As the push for sustainability continues, the need for innovation in the MRF industry will expand. Companies considering acquiring new technologies should review their operations to determine whether a purchase, finance lease, or operational lease makes the best financial sense.
By Mike Fitzsimmons
According to a 2024 study, there are 521 materials recovery facilities (MRFs) operating in the U.S. They recover 64 Tg (teragrams) of recyclable materials yearly, which represents 24 percent of municipal solid waste. The materials recovery industry is estimated to have a value of $3.45 billion in 2026 with a projected CAGR (compound annual growth rate) of 5.49 percent through at least 2035.
In this article, we will look at what is driving that growth, how MRFs can keep up with demand through deployment of advanced technologies, and ways to finance those acquisitions.
What is Driving Growth?
Numerous factors are coming together to create an unprecedented demand for materials recovery and recycling:
Public demand—As the public becomes more aware of the environmental costs of a disposable society, there is a growing call for more sustainable systems and a circular economy. This is leading to pressure on community leaders to offer recycling options in cities and towns.
Sustainability mandates—In order to meet sustainability goals, some governmental bodies are relying on mandates requiring the provision of recycling services. EPR laws—which require producers to plan for the eventual disposal of their products—have been passed in Maine and Oregon and are being considered elsewhere.
Reduced landfill space and increased fees—As one example, Indiana has only 34 permitted landfills, down from 79 in 1990, and the state’s new blueprint for waste management will likely include a per-ton surcharge for landfilled or incinerated waste. Currently, the state recycles only 9 to 15 percent of its waste but has an aggressive target of 50 percent in its new plan.
Tariffs on steel and aluminum—With the 2025 introduction of 50 percent tariffs on aluminum and steel and their derivatives, the demand for recycled metals has gone up. Data firm The Global Statistics predicts that the cost of premium steel and aluminum will go up by 77 percent and 139 percent respectively, making the use of recycled metals that much more attractive.
Energy security—Smelting of primary aluminum demands massive amounts of energy, and the restructuring of energy markets in the 1970s led to the decline in the number of smelters from 33 to only four today. Making aluminum from recycled metal requires only about 5 percent of the energy needed to smelt primary aluminum.
Materials security—Onshoring sources of metals by deriving them from recycled items also provides a measure of materials security in turbulent political times. So does recovering rare earth metals from electronics in order to reduce dependence on non-domestic sources.
Technological Advances to Meet Demand
MRFs are achieving improved sortation with AI-driven computer vision and robots for more efficient and precise separation of materials. Laser-induced breakdown spectroscopy (LIBS) technology can assess materials quickly and remotely to determine their makeup. Similarly, X-ray fluorescence (XRF) can be used to identify the metal contents of waste materials, which is especially important in electronics recycling.
To reduce the need for presorting, some operations are deploying OCC (old corrugated container) auger systems. With anti-wrapping technology, this equipment can reduce the amount of material that needs to be manually presorted and can cut down on jams downstream.
All of these technologies reduce contaminants which increases the revenue potential for processed waste to recyclers and manufacturers. They increase throughput, improve safety, and help hold down labor costs.
Technologies and Economies of Scale
With MRFs, bigger really is better. A 2024 study found that large MRFs (>10,000 megagrams per year) were 100 times more energy efficient than small facilities (<1,000 megagrams per year).
The study also found that large MRFs, which are far more likely to use advanced sorting technology, were able to process plastics more effectively, with that fraction making up 33 percent of revenue as compared to only 5 percent for small MRFs.
Financing Technological Upgrades
To remain competitive, MRFs need to keep up with rapidly changing advanced technologies. However, that does not always mean purchasing new machinery. Leasing equipment allows an MRF operator to have the newest technology without a large outlay of cash. Leasing also provides the lessee with the advantage of not being saddled with equipment that could become obsolete in a few years.
In addition, finance (formerly capital) leases generally qualify for tax incentives under the One Big Beautiful Bill (OBBB) tax law passed last year. The law allows lessees to write off 100 percent of the cost of the equipment in the year in which it was acquired and put into service (100 percent bonus depreciation).
Types of Leases
MRF equipment can be financed through either finance or operating leases. Each type of lease has advantages that fit different business situations:
- Finance leases—These contracts make the most sense when the lessee expects to purchase the equipment at the end of the lease period. They offer the lessee control over where and how the piece is used. Finance leases are appropriate when the equipment has a relatively long useful life and will not become obsolete quickly. Another advantage of finance leases is that the interest on them is accounted for below the operating line; this means the lease can have a positive impact on EBITDA (earnings before interest, taxes, depreciation, and amortization).
- Operating leases—This type of contract is best suited for situations where the lessee does not expect to hold the equipment for an extended period. It is appropriate for equipment that is needed for a one-off project or for items that may become outdated quickly. The interest expense for an operating lease reduces EBITDA.
The Best Financial Sense
As the push for sustainability continues, the need for innovation in the MRF industry will expand. Companies considering acquiring new technologies should review their operations to identify what types of equipment would be most advantageous. They should then determine—based on how long the equipment is likely to be used and other factors—whether a purchase, finance lease, or operational lease makes the best financial sense | WA.
Mike Fitzsimmons serves as Vice President of Sales – Construction and Material Handling at Summit Funding Group. With more than 30 years of experience in the equipment finance industry, Mike has held leadership roles across sales, marketing, and operations. He can be reached at [email protected].
References
www.sciencedirect.com/science/article/abs/pii/S0956053X24006408
www.businessresearchinsights.com/market-reports/materials-recovery-facility-mrf-market-124765
www.epa.gov/circulareconomy/what-circular-economy
www.recyclingtoday.org/blogs/news/recycling-in-the-usa-challenges-trends-and-the-future
https://indianacapitalchronicle.com/2025/10/06/a-blueprint-state-readies-replacement-to-long-outdated-waste-management-plan/
www.congress.gov/crs_external_products/IN/PDF/IN12519/IN12519.5.pdf
www.canarymedia.com/articles/clean-aluminum/trump-tariffs-spur-metal-recycling
www.theglobalstatistics.com/united-states-steel-and-aluminum-tariffs/
www.canarymedia.com/articles/clean-aluminum/us-manufacturing-power-challenges
www.reuters.com/science/zurich-researchers-pioneer-rare-earth-e-waste-recycling-2025-06-26/
www.sortedtech.io/post/how-to-implement-computer-vision-in-your-mrf
www.sciencedirect.com/science/article/abs/pii/S0969806X1931343X
www.sciencedirect.com/science/article/pii/S0956053X24005361
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