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2 Factors Affecting Industrial Decisions About Hazardous Waste Generation INTRODUCTION Prior to the recent national focus on hazardous waste, industry had few incentives to reduce the generation of hazardous waste. As a result of legislative and regula- tory changes implemented under the Resource Conservation and Recovery Act of 1976 (RCRA) and increased public awareness and concern, there now are important reasons for waste generators to consider using methods to reduce generation of hazardous waste. These reasons include the following: . Substantially higher costs for disposal of hazardous waste Prospects of substantial liability for the costs of remedial (cleanup) actions Risks of third-party liability, even where a generator may not be directly responsible for improper disposal of hazardous waste Potential for adverse public relations Public opposition to local siting of hazardous waste management facilities . As discussed in the preceding chapter, the amount of hazardous waste reduction that has occurred in response to these incentives is difficult to document. Although waste reduction efforts have increased to some extent, the successes have not been uniform across different industries and within an industry. The committee believes that significant opportunities remain to reduce further the generation of hazardous waste. Government will need to make additional efforts to encourage firms to undertake this reduction. 17

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18 The committee believes that public policies that directly control industrial processes through regulations would be extremely complex from an administrative and practical point of view. The sheer number of and variations in industrial processes throughout the country make effective administration of a program that specifies required changes in industrial processes very difficult. Moreover, waste reduction involves changes in manufactur- ing processes, which have generally been outside the traditional purview of environmental regulations. There- fore, public policy approaches other than direct regula- tion of manufacturing processes, such as incentives that reinforce industrial decisions to change production processes, are preferable. A close examination of the factors that affect industrial decisions about waste generation may reveal opportunities for public policy to encourage industries to undertake waste reduction efforts. Industrial decisions about the generation of hazardous waste are the result of many choices made by manufacturers in the course of doing business and the incentives provided by society to favor some of these choices over others. Some of the choices that can be made by an individual manufacturer are illustrated schematically in Figure 2.1. The manufacturer's choice of the final product (Step E) prescribes the choice of raw materials and processing procedures or process chemistry (Steps A and B). At this step, waste reduction through minimization and abatement could be considered (Step C). The choices, in turn, determine the quantity and kinds of residuals (Steps D and F). For purposes of this discussion, the noneconomic residuals can be divided into two categories--hazardous waste (Step G) and other waste (Step H). Management of the other waste is outside the scope of this study. There are three possible dispositions for the hazardous noneconomic by-products of production processes (Step G). First, they may be recycled, reused, or otherwise processed to yield economically useful products (Step I). Second, there may be opportunities, such as those listed in Appendix A, for conversion of hazardous by-products to make them less hazardous or nonhazardous (Step J). Third, the waste may be placed in the environment (Step K). Although Figure 2.1 is a simplification of actual manufacturing processes, it indicates that the generation of hazardous waste is the result of numerous interdepen- dent technological, production, and marketing considera-

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19 A Raw Materials B - ~ | Processes r D ~ E Waste Reduction through Minimization and Abatement . Noneconomic Manufactured Economic Resi lua I s Products By products G ~ ~ ~ H Hazardous Other Waste Waste 1 1 ~ 11 _1 1 Waste Reduction Conversion to through Recycl ing Less Hazardous or Reuse or Nonhazardous r ~ Placement in the Environment 1 FIGURE 2.1 The waste production process. See text for an explanation of the steps. Lions. The schematic representation of Figure 2.1 would become more complex as additional interdependencies are identified, but in this theoretical framework the "solutions to the hazardous waste generation problem appears relatively simple; either increase the cost of hazardous waste disposal to the point where business

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20 managers would choose not to generate the waste in the first place or make the cost of recycling or reuse so low (even negative) that industries would be moved to undertake recycling and reuse activities. Economic forces, however, do not work as quickly or smoothly as theory might imply. Choices could be limited, for example, because information about existing tech- nologies might not be available or attitudes within firms might impede change. Some considerations are not under the control of the corporate manager or production superintendent. Table 2.1 presents the major factors affecting indus- trial decisions about the types and amounts of hazardous waste they generate. The previous chapter suggested that the role of each of the factors in industrial decisions depends on the phase of development of the particular firm's strategy for hazardous waste reduction. The remaining sections of this chapter contain dis- cussions of each factor and suggestions of opportunities for public policy to take the factor into account. The dynamic nature of the considerations should be kept in mind as each factor is examined in detail. TABLE 2.1 Factors Affecting Industrial Decisions About the Generation of Hazardous Waste Availability of land disposal Attitudes toward change Availability of information about waste reduction methodologies Regulatory issues in reducing generation of hazardous waste Needs for research and development Capital costs Issues in assembling, processing, and sale of recycled materials Product quality standards

