By Greg Scheurich
Posted on Jun. 17, 2010
You may never have never heard of Patricia Woertz, or Archer Daniels Midland. Woertz is the CEO of ADM, America’s 27th largest company, and it’s the largest company headed by a female in the US. The reason you ought to care is that Woertz and ADM have the power to make your life more expensive – much more expensive. And they have been aggressively exercising that power for over 30 years.
ADM is the largest primary food processor in the country – it turns corn and soybeans (among other products) into a host of consumer products: corn flakes, cornstarch, corn syrup, corn meal, popcorn, and hundreds of other items. One of those other items is ethanol. Ethanol is a pure grain alcohol that, when blended with gasoline, yields gasohol – the E10 or E85 blends. Ethanol has long been touted as a path to energy independence, the way to reduce, or even eliminate, oil imports.
More accurately, though, ethanol is the latest incarnation of snake oil. It is an inferior product in every facet, and the entire ethanol industry would disappear overnight if the federal government would perform its intended function – the service and protection of its people – and end ethanol subsidies once and for all.
The origin of ethanol as a national fuel source can be traced back to the national hysteria surrounding the oil shocks of the 1970’s. An enterprising Dwayne Andreas (then-chairman of ADM) managed to convince President Carter that a domestically produced fuel substitute could reduce or even eliminate dependence on foreign oil. Andreas managed to secure massive federal subsidies for both the production and consumption of ethanol – and a new “industry” was born, albeit one that would not survive off the omnipresent life-support of the federal government. Sadly, as can only be expected of a product that cannot compete on its own merits, ethanol has proven to be a success only as a case in corporate welfare, not as a viable form of alternative fuel.
Ethanol is the greatest bust in the history of this country joining the ranks of the Edsel, New Coke, the USFL and Ishtar -- all are great names in failure, but none can compare to the sweeping and encompassing flop that is ethanol. Ethanol disappoints functionally, economically, socially, and, perhaps worst of all, ecologically.
Ethanol has only about 67% the energy of a similar volume of gasoline. Thus, E85 (a 15% ethanol blend) has less energy than gasoline – and delivers only about 75% of the mileage that gasoline would in the same “flex fuel” car. Ethanol does not perform in cold weather without special additives and lubricants that are not required in traditional gasoline. Ethanol results in higher NOx emissions (a significant component of smog) than gasoline and also has the potential to damage engines not specifically designed for ethanol use.
While the current national average prices for gasoline ($2.72/gallon) and E85 ($2.20/gallon) might falsely imply that E85 is cheaper, when adjusting for mileage delivered, the true price of E85 ($2.20/.75 = $2.93/gallon) can be seen to be almost 10% higher than gas. This price delta continues to exist despite billions of taxpayer dollars annually given to ethanol producers to artificially create a market for this otherwise worthless product.
Ethanol is currently derived almost exclusively from corn. While there is much hype about generating ethanol or biodiesel from other non-edible sources (e.g. algae, cornstalks, grasses), those processes are not yet in place at anything approaching a commercial level. Because corn pricing behaves as a function of supply and demand, any significant increase in demand (e.g. ethanol production) without a corresponding increase in supply will necessarily lead to increases in price.
Multiple studies from such varied sources as Oak Ridge National Laboratory, National Renewable Energy Laboratory, US Department of Agriculture, Kraft Foods, International Monetary Fund, and the World Bank, have found that ethanol production has led to spikes in global food prices – not just foods used directly in ethanol production (e.g. corn, soy, and sugar), but substitute foods as well (e.g. wheat, rice, etc). A June 2009 Oxfam study concluded that global food price increases directly attributable to ethanol production were responsible for pushing an additional 30 million people into poverty. In a competition for resources, the world’s richest 700 million people (drivers) will necessarily outcompete the world’s poorest 3 billion (those living at or near the poverty level), and exacerbate what are already dire living conditions among those subsisting on minimal diets.
All of this aside, however, the greatest offense of ethanol lies in its fundamental deceit. If the yellow brick road of the green movement is the ideal of cleaner and renewable energy sources, then ethanol is not the wizard, but the man behind the curtain.
Outside the US, the push for biofuels is causing serious damage. In Asia, peat bogs are being drained and burned to make more room for oil palm production. These efforts to create more land for biofuels are inherently carbon-intensive operations, not to mention massively destructive from an environmental perspective. As much as 98% of the Indonesian rainforest could be degraded or destroyed by 2020, much of that due to the planting of palm oil for biofuel production. The biofuel industry has, ironically, created the world’s most carbon intensive fuel, all in the name of saving the planet.
For those ardent supporters of ethanol, consider, finally, this: Each bushel of corn can yield approximately 2.8 gallons of ethanol. Each acre of land can yield approximately 150 bushels of corn. Therefore, each acre can produce approximately 420 gallons of ethanol. Adjusted for mileage concerns, that equates to roughly 315 gallons of gasoline. In 2009, the US consumed approximately 140 billion gallons of gasoline. At 315 gallons per acre, that equates to nearly 700,000 square miles of land devoted to growing corn dedicated to ethanol production. Texas covers only 270,000 square miles of land.
The Lower 48 covers about 3.2 million square miles. To satisfy this nation’s thirst for gasoline, nearly 20% of the entire country – mountains, cities, plains, and lakes – would have to be covered in corn slated for ethanol production. The numbers don’t lie – ethanol is prohibitively expensive, ill-performing, carbon-intensive, and fundamentally unsuited as a replacement for oil-derived gasoline. But ADM hopes that you – or at least your senators and representatives – won’t realize that anytime
Greg Scheurich is a professional engineer based in Fort Worth.
