EcoCycle's Eric Lombardi talks about social enterprise and offers advice to the Transition Movement

It’s trash day in my little Denver suburb as I take my dog on an early morning walk.

A few of my neighbors have set out recycling bins alongside their single, small trash can. Some have completely filled two rollaway trash cans and have stacked large cardboard boxes from a weekend purchase near their recycling bin. There’s a bright colored plastic play set, once loved and now kicked to the curb to make room for the next acquisition. This time of year, the piles are bigger, with several huge lawn bags filled with grass clippings and yard waste stacked up with the rest of the garbage. One neighbor even put out an entire aspen tree on the curb—cut neatly into six foot-long sections—in the hopes it would all conveniently disappear when he got home from work. He would turn out to be disappointed.

Without any monetary incentive from our trash company to reduce the volume of landfill waste, my neighbors probably recycle because they want to do something good for the environment. The fact that I see many of my neighbors throwing away yard waste and grass clippings instead of composting makes me think they’re missing the point. Then again, it wasn’t that long ago that I thought throwing grass or leaves into the trash was okay because these were “natural” materials that would just decompose without any threat to the environment. That was before I learned how much the garbage that ends up in the landfill actually contributes to global warming.

It’s not just that the decomposition of things like food scraps and grass clippings creates methane gas. Trash also gets incinerated, a process that emits pollution and carbon dioxide. When virgin resources for such products as plastics, paper and metal have to be mined and extracted, it adds to carbon emissions because of the fuel spent on extraction, transport and manufacture.

Significantly reducing the amount of organic materials in the landfill (like those grass clippings and tree branches), can make a big difference in the amount of greenhouse gases emitted into the atmosphere. According to a 2008 report entitled “Stop Trashing the Climate,” a zero-waste approach to waste management is “one of the fastest, cheapest, and most effective strategies we can use to protect the climate and the environment.” The report states that if the U.S. can conservatively reduce the amount of waste that is either landfilled or incinerated, it would be the greenhouse gas equivalent of taking 21% of the existing coal-fired power plants offline. This would represent 7% of the total reduction in greenhouse gas emissions that most scientists say is needed in order to put us on track to stabilizing the climate in the next 40 years. This can be just as effective as other leading strategies proposed by experts, such as increasing efficiency standards in passenger vehicles and electrical appliances.

Eric Lombardi, Executive Director of Eco-Cycle, one of the largest non—profit recyclers in the U.S., co-authored the report and is passionate about doing what he can to implement a “Zero-Waste” system of resource management in order to help stabilize the climate. He also leads Eco-Cycle in its mission to collaborate with local communities in reducing their use of natural resources by recycling or reusing its discards. Their goal is to make Boulder a model for the world in how zero waste can be accomplished. Their efforts toward this goal are what earned Eco-Cycle the Best Non-Profit Organization Award in 2008.

When Eric Lombardi took over Eco-Cycle as Executive Director in 1989, the recycling revolution was just getting started. The 90s saw a boom in the recycling industry, with companies like Eco-Cycle in the forefront of the Zero Waste Age. It was the hey-day of recycling, and business was good.

Then the economy crashed in the fall of 2008.

The market for recycled plastics and “secondary materials” plummeted along with the stock market. Eco-Cycle is now selling its materials for a fraction of what it used to before the economic meltdown, a fact that has put a lot of Lombardi’s ambitious projects on hold for now. One of the projects is the Zero Waste Park, a one-stop materials recovery center intended to go in front of a landfill.

Does the recession mean Zero Waste was just a nice idea for a better time, or is there hope that environmental projects can survive economic instability?

“Right now we have no money, we’re bleeding very badly. Thank God I saved a lot of money in the last ten years,” says Lombardi.

But Eco-Cycle is hanging on, and Lombardi’s optimism about the future of what he calls the “resource management industry” almost eclipses any worries about his company’s finances. He’s already thinking of new ways to make money—lots of money—and still be a steward for the environment.

“It’s going to take a new kind of capitalism for that to happen.”

He acknowledges that it’s going to take plenty of creativity and a willingness from the community to jump onboard with a new way of doing business. He’s been following the Transition Town Movement and is also “very interested” in the relocalization movement because he sees how vulnerable the recycling industry has become because of economic globalization.

Why is the relocalization movement so important for America from your perspective?

Lombardi: We used to be a social community movement in the 70s and 80s. In the 90s we became a commodity business. It was all good and it was all local.

But everything changed when China stepped in and started sucking up all the recyclables in the late 90s. They paid so much that they really, really crippled the domestic recycling industry in the U.S. because the domestic mills—which were older—couldn’t pay what the Chinese were able to pay. You could fill up a cargo container that was empty at the port of Los Angeles for $600, versus the $6000 it cost to ship a container full of VCRs or whatever from China to the U.S.

