Plastic wrap: scaling-up recycling, boosting biomanufacturing

Welcome to Plastic wrap, our bimonthly review of the science, policy and corporate activity pivotal in creating a circular plastics value chain.

Highlights from this issue include: environmental-metrics specialist CDP including plastics data on its corporate disclosures platform, research into aligning global plastics manufacturing with planetary boundaries, a major policy boost for US biomanufacturing and funding for innovative, fashion, sports-surfaces and AI-driven recycling enterprises. 

As private-equity specialists focused on growth-stage investments in this space, we are excited to see peer asset-management firms jointly call on major consumer companies like Amazon, McDonald’s and PepsiCo¹ to reduce their dependence on plastics given the financial risks caused by the environmental impact of pollution. Reporting on the coalition, the Financial Times identified our Plastic Circularity strategy as being focused on the “transformation needed” to make the value chain sustainable.

Science

Can recycled plastic waste sustain future global plastics production? Researchers from ETH Zurich, the University of California and RWTH Aachen University have investigated whether 14 bulk plastics comprising 90% of plastic products manufactured worldwide could be produced in a circular way that respects planetary boundaries.

Their answer? Yes, but achieving this would require three key developments:

1. At least 74% of plastic to be recycled. In Europe, only 15% is currently recycled
2. Better recycling processes, including chemical processes and approaches for plastics that are not currently recycled, such as polyurethanes used as foams
3. For the 26% of plastic that is not recycled, carbon sourced from biomass or CO2 captured from the atmosphere would need to replace fossil fuels as feedstock

The researchers note that 2050 is a more realistic target date to complete this transformation than 2030. Moderating demand, by assigning a higher value to plastic that better reflects its outstanding properties, might also be required. This would encourage a more considered use of plastic, incentivise recycling and make bio-based alternatives more cost-competitive.

Embedding “product stewardship” among plastic manufacturers, so their responsibilities do not end once goods leave factories but address disposal and recycling, would integrate circularity in product design and processes.

Mechanical recycling – in which plastic is regranulated to form new products – has long been the dominant process for recycling plastic. But to scale-up recycling to a level approaching circularity, the widespread application of chemical processes is needed. This method of recycling, which typically leads to monomer building blocks for new materials, would increase the range of plastics recycled.

To estimate the impact of greater chemical recycling, new research published in the journal Resources, Conservation & Recycling undertakes a material flow analysis based on the 10 most popular polymers to generate quantitative estimates of how chemical processes can add to overall recycling rates in Europe. The study concludes that a progressive combination of mechanical and chemical recycling would increase Europe’s overall recycling rate to up to 80%. If only mechanical recycling were implemented, a rate of less than 50% would be achieved.

Policy, regulation and disclosure

Aiming to tackle corporate greenwashing, a proposed European Commission law could support the development of circular plastics.

The chief aim of the Green Claims Directive is to ensure “consumers are provided with reliable, comparable and verifiable information which enables them to make more environmentally sustainable decisions”. Specifically, it seeks to prevent businesses from using misleading or unsubstantiated claims that its activities:

• Positively impact the environment or cause no damage
• Harm the environment less than those of one or more competitors
• Have improved impact over time

If a company’s environmental claim – for example, that its packaging is made from 30% recycled plastic, is proven to be unsubstantiated, the law would enforce a fine of up to 4% of total revenues the firm sources from the European Union.

Through the law, the Commission aims to prevent greenwashing – but also support the competitiveness of companies that are making genuine, verifiable efforts to become more sustainable.

Across the Atlantic, the US Government has launched a biomanufacturing push that includes a goal for 90% of plastics and 30% of chemicals to be produced from biomaterials within two decades. This would see bio-based inputs replace feedstocks comprised predominantly of fossil fuels. The goal, spurred by an executive order last September to boost the market for bioplastics, has funding of more than USD 1 billion from the Defense Department.

Food, fuels and other products are also included in the programme, which aims to boost US competitiveness in biomanufacturing. The US reportedly possesses the scientific capabilities underpinning bio-based goods but lags Europe and China in production capacity. According to McKinsey, the known pipeline of biological capabilities could generate up to USD 4 trillion in “direct economic impact” annually in the next 10-20 years.

Best known for its work in collecting voluntary greenhouse-gas emission reporting from companies, CDP, a specialist in enabling businesses to improve the transparency of their impact on nature, has included plastics in its environmental disclosure platform. This year, 6,743 firms will provide data on the production and use of the most problematic plastics – such as polymers and packaging – that will be made available from September to the 740 financial institutions that CDP works with.

Chemicals, apparel, food and beverage, fossil-fuel and packaging companies have been invited to participate. Despite the scale and visibility of the plastic-pollution crisis, many companies, investors and policymakers lack the “robust data” needed to develop “equitable and just transition plans”, according to Cate Lamb, Global Director for Water Security at CDP. “In turn, investors and policymakers need access to relevant, comprehensive and comparable [plastics] data across the global economy on which to make better decisions.”

Corporate activity

Funding for sustainable fashion, advanced recycling and sports-surfaces enterprises were highlights we have identified among recent announcements¹ aligned with the themes of innovative materials, new usage models and improved collection, sortation and recycling.

Sources

[1] Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document.

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