass have occurred because of low
 domestic  green  glass manufacturing capacity and  a  large volume of imported green
 glass containers  (e.g., beer and wine bottles).

        There are some short-term technical limitations  on cullet use. According  to
 container manufacturers we  spoke  to, most plants would require modifications to
 operate using greater than 50 percent cullet, but the modifications are technically
 possible. Although  some plants are currently using cullet  at or above the 50 percent
 level, most of the container industry has a  "batch percentage" in the 20 to 30 percent
 range.  Because the furnaces run continuously and must be set for a given mix of cullet
 and other inputs, the plant operator must  be sure  there is sufficient cullet to  maintain
 the feed rate. Since cullet supply (i.e., recovery from households and others)  has  been
 somewhat uncertain, it is prudent to plan conservatively  for the batch percentage. With
 more supply becoming available through curbside  and other programs,  batch
 percentages will likely increase, especially  at plants near major supplies  (i.e., near
 population centers with active recovery programs).
 17Gordon Stewart, "Cullet and Glass Container  Manufacture," Resource Recycling,
 March/April 1986. According to Nancy A. Lang  ("Hoisting the Glass," Beverage  World,
 June 1989), fuel makes up 15 percent of the cost of producing virgin glass. Thus glass
 using 10 percent cullet has a 0.15 percent (15 percent of 1 percent savings) to 0,75 percent
 (15 percent of 5 percent savings) cost advantage over virgin glass, not including the
 difference  in price between cullet  and virgin materials.
8

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      Gullet prices do not vary over time as much as other commodity prices. Gullet-
handling firms interviewed, as well as officials from  state and local governments,
report that prices stay fairly steady. Several cullet sellers interviewed reported that
prices they received had "always been" in the $40 to $45 per ton range. Others quoted
higher or lower prices based on location or glass color, but individual marketers
typically do not experience wide fluctuations in the price they receive for cullet. We were
unable to identify data sources showing cullet prices over an extended period, however.

      Cullet prices vary depending on the color of the glass and the region in which it is
sold.  Because of the prevalence of clear glass containers in production,  demand (and
price) for clear or flint cullet is generally stronger. Less green and brown glass are
manufactured domestically and imported  colored glass provides additional supply
which weakens prices. Regional differences result primarily from transportation  costs.

      Table II-2 shows recent  cullet prices, taken  from the August 13, 1991, issue  of
Recycling Times, for three color types in seven regions of the United States. These data
show that, while end users (glass manufacturers) are paying $0 to $15 per ton for green
glass cullet in the Northeast, the price for the same cullet in the South Central states is
$50 per ton. Smaller price differentials exist within some regions for different colors of
glass. For instance, in the Northeast, green cullet sells for $0 to $15 per  ton to end users,
while clear cullet sells at $43 to $50 per ton. In the South, green cullet sells for $10 to $20
per ton versus $50 per ton for clear cullet. These price differences affect the price
municipalities and private collectors receive for their cullet, even though the price to
those municipalities and collectors does not fluctuate greatly over time. A  nationwide
study published by the Glass Packaging Institute,  in  which 19 communities with
recycling programs were surveyed,  reported cullet prices ranging from $25 to $66 per
ton.18 Further  discussion of price variations is  presented in Chapter III.
 8Glass  Packaging Institute, Comprehensive Curbside Recycling, 1988.

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Table 11-2
Cullet Prices Paid by Glass Manufacturers by Region and Color
(dollars per ton)
Cullet
color
Clear
Brown
Green
.Price
in the
Northeast
$43-5O
20-25
0-15
Mid-
Atlantic
$5O-55
45-55
1 0-20
South
$50
50
1 0-20
South
Central
$50
50
50
East
Central
$4O-55
22-25
0-15
West
Central West*
$50 $60
50 60
50 60
includes California scrap price which is subsidized by the glass packaging industry
state; the subsidy is a response to California's container recycling law, AB 2020
Source: Recycling Times, August 13
1991. Prices cover July
15 to August 2,
1991.
 Consumption of Cullet by Non-Container Glass Producers

       The use of cullet in the non-container class industries varies greatly. Some
 industries, such as the fiberglass insulation industry, use a small amount of cullet in
 their manufacturing  processes.  The glass bead industry uses a significant amount of
 cullet according to the Glass Packaging  Institute. Other industries, such as the
 producers of many kinds of pressed and  blown glassware, purchase no cullet and in fact
 sell  their own scrap.  Producers of non-container glass more  commonly use small
 amounts of cullet which are mostly self-generated  and rarely purchased. As
 mentioned earlier, however, we could not find reliable data on cullet usage in these
 industries.

       In part, the reluctance in many glass industries (other  than glass container
 manufacturers)  to use cullet stems from technical requirements. Container glass is  not
 suitable for some glass  industries because of differences in chemical composition
 between container  glass and non-container glass.  Differences in color may also cause
 technical problems. Some of this reluctance may also result from a stigma attached to
 recycled glass. Prior to 1970, most glass container manufacturers limited their use of
 cullet either in the belief that recovered glass was not as reliable as other glass or in the
 belief that consumers would not accept glass made  partly from  recovered materials.  For
 some firms, such as a fiberglass reinforcements company we interviewed, there  is no
 economic advantage to using cullet now,  so they are not interested in doing so. However
 real or imaginary the  barriers to cullet use, the result has been low use of scrap in
 industries other than  the glass container industry.