The Chinese thought, not only are we getting this stuff (cheap), we’re turning it into new products and selling it back to America. So for about 10 years this incredible manufacturing industry in China vacuumed up all the scrap commodities in America, Europe and all over the world, actually. China set the prices for ten years while we went to sleep.

And then something significant happened last fall. Specifically, it happened in October and November for the industry. China stopped buying.

This why the re-localization movement is so important.

Right—it’s important because it helps make communities more resilient and it allows companies like Eco-Cycle, that work for social and environmental good, to survive fluctuations in the global market price of commodities.

How is EcoCycle handling the drop in prices for recyclables due to the global economic recession? Are you having to warehouse a lot of the recyclables?

Lombardi: We’ve seen prices at these levels before in the early 90s. They’re enough to survive on. So we’re all surviving. The good news is that most of the material—over 80% of the material—is still being purchased and used in the industry. Somewhere around 10-15% is being warehoused.

That’s global capitalism at its finest. You buy it cheap, store it, and sell it when it’s expensive again.

Who’s buying the 80% now?

Lombardi: Mostly Asia, some domestic. Most of Eco-Cycle’s materials are domestic. Ninety percent of the material I sell stays domestic, but that’s because of who we are. We’re a true double bottom line social enterprise. We make decisions based on the double bottom line.

When I took over twenty years ago when this place was on the verge of bankruptcy, I told the Board, look, we’re going to make ten percent on everything we touch. We should grow, because Eco-Cycle stands for the right stuff. They said, “Is that legal?” and I said yeah, it’s legal. As long as we don’t pay ourselves high salaries and buy Ferraris and stuff, it’s legal. It’s true, under a 501c legal structure, you can make a profit in America.

So we started making money in the 90s. Eco-Cycle exploded because I ran this place like a business.

What is the business model that’s going to drive companies like EcoCycle, who “stand for the right stuff” forward in the future?

Lombardi: I really believe that the organizational structure that is going to facilitate the transition from the 20^th century waste management industry to the 21^st century resource management industry is social enterprise. Social enterprise is the business model that’s going to move this forward.

(Social enterprises are organizations that trade in goods and services not only for a profit, but also for the common social or environmental good of the community. Rather than focusing on maximizing their shareholder value, social enterprise businesses aim to further their goals toward environmental or social justice issues, thereby combing profit with a social-value-generating component.)

Last September I was asked to speak in Scotland at the first world conference on social enterprise. There were 450 people there from around the world and only eight Americans. It’s so exciting, and yet we are so far behind.

Is this what your vision for the Zero Waste park is? A kind of social enterprise that’s both good for the environment and good for the bottom line?

Lombardi: I formulated the Zero Waste Park as a solution for anyone who wants to do something like that in America. Right now we’re a landfilling country, and the only good thing about landfills is that they are already toxic locations to their neighbors. Zero Waste Parks could be located in the old landfills.

All the discarded resources in the community go to the landfill, but they have to go through the Zero Waste Park first. Some materials are going to get paid for, depending on what the market is for them, some materials can be dropped off for free. Some materials you’ll have to pay to dump, but they’ll be recovered and recycled.

Getting to absolute zero is inconceivable, so our goal is 90% recovery. The last 10% that comes out at the back of the park will be charged at a rate comparable to what policymakers in Europe have decided. The true cost of landfilling is $300 a ton, when you consider all the environmental externalities.

We’ve got all the environmental experts telling us that we can’t bury stuff at $15 a ton. But that’s what we’re doing here in Colorado. It’s a joke.

I can see this incentivizing haulers to reduce the amount of trash that goes into the landflll, so they can make as much profit as possible from what they’re charging their customers for trash pickup.

Lombardi: That’s the key concept. We want the clean companies to win the profits in the future. That way, source-separated discards are more profitable than mixed waste in the landfill. That’s the opposite of what the situation is today.

I love the idea of paying per trash bag instead of a flat rate for my disposal service. It would put the price in my control, based on how much I’m choosing to recycle or throw away.

Lombardi: Pay-As-You-Throw, or PAYT, is a revolution that went right past Colorado. It’s a big program that’s accepted in over 4,000 cities. Eco-Cycle has been doing community organizing very intensely in the last three or four years and we’ve succeeded in getting the cities of Lafayette and Louisville to adopt PAYT citywide programs. They’re huge victories.

People in Louisville are switching over to the smallest trashcan they can, which costs like $7 a month. Recycle bins are free. Compost bins do cost a little bit. If you’ve got these three bins in your house, you just saved yourself a bunch of money and you did something good for the environment.

That sounds like a real win-win situation, especially when you consider that you’re reducing the amount of compostables in the landfill emitting methane into the atmosphere.

Lombardi: You’ve just put your finger on the hottest topic in the Zero Waste movement. We created a campaign we call COOL—Compostable Organics Out of the Landfill. Cool will have such beneficial impacts—not just the elimination of greenhouse gases out of the landfills, but also the compost going back to the local farms. Carbon sequestration, water conservation, soil regeneration—these are all the benefits that come from compost.

How could EcoCycle benefit financially from managing compost?

Lombardi: Right now compost is a product that competes with the fertilizer industry, which is a very lucrative industry. But fertilizer has toxicity and it’s based on non-renewable resources. We want to create an industry that competes with synthetic fertilizer and we want to support a natural industry.

Right now people are not educated enough about what fertilizer does in their soil. Even farmers don’t know enough about it. They just know their neighbors are doing it, and the salesman told them it’s the latest, greatest thing. Just write me a check, put this on the ground and your tomatoes will grow. The old generation farmers aren’t hip, but the new generation farmers are.

What we need for compost to compete with fertilizer is for the price of compost to go up. Right now the price is too low and people don’t realize the benefits of water conservation and carbon sequestration. We need the price of compost to double coast to coast.

I met with the organic farmers in Boulder County a couple of years ago and asked them, if we invest the money to make a product, will you buy it? It’s an 80 million dollar investment. They told me that they know our soil needs help here in Colorado, and if we could make good compost at a fair price, they would buy everything we could make. The issue here is “fair price.”

So even when you’re trying to do something good, it still has to compete with the free market.

Lombardi: That’s why social enterprise is so important. If I can find a piece of land, and the county commissioners will work with me, I will then call the organic farmers and tell them, “Guys, define fair price, ok? I need to make 10%. That means you have to buy my compost at $18 a yard. Will you do that?”

I’m going to invite my buyer in as a partner. If they don’t join us, they won’t have an opportunity to buy high quality compost at a fair price. They’ll be left to the winds of the synthetic fertilizer industry and all the Cargills of the world, who really run the planet.

They’re going to want out of Cargill because when oil and natural gas prices go up due to a shortfall of supply and demand after Peak Oil, so will the price of those fossil-fuel-based pesticides and fertilizers.

Lombardi: I was in the energy industry. And you know what? There’s a hell of a lot more carbon energy under the ground than anyone’s talking about. Believe me.

In our lifetime carbon energy is going to be here. We’re not in for a shortage anytime soon. Don’t buy that. Peak Oil is twenty to thirty years away still. We have a lot of work to do in the next twenty to thirty years.

But isn’t the point that even if we were to have unlimited carbon resources, we shouldn’t be burning through it at the rate we’re doing because of climate change considerations?

Lombardi: Yes, that’s the discussion that needs to be going on. With the global recession going on, we’re not even going to have that discussion for decades. That’s why I say we can’t even wait for the price of carbon to go up. We’re in an immediate global warming situation where we have to immediately cap the gases.

In his book, Ecological Economics, Herman Daly says that the free market cannot solve the environmental crisis. Do you agree?

Lombardi: Yes. That’s the key point right there. People’s mind’s are just opening up to that fact. There are certain things that the free market won’t do. This is a philosophical underpinning that the social enterprise movement in the UK has embraced. Even Tony Blair has embraced it.

This means we have to create non-greenhouse gas emissions ways of doing things. I’m excited about this, because I think there’s money to be made, jobs to be had. We can do this. We can do non-carbon energy and we can do resource recovery.

But it’s going to take a new kind of capitalism for that to happen.

What about the critics that say that what you’re talking about is a form of “socialism” or even the death of capitalism?

Lombardi: We need to reframe it in a way that will get them excited with us. Social enterprise is about jobs and all the neat shit that green collar jobs are going to bring them.

Social enterprise is a profit-making business, but it also gives a concession to the community benefit, to social justice, to the public health.

We’re going to give social enterprise the legal structure in America, and we’re going to create new businesses and have Zero Waste millionaires out there. Bill Gates said in an article that we need a more creative capitalism to solve the problems of the world. If Bill Gates can say it, anybody can say it.

What advice would you give the Transition Town movement in its efforts to build community resilience and sustainability?

Lombardi: Here’s the problem. I don’t think enough of the people in the Transition Movement are business people. There needs to be more business people involved who have tried to create and find new business opportunities in a community. We need to start creating new social enterprise businesses in our towns.

A lot of people have no clue how difficult it is to do local business.

When you actually do it—not just talk about it—but actually do it, it is brain damage unbelievable. It’s expensive—three times as much as what you thought it would be. And the chances for success are far less than you thought.

That’s part of the reason these global companies are winning. They have the money and the expertise and the clout to cut through local politics and local land use issues.

If the Transition Movement doesn’t talk about the local planning and land use issues, you will be nothing more than another interesting book or another interesting idea.