Friday, 18 June 2010
Pioneer Power Enters Wind Turbine Industry Through Acquisition
SustainableBusiness.com News
Pioneer Power Solutions, Inc. (OTCBB: PPSI), a manufacturer of liquid filled, encapsulated and ventilated transformers for utility, industrial and commercial applications, announced it will acquire certain assets of wind turbine maker AAER Inc. (AAER), which has been strugglig to repay debts.
Under terms of the agreement, Pioneer will acquire most of the Inventory, Capital Assets, Intangible Assets and Intellectual Property of AAER for CDN $450,000 (approximately US $431,500) in cash.
In March, Quebec-based AAER Inc. (AAE.V) announced that it and its U.S. subsidiaries, AAER USA Inc. and Wind-Smart LLC obtained court protection under the Companies' Creditors Arrangement Act (CCAA) in Canada.
Upon closing, AAER will be renamed Pioneer Wind Energy Systems, Inc. and become a subsidiary of PPSI.
Pioneer will have the ability to produce four separate wind turbines, ranging in size from 1 megawatt (MW) to 1.5 MW.
Nathan Mazurek, Chairman and CEO of Pioneer, said the new company will address smaller wind projects where orders are expected to be in range of 1-5 turbines. "Our goal is to reach an operating run rate of delivering between 50-100 turbines per year within the first three years," he said.
He added taht the wind turbine company will be able to leverage the existing sales efforts with those of PPSI and recently acquired Jefferson Electric.
Website: www.pioneerpowersolutions.com
Pioneer Power Solutions, Inc. (OTCBB: PPSI), a manufacturer of liquid filled, encapsulated and ventilated transformers for utility, industrial and commercial applications, announced it will acquire certain assets of wind turbine maker AAER Inc. (AAER), which has been strugglig to repay debts.
Under terms of the agreement, Pioneer will acquire most of the Inventory, Capital Assets, Intangible Assets and Intellectual Property of AAER for CDN $450,000 (approximately US $431,500) in cash.
In March, Quebec-based AAER Inc. (AAE.V) announced that it and its U.S. subsidiaries, AAER USA Inc. and Wind-Smart LLC obtained court protection under the Companies' Creditors Arrangement Act (CCAA) in Canada.
Upon closing, AAER will be renamed Pioneer Wind Energy Systems, Inc. and become a subsidiary of PPSI.
Pioneer will have the ability to produce four separate wind turbines, ranging in size from 1 megawatt (MW) to 1.5 MW.
Nathan Mazurek, Chairman and CEO of Pioneer, said the new company will address smaller wind projects where orders are expected to be in range of 1-5 turbines. "Our goal is to reach an operating run rate of delivering between 50-100 turbines per year within the first three years," he said.
He added taht the wind turbine company will be able to leverage the existing sales efforts with those of PPSI and recently acquired Jefferson Electric.
Website: www.pioneerpowersolutions.com
Gas power stations 'should have carbon capture'
Climate committee calls for measure in order to meet target to cut emissions by 80%
Juliette Jowit guardian.co.uk, Thursday 17 June 2010 18.59 BST
Britain will miss its legal target to cut emissions by 80% by the middle of the century unless action is taken to cut greenhouse pollution from gas-powered stations, influential government advisers warned today.
In a letter to Chris Huhne, the climate secretary, the climate change committee said the government's existing pledge to fit new coal power stations with expensive carbon capture and storage equipment should be extended to new gas generators as well. Such a move could see the UK be the first in the world to build such a plant and capitalise on a new "dash for gas".
To avoid missing carbon targets the committee said the government should change its promise to fund up to four trials of carbon capture and storage (CCS) equipment on coal stations and do "at least one" of the demonstrations with gas power.
To provide long-term incentives to the industry to develop the technology, Adair Turner, the committee chairman, also urged the Conservative-Liberal Democrat cabinet to extend a promised emissions performance standard (EPS) for coal power to the gas sector. Such standards, which regulate what power stations can emit and could be set in the energy bill later this year, would need to be zero greenhouse gas emissions from 2020, David Kennedy, the committee's chief executive, said.
Although coal is more polluting than gas per unit of energy generated, the recent fall in gas prices, new shale gas mining and mass campaigns against new coal power have stimulated a second "dash for gas". According to The Ends Report, the specialist environment news service, about 24 new gas-powered station – adding up to 29 gigawatts of power – are under construction or in the planning process, compared with two planning applications for new coal generators, and a handful of other mooted projects.
"Under business-as-usual and current market arrangements, our modelling says people will keep building new gas-fired generation beyond 2020, and that's in conflict with de-carbonisation," said Kennedy.
The letter argues that gas with CCS would be likely to be cheaper than coal stations with the equipment fitted, making it a more affordable way of producing clean electricity,
Since Norway has recently cancelled a planned trial of the gas CCS technology, Britain could also be the first country in the world to build one.
The latest advice from the climate change committee, which will make its second report to parliament at the end of this month, is likely to meet resistance from the Association of Electricity Producers, whose chief executive David Porter suggested it was crucial to test gas-power CCS before deadlines were set to introduce it, and hinted that to demand the technology too soon might push energy prices much higher than necessary. He also said that a new EPS was unnecessary for gas because all plants had to operate within limits set by the European carbon trading scheme.
