A collection problem

Departments - Commodities Plastics

With recycled-content commitments, demand is outpacing supply for rPET.

October 26, 2021

Panelists during the 2021 Paper & Plastics Recycling Conference Webinar Series expressed concern about what recycled-content mandates might mean for the economics of recycled polyethylene terephthalate (rPET) given the low plastics recycling rate in the United States.

John Cook, director of sustainability at Niagara Bottling, headquartered in Ontario, California, said rPET pricing traditionally has been linked with virgin PET pricing, though recycled-content mandates are leading to a decoupling of the two materials.

California and Washington have recycled-content mandates, with the first phase of California’s mandate, requiring 15 percent recycled content in plastic beverage containers, going into effect in 2022. By 2030, the mandate will increase to 30 percent recycled content. Beverage bottles sold in Washington will need to include 15 percent recycled content by Jan. 1, 2023, increasing to 50 percent by Jan. 1, 2031.

He noted that mandates outside the U.S. also have driven the decoupling of rPET and virgin PET pricing. “We may see PET bales leaving the U.S. because of that,” Cook said, referring to mandates outside of this country.

“There are not enough bales to go around … A quarter of CRV (California Redemption Value) bales are going outside the country.” – Paul Bahou, president, Global Plastics Recycling

Paul Bahou, president of Global Plastics Recycling, Perris, California, said, “There are not enough bales to go around” in his state. “A quarter of CRV (California Redemption Value) bales are going outside the country,” he said, noting that demand from Mexico was particularly strong. This export interest is driving the price of Grade A bales up.

Lori Carson, site manager for PET recycler Phoenix Technologies International, Bowling Green, Ohio, said, traditionally, “The price decouples when there are disruptions to the virgin stream. When the disruption goes away … the price gravitates back.” However, she said she is concerned that the recycled-content mandates “have the potential to really disrupt the market because there are not yet mandates for collection.”

She continued, “I would prefer collection get worked on before demand” because companies are more likely to do what is economically feasible. Instead, she said, such mandates likely will force the rPET price up because robust supply is not yet in place.

As moderator Kate Davenport of material recovery facility operator Eureka Recycling in Minneapolis noted, citing figures from Circularity in Action, the PET bottle recycling rate in 2019 was 27.9 percent, one percentage point lower than it was in 2018.

Davenport also said most of the PET recovered for recycling in the U.S. goes to the fiber market. She asked the panelists how this is likely to change given voluntary commitments from brands to increase their use of recycled content and the legislative mandates.

Carson noted that while some fiber applications promote their sustainability aspects by virtue of their recