Poor market conditions and a dramatic decline in the amount of carpet being recycled in California in Q3 has led CARE to request an increase in the carpet assessment to 20 cents per sq.yd. from the current 10 cents per sq. yd. for all carpet sold or shipped in California. CARE anticipates the increase will be approved at the January 26, 2016 public meeting; if approved, the increase will go into effect on March 1. “Tough times call for tough measures,” notes CARE Executive Director Bob Peoples, “We have increased incentive types and amounts in 2015 in order to bolster the industry, which is facing severe financial challenges as outlets for these materials have contracted. Increasing the assessment to 20 cents will fund this increased support, with a goal of creating a stable and viable market for post-consumer carpet.” Without the increased assessment, there were fears that the existing infrastructure for carpet recycling in California would not remain viable. Dr. Peoples gives context to the current situation that made the assessment increase essential:
Third quarter results reflect the continuing decline in market demand for recycled post-consumer carpet based materials. While carpet sales in Q3 were strong, as expected, for the first time we saw a dramatic decline in recycled output. CARE continues to try and understand the dynamics of this declining market and take steps to both mitigate the impact to our stakeholder community and understand how we can stimulate further use of PCC materials. Domestic and international experts on recycling in general, and carpet specifically, assert that the price of crude oil underpins the collapse in pricing of many recycled commodities. The ripple effects of this impact means that two major U.S. recyclers are not accepting carpet for recycling, and a third has curtailed collection at this time. In addition, the collapse of demand from China has been a significant factor in this drop in market outlets. At this time a common refrain among recyclers has been, “I have no orders for material.”
As a result of this dramatic decline, CARE has worked with the SPC and SFOC (CARE committees) to implement a significant round of new and increased subsidies in an effort to move the market. The subsidy increases were made retroactive to Q3 in an effort to support the California infrastructure at this stressful time. CARE hosted five stakeholder workshops in the third quarter to solicit feedback and ideas. Early responses to higher subsidies indicate traction, but as we know, such market moves take time to gain impact due to testing demands, equipment purchases/modifications and adoption.
CARE’s decision making bodies, the SPC and SFOC, approved the submission of California Plan Addendums 2 & 3 for consideration by CalRecycle. The first of these changes were approved by CalRecycle at their October 20, 2015 public meeting, while remaining items will be considered on January 26, 2016. Among these many changes, CARE has submitted a request to increase the assessment from 10 to 20 cents/sq.yd., effective March 1, 2016 in addition to the formation of a new California Council for Carpet Recycling and new grant programs.
Stakeholders are invited to view and comment on the recently submitted Plan Addendum at the CalRecycle website.