"There is a long list of gas-fired projects which are planned to replace coal, oil and nuclear plant which has to close in the next decade," said Porter. "It is vitally important that the huge investment required to build these power stations is not scared off."The Carbon Capture and Storage Association welcomed the focus on gas power, but urged the government not to replace a coal demo but to add another demonstration project for gas. "We absolutely support the development of CCS for gas generation, but this cannot be at the expense of de-carbonising coal generation," said Jeff Chapman, the group's chief executive.
There was a much warmer welcome from John Sauven, executive director of the vociferous anti-coal campaign group Greenpeace: "In the last decade it was coal that posed the great threat to our CO2 emissions targets. In the coming years it will be gas that drops into the cross-hairs of campaigners and politicians determined to fight climate change. New gas-fired power stations should only be built if they, like coal, can be zero-carbon by 2030."
According to analysis by the climate change committee, the cost of fitting CCS to coal and gas plants would be considerably higher than current generation, but lower than future unabated power stations because of rising carbon trading costs to energy producers. For gas the cost per megawatt hour is currently just under £70, in future with CCS it would be a bit less than £105 while without CCS it would be £115, calculates the committee. For coal the unit cost is currently about £60, rising to £115 with CCS and £160 without CCS, it says. The scenarios assume Defra's central scenario for gas prices in 2030.
In 2008, gas supplied nearly 47% of UK electricity generation, compared to nearly 34% from coal.
Juliette Jowit guardian.co.uk, Thursday 17 June 2010 18.59 BST
Britain will miss its legal target to cut emissions by 80% by the middle of the century unless action is taken to cut greenhouse pollution from gas-powered stations, influential government advisers warned today.
In a letter to Chris Huhne, the climate secretary, the climate change committee said the government's existing pledge to fit new coal power stations with expensive carbon capture and storage equipment should be extended to new gas generators as well. Such a move could see the UK be the first in the world to build such a plant and capitalise on a new "dash for gas".
To avoid missing carbon targets the committee said the government should change its promise to fund up to four trials of carbon capture and storage (CCS) equipment on coal stations and do "at least one" of the demonstrations with gas power.
To provide long-term incentives to the industry to develop the technology, Adair Turner, the committee chairman, also urged the Conservative-Liberal Democrat cabinet to extend a promised emissions performance standard (EPS) for coal power to the gas sector. Such standards, which regulate what power stations can emit and could be set in the energy bill later this year, would need to be zero greenhouse gas emissions from 2020, David Kennedy, the committee's chief executive, said.
Although coal is more polluting than gas per unit of energy generated, the recent fall in gas prices, new shale gas mining and mass campaigns against new coal power have stimulated a second "dash for gas". According to The Ends Report, the specialist environment news service, about 24 new gas-powered station – adding up to 29 gigawatts of power – are under construction or in the planning process, compared with two planning applications for new coal generators, and a handful of other mooted projects.
"Under business-as-usual and current market arrangements, our modelling says people will keep building new gas-fired generation beyond 2020, and that's in conflict with de-carbonisation," said Kennedy.
The letter argues that gas with CCS would be likely to be cheaper than coal stations with the equipment fitted, making it a more affordable way of producing clean electricity,
Since Norway has recently cancelled a planned trial of the gas CCS technology, Britain could also be the first country in the world to build one.
The latest advice from the climate change committee, which will make its second report to parliament at the end of this month, is likely to meet resistance from the Association of Electricity Producers, whose chief executive David Porter suggested it was crucial to test gas-power CCS before deadlines were set to introduce it, and hinted that to demand the technology too soon might push energy prices much higher than necessary. He also said that a new EPS was unnecessary for gas because all plants had to operate within limits set by the European carbon trading scheme.
"There is a long list of gas-fired projects which are planned to replace coal, oil and nuclear plant which has to close in the next decade," said Porter. "It is vitally important that the huge investment required to build these power stations is not scared off."The Carbon Capture and Storage Association welcomed the focus on gas power, but urged the government not to replace a coal demo but to add another demonstration project for gas. "We absolutely support the development of CCS for gas generation, but this cannot be at the expense of de-carbonising coal generation," said Jeff Chapman, the group's chief executive.
There was a much warmer welcome from John Sauven, executive director of the vociferous anti-coal campaign group Greenpeace: "In the last decade it was coal that posed the great threat to our CO2 emissions targets. In the coming years it will be gas that drops into the cross-hairs of campaigners and politicians determined to fight climate change. New gas-fired power stations should only be built if they, like coal, can be zero-carbon by 2030."
According to analysis by the climate change committee, the cost of fitting CCS to coal and gas plants would be considerably higher than current generation, but lower than future unabated power stations because of rising carbon trading costs to energy producers. For gas the cost per megawatt hour is currently just under £70, in future with CCS it would be a bit less than £105 while without CCS it would be £115, calculates the committee. For coal the unit cost is currently about £60, rising to £115 with CCS and £160 without CCS, it says. The scenarios assume Defra's central scenario for gas prices in 2030.
In 2008, gas supplied nearly 47% of UK electricity generation, compared to nearly 34% from coal.
RTI International teams with BASF on carbon capture
Triangle Business Journal
RTI International is teaming up with BASF Corp. on a $2 million grant to develop a new way of capturing carbon dioxide from power plants and other industrial facilities.