       The fiberglass  insulation industry is one example of a  non-container industry
 that faces quality constraints on the amount of cullet they can use. While some
 fiberglass insulation  manufacturers  use  pre-consumer cullet from a variety of glass
 manufacturing processes, post-consumer cullet is less  feasible  because of its
10

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inconsistent quality. The major  requirement for using cullet in fiberglass insulation is
consistency; fiberglass  manufacturing is  more  sensitive than  container  manufacturing
to contaminants and to differences in the composition of the glass. This sensitivity has
been the limiting  factor in the use of post-consumer cullet. In addition, bottle cullet
does not contain boron, the key  (and  most expensive)  ingredient in fiberglass. Thus, the
materials cost savings  for using post-consumer cullet are less for fiberglass  makers
than for container manufacturers. In addition,  energy savings  in this industry are not
as great as in container manufacturing  each 10 percent of the batch displaced by
cullet saves 1 to 3 percent of the energy used to make virgin insulation.19 By
comparison, container manufacturers  realize an energy  savings of 1 to 5  percent for
every 10 percent of cullet.

      "Glasphalt"  is another commonly cited potential use for cullet, although it is not
yet in widespread use.  Several communities have tested this mixture of glass cullet and
asphalt, which is used to pave roads.  These communities, in tests using from 20 to 40
percent cullet in the glasphalt,  found several disadvantages to the mixture. Using
glasphalt actually increases the  initial cost of paving by 25 to 40 percent.20In addition,
traction is not as good on glasphalt as on asphalt at speeds above 40 miles per hour, and
"rutting" may occur in the road  when studded tires are  driven over the glasphalt.
Finally, "stripping," the appearance of loose grains of glass on the road, occurs in the
first few weeks after paving. These problems are weighed against the advantage that
glasphalt dries faster and retains heat longer than asphalt.21 Glasphalt may  also
provide a low-cost outlet for mixed-color cullet. Also, on residential streets, problems
with traction  may not be as serious as  on  roads with  higher speed limits. In any case,
more widespread use of glasphalt will probably be required to verify and generalize the
experience of the few communities that have tested the mixture.
19,1
  EPA Insulation  Guideline, Part 3,"  Waste Age, June  1989.

20Personal  Communication, John Rugg, National  Pavement Asphalt Association,
August 1990,

21Tom Watson, "When the Tire Hits the Glasphalt," Resource Recycling, July 1988.

                                                                                11

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                                               Figure  II-1

                             The  Post-Consumer  Glass Recycling  Path
   Consumers

    Residential

    Commercial
    Industrial
                                 Deposit
                                programs
Buy-back and
  drop-off
  centers
                                Curbside
                                programs
                                                          Independent
                                                             cullet
                                                          processors/
                                                            dealers
                                                           Materials
                                                           recovery
                                                           facilities
                                                            (MRFs)
                                                             Glass
                                                           container
                                                            industry
                                      Major volumes

                                      Moderate volumes

                                      Low volumes
                                                      -   Flat glass
                                                         Miscellaneous
                                                          pressed and
                                                          blown glass
                                                           Fiberglass
                                                           insulation
                                                                                         Fiberglass
                                                                                       reinforcements
                                                                                        Fiber optic
                                                                                          cable
                                                                                iH
                                                        Alternative uses
                                                         (e.g., glass in
                                                         asphalt, brick,
                                                          and block)
12

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The Post-Consumer Glass Recycling Path


      Post-consumer cullet can follow any one of a number of paths from the original
glass  consumer to the eventual end use. (See Figure II-l.) Several  options exist for
collecting post-consumer  glass.  In addition, cullet may go through an intermediary for
processing before it  is passed on down the recycling path. Finally, although most  post-
consumer cullet is eventually consumed at  glass container plants, a small portion  of the
cullet may end up being used by other types of cullet consumers.

Collection

      Glass containers are collected from  consumers  through three primary  channels:
deposit programs, programs involving  drop-off or buy-back  centers, and  curbside
pickup. No estimates of the quantity of cullet obtained  from each of these sources exist.
Deposit programs, as mentioned above, operate in nine states with a total  population of
44 million people (18 percent of the U.S. population).  Under these programs, consumers
pay a minimum deposit of 5 cents (Michigan has a 10 cents deposit) on all beer and soft
drink  containers,  including glass  bottles.22 Many of the deposit programs  include wine
coolers, two include  wine  and liquor bottles, and one includes juice bottles. The beverage
industry also  sponsors drop-off or  buy-back centers in a number of states. Through
these programs, consumers can return or sell their containers back to major  glass-
container manufacturers  without having the glass pass through  any intermediary.
Finally, source separation with curbside pickup  is  an  emerging method of collecting
glass  without imposing the inconvenience of transporting glass to a retailer or recycler.
In this case, municipalities or private haulers collect the glass and sell  it either to  a
container producer directly or to an intermediary.
22In California's deposit-type program (AB 2020), the redemption payment by
distributors is 2 cents per container, and 4 cents per container of 24 ounces or more. The
refund value is 5 cents for every two containers,  and 5 cents per container of 24 ounces or
more.

                                                                               13

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       Reliable data on the amount of glass recycled by each method are not available,
 but we believe that deposit programs probably provided the largest fraction of container
 cullet in 1988.23 Although deposit  programs primarily  focus on beer and soft drink
 container glass, the California program,  drop-off centers, and curbside programs
 accept all types of glass  containers. While the data cited earlier indicate that most  glass
 recycled  from municipal solid waste is from beverage containers, the growth of these
 other glass recycling programs in the past several years suggests that  a broader range
 of glass  containers is currently recycled.  Data from California's Division  of Recycling
 indicate that for the last six months of 1988, 566 million glass beer and  soft drink
 containers were recycled (207 million of which were refillable bottles), as well as 138
 million  other glass containers, including juice  and food  containers.24 No  national  data
 exist  describing glass  recycled through drop-off and curbside programs,  however.


