President’s Message: 2011 Drought, Wildfires Highlight Future Water Issues

TCC President & CEO Hector L. Rivero

If there were ever a year to remind Texans of our state’s water issues, 2011 was it.  During months of record drought and heat, our reservoirs and lakes dipped, cities restricted water usage and aging water mains burst. The persistent dry conditions paved the way for a record-breaking number of devastating wildfires across Texas.

The drought caused at least $5.2 billion in losses, and the fires cost billions more in damage. The past summer was the hottest on record and climatologists predict the state has finished the second year of a nine-year drought.

According to the Texas Water Development Board’s (TWDB) State Water Plan, without improvements to our current system, by 2060, over 80% of Texas’ population could lack enough water during a drought. To deal with a population that’s expected to double by then, Texas’ water infrastructure needs $231 billion in upgrades.

Some of those water, sewer, flood-control and conservation projects will be more easily financed because voters approved Proposition 2 in November.

Smaller government entities that build and maintain our water system (towns, cities and municipal utility districts) can’t borrow money as cheaply as Texas can. So to help out, the TWDB will set up a fund to lend the little entities money at lower rates of interest than they can get on their own.

The cost to Texas taxpayers is virtually nothing because the loan fund – up to $6 billion at any given time – is financed through state bonds. Those bonds are paid off via loan payments from the smaller water entities, which in turn get their money from local taxes and utility bill payments.

Creating a revolving fund also helps cities access to capital without having to ask voters to replenish it every few elections. By keeping the fund under $6 billion, the TWDB won’t require voter reauthorization. That certainty helps cities plan for their future infrastructure needs.

The Texas Legislature remains focused on the state’s water supply, even in the interim.  Since state lawmakers won’t reconvene until January 2013, Lt. Gov. David Dewhurst and House Speaker Joe Straus have assigned interim committee charges to examine important issues prior to the next Legislative Session.

Various committees in the Texas Legislature have begun studying the impact of the drought’s effect on power generation, agriculture and the economy.

Our industry has been asked about the drought’s effect on business, and what water conservation initiatives industry employs in their operations that might be considered by Legislature in developing its future water policy.

While the chemical manufacturing requires large volumes of water, most chemical plants return approximately 75% of the water used to downstream sources, and that water is returned cleaner than when it was captured. Many facilities are located along the Texas coast, so they’re often at the end of rivers that provide water for their operations. As droughts dry up our rivers, lakes and reservoirs, the supply of water for cities, agriculture and manufacturers all along a river basin is impacted and could lead to dire water shortages for downstream industries.

Another issue potentially impacting water supply is the pending outcome in a lawsuit in which TCC is a defendant. In December, The Aransas Project v. Shaw, et al was tried in federal court in Corpus Christi. TCC, along with three co-defendants – the State of Texas, the Guadalupe-Blanco River Authority (GBRA) and the San Antonio River Authority (SARA) – defended the Texas water rights allocation system against a federal Endangered Species Act claim. The relief sought by the Plaintiffs in this case is a directive to the State of Texas that it must reallocate existing water rights in parts of the state to ensure that endangered species have an adequate water supply. While a decision in the case will likely not be received for several months, the action of the federal court could also impact Texas’ water supply.

Without an adequate supply of water, manufacturers would be unable to operate and may result in production slowdowns or stoppage, which impact jobs and make those facilities less globally competitive.  

Another issue with wide-reaching implications to the chemical industry is the future of “fracking” (or hydraulic fracturing) for natural gas drilling. Key lawmakers are encouraging drilling operators to invoke recycling technologies in their fracking operations.

The chemical industry in Texas is poised for new investment and job growth as a result of abundant new supply of natural gas from these previously untapped shale deposits. Further development of shale gas and ethane can promote even greater economic investment and job growth for our industry, provided sound science is used in any new regulations on gas producers.

Water will be one of the most important public policy issues for decades. It is important that all of us do our part to support conservation, recycling technologies, and sound public policy that will ensure a supply of water for our cities, our agricultural producers, and manufacturing for generations to come.

