Sarasota County Innovative Grant Project #1. Carpet Recycling

Transcription

1 Sarasota County Innovative Grant Project #1 Carpet Recycling Final Report to the Florida Department of Environmental Protection February 18, 2000 Submitted by: Sarasota County Government Prepared by: R. W. Beck, Inc.

2 Cover photograph courtesy of R. W. Beck, Inc. This report has been prepared for the use of the Florida Department of Environmental Protection ( client ). The conclusions, observations, and recommendations contained herein constitute the opinions of R. W. Beck, Inc., ( R. W. Beck ). To the extent that statements, information, and opinions provided by the client or others have been used in the preparation of this report, R. W. Beck has relied upon the same to be accurate, and for which no assurances are intended and no representations or warranties are made. R. W. Beck makes no certification and gives no assurances except as explicitly set forth in this report. Printed on recycled paper (25 percent post-consumer content).

3 TABLE OF CONTENTS TABLE OF CONTENTS...I EXECUTIVE SUMMARY...1 UNDERSTANDING CARPET...1 MARKETS...1 SARASOTA COUNTY PILOT COLLECTION PROGRAMS...2 LESSONS LEARNED...3 CONCLUSIONS...3 RECOMMENDATIONS...4 KEEP THE PROGRAM SIMPLE...4 PROVIDE INCENTIVES...4 PIGGYBACK WITH OTHER OPERATIONS...5 TAKE A FLEXIBLE PROGRAM APPROACH...5 SECTION 1 - INTRODUCTION...1 PROJECT GOALS AND OBJECTIVES...2 REPORT ORGANIZATION...2 WHAT IS CARPET?...3 BROADLOOM CARPET...3 OTHER CARPET TYPES...4 TRENDS IN CARPET MANUFACTURE...5 SOURCES OF USED CARPET...5 SECTION 2 - MARKETING RECOVERED CARPET...1 MARKET SUMMARY...1 EVERGREEN NYLON RECYCLING LLC...2 DUPONT...3 C'BOARD...3 WELLMAN...3 COLLINS & AIKMAN (C&A)...4 BASF...4 MILLIKEN & COMPANY...4 INTERFACE FLOORING SYSTEMS...4 UNITED RECYCLING, INC. (URI)...4 ADVANCED TEXTILE RECYCLERS (ATR)...4 MARKET ANALYSIS...5 IMPACT OF THE EVERGREEN NYLON RECYCLING PLANT ON MARKET DEMAND...5 IMPACT OF THE EVERGREEN NYLON RECYCLING PLANT ON MARKET PRICING...7 IN-STATE MARKET ALTERNATIVES FOR SARASOTA COUNTY...8 W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page i

4 Table of Contents SECTION 3 - CARPET RECYCLING PROGRAM DESIGN...1 WASTE FLOW ISSUES THAT AFFECT RECYCLING PROGRAM DESIGN...1 STEPS TAKEN IN SELECTING CARPET RECYCLING PROGRAM OPTIONS...3 IDENTIFY STAKEHOLDERS...3 MAP CARPET FLOW PATHS...4 EXAMINE OTHER CARPET RECOVERY PROGRAMS...9 CARPET WASTE COMPOSITION STUDY...11 IDENTIFY AND REVIEW RECOVERY PROGRAM OPTIONS...14 CONDUCT A PRO FORMA ANALYSIS OF OPTIONS...18 RECOVERY OPTIONS SELECTED FOR IMPLEMENTATION...19 SECTION 4 - PILOT PROGRAM IMPLEMENTATION AND RESULTS...1 MRF DROP-OFF...2 OVERVIEW...2 FEES CHARGED TO PROJECT PARTICIPANTS...3 EDUCATION PROGRAM...3 OPERATION...3 PILOT PROGRAM RESULTS...4 PILOT PROGRAM ECONOMICS...6 CONCLUSIONS...9 PAD RECYCLER DROP-OFF... ERROR! BOOKMARK NOT DEFINED. OVERVIEW...11 EDUCATION PROGRAM...11 OPERATION...11 PILOT PROGRAM RESULTS...12 PILOT PROGRAM ECONOMICS...12 CONSTRUCTION & DEMOLITION DEBRIS RECYCLER RECOVERY...15 OVERVIEW...15 FEES CHARGED TO PROJECT PARTICIPANTS...15 OPERATION...16 PILOT PROGRAM RESULTS...16 PILOT PROGRAM ECONOMICS...17 CONCLUSIONS...18 SITE SORT...19 OVERVIEW...19 FEES CHARGED TO PROJECT PARTICIPANTS...20 EDUCATION PROGRAM...20 OPERATION...20 PILOT PROGRAM RESULTS...21 PILOT PROGRAM ECONOMICS...23 CONCLUSIONS...24 Page ii R. W. Beck, Inc. W:\005501\032105\REPORT\REPORT MASTER.DOC

