An energized outlook: a global energy squeeze may continue to make secondary commodities valuable ones.

Recycling advocates have long presented the notion that using secondary commodities in the manufacturing process is an energy-saving endeavor. In some cases, there are frequently cited statistics offered to help back up this claim, such as that melting used aluminum beverage containers (UBCs) requires 95 percent less energy than producing aluminum sheet starting with the mining process.

Environmentalists gravitate toward recycling for reasons of resource preservation, with the best case scenarios being those that save mineral or forest resources at the same time energy resources are also being saved.

Market-based recycling, however, is far more dependent on the energy savings side of the equation. With energy prices--particularly those based on petroleum--hitting historic highs, those in the recycling business stand to gain a great deal if it turns out that the collection, processing and shipping, followed by re-melting, re-pulping or otherwise re-using collected recyclables, offers bankable energy savings.

ARTIFICIAL HIGH? If recyclers make long-term plans based on competing in an era of high-priced oil, can they be assured that expensive oil is here to stay?

Economists and other analysts have predicted looming scarcity in the past, only to be tricked by the roller coaster nature of commodity supply, demand and pricing.

Oil has been particularly volatile in the post-World War II era, with a unified effort by producers to restrict the market in the 1970s resulting in a notable price spike. This was followed by an eventual glut of the black liquid that brought oil down to as low as $9 per barrel in the late 1990s when the economies of East Asia cooled in unison.

If conditions are truly different this time, the factor most often cited is the growth of consumerism and economic development in the BRIC countries (Brazil, Russia, India and China).

These four nations and other nations adjoining each of them are, through various combinations of state initiative and free-market expansion, adding' millions of people each year to non-agrarian, urban and even middle-class styles of living that consume more petroleum than previous rural lifestyles.

The soaring global demand far oil from the BRIC nations--added to the already robust demand from North America, Europe and Japan--has recently been coupled with turmoil in key oil producing regions, most notably the Middle East and Nigeria.

The result in 2006 has been oil prices that have topped $70 and even $75 per barrel and predictions by some analysts that per barrel prices in the triple digits are not out of the question.

But analysts and futurists seldom speak as one, and theorists who see a looming oil glut are also stepping forward. Analysts such as CNBC's Jim Jubak note that heavy sour crude oil is trading much lower than its light sweet crude counterpoint, and that refiners are adjusting, to handle this more abundant grade.

Exploration and new drilling efforts have been re-kindled throughout the globe, which to some analysts indicates that supply may be able to catch up with demand even if the economies of the BRIC countries continue to advance.

Even if oil prices settle back below their current soaring levels, today's pricing has caused manufacturers and buyer all through the supply chain to consider their energy costs. Such thinking should benefit energy-efficient production processes, which recyclers claim as a selling point.

SECONDARY ENERGY. Among the recycling segment that claim an overwhelming energy-efficiency advantage are secondary aluminum producers.

While using scrap paper can save from 25 percent to 45 percent in energy consumption, and steel scrap can save 60 percent on energy, users of aluminum scrap claim a 95 percent energy savings over the mining, screening, smelting and refining processes used to make primary aluminum.

On its Web site, the International Aluminium Institute, London, states, "The recycling of aluminum requires only 5 percent of the energy to produce secondary metal as compared to primary metal and generates only 5 percent of the green house gas emissions."

The figure is uniformly cited by aluminum companies, trade groups, recycling trade associations and environmental advocacy organizations.

With such energy savings, the market for clean aluminum scrap has never been an issue. Sustained high energy prices only bring the additional question of whether aluminum producers, rather than paying a discount for scrap because of contaminants and reduced melting yield, will in the future be paying a premium because of the energy savings.

Other secondary commodities are also positioned to save energy for manufacturers, with researchers at Oak Ridge National Laboratories claiming that one ton of paper made from re covered fiber saves some three of four barrels of oil compared to logging and chipping trees.

The use of iron and steel scrap also saves several steps vs. the mining and screening of iron ore, resulting in energy savings often calculated in the 60 percent range. Even though many of the new steel mills coming online in China have not been of the scrap-intensive electric arc furnace (EAF) variety, the decision is probably because of a perceived lack of available material rather than a calculation that iron ore and basic oxygen furnaces are more energy efficient.

An increased interest in plastics recycling from manufacturers, recyclers and entrepreneurs of all types seems to point to the double savings aspect of using more plastic scrap.

PLASTIC EXAMPLE. With its reliance not only on fossil fuels as a production cost, but also petro-chemicals as an ingredient, plastics manufacturing has been ripe for increased recycling attention.

Anecdotally, observers have been seeing many of the same manufacturers who resisted using recycled materials a few years ago begin to explore adjustments to their manufacturing processes to be more open to recycled content.

Hewlett Packard (HP), Palo Alto, Calif., may be ahead of some competitors in its use of recycled plastic, and now claims to use 30 percent recycled content in its laser jet printer supplies.

In the office machine segment, Toshiba is among the manufacturers claiming to use recycled plastic in the production of its copying machine toner cartridges.

Office products manufacturer Canon is also implementing systems to use recycled plastic. According to a corporate sustainability report, the company has "developed special methods for recycling plastics from collected products. Paper supply cassettes from copying machines are collected (HIPS material), preprocessed in Japan for washing and removal of foreign substances and shipped to a local plastic producer in Thailand for processing into m-PPE (modified polyphenylene ether resin). The recycled plastic yielded meets the same quality and safety standards as virgin plastic. The material is used to manufacture the power supply casings in inkjet printers."

The company says that projects such as this one meant that in 2004, "as much as 4,409 tons of reused and recycled plastic was incorporated into products."

Suppliers of plastic recycling services and components view themselves as a critical link in ensuring that more recycled plastic material is used by manufacturers. Markets such as EPS (expanded polystyrene) building materials have gained traction in the last several years, as has the use of recycled plastic in automotive components.

Although recycling legislation in the European Union and other parts of the world has, to some extent, driven automotive manufacturers and their suppliers toward recycled content, bottom line savings can provide another form of incentive.

Rieter Automotive North America, Farmington Hills, Mich., has found market acceptance for its automotive acoustic products made with recycled content (including post-consumer PET bottles), according to the company's Hameed Khan, who offered a presentation on the topic at Recycling Today's Plastics Recycling Conference in late June in Chicago.

Plastics recycling activity in the United States may well be dwarfed by activity in China. Japanese exports of plastic scrap increased nearly tenfold in less than a decade, from 69,900 metric tons in 1993 to 680,000 metric tons in 2001. More than 90 percent of this material headed to China or to Hong Kong, which served as a transit point to China.

The use of recycled PET and polypropylene resins can save 10 or 11 barrels of oil per ton compared to virgin sourcing, putting scrap plastic second only to the use of aluminum scrap as a petroleum saver.

As collectors and processors of recycled materials struggle with higher transportation and facility energy costs, they will be keeping a hopeful eye on the notion that the surge in energy prices is also yielding benefits: the long-term viability of their industry and the favorable attention of capital markets seeking a smart investment in an era of global energy scarcity.

The author is editor of Recycling Today and can be contacted at [e-mail].

Energy Savings Per Ton, Recycled vs. Virgin

MATERIAL            % REDUCTION IN ENERGY   EQUIV. IN BARRELS OF OIL

Aluminum                     95%                      37.2
Plastic (PET)                57%                      11.0
Steel                        61%                      2.7
Paper (Newsprint)            45%                      4.0

Sources: Department of Energy, Argonne National Labs, Franklin
Associates, AL Associates, AISI, Phillips 66, Wellman, National
Resources Defense Council.

Refiner Acquisition Cost of Saudi Light Crude Oil

(Per Barrel in Nominal [Non-Inflation Adjusted] Dollars)

MONTH                  COST PER BARREL

July 1971                   $2.18
July 1976                  $13.51
July 1981                  $36.58
July 1986                  $10.91
July 1991                  $18.14
July 1996                  $19.60
July 2001                  $22.76
July 2006                  $67.79

Source: Energy Information Administration division of the U.S.
Department of Energy