Many of the recyclables collected in Honolulu residents’ blue bins could eventually wind up at the city’s HPOWER plant in Kapolei instead of overseas, based on the recommendations of a new city auditor’s report.

The report, released Wednesday, found the move could save the city millions of dollars as the cost to send Hawaii recyclables overseas has soared and the market for those materials has declined.

If it had instead incinerated recyclables at the HPOWER waste-to-energy facility, the city could have saved some $7 million in recycling disposal costs between 2013 and 2016, according to Wayne Kawamura, a senior auditor. The move further could have generated $29.5 million in electricity revenues for the city during that same time, according to the report.

“It’s less popularly known but it’s another form of recycling,” he said of converting traditional recyclables into energy at the plant.

The city contracts with Covanta Honolulu to run HPOWER, and it must send that operator 800,000 tons of waste a year or else pay the difference. From 2013 to 2105 the city paid out $6.2 million to cover the tons it missed and their lost electricity revenues, according to the auditor’s report.

The city auditor recommends changing city and state laws to allow the city to divert those recyclables to HPOWER during market downturns. The report could give city officials leverage as they lobby to make those changes during the state’s legislative session next year.

The city’s Department of Environmental Services wants to be “more flexible” in how it disposes of recyclables, said Tim Houghton, the department’s deputy director.

The audit, which was conducted from May 2016 to July 2017, blames the dwindling market on the Great Recession and prices that haven’t recovered. Growing restrictions on the recyclables market in China also have helped drive down the market, according to Houghton.

“This is a big problem,” and it “seems to be getting worse,” he said Thursday.

Meanwhile the city’s costs to process curbside recyclables soared from $45 a ton in 2009, when it fully launched around Oahu, to $142 a ton in 2016, the report found. With no recycling plants on the islands, the city must ship what it collects overseas — making those costs more expensive than on the mainland, Houghton said.

The report further recommends that the city not revive its former “white-bin” community recycling program because its costs were too high. The auditor investigated these issues following a 2015 resolution in which some city leaders wondered whether their recycling efforts were cost-effective.