The future of recycling

Abstract

Recycling in general and metal recycling in particular, many believe, enjoy a very bright future. As resource depletion, environmental concerns, and other factors drive primary production costs up, the relative importance of recycling in supplying the material needs of society will grow. This optimistic view, however, may paint an overly rosy and misleading picture. A large portion of secondary metal production is based on the recycling of new scrap, which is constrained far more by the available supply of new scrap than by metal prices or recycling costs. Secondary production from old scrap is more sensitive to costs and prices, and so would benefit from a rise in metal prices. History, however, indicates that the cost-reducing effects of new technology have over the past century more than offset the cost-increasing effects of depletion, causing real metal prices to fall. In recent decades, this decline in prices has continued despite government policies that are increasingly forcing firms to cover their environmental costs. While this favorable trend may not continue forever, it does suggest that secondary producers will have to pursue aggressively new technologies and other innovations that reduce their costs as fast or faster than primary producers if they hope to expand their future share of total metal production.