Explainer: Composting & organics diversion — what it is, why it matters, and how to evaluate options

In 2024, the United States sent approximately 23 million tons of food waste to landfills, releasing over 600,000 metric tons of methane—a greenhouse gas with 80 times the warming potential of carbon dioxide over a 20-year period (EPA, 2024). Yet despite this staggering climate impact, only 4.1% of food waste is composted nationally, representing one of the largest untapped opportunities in municipal sustainability. With organics recycling investment exceeding $453 million by mid-2025—already surpassing all of 2024—the composting sector stands at an inflection point where policy mandates, infrastructure buildout, and private capital are finally converging (Closed Loop Partners, 2024).

Why It Matters

Organic waste—food scraps, yard trimmings, and other biodegradable materials—constitutes approximately 30% of municipal solid waste streams but generates disproportionate environmental harm when landfilled. According to EPA research published in October 2023, food waste represents 24% of all landfill material but accounts for 58% of fugitive methane emissions. This occurs because organic matter decomposes anaerobically (without oxygen) in landfill conditions, producing methane rather than the carbon dioxide generated through aerobic composting.

The climate math is compelling. ReFED's October 2024 methane report calculated that U.S. surplus food generates a methane footprint equivalent to 4 million metric tons annually—comparable to emissions from 50 million gas-powered vehicles. Critically, 61% of this methane escapes to the atmosphere before landfill gas collection systems can capture it, and half of food waste's carbon degrades within just 3.6 years of disposal. This rapid emission profile means that diversion strategies deliver immediate climate benefits, unlike longer-term carbon sequestration approaches.

Beyond climate impact, organics diversion creates economic value. The global compost market is projected to reach $13 billion by 2030 at a 7% CAGR, driven by agricultural demand for soil amendments, regenerative farming practices, and carbon credit generation. Massachusetts' 2014 commercial organics ban, which requires businesses generating one ton or more of food waste weekly to divert it from landfills, created over 900 jobs and $77 million in economic activity—demonstrating that regulation catalyzes market development.

For corporations managing Scope 3 emissions, organics diversion addresses waste-related impacts that typically constitute 5-15% of supply chain footprints. As disclosure requirements tighten under frameworks like the EU's Corporate Sustainability Reporting Directive (CSRD) and California's climate disclosure laws, verifiable waste diversion data becomes a compliance imperative rather than a voluntary initiative.

Key Concepts

Aerobic vs. Anaerobic Decomposition: The fundamental distinction driving composting's climate benefit. Aerobic decomposition (with oxygen) converts organic matter primarily to CO₂ and stable humus, while anaerobic conditions (landfills) produce methane. Well-managed composting systems generate minimal methane—approximately 6.6-8.8 kg CH₄-C per metric ton of wet food waste, compared to roughly one ton CO₂-equivalent per ton of landfilled food waste (Nature Scientific Reports, 2023).

Organics Capture Rate: The percentage of available organic waste actually collected through diversion programs. Many municipalities with curbside organics programs struggle with capture rates below 30%, indicating that infrastructure alone doesn't guarantee participation. NYC's expanded universal organics program, for example, saw declining capture rates despite broader service coverage.

Feedstock Contamination: Non-compostable materials mixed with organic waste streams—typically plastics, glass, and metals. Contamination rates averaging 15-25% at processing facilities increase operational costs, degrade compost quality, and can render entire batches unmarketable. Managing contamination represents approximately 20% of operating expenses for commercial composters.

Compost Maturity and Quality Standards: Finished compost varies dramatically in nutrient content, pathogen destruction, and weed seed viability. The US Composting Council's Seal of Testing Assurance (STA) program provides standardized testing protocols, while state agricultural departments regulate compost sales. Premium agricultural markets require verified C:N ratios, pH levels, and heavy metal testing.

Processing Technologies: Municipal systems typically employ windrow composting (turned piles), aerated static pile (ASP) systems, or in-vessel composting. Each technology offers different throughput capacity, land requirements, odor control, and process timing tradeoffs. Anaerobic digestion (AD) represents an alternative processing pathway that captures biogas for energy generation while producing digestate that can be composted.

Sector-Specific KPIs

Metric	Good Performance	Excellent Performance	Measurement Method
Organics Capture Rate	>40% of available feedstock	>65% of available feedstock	Tonnage collected vs. waste characterization baseline
Contamination Rate	<15% by weight	<8% by weight	Incoming load sampling
Process Time (Food Waste)	<90 days to stable compost	<60 days to stable compost	Temperature/CO₂ monitoring
Finished Compost Quality	Meets STA standards	Premium agricultural grade	Third-party lab testing
GHG Reduction	>0.5 MT CO₂e per ton diverted	>0.8 MT CO₂e per ton diverted	EPA WARM model or equivalent
Program Participation	>50% of eligible accounts	>75% of eligible accounts	Route audits and subscription data

What's Working and What Isn't

What's Working

State Mandates Driving Infrastructure Investment: California's SB 1383 requires a 75% reduction in organic waste disposal by 2025 compared to 2014 baselines. While implementation challenges persist, the mandate has catalyzed significant infrastructure development—CalRecycle estimates 75-100 new large-scale composting facilities are needed by 2025. Ten states, nine cities, and Washington D.C. have now adopted organic waste landfill restrictions covering approximately 100 million people (30% of the U.S. population).

