Environ. Sci. Technol. 2006, 40, 1672-1680
Economic Analysis of Electronic Waste Recycling: Modeling the Cost and Revenue of a Materials Recovery Facility in California HAI-YONG KANG* AND JULIE M. SCHOENUNG Department of Chemical Engineering and Materials Science, 3118 Bainer Hall, One Shields Avenue, University of California, Davis, California 95616
The objectives of this study are to identify the various techniques used for treating electronic waste (e-waste) at material recovery facilities (MRFs) in the state of California and to investigate the costs and revenue drivers for these techniques. The economics of a representative e-waste MRF are evaluated by using technical cost modeling (TCM). MRFs are a critical element in the infrastructure being developed within the e-waste recycling industry. At an MRF, collected e-waste can become marketable output products including resalable systems/components and recyclable materials such as plastics, metals, and glass. TCM has two main constituents, inputs and outputs. Inputs are process-related and economic variables, which are directly specified in each model. Inputs can be divided into two parts: inputs for cost estimation and for revenue estimation. Outputs are the results of modeling and consist of costs and revenues, distributed by unit operation, cost element, and revenue source. The results of the present analysis indicate that the largest cost driver for the operation of the defined California e-waste MRF is the materials cost (37% of total cost), which includes the cost to outsource the recycling of the cathode ray tubes (CRTs) ($0.33/kg); the second largest cost driver is labor cost (28% of total cost without accounting for overhead). The other cost drivers are transportation, building, and equipment costs. The most costly unit operation is cathode ray tube glass recycling, and the next are sorting, collecting, and dismantling. The largest revenue source is the fee charged to the customer; metal recovery is the second largest revenue source.
Introduction The development of the electronics industry has made our everyday life easier and more convenient. However, because the useful lifespan of consumer electronic devices is decreasing as a result of rapid changes in equipment features and capabilities, the waste stream created by these obsolete electronic devices is growing rapidly. The primary issue associated with these large amounts of obsolete electronic devices is the adverse effects they can have on human health and the environment, because various toxic materials such as lead, cadmium, and mercury are contained in e-waste. Personal computers (PCs), for instance, contain eight toxic metals that are categorized as hazardous by the Resource Conservation and Recovery Act (RCRA) (1). 1672
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FIGURE 1. Process sequence at a representative materials recovery facility (MRF) for e-waste recycling. In fact, in the United States, electronic waste is the largest source of heavy metals in municipal solid waste (2). Many countries are now implementing or proposing legislation that would reduce the use of toxic materials in electronic products (3). For example, the European Union (EU) is in the process of implementing the Restriction of the Use of Certain Hazardous Substances (RoHS) Directive, which bans certain substances from future use in electrical and electronic equipment (4). Also, in the United States, some states have passed laws to encourage recycling of obsolete electronic products. Several years ago, the states of Massachusetts and California banned the disposal of CRT monitors in landfills (5, 6). Recently, the state of Minnesota has also proposed a bill to ban CRT-containing electronics from being disposed of in landfills (7, 8). These pieces of legislation seek to direct CRT glass, which contains lead (Pb), to proper recycling. Many other states are currently developing regulations for computer equipment disposal and recycling (7, 8). The state of California passed the California Electronic Waste Recycling Act (CEWRA) in 2003. According to this act, manufacturers and consumers, not local government, are responsible for the costs associated with recycling and disposal of e-waste. All manufacturers that sell their products in California must provide a proper and effective recycling system for recovered electronic devices. They must also submit a report that describes their efforts to reduce the use of hazardous materials and the estimated amount of recycled materials contained in their electronic devices (9). Also, this act imposes an extra charge to the consumer when a new LCD or CRT monitor is purchased. Used electronic devices also contain high-value materials such as gold, palladium, copper, and plastics. For example, 1 ton of electronic scrap from PCs contains more gold than that recovered from 17 tons of gold ore (2). Furthermore, several obsolete but functional electronic devices can be reused, if identified and sorted out by experts. For instance, some collected obsolete electronic devices still operate without any mechanical or functional problems. These resale or refurbished electronic devices are one of the major revenue sources for e-waste recyclers (10, 11). To cope with obsolete electronic equipment, several treatment options are used. Among these options, recycling and reuse of end-of-life (EOL) electronic products is the most feasible option to date (12). But electronic recycling has a short history, so there is not yet a broad and fixed infrastructure in place, and the size of the recycling companies are small. Most have fewer than 20 employees, which is small compared to other industries (13). In the electronic waste recycling industry, the materials recovery facility (MRF) plays a key role, both as part of private companies (manufacturers) and through municipalities. Figure 1 shows a process flow diagram for a representative e-waste recycling MRF. E-waste 10.1021/es0503783 CCC: $33.50
2006 American Chemical Society Published on Web 01/24/2006
recycling starts with the collection of e-waste and its subsequent transport to the MRF. Usually, for this transportation need, MRFs use either their own transportation equipment or rental transportation equipment available from local municipalities (i.e., waste management companies). These steps are then followed by a sorting process through which resale systems/components are isolated and nonfunctioning equipment is subsequently dismantled. The remaining materials are then shredded and separated to facilitate material recovery, as described below. The most common e-waste product is a personal computer system, which consists of a monitor (typically a CRT for waste units) and a central processing unit (CPU) (13). Thus, for the present case study, PCs have been chosen as the target product to calculate the cost and revenue for a representative e-waste MRF. Resalable equipment such as clean and functional monitors and CPUs can be sold to regional repair shops to generate revenue. The other equipment is then dismantled. After size reduction, some of the recovered materials (i.e., plastics and metals) are further separated; those with value are then sold to scrap dealers by auction. The CRT glass, however, is transported to a CRT glass recycling company for a specified recycling fee, which includes the transportation cost. The recovered output of the MRF process can be categorized into three parts: metals, plastics, and glass. Lead, copper, zinc, steel, and aluminum are representative metals used in electronics that can be separated and recovered for use in secondary markets (12). For plastics, high-impact polystyrene (HIPS), acrylonitrile butadiene styrene (ABS), polyphenylene oxide (PPO), and polycarbonate/acrylonitrile butadiene styrene (PC/ABS) are widely used in the electronic industry (14). Rios et al. (15) described an engineering approach for the effective separation of plastics at an e-waste MRF, and Basdere and Seliger (16) evaluated the feasibility of automation for end-of-life electronics disassembly. Much of the metal and plastic recovery is ultimately handled by organizations outside the MRF. The specific capabilities of a given MRF are unique. There are several MRFs for obsolete electronic products that are operated by original equipment manufacturers (OEMs), local organizations (nonprofit organizations, local government agencies), and private recyclers. Approximately 500 e-waste recycling companies are currently operating in the United States (13), and they are concentrated in the Midwest, New England, and the West; each region accounts for approximately a quarter of the recycling companies (12). Most often, an e-waste MRF is a small to mid-size recycling facility that collects obsolete electronic products from households and local communities through permanent collection programs. As a result, the electronic products that are collected are not homogeneous and, over time, exhibit large variations in size, physical/functional condition, and type of electronic product, especially in comparison to obsolete electronics collected from manufacturers and industrial users (13). Generally, homogeneous e-waste from large business computer users is more valuable than less homogeneous e-waste from households (17). These factors will influence the costs and revenues associated with a specific e-waste MRF. Several studies have been conducted to estimate the costs associated with the recycling of e-waste. For instance, Macauley and Palmer (18), and Boyce et al. (19) evaluated CRT monitor recycling. Lu and Stuart (20) evaluated the cost for industrial and residential returns via special collection events. Boon et al. (21) and Jung and Bartel (22) also considered the costs associated with an e-waste special collection event. Rios et al. (15) analyzed the difference in cost for bulk and separated plastic recycling. These studies are limited in scope, and, moreover, were conducted prior
FIGURE 2. Flow of costs and revenues in an MRF operation for e-waste. to state mandates banning landfill disposal and incineration of CRT monitors.
Scope For the present study, we developed an input/output model to evaluate the economic drivers associated with a representative e-waste MRF operated in the state of California. Costs and revenues for each unit operation and for each item that causes cost or revenue, such as materials, labor, and system/component resale, were quantified. By estimating the costs and revenues for each unit operation, the model calculates the total processing costs and revenues in operating an MRF that handles e-waste. This methodology allows us to identify critical cost and revenue drivers. Sensitivity analysis was used to evaluate the sensitivity of the modeling results to key input values. Sensitivity of costs and revenue to variations in the total treatment amount and the relative amount of CRT monitors was evaluated. This study is focused on the situation in the state of California. The state of California has banned the disposal of CRT monitors to both landfills and incineration. Therefore, all CRTs must be recycled. This fact creates a unique feature in the California e-waste recycling industry. The MRF treatment ratio for CRTs and CPUs is 3:1 (23). For a previous study, which was not focused on California, the ratio was determined to be 2:1 (24). In addition, we assume the size of the e-waste MRF to be that which is typical today (∼20 employees, 2500-5000 tons/year treatment volume) (13, 24) for the treatment of heterogeneous waste collected at a permanent residential collection site. At this MRF, we assume the MRF is responsible for collecting the waste and transporting it to the MRF. We also assume that the steel, aluminum, copper, and zinc scrap are physically separated at the facility via magnetic and eddy current separation, respectively, before being sold to secondary suppliers; other metals are sold for further separation and refinement. No chemical extraction occurs at the MRF. For the plastics recovery, we assume that the large pieces, such as the ABS monitor housing, are separated by hand. Further plastics separation is conducted at specialty plastics recyclers, to whom the plastics scrap is sold.
Methodology To set up our economic model for the e-waste MRF defined above, technical cost modeling (TCM) was utilized (25, 26). A TCM was used to estimate and analyze the costs and revenues associated with the MRF processes. Figure 2 shows the cost and revenue flows in an MRF operation. Costs, which consist of labor, building, equipment, energy, materials, and transportation, are shown as arrows out from the ‘MRF’ box. The arrows pointing inward to the MRF represent revenue sources for the MRF. Revenues for an e-waste MRF consist of resale systems/components, materials recovery, and fees from customers. VOL. 40, NO. 5, 2006 / ENVIRONMENTAL SCIENCE & TECHNOLOGY
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The model has two main constituents, inputs and outputs. Inputs are variables that are directly specified in the model. Outputs are the results of the modeling and consist of cost and revenue estimates. First, the basic unit operations are reviewed and process options within these steps are identified: collection (which includes transportation), sorting, testing, dismantling, size reduction, separation (which includes magnetic and eddy current separation), landfill, CRT recycling (which is outsourced), and sales are the unit operations considered for the present analysis. Cost elements are also defined: labor, energy, materials, transportation, equipment, and building. Second, for the selected unit operations, baseline costs are calculated and the key process parameters are evaluated. In this step we rely on published sources and on data from individuals and private companies. Third, with these process parameters, we establish the functional relationships that can be used to calculate the costs. Fourth, by adding up the key process-derived costs, we can get a cost for each unit operation. Finally, the total MRF operation cost is calculated by summing all the unit operation costs. Revenues for each unit operation and total MRF operating revenue can be estimated with the same logic as that used for the cost estimation. The revenue sources considered are fees charged to customers, materials recovery (metals and plastics), and resale of systems/components. Representative equations used for cost and revenue estimation are shown below.
TABLE 1. Representative General Inputs Used in MRF Cost Modelinga price of electricity (industry sector) ($/kWh) operating time (days/year) labor wage ($/h) price for building space ($/m2‚month) treatment volume (tons/year) CRT treatment amount (wt %) CPU and others treatment amount (wt %)
N(0.10, 0.02)b 240 N(9.0, 1) 3.55 2500 75 25
a Specific to California; see refs 23 and 27-29. b N(µ, σ) indicates a normal distribution with mean µ and standard deviation σ.
TABLE 2. Representative Materials Composition Assumed for the Central Processing Units and Cathode Ray Tube Monitorsa materialb
CPUs (wt %)
lead copper steel aluminum zinc precious metals other materials HIPS ABS PPO glass
10.8 5.6 26.9 23.9 3.7 0.05 3 1.3 15.2 9.5
CRT monitors (wt %) 6.1 9.1
2.6 18 64.1
See refs 19 and 31-35. b HIPS, high-impact polystyrene; ABS, acrylonitrile butadiene styrene; PPO, polyphenylene oxide. a
unit operation cost ) materials + energy + labor + transportation + equipment + building (1) total cost )
∑
(cost at each unit operation)
(2)
revenue ) resale systems/components + recovered materials + fees to customers (3) The materials cost includes rebates to the customer, waste disposal (landfill) fees, and CRT glass recycling costs. It should be noted that, from the perspective of the MRF, the CRT glass recycling cost can best be considered as simply a materials cost because it is a service provided by another company, even though the actual costs from the perspective of this other company would include transportation, labor, utilities, equipment, etc. The cost of energy consumption at the MRF is calculated on the basis of the information on energy costs and energy consumption per unit operation. The cost of labor is a function of the wages and the number of laborers associated with the unit operation. The transportation cost is estimated on the basis of the information on transportation distance to the MRF and to the landfill site. The equipment costs are determined by the number of machines required and the cost per machine. The building cost includes cost for building and land. Overhead costs are not considered.
Input Parameters The role of an MRF is to take collected e-waste and, after several processes, resell the systems/components, sell the materials recovered from collected e-waste, and pay a fee for disposal of the remaining waste (see Figure 1). The input parameters for the e-waste MRF TCM are categorized into two parts: inputs for cost calculation and inputs for revenue calculation. The main input parameters needed to calculate costs for each unit operation include equipment costs, labor costs, material costs, and transportation costs. Input parameters for revenue estimation include the fees charged to customers, 1674
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TABLE 3. Representative Process Related Input Variables Used in Each Unit Operationa MRF equipment cost recovery life (years) resale price for CPU (Pentium III) ($/unit) resale price for CRT monitor (17 in.) ($/unit) fee charged to customer for CRT monitor (17 in.) ($/unit) rebate for working computer ($/unit) resale price for board ($/kg) landfill tipping fee ($/kg)
7 N(32.5, 7.5)b N(30, 5) 10
N(3.5, 1.5) N(1, 0.5) N(0.1, 0.02)
a Specific to California; see refs 23, 36, and 37. b N(µ, σ) indicates a normal distribution with mean µ and standard deviation σ.
systems/components resale values, plastics recovery values, and metals recovery values. The general input values for MRF cost modeling are listed in Table 1. These general input parameters are common to all of the unit operations but are specific to the state of California. Additional input data used to determine the costs and revenues are provided in Tables 2 and 3. Table 2 shows the typical materials composition assumed for the CPUs and CRT monitors. Table 3 shows the input variables used in each unit operation. Metals represent more than 73 wt % of the total CPU composition, and glass is the largest component of CRT monitors, representing more than 61 wt %. Recovered metals and plastics are sold by auction. The values of these fluctuate and are dependent on market conditions and recovered material quality (30). Systems and components can be sold only if they are clean and functional. Furthermore, at present, the main process chip for the CPU must be at least Pentium III clock speed, the random access memory (RAM) should be at least 128 Mb, and the recommended hard drive capacity must be larger than 8 Gb. Also, for CRTs, the display size should be 17 inch or larger and the plastic housing should show no signs of age. These are the current requirements. Clearly, these will vary with time, as secondary markets change.
FIGURE 3. Annual operating cost, distributed by cost element for an e-waste MRF. CRT 75 wt %; CPU 25 wt %; treatment amount 2500 tons/year.
FIGURE 4. Annual operating costs, distributed by unit operation, for an e-waste MRF. CRT 75 wt %; CPU 25 wt %; total treatment 2500 tons/year.
Results and Discussion Operating Cost Analysis. Figure 3 shows the annual operating cost, distributed by cost element for an e-waste MRF in California. The largest cost driver is materials cost (which includes the cost to send CRT glass out for recycling, the customer rebate, and the landfill tipping fee for residual waste), at approximately 37% of the total operating cost. The second largest cost driver is labor cost, at approximately 28% of the total operating cost. It should be noted that this does not include overhead labor, which, if included, would result in labor costs being more significant. As seen from Figure 3, these two cost drivers are most critical and, combined, represent almost 65% of the total cost. Within the materials cost, the cost of sending the CRT glass out for recycling represents more than 80% of the total materials cost. In the state of California, collected CRT glass must be recycled (9). To fulfill this regulatory requirement, collected CRT glass is transported to glass smelters to be recycled, but these smelters are not located on the west coast of the United States (12). Thus, it is to be expected that the cost to recycle CRTs, which includes the cost of cross-country transportation to the glass recycler, will be high. The U.S. Environmental Protection Agency (EPA) reported that the general transportation cost for CRTs is approximately $2.253.41/mile for a full truckload in a 23-ton trailer, depending on transportation conditions (38). During MRF processing of e-waste, many unit operations such as sorting, testing, dismantling, and sales depend on
labor-intensive processes, which results in high labor cost. Transportation cost represents the costs for transportation of collected obsolete equipment to the MRF and the costs for transportation of residues to landfill sites after MRF processing. Energy cost is the smallest cost driver in the e-waste MRF. Figure 4 shows the distribution of annual operating cost by unit operation. CRT recycling cost represents the largest portion, approximately 30%, and then sorting, collection, and dismantling costs represent more than 10% each in the MRF operation. It is important to recall that this analysis is for the situation in the state of California, where CRTs must be recycled. If the same study is conducted for other states in which CRT glass recycling is optional, the percentage of the cost represented by the CRT glass recycling cost will be decreased. In the present case study, the cost to recycle CRTs has been calculated at $0.33/kg. But other studies, which were conducted outside California, show this cost to be $0.20-0.22/kg (39, 40). Other studies indicate that the most costly step in e-waste recycling is often collection (13, 41, 42). But in this study the most critical cost driver is the cost to have CRT glass recycled; secondary cost drivers include sorting, collection, dismantling, and separation. There are several reasons for these discrepancies. First, the former studies do not consider the entire process for e-waste recycling. They consider only special drop-off collection programs. Also, they do not model a conventional e-waste MRF operation, because they only VOL. 40, NO. 5, 2006 / ENVIRONMENTAL SCIENCE & TECHNOLOGY
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Figure 6 shows the distribution in annual revenue by revenue source. The largest revenue source is the fee charged to customers for recycling, which represents approximately 60% of total revenue. This is consistent with the results of a survey conducted by the International Association of Electronics Recyclers (24). The second largest revenue source comes from recovered metals. Resale of systems/components generates the least revenue. Most of the equipment collected at an e-waste MRF is either nonfunctional or outdated. Only a limited amount (
