Out of sight out of mind. It’s a philosophy that has for decades guided our relationship to waste, especially plastics. But today our plastic pollution problem has become impossible to overlook.


The plastic recycling rate in the US was 8.7 percent in 2018. A much larger portion was improperly discarded with plastics accounting for 16.3 percent of all material solid waste (MSW) combusted and 18.5 percent of all MSW landfilled. And then there’s the plastic that never makes it into our management systems. In 2016, the US generated the largest amount of plastic pollution of any country and was the third-largest contributor of plastic pollution in coastal environments.


Yet nationally and globally we are only projected to produce and use more plastics. While the pandemic saw an improvement in some environmental outcomes, the proliferation of single use plastics was not one of them. US demand for flexible packaging, most of which is single-use plastic, increased by 4 to 5 percent in 2020 compared to the year prior, and demand is expected to grow 4.5% annually over the next five years, according to consulting firm Wood Mackenzie.


It seems we are learning more everyday about the public and environmental health hazards that are emerging as a result of the indiscriminate use and disposal of plastics. Millions of animals are killed by plastics every year, microplastics have been found in every corner of the globe, at least 8 million tons of plastic end up in the ocean annually, chemicals added to plastics are absorbed by our bodies through food we eat and the products we touch, and plastic buried in landfills can leach harmful chemicals into the groundwater. So how did we get here? Why do we keep ramping up plastic production despite our inability to handle plastic waste?



The Real Recycling Story

The use of plastic has exploded since large-scale production began in the 1950s. When plastics started coming under fire in the 1980s and legislation and other initiatives were being introduced to curb the use of plastics, the plastics industry made a concerted effort to promote recycling to legitimize the continued sale of single use products. An NPR investigation into the history of the plastic industry’s relationship with recycling, found that most industry executives knew that recycling would always be a losing game and was unlikely to ever be feasible, economical, and sustainable on a large scale.


The demand for plastics recycling is driven by two things: The price of ingredients for virgin plastics, and legislation and commitments that set minimum requirements for recycled material in plastics.


Plastic is derived from naphtha, a crude oil based product, or ethane, a natural gas liquid. A decade ago when more of our plastic was derived from oil, the US used to be among the highest cost plastics producers in the world. But the fracking boom created a plentiful supply of ethane and made plastic production radically cheaper in the US, providing the industry with a glut of raw material and setting the stage for a “plastics revolution”. According to the American Chemistry Council, nearly 350 fracking-enabled petrochemical projects that cost more than $200 billion have been planned or completed since 2010. With such low prices for virgin raw materials, recycling makes little financial sense. In 2019, California’s largest recycling plant closed because of increased business costs and falling prices for recycled materials.


Demand is also being impacted by a growing number of laws and company commitments to utilize more recycled plastics. In response to increasing consumer and investor concern over the environmental impacts of plastic packaging, several companies and brands have announced commitments to incorporate minimum percentages, usually 25%, of post consumer recycled plastic (PCR) into their packaging by 2025. Some large beverage companies have even more ambitious goals such as Nestle which has pledged to use 50% recycled PET across their domestic portfolio by 2025. Nationally, there has also been a push to pass legislation at local, state and even federal levels aimed at increasing demand for recycled plastics. In September 2020, California passed Assembly Bill 739, becoming the first US state to legally mandate the use of recycled content in packaging. The bill implements a tiered plan requiring all plastic beverage containers to contain 15% PCR by 2022 and ramping up to 50% by 2030.


But despite rising demand for recycled plastics in recent years to meet these company and government goals, the recycling rate has not improved for the past decade and even fell by a percentage point in 2019. According to a 2019 report by the Recycling Partnership, there is an annual gap of more than one billion pounds between current US supply and projected 2025 demand. This is because of how we’ve dealt with recycling in the past and the fact that the availability of recycled plastics is not really responsive to demand.



US Recycling: A Dirty History


The US has a history of exporting most of our plastic waste, resulting in an underdeveloped domestic recycling industry and a false notion for consumers about what is recyclable.