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21 COST OF LAND DISPOSAL Hazardous waste management in the past has been skewed in favor of land disposal, largely because costs were low and risks to human health and the environment attendant to land disposal were not appreciated. Land disposal historically has been the least expensive alternative. The low cost to waste generators of land disposal, however, has not adequately reflected the long-term costs to society of cleanup, possible health effects, irrever- sible environmental degradation, and various other consequences. The committee believes that the discrepancy between the "trues cost and the current cost of waste management options, in this case land disposal, is a crucial factor that must be addressed in order to promote actions to reduce the generation of hazardous waste. If the costs could be assessed adequately, economics would favor waste reduction or treatment over land disposal in many instances. However, an economic evaluation of this long-term true cost is probably not possible for the following reasons: . there are . The long-term transport and fate of land-disposed hazardous waste cannot now be reliably estimated, so that significant uncertainties in estimates of exposure. The long-term health effects of exposure to hazardous waste are largely unknown. There are continuing uncertainties as to how health and environmental effects should be translated into monetary values, even if these effects could be determined accurately. There are uncertainties concerning the appropriate discount rate for such an evaluation, i.e., what the appropriate discount rate would be to weigh society's responsibilities to future generations against its responsibilities to current generations. The current cost of land disposal may not accurately represent the generators' total long-term costs either. For example, while it is generally accepted that the immediate out-of-pocket cost for landfilling renders it a relatively inexpensive option, some generators use landfills more sparingly than short-term economic considerations would indicate. This practice occurs for a variety of reasons, such as to avoid potential long-term liability in the event that waste leaks from

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22 the disposal sites. Recent judicial and administrative decisions concerning the liability of generators for disposal site cleanup under the Comprehensive Emergency Response Compensation and Liability ACt of 1980 (CERCLA; PL 96-510) have highlighted the fact that generators may be held liable for very large cleanup costs. Con- sequently, many generators are becoming aware of the potential longer-term costs associated with land disposal and are altering their dependence upon this waste management option accordingly. It is not clear whether additional liability requirements would heighten this effect, as statutory expansion of cleanup liability and judicial expansion of potential civil liability to injured third parties are already having a high impact on how companies do business (Hall 1983). In addition, in some instances certain wastes are restricted from land disposal on a categorical or volumetric basis. The rising costs of land disposal already are becoming, and are likely to continue to be, an extremely significant factor motivating industry to consider changing their current waste management practices. For example, quoted prices from nine commercial waste management firms increased from $120-168 per wet metric tonne in 1980 to $168-240 per wet metric tonne in 1981 for landfilling of drummed hazardous waste, and increased from $44-55 per wet metric tonne in 1980 to $55-83 per wet metric tonne in 1981 for landfilling of bulk hazardous waste (Booz-Allen and Hamilton, Inc. 1982). Public policy approaches, such as taxes and restric- tions on land disposal, that maintain the current trend of increasing costs to generators for land disposal are likely to continue to promote interest in waste reduction activities. Fees and taxes on the landfilling of waste and waste-end taxes on the generation of waste, for example, are direct mechanisms for making other waste management options more competitive with use of landfills for some waste. ATTITUDES TOWARD CHANGE Attitudes toward changes in industrial processes or practices vary widely from firm to firm and affect the implementation of strategies to reduce waste generation Waste generators may be reluctant to take risks with unproven technologies or to compromise other goals, may be ignorant (or mistrustful) of alternatives, or may .

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23 simply be uninterested in changing habits. These influences could delay or prevent consideration of waste reduction methodologies in the early phase of implementing a waste reduction strategy. A large component of corporate resistance to the use of waste reduction methods comes from the managerial level. For example, where on-site processing of waste streams has been proposed to enhance opportunities for recycling or reuse, managers may be reluctant to accept the risks associated with reliability of the technology- This conservatism results from the business manager's important role of controlling current costs and allocating resources where the needs and expected economic returns are greatest. During the design and development of new production processes, there may be a tendency to select proven technologies rather than to innovate with methods that may generate less waste. End-of-pipe treatment generally has been preferred over waste reduction processes because the former approaches often do not require changes in the production processes. Once a manufacturing process is implemented, there may be even greater reluctance to make major modifications in the operation. The risks of installing waste reduction methods include the following: . Uncertain investment returns Production downtime Operational difficulties or product quality problems Potential loss of proprietary information to a waste reduction consultant A "crisis orientation" among management can also inhibit the implementation of waste reduction programs. As discussed in Appendix B. an organized and comprehensive waste reduction program is centered on an exhaustive and systematic analysis of the reduction potential for each waste stream a firm produces. In contrast, a firm may apply one isolated reduction measure at a time in response to new issues or regulatory measures. In some cases, this piecemeal approach to waste reduction may lead firms to Reemphasize waste reduction as soon as they have made one incremental adjustment and to reassign the engineers responsible for the innovation to other, more traditional tasks. The responsibility for increased attention to waste reduction does and should extend throughout a corporation

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24 or a manufacturing facility to the production line, where reduction ultimately must occur. Labor may resist technological or procedural changes either because of a reluctance to change habitual practices or because jobs are perceived to be at risk. But successful waste reduction depends on the day-to-day cooperation of production employees, who often are in the best position to identify some kinds of waste reduction opportunities. They also are the ones who must implement new techniques or practices. Often one of the most effective first steps in a waste reduction strategy is to foster good housekeeping practices in the shop, a step only production employees can implement. Ideally, firms may want to ensure that a corporate- level commitment to waste reduction is understood and accepted at all levels. In practice, this goal often is elusive, partly because the individuals responsible for waste management at larger companies usually are not those responsible for overseeing research, engineering, or production processes. Those involved in product development or process design may not recognize problems with waste disposal or the benefits of waste reduction. Waste management officers in manufacturing may see their role as securing the lowest-cost means for legal waste disposal, often overlooking other possible objectives of more comprehensive management strategies such as recycling, reuse, or process changes. The committee believes that in the early stages of waste reduction efforts, good housekeeping and other opportunities for waste minimization can be effectively exploited. These opportunities tend to cost little. Educational programs and information dissemination provide the most promising public policy directions for lowering attitudinal resistance and increasing the drive to seek out and implement these types of activities. Education of the design and development engineer on the desirability of waste reduction can be valuable, either as part of the engineer's formal education or as part of on-the-job training. Public institutions and professional societies could work with engineering schools to ensure that study of the impacts of concen- tration, source separation, and internal recycling on waste generation becomes part of the standard curriculum for process engineers. Dissemination of information about opportunities for waste reduction can be enhanced through trade shows, printed material, conferences, and perhaps via government-funded demonstration projects. It

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25 could be that those responsible for plant operation simply are not fully aware of the actual costs in lost yield, waste-handling costs, disposal costs, and environ- mental liability associated with the waste stream. If the actual costs and opportunities are clarified, reasons for applying new waste reduction technology may become more clear. Application of waste-specific accounting methods could be beneficial in overcoming initial resistance to change. With proper accounting, information could become available on actual waste production, characteristics, variability, and disposal costs. AVAILABILITY OF INFORMATION ABOUT WASTE REDUCTION METHODOLOGIE S Some analysts argue that there has been little exchange of information about the waste reduction techniques already in use by some companies (Hirschhorn 1983, Sarokin 1983). Reducing the generation of hazardous waste provides a company with a temporary competitive advantage in a business where waste management costs are a significant fraction of gross production or transaction costs. Thus many firms seem reluctant to release information about their waste reduction practices because doing so might provide competitors with information on confidential processes or the technology being used. This lack of communication may delay or prevent firms from considering changes in their waste management practices and implementing simple, low-cost measures to reduce waste generation. Lack of information may particularly inhibit the adoption of waste reduction strategies by small businesses, which often do not have the resources to explore opportunities for waste reduction on their own. It is interesting to note that the United States has very few citations in the Economic Commission for Europe's Compendium on Low-and Non-waste Technologies (Economic Commission for Europe 1981). Part of the reluctance of industry to disclose information may be attributed to the fact that the regulatory system is information-driven. Once the success of one company in waste reduction becomes widely known, the regulator often wants other firms to follow its example. The originating firm often receives little economic return for the innovation, and its competitors benefit from the ability to use processes in whose development they did not participate.

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26 Opinions differ on the degree of importance of the confidentiality problem. In industries in which processes are fairly uniform throughout the industry, such as the electroplating and petroleum industries, confidentiality may be a lesser consideration. The competitive advantage between firms is gained by more competitive products, decreased total costs, or increased levels of service. In industries where the competitive advantage results from differences in processes, such as the chemical and pharmaceutical industries, confidential- ity considerations may be more important. The confidential nature of waste reduction methods may be particularly significant for limiting the availability of information about techniques for waste abatement and minimization involving process modifications. The availability of information about recycling and reuse of hazardous waste may also be limited, not only because of the potential economic advantage gained by successfully recycling and reusing waste, but also because of the possibility that competitors will acquire knowledge of production processes through examination of the waste stream. Most waste exchanges (see section below on issues in assembling, processing, and sale of recycled materials for a description of waste exchange) and commercial recyclers offer very stringent confidentiality assurances to the generators who use their services. These agree- ments often incorporate elaborate nondisclosure proce- dures. Many vendors offering recycling equipment have proprietary processes so that potential users cannot develop the method themselves. Attention to confidential- ity among vendors of recycling equipment may be greater than it is among the generators themselves. However, no clear consensus has developed concerning the degree to which confidentiality considerations actually inhibit the effectiveness of waste exchanges (Herndon 1983). Patents do not generally provide a means for protecting the confidentiality of waste reduction methods used by a firm. Many waste reduction methods are not patentable because the methods involve changes in operating practices that are well known. For example, separation of waste streams to permit recovery or improvements in housekeeping practices may reduce the generation of hazardous waste; these practices are not generally patentable though they may need to be adapted to specific circumstances. The committee is not optimistic about the possibilities for overcoming the problems posed by confidentiality of

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27 information through stricter agreements or other arrange- ments. Firms will always be reluctant to disclose information about their processes that provide them with a competitive advantage. However, governments, trade associations, universities, and other institutions can provide mechanisms for dissemination of generic information about waste reduction techniques e Some of these opportunities include the following: Educational programs for generators, engineers, and plant operators State-established authorities, university-based groups, trade associations, and other appropriate groups to disseminate information Competition for novel means to reduce generation Workshops, conferences, technology transfer sessions, and other educational programs can provide generic information on how waste can be reduced in certain industrial categories. States or trade organizations may wish to fund studies of these generic possibilities and to provide estimates of return-on-investment and other economic and technical incentives to encourage the industries to implement the procedures. These types of efforts would be most successful in industries where processes are not highly confidential. In addition, in the education of process engineers an increased emphasis on residuals could focus on the impacts of concentration, source separation, and internal recycling on the generation of waste. Publicly funded authorities or university-based groups could explore opportunities for waste reduction in specific industries. The information obtained would be made freely available. . State-sponsored competitions for industries to develop novel means for reducing generation of waste could be a mechanism to encourage industries to disclose method- ologies for waste reduction. Besides a cash prize and some very favorable publicity, the company may have to disclose the methodology used so that other firms can benefit from their work.

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34 In the near term, a series of steps can be initiated that will move toward greater program predictability. For example, government should clearly show its regulatory intent for these materials by developing a priority plan for implementation of RCRA. A comprehensive review could be undertaken to locate and eliminate inconsistencies, such as the relationship between RCRA and the pretreat- ment program under the Clean Water Act, and loopholes, such as the waste-oil program, in the regulations. A program plan could be developed by EPA detailing the manner in which RCRA will be implemented in those states not qualifying for delegation. Stringency of Standards Standards that are too strict, too weak, or highly variable can thwart progress in reducing hazardous waste generation. In this discussion, "standards" refers to both design and performance standards, as well as to procedural standards such as the manifest system mandated by RCRA. The term does not refer solely to some specific numerical requirement. In the preceding section, it was suggested that overly rigorous standards affecting techniques of reuse and recycling may discourage the use of these techniques. Elsewhere in this report it has been suggested that insufficiently strict standards for landfilling also may impede the reduction in generation of waste. It is theoretically clear that more stringent standards will impose additional costs and therefore reduce the generation of waste. The committee concludes that regula- tions should be written to achieve health or environmental goals and should be made as stringent as necessary to achieve these goals. Nonetheless, excessive restraints, unwarranted in light of perceived threats to public health or environmental quality, should be avoided. There are certain areas where changes in the standards would bring about a reduction in waste generated, and where such changes are appropriate to protect public health and the environment. For example, the following actions may be appropriate to protect public health and, at the same time, encourage reduction in generation of waste: (1) restricting materials allowed to be land- filled, (2) rapid phasing out of old, inadequate fills, and (3) strengthening requirements for long-term care. Such changes would raise landfilling costs and bring