With the U.S. Department of Energy grant, Research Triangle Park-based RTI will partner with German company BASF on making a system that is not dependent on water and uses 40 percent less energy than current emissions scrubbing systems. Dave Myers, vice president of the engineering and technology unit at RTI, said in a statement that working with BASF will help provide a path for rapid commercialization of the technology. The grant is part of the Energy Department’s stimulus funding.
RTI employs about 2,200 in the Triangle.
Read more: RTI International teams with BASF on carbon capture - Triangle Business Journal
RTI International is teaming up with BASF Corp. on a $2 million grant to develop a new way of capturing carbon dioxide from power plants and other industrial facilities.
With the U.S. Department of Energy grant, Research Triangle Park-based RTI will partner with German company BASF on making a system that is not dependent on water and uses 40 percent less energy than current emissions scrubbing systems. Dave Myers, vice president of the engineering and technology unit at RTI, said in a statement that working with BASF will help provide a path for rapid commercialization of the technology. The grant is part of the Energy Department’s stimulus funding.
RTI employs about 2,200 in the Triangle.
Read more: RTI International teams with BASF on carbon capture - Triangle Business Journal
TerraCycle: The Google of garbage?
Tom Szaky plans to turn his waste recycling company TerraCycle into a billion-dollar business
By Lucie Young
Published: 12:30PM BST 17 Jun 2010
The casts of worms fed on food waste are turned into a liquid fertiliser and sold in re-purposed soft-drinks bottles Photo: Courtesy TerraCycle
Tom Szaky wants to be the rag-and-bone man to the world, collecting the rubbish no one else wants – cigarette butts, razors, expired pills and plastic food wrappers – and turning an enormous profit by finding new uses for it.
His US-based company TerraCycle already has rubbish collecting and recycling operations in six countries and expects to launch in 11 more (including Japan, Australia and Sweden) in the next year. He launched TerraCycle in Britain last September and in Ireland this month.
Plans to 'revitalise' New York's Coney Island condemned'We’re just a $40 million company at the moment,’ he says. But he plans to become the Google of garbage. 'A billion-dollar company doesn’t seem that big… why not!’
When I first meet Szaky, 28, at the launch of TerraCycle’s pop-up store in the Port Authority bus terminal in Manhattan, he is proudly showing off some of the 200 products that carry the TerraCycle logo.
These products, made using some of the waste TerraCycle collects, include backpacks created from Capri Sun juice pouches, folders covered in coffee refill bags, and kites made out of biscuit packets. In signature TerraCycle style, no money has been spent on the store’s decor. The tables are made of salvaged doors, propped up on old fire extinguishers or the company’s new plastic rubbish bins.
TerraCycle is based in Trenton, New Jersey. 'It is the fourth most dangerous city in the US,’ Szaky, who lived there until five years ago, says. 'It has a lot of gang violence. One day I found five bulletholes in my bedroom.’
Consequently, industrial space costs next to nothing. Inside the 25,000 sq ft headquarters, which the company bought in 2004, there are 70 employees, and an odd assortment of desks and tables that would not look amiss at a jumble sale; a couple of the walls are graffiti-ed by local artists. Szaky’s press manager, Albe Zakes, who is showing me around, admits, 'It gets painfully cold here in winter. I got gloves because my hands were shaking too much to type.’
Szaky is sitting in his own windowless office on equally battered-looking furniture. He has just finished a meeting with a British tea brand that wants him to start a collection scheme for its unrecyclable plastic wrappers.
Unpaid waste collectors are the backbone of TerraCycle’s recycling programme. Any person or group can sign up on the company’s website to join a 'brigade’ and collect the used packaging of any featured brands. It is free of charge to post items to TerraCycle and for each item sent you earn 2p to go towards the charity or school of your choice. 'The number-one reason people give for joining the brigades is they don’t want these materials ending up in a landfill, and they say they want to do their bit for the planet,’ Szaky explains.
The financing of the brigades – the donations to charity, the shipping and website costs, plus a retainer to TerraCycle – is met by the companies whose products are collected (for instance Kraft, which makes one of TerraCycle’s most popular 'waste streams’, the Capri Sun juice pouches). 'It all comes out of the company’s marketing budget,’ says Szaky, who has struck deals with an impressive list of multinational corporations to sponsor brigades, including Starbucks, Kraft, Johnson & Johnson, Mars, Coca-Cola, Kellogg's and Nestlé. In the US, corporate funding for the brigades will top $12 million this year.
According to Szaky, the reason corporations are scrambling to start collection programmes is that they want to help the environment. But it is good PR, too. 'It is negative advertising for the companies if their branded goods wind up littering the streets,’ he says. Far better to have their goods turned into something new, but with their logo still prominently displayed. And there is a huge financial incentive. Chris Baker, the general manager of TerraCycle Europe, says that some of TerraCycle’s corporate partners 'have seen a rise in sales of seven-to-eight-figure-dollar values’.
Kraft was so impressed by the success of the TerraCycle programme in the US that it pushed the company to expand into Europe. 'They want us to open in a new country every three months,’ Szaky says. Last September TerraCycle opened an office employing three staff near Liverpool Street station in London. The first brands on the TerraCycle UK website asking for volunteers to join the collection brigades were the coffee makers Kenco and Tassimo, both owned by Kraft. In April they were joined by the children’s food company Ella’s Kitchen.