 Intermediaries/Processing

       Most cullet must be processed in some fashion before it can be remelted and made
 into new glass. Cullet processing typically occurs in one of three types  of facilities:  a
 beneficiation plant  installed  at a container manufacturing plant, an independent
 intermediate processor, or a materials recovery  facility (MRF). These three types of
 processing share two major common features.  First, all have systems  to remove
 contaminants and crush glass. Second, the three types of processors are regional in
 scope, with each facility  handling over 10,000 tons per year and serving more than one
 container plant.25

       Frequently, glass container plants  can  process the cullet themselves at one of the
 27 beneficiation units in the United States. Most of these 27 beneficiation units have the
 same basic design.  The beneficiation unit can process 15 to 20 tons of color-sorted glass
 per hour.26The system  removes contaminants such as paper, plastic,  or  metal from
 the glass, and  crushes the glass.  These units could run virtually around the clock,
 given adequate cullet supplies. For comparative purposes, we calculated  the processing
 capacity of these 27 units.  Given a unit running 24 hours per day 7 days a  week for  45
 23We can arrive at a rough estimate of glass returned through  deposit programs using
 previously  cited information.  The Department of Commerce reported 150 million gross
 beer and soft drink containers shipped in 1988. If we assume that 18 percent of the
 population living in deposit states buy 18 percent of those bottles, then 3.9 billion bottles
 were sold in those states.  Assuming a comparatively high return rate of 85 percent,
 about 3.3 billion bottles could have come back in those states. At an average of two bottles
 per pound, this works out to recovery of about 825,000 tons of glass, or slightly over one-
 half of the U.S. EPA estimate for 1988.

 24California Division of Recycling, Biannual Report on Redemption and Recycling
 Rates: July 1, 1988 to December 31, 1988, pp. 5,8.

 25Steve Apotheker,  "Glass  Processing:  the  Link  Between  Collection and Manufacture,"
 Resource Recycling, July 1989,  p. 38.

 26Ibid., p. 41.

14

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weeks, these 27 plants could process over 4 million tons of cullet each year.27 It is
estimated that the total for glass recovery by all facilities was 1.2 million tons in 1988.
Since beneficiation units are running at or near capacity at  many plants and glass is
also processed  by  other intermediaries as well, these data suggest either that this
estimate is too low or that glass recycling has increased substantially since 1988.

      Alternatively, the cullet maybe processed by an intermediary that buys the glass
from the collector, processes it into furnace-ready cullet,  and sells it to a glass
manufacturer.  These  intermediate glass processors, until recently, handled pre-
consumer scrap caused by breakage  at manufacturing and  distribution plants. Now
these processors are beginning to become involved in post-consumer scrap as well.  An
average processing plant costs $300,000 to $500,000 to build and has a capacity of 10 to 25
tons per hour.28  Although the number of intermediate  glass processors is unknown,
the largest such company, the Cleveland-based Bassichis Company, operates 17  plants.
We were unable to find reliable data on the total number  or capacity of these
intermediate  processors.

      Materials recovery facilities (MRFs) operate in areas where a high volume of
post-consumer  recycling makes it economical to separate types of recyclable  (paper,
metals, glass, plastic) and to  process recycled glass at the same facility. MRFs  typically
separate glass from  other  recyclable through a combination of hand sorting, magnets
and/or density separation.  Glass  is then color-sorted by  hand or by machine. The last
step resembles the processing done at a beneficiation plant.  The cost and capacity of
these systems vary, with capital costs per ton of daily capacity ranging from $10,000 to
$75,000 per facility, and capacities anywhere between 8 and  300 tons per day. A recent
survey put the number of MRFs operating or planned at  99,  with 47 currently accepting
recyclables.29

      In addition, dealers  perform the function of purchasing cullet from a number of
relatively small collectors  and then selling a much larger amount of cullet to a  glass
manufacturer.  According  to the glass container industry, one of the biggest problems  in
increasing cullet use in the container industry is the difficulty of guaranteeing a steady
supply of cullet. Because glass producers can only change the proportion  of ingredients
in their vats slowly, they may use less cullet in the production process to guarantee that
they will always be able to purchase enough cullet. Dealers  can help guarantee a steady
supply by grouping small collectors together.
27Since glass furnaces typically operate  around the clock, these units could also operate
constantly to provide raw material.

28Apotheker,  p.  40.

29Jim Glenn, "Fast Pace for MRF Development," Biocycle, May 1990.

                                                                                15

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 Summary


       The technology for recycling container glass  is relatively simple and well
 established. Mechanisms for  recovering glass from the  municipal solid waste stream
 exist in many  areas  and include beverage container  deposits, buy-back or drop-off
 centers, and curbside collection  programs. Deposit programs focus on beer and soft
 drink containers, and, in some states, include wine coolers, wine, liquor, and/or juice
 containers.  Estimates prepared for EPA suggest that beer and soft drink containers
 accounted for the majority of cullet recovered from municipal solid waste in 1988. Other
 programs, which are expanding, focus on a broader  range of glass containers.
 Unfortunately,  no comprehensive data exist to document the total quantity of post-
 consumer cullet that is  collected. Finally, the little information available indicates that
 post-consumer  non-container  glass is rarely recycled because of the  absence of
 collection mechanisms and the  technological  difficulties  in  reusing  non-container
 glass  and in separating other materials from the  glass.
16

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      III. Factors Influencing the Gullet Markets
      We have divided our consideration of issues affecting the cullet market into
those that affect the supply of recovered cullet and those that affect demand for
recovered cullet. For each side of the market, we will present issues that shape
the supply of or demand for cullet,  discuss trends in the industry that will
influence  the markets in the  future, and present conclusions, which include our
assessment  of the ramifications of our findings for government  policies.
Supply of Cullet


      The supply side of a market reflects the costs of producing a given output.
For the cullet market, the supply function can be thought of as the relationship
between the price  of cullet deliveries to glass manufacturers and the amount of
cullet that suppliers are willing to  deliver for that price. In most markets,
suppliers are willing  to provide some small quantity even at low prices. However,
suppliers generally respond to higher prices by  increasing the quantity they
supply.