EPA Cross State Air Pollution Rule Put on Hold by Appeals Court

A federal court ruled last week that the Environmental Protection Agency (EPA) must delay implementing the Cross State Air Pollution Rule (CSAPR), siding with electric power producers seeking to defeat the new regulations.

A three-judge panel of the U.S. Appeals Court in Washington granted a request by electric power producers and other challengers to delay the deadline for plants in Texas and 26 other states to begin reducing emissions of sulfur dioxide and nitrogen oxide while the court considers the rule’s legality.

“Petitioners have satisfied the standards required for a stay pending court review,” Judges Brett Kavanaugh, Thomas Griffith and Janice Rogers Brown said in the court’s ruling.

More than three dozen lawsuits in the D.C. court seek to derail CSAPR, which was issued in July and revised in October. The court hasn’t scheduled a date for argument, though the court’s order suggested the judges would hear the case by April.

Southern Co., EME Homer City Generation LP, a unit of Edison International, and Energy Future Holdings Corp. units in Texas are among the power companies challenging the rule. The state of Texas, the National Mining Association and the International Brotherhood of Electrical Workers joined in parallel cases, saying the rule puts an undue financial burden on power producers and threatens electricity reliability by forcing companies to shut some older plants.

“The court’s decision is not a decision on the merits of the rule and EPA firmly believes that when the court does weigh the merits of the rule it will ultimately be upheld,” Betsaida Alcantara, an EPA spokeswoman, said in an e-mail.

CSAPR attempts to impose caps on sulfur dioxide, which can lead to acid rain and soot harmful to humans and ecosystems, and nitrogen oxide, a component of ground-level ozone and a main ingredient of smog. The rule applies to emissions that cross state lines.

Power companies, state officials and lawmakers said the EPA provided too little time to comply, and argued in court that the October revisions should invalidate the entire rule.

Luminant Generation Co., an Energy Future Holdings Corp. unit, claims the measure will force it to eliminate at least 500 jobs in Texas.

“We are pleased with the court’s ruling because it recognizes the irreparable harm that would have resulted from the short six-month timeline for compliance outlined in the original rule,” David Campbell, Luminant’s chief executive officer, said in a statement.

Scott Segal, a lobbyist at Bracewell & Giuliani LLC in Washington, representing operators of coal-fired plants such as Southern Co., said postponement of regulations are allowed when there is “a strong chance of success” the challenge will succeed and when the parties can be injured without such relief.

“Stays are hard to come by in the world of Clean Air Act litigation, which makes the stay of the cross-state rule all the more significant,” Segal said in an e-mail.

The power companies’ effort is opposed by the Natural Resources Defense Council, the Environmental Defense Fund, power companies such as Chicago-based Exelon Corp. and states such as New York and Illinois.

It is highly unlikely that the cross-state rule will take effect in 2012, even if the EPA ends up winning the court case, Henry Eisenberg, counsel with the environmental department of Skadden Arps Slate Meagher & Flom LLP, said in a phone interview. “I wouldn’t be surprised if EPA set the clock back,” Eisenberg said.

The stay “suggests clearly that the petitioners have brought issues that are likely to be decided in their favor,” Christine Tezak, senior policy analyst with Robert W. Baird & Co. Inc., said in a phone interview. Therefore, the rule, “as written, likely won’t ever go into effect,” she said.

The ruling takes some of the pressure off of power companies that rely heavily on coal-fired plants to rapidly install pollution controls or switch to cleaner-burning fuels, such as natural gas, Tezak said.

They’ll still need to invest over time in scrubbers, baghouses and other technology to comply with new EPA curbs on mercury and other airborne toxins, which were made final earlier this month and will take effect in March 2015.

“What you’ll have for coal-fired utility owners is a better opportunity to more rationally invest in their fleet,” Tezak said.

U.S. Manufacturing Activity Rises at Fastest Pace in 6 Months

Manufacturing grew in December at the fastest pace in six months and hiring at U.S. factories picked up. The data helped bolster the view that the economy gained momentum at the end of last year.

The Institute for Supply Management (ISM), a trade group of purchasing managers, said that its manufacturing index rose to 53.9 from 52.7 in November. Readings above 50 indicate expansion.