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35 about a reduction in generation, depending on relative costs of other treatment and disposal options. Degree of Success in Implementation of the Program Implementation involves the setting of standards, issuing of permits, and inspection and enforcement. The slow pace with which RCRA initially was implemented likely did not encourage industry to pursue waste reduction as vigorously as might have been expected during the 1970s. Recently, the situation appears to be improving. This year, for example, EPA has established a priority procedure that will require new permits for landfills and incinerators under the full provisions of RCRA. The committee does, however, wish to emphasize that the current trend toward stronger program implementation must be continued if reduction efforts are to be maximized. As EPA or states undertake implementation of the full regulatory program of RCRA, adequate resources must be allocated to ensure that implementation is successful. There is some reason to believe that this needed vigorous allocation of resources will not take place unless a substantial new commitment is made at both the state and the federal level. It appears that perhaps fewer than half the states will qualify for full delegation of RCRA. The committee is aware of no specific budgetary plans within EPA that would enable it to acquire the new resources to implement a complete regulatory program in all the unqualified states. Such a requirement would pose a substantial challenge to EPA. Available resources at the state level may also not be adequate. After two years of interim authority at the state level, the noncompliance rate for phase I of the RCRA program is over 60 percent in the priority areas of groundwater monitoring, financial, and closure require- ments (W. Ruckelshaus, U.S. Environmental Protection Agency, letter to officials in state environmental agencies, April 4, 1984). Resources and strong program direction will be necessary to improve this situation.

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36 NEEDS FOR RESEARCH AND DEVELOPMENT Residual materials are associated with almost all manufacturing processes. If the ultimate societal goal is to reduce waste generation to the lowest feasible level, then the need for research and development, taken to mean the aggregate activities needed to devise and demonstrate technologies leading to as-yet-unproven means for reducing the volumes of hazardous waste generated, is an important one. Methodologies exist to reduce hazardous waste generation, but they are not universally used. Often there are obstacles to implementation. For example, in processes employing liquid-liquid extraction to reclaim potentially hazardous solvents, the efficiency of mass transfer depends on fluid velocities. In specific applications, the waste stream temperature, flow rates, pipe sizes, and other factors affecting fluid velocities must be evaluated; in some cases in-place testing of mass transfer is needed. These efforts are for adapting a developed technique to a particular situation. In the case of liquid-liquid extraction, one would conclude that a technique was available and that research was not needed to develop a new technology. However, unless scientific and engineering staff were aware of this solvent recovery procedure and were available to conduct tests on design and to implement this solvent recovery process, the unavailability of methodologies would be perceived as a major constraint to reducing generation. A number of individual facilities, corporations, or industrial subcategories may have already implemented available techniques and may have reached their practical limits of waste reduction given currently available technology. For this group, new technologies will be necessary for further improvement. There are relatively few such instances, however. On a national scale, research and development of advanced reduction tech- nologies is not crucially needed until the existing opportunities are implemented and their impact known. There are a multitude of opportunities for adapting simple, low-cost practices already available, for example, spray rather than tank rinsing in electroplating or similar processes to reduce the amount of contaminated solution requiring disposal; separation of cooling water to avoid mixing with contaminated materials and to allow reuse of the water; substitution of water-based adhesives