Public-Private Partnership Models: Companies like Atlas Organics have scaled by partnering with municipalities that lack capital or expertise to develop composting infrastructure independently. This model—where private operators bring processing capacity and municipalities guarantee feedstock through contract hauling—has enabled rapid facility development in underserved markets.

Commercial Sector Leadership: Large food waste generators including grocery chains, food manufacturers, and hospitality companies have implemented source-separated organics programs driven by waste cost reduction, sustainability commitments, and customer expectations. Walmart, Kroger, and Sysco have all established organics diversion targets that drive demand for processing capacity.

Subscription-Based Residential Services: Companies like CompostNow have demonstrated consumer willingness to pay for convenient curbside organics collection, even in markets without municipal programs. These services fill infrastructure gaps while building public awareness and behavior change.

What Isn't Working

Infrastructure Buildout Lag: Despite growing demand, composting facility capacity grew only 8% between 2018 and 2023 (Closed Loop Partners, 2024). Permitting challenges, community opposition (NIMBY concerns about odor), and long development timelines create bottlenecks. California's infrastructure gap illustrates this challenge—the state needs to divert an additional 5 million metric tonnes of organic material annually to meet SB 1383 targets.

Low Residential Participation Rates: Even where curbside organics programs exist, participation often remains disappointingly low. Behavioral barriers including inconvenience, confusion about acceptable materials, and "yuck factor" concerns about kitchen collection containers limit program effectiveness. Without sustained education and enforcement, capture rates plateau below 40%.

Contamination Economics: High contamination forces composters to either invest in expensive preprocessing equipment, absorb quality penalties, or reject loads entirely—all of which undermine business viability. The disconnect between what consumers believe is compostable (especially certified compostable packaging) and what processing facilities can actually accept creates persistent confusion.

Fragmented Data and Measurement: The lack of standardized metrics across jurisdictions makes benchmarking difficult. EPA's most comprehensive national data remains from 2018, creating significant uncertainty about current diversion rates. Without reliable measurement, claims of diversion progress often constitute "measurement theater" rather than verified impact.

Key Players

Established Leaders

Republic Services and Waste Management: The largest U.S. waste haulers have expanded organics processing capacity through acquisitions and facility development, though their primary business remains landfilling. Their market position provides infrastructure access but creates potential conflicts between composting growth and core landfill revenues.

Harvest Power (now Generate Capital portfolio): Pioneered large-scale organics processing combining anaerobic digestion with composting, creating integrated facilities that produce both renewable energy and soil amendments.

Denali Water Solutions: One of the top-rated global composting companies (per Tracxn), providing large-scale organics processing and biosolids management services across North America.

Emerging Startups

Atlas Organics (Greenville, SC): Raised multiple venture rounds from Spring Lane Capital, Closed Loop Ventures, and Gratitude Railroad to develop regional composting facilities through municipal partnerships. Currently operates facilities processing commercial and residential organics across the southeastern United States.

Ecotone Renewables (Pittsburgh, PA): Developed the ZEUS digester for on-site commercial food waste processing, raising over $6.3 million including a $2.2 million USDA Fertilizer Production Expansion Program grant. Their decentralized approach targets commercial kitchens that generate consistent organic waste streams.

Maeko (Kuala Lumpur, Malaysia): WEF Circulars Accelerator participant offering 24-hour composting machines for industrial and home use, addressing infrastructure gaps in emerging markets where municipal composting systems remain undeveloped.

Key Investors & Funders

Closed Loop Partners / Closed Loop Ventures: The leading circular economy-focused investment platform, providing both grant funding through the Composting Consortium and equity investment in infrastructure developers. Their 2024 Composting Consortium report identified blended capital approaches needed to scale processing capacity.

Spring Lane Capital: Deploys $10-25 million in project-level capital for composting facility development, filling the gap between early-stage venture and traditional infrastructure finance.

ReFED: Provides catalytic grants of $50,000-$250,000 for food waste solutions, focusing on innovations that address system-level barriers to organics diversion.