      The major factor affecting the supply of cullet is the increasing attention
being paid to recovery by consumers; the federal, state,  and local governments;
the media; and industry. Escalating landfilling costs will continue to lead to
greater efforts to provide convenient recovery opportunities for glass, increasing
the supply of cullet.  Expanded recovery  through  curbside  and  drop-off programs
will also increase the supply of container cullet not tied  to deposit laws. We expect
the quantity of cullet supplied to increase over the next few years.
Factors Influencing Supply

      The major factors we have identified are summarized below. The text that
follows describes these issues in more detail.

           Nonprice motivations for supplying cullet are important, particularly
            because the historical market price of cullet is low on a per bottle
            basis.

           The influence of public attention to recycling, an expansion  of
            convenient recycling opportunities, and the prospect of higher
            landfilling  costs should increase the supply of cullet.

           Regional differences in  the supply of cullet exist because recycling is
            concentrated in certain regions, and because the cost of
            transportation limits the effective range of cullet sales.
                                                                              17

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            Nonprice Motivations Affect Consumers'
            Decisions to Recycle Containers

            The existence of drop-off centers where  consumers, in effect, donate their
      containers by dropping them off without getting money back shows that the desire
      to "do good" is an important motivation to recycle glass. The economic motivation
      for consumers is weakened by the  low price of cullet relative to the cost incurred
      in supplying cullet and the low cost of alternatives to recycling (e.g., land
      disposal). Currently, the scrap value of a typical glass beverage bottle is almost a
      penny and a half (assuming $50 per ton and an average of two bottles per pound).
      In areas that rely on  drop-off or buy-back centers to collect used glass containers,
      the low price paid does not provide a strong incentive to consumers to return their
      containers.  One study estimated that the return on a consumer's time  spent in
      preparing bottles for return was about 4 cents  per minute, or $2.40 per hour.17
      Consumers may be more influenced by the  perception that donating used glass is
      an inexpensive way to contribute to a charity, or that recycling glass is an easy
      way to help the environment.

             Monetary return does play some part in consumer willingness to recycle
      glass. Our rough analysis of 1988  data described in Chapter II suggests that the
      nine states with deposit laws were recycling more than half the total glass beer
      and soft drink containers recycled in the United States, a significantly  larger
      share per state than  contributed by non-deposit states. To achieve this response,
      however, the deposit states have had to offer returns on bottles that are far above
      the market scrap value of the bottle and we have not considered the cost associated
      with deposit laws.

             The experience  with price and nonprice  motivations to recycle has been
      limited to a certain range of prices. In deposit states, a  deposit of 5 to 10 cents
      stimulates  the quantity of glass containers recycled. Elsewhere, the return to
      consumers  is lower, despite the efforts of some large manufacturers of glass
      containers  to subsidize container  returns.  For instance,  California's Glass
      Recycling Corporation, formed by  container manufacturers in the state,
      subsidizes container returns in order to prop container prices above a state-
      mandated  minimum.

             Finally, we have not considered  the entire benefit to society of recycling.
      Land disposal may be underpriced implying that recycling yields  significant
      benefits beyond those currently recognized.
       17Darlene Snow and Ballina Edwards, Glass Recycling:  Opportunities and
       Constraints, August 1985.

       18The scrap price subsidy has been paid to avoid a processing fee which could be
       levied against all glass containers sold. The processing  fee,  established by AB
       2020, is designed to ensure that recyclers earn enough to cover their costs plus  a
       reasonable profit.
18

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      Deposit Programs May Focus
      on Only a Limited Share of Containers

      As cited  in the previous chapter, the majority of all post-consumer recycled
glass in 1988 came from beer and soft drink containers. This is a result of the
deposit laws in nine states and  other  recycling  programs. Deposit programs, in
most cases, establish deposits and provide return opportunities for soft drink and
beer bottles only, which represent about 58 percent of containers sold.19 Due to
the limited focus of these deposit programs, recycling rates for other container
glass and non-container glass have  been relatively  unaffected by deposit laws.

      In other  areas, any glass container can be  dropped off at a center or put out
for curbside collection.  Most buy-back and drop-off centers accept  non-beverage
containers  or even non-container glass.  Given the growth  of these non-deposit
programs,  especially those providing curbside pickup, we would expect a  shift
away from the  dominance of beer and soft drink containers  in the national
recycling  statistics.
       Glass Containers Face Competition
      from Aluminum and Plastic

       Since the introduction of plastic beverage containers in the late 1970s, the
glass share of the beverage container market,  as well as the non-beverage
container market, has dropped consistently. Prior  to that,  glass was also losing
market share to aluminum cans. In the soft drink market, for example, glass
containers accounted for 80 percent of packaged soft drink sales in 1970. By  1980,
the glass share had fallen to 45 percent and in 1989 it was 22 percent.20arket
factors have favored growth for  aluminum and plastic.  Both materials are  lighter
than glass and both are shatterproof. Aluminum cans have  captured a  large
share of the convenience market and the larger plastic containers have created a
substantial market for  at-home consumption.