To fully understand our tenuous relationships with recycling we need to go back to January 1st 2018. The way recycling has historically worked in the US is that we sold 70 percent of our plastic recycling to China because their booming manufacturing sector had a constant demand for materials. In 2016 the US exported 16 million tons of plastic, paper and metals to China but about 30% were contaminated and therefore never recycled. This imported trash was polluting China’s countryside and oceans with an estimated 1.3-1.5 million metric tons of plastic ending up in the ocean off China’s coast each year. China decided to curb this pollution by passing its “National Sword” policy on the first day of 2018 which set a maximum contamination level at .3 percent. The US contamination level is around 25 percent. The world’s largest market for processing recycled waste essentially shut its doors.


This was a huge blow for recyclers. Since the US was reliant on other countries to buy our recyclables their value was incredibly low and the US found itself with much more supply than countries were demanding causing the price of plastics to plummet. Municipalities that couldn't take the hit cut back on their recycling programs. Over 70 curbside recycling programs ended, many drop-off sites closed and others passed on the cost to residents. The US tried sending its plastic waste to other countries such as Vietnam, Malaysia and Thailand but they too started refusing to take it. The US then began diverting waste to Cambodia, Ghana, Laos, Bangladesh, Kenya, Ethiopia and Senegal--countries that have cheap labor and lax environmental rules. These countries lack adequate resources to properly manage and process this waste with many of them mismanaging more than 70 percent of their own plastic waste.


The upside of the recycling crisis triggered by China is that since 2018, the US has expanded its own recycling capacities. Although the national recycling rate appears stagnant, it’s important to note that since the implementation of China’s National Sword policy, more material is being processed domestically than ever before. In 2009, the US exported 800-850 million pounds in bottles and domestically processed about 600-650 million pounds. By 2019 the US was exporting only 139 million pounds of bottles and domestically processing nearly 1.6 billion pounds.



Plastic is not Elastic


The issue today is that expanding our recycling capacity does not mean more items will be recycled. The plastics economy is highly fragmented with a lack of standards and coordination across the value chain resulting in un-streamlined materials and collection and sorting systems which make it harder for consumers to successfully recycle.


First, not all plastics are created equal. There are many different kinds of plastics and because they can’t be melted together they have to be sorted out. In the US, the only plastic materials that have been economically recoverable at scale are clean PET (#1) and HDPE (#2) plastic which are mostly used to make water and soda bottles, and milk, juice and shampoo bottles respectively. While there is a growing consciousness around designing packaging with the end outcome in mind, many consumer goods companies and retail food service businesses still utilize packaging that has no value in recycling markets. Plastic packaging has become increasingly complex with colors, additives, and multilayer mixed compositions that make it more difficult to recycle. And at the end of the day, even if they do get recycled, plastics can only be recycled 2-3 times before the polymers break down in the recycling process.


Then there is the collection process. Recycling companies have varying product specifications and accept different levels of contamination. Waste collection systems can diverge significantly, yielding non uniform compositions of waste to be recycled and varying qualities of recycled material, though investments in standardization are being made by companies across the waste management industry. Additionally, curbside collection services are usually managed by local governments and funded with taxpayer dollars and are therefore subject to disruption or cancellation especially when governments are trying to cut expenses.


The other issue is that there’s a lack of education around the why and how of recycling. A history of exporting our waste and not seeing the outcomes means Americans tend to be “aspirational” about their recycling. Today about 25 percent of what we throw in the blue bins is contaminated. Many US residents find it difficult to recycle due to underdeveloped residential curbside services, lack of recycling equipment or lack of understanding of proper recycling methods. Even PET plastic that is truly recyclable and in high demand in the US today only has a recycling rate of 29 percent.


All of these obstacles to effective recycling mean that companies can’t really control supply no matter how much demand there is. Recycling markets do not follow traditional supply-demand trends since consumers directly control the supply with commodity values having little to no influence over behavior. At the same time municipalities and local governments control how that supply is collected and enters the value chain. Governments and plastics producers can try to shore up as much demand as they want, but if the supply isn’t there nothing will change.