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37 for solvent-based ones; and caustic and acid reclamation and reuse. In the national perspective, as more reduction in waste generation occurs, new techniques to accomplish even greater waste reduction will need to be developed. The importance of research and development thus will increase with time as the majority of industries implement currently available techniques and see the need to undertake further reduction. Facilitating research and development In certain industries, those for which new technologies would make a significant difference, eventually will become an important consideration in public policy. The current need among a substantial majority of industrial generators is to encourage their adoption of existing methods. This implementation requires substan- tial resources for technical assistance, particularly for small firms, and will lead to a steady increase in the need to develop more complex methods for reducing the generation of hazardous waste. Thus the need for research and development will generally become important in the future when existing techniques have been fully utilized on a national scale. The perception that waste reduction methods are not available currently has a much broader effect than does the actual lack of available techniques; both the perception and the true needs can be addressed through public policy. For example, means to address the needs might include the following: . Devoting resources to demonstration of existing methods in a wide variety of actual situations Implementing educational programs for generators, engineers, and plant operators Funding a limited number of groups for research and development Instead of devoting the majority of the resources to research, typically at universities and research organizations, appropriate groups could be supported to promote actual implementation. Such groups might be organized at the technical level to provide guidance for the plant engineering needed to tailor available techniques to specific industrial facilities lacking in-house personnel. Educational programs also could provide access to information about available waste reduction practices or

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38 to those familiar with such methods. Trade associations could be helpful in keeping the industries informed about available techniques. Local universities and colleges, trade associations, and other appropriate groups could organize workshops and conferences for industry groups. In the select cases for which existing methods have been exhausted, research and development is needed to achieve further reductions in the generation of hazardous waste. Funding of groups to perform research on waste reduction methodologies would be a valuable investment. Because research and development has a long lead time, a well-developed, ongoing research effort on waste reduction methods will allow an orderly transition to future national waste reduction efforts as more industries utilize available methodologies and need to develop new approaches. CAPITAL COSTS In many cases, the lower operating and disposal costs achievable with more efficient processes may enable waste reduction initiatives to pay for themselves and eventually to improve the profitability of a process. There are many examples cited in the trade and popular press as well as the technical literature (Campbell and Glenn 1982, Huisingh and Bailey 1982, Ministere de l'Environ- ment 1981, Royston 1979). However, many companies, especially firms whose plants are antiquated, may not be able to justify the fixed capital investment some tech- nologies require. Competition, domestic and inter- national, often makes companies reluctant to invest in waste reduction equipment or process changes when economic advantages are not clear. Capital costs of equipment may become significant after industries have exploited the low-cost oppor- tunities for reducing generation that generally represent the first steps in waste reduction. Capital costs could be a significant constraint as more capital-intensive approaches are needed to achieve further reductions. Public policy approaches that lower the actual capital costs of waste reduction to industry may be important in the future as the nation progresses in its waste reduction effort and incentives are needed for implementing sophisticated, high-cost technologies. These approaches could include the following:

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39 Low- or no-interest loans, with liberal repayment plans, for reduction expenditures. The loans could be offered by government to cover the cost of an environ- mental audit to determine the optimal ways to reduce waste generation as well as the capital costs of the change itself. . Guaranteed loans extended to firms by private investors, to make financing of waste reduction measures easier to obtain. Tax deductions, tax credits for waste reduction initiatives, or exemptions from the sales tax or import duties for recovery or reduction equipment. Direct government subsidies to firms developing reduction methodologies, in order to reduce the start-up price of these investments. Government actions to allow and encourage smaller firms to pool their resources to implement a joint reduction strategy or construct and operate joint resource recovery facilities. A problem with any type of government subsidy for waste reduction is in implementing the program and establishing whether the firm in fact qualifies for the subsidy. The approaches discussed above need to be analyzed in detail to determine their merit in various situations. ISSUES IN ASSEMBLING, PROCESSING, AND SALE OF RECYCLED MATERIALS Recycling is an important option for reducing the generation of hazardous industrial waste. Both on-site and off-site recycling can be significant on a national scale. In this section, the focus is on impediments to off-site recycling and how these can be overcome. On-site recycling generally involves the same factors as waste abatement and minimization, as discussed elsewhere in this chapter. According to EPA estimates (Westat 1984), of the 264 million metric tonnes of hazardous waste generated in 1981, only a small portion was recycled. Nevertheless, recycling appears to be an increasingly attractive option to generators; the number of generators recycling waste increased from 5700 prior to 1981, to 6100 during 1981, and to 7800 after 1981.