       Competition from plastic  and  aluminum has translated into a decline in
the real value of glass container shipments  every year from 1977 to 1987.21 The
number of containers shipped also declined between 1980 and  1988.22 However, in
19U.S. Department of Commerce, U.S. Industrial Outlook 1990, p.  11-1.

'"National Soft Drink Association,  1986 Statistical Profile and Beverage Industry
Annual Manual 1990/91, p. 72.

21Predicasts, Inc., Predicasts'Basebook, 1989, p. 501.

22U.S. Department of Commerce, U.S. Industrial Outlook 1989.
                                                                              19

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       1989, product shipments of glass containers grew slightly; this growth trend is
       expected to continue in the 1990s.23

             The competition from other materials has meant that fewer glass
       containers are shipped  and less glass is available for recovery and recycling:
       estimated shipments of glass containers in 1989 were approximately 12 percent
       below 1980  levels.24 The declining number of glass  containers as well  as increase
       in recovery of glass means that less glass enters the municipal solid waste
       stream.  Because of limited data, it is difficult to identify the effect of this loss of
       market  share on the amount of glass recycled.


             The Mix of Glass Recycling Programs Available Affects Gullet Supply

             Even  though more  states and localities are instituting recycling programs
       as  a means  of handling solid waste, effective and convenient glass recycling
       opportunities do not yet exist in all  areas. One barrier that has slowed the
       establishment of glass recycling programs is the relatively low price of cullet.
       Still, when the avoided costs of landfilling are taken into account, recycling may
       be  a less expensive method of handling glass (although the costs of both recycling
       and landfilling vary among communities) .25  If more communities become
       aware of the costs that  can be avoided by recycling glass, the supply of cullet
       should  increase.

             Another factor affecting  recycling rates is the type of collection. In some
       areas, the only recycling opportunities are provided by the beverage or container
       industry; these programs  almost always require consumers to travel to a
       particular location (either a staffed  center,  an "igloo" disposal container, or a
       "reverse vending machine") to return their glass containers.

             The most convenient option is collection of glass at the household. Curbside
       collection allows consumers to  recycle glass with only the minimal  effort of
       separating the glass from  other trash (and sometimes sorting the glass by  color).
       As a result,  the  supply of cullet is affected  by the mix of curbside, drop-off, and
       deposit  programs throughout the country.  As more localities adopt curbside
       programs, the cullet supply should increase.
       23U.S. Department of Commerce, U.S. Industrial Outlook 1990.

       24U.S. Department of Commerce,  U.S. Industrial  Outlook 5-1990.

       25Although costs vary widely, disposal of a glass beverage bottle has an average
       cost of about 0.7 cents; this assumes two bottles per pound and the average tipping
       fee of $27 per ton reported in Waste Age in March 1989. With scrap prices over  1
       cent per container ($50 per ton), this provides a difference of more than $75 per  ton
       to offset  the recycling costs. Recently promulgated federal  regulations for
       municipal landfills will likely increase the avoided cost of disposal.
20

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      The Market for Gullet Is Regional

      The variation in cullet  price by region, discussed in Chapter II, shows that
the market  for cullet is regional, rather than national.  Lack of a high volume of
interregional scrap shipments allows cullet prices in different regions to  differ
greatly. The existence of large price differences by color in some regions and not
in others  also results from the regional nature of the market.

      The transportation of cullet from the collection point to the glass plant is
paid for by the supplier, not the end user  of the cullet.  (However, some
manufacturers pay a $5-per-ton bonus for cullet shipped more than 50 miles,
and  an additional $5-per-ton  bonus for  cullet shipped more than 300 miles.)  This
means that  the farther the cullet must be  shipped, the less profitable  it is for the
recycler (a community, an intermediary who buys from the community, or
individual consumers)  to recycle glass.  Furthermore, transportation  is the
largest cost component in supplying cullet. Consequently, little movement of
cullet between regions  occurs, allowing the price of cullet to differ greatly  by
region.

      According to several state and local government  officials interviewed, a
significant amount of cullet crosses state boundaries. However, most interstate
movement appears to occur between neighboring states, such  as Iowa and
Illinois, and may primarily reflect the color requirements of a certain plant. For
example,  a  local plant  may produce only  clear glass and all colored glass would
have to be  shipped elsewhere,  perhaps out-of-state.  In  the  Northeast, cullet
seems  to  move farther: both Maine and Connecticut officials report glass  collected
in those states moving as far as Pennsylvania. Even in the Northeast, however,
no state  or  local officials reported  significant interregional movements of cullet.
In addition  to the transportation cost,  another factor inhibiting interregional
movement may be that cullet collectors and processors are much more likely to be
aware  of  the glass manufacturing  plants  in their  own areas than in other regions
of the country.

      Recycling of Non-Container Glass
      Is Hampered by Handling Problems

      Other glass products are much more difficult to  recycle than containers,
either because they are durable products or because they are mixed with other
materials. For instance, light bulbs and  other purchased glass products  contain
large quantities of metal. Flat glass maybe heavy and  awkward for consumers to
transport. Non-container glass does not account for a  large share of municipal
solid waste  (although its share of industrial and  commercial waste is unclear).
The  recycling of these  products is  hampered by physical constraints on collecting
and  handling; these  constraints suggest that recycling  these materials would be
extremely expensive  compared to the potential revenue.
                                                                               21

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      Demand for Gullet
             For the cullet market, the demand function expresses the relationship
      between a given price of cullet and the quantity that consumers of cullet will
      purchase at that price. The cullet market is typical in that some consumers are
      willing to buy some scrap at a  relatively high price; however, if scrap suppliers
      wish to increase sales, they must lower the  price of cullet to increase the quantity
      demanded.