In the next six months, Szaky expects to begin British collection schemes for used tea packets, yogurt pots, toothpaste tubes, toothbrushes, cosmetics containers and asthma inhalers (medical waste is a new stream for Szaky). Nearly 30,000 British consumers are already sending used items to TerraCycle’s 64,000 sq ft warehouse in Rainham, Essex (a site overseen by a further three employees). 'We’ve grown faster in the UK than in any other country,’ Szaky says.
To say Szaky has always been ambitious is an understatement. Growing up in Toronto, where his family moved after leaving Hungary in 1987, by his 16th birthday he had started a website design business and several dotcom companies. His first foray into recycling was in 2001 during his first year at Princeton University in New Jersey, where he was studying psychology and economics.
Szaky’s novel business plan was to 'make a tremendous amount of money’ out of the leftovers from the Princeton canteen. The scheme involved shovelling the food slops on to a Heath-Robinson-like conveyer belt, where worms would gobble up the leftovers and turn it into worm casts, which were then liquefied to form a rich fertiliser for the gardening industry. Apart from the labour, mostly provided by the worms, and the cost of running the machine, it was a zero-cost operation. Szaky decided to sell this home-brewed plant food, Earth Plant Fuel, in re-purposed soft-drinks bottles with spray-gun tops bought from a remainder company. In the two years it took for orders from shops to start trickling in, he dropped out of college and TerraCycle was born.
TerraCycle has undergone two big shifts since those early days. The first was in 2007 when Seth Goldman, the founder of the US drinks company Honest Tea, asked Szaky if he could find a second life for his Honest Kids juice pouches, made from a combination of plastic and aluminium.
'Most flexible plastic is not recyclable, and the combination of flexible plastic and metal is a killer,’ Szaky says. In a bid to find a solution, Szaky sat up all night teaching himself to sew the empty pouches into tote bags. Goldman loved the idea and together they came up with the first corporately financed collection brigades.
In those early days, upcycling (making a new product out of an item of rubbish, and keeping its basic shape and structure without adding heat or chemicals) was TerraCycle’s mantra, and it is the focus of Szaky’s book, Revolution in a Bottle, published last year.
But TerraCycle was soon a casualty of its success. As dozens of corporations began asking Szaky to find new uses for their waste, he struggled to cope with demand. 'We lost $4.5 million in 2008,’ he says. 'We were only using post-consumer waste and upcycling products.’ Albe Zakes expands: 'To clean and sort and manipulate the post-consumer waste [the waste sent in by the collection brigades] was costing too much money.’
The company turnaround began in late 2008 after Szaky discovered a new waste stream that did not need cleaning and was far easier to manipulate. Szaky takes me for a spin in his BMW sports car (he insists he is buying an energy-efficient Tesla next year) to visit the company’s new 250,000 sq ft warehouse, down the road from its HQ (TerraCycle has 10 such rubbish depots, five in the US and five around the world). Inside are rolls and rolls of pristine packaging for crisps, sweets, coffee, pet food, biscuits and so on.
'This is pre-consumer waste,’ Szaky explains, by which he means corporate surplus. 'Between one and six per cent of most companies’ annual production is pre-consumer waste.’
When I point out to Zakes that the rolls look perfectly good, he agrees: 'There is nothing wrong with them. Often it’s just when the shift ends, the workers throw the end roll off and put a new one on.’ This kind of excess makes up the bulk of the material TerraCycle collects. Of the three billion waste units TerraCycle has received so far this year, 96 per cent is corporate waste.
The second change came in 2009, when TerraCycle stopped making any products inhouse and began to license the manufacture of its bags, kites and pencil cases to companies around the world. 'They are now made in the US, Mexico, South America and China,’ Zakes says. TerraCycle sells these companies its waste to create the products, which will carry the TerraCycle logo, and takes a 5-15 per cent cut of the sales profits. In effect, TerraCycle is lending these companies its name to promote sales. 'TerraCycle is the good housekeeping seal of approval in the world of upcycling,’ Scott Fuller, the senior vice president of product development, says.
TerraCycle is on the brink of yet another massive transition. Alongside its existing upcycling operation, it is launching into the controversial area of recycled plastics. The move was inevitable, Szaky says, because TerraCycle’s warehouses are bursting at the seams with rubbish from the collection brigades and corporate waste, and 'the demand for upcycled products can’t use all of the waste’.
In addition, each week another company approaches Szaky to start a brigade for a new waste stream. He is currently considering starting collection brigades for tampon applicators, spectacles, spectacle cases, glue tubes, marker pens, razor blades, medical waste such as expired pills and even cigarette butts. 'We want to be the recycling solution for everything that’s not recyclable today,’ Szaky says. 'But we don’t have all the answers yet,’ Fuller adds.
Currently 75 per cent of the waste coming into TerraCycle is some form of plastic, such as the baby food pouches, crisp packets and plastic bags. The company’s new solution is to shred, melt and, with the addition of chemicals, create different grades of plastic pellets that can be re-used in products such as children’s furniture and toys, and household items. The plastic pellets (which are made 'predominantly in the US and China’, Szaky says) are yet another lucrative income stream.
'It is cheaper than virgin plastic. Our polypropylene is 50 cents a pound whereas virgin plastic is 60 cents.’ Pat Conlon, TerraCycle’s senior vice president of operations and inhouse plastics expert, proudly boasts, 'We’ll move about six million pounds in weight of plastic this year. Next year it could be 30 million and the year after 100 million.’
Already big plastics product brands in the US including Rubbermaid, Oxo Good Grips and major toy companies are buying TerraCycle’s plastic. These companies will be launching 30 different products in the next 12 months, each with the TerraCycle logo on them. They include rubbish bins made out of crisp bags, chopping-boards containing ground-up glue bottles, and plates and cups for college students made of sweet wrappers.
For the environmental scientist Frederick vom Saal, the professor of biology at the University of Missouri and a contributor to Time magazine’s recent cover story 'The perils of plastic’, a significant reduction in the need for new plastics is a great idea.
'Things are being thrown into the landfill willy-nilly that are leaching toxins into the aquifers and oceans. We are turning the world into a giant plastics cesspool.’ But recycling plastics isn’t necessarily the solution. 'We know from the literature that recycled products are less stable and inferior,’ vom Saal says, and he lists some of the known adverse health effects that have arisen from chemicals that leach out of plastics. 'They include many of the diseases we’ve seen an increase in since the Second World War – heart disease, obesity, diabetes, asthma, allergies.’
When I repeat these comments to Szaky, he surprisingly agrees: 'He is absolutely right. There is no debate from my end. But saying it would be a better place without plastics is a hard one because plastics provide so many improvements in life. The perfect solution would be that we all stop buying anything, but that’s not reality. Within reality what we are doing is the best solution I know of so far.’
I had queried the safety of Terracycle’s plastics with Conlon, who had assured me their products have passed the American Consumer Product Safety Improvement Act (CPSIA) 2009 standard and all the current regulations. To which vom Saal responds, 'The government standards are a joke. The CPSIA have never regulated anything.’
Szaky is amused to hear vom Saal’s comments. 'I would tend to agree,’ he says. 'Could it be better? Absolutely. I really hope that someone who has the ability to effect regulation reads this article and does something about it.’
But in the meantime, Szaky is going to continue expanding into recycled plastics. Life is good for him. He estimates his net worth at $5 million; he has taken up gliding and bought a modest house in nearby Princeton. The only blot on this otherwise perfect landscape is that his wife, Soyeon Lee, a classical pianist to whom he dedicated his book, recently left him 'and took all the furniture’. So he is reluctantly having to start shopping again. 'I try to buy as little as possible. I don’t want to go to Ikea and throw it out after three years, so I buy expensive durable products.’ He has worn the same pair of jeans for nine months and his favourite cotton blazer is 10 years old. And although the company is making a profit – a projected $3.2 million this year – the only minor improvements Szaky has planned for the tatty-looking Terracycle headquarters are solar panels. 'I am green when it is economical for me,’ he says. 'The solar panels will save a bunch of cash.’
Szaky thinks the world would be a greener place if more people adopted his own ethos of buying as little as possible. He puts the responsibility for the growing mound of plastic waste (America produced 28 million tons in 2005; five years later that level is probably over 30 million tons) squarely at the consumers’ feet.
'Consumers can say they are the innocent bystanders, but frankly you are still pulling the trigger. If you don’t want this stuff, don’t buy it and the corporations will change.’ Of course, he is banking on that not happening any time soon. Minutes later, he is musing about where to expand next. 'India and China would be great. We will probably leave Africa to the end. There aren’t so many big brands there yet.’
By Lucie Young
Published: 12:30PM BST 17 Jun 2010
The casts of worms fed on food waste are turned into a liquid fertiliser and sold in re-purposed soft-drinks bottles Photo: Courtesy TerraCycle
Tom Szaky wants to be the rag-and-bone man to the world, collecting the rubbish no one else wants – cigarette butts, razors, expired pills and plastic food wrappers – and turning an enormous profit by finding new uses for it.
His US-based company TerraCycle already has rubbish collecting and recycling operations in six countries and expects to launch in 11 more (including Japan, Australia and Sweden) in the next year. He launched TerraCycle in Britain last September and in Ireland this month.
Plans to 'revitalise' New York's Coney Island condemned'We’re just a $40 million company at the moment,’ he says. But he plans to become the Google of garbage. 'A billion-dollar company doesn’t seem that big… why not!’
When I first meet Szaky, 28, at the launch of TerraCycle’s pop-up store in the Port Authority bus terminal in Manhattan, he is proudly showing off some of the 200 products that carry the TerraCycle logo.
These products, made using some of the waste TerraCycle collects, include backpacks created from Capri Sun juice pouches, folders covered in coffee refill bags, and kites made out of biscuit packets. In signature TerraCycle style, no money has been spent on the store’s decor. The tables are made of salvaged doors, propped up on old fire extinguishers or the company’s new plastic rubbish bins.
TerraCycle is based in Trenton, New Jersey. 'It is the fourth most dangerous city in the US,’ Szaky, who lived there until five years ago, says. 'It has a lot of gang violence. One day I found five bulletholes in my bedroom.’
Consequently, industrial space costs next to nothing. Inside the 25,000 sq ft headquarters, which the company bought in 2004, there are 70 employees, and an odd assortment of desks and tables that would not look amiss at a jumble sale; a couple of the walls are graffiti-ed by local artists. Szaky’s press manager, Albe Zakes, who is showing me around, admits, 'It gets painfully cold here in winter. I got gloves because my hands were shaking too much to type.’
Szaky is sitting in his own windowless office on equally battered-looking furniture. He has just finished a meeting with a British tea brand that wants him to start a collection scheme for its unrecyclable plastic wrappers.
Unpaid waste collectors are the backbone of TerraCycle’s recycling programme. Any person or group can sign up on the company’s website to join a 'brigade’ and collect the used packaging of any featured brands. It is free of charge to post items to TerraCycle and for each item sent you earn 2p to go towards the charity or school of your choice. 'The number-one reason people give for joining the brigades is they don’t want these materials ending up in a landfill, and they say they want to do their bit for the planet,’ Szaky explains.
The financing of the brigades – the donations to charity, the shipping and website costs, plus a retainer to TerraCycle – is met by the companies whose products are collected (for instance Kraft, which makes one of TerraCycle’s most popular 'waste streams’, the Capri Sun juice pouches). 'It all comes out of the company’s marketing budget,’ says Szaky, who has struck deals with an impressive list of multinational corporations to sponsor brigades, including Starbucks, Kraft, Johnson & Johnson, Mars, Coca-Cola, Kellogg's and Nestlé. In the US, corporate funding for the brigades will top $12 million this year.
According to Szaky, the reason corporations are scrambling to start collection programmes is that they want to help the environment. But it is good PR, too. 'It is negative advertising for the companies if their branded goods wind up littering the streets,’ he says. Far better to have their goods turned into something new, but with their logo still prominently displayed. And there is a huge financial incentive. Chris Baker, the general manager of TerraCycle Europe, says that some of TerraCycle’s corporate partners 'have seen a rise in sales of seven-to-eight-figure-dollar values’.
Kraft was so impressed by the success of the TerraCycle programme in the US that it pushed the company to expand into Europe. 'They want us to open in a new country every three months,’ Szaky says. Last September TerraCycle opened an office employing three staff near Liverpool Street station in London. The first brands on the TerraCycle UK website asking for volunteers to join the collection brigades were the coffee makers Kenco and Tassimo, both owned by Kraft. In April they were joined by the children’s food company Ella’s Kitchen.
In the next six months, Szaky expects to begin British collection schemes for used tea packets, yogurt pots, toothpaste tubes, toothbrushes, cosmetics containers and asthma inhalers (medical waste is a new stream for Szaky). Nearly 30,000 British consumers are already sending used items to TerraCycle’s 64,000 sq ft warehouse in Rainham, Essex (a site overseen by a further three employees). 'We’ve grown faster in the UK than in any other country,’ Szaky says.
To say Szaky has always been ambitious is an understatement. Growing up in Toronto, where his family moved after leaving Hungary in 1987, by his 16th birthday he had started a website design business and several dotcom companies. His first foray into recycling was in 2001 during his first year at Princeton University in New Jersey, where he was studying psychology and economics.
Szaky’s novel business plan was to 'make a tremendous amount of money’ out of the leftovers from the Princeton canteen. The scheme involved shovelling the food slops on to a Heath-Robinson-like conveyer belt, where worms would gobble up the leftovers and turn it into worm casts, which were then liquefied to form a rich fertiliser for the gardening industry. Apart from the labour, mostly provided by the worms, and the cost of running the machine, it was a zero-cost operation. Szaky decided to sell this home-brewed plant food, Earth Plant Fuel, in re-purposed soft-drinks bottles with spray-gun tops bought from a remainder company. In the two years it took for orders from shops to start trickling in, he dropped out of college and TerraCycle was born.
TerraCycle has undergone two big shifts since those early days. The first was in 2007 when Seth Goldman, the founder of the US drinks company Honest Tea, asked Szaky if he could find a second life for his Honest Kids juice pouches, made from a combination of plastic and aluminium.
'Most flexible plastic is not recyclable, and the combination of flexible plastic and metal is a killer,’ Szaky says. In a bid to find a solution, Szaky sat up all night teaching himself to sew the empty pouches into tote bags. Goldman loved the idea and together they came up with the first corporately financed collection brigades.
In those early days, upcycling (making a new product out of an item of rubbish, and keeping its basic shape and structure without adding heat or chemicals) was TerraCycle’s mantra, and it is the focus of Szaky’s book, Revolution in a Bottle, published last year.
But TerraCycle was soon a casualty of its success. As dozens of corporations began asking Szaky to find new uses for their waste, he struggled to cope with demand. 'We lost $4.5 million in 2008,’ he says. 'We were only using post-consumer waste and upcycling products.’ Albe Zakes expands: 'To clean and sort and manipulate the post-consumer waste [the waste sent in by the collection brigades] was costing too much money.’
The company turnaround began in late 2008 after Szaky discovered a new waste stream that did not need cleaning and was far easier to manipulate. Szaky takes me for a spin in his BMW sports car (he insists he is buying an energy-efficient Tesla next year) to visit the company’s new 250,000 sq ft warehouse, down the road from its HQ (TerraCycle has 10 such rubbish depots, five in the US and five around the world). Inside are rolls and rolls of pristine packaging for crisps, sweets, coffee, pet food, biscuits and so on.
'This is pre-consumer waste,’ Szaky explains, by which he means corporate surplus. 'Between one and six per cent of most companies’ annual production is pre-consumer waste.’
