It’s no secret we have a plastics problem. The world produces 380 million tons of plastic per year – the same total weight as 90% of humans on Earth. Globally, it is estimated that only about 9 percent of plastic waste is recycled, with the average in the US trending lower at 5-6 percent. Growing awareness around the impacts of plastic use, as well as new regulations, have resulted in many CPG companies making pledges to reduce their environmental impact, which is increasing demand for recycled materials. In this article, we’ll explore the benefits and challenges to advanced recycling technologies and the role of corporations and policy in helping them achieve scale.
The use of plastics has increased 20-fold in the past half century and is expected to double again in the next 20 years. Only 14 percent of plastic packaging is collected for recycling, and 72 percent is not recovered at all. The externalities related to plastics use and waste are extensive, including the degradation of natural systems, greenhouse gas emissions from production (virgin feedstocks for plastics represent about six percent of global oil consumption), and the health and environmental impacts of after-use incineration.
Going Beyond the Basics with Advanced Recycling
Traditional recycling involves the sorting, cleaning, grinding, and reprocessing of materials so they can be used in new products. This method of converting products to secondary raw materials keeps polymers intact and does not alter the chemical structure. While traditional recycling works well under certain circumstances, there are a number of challenges that make it less effective. Contaminated plastics and plastics that contain multiple types of polymers create difficulties for traditional recycling processes. Additionally, the material created is usually of lesser quality than virgin material and degrades over time.
As the demand grows for recycling solutions that fill the gap in current processes, there is increased interest in the opportunity for advanced technologies. Advanced recycling refers to a process where the material is broken down into its building blocks. There are a number of different methods that fit into this category:
Advanced mechanical recycling refers to the use of enhanced techniques and more sophisticated technologies to improve the quality and efficiency of the recycling process.
Chemical recycling breaks polymers into individual monomers that serve as raw materials for new products. There are a number of different types of chemical recycling technologies, including:
Depolymerization: A process that breaks down polymers into their monomers or smaller molecules.
Pyrolysis: A process that heats waste materials without oxygen, breaking them down into simpler chemical compounds such as oils and gases. These can be refined into fuels, chemicals, or new plastics.
Gasification: Similar to pyrolysis, gasification is a chemical process where waste materials are heated to a very high temperature in a low-oxygen environment. This reaction creates a combustible gas, which can be used to produce fuels or chemical feedstock.
Solvent-based recycling: A method that uses solvents to dissolve and separate polymers from contaminants and additives. The purified polymers can then be recovered and reused.
The benefits of advanced recycling technologies include higher-quality outputs, the ability to handle a wider variety of plastics, and the need for fewer raw materials. Advanced recycling can deal with plastic waste that is difficult for traditional recycling to handle, such as contaminated or mixed polymer products. Since waste is broken down into new chemicals and plastics that perform like virgin materials, the outputs of these processes can be used in high-quality applications. From a carbon footprint perspective, fewer fossil fuel resources are needed if plastics are reused. As a result, the economic opportunity for advanced recycling technologies is substantial. According to a Closed Loop Partners report, technologies that purify, decompose, or convert plastics into almost new materials could unlock potential revenue opportunities of $120 billion in the US and Canada alone.
Corporates Stepping Up
Increased demand spurred by corporate pledges for recycled materials is helping to drive the development of these advanced technologies. Seventy-two percent of the world’s largest companies have made some form of voluntary commitment to reduce plastic pollution. Examples include:
Coca-Cola: Aims to use at least 50 percent recycled material in packaging by 2030.
Colgate-Palmolive: Aims to use 25 percent post-consumer recycled plastic in packaging by 2025.
Dow: Aims to deliver 3 million metric tons per year of renewable and circular solutions per year by 2030.
Dell: Aims to have over 50 percent of product content and 100 percent of packaging made from recycled or renewable materials by 2030.
HP: Aims to use 30 percent postconsumer recycled content plastic across HP’s personal systems and print product portfolio by 2025.
PepsiCo: Aims to use using 50 percent recycled content in plastic packaging by 2030.
Samsung: Aims to use 100 percent recycled plastic in mobile device packaging by 2025.
Unilever: Aims to use 25 percent recycled plastic by 2025.
According to a McKinsey report, the demand for post-consumer recycled plastic packaging will increase threefold by 2030 while the supply of these recycled materials is only expected to double. Through further collaboration between large corporations and recycling companies, we believe we can get closer to meeting this demand.
S2G Portfolio Spotlight
Dow’s recent acquisition of S2G portfolio company Circulus is one example of corporate activity in the sector. As one of the world’s largest chemicals and plastics manufacturers, Dow has committed to transforming plastic waste and other forms of alternative feedstock to commercialize three million tons of circular and renewable solutions annually.
To do this, the company is building industrial ecosystems to collect, reuse, or recycle waste and expand its portfolio to meet rapidly growing demand. Circulus is a low-density polyethylene recycler that converts plastic waste into post-consumer resins for use in a variety of applications, including packaging, shrink and stretch wraps, stand-up pouches, injection-molded goods, and industrial sheeting. In addition to producing high-quality recycled materials, the GHG emissions from Circulus’ process are about 90 percent less than for virgin LDPE. Dow’s acquisition of Circulus will add a capacity of 50,000 metric tons of recycled materials annually, getting Dow closer to their Transform the Waste goal.
S2G invested in Circulus out of its Special Opportunities Fund; the investment is emblematic of the type of asset-oriented investments with system-level impact that the Special Opportunities team focuses on. We believe the company’s operations involve limited technology risk, as it leverages proven technologies to produce the specialty recycled LDPE that serves as a more sustainable input to other products.
Overcoming Hurdles with Policy & Innovation
While corporate pledges are critical to ensure demand for recycled materials, challenges still exist, with many companies struggling to meet targets. A 2022 McKinsey study found that fewer than 30 percent of LLM organizations are prepared to meet their commitments and that 75 percent of companies consider packaging sustainability only after the product concept has been finalized. The availability of high-quality recycled materials that meet specific industry needs remains limited. There are a number of reasons for this, such as supply chain issues with the collection and sorting of waste materials. Additionally, many corporates have complex supply chains making it difficult to ensure a steady supply of recycled materials across these diverse supply chains.
Furthermore, many of the advanced technologies that can produce high-quality recycled materials are still in development and not yet widespread. They face some obstacles to commercialization, such as high initial costs to take them from pilot to industrial scale, and technological hurdles, like ensuring consistent quality, process stability, and equipment reliability. The regulatory landscape for advanced recycling is also still evolving. This uncertainty can complicate the planning and development of new facilities.
We believe policy has a role to play in addressing some of these issues, starting with the need for standardized classifications and quality standards for outputs from advanced recycling technologies to ensure product safety and performance. The development and adoption of advanced recycling technologies can also benefit from supportive policies such as tax incentives or grants, as well as regulations that encourage or mandate the use of recycled content, such as extended producer responsibility or EPR legislation. The first extended producer responsibility law in the US requiring packaging producers to contribute to the costs of recycling their materials takes effect in Oregon on July 1, 2025. In the coming years, multiple states will implement such regulations, such as Colorado, Maine, California, and Minnesota.
We believe these challenges are surmountable. Investing in advanced recycling technologies, strengthening partnerships among stakeholders, and promoting supportive regulations and consumer education can all contribute to improving recycling outcomes and creating circular economies.
Photos taken by S2G at the Circulus facility in Ardmore, OK.