Stocks surged in the first day of trading for 2012, in part because of reports that manufacturing grew in China and India in December, two of the world’s largest economies. The report on U.S. factory growth added to those early gains on Wall Street.

U.S manufacturing has expanded for more than two years. Factories were one of the first areas of the economy to start growing after the recession officially ended in June 2009.

The latest ISM survey showed that U.S. factories should start the year strongly. Factories hired last month at the fastest pace since June, the survey found. A measure of new orders rose, a good sign for future output. And exports also increased last month, though it’s not clear how long that will last. Europe’s economy is faltering amidst a debt crisis.

Consumers are gaining confidence and are spending more. Some economists forecast that car sales increased in December after a strong month of sales in November. That should boost output among automakers and also steel companies, tire makers and others that supply the industry.

Orders for long-lasting manufacturing goods jumped in November, the Commerce Department said last month.

Still, demand for core capital goods, which are often a proxy for business investment plans, fell for the second straight month. Business spending has been a key driver of economic growth in 2011. If businesses cut back on spending, economic growth is likely to slow. Businesses are less likely to retreat, however, if the economy continues to improve.

The Conference Board said last week that its consumer confidence index rose in December to the highest level since April. That’s important because consumer spending accounts for about 70 percent of the economy.

And the number of people applying for unemployment benefits each week is dropping steadily, evidence that companies are cutting fewer jobs. Weekly applications have dropped by 10 percent in the past three months.

Employers are hiring more workers, too. The economy generated an average of 143,000 net jobs a month from September through November. That’s almost double the pace for the previous three months.

The economy likely grew at an annual rate of 3 percent or more in the final three months of this year, analysts say. That would top the 1.8 percent growth rate in the July-September quarter, and the 0.9 percent growth rate in the first half of the year.

Analysts forecast a modest expansion of 2.4 percent in 2012, an Associated Press survey of economists found.

Chevron Phillips to Spend $5 Billion on Texas Ethylene Plant

Chevron Phillips Chemical Co., a joint venture equally owned by Chevron Corp. and ConocoPhillips, will spend about $5 billion to build one of the first new ethylene production facilities in the U.S. since 2001.

The company selected its site in Baytown, Texas, for new factories to convert ethane into ethylene starting in 2017, The Woodlands, Texas-based Chevron Phillips said in a statement. The cost includes an ethylene plant, capable of producing 1.5 million metric tons of the gaseous chemical a year, and two plants for making polyethylene plastic, said Melanie Samuelson, a company spokeswoman in an interview.

The industry is investing in U.S. production of ethylene, the most widely used petrochemical, as natural gas costs have dropped. Ethane is derived from gas, which has dropped in price as new technologies have boosted production from shale formations. The U.S. has a cost advantage relative to producers in Asia and Europe where ethylene is made from oil-derived naphtha.

“We are pleased that the development of shale-gas resources in the U.S. has set the stage for major petrochemical investment and job creation in our backyard,” Peter L. Cella, chief executive officer of Chevron Phillips, said in the statement. The chemical company announced in March plans to consider the project.

Chevron Phillips plans to convert ethylene from its new cracker into 1 billion metric tons a year of polyethylene at plants to be built at either the company’s Cedar Bayou site in Baytown or at the nearby Sweeny site in Old Ocean. A final selection will be made by March, the company said. Polyethylene is a plastic used in grocery bags and food packaging.

Shaw Energy & Chemicals Ltd. is designing the ethane cracker. Federal and state permit applications for air emissions will be filed this week, with approvals anticipated in 2013, according to the statement.

Chevron Phillips said it chose to build adjacent to an existing cracker in Baytown, located about 30 miles (48 kilometers) east of downtown Houston, because the site has access to ethane and ethylene pipelines and storage caverns, as well as to the Mont Belvieu gas-processing hub.

The plants will employ 400 people and the construction project will create 10,000 jobs, the company said.