When I point out to Zakes that the rolls look perfectly good, he agrees: 'There is nothing wrong with them. Often it’s just when the shift ends, the workers throw the end roll off and put a new one on.’ This kind of excess makes up the bulk of the material TerraCycle collects. Of the three billion waste units TerraCycle has received so far this year, 96 per cent is corporate waste.
The second change came in 2009, when TerraCycle stopped making any products inhouse and began to license the manufacture of its bags, kites and pencil cases to companies around the world. 'They are now made in the US, Mexico, South America and China,’ Zakes says. TerraCycle sells these companies its waste to create the products, which will carry the TerraCycle logo, and takes a 5-15 per cent cut of the sales profits. In effect, TerraCycle is lending these companies its name to promote sales. 'TerraCycle is the good housekeeping seal of approval in the world of upcycling,’ Scott Fuller, the senior vice president of product development, says.
TerraCycle is on the brink of yet another massive transition. Alongside its existing upcycling operation, it is launching into the controversial area of recycled plastics. The move was inevitable, Szaky says, because TerraCycle’s warehouses are bursting at the seams with rubbish from the collection brigades and corporate waste, and 'the demand for upcycled products can’t use all of the waste’.
In addition, each week another company approaches Szaky to start a brigade for a new waste stream. He is currently considering starting collection brigades for tampon applicators, spectacles, spectacle cases, glue tubes, marker pens, razor blades, medical waste such as expired pills and even cigarette butts. 'We want to be the recycling solution for everything that’s not recyclable today,’ Szaky says. 'But we don’t have all the answers yet,’ Fuller adds.
Currently 75 per cent of the waste coming into TerraCycle is some form of plastic, such as the baby food pouches, crisp packets and plastic bags. The company’s new solution is to shred, melt and, with the addition of chemicals, create different grades of plastic pellets that can be re-used in products such as children’s furniture and toys, and household items. The plastic pellets (which are made 'predominantly in the US and China’, Szaky says) are yet another lucrative income stream.
'It is cheaper than virgin plastic. Our polypropylene is 50 cents a pound whereas virgin plastic is 60 cents.’ Pat Conlon, TerraCycle’s senior vice president of operations and inhouse plastics expert, proudly boasts, 'We’ll move about six million pounds in weight of plastic this year. Next year it could be 30 million and the year after 100 million.’
Already big plastics product brands in the US including Rubbermaid, Oxo Good Grips and major toy companies are buying TerraCycle’s plastic. These companies will be launching 30 different products in the next 12 months, each with the TerraCycle logo on them. They include rubbish bins made out of crisp bags, chopping-boards containing ground-up glue bottles, and plates and cups for college students made of sweet wrappers.
For the environmental scientist Frederick vom Saal, the professor of biology at the University of Missouri and a contributor to Time magazine’s recent cover story 'The perils of plastic’, a significant reduction in the need for new plastics is a great idea.
'Things are being thrown into the landfill willy-nilly that are leaching toxins into the aquifers and oceans. We are turning the world into a giant plastics cesspool.’ But recycling plastics isn’t necessarily the solution. 'We know from the literature that recycled products are less stable and inferior,’ vom Saal says, and he lists some of the known adverse health effects that have arisen from chemicals that leach out of plastics. 'They include many of the diseases we’ve seen an increase in since the Second World War – heart disease, obesity, diabetes, asthma, allergies.’
When I repeat these comments to Szaky, he surprisingly agrees: 'He is absolutely right. There is no debate from my end. But saying it would be a better place without plastics is a hard one because plastics provide so many improvements in life. The perfect solution would be that we all stop buying anything, but that’s not reality. Within reality what we are doing is the best solution I know of so far.’
I had queried the safety of Terracycle’s plastics with Conlon, who had assured me their products have passed the American Consumer Product Safety Improvement Act (CPSIA) 2009 standard and all the current regulations. To which vom Saal responds, 'The government standards are a joke. The CPSIA have never regulated anything.’
Szaky is amused to hear vom Saal’s comments. 'I would tend to agree,’ he says. 'Could it be better? Absolutely. I really hope that someone who has the ability to effect regulation reads this article and does something about it.’
But in the meantime, Szaky is going to continue expanding into recycled plastics. Life is good for him. He estimates his net worth at $5 million; he has taken up gliding and bought a modest house in nearby Princeton. The only blot on this otherwise perfect landscape is that his wife, Soyeon Lee, a classical pianist to whom he dedicated his book, recently left him 'and took all the furniture’. So he is reluctantly having to start shopping again. 'I try to buy as little as possible. I don’t want to go to Ikea and throw it out after three years, so I buy expensive durable products.’ He has worn the same pair of jeans for nine months and his favourite cotton blazer is 10 years old. And although the company is making a profit – a projected $3.2 million this year – the only minor improvements Szaky has planned for the tatty-looking Terracycle headquarters are solar panels. 'I am green when it is economical for me,’ he says. 'The solar panels will save a bunch of cash.’
Szaky thinks the world would be a greener place if more people adopted his own ethos of buying as little as possible. He puts the responsibility for the growing mound of plastic waste (America produced 28 million tons in 2005; five years later that level is probably over 30 million tons) squarely at the consumers’ feet.
'Consumers can say they are the innocent bystanders, but frankly you are still pulling the trigger. If you don’t want this stuff, don’t buy it and the corporations will change.’ Of course, he is banking on that not happening any time soon. Minutes later, he is musing about where to expand next. 'India and China would be great. We will probably leave Africa to the end. There aren’t so many big brands there yet.’
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