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REMARKS BY THOMAS P. DUNNENATIONAL RECYCLING COALITIONMINNEAPOLIS, MINNESOTAAUGUST 30, 2005I want to thank Kate Krebs and the National Recycling Coalition for invitingme here this morning. I asked to be invited, because there appears to be adysfunction in the recycling market.On the one hand, if you look at the prices being paid for virgin rawmaterials, this should be the best of times for recyclers. The price of raw materials,including fossil fuels, has risen rapidly across the board over the past few years.You

d expect high material prices would give people a bigger incentive to usematerials more efficiently. And that includes using recycled materials. But, on theother hand, if you look at recycling rates over the past few years, they

re generallyflat or, for some materials, declining.Why are we having trouble expanding recycling rates in this country, whenthe used materials themselves are in such demand? What

s going on here?I don

t have the answer to that, and there may be several answers at play. Sotoday I want to look at this troubling question and its implications for yourindustry. And then suggest some of the things that could be done to moverecycling rates up.The track of commodity prices has traditionally been a gut-wrenching rollercoaster ride. And because of dramatic changes in the global economy, the ride forthe past few years has been up up up at a dizzying pace. Crude oil is the oneexample that everyone knows about, the one example whose changing price isfront page news. And the world price of crude oil is way up.

How much is it up? That depends on what day you ask. Last week the priceof crude oil rose to 68 dollars a barrel, the highest price ever in nominal terms.It

s possible that world oil prices could drift downward again. But I don

tknow anyone who expects to see 20 dollars a barrel ever again, or even 30 dollars abarrel. Goldman Sachs has predicted that oil will cost $60 a barrel for the next fiveyears.Oil prices will fluctuate in the future, as they have in the past. But they

llalmost certainly fluctuate at much higher levels.The same global economic growth that

s driving up crude oil prices isdriving up the global price of other raw materials. Two weeks ago, the price of copper hit a new high on the London Metal Exchange. Nickel is now selling forabout three times more than in 2001. The price of aluminum rose by over one-third between 2003 and 2005. One index of a broad range of commodities is nowmore than 50 percent higher than it was four years ago.This is good news for your industry. The rising price of raw materials ishelping drive up the price of the recycled materials that replace them. The marketprice for recycled PET almost doubled between 2000 and 2005. The market pricefor recycled HDPE went up by about two-thirds during the same period. The pricefor used aluminum cans increased by about a third.But apparently these increases in commodity prices have not driven similarincreases in recycling rates in the United States. Since the year 2000, the rate atwhich we recycle or compost municipal solid waste has barely budged. Thepercentage of materials recovered in 2003

the last year for which we havecomplete data

was up only slightly from four years earlier.If you look at individual components of the municipal solid waste stream,

the picture is inconsistent. The recycling rate for paper, for example, is rising, butnot as fast as you

d like. It

s now approaching 50 percent, almost double the rate in1990. Corrugated cardboard and newspaper recycling rates are much higher thanthat. But the paper recycling industry is still hungry for fiber.The recycling rate for metals, on the other hand, inched up only slightlybetween 1995 and 2003. Overall plastics recycling was virtually unchanged overthe same period. The recycling of aluminum beverage cans actually declined, fromalmost 60 percent in 1997 to 44 percent in 2003. Recent data show the recyclingrate for aluminum cans is increasing, but only slightly. Given the recent rise in thevalue of those cans, that

s astounding.The bottom line? Recycling rates for materials found in the municipal solidwaste stream have been flat, at best, for the past several years. On paper, that partof your business looks stagnant.Why this disconnect between commodity prices and recycling rates? Andwhat does that say about the future of your industry? To what extent are U.S.recyclers affected by competition from other countries? It looks like Americanrecyclers are in the same boat as American garment manufacturers; that is,businesses with inherent cost structures that make it very difficult to compete withforeign competitors.Is that true? If it

s true, should the government care? Since global economicforces seem to be at least part of the problem facing you, can the federalgovernment do anything about it? Should the federal government do anythingabout it? And if so, what? What would be a proper and effective federal role in asituation like this?I

m asking a lot of questions here, and I don

t have a lot of answers. But I

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Environmental Protection Agency: 2005 0830 dunne nrc12

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