INSIGHT: Investment needed to secure North America recyclates supply as demand grows

HOUSTON (ICIS)–Targets set by brand-owners and regulations have been contributing to a growing demand for recyclates in North America.

Several brands are committed to use 25% of minimum recycled content in their packaging by 2025. Additionally, manufacturers in California are required to include 15% of post-consumer recycled plastic (PCR) in beverage containers by 2022.

However, supply to fulfil the targets is still limited, especially for high-quality food-grade recycled resins to be used in food and beverage packaging. As a result, different end-markets have been competing from the same source of feedstock: bottles, as they are more widely accepted in collection systems and more high quality volumes are available.

Investment in collection and recycling capabilities are needed, therefore, to secure availability and the reliability of supply. Also, investment in education could encourage consumers to participate in collection programmes as well as to purchase packaging with recycled content.

To improve the supply of recyclates, the main challenges are higher volumes and quality of plastic waste that becomes the feedstock.

Companies have been working on packaging designs to facilitate recycling with the main goal of developing alternatives that are not only technically recyclable but also widely accepted in collection systems.

Effective sorting and collection of waste is essential to guarantee the availability and reliability of good quality plastic waste, which is mainly influenced by consumer behaviour and their access to collection systems.

The supply of recyclates is also dependent on the recycling element of the chain building greater capacities at a pace to meet demand, installing high quality sorting and washing technologies to process as efficiently as possible the varied qualities of feedstock coming through the waste stream.

According to the National Association for PET Container Resources (NAPCOR), the recycling rate of polyethylene terephthalate (PET) post-consumer bottles in North America was 35% in 2019 while the US alone was 28%.

The non-profit Ecology and Corporate Commitment (ECOCE) reported that the collection rate of PET bottles was 56% in Mexico and 40% in Canada in the same year.

Considering other resin types used in bottles in the US, bottle recycling rates of high-density polyethylene (HDPE) and polypropylene (PP) were 30% and 17%, respectively, in 2018. Regarding films, which are mostly made of polyethylene (PE), collection rates are even lower, at a level of 8% in 2017, according to More Recycling.

The ICIS Recycling Supply Tracker identified just over 300 mechanical recyclers in North America, of which 29% are responsible for 70% of the total capacity of 7.6m tonnes/year. The research includes recycled polyethylene terephthalate (R-PET), recycled polyethylene (R-PE), and Recycled polypropylene (R-PP).

Considering both post-consumer and post-industrial feedstock sources, polyolefins represent almost 70% of the recycling capacity in North America, with R-PE being the largest resin type alone.

However, the split of feedstock sources varies extensively among the resins, as represented in the following chart. 75% of R-PET capacity is originated from post-consumer waste whereas almost 70% of recycled polyolefins are sourced from post-industrial waste.

According to the ICIS Recycling Supply Tracker, the actual production of recyclates in North America currently represents 13% of the region’s total production of PE, PP, and PET. This again underlines the limited supply of feedstock to recycling systems and ultimately the challenges brands and retailers have in achieving their goals related to recycled content usage.

“Collection and sorting are often the bottleneck to the recycle supply chain developing high quality and increased volumes of recyclate; clearly this is acute in the US market where collection rates have stagnated and no drivers to transform the status quo,” said Helen McGeough, Senior Analyst and Global Analyst Team Lead, Plastic Recycling at ICIS.

“With demand for recycled polymers escalating across a number of industries there needs to be a step change in recycling capacity to match.  However, without improved collection activity and consumer participation, the supply prospects are challenged.”

End markets for packaging with recycled content are driven, among others, by brand owners, regulation, industry associations, and consumers. Several brand owners have been following the lead of the Ellen MacArthur Foundation Global Commitment which aims to have 25% of post-consumer recycled content in plastic packaging by 2025.

Some brands have even set more ambitious targets. For instance, besides the 25% of recycled material on overall plastic packaging, Danone set 50% of recycled material on beverage bottles, and 100% for Evian bottles by 2025.

Another example is Nestlé Waters which has committed to 35% R-PET in its bottles by 2025 globally and 50% in the United States.

“Another relevant initiative for the recycling market is the US Plastics Pact, which is a collaboration of the Ellen MacArthur Foundation, World Wildlife Fund (WWF) and The Recycling Partnership,” said , said Hyejin Kim, ICIS Analyst, Plastic Recycling, The Americas.

“The programme highlights, among other goals, a target to make plastic packaging with a minimum average of 30% of recycled or bio-based content by 2025.”

California became the first US state to mandate a minimum recycled content in plastic beverage containers. Starting in 2022, manufacturers are required to include an annual average of 15% of post-consumer recycled plastic (PCR) in beverage containers.

By 2025 the mandate is set to increase to 25% and by 2030 to 50%.

This is the first law of its kind in the Americas. Further requirements are expected to emerge in other states as well as for other plastic packaging besides bottles, in order to develop and create value in the US recycling chain.

Nationwide, US President Donald Trump has recently signed the Save Our Seas 2.0 Act into public law. It will provide $55m in grant funds to support recycling programmes while encouraging and promoting a circular economy.

In Canada, the government of Alberta announced plans to work with the Plastics Alliance of Alberta to become a leading province for plastics recycling by 2030. The collaboration aims to establish a plastics circular economy and includes discussions on extended producer responsibility (EPR), design for recycling, use of recycled content, among others.

In conclusion, several initiatives have been developed towards circular economy and plastics recycling in North America. However, to make them viable and sustainable, value must be created in the entire chain, from waste collection and processing to the end-markets for recyclates.

Insight by Paula Leardini
Additional reporting by Helen McGeough