Dow Chemical Co., the world’s largest ethylene producer, plans to spend $4 billion in the U.S. to build a Gulf Coast cracker by 2017, two propylene plants and to reopen an idled Louisiana cracker. Sasol Ltd. may spend as much as $4.5 billion to build a cracker and related plants in Louisiana. And LyondellBasell Industries NV is among companies expanding existing U.S. facilities to benefit from low-cost ethane.

Enterprise to Move Forward with Ethane Pipeline to Gulf Coast

Enterprise Products Partners LP said it has received enough commitments to move ahead with a planned 1,230-mile pipeline to deliver growing ethane production from the Marcellus and Utica shale regions to the U.S. Gulf Coast.

Increased natural gas drilling in areas such as the Marcellus shale in the northeastern U.S. is leading to a growing supply of co-product ethane, a raw material for petrochemical production.

"The willingness of shippers to commit to a term of at least 15 years reflects the long-term potential of shale development in the Appalachian region and provides us with the assurance necessary to build the midstream infrastructure," said Michael A. Creel, president and chief executive of Enterprise's general partner, Enterprise Products Holdings LLC.

The pipeline will begin in Pennsylvania with 595 miles of new pipeline extending to Missouri, where Enterprise plans to reverse an existing pipeline and place it in ethane service. At the southern end, Enterprise plans to construct a 55-mile pipeline to provide shippers with access to its Mont Belvieu, Texas, storage facility, providing indirect and direct access to U.S. ethylene plants.

In November, Chesapeake Energy Corp. — one of the most active drillers in the Marcellus — announced an agreement to supply Enterprise Products Partners with ethane for the planned pipeline.

Enterprise has seen results soar in recent quarters, helped in part by its $3.3 billion merger with Teppco Partners LP in late 2009, which created one of the largest pipeline companies in the U.S. The company in November reported third-quarter profit surged on contributions from acquisitions and as revenue climbed.

Senator Collins: DHS Has Misled Congress on CFATS Program

Senator Sue Collins (R-Maine)

The Department of Homeland Security (DHS) has misled Congress about the effectiveness of a nearly five-year-old program that is meant to secure the nation’s chemical facilities against potential terrorist attacks, according to Sen. Susan Collins (R-Maine).

The ranking Republican member of the Senate Committee on Homeland Security and Governmental Affairs, Collins said she is “extremely disappointed” by the findings in an internal DHS report, which evaluates the strengths and weaknesses of the Chemical Facility Anti-Terrorism Standards (CFATS) program.

The internal assessment indicates, “serious management problems, wasteful spending, insufficient and untrained personnel, and union demands are hindering the department’s implementation of this vital antiterrorism program.”

In 2006, Congress included an amendment in an appropriations bill that directed DHS to regulate security at “high-risk” chemical plants. A year later, DHS unveiled the CFATS program, which requires these facilities to conduct vulnerability assessments, develop site security plans, and submit the plans to DHS for approval.

The report says the program has been slow in getting off the ground because of numerous management and personnel problems within the DHS branch that administers CFATS, the Infrastructure Security Compliance Division (ISCD).

Constant turnover of ISCD’s management since President Barack Obama took office in January 2009 has contributed to the lack of progress in implementing CFATS, says William Allmond IV, vice president of government relations of the Society of Chemical Manufacturers and Affiliates, a trade group representing the batch chemical industry.

He notes that several senior-level policy staff members left after the division’s former director, Sue Armstrong, was reassigned within DHS to fill a position vacated by a political appointee of the Bush Administration. Since then, ISCD has been run by several acting directors and deputy directors and additional key staff has departed.

“Each time there has been a management change, policy staff has had to spend weeks, if not months, bringing the new ISCD leadership up to speed, which distracts them away from implementation,” Allmond says.

In July, Rand Beers, the undersecretary of DHS’s National Protection & Programs Directorate, appointed a fresh team to manage CFATS. Shortly thereafter, he ordered newly installed ISCD Director Penny J. Anderson and Deputy Director David Wulf to identify problems that need to be addressed and to devise an action plan. Their findings have not been publicly released, but a copy of the internal study was leaked to Fox News.

