Greenstar supports Austin Texas recycling program

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Austin is an environmental leader that deserves the best possible recycling program. Recently, the city voted to reject all current bids for a proposed new recycling plant. Regardless of what happens next, Austin's residents should know the facts behind the current recycling program with Greenstar and understand what needs to be considered as the process moves forward.

In 2008, Greenstar stepped forward to make a multi-million dollar investment to initiate the single stream recycling program. While the city did lose money in the first year of the contract, this was due entirely to the collapse in commodity values. Those prices have rebounded, and Austin is now making money on its recycling contract with Greenstar.

Greenstar has consistently met or exceeded contract specifications, even as it carried a multi-million dollar liability for the contract. In fact, the city rejected a Greenstar offer to reduce its processing fee in exchange for a three year extension of the original contract, worth approximately one million dollars annually. Long-term contracts allowing for lower processing costs are standard procedure in other large Texas cities.

To date, Austin has deferred the capital costs of building a local recycling facility by utilizing existing capacity to process its recyclables in San Antonio at the largest, most automated recycling facility in Texas. Transport emissions are minimized by using biofuel and are miniscule when compared to the total emissions savings achieved through the program (30 MTCO2E of emissions each month vs 16,790 MTCO2E of emissions reductions). Net emissions reductions are equivalent to removing over 3,500 cars from the local roadway.

Recycling Programs are not Free
Cities typically engage in recycling programs for: 1) environmental benefits, and 2) landfill cost avoidance. When commodity prices are high, there's an added benefit - recycling rebates. Greenstar rebates 90% of the value of paper and 75% of the value of containers to the city.

Recycling programs are not free. And while Texas Disposal Systems (TDS) recently proposed an initially "free" recycling program, it's anything but free. Its short-term option generates $5.8 million in recycling proceeds at today's market prices, but offers no rebates for the City of Austin. The long-term option offers rebates comparable to Austin's existing recycling program with Greenstar, but Austin pays TDS its full operating costs plus 15% in profit and administration fees - under any market conditions. TDS is a landfill operator with no prior single stream experience. In exchange for providing the initially "free" recycling program, TDS would require a 20 year extension on its landfill contract with the city. Sound free?

Looking Forward: Leave No Waste
Are the citizens of Austin really committed to the best environmental solution possible as they look to the future? Greenstar, whose only business is recycling, has invested $55 million in recycling technology in Texas and $300 million in the U.S. in the last 3 years. We are committed to the ideal of leaving no waste behind.

Since 2008, under the Greenstar contract, recycling participation is up nearly 75% in Austin and thousands of tons have been diverted from landfills.

On the other hand, TDS is a landfill operator. In exchange for providing the initially "free" recycling program, TDS would require a 20 year extension on its landfill contract. There would be no competitive price bidding thereafter for 40 years. By reducing the materials going into landfills, Austin's current recycling program has adversely impacted TDS' bottom-line. With no prior single stream processing experience, TDS currently transports its recyclables to Greenstar's San Antonio facility. Under the proposed TDS plan, the recyclables would still be transported approximately 30 miles.

When the city was looking for a recycling partner, TDS had 10 years to invest in recycling under its existing landfill contract, but did not do so. Now, TDS is investing in 10 year old recycling equipment that will not yield the same volume as more modern technology. The result: more residue going into TDS' landfill.

Greenstar urges the citizens of Austin to know all the facts. To learn more, visit our website and follow us on Twitter at greenstarna.

When the blended value exceeds $102/ton, the city makes money. When below $102/ton, rebates are not sufficient to cover processing fees and transportation costs. Austin's program was launched at the beginning of a recession and commodity crash; however, it is now making money on its recycling contract.

The City of Austin should be applauded for its commitment to recycling with increases of almost 75% since the introduction of single-stream recycling with Greenstar.

The city would have incurred significant charges to upgrade its own recycling system if single-stream had not been introduced in October 2008.
Greenstar was hired to rollout the program and transport the materials to its facility in San Antonio while the city determined its best course of action in building its own facility.
Recycling is one of the best ways to reduce greenhouse gases—and saves money over the cost of landfill.

The City of Austin entered a short-term agreement with Greenstar for its recycling program (2 years) while it determined its longer-term strategy.

Greenstar paid millions of dollars to upgrade its own systems to accommodate Austin recycling.
Greenstar is providing the transportation of the recyclables at cost to the city.
Even after payment is made, the city is expected to save money by upgrading to the single-stream program due to avoided landfill disposal and equipment costs.
Other cities in Texas have long-term commitments with Greenstar (10 years) and this has lowered the cost of recycling in areas like Dallas and San Antonio.
Greenstar is one of the largest recyclers in Texas—recycling is its only business (no competing landfill, or paper mills). Greenstar wants to be in Austin for the long-term and achieve Austin's goal of zero waste.

The environmental benefits of recycling to the Austin area are significant. The emissions from the 80-mile transport of the recyclables to San Antonio are miniscule when compared to the overall reduction in the greenhouse gases.

Source: EPA Warm Model, based on current recycling volumes

Greenstar has submitted three proposals to the city to lower the price of its recycling contract. The first proposal offered immediate savings of $1 million per year.

The proposals provide immediate financial relief on processing fees in exchange for an extension of the contract.
The proposals provide flexibility for the city to continue building its successful single stream recycling program while the city determines the best course for building a recycling facility in Austin.

The first proposal was submitted on September 8, 2009. Savings would have started immediately.

October, 2008 - Single-stream recycling launches in Austin with Greenstar. All recyclables can be placed in one bin providing convenience for Austin residents and more efficient collection for the city.

September, 2009 - Greenstar submits its first proposal, at the city's request, to reduce its processing fee. If accepted, the city would save $1 million per year for an extension of the contract for three years.

October, 2009 - Greenstar submits two other proposals, at the city's request, to reduce its processing fees in exchange for one- and two-year contract extensions.

November, 2009 - City issues Request for Proposal to build a Material Recovery Facility (MRF) in Austin.

January, 2010 - Seven proposals received to build and operate a Material Recovery Facility in Austin.

May, 2010 - Presentations to City Council for new Material Recovery Facility in Austin. Final three bidders include Balcones Resources, Waste Management Recycle America and Allied Waste Services.

June, 2010 - City Council votes to throw out all bids for new recycling facility and consider negotiating recycling contracts outside of an RFP process. City Council meeting held Thursday, June 24th.

September, 2010 - Current Greenstar contract set to expire.

Greenstar is one of America's recycling leaders, headquartered in Texas.

2.0 million tons a year processed in the US.
Operations in San Antonio, Dallas, Houston and Austin.
Recycling company with no competing landfill or paper mill assets.
Recycling solutions for paper, plastic, glass and metals.
Dynamic expansion in the U.S. since establishment (2007), growing the business by 16 facilities and establishing the corporate headquarters in Houston.
Over 10,000 managed retail and commercial locations across all 50 US states and 13 Canadian provinces including many leading regional and national brands.