Companies Try Boosting Demand for Recycled Plastics: Q&A

(Bloomberg) -- The economics of plastic recycling have suddenly been upended, thanks to a Chinese import ban and cheap U.S. oil used to make virgin plastic. That’s made recycled plastic suddenly more expensive than virgin plastic and made it more important to create corporate demand for recycled materials, according to Dylan de Thomas, vice president of industry collaboration at The Recycling Partnership.

The nonprofit, along with the Association of Plastics Recyclers, recently started recruiting companies to pledge to use more recycled plastics in their industrial facilities and supply chains. Target Corp., Procter & Gamble Co., Coca-Cola North America, Campbell Soup and Keurig Green Mountain Inc. are among those that signed on last month.

He spoke to Emily Chasan on Nov. 21. Comments have been edited and condensed.

What’s happening in the market for recycled plastics?

Typically, recycled plastics enjoyed a price advantage over virgin plastic, and that’s flipped. There’s a Chinese scrap ban right now, where they’re no longer accepting recycled plastics from anywhere outside of China. That’s a huge market that’s gone.

With fracking, the U.S. is now a net producer of fossil fuels, including the natural gas that a lot of plastics are made from. Because of that, the U.S. started building new ethylene cracker manufacturing facilities 10 years ago to make plastics here. They had mostly been outside the U.S. before, but now they’ve just come online and the older facilities are also still online, so there’s just been a tsunami of cheap virgin plastic material entering the marketplace.

How has that created a demand problem for recycled material?

With recycling, you don’t get the environmental benefits unless you make something new out of that recycled material. Making something new from recycled material replaces virgin material, and that’s what saves huge amounts of energy, water and greenhouse gas emissions.

For a long time this wasn’t an issue because recycled material was cheaper. The aluminum industry still has a huge cost incentive for using recycled aluminum, and with plastics that used to be the case but it’s not anymore. All of a sudden, the person at companies trying to reduce costs is facing a challenge to using recycled material, and budgeting staff are not necessarily familiar with the sustainability case. Recycled plastics now are not moving.

How are you working with companies to boost demand?

There’s still a lot of value to this material and some companies don’t want to lose that. They are trying to hit environmental goals, and using recycled materials can help with that. The companies in our project agreed to do an assessment of their own facilities to look at goods on the floor that can use more post-consumer recycled plastic, such as pallets, trash cans, caution cones, tote boxes.

They are going back to their manufacturers and asking them to use a percentage of recycled material in those items. Because these are big companies, they can pull a lot more recycled material through the system. In the first year, we’re expecting they will consume 20,000 tons more of recycled material than they otherwise would have.

Why these products and not the items on the shelves?

This isn’t the plastic resin they use in a soda bottle. To make those clear and shiny you need really clean plastic. But for a pallet, you can use dirtier material. This is going after the lowest common denominator of plastic that’s on the market that can’t go into a yogurt cup or drink packaging, but we still want to move through the system. These facilities are constantly breaking pallets and having to replace them. This can have an immediate impact.

Can this become a long-term change?

We’re trying to get this to be automatic, so whenever a supplier goes to make some of these items there’s an expectation that they’ll contain 25% recycled material. Then they’ll be able to sign long-term agreements with recyclers.

There’s an expectation from consumers that they’re able to recycle the goods that they buy, and companies are realizing they have to meet that expectation. This is a way of ensuring those materials have somewhere to go.

To contact the reporter on this story: Emily Chasan in New York at echasan1@bloomberg.net.

To contact the editors responsible for this story: Alicia Ritcey at aritcey@bloomberg.net, Peter Eichenbaum

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