5 Table of Contents SECTION 5 - COMPARISON OF RESULTS AND PROGRAM POTENTIAL...1 COST-SAVINGS COMPARISON...1 OVERALL PROGRAM EFFECTIVENESS COMPARISON...2 FACTORS CHALLENGING CARPET RECOVERY IN SARASOTA COUNTY...3 LACK OF N66 MARKETS...4 LOWER NYLON 6 RECOVERY AS A PERCENT OF TOTAL CARPET AND CARPET STORE WASTE...5 LACK OF NECESSARY MATERIAL VOLUMES...5 SECTION 6 - CONCLUSIONS AND RECOMMENDATIONS...1 CONCLUSIONS...1 RECOMMENDATIONS...1 KEEP THE PROGRAM SIMPLE...2 PROVIDE INCENTIVES...2 PIGGYBACK WITH OTHER OPERATIONS...2 TAKE A FLEXIBLE PROGRAM APPROACH...2 APPENDIX A - MEETING THE OBJECTIVES OF THE INNOVATIVE GRANT PROGRAM...1 EQUIPMENT AND SERVICES UTILIZED...1 ACKNOWLEDGEMENTS...1 INTERGOVERNMENTAL COOPERATION...2 ADVANCED RECYCLING TECHNOLOGY...2 DETECTOR TECHNOLOGY...3 EVALUATION OF THE PORTABLE SPECTROSCOPY AS AN ADVANCED TECHNOLOGY...4 DEPOLYMERIZATION TECHNOLOGY...5 PRESENTATION OF PROGRAM RESULTS...6 APPENDIX B - MARKET DEVELOPMENT OPPORTUNITIES...1 RECYCLED RESIN PRODUCTION...3 DEPOLYMERIZATION...3 MECHANICAL RECLAMATION AND PURIFICATION...4 WHOLE CARPET REPROCESSING...4 INDIVIDUALIZED FIBER PRODUCTION...5 SHREDDED CARPET, LESS THAN ABSORBENTS AND ANIMAL BEDDING...7 SOUND DEADENING APPLICATIONS...7 ROAD STABILIZER...7 SHREDDED CARPET, LESS THAN REUSE...8 APPENDIX C - FACTORS THAT AFFECT RECOVERED CARPET MARKET PRICES AND DEMAND...1 APPENDIX D - EDUCATIONAL MATERIALS...1 W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page iii

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7 EXECUTIVE SUMMARY Carpet and rugs compose 1.1 percent of generated municipal solid waste in the United States, or about 2 to 3 million tons per year. 1 In Florida, carpet and rugs are estimated to account for 275,000 tons of the waste stream annually. Sarasota County, Florida, typifies communities interested in carpet recycling. Although the County manages an aggressive recycling program that has achieved a 54 percent solid waste recycling rate, it continues to "push the envelope" by targeting additional materials, such as carpet, for diversion. Because the Florida Department of Environmental Protection had a common interest in carpet recycling, it provided Innovative Grant funding for a project to evaluate the cost and effectiveness of several pilot collection and processing options. The consulting firm of R. W. Beck, Inc. was selected by Sarasota County (the County ) to manage the project. UNDERSTANDING CARPET Carpet is a composite product made from face fibers that are bonded to a backing material. Manufacturers make different brands of carpet from different face fibers, which makes carpet recycling programs more challenging because most carpet recyclers only accept carpet made from a particular type of face fiber. The most common face fibers (and their respective percentage of the carpet market) are: nylon 66 (40 percent), nylon 6 (30 percent), polypropylene Olefin (15 percent), polyester PET (10 percent), and other (such as wool) (5 percent). MARKETS Carpet recycling is in its infancy in the United States. The carpet recycling industry is driven primarily by certain resin producers seeking a low cost feedstock material and by certain large carpet manufacturers using carpet recycling as a promotional tool to increase their carpet sales. Recycling programs offered by carpet manufacturers are typically only available to large commercial and institutional establishments that utilize a competitive contracting approach for replacing their carpet. Evergreen Nylon Recycling LLC (Augusta, Georgia) is the largest market for used carpet. However, it only accepts carpet made of nylon 6 face fibers. Evergreen can recycle 200 million pounds per year of nylon 6 carpet, approximately 20 percent of all used nylon 6 carpet generated in the United States. Evergreen is continuing to set up a network of suppliers of recovered carpet to meet its demand. Markets for other carpet types, however, are meeting their material needs from existing suppliers at this time, and are not purchasing material from new suppliers. This has created a market imbalance for recovered carpet. 1 Based on national data compiled for the U. S. Environmental Protection Agency for W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page ES-1

8 Executive Summary SARASOTA COUNTY PILOT COLLECTION PROGRAMS Four collection and processing options were pilot tested in Sarasota County: C&D Recycler Recovery; MRF Drop-Off; Site Sort; and Pad Recycler Drop-Off. The C&D Recycler Recovery program diverted roll-off loads of waste from retail carpet stores to a construction and demolition debris (C&D) recycler, whose tip fee was less than Sarasota County's landfill tip fee. Nylon 6 carpet, polyurethane underlay pad, and processible C&D materials (e.g., pallets, ceramic tile, and wood) were all recycled. This option achieved a high level of diversion because it recycled more than just carpet. The program achieved a savings compared to disposal of $435 per retail carpet store per month. The MRF Drop-Off program accepted all types of carpet, underlay pad, and all other carpet installation waste at a materials recovery facility (MRF). The MRF did not charge or pay for any carpet or related material. This method provided a financial incentive of avoided disposal costs to the participating retail stores. The biggest drawback of this option was the lack of incentive for the installers, who are typically independent contractors to the retail stores, to deliver materials to the drop-off location. Unless the stores either required them to deliver their waste, or compensated them for their additional time, most installers did not participate. The MRF Drop-Off Processor program achieved approximately ten percent participation by installers. The program achieved a savings compared to disposal of $526 (before compensating installers) per retail carpet store per month. The Site Sort Collection program operated a collection route among retail carpet stores. Twice per week a recycling collection crew stopped at each participating store and removed only nylon 6 carpet. This option achieved a high level of diversion, although the cost of diversion was high (due to transportation costs and inefficiencies discovered in the collection procedure). The program achieved savings of $163 per retail carpet store per month. The Pad Recycler Drop-Off program included a drop-off site that paid a scrap value for polyurethane underlay pad and accepted nylon 6 carpet at no value. This option had two drawbacks: (1) it was less conveniently located compared to the MRF drop-off site location; and (2) installers still needed to dispose of unmarketable carpet and other installation waste. The primary benefit of this option is that it provided a financial incentive to installers (who recovered marketable pad), and the stores (who avoided nylon 6 carpet disposal fees). The program achieved savings of $130 per retail carpet store per month. An additional option was investigated but not pilot-tested because of unfavorable economics compared to the other pilot options. This additional option would have required carpet to be source-separated and placed into a recycling roll-off container at the store. The carpet would then have been collected and delivered to a central processing facility for sorting. A desk-top analysis revealed that the economics for this option were not favorable compared to the other options discussed above. Page ES-2 R. W. Beck, Inc. W:\005501\032105\REPORT\REPORT MASTER.DOC

9 LESSONS LEARNED Executive Summary Because viable markets were only available for nylon 6 face fiber during this study, only 30 percent of the total used carpet waste stream could be targeted. As a result, it soon became apparent that the lack of markets for the remaining 70 percent made the economics of a carpet recycling program challenging. Furthermore, not enough carpet was collected in Sarasota County to generate significant revenues for most recycling businesses. Successful programs that are operated elsewhere had one or more of the following elements in common: The program operator "got in on the ground floor" and could market at least some nylon 66 carpet to existing markets; The program collected and processed polyurethane underlay pad, and/or other marketable materials; The program operator charged a tipping fee or a recycling service fee; The program operator received some form of government recycling funding, either directly or indirectly (such as reduced residue disposal costs). Other strategies that help to maximize diversion while minimizing costs included targeting only the larger retail generators (including home improvement stores, such as Home Depot and Sears, which also sell and install large amounts of carpet) and targeting commercial contract installers. CONCLUSIONS The following conclusions resulted from the performance of this project: Recycling post-consumer carpet is challenging based on current market conditions. Certain of the options analyzed as part of this project showed promise even though markets are lacking for up to 70 percent of waste carpet. The lack of a consistent viable market for nylon 66 carpet adversely affected the economic results of the program. Had a market been available for nylon 66 carpet, the financial results of the options analyzed would have been significantly better. Participation from carpet retailers and their installers is critical to the success of certain carpet recycling programs, particularly where carpeting must be delivered to a drop-off location. The ability to convince carpet stores to participate in a post-consumer carpet recycling program is heavily influenced by program economics (i.e., financial benefit to the retailer and their installers). However, concern for the environment was also sited by several store owners as their impetus for participating in the program. Local conditions (including local disposal practices; tipping fees; waste container rental, pull, and service fees; labor cost; existing recycling programs for polyurethane pad; and community size) are key factors in determining the success or failure of a carpet recycling program. W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page ES-3

10 Executive Summary Sorting of mixed carpet store waste at a C&D processing facility capable of recovering materials in addition to carpet (e.g., wood, ceramics, corrugated cardboard, metals) can be a cost effective method for recovering carpet with minimal disruption to waste handling activities at the retailer. RECOMMENDATIONS Although most of the lessons learned in Sarasota County apply to other communities as well, each community is unique, and what works in one community may not apply to another. Conditions vary between locations. Therefore, it is recommended that the feasibility of carpet recycling be evaluated on a case-by-case basis. Potential carpet recyclers need to research and consider other local factors that may or may not be favorable to carpet recycling cost-effectiveness. Four primary recommendations were derived from the research conducted as a result of this grant project: Keep the program simple; Provide incentives; Piggyback with other operations; and Take a flexible program approach. These recommendations are discussed as follows. KEEP THE PROGRAM SIMPLE The first principle is to keep the program simple for participants to achieve greatest participation. Generators (carpet stores and installers) are more open to programs that do not require training or implementing new processes. As the hassle factor increases, participation will decrease. Wherever possible, the program should use existing recycling infrastructure and recycling methods already in place. PROVIDE INCENTIVES The next principle is to provide incentives for all participants. This involves allocating revenues/benefits fairly among all the stakeholders. When a program benefits one stakeholder at another s expense, the program s success is likely to falter without a reallocation of the benefits resulting from the program (e.g., disposal fee savings). The processor must be compensated as well as the generator. If installers have a role in the recovery effort (by delivering the carpet to a drop-off for example), they must be compensated as well. Generally, a program that diverts significant quantities of carpet will result in significant savings to the carpet store generator. Thus, the savings on tip fees and hauling charges can be shared as recycling fees to processors or incentives to installers. Page ES-4 R. W. Beck, Inc. W:\005501\032105\REPORT\REPORT MASTER.DOC

11 Executive Summary PIGGYBACK WITH OTHER OPERATIONS The third principle is to piggyback with other operations to capitalize on existing fixed overhead expenses that are already covered. A carpet program has a greater likelihood of success and profitability if co-located with or operated as a sideline at a polyurethane pad buy-back shop, a MRF, or a C&D recycler than if operated as a stand-alone business. By piggybacking the cost of labor, land, buildings, equipment, and overhead is shared in part by other activities. TAKE A FLEXIBLE PROGRAM APPROACH The fourth principle is to take a flexible program approach in designing a program. Local conditions will greatly influence the type of program that is appropriate for an individual community. Program operators must carefully evaluate the resources available before establishing a program. Carpet recycling is in its infancy and flexible programs will be able to incorporate best management practices for operating a carpet recycling program as they continue to emerge. The lessons learned from this project should be factored into any startup carpet recovery program rather than reinventing the wheel. W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page ES-5

