Page 47 - Plastics News April 2024

INTERNATIONAL NEWS

Plastic recycling is broken. Capitalism can fix it
plastic is lower than virgin plastic, however: They rely on the market to
buyers switch to recycled plastic. And stimulate the development of a plastic
if the price of virgin plastic is lower, recycling industry. Neither approach
buyers switch to virgin plastic. Re- helps to directly finance the significant
grettably, many companies are more capital requirements of the recycling
concerned about the price of plastic industry. Where will the money come
feedstock than the environmental im- from to pay for the costly infrastruc-
pact of more plastic. ture required for plastic recycling?
What makes this switching unpredict- The question is how to get capital in-
able is the fact that the price of virgin vestment directly to the recycling in-
hen it comes to plastic waste, plastic is directly related to the price dustry so it can invest confidently in
Wthe numbers are alarming. And of oil from which it is sourced. If the the equipment, personnel and training
they’re getting worse. price of oil drops, so does the price necessary to create a dramatically ex-
According to the OECD, 91% of all of virgin plastic. If the price drop of panded global plastic recycling indus-
plastic used goes unrecycled into na- oil is material, then the market for re- try.
ture, oceans, landfill or incineration cycling plastic feedstock collapses. As Discussions around the Plastic Treaty
every year that’s 320 million tons. By such, plastic recycling the world over discussions have so far surfaced very
2060, there will be an additional 30 is essentially held hostage to the price few ideas on this front. Other than a
billion tons. Only 5 billion tons are of virgin plastic. global sinking fund from UN member
predicted to be recycled. The world For example, a substantial portion states, which few taxpayers are likely
needs a plan to fix its plastic prob- of Europe’s plastic recycling capacity to be happy about, the draft treaty is
lem. The United Nations has com- has disappeared in the past two years eerily silent.
mitted to delivering a legally binding due to unsustainable trading condi- Plastic Collective, the World Bank
Plastic Treaty by the end of 2024. This tions brought on by the drop in the and Citibank have spent many years
month, more than 175 governments price of oil. Now imagine you’re an developing a scalable financing mech-
will convene in Ottawa for the fourth investor or an entrepreneur looking anism to directly address the capitali-
and penultimate round of negotiations to invest $10 million in an expensive zation of plastic recycling in countries
of the Plastic Treaty. plastic recycling facility. Would you do where plastic waste is at its worst and
The most important thing for the so knowing that some global event finance options are few. The result is
Plastic Treaty to get right is the devel- completely unrelated to your business the Plastic Waste Reduction Bond, the
opment of sufficient global recycling could result in a drop in the price of first of which was offered in January.
capacity to ensure that all plastic used oil, making virgin plastic cheaper than It is a $100 million principal protected
will be recycled and a circular econo- recycled plastic you would produce? bond, with $14 million deployed for
my will be realized. That’s a colossal The answer is clear and explains why two plastic recycling projects in Gha-
industrial undertaking. the world has just 9% of the recycling na and Indonesia. The two projects
The business of plastic recycling is capacity it needs. will use the funds to invest in new
economically fragile at best and in Various solutions are being put forth. technologies, equipment, facilities and
many ways it is also broken. Some countries demand that compa- staff to increase their collection and
At the heart of the challenge is the nies pay a tax for the amount of virgin recycling capacity by 500% over the
task of selling the “feedstock” that is plastic they use. Other countries re- next three years and process an ad-
produced by plastic recyclers. Right quire the use of a certain amount of ditional 250,000 tons of plastic waste
now, buyers of plastic feedstock can recycling plastic in packaging. over the next 10 years.
choose between virgin plastic or re- There is one (big) problem with both What makes this transformative is that
cycled plastic when they make their the “virgin plastic tax” and the “mini- the projects which receive the money
packaging. If the price of recycled mum recycled content” solutions, pay it back using plastic credits, with

PLASTICS NEWS 49
April 2024