But most crucially, no matter how much we recycle, the supply of new plastics will just keep increasing because making plastics is profitable for petrochemical companies. The same companies that are investing $1.5 billion in recycling, are also investing $65 billion to dramatically expand plastics production in the US with more than 333 petrochemical projects underway or newly completed. Petrochemicals now account for 14 percent of oil use and are expected to drive half of oil demand growth between now and 2050. The World Economic Forum predicts that plastic production will double over the next 20 years. In a world looking to shift away from oil and fossil fuels, plastics is where oil and gas companies see growth.



So What Can Be Done?


Manufacturers can design for end-of-life sustainability


While multinational companies have made extensive and ambitious plastic pollution reduction pledges, “recyclable” is not the same as “recycled”. Labeling an item as recyclable should be less based on whether something can technically or theoretically be recycled and more on whether it should or will be recycled. Waste reduction will come down to material, product and packaging design that addresses end of life management to ensure it is truly “recyclable.”


S2G portfolio company Footprint, is aiming to eliminate single-use and short term use plastics by creating packaging with the entire product lifecycle in mind, made from 100 percent biobased, compostable, recyclable fibers. The company has worked with multinational companies from ConAgra to Beyond Meat, Molson Coors, and Whole Foods to develop new plant-based fiber bowls, clamshell containers, trays, cups and consumer packaging products and has already helped eliminate over 61 million pounds of plastic. It is efforts like these to design and distribute packaging that is responsive to our current waste management systems that will reduce “wishful recycling,” and help improve our recycling rates.


Governments can incentivize recycling and disincentivize the production of non-recyclable products


There are a number of local, state and national policies that are aimed at reducing plastic waste. Bans on single use plastic products such as bags, straws and polystyrene foam food containers have been successful in curbing plastic waste. One study found that shoppers in cities that banned plastic bags in California before the 2016 statewide ban took effect used fewer shopping bags resulting in a reduction of about 40 million pounds of plastic waste. Another popular piece of legislation are beverage container deposit schemes which can reduce the amount of beverage containers that end up in the ocean by 40 percent.


A new kind of law that is being discussed in many states would shift recycling costs away from taxpayers and onto packaging producers. Currently, producers are not the ones that have to handle the disposal of their products and therefore have little incentive to manufacture products out of more recyclable materials. Extended Producer Responsibility, or EPR, essentially compels manufacturers to pay for the end-waste of their products by requiring companies to fork over different amounts of money to municipalities to cover their recycling expenses. While several states have seen unsuccessful EPR bills in the past, a combination of pressure from lawmakers and growing public concern about the environment and rising cost of recycling could enable states to pass the first EPR policies for plastic packaging. In February of this year, ten state legislatures introduced the formation of a National Extended Producer Responsibility for Packaging Legislator Network in the hopes that a more uniform and interstate approach to EPR legislation would be easier for the industry to implement.


Consumers can prioritize sustainably designed products and packaging


At the end of the day the most straightforward way to reduce the environmental and social impacts of plastic waste is to produce less plastic. Consumers can directly stem the flow of waste into our landfills and environment by investing in reusable products and avoiding, when possible, single use items and wasteful packaging. According to a survey conducted by Accenture, consumers are headed in this direction with 72 percent buying more environmentally friendly products than they did five years ago and 81 percent anticipated to buy even more over the next five years. By changing some of our purchasing practices and prioritizing products that generate less waste, consumers can send a clear signal to companies that investing in materials, products and packaging that have been designed for sustainable and practical end-of-life outcomes is fundamental for retaining their customer base moving forward.



To learn more about the recycling industry and Footprint’s solutions check out our upcoming Where We Grow From Here podcast episode where we interview Footprint Founder and CEO Troy Swope and Expert Advisory Board Member Darin Olien on how they are tackling plastic pollution through innovative packaging and powerful partnerships.

When Demand is Not Enough: The Problem with Plastic Recycling and What We Can Do About it

When Demand is Not Enough: The Problem with Plastic Recycling and What We Can Do About it

Tonya Bakritzes

SVP Marketing

Tonya Bakritzes is SVP of Marketing at S2G Ventures where she oversees the fund’s brand strategy, marketing and communications and provides strategic guidance to the fund’s portfolio companies.

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