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13 SECTION 1 - INTRODUCTION According to the Florida Department of Environmental Protection ( FDEP ), 50 percent of the State s waste is commercially generated. Therefore, Florida counties must focus on programs beyond residential curbside programs to improve recycling rates and divert items not traditionally recycled. Carpet waste, which is typically disposed in the commercial waste stream, has not been targeted for recovery in Florida communities. The limited attempts to recycle carpet have been met with significant operational challenges. Sarasota County, Florida, typifies communities interested in the potential of carpet recycling. Although the County manages an aggressive recycling program that has achieved a 54 percent solid waste recycling rate, it continues to "push the envelope" by targeting additional materials, such as carpet, for diversion. Because the FDEP had a common interest in carpet recycling, it provided Innovative Recycling Grant funding for this project to evaluate the cost and effectiveness of several pilot collection and processing options. The consulting firm of R. W. Beck, Inc. was selected by the County to manage the project. This report summarizes the lessons learned in Sarasota County as a result of the project and addresses barriers to carpet recycling and elements of innovation that can lead to increased carpet recycling in the State. The United States Environmental Protection Agency reports that carpet and rugs compose approximately 1.1 percent of generated municipal solid waste ( MSW ), or the equivalent of 275,000 tons of Florida's waste stream annually. As a point of comparison, the types of plastics containers typically targeted by community recycling programs for recycling (beverage and detergent bottles and jugs) compose nearly the same amount of the waste stream (1.0 percent of generated municipal solid waste). In spite of its availability in the waste stream, less than 1 percent of post-consumer carpet and rugs was recycled nationally in 1998 compared to 25 percent of plastic beverage and detergent bottles and jugs recycled. Two main barriers have hindered carpet recycling in the past: (1) the variety of materials used in manufacturing carpet; and (2) limitations of sorting and reclaiming technologies. Recent technological developments now allow carpet to be sorted and reclaimed on a wider scale. For example, an $80 million joint venture facility Evergreen Nylon Recycling LLC has been constructed in Augusta, GA to recycle large volumes of post-consumer carpet (up to 200 million pounds of used carpet annually). This new market is a significant driver in the collection of used carpet for recycling and has prompted governmental interest in fostering recovery programs for carpet. W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page 1-1

14 Section 1- Introduction PROJECT GOALS AND OBJECTIVES The stated goal of the Sarasota Carpet Recycling Project was to develop a self sustaining carpet recycling program in Sarasota County that could ultimately be adapted to other parts of the State and beyond. The approach used to achieve this overarching goal consisted of four primary tasks as follows: Perform an evaluation of markets available to accept and recycle waste carpet collected as a result of the project; Identify, evaluate, and short list alternative carpet collection and recovery options for nylon 6 and nylon 66; Implement the preferred collection and recovery option(s); and Identify market development opportunities for the 30 percent of carpeting assumed to be unmarketable. The following describes the results of the project as well as conclusions and recommendations that should be considered by other communities that are considering the development of a carpet recycling program. REPORT ORGANIZATION This report contains the following sections: Section 1 Introduction. Presents the project goals and objectives and provides a basic understanding of carpeting and its properties. This section also provides a brief discussion of where waste carpet is typically generated. Section 2 Marketing Recovered Carpet. Describes in detail the current market opportunities for recovered carpet and suggests new markets to be explored. Section 3 Carpet Recycling Program Design. Describes the process and results of preimplementation research and stakeholder feedback. The section maps out carpet flows from creation, through use, into recycling, and back into use and presents the results of carpet waste characterization conducted for this project. Section 4 Pilot Program Implementation and Results. Describes the four recycling program options pilot-tested as part of this project. Section 5 Comparison of Results and Program Potential. Compares results of the four recycling program options pilot tested as part of this project and evaluates their potential for long-term implementation, including barriers that must be overcome. Section 6 Conclusions and Recommendations. Presents the conclusions from the study results and makes recommendations for future programs. Page 1-2 R. W. Beck, Inc. W:\005501\032105\REPORT\REPORT MASTER.DOC

15 WHAT IS CARPET? Section 1- Introduction Carpet is very different from most other commonly recycled products. To start with, carpet is a durable product, which is made to last for many years. The average life of a residential carpet is 12 years. The life of a commercial carpet can vary a great deal depending on the market segment, but is roughly 8 years. This means that the carpet recycled today was sold about a decade ago. BROADLOOM CARPET Carpet is also different because it is a composite product made from several materials that are integrated to resist wear and mechanical degradation. Broadloom carpet, the type most widely used in both homes and businesses, has a structure that includes 1 : Visible face fiber, which accounts for approximately 46 percent of the carpet weight; Backing material (made of woven polypropylene "olefin" fibers) that the face fibers are woven into, which accounts for approximately 10 percent of the carpet weight; and Mineral-filled latex "glue" that stiffens the backing and holds the whole product together. This component accounts for the remaining 44 percent of the carpet weight. The face fiber itself can be made from several different materials, and one manufacturer may make several different brands of carpet from different face fibers. This diversity in construction makes carpet recycling challenging because most end-markets for postconsumer carpet only accept carpet made from a particular type of face fiber. N y l o n % Source: Figure 1-1 Waste Carpet Generated in 1998 O t h e r 5 % P E T 1 0 % N y l o n % O l e f i n 1 5 % R. W. Beck estimate derived from carpet sales data. There are five basic types of carpet face fibers: nylon 6; nylon 66; olefin (polypropylene); polyester; and other materials (such as acrylic or wool). The Carpet and Rug Institute reports that approximately 97 percent of all carpet is manufactured from synthetic fibers. Figure 1-1, Waste Carpet Generated in 1998, shows the relative proportion of broadloom waste carpet generated in 1998 broken down by face fiber type. The following descriptions include performance assessments from the Carpet and Rug Institute. Nylon face fibers represented approximately 70 percent of waste carpet generated in the United States in There are two types of nylon used in carpet construction nylon 66 and nylon 6 that comprise approximately 40 percent and 30 percent of all waste carpet generated, respectively. 1 Source: Evergreen Nylon Recycling W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page 1-3