Collins says the assessment “flies in the face of assurances of effective implementation” that DHS has repeatedly given to the Senate Homeland Security Committee. For example, she notes, in March 2010, Beers testified “the CFATS program has been, I think, a tremendous success to date” and stated that DHS began inspecting the highest-risk facilities in February 2010. The report says ISCD has yet to conduct a compliance inspection and only recently started approving any security plans.

The findings in the internal assessment “contradict the official testimony of department officials,” Collins says. “The new managers of the CFATS program and the senior leadership of the department claim these problems will be fixed. They must be,” she adds.

The chemical industry, which has invested billions of dollars to upgrade security and meet CFATS’s requirements, is also concerned about the slow pace of program implementation.

“The process of getting site security plans approved has been taking longer than everyone involved, including DHS and Congress, would have liked,” Allmond remarks. “We share that frustration.”

DHS needs to quickly fill open ISCD staff positions with well-qualified, seasoned professionals, Allmond adds. “Having the right people in place will bring much-needed stability to the administration of the program,” he says.

The Wall Street Journal Editorial: Lisa Jackson’s Power Play
Harming the Economy, Degrading the U.S. Grid: Another Day at the EPA

EPA Chief Lisa Jackson

At an unusual gala ceremony on the release of a major new Environmental Protection Agency (EPA) rule, chief Lisa Jackson called it “historic” and “a great victory.” And she’s right: The rule may be the most expensive the agency has ever issued, and it represents the triumph of the Obama Administration’s green agenda over economic growth and job creation. Congratulations.

The so-called utility rule requires power plants to install “maximum achievable control technology” (MACT) to reduce mercury emissions and other trace gases. But the true goal of the rule’s 1,117 pages is to harm coal-fired power plants and force large parts of the fleet — the U.S. power system workhorse — to shut down in the name of climate change. The EPA figures the rule will cost $9.6 billion, which is a gross, deliberate underestimate.

In return Ms. Jackson says the public will get billions of dollars of health benefits like less asthma if not a cure for cancer. Those credulous enough to believe her should understand that the total benefits of mercury reduction amount to all of $6 million. That’s total present value, not benefits per year — oh, and that’s an -illion with an “m,” which is not normally how things work out in President Obama's Washington.

The rest of the purported benefits — to be precise, 99.99% — come by double-counting pollution reductions like soot that the EPA regulates through separate programs. Using such “co-benefits” is an abuse of the cost-benefit process and shows that Cass Sunstein’s team at the White House regulatory office — many of whom opposed the rule — got steamrolled.

As baseload coal power is retired or idled, the reliability of the electrical grid will be compromised, as every neutral analyst expects. Some utilities like Calpine Corp. and PSEG have claimed in these pages that the reliability concerns are overblown, but the Alfred E. Newman crowd has a vested interest in profiting from the higher wholesale electricity clearing prices that the EPA wants to cause.

Meanwhile, the Federal Energy Regulatory Commission (FERC), which is charged with protecting reliability, abnegated its statutory responsibilities as the rule was being written.

One FERC economist wrote in a March email that “I don't think there is any value in continuing to engage EPA on the issues. EPA has indicated that these are their assumptions and have made it clear that are not changed [sic] anything on reliability . . . [EPA] does not directly answer anything associated with local reliability.” The EPA repeatedly told Congress that it had “very frequent substantive contact and consultation with FERC.”

The EPA also took the extraordinary step of issuing a pre-emptive “enforcement memorandum,” which is typically issued only after the EPA determines its rules are being broken. The memo tells utilities that they must admit to violating clean air laws if they can’t retrofit their plants within the EPA’s timeframe at any cost or if shutting down a plant will lead to regional blackouts. Such legal admissions force companies into a de facto EPA receivership and expose them to lawsuits and other liabilities.

The economic harm here is vast, and the utility rule saga — from the EPA’s reckless endangerment to the White House's failure to temper Ms. Jackson — has been a disgrace.

Gunther: In Defense of the Plastic Bag

GreenBiz.com Sr. Writer Marc Gunther

Pity the much-maligned plastic bag.