             The major factor  determining demand growth over the next few years is
      likely to be the projected modest growth in glass  container shipments, although
      there is still room for container companies  to increase their percentage use of
      cullet. Glass container producers may be more likely to use cullet as they become
      convinced of the stability of cullet supply.

             Alternative uses for cullet should show  a small expansion as growing
      supply pushes down cullet prices. But those industries considering alternative
      uses may need some additional incentive to reconsider their current position on
      the  feasibility of using cullet.

      Factors Affecting Demand

             The major factors we have identified are summarized below. The text that
      follows describes these issues in more detail.

                  The container industry remains the  major end user of post-
                   consumer  cullet.

                  The major  concerns of glass container makers in using cullet are
                   contamination in the cullet and guaranteeing a  reliable cullet
                   Supply.

                  The container industry is motivated to use available cullet because of
                   benefits such as reduced energy use  and because of concern over
                   public  image.

                  Slow growth in the container industry means that industry's
                   demand  for cullet will grow, although modestly.

                  Non-container glass industries face  barriers to increasing cullet
                   use; the barriers may be based on technical issues or  on the cost of
                   learning how to use cullet in their industries.

                  An increasing supply of cullet  should combine with  sluggishly
                   increasing  demand, resulting in modest increases in cullet
                   recycling.
22

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      Container Gullet Dominates the Gullet Market

      Because of the short-term use of glass containers, as well as the manner in
which recycling programs have been set up,  container cullet has been collected
more successfully from residential and commercial consumers than has  any
other type of cullet. And because it is easier  for glass manufacturers to use cullet
originating from only their own industries  cullet that generally already
conforms  to production requirements  most of the container cullet is  purchased
by the container industry for use in new containers.

      Because of their few numbers and their dominance of recycling, the
container companies effectively set cullet prices. The container companies are
buying cullet at approximately $50 per ton, and other users of residential and
commercial cullet must compete with the large container market for cullet. In
many cases, cullet is not worth these prices to  other cullet users such as
fiberglass insulation or  glasphalt manufacturers.  Thus, although  alternative
uses for cullet are growing because of the general increase  in  cullet supply,
alternative users still represent a very  small portion of the post-consumer cullet
market compared to the container producers. However, in  some cases, where
alternative users can purchase cullet in the  area around their manufacturing
plants, suppliers find it more profitable to sell cheaply to the nearby alternative
user than to pay transportation costs to a higher-paying container  plant farther
away.


      Consistency of Supply Is Critical to Glass Manufacturers .

      Glass making is a  continuous,  closely-monitored process. The ingredients
of glass  lime, soda ash, glass sand, and any cullet used in  the process  are
fed continuously into vats that  operate 24 hours a day.  The materials are melted
in the vats, and the product is  removed from the vats continuously.  The mix of the
inputs can be changed only slowly, and the transition glass produced during the
changeover is unusable except as in-house cullet to be blended back into the
process.

      Because of the nature of the process, the ratio of  cullet to virgin materials
used can  be changed only  slowly during glassmaking.  As  a result, glass
container manufacturers find that a major problem is  guaranteeing a  consistent
supply of cullet. One strategy the container makers use to guarantee supply is to
deal, when possible, with large intermediaries who can provide a greater volume
of cullet with greater reliability than can small, individual communities or cullet
processors.

      The technical requirements of glassmaking  also  mean that  short-run
quantity demanded is probably not very sensitive to price.  However, the major
glass container manufacturers  have maximum prices that they will pay for
cullet,  even in the short term, and there is no reason to believe that long-term
demand for cullet would not be responsive to price. The combination  of concerns
                                                                               23

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       about a guaranteed supply, other nonprice influences on demand, and the
       historically stable price of cullet makes it impossible to predict how a substantial
       increase or decrease in cullet prices would affect the quantity demanded.


             Container Companies Are Pushing to Increase Their Cullet Use

             Like many other packaging manufacturers, glass container producers
       have been working hard to increase the recycling rates for their product, in part
       because recycling improves the  industry's public image and also because
       increased recycling  rates (i.e., increased cullet supply)  will depress the price of
       cullet, thus decreasing production costs.  In addition, because of the advantages
       mentioned in Chapter II associated with  using cullet to replace virgin
       ingredients, the  container industry has a long-term interest in seeing stable and
       efficient markets for  cullet develop. Considering the competition among
       aluminum, glass, and plastic in the beverage container market, glass container
       makers need to be aggressive in finding ways to keep costs down.
             How Glass Fares in the Competition with Aluminum
             and Plastic Will Influence Cullet Demand

             Because cullet is an input to the glass container manufacturing process, a
       change in the volume of glass  container production should affect the demand for
       cullet. (For example, if glass containers were to be replaced entirely by plastic
       containers, demand for cullet  would obviously decrease.)  Industry observers
       predict that the  glass container industry will continue to see  modest growth  over
       the next few years. The  U.S. Department of Commerce, for instance,  projects that
       the volume of glass container shipments will rise approximately 1  percent during
       the 1990-1994 period.26 This increase should slightly heighten the  demand for
       cullet.

             Color Is Important in Assessing Cullet Demand

             Because of the  technical specifications for the manufacture of glass
       containers, nearly all the cullet used in making glass of a particular  color must
       be cullet of that same color. The Glass Packaging Institute estimates  that roughly
       two-thirds of containers  are made of flint glass, one-quarter are brown, and the
       remaining 8 or 9 percent are green.  Flint glass,  for instance, can contain no
       more than 5 percent amber cullet and no more than 1  percent green cullet. This
       means that the three  major cullet colors are sold separately and that their market
       situations are not always the same.