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40 Waste exchanges are one mechanism for promoting recycling of hazardous materials. They provide a mechanism for a user of materials to identify a waste generator producing a reprocessed or reused material that can be used. Typically, listings of wastes wanted and wastes available are provided to the exchange, which publishes the lists periodically. Inquiries about listed materials are forwarded by the exchange to the generators. This arrangement allows firms to advertise their feed- stocks or waste without disclosing proprietary information that might compromise their competitive advantage (Dorn and McAdams 1982). Passive exchanges or clearinghouses broker only information on materials wanted and wastes available. They are usually small, nonprofit groups, subsidized or wholly funded in some instances by state and regional governments. Because passive exchanges focus on materials of unknown or unrecognized value (i.e., materials generally regarded as waste), they do not compete with commercial or industrial brokers of by-products. Active exchanges or materials exchanges, on the other hand, actually accept or purchase wastes, reprocess them, and sell them at a profit. Therefore they usually handle waste with high market value (Dorn and McAdams 1982, Gaines 1982). The first waste exchange in the United States began operating in St. Louis in 1975. AS of 1982, 34 waste exchanges were active in the United States and 17 in foreign countries (Dorn and McAdams 1982). The effective- ness of waste exchanges and the problems associated with their use for hazardous waste are described by Gaines (1982). Waste exchanges have met with varying degrees of success in this country (Herndon 1983). The obstacles to successful operation of waste exchanges are largely the same as those that impede the development of other off-site commercial recycling facilities, as discussed below. Several successful recycling programs currently are making effective and economic use of hazardous waste. The best example is solvent recycling both on and off the site of commercial facilities. The technology for solvent recovery (distillation) is well established (U.S. EPA 1981). Solvents contaminated with a wide variety of impurities can be successfully processed. The resulting products readily meet exacting specifications and are sold into the market below the price of virgin solvents.

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41 Other waste streams may be less successfully recycled, because of one or more technological, economic, practical, or other factors. There are several technical obstacles to the recycling of hazardous waste. Nominally identical waste streams may differ between plants and between batches from the same plant; this variability in raw material can make processing difficult. Recyclers in general have difficulty, and hence tend to avoid, separating and purifying complex mixtures of waste. In some areas, technology is not available, and in other areas, technology has been developed but is not economical. There also are economic constraints to establishing recycling facilities. Transportation costs, for example, can be a major determinant of the economics of recycling high-volume, low- concentration waste. The uncertainty of quality and quantity of waste can lead generators to lack confidence in their supply of recycled materials; this can inhibit the development of markets for recycling facilities. Certain other practical considerations also make recycling less attractive. Industry often is faced with liabilities connected with waste transfer, such as under the "joint and several liability provisions of CERCLA. In general, liability issues have yet to be clearly resolved under either state or federal regulations (see Hall 1983). In response to this concern, many generators prefer on-site to off-site recycling. However, industry often may perceive on-site recycling as an undesirable venture into another business. Concerns about confidentiality and trade secrets often hinder waste exchanges, as discussed under the section, unavailability of Information About Waste Reduction Methodologies. n In addition, continuous revisions in regulations and uncertainties about future regulations on recycling make entrepreneurs reluctant to develop recycling facilities. Another factor that may limit the availability of recycling facilities is public resistance to the siting of such facilities. These issues are related to many of the other factors described in this chapter. The development of markets for recycled materials is in part related to the predictability of the regulatory system because a market will develop in response to a regulatory system only if the latter is predictable. In addition, product quality standards are involved in situations where more lenient product specifications would enable generators to use recycled materials in their production processes.

