Plastics debates, climate risks, biogas opportunities, fleet developments, environmental justice action and still more M&A: The Waste Dive team is looking ahead to some of the most complex trends that are expected to play out in 2023.
We invite you to share your thoughts on these trends, or highlight other issues you'll be following. Please also join us for a live, virtual event on Jan. 24 to hear from top industry executives and policy experts about what they're focusing on in the new year.
The waste industry's multiyear acquisition trend is expected to continue into 2023 for many of the same reasons that have been driving it to date. Labor and supply chain challenges, exacerbated by the pandemic, have made it harder for smaller operators to keep up. Plus, increasing numbers of private equity buyers or investment funds driven by ESG considerations are looking to expand in a recession-resilient market.
At the same time, industry sources believe the number of new companies may be declining due to the high capital requirements for entering the market and the operating fatigue driving others to sell. If this trend persists, and existing players continue to consolidate market share (especially on the post-collection side), the question becomes if or how the cost and variety of services being offered will change.
Will this trend of ongoing acquisitions ultimately lead to notable changes in how material is being managed, or will it just direct the same amounts of waste to a smaller number of disposal sites? Will it lead to a modernization of collection technology and improved service, or higher costs for customers to receive similar service? And as the industry's emerging group of mid-sized regional players continues to grow, who will they buy (or sell to) along the way?
Plastic is one of the most controversial materials in recycling right now, and 2023 will be a year that could further polarize the industry while possibly showing signs of viability for new and emerging business ventures.
Chemical recycling will come further into focus in 2023 through potential regulations and business decisions. Michigan recently became the 21st state to pass a law reclassifying chemical recycling as a manufacturing process instead of waste management. Proponents see this legislation as a key business opportunity and an outlet for plastics that typically go to disposal. Yet environmentalists say the technologies don't cut plastic production and promote pollution in overburdened communities.
Industry players are also expected to take advantage of new or shifting regulations to build additional plastic business ventures in 2023, especially as brands continue to make pledges to use more recycled content. WM's acquisition of Avangard last year and Republic Services' investment in an integrated plastics recycling facility in Las Vegas are examples of haulers betting on the growing financial potential of recycled plastics. Others are budgeting for major equipment and facility upgrades to better separate typical plastics and future-proof against swings in plastic commodity markets.
Activists in environmentally overburdened communities have been fighting against pollution for decades, and state and federal entities have started to catch up in recent years by passing environmental justice laws and directing more resources to the issue. Whether those investments have made a measurable or meaningful impact — and what that could mean for waste operations — could be a major topic in 2023.
New York Gov. Kathy Hochul signed a bill in December requiring the state's environmental permitting process to consider the cumulative impacts on disadvantaged communities when siting certain facilities, including those for waste or recycling. This follows a related 2020 bill in New Jersey, which many in the waste industry consider to be the country's most notable and detailed EJ law. Activists in New York hope they now have added traction to fight pollution in their neighborhoods, while policy experts think more such bills could be introduced in other states soon.
The U.S. EPA has big plans for its new national office, opened last year with the intent of formalizing and prioritizing EJ concerns and enforcement, and hinted that more action could come in 2023. It's also disbursing $100 million in funding for EJ initiatives through the Inflation Reduction Act. It's too soon to know whether any of the grants — available to states, tribes and community-based organizations — will go toward initiatives involving impacts from the waste and recycling industry. EPA Administrator Michael Regan said it was important to offer funding directly to communities. "Those who experience environmental justice challenges know their community's concerns better than anyone else," he said during a January briefing.
Waste's role in public and private sector sustainability targets has been discussed for years. But the impacts of climate change are showing up more in day-to-day collection and in how municipalities and other operators anticipate future risks. Just in the past month — on the heels of the third-costliest year on record related to climate disaster events — Buffalo, New York, and the Midwest experienced intense cold and snow, and California faced harsh flooding and mudslides.
Deliberate preparations are also happening. In New York, a proposed bill would compel the city's Department of Sanitation to create an emergency and resiliency plan and prioritize collection in flood-prone areas ahead of heavy rainfall. Those challenges span all four seasons. Acknowledging the dangerous heat of summer, U.S. OSHA will continue to work this year on developing a workplace heat standard. Miami-Dade County in a recent extreme heat action plan said that, in the absence of federal and state action, it will pursue the nation's first countywide heat standard for outdoor workers. And in Texas, Austin Resource Recovery has worked to try to secure a reliable air conditioning solution in its trucks to make them safe and tolerable for workers.
On the private side, evolving levels of sustainability reporting allow for discussion of physical climate risks. The nation's second-largest hauler outlined future productivity loss risks it foresees stemming from heat, and potential harm from heavy precipitation at landfills.
The buzz around biogas is only expected to keep building this year. The results of big acquisitions such as BP-Archaea and BlackRock-Vanguard Renewables will start coming into focus, while multiple projects from other companies also begin to come online. Many millions of dollars have been committed to landfill and anaerobic digestion projects, with industry observers seeing significant untapped potential.
The sector is also closely watching upcoming federal Renewable Fuel Standard changes. They could have notable financial implications for new and existing anaerobic digestion and landfill RNG projects, while also playing a role in the alternative fuel vehicle market. This shift — coupled with existing low-carbon fuel standards in certain states, and growing interest from ESG-focused companies and investors — is expected to drive further investment in the sector.
Disposal is still a cheaper alternative in many areas and composting remains a less capital-intensive infrastructure option for organics recycling than digestion. Outside of regions with regulatory requirements (such as California, which is expected to ramp up SB 1383 enforcement this year), will investment and regulatory trends encourage more diversion of organic waste via systems such as anaerobic digestion? Or will a similar amount of organic waste still end up in landfills with more advanced systems to collect and monetize the RNG being emitted?