             For instance, in some areas with a heavy emphasis on recycling  (areas like
       the Northeast with recycling mandates, deposit laws, and  high  disposal costs),
       the market is nearly saturated with green cullet because many imported beers are
       6U.S. Department of Commerce, U.S. Industrial Outlook 1990.
24

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packaged in green glass.  In these same areas, flint cullet is scarce and more
expensive, while amber occupies a  middle position. (See Table II-2.) The green
glass marketing problems will be limited, however, by the relatively low share of
green glass containers (8  or 9 percent) and the low share of imported glass
containers  about  3 percent of all container types according to Department of
Commerce estimates. So  although markets for green cullet maybe fragile,  the
rest of the industry  appears willing to handle more cullet.
      Some Glass Industries Are Unwilling to Use Cullet

      Another barrier to the expansion of alternative uses for cullet is an
unwillingness to use cullet on the part of manufacturers in some glass
industries. It  is difficult to discern whether these industries  including  many
types of pressed and blown glass, flat  glass, and fiberglass reinforcements   face
technical barriers or whether the decision not to use cullet is an economic  one.
The  answer is probably both. For example,  the technical specifications for cullet
for many  of these glass industries are tighter  (particularly for container cullet)
than those of the container industry. But a  similar reluctance to use  cullet once
prevailed  in the container industry until the industry learned more about the
nature of cullet and how to use it. Although many industry representatives said
their companies  could not use cullet, one company's technical expert indicated
that, if prices or regulations changed enough to make it worthwhile,  his firm
would be compelled to find ways to use more cullet than it does today.
                                                                               25

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   IV. Government Intervention in  Gullet Markets
      Government programs at the state and local levels are responsible for
much of the glass recycling that occurs.   Most of the post-consumer scrap is
recovered from curbside, drop-off,  or  deposit programs mandated by or operated
by  governments.  This chapter discusses  the desirability of increased government
involvement in glass recycling, describes existing policies, and then considers
potential government involvement in  the  market with the objective of increasing
recycling. The list of potential initiatives  is not indicative of intended government
actions or policies. Instead,  it simply presents possible scenarios for
consideration should a determination be  made that the marketplace is not
functioning  properly and must be  influenced to correct the problem.
Market-Based Incentives

       In cases where significant environmental problems are caused by  market
failures, EPA strongly supports the use of economic incentives (at the appropriate
jurisdictional level) to address the environmental  problem rather than traditional
command-and-control regulatory approaches. With the glass recycling
markets, our conclusion to date is that incentive-based options are best applied at
the state and local level, where the solution can be tailored to the particular needs
of that jurisdiction.

Summary of Current Involvement
       Government programs have affected the container sector of the glass
 industry through the introduction of deposit legislation and other recycling
 programs.  Deposit laws were first enacted in the early 1970s and have focused
 primarily on beer and soft drink containers.  Several states require deposits on
 other beverage containers, such as wine cooler, wine,  liquor, and juice
 containers, but no  states have deposits on non-beverage containers. Some states
 are considering advanced disposal fees on beverage and food containers.

       The deposit programs  increase the value of empty containers far above their
 actual scrap  value. (Scrap value averages slightly more than a penny for a glass
 beer or soda bottle as described in Chapter III.) This higher value, combined with
 publicity about the program and  numerous  redemption locations, encourages
 returns. Under these  programs, consumers return containers at  retail outlets or
 redemption centers and redeem their deposits..

       Mandatory recycling collection programs, which have emerged only in the
 last few years, are oriented  less toward incentives and more toward command-
                                                                           27

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     and-control than are deposit programs.  These programs  mandate the local
     development of recycling collection programs  for many materials, often including
     glass. The most prevalent approach taken thus far requires consumers to
     separate glass from the waste stream at home, where it is subsequently collected
     by the community. These programs expand the types of glass accepted to include
     other container glass (e.g., food jars, liquor bottles, medicine bottles).

           California's approach  to container collection is different. The California
     program creates a redemption value of 2.5 cents on glass beverage  containers.
     Consumers returning containers not only receive their 2.5  cents back but also
     may receive as a bonus a share of the funds generated by  unreturned containers.
     The economic incentive makes the program similar to a deposit program, but the
     return is through an independent network of recyclers established  and subsidized
     by the program.  In  addition, consumers  may  return  any glass containers to these
     recycling centers, even  if the container does not have a redemption value.

           These three programs have similar effects on the supply side of the cullet
     market:  they  force more glass into the market than would otherwise be available.
     Voluntary recycling  programs also facilitate the return of glass containers by
     making  recycling  opportunities more convenient. While precise estimates are not
     available,  these government programs  (i.e., deposit  programs, mandatory
     recycling, and the California program) are responsible for a large majority of
     cullet used in the container industry.

           Another form of  government involvement in  the cullet market is less
     obvious and almost  certainly less significant.  The  federal tax code provides tax
     benefits  (e.g., depletion allowances) for raw materials used in  the production of
     glass and many other products. These benefits constitute a tax subsidy favoring
     the use of raw materials over cullet, since depletion  allowances for natural gas
     and sand, for example, reduce the actual costs of  those inputs. No  analytical
     evidence exists that fully describes the effect of the  subsidy.
     Effects of Possible Federal Actions to Increase Glass Recycling
     supply options

            Mandatory container recycling at a national level would likely depress the
     price of cullet because the large increase in the supply of cullet following
     enactment of such a program would almost certainly lead to excess supply in the
     cullet markets.  Furthermore, consumers would bear the cost of collecting and
     sorting the glass. Economic incentives designed to stimulate supply include tax
     credits on recycling equipment and operations, which also reduce the cost of
     supplying cullet, and deposit programs, which increase the value of empty
     containers and impose  collection and handling costs on retailers and the  beverage
     industry.  Of course, the cost of these programs will ultimately be borne by
     taxpayers/consumers as  well.
28

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      Another way to decrease the cost of supplying cullet is to encourage the
establishment  of larger, regional programs to collect and process material. Such
programs would allow operators to achieve  scale economies  and to provide a
higher-quality  and more predictable  supply for  buyers.  Programs in New
Hampshire  and in Montgomery County,  Pennsylvania, are cooperatively
marketing a range  of recycled materials, including glass.