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42 Approaches that could encourage the development of recycling facilities include the following: Increasing procurement of recycled materials or materials containing some recycled component. The Resource Conservation and Recovery Act (42 USC 6002) requires EPA to encourage the use of recycled material government projects, "given reasonable levels of price and performance. n In addition, increasing procurement by industry would encourage recycling, although industry would tend to procure recycled materials only if it was economic. Study is necessary to delineate materials that are good candidates for procurement programs, including, for example, paints, thinners, and ferric chloride wastes Streamlining federal and state regulations so that they treat recycling plants more like ordinary chemical processing plants. With tighter enforcement and financial assurance requirements, recyclers could be regulated with more flexibility without unreasonable risk to health and environmental quality. Increasing public education to demonstrate that properly managed recycling can mean less danger from waste, not more. This may ease the difficulties in siting recycling facilities. Increasing financial assistance to waste exchanges so that they can play a more active role in arranging for recycling and reuse of materials. PRODUCT QUALITY STANDARDS . A product quality standard is a description of a commercial product. The standard may have been developed by the supplier of the product, by the purchaser (particularly military and civilian government procure- ment), or by a standards-setting organization. Regardless of its origin, the purpose of the standard is to describe the characteristics of a product in a manner that can be relied upon by both buyer and seller. The specifications that make up a product standard may relate to any characteristic of the product, including the aesthetics of the product, its ability to function in its intended application, health and environmental risks, and acceptable levels of impurities. Product quality standards can be a factor in industrial decisions about waste generation. A nonfunctional standard specifying the aesthetic characteristics of a

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43 product could, for example, limit the opportunities for implementing waste reduction technologies. Modifying product quality standards could increase the opportunities for process change or redesign of products leading to waste reduction and thereby lower the technological, economic, or noliticallv ac~nt~hl" 1 imil" For Manic ~ .= ~ ~ ~ ~ ~ ~ generation. For example, in the electroplating industry bright cadmium plating is important for the aesthetics of the product but is not necessary for protection of the finish. If existing specifications for certain cadmium- plating applications were relaxed, cadmium and cyanide concentrations in the waste could possibly be substan- tially reduced. Relaxing product quality standards would enable some industries to reduce their generation of hazardous waste through process changes and raw material substitution important for waste abatement and minimization. In some instances, recycled materials could be substituted for virgin raw materials as feedstock in the production process. These opportunities undoubtedly vary between types of industries and even between processes within an industry. The opportunities must be studied on a case-by-case basis. Relaxation of standards also could expand opportunities to prevent some off-grade products from being discarded as hazardous waste. This would be possible where out-of- specification products are hazardous and are discarded as waste instead of recycled, mixed with other batches of products to produce a blend that is within specifications, or sold for uses that can tolerate out-of-specification products. Whether such opportunities are substantial can vary enormously depending on current commercial practices. In general, the initiative to alter a product standard rests in the hands of the organization that established the standard. For example, a standard established by a manufacturer of a-product can be changed by the manufac- turer, though the manufacturer may be influenced to initiate such changes by pressures from customers, government, other standards-setting organizations, or the public. Unfortunately, the organization setting the standard often does not recognize or is not aware of the hazardous waste that may be generated because of that standard. This gap is a severe constraint. Changes in a standard established by a commercial organization may be difficult to make because of competitive pressures. Nonetheless, there may be some instances in which either a purchaser or a seller has

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44 established specifications that no longer have significant commercial importance but that do affect the amount of hazardous waste that is generated. The consumers of products play a significant role in taking initiatives to change product quality standards. Consumers include the government, both civilian and military, and industries as well as the public at large. Though they generally would not be aware of the relation- ship between particular specifications and the generation of hazardous waste, consumers nonetheless can identify those specifications that are essential from the point of view of the utility of the products they purchase. For example, industrial or government consumers could invite suppliers to bid against pared-down specifications. They might also talk with suppliers to bring the relationship between specifications and waste generation into better focus. These actions could be particularly important for government in its role as a consumer of products. Individual corporations can examine their product specifications to identify instances in which obsolete or nonfunctional specifications stand in the way of reduction of waste generation. Trade associations and standards- setting organizations can consider whether modification of specific, nonfunctional specifications could lead to a reduction in the generation of hazardous waste. Also, federal, state, and local government agencies can initiate dialogue with suppliers to identify specific opportunities for standard rewriting that would start to focus on waste reduction. As noted earlier, however, the connection between a product standard and the generation of hazardous waste is poorly understood by the standards- setting organization and the public. This constraint can be overcome by (1) clearly identifying the linkage in a reasonably quantitative way and (2) implementing an educational program to disseminate this information. Conceivably, explicit attention to this subject by a specially constituted group organized under the auspices of an appropriate private organization or public institution could identify--industry by industry--the specific opportunities that merit attention. Finally, the relationship between specifications and waste reduction may be an appropriate subject for attention at academic institutions, particularly by means of industry-sponsored research grants.