There are actually two separate questions bundled into this larger question:
What is the most environmentally sound end use for shredded paper?
How do we get to the correct end use with curbside pickup?
The answer to the first question may surprise you. In short, the best end use for shredded paper depends on what type of shred you produce. Long fiber shred can be recycled into new sheets of paper, reducing our impact on natural resources. Short fiber shred, unfortunately, does not lend itself to the recycling process. Short fiber shredded paper usually just becomes waste at the paper mill. For this reason, confetti or cross-cut shred is best disposed of as compost. In compost piles, shredded paper adds a great source of carbon—a beneficial ingredient in clean, green compost.
Once you’ve determined whether your shreds belong in the recycling or compost, bagging your shreds will ensure it gets to the right place. Loose shredded paper tends to fly out of recycling and yard waste carts and can end up spread around neighborhoods. The easiest way to remedy this is to stuff shredded paper into a paper bag, which is also a recyclable and compostable product. This simple step will ensure that shredded paper gets to its environmentally friendly final destination.