Dow, NOVA, LyondellBasell announce new circular plastics fund

Stefan Baumgarten

26-May-2021

HOUSTON (ICIS)–Petrochemicals majors Dow, LyondellBasell and NOVA Chemicals on Wednesday announced a new $25m “Closed Loop Circular Plastics Fund”.

The fund, expected to eventually deploy $100m, will invest in technologies, companies and infrastructure projects that enhance the recovery and recycling of certain “target materials”, including post-consumer and post-industrial polyethylene (PE) and polypropylene (PP), in the US and Canada.

The aim is to enable the recycling of more than 500m pounds of plastics over the fund’s 10-year lifespan.

“This fund presents an innovative way to support the scaling of recycling infrastructure and technology in North America with the ultimate goal of helping to end plastic waste in the environment,” said Bob Patel, CEO of LyondellBasell in a statement to ICIS.

The fund’s investments will focus on three areas:

Access – Increasing the collection of targeted PE and PP plastics by advancing current and next-generation material collection systems, including transportation, logistics and recycling sortation technologies and infrastructure.

Optimisation – Upgrading recycling systems to more efficiently aggregate, classify and sort the targeted plastics to increase the total amount of high-quality plastic, including food-grade and medical-grade plastic, sent for remanufacturing.

Manufacturing – Investing in facilities and equipment that manufacture finished products, packaging or related goods using recycled content, including recycled PE and PP.

The fund will use a mix of debt and equity financing, and will also aim to stimulate co-investments, including those from financial institutions, the companies said.

The fund’s performance will be benchmarked on a combination of financial and impact outcomes, including tons of PE and PP impacted (ex: diverted from landfills), and tonnes of greenhouse gas (GHG) emissions avoided or reduced, said a LyondellBasell spokesperson.

WEAK RECYCING SYSTEMS NEED INVESTMENTS
They added that the current supply of recycled plastics meets only 6% of demand for the most commonly used plastics in the US and Canada.

“Systemic bottlenecks, misaligned incentives and policies, technological inefficiencies and outdated equipment across the plastics recovery system contribute to millions of tons of plastic going to waste in landfills and oceans,” they said.

Increasing the recovery and recirculation of plastics could help meet an addressable market for plastics with potential revenue opportunities of $120bn in the US and Canada alone, they said, citing information from Closed Loop Partners.

“Addressing the challenge of plastic waste in the environment requires collective action on multiple fronts,” said LyondellBasell’s Patel.

“As a company, we have been executing a multi-pronged strategy that includes innovations in mechanical recycling, the advancement of molecular recycling technologies and the incorporation of renewable feedstocks into our manufacturing,” he added.

LyondellBasell contributed $10m to the fund.

Interested companies or others can apply for funding through Closed Loop Partners, which will manage the fund.

New York-based investment firm Closed Loop Partners is comprised of venture capital, growth equity, private equity, project-based finance and an innovation centre focused on building the circular economy.

Additional reporting by Joseph Chang

(Recasts, adds paragraphs throughout on life of the fund, benchmarking of performance, LyondellBasell’s investment)

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