Plastic bags are being banned or taxed in cities and counties across America – most recently in Seattle, and before that in San Francisco, Portland and Washington, D.C. (And the debate will continue through March in Austin, Texas.)

Beginning in January, Montgomery County, MD, where I live, will impose a five-cent charge for carryout bags at all retail stores. Like most of my neighbors (median household income in the county tops $92,000) I can afford the extra nickel.
 (photo, caption of Gunther)

But I’m not persuaded that plastic bag bans or taxes make sense. Here’s why.

They’re not based on science. Independent studies show that plastic bags are environmentally preferable to paper. Others suggest that, when they are reused, they are preferable to the reusable plastic or cloth sacks that many of us tote around.

Some of the arguments put forth for the bans don’t hold up. That plastic waste in the oceans you’ve probably read about? No, it’s not the size of Texas. Nor is it made of plastic bags.

Getting rid of carryout bags won’t lead to a long-term solution to the problem of plastic waste. Maybe instead of banning or taxing bags, we should be recycling them. That’s the argument being put forth by a company called Hilex Poly, which will recycle tens of millions of pounds of plastic bags, sacks and wraps this year, and would like to do more.

You may disagree but after digging into this subject for a while, I’m certain about only one thing: It’s complicated.

The arguments for plastic bag bans or taxes are, by now, familiar. The Montgomery County carryout bag law “is designed to improve our environment by cutting down plastic bags — a significant source of litter — which pollute our streets, streams, and playgrounds, and harm property values.” Econ 101 tells you that charging 5 cents for plastic bags creates an incentive for people to use fewer of them, and carry reusable bags instead. Proceeds go to “programs that fight litter and provide storm water pollution control.”

Bill Hickman, who leads the Rise Above Plastics campaign at the Surfrider Foundation, an advocacy group, told me by phone: “We’re trying to stop the plastic impact on the marine environment. Plastic doesn’t biodegrade in our lifetime… Anything, single use, at the end of the day has negative effects on our environment.”

All true, but…

Studies say that plastic bags have a lighter environmental footprint than paper, and in some cases are preferable to reusable bags. A thorough life cycle analysis done in the UK by the government’s environment agency in 2006 found that HDPE (high-density polyethylene, the typical lightweight plastic bags) are superior to paper because they require less energy and far less water to make and take up less space in landfill. Comparing them to reusable non woven polypropylene (PP) bags–the typical reusable bag, made in China, and sold by grocers–the study found that their impacts depend upon the number of times that plastic bags are reused.

Data on this is scarce and controversial – critics of plastic say the bags are typically used just once, but the industry says they are frequently used, often as garbage bags, or to carry kids’ lunches to school, or pick up dog poop. (Banning plastic carryout bags means that people may have to buy bags for those purposes.) Focusing on the climate issue, the 120-page-long UK study says:

The paper, LDPE, non-woven PP and cotton bags should be reused at least 3, 4, 11 and 131 times respectively to ensure that they have lower global warming potential than conventional HDPE carrier bags that are not reused.

If I understand that correctly, it means that one reusable bag has the carbon footprint of 13 disposable bags that are used just once. If you use the disposable bag twice, you’ll need to deploy the reusable bag 26 times before you are ahead in terms of global warming. By the way, this doesn’t include the impact of washing the reusable bag in hot water, which is highly recommended because bacteria like E. coli and fecal coliform can thrive in reusable bags, according to another study, which, it must be said, was financed by the plastics industry.

A study from the University of California, Chico, funded by Keep California Beautiful, analyzed the UK studies, as well as research from Scotland, Australia and a U.S. consulting firm and found that “reusable plastic bags can have lower environmental impacts than single-use polyethylene plastic grocery bags.” But it also found traces of cadmium and lead in the reusable bags. The professor who did the study has consulted for both plastic bag and reusable bag makers. Like I said, it’s complicated.

Plastic pollution of the oceans probably isn’t as bad as you think. You can find dire stories of plastic pollution, as well as birds being strangled by plastic bags, on the websites of Surfrider and Save the Bay. Oprah Winfrey devoted a television program to the problem, saying:

The Great Pacific Garbage Patch stretches from the coast of California to Japan, and it’s estimated to be twice the size of Texas. “This is the most shocking thing I have seen,” Oprah says.