      Finally,  to increase the supply of recycled cullet, local government could
discourage disposal  of glass by ensuring that disposal fees cover the full costs of
waste disposal and  publicizing those costs.  Awareness of full avoided disposal
costs would increase the economic viability of collecting  and recycling glass and
other materials. Federal and state governments could also  provide guidance  to
communities about how to compute their full avoided disposal costs. Since many
communities are unaware  of or underreport their disposal  costs their customers,
this would  heighten awareness of recycling as a cost-saving measure. EPA  is
currently developing information to help  communities assess and report the  full
cost ("true-cost accounting") of solid waste  management.

      Data on which forms of collection are the most  efficient and effective are
relatively scarce.  The application of these incentives and programs would require
additional information about costs, consumer behavior, and the demand side  of
the market.
Demand Options

      Demand for scrap glass could be increased by offering incentives that make
cullet a less expensive input, intervening directly in input markets, or improving
the marketability of cullet. Incentives  for cullet use include tax credits for cullet
processing equipment  (beneficiation units) or a tax credit for the glass producer
based on the percentage or volume of cullet used in its batches. An alternative
approach  is to increase the cost of virgin glass by eliminating applicable depletion
allowances or by assessing a tax on the production of glass with no recycled
content.

      One possible approach would be to require a  minimum content of cullet in
glass products. Unlike an  incentive approach, this alternative does not take  into
account the various cullet market conditions  faced by different producers and
allows significantly less flexibility.  Under this option,  the  government could
either require that all glass procured by its agencies and contractors include a
minimum recycled content or apply the requirement to all glass.

      Another marketing  option is to  facilitate formation of regional  marketing
groups combining  cullet  from  individual collection programs.  One  of producers'
biggest risks in using cullet is that supplies will evaporate and they will not  be
able to sustain production with a given level of cullet input. Agents representing
a large number of collection programs  would have the ability to ensure a reliable
flow of adequate quantities of materials.

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     Report Conclusions

           Unfortunately, the data on glass recycling are inadequate to characterize
     the scrap market completely. The glass industry does not publish information on
     the uses of cullet, but available information indicates that the container industry
     is  the  primary end user of post-consumer cullet.

           Post-consumer cullet is supplied through several different channels,
     including deposit-refund laws, curbside  collection  programs,  drop-off  centers,
     and buy-back centers. No data on the quantities of cullet supplied through each
     of these programs are systematically collected.  It is estimated that approximately
     73 percent of glass recycled in 1988 was beer and soft drink container glass. The
     remaining 27 percent was other container glass  and non-container glass. This
     mix represents a  change in the historical composition of cullet. Until recently,
     beer and soft drink containers accounted for virtually 100 percent of recycled
     glass.  Growth  in recycling programs, especially  curbside  programs, has
     increased the quantity of other glass recycled,  resulting in  the present  mix.
     Continued growth in curbside and other recycling programs is likely given rising
     landfill costs, landfill capacity constraints, and resistance to siting new disposal
     facilities.

           The increasing supply  of post-consumer cullet is expected to coincide with
     moderately increasing demand for cullet, with the container industry  continuing
     as the primary source of demand. The container industry is motivated to use
     available cullet because  of benefits such as decreased energy use and the favorable
     public  image it provides.

           Markets for container cullet are regional, and are differentiated by color,
     with the green glass market the most fragile. The price of  green cullet  is less
     than that of amber or clear cullet because of the large quantity of green glass
     imported (e.g.,  foreign beers)  and the more limited domestic uses of green cullet.
     Green  glass  accounts for a relatively small share  of the total container  market,
     however,  and, while some  regional markets  might experience gluts of  green
     cullet,  green cullet markets are not saturated  nationwide.

           The overall outlook for glass recycling is healthy. Technical  barriers to
     cullet use in the  major  market (containers) are few and consumers appear
     willing  to return glass containers  of all types given the opportunity. The rapid
     increase in the supply of containers from curbside and  drop-off programs should
     offer reliable evidence to container manufacturers that supply will  remain strong
     and that increased investments in cullet processing and use are warranted. The
     major  concern that remains,  however, is cullet quality.  It is not enough that
     consumers are given the opportunity to return their bottles and jars: Consumers
     must be educated that color or ceramic contamination  can render an entire
     trailerload of cullet worthless.

           Other outlets for  container cullet exist, but have not been price-competitive
     with container manufacturers in  most cases.  Of particular  interest are lower-
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value markets for contaminated loads  or green glass cullet which is currently in
excess supply in several parts of the country.

      Other types of glass will  continue to face substantial logistical problems
with post-consumer  recycling because  of the disparate sources of relatively small
quantities (e.g., window glass)  and the difficulty of separating glass  from other
multi-material  products (e.g.,  light  bulbs). Nevertheless, with  rising waste
disposal costs and heightened consumer interest in recycling, even  these sectors
may see stronger incentives  to  recover glass and return  it to manufacturers.
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