Examples

San Diego's Organics Program Expansion: Following California's SB 1383 mandate, San Diego increased organic waste collection by 106% over two years, with municipal participation doubling since 2022. The city's approach combined phased rollout, extensive community education, and enforcement mechanisms to achieve results significantly exceeding statewide averages. San Diego now targets 100% waste diversion by 2040.
Denver's Residential Composting Growth: Denver expanded residential organics service to 75,000 homes by 2024, achieving a 55% increase in diverted tonnage compared to 2023. The city employed a subscription model with subsidized collection fees to reduce barriers to participation while building processing infrastructure through contracts with regional composters.
Massachusetts Commercial Organics Ban: Implemented in 2014, this regulation requires businesses and institutions generating one ton or more of food waste per week to divert it from disposal. The policy created a commercial organics processing industry where none previously existed, with documented outcomes including 900+ jobs created and $77 million in economic activity—demonstrating that regulatory mandates can catalyze market development.

Action Checklist

Conduct a waste characterization study to quantify organic waste volumes and composition across your operations or jurisdiction
Map existing processing infrastructure within economically viable hauling distances (typically 50 miles) and identify capacity gaps
Evaluate feedstock contamination risks by auditing current waste streams and identifying problematic materials
Assess policy landscape including existing mandates, pending legislation, and potential carbon credit eligibility
Develop a phased implementation plan starting with high-volume, low-contamination generators before expanding to more challenging streams
Establish measurement protocols aligned with EPA methodologies and STA standards to enable credible impact reporting
Identify funding sources including state grants, USDA programs, and private capital for infrastructure development

FAQ

Q: How does composting compare to anaerobic digestion for climate impact? A: Both approaches divert organics from landfills and prevent methane emissions, but they offer different co-benefits. Anaerobic digestion captures biogas for energy generation, creating renewable fuel or electricity while producing digestate that requires further processing. Composting produces finished soil amendments directly and generally requires lower capital investment, but doesn't generate energy. The optimal choice depends on local energy markets, feedstock characteristics, and end-product demand. Many facilities combine both technologies.

Q: What contamination levels make organics diversion economically unviable? A: Contamination rates above 20-25% typically undermine composting economics, as preprocessing costs and product quality penalties exceed the value captured from diversion. However, thresholds vary based on contaminant types—glass and metal can often be screened out mechanically, while plastic film contamination is more problematic. Successful programs invest heavily in source separation education and use load rejection policies to maintain quality standards.

Q: How should organizations account for composting in Scope 3 emissions reporting? A: Under GHG Protocol guidance, emissions from waste generated in operations (Category 5) should reflect actual disposal pathways. Composting typically generates 0.1-0.2 MT CO₂e per ton of organic waste processed—significantly less than the 0.8-1.2 MT CO₂e per ton for landfilling. Organizations should use EPA's WARM model or equivalent lifecycle assessments with facility-specific data where available. Critically, avoided emissions from diversion are not subtracted from Scope 3 totals but may be reported separately as emission reductions.

Q: What role does compostable packaging play in organics diversion systems? A: Certified compostable packaging (ASTM D6400 or D6868 standards) theoretically enables packaging to be processed alongside food waste. However, practical challenges remain significant. Many composting facilities cannot accept certified compostable packaging due to processing time constraints, contamination concerns, or permit limitations. The Composting Consortium has documented this disconnect and is working to align packaging certification with actual processing capabilities. Organizations should verify acceptance with their specific processing partners before implementing compostable packaging programs.

Q: What investment returns can composting infrastructure generate? A: Returns vary significantly based on tipping fees, finished compost pricing, and operating costs. The Closed Loop Partners analysis suggests typical composting facilities require $10-25 million in deployment capital with 15-20 month paths to breakeven. Revenue streams include gate fees ($40-80 per ton), finished compost sales ($15-40 per cubic yard), and increasingly, carbon credit generation. Public-private partnerships can de-risk investments through long-term feedstock contracts with municipalities.

Sources

U.S. Environmental Protection Agency. "Quantifying Methane Emissions from Landfilled Food Waste." October 2023. https://www.epa.gov/land-research/quantifying-methane-emissions-landfilled-food-waste
ReFED. "The Methane Impact of Food Loss and Waste in the United States." October 2024. https://refed.org/food-waste/climate-and-resources/
Closed Loop Partners. "Composting Consortium Report: Investment Opportunities to Scale Food-Waste Composting Infrastructure." July 2024. https://www.closedlooppartners.com/the-composting-consortium-identifies-opportunities/
U.S. Environmental Protection Agency. "National Overview: Facts and Figures on Materials, Wastes and Recycling." 2024. https://www.epa.gov/facts-and-figures-about-materials-waste-and-recycling/national-overview-facts-and-figures-materials
Colorado Department of Public Health and Environment. "Solid Waste Management Data and Reports." 2024. https://cdphe.colorado.gov/hm/swreports
Nature Scientific Reports. "Assessing the climate change mitigation potential from food waste composting." 2023. https://www.nature.com/articles/s41598-023-34174-z
CalRecycle. "SB 1383 Implementation Resources and Infrastructure Assessment." 2024.
Washington State Department of Ecology. "New Rule to Decrease Landfill Methane Emissions." May 2024. https://ecology.wa.gov/about-us/who-we-are/news/2024/new-rule-to-decrease-landfill-methane-emissions