16 Section 1- Introduction Olefin (polypropylene) carpets represented approximately 15 percent of waste carpet generated in the United States in Olefin carpets are strong, resists wear and permanent stains, and are easily cleaned and colorfast because color is added during fiber production. Polyester (PET) composes less than 10 percent of waste carpet generated in Some polyester carpet is made from recycled PET soft drink bottles. Acrylic offers the appearance and feel of wool without the cost. This fiber offers low static level and is moisture and mildew-resistant. Wool is a natural fiber noted for its luxury and performance. Wool is soft, has high bulk, and is available in many colors. Generally, wool is somewhat more expensive than synthetic fibers. Blends, such as wool/nylon and acrylic/olefin, are also used provide specific performance characteristics. Local consumer purchase trends can vary considerably from the averages. Carpet retailers tend to develop relationships with one particular mill or carpet manufacturer. The carpet dealer often promotes one carpet over another, influencing the make up of carpet installations in an area. While these variables tend to average out over a region, this may not be the case in every locale. As a result, the composition of carpeting can vary from community to community. OTHER CARPET TYPES Far less common than broadloom carpet is vinyl-backed carpet, which composes only a small percentage of all carpet. This type of carpet is often sold as modular carpet tile (squares of carpet 18 inches on a side) and is typically used in commercial settings, particularly those that experience heavy foot traffic. Vinyl-backed carpet differs from broadloom carpet in that the face fibers, which are almost always nylon, are integrally molded into a vinyl backing. Recycling of vinyl-backed carpet requires a different process than is used for recycling broadloom carpet, so companies that recycle carpet usually accept and recycle either one or the other. Source: Honeywell Figure 1-2 Trends in Carpet Shipments Page 1-4 R. W. Beck, Inc. W:\005501\032105\REPORT\REPORT MASTER.DOC

17 Section 1- Introduction TRENDS IN CARPET MANUFACTURE Carpet recycled today was probably placed into service approximately ten years earlier. Therefore, carpet recyclers are wise to be aware of carpet manufacturing trends to prepare for recycling. A website created by Honeywell International reports historical industry data on the market share of fibers used in the carpet industry. Between 1980 and 1994, the percentage of nylon carpet market share has fallen from 83.2 percent to Meanwhile, the total quantity of carpet produced each year has increased from 1.62 billion pounds in 1980 to 3.15 billion pounds in Figure 1-2, Trends in Carpet Shipments, depicts annual shipments of carpet by fiber type. As Figure 1-2 shows, nylon shipments have increased over time, but not at the rate of olefin carpets, which grew from 9.4 percent of market share in 1980 to 26.2 percent in Even though its market share has fallen, nylon remains the largest single component of the carpet stream, providing ongoing opportunity to recycle nylon carpet. SOURCES OF USED CARPET Carpet recovery programs target old carpet that is being removed through: (1) retail carpet replacement for homes and small businesses; and (2) contract carpet replacement for apartments, hotels, motels, large businesses, and institutions. Two-thirds of waste carpet is generated in homes and small businesses, according to Evergreen. The other one-third is generated as a result of competitively bid commercial carpet removal and installation contracts. In many parts of the United States, and in most parts of Florida, old carpet is considered a bulky waste material that cannot be collected curbside on scheduled waste collection days. In these areas, old carpet removed from homes and small businesses is transported by the installer back to the retail store for disposal in the store's waste container. This system presents different options for carpet recovery than does a system where carpet is commonly placed at the curb for disposal. Competition is keen for large commercial carpet installation contracts. As a result, carpet manufacturers have become more actively involved further down the distribution chain and bid on these contracts. For example, DuPont makes nylon raw material, spins it into fiber, converts the fiber to carpet, and installs it through its contract flooring division. W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page 1-5

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19 SECTION 2 - MARKETING RECOVERED CARPET If real estate development value can be described in three words, location, location, location, then successful recycling program development could be described in the three words: markets, markets, markets. This section of the report provides: A summary of markets for carpet that is locally collected and processed; and An analysis of national markets and local alternative markets. MARKET SUMMARY The majority of carpet that has been recycled to date in the U. S. has been collected through strategic alliances among collectors, processors, and manufacturers. These relationships have primarily been driven by carpet manufacturers with downstream commercial contract installation businesses. Carpet manufacturers have found that they can get a foot in the door for their new carpet on commercial carpet installations by promising to keep used commercial carpet out of the local landfill (either by recycling it or sending it to a waste-toenergy facility). Because the primary business of these companies is to sell new carpet, recycling is not a core business activity and is a loss leader in some situations. The recycling programs operated by these carpet manufacturers are, therefore, typically reserved only for commercial contract installation jobs and are not available to suppliers outside of their distribution network. In considering options for carpet recycling, R. W. Beck attempted to identify potential existing markets for used carpet. We asked each potential market about the carpet types accepted as part of their program, the products made from the recovered carpet, and if the company accepts material from new suppliers. Table 2-1, Potential Markets for Recovered Carpet (found on the next page), summarizes the results of the market survey. Although several companies recycle a wide variety of carpet types, only Evergreen Nylon Recycling LLC currently accepts recovered carpet from new suppliers. All the other companies either: (1) obtain enough carpet from existing suppliers; or (2) restrict their recycling activities to commercial contract carpet recovered through their distribution network. W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page 2-1

20 Section 2 - Marketing Recovered Carpet Table 2-1 Potential Markets for Recovered Carpet Company Name and Recycling Facility Location Evergreen Nylon Recycling LLC Augusta, GA DuPont Chattanooga, TN C Board USA Thomson, GA Wellman Inc. Johnsonville, SC Collins & Aikman Dalton, GA BASF Arnprior, ON, Canada Milliken Carpet LaGrange, GA Interface Flooring Systems LaGrange, GA Advanced Textile Recyclers Cartersville, GA United Recycling, Inc. Minneapolis, MN Accepts Carpet from New Suppliers? Yes No Yes (although currently shut down and reorganizing) Not at this time No No No No No No - out of business Carpet Types Accepted Broadloom carpet with nylon 6 face fibers Any, provided DuPont Contract Flooring installs new DuPont commercial carpet Various Broadloom carpet with nylon 6 and 66 face fibers Any vinyl-backed carpet BASF nylon 6 carpet only, or carpet replaced with BASF nylon 6 carpet Milliken commercial contract carpet tile Lease Interface commercial carpet tile Carpet manufacturing scrap Nylon 6, nylon 66, pad, and polypropylene Each of these markets is discussed in greater detail below. EVERGREEN NYLON RECYCLING LLC Recycled Products Made Produces virgin-equivalent nylon 6 resin Automobile parts, sod reinforcements, carpet backing, wood-like products, padding, soundproofing, and floor tiles Fiber underlay matting, padding, furniture filling, automotive padding, and engineered items. Black nylon resin for automobile parts Vinyl carpet backing Produces virgin-equivalent nylon 6 resin. Reuse as carpet clean and overprint Maintains carpet over its useful life, then recycles into various products Various fiber products Extruded products, auto parts, carpet tack strips Evergreen Nylon Recycling LLC, Augusta, Georgia (Evergreen) opened its new $80 million nylon 6 carpet recycling facility in November 1999 with a designed capacity to process 200 million pounds per year of used nylon 6 carpet. Evergreen is a joint venture between Honeywell International, Inc. and DSM Chemicals North America, Inc. Honeywell International, Inc. was formed in December 1999 when Honeywell, Inc. merged with Page 2-2 R. W. Beck, Inc. W:\005501\032105\REPORT\REPORT MASTER.DOC

21 Section 2 - Marketing Recovered Carpet AlliedSignal, Inc.. Some people in the carpet recycling industry refer to this facility as the AlliedSignal facility because of AlliedSignal's highly visible involvement in promoting the facility, setting up collection program partners, and sourcing used carpet. All of the carpet that is processed at this facility is purchased through third-party collectors that Honeywell (AlliedSignal) has developed supplier contracts with. Evergreen recycles nylon 6 using a chemical process called depolymerization. This process breaks nylon 6 down to its basic building block chemical (caprolactam), which is refined to high purity to remove colorants and other contaminants, and processes it back into nylon 6 resin. Because of the specific chemistry involved in Evergreen's recycling process, it can only recycle carpet with face fibers made of nylon 6 at its plant. The process produces a recycled resin that is in all respects equivalent to virgin resin, enabling nylon 6 carpet fiber to be recycled closed-loop back into carpet fiber if so desired. DUPONT DuPont is currently operating a carpet separation and recycling facility in Chattanooga, Tennessee to recover nylon 66 from post-consumer carpets. The recovered nylon 66 is compounded into a black resin with 25 percent post-consumer recycled nylon and is used for the production of automobile parts, sod reinforcements, and carpet backing among other things. DuPont also operates a small pilot reactor in Canada to depolymerize both nylon 6 and nylon 66 to recover HMDA (hexamethylenediamine). DuPont has stated that it would like to scale this process up to a larger commercial facility within a few years. DuPont collects most of the carpet it needs on its own. It takes back the carpet that is replaced by DuPont Antron carpets during commercial installations. In 1999, DuPont formed a network of commercial dealers who only sell DuPont products. The company recently announced that all the carpet removed by these dealers will be shipped back to Chattanooga for recycling. This arrangement will limit the need for DuPont to purchase carpet on the open market in the future. C'BOARD Until the fall of 1999, carpet collected by DuPont was sent to C'Board in Thomson, GA for pre-processing. C'Board sorted the carpet by face fiber type, sent the nylon 66 back to DuPont and marketed or recycled the remaining carpeting. C Board closed in the fall of 1999 for reorganization under bankruptcy proceedings. It hopes to reopen in 2000, and will likely be more restrictive in the carpet it accepts for recycling (such as only accepting nylon carpets). WELLMAN Wellman's involvement in carpet recycling is very similar to DuPont's. They are producing a black nylon resin. The carpet accepted at this facility is collected through a small number of large third-party collectors under contract to Wellman. Wellman does not currently purchase any carpet on the open market, although a need for additional suppliers is anticipated in the future. W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page 2-3

22 Section 2 - Marketing Recovered Carpet COLLINS & AIKMAN (C&A) C&A has a program to recycle its own vinyl-backed carpet, although it may accept other vinyl-backed carpet on a case-by-case basis. C&A recycles the whole carpet into vinyl backing for its new carpets. The nylon fibers from the recycled carpet reportedly make the new backing stronger than virgin vinyl backing. BASF BASF's recycling program is primarily market driven. When a customer purchases BASF's brand 6ix Again product, BASF guarantees that they will recycle the carpet at the end of its useful life (with some restrictions). BASF requires: The original sales receipt; Proof of the 6ix Again logo back stamp; and The customer must bear the cost to transport the carpet to one of BASF's collection centers. Customers receive no revenue for returning the carpet, and BASF does not purchase anything from independent collectors. Recently, BASF announced an expansion" program. Under this program, BASF will accept any carpet that is replaced by a 6ix Again product for recycling. There is a fee for this service and BASF may incinerate some of the recovered material (carpet that can t be effectively processed through depolymerization). MILLIKEN & COMPANY Milliken has a program to remove vinyl-backed carpet tile, redye it, and resell the carpet. Usually, the carpet reused in this program is carpet tile Milliken originally installed, which is removed, redyed, and resold to the original customer. Conventional broadloom carpet with a woven polypropylene backing cannot be reused in this program. Furthermore, Milliken deals directly with the customer rather than through independent collectors. INTERFACE FLOORING SYSTEMS Interface has a commercial carpet lease program in which it retains ownership of the carpet installed in commercial buildings. Under this program Interface maintains the carpet and ensures reuse or recycling. UNITED RECYCLING, INC. (URI) URI collected and processed all types of carpet in the Minneapolis, St. Paul area until it went bankrupt in Its assets are for sale. URI s efforts were limited to this geographic region. ADVANCED TEXTILE RECYCLERS (ATR) ATR recycles post-industrial waste from the carpet industry. Although it has expressed interest in recycling post-consumer carpet, it has no plans to do so for the immediate future. Page 2-4 R. W. Beck, Inc. W:\005501\032105\REPORT\REPORT MASTER.DOC

23 MARKET ANALYSIS Section 2 - Marketing Recovered Carpet At the time the Sarasota Carpet Recycling Program was proposed, markets for nylon 66 carpet were accepting new supplies of material. However, most markets are closed to new suppliers of post-consumer carpet. Currently, only nylon 6 carpet is in demand, while demand for other types of carpeting such as nylon 66, polyester, olefin, and other carpeting (which makes up 70 percent of all waste carpet generated) is limited, if not non-existent. Ideally, markets for a recovered commodity will develop at the same pace as collection of the commodity. Market equilibrium can be upset by excessive demand by manufacturers or excessive supply by collectors. IMPACT OF THE EVERGREEN NYLON RECYCLING PLANT ON MARKET DEMAND Supply and demand for recovered carpet have been evenly paced, although growing slowly in the past decade. Figure 2-1, Approximate Recovered Carpet Market Demand, depicts historical recycling market consumption for all types of carpets and illustrates the effect of the Evergreen facility on projected total recovered carpet demand through When Evergreen opened its nylon 6 carpet recycling facility in November 1999 with an enormous demand for used nylon 6 carpet, the facility created both opportunity and imbalance in the carpet recycling market. Figure 2-1 Approximate Recovered Carpet Market Demand Millions of Pounds Evergreen's new facility presents an opportunity because of the significant increase in market demand for recovered carpet. As early as 1997, in anticipation of the facility s startup, Evergreen began aggressively setting up a network of waste carpet suppliers and also began stockpiling material. By December 2000, Evergreen hopes to complete its network of suppliers so it can operate the facility at its designed capacity. However, this new nylon 6 market has also created an imbalance. Nylon 6 carpet makes up only about 30 percent of the total waste carpet generated. Because no one can identify nylon 6 by sight, touch, or smell, used carpets must be tested with special detection equipment in order to identify and divert those carpets with nylon 6 face fiber. Thus, for every ton of nylon 6 carpet collected, it is estimated that another 2 to 3 tons of other carpeting must be handled. Because of Evergreen s need for only nylon 6 fiber, and the difficulties of easily segregating this product from other carpet types, incidental collection of other face fiber types of carpet Source: R. W. Beck, Inc W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page 2-5

24 Section 2 - Marketing Recovered Carpet (in particular nylon 66) has increased dramatically. However, end-user market growth for carpet made with other face fibers has not kept pace with the explosion in collections spurred by Evergreen. As a result, existing markets that had previously purchased nylon 66 carpet don't currently accept this material from new suppliers and limit the amount of nylon 66 carpet they accept from existing suppliers. Markets for other face-fiber types are extremely limited or non-existent. Therefore, most non-nylon 6 carpet that is collected outside of contract commercial carpet replacements is disposed. The lack of markets for nylon 66 and other non-nylon 6 carpeting is a significant obstacle to cost-effective waste carpet recovery. At the time the Sarasota Carpet Recovery Project was initially conceived, end markets existed for all types of nylon carpeting (both nylon 6 and nylon 66). As a result, it was anticipated during the initial program design that up to 70 percent of the waste carpet generated and collected would be marketed. However, changing market conditions at the project start resulted in disposing of all carpet handled except for nylon 6 carpet. This adversely affected the overall economics of the pilot alternatives identified at the inception of the project (more fully described in Section 4 of this report). There is market risk associated with the Evergreen joint venture, particularly if not enough nylon 6 carpet is recovered on the local level and shipped to the plant. A comparison can be made to the failure of post-consumer PET bottle (e.g., soft drink bottles) depolymerization facilities in early 1990s. Those facilities failed, in part, because they were unable to source enough PET bottles to meet plant capacity-utilization levels required to produce chemicallyrecycled PET at a cost that was competitive with virgin resin manufacture. The situation is different with nylon because of the higher virgin resin price nylon enjoys compared to PET, and because other competing markets for the material are not as well developed. However, a common challenge will be to fully utilize the plant, which is designed to utilize approximately 20 percent of the total available nylon 6 carpet disposed in the United States. 1 Recovering this much material will be difficult given the market obstacles discussed in this section, and other obstacles that are discussed later in this report. The Evergreen facility will continue to drive the recovery of used carpet for the immediate future. The challenge to the industry is finding viable and profitable markets for the other carpet that will be collected, but not utilized at the Evergreen plant. Evergreen is aware of the imbalance and is investigating markets and processes to utilize other carpet types, especially nylon 66, which may hold the best value. Other parties also see opportunity in carpet recycling spurred by the Evergreen project and are searching for methods to costeffectively recycle these other grades of carpeting. A review of other potential market development opportunities for carpet was performed as part of this project. A summary of these market development findings is provided in Appendix B of this report. 1 Source: Honeywell. Page 2-6 R. W. Beck, Inc. W:\005501\032105\REPORT\REPORT MASTER.DOC

25 Section 2 - Marketing Recovered Carpet IMPACT OF THE EVERGREEN NYLON RECYCLING PLANT ON MARKET PRICING Destabilization of market equilibrium will influence commodity pricing. Assuming a free market with open competition, if the demand requirements increase beyond supply, commodity prices rise. If supply increases beyond demand, then a glut occurs and commodity prices fall. Evergreen provides an interesting case study in economics. In an open market, a company with such a large demand for material would normally be pressured by suppliers to pay prices sufficiently high enough to cover the cost of collection, handling, and transport of the material to market as well as a fair return on investment or risk losing its supply of material. However, Evergreen currently sets the street price for recovered nylon 6 carpet (currently about six cents per pound, FOB processor) at a price that, in many instances, does not result in a positive net return to the supplier. This market dynamic has come about for the following reasons: Alternative nylon 6 markets are limited to just a couple of companies, which have a much smaller demand for the material than Evergreen. As a result, suppliers that have initiated collection of carpet have limited outlets for their collected product. Suppliers are dependent on Evergreen s proprietary carpet identification instrument (the CarpID, discussed further in Appendix A), which offers advantages of low cost and portability compared to other instruments. Evergreen only leases it will not sell the CarpID to suppliers. Furthermore, its lease agreement requires suppliers to only market nylon 6 carpet to Evergreen. This effectively eliminates market competition for nylon 6 carpet when Evergreen s detector is used. Due to the nascent nature of the carpet recovery industry, many suppliers are unsure of the exact costs associated with collecting carpet and initially underestimate the operating and capital costs required to collect waste carpet. It is expected that as suppliers build a more extensive work history collecting carpet, increased efficiency resulting from new collection and handling techniques will ultimately lower suppliers operating costs and, as a result, their break even points. Clearly, a large and steady supply of nylon 6 carpet will be required to run the Evergreen plant near its designed capacity to operate efficiently. Evergreen may ultimately be required to increase the market price paid for recovered nylon 6 if the current market price proves insufficient to: (1) sustain existing carpet collection and processing programs (after taking into account improved program efficiency); or (2) attract sufficient new suppliers to collect enough waste carpet to meet its facility s feedstock needs. Alternatively, if competitive identification instruments and markets develop, free-market competition could also pressure price increases for nylon 6 carpet. Unfortunately, given the large imbalance between supply and demand for carpet of other face fiber types, it is unlikely that market pricing for carpets of other face fibers will significantly improve in the immediate future. However, the market outlook is better for nylon 66 carpet compared to carpet made from other face fiber types because of the higher intrinsic value of nylon compared to other resin types. Appendix D provides additional W:\005501\032105\REPORT\REPORT MASTER.DOC R. W. Beck, Inc. Page 2-7

26 Section 2 - Marketing Recovered Carpet detail on factors that impact and limit scrap value for nylon and other face fiber carpet types. IN-STATE MARKET ALTERNATIVES FOR SARASOTA COUNTY This section discusses in-state market alternatives for non-nylon 6 carpet collected in Sarasota County. These alternatives are in discussed greater depth (though not with a Florida focus) in Appendix B. Reuse Reusing whole carpet "as is" or after simple cleaning is limited to carpet in good condition. Reuse could divert some additional carpet on the margin; however, other recycling markets are needed to significantly reduce the amount of carpeting currently being disposed in the County. Two carpet stores in Sarasota County already divert carpet from disposal through reuse. One store is located near a low income neighborhood and routinely sets reusable carpet next to (not inside) the waste container. These set aside carpets disappear at night or on weekends. Presumably, the diverted carpet is reused without any further processing. A second store also sets aside good reusable carpet. In this case, a landlord collects the carpet and installs it in low-income housing and apartments. The exact economic arrangements between the store and the landlord were not disclosed. Face Fiber Recovery Carpet shredding and mechanical removal of face fiber offer opportunities for state or regional facilities to add value and divert significant quantities of material. There are no textile recycling companies in the Sarasota area with the equipment needed to remove and individualize fibers from carpets, so recovered carpet would need to be shipped a considerable distance (at significant expense) to make use of individualized fiber markets. Meyer & Gabbert Excavating is a construction and demolition ( C&D ) debris recycler that is located at Sarasota County's landfill complex. Meyer & Gabbert produces alternative daily cover (ADC) for the County's landfill by hammermill shredding. Because the company lacks a shear-shredder capable of handling carpet, it cannot shred carpet for use as ADC without making an additional capital equipment purchase. A Tampa company with a shear-shredder investigated carpet recycling as a potential new business opportunity, but decided that the economics were not favorable, particularly for non-nylon carpet components. The company was not interested in test-shredding carpet for this innovative grant project. Refuse Derived Fuel An alternative to disposing of unmarketable carpet in Sarasota County's landfill is to burn carpet for fuel. In addition to counties with waste-to-energy plants that could potentially accept whole carpet (Broward, Dade, Lake, Lee, Hillsborough, Palm Beach, and Pinellas), there are other facilities in Florida that produce or burn refusederived fuel (RDF) that could include shredded carpet. These facilities are listed below: Ridge Generating Station (Polk County) burns wood waste and tires. Montenay Power (Dade County Resource Recovery Facility) produces RDF. Page 2-8 R. W. Beck, Inc. W:\005501\032105\REPORT\REPORT MASTER.DOC