Junkyards Get Greener With a Shift to Recycled Steel

(Bloomberg Businessweek) -- The junkyard system of getting rid of damaged and end-of-life vehicles is shifting away from the mom and pop operations of the past and, in the process, offering a lift for the environment.

As cars get more complex and expensive to fix, insurers have become more willing to total vehicles rather than repair them, says Jeff Liaw, president of Copart Inc., a Dallas-based salvage company with 200 locations across the U.S. and abroad. That’s boosting the number of cars heading to the junkyard, which in many cases no longer means a facility with acres of land to hold rusting metal husks. Instead, at more than 10,000 junkyards—from Counselman Automotive Recycling in Mobile, Ala., to any number of Pick-n-Pull auto dismantlers across the country—cars are stripped, and the leftover metal—mostly steel and aluminum—is shredded, then melted down to make recycled steel that’s increasingly used in new autos. Reusing steel can lower carmakers’ costs by 20% to 60%, says Jonathan Morrow, former president of the Automotive Recyclers Association. And it helps the environment, according to a Worcester Polytechnic Institute study that found recycling 165,500 vehicles in Massachusetts cut 2.2 million tons of carbon dioxide emissions. The business “is heading toward a zero-waste situation,” says Brajendra Mishra, director of the school’s Metal Processing Institute. “This is, in a sense, what a circular economy represents.”

While car junkyards have typically been family-owned operations, larger companies such as Nucor Corp. and Steel Dynamics Inc. are getting into the business, applying sophisticated processes to separate out different metals during the shredding process and using electric-arc furnaces to recycle steel. These furnaces produce about 25% of the carbon emissions created by traditional blast furnaces used to make virgin steel, according to the CRU Group, a London-based consulting firm. “We are looked at as a junkyard industry, something you don’t want in your community,” Morrow says. “The industry does exist to be profitable, but we do try to provide a service that saves the environment and money for consumers.” That’s a side of the business that’s often not seen, he says.

Junkyards Get Greener With a Shift to Recycled Steel

About 12 million vehicles are junked in the U.S. annually, according to the Applied Materials Division at Argonne National Laboratory. Counting retail and business-to-business scrap sales, the industry took in $32 billion in sales in 2018. By law, new cars now contain a minimum of 25% recycled content, mainly steel and iron, according to the Steel Recycling Institute. More recycled parts are being produced every year, says Morrow, who owns M&M Auto Parts in Fredericksburg, Va. He says the recycling industry is “being constricted to a smaller number of players” as mom and pop shops can’t keep up with technological developments that have automated so many car functions, or with online sales, among other factors.

About 25% of shredded vehicle material isn’t recyclable today, according to data from the Argonne lab. (That material typically ends up in landfills.) But more efficient and smarter technology—artificial intelligence that enables car operators to detect potential collisions, for example—could make the zero-waste vision a reality over the next three decades. “From an environmental standpoint, we aren’t selling trash,” says Morrow. “We are putting things back into use. The tag line here is ‘we recycle everything, even the air in the tires.’ ”

To contact the editor responsible for this story: Dimitra Kessenides at dkessenides1@bloomberg.net

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