Whether Oprah has actually seen the garbage patch is anyone’s guess. But Angelicque “Angel” White, an assistant professor of oceanography at Oregon State, participated in one of the few expeditions solely aimed at understanding the abundance of plastic debris in the Pacific. He says the claim that the “Great Garbage Patch” between California and Japan is twice the size of Texas is flat wrong. OSU reports:

“There is no doubt that the amount of plastic in the world’s oceans is troubling, but this kind of exaggeration undermines the credibility of scientists,” White said. “We have data that allow us to make reasonable estimates; we don’t need the hyperbole.

According to NOAA and others, plastic debris in the oceans comes from many sources, including fishing lines, PET bottles, polyester clothing, detergent bottles, plumbing pipes, drinking straws and toothbrushes.

Why not recycle? Since we’re never going to ban all plastic bags and containers – plastics used to carry fruits and vegetables, plastic newspaper wrappers, styrofoam containers used for carryout food, etc – maybe the answer is to support and develop robust recycling streams for plastic. Like PET bottles, plastic bags are 100% recyclable. The plastic isn’t the problem; litter is the problem.

Unfortunately, recycling rates are low, but the good news is that they are climbing. EPA recently reported that in 2010 recycling was up from 12% to 15% for polyethylene bags, sacks and wraps. The more plastic bags are recycled and reused, the less their environmental impact, of course.

Mark Daniels, who is vice president of sustainability for Hilex, a leading manufacturer and recycler of plastic bags, put this argument to me. Hilex pays about $300 to $400 a ton to supermarkets and others for used plastic bags, stretch wrap, the plastic wrap that goes around bottles, etc. They company says it will recycled between 35 and 38 millions pounds of post-consumer plastic bags this year – a tiny fraction of all bags, but still – and it wishes it had more.

Hilex does its recycling at a plant in Indiana that it opened in 2005, and doubled in size in 2010.

“It is less expensive for us to collect, purchase, transport and reprocess and redistribute that material to all of our other plants than it is to purchase virgin material,” Daniels told me. That’s true even though plastic bags are made from natural gas, which is cheap right now.

But a robust supply of post-consumer plastic is needed to keep the plant busy. “We can triple our capacity to nearly 100 million pounds,” he said. “But it’s difficult for our company and our board of directors to commit those tens of millions of dollars,” without the support of cities, towns, retailers and environmentalists for more recycling. “We should be 100% aligned with environmentalists,” Daniels said.

The truth is, we don’t really have a clear answer to the age-old question of “paper or plastic,” now amended to say, “paper, plastic or reusable?” Too many variables are at play.

My own answer? I carry several reusable bags in the trunk of my (hybrid) car and bring them into the grocery store when I remember. When I don’t, I take plastic and bring it back to be recycled. I don’t feel bad about that. Neither should you.

GreenBiz.com Senior Writer Marc Gunther is a longtime journalist and speaker whose focus is business and sustainability.

Upcoming TCC & ACIT Events

January 17, 2012 – South Texas Joint ACIT/ABC Economic Outlook Luncheon at the Ortiz Center in Corpus Christi. Please Note: this is a date change from January 18th. Click here for details.

February 15, 2012 – Mid-Coast Joint ACIT/ABC Luncheon at River Place in Freeport. Details to follow.

February 23, 2012 – ACIT Houston Ship Channel Reverse Trade Show at the Pasadena Convention Center. Click here for details.

March 22, 2012 – ACIT Mid-Coast Reverse Trade Show at the Lake Jackson Civic Center. Click here for details.

March 28, 2012 – South Texas Joint ACIT/ABC Political Forum at the Ortiz Center in Corpus Christi. Details to follow.

April 19, 2012 – ACIT Houston Ship Channel Clay Shoot. Details to follow.

Upcoming Member Events

For a listing of TCC & ACIT Member promotions and events, please click http://www.acit.org/categories/Events/Upcoming-Member-Events/.
(These events are not organized or endorsed by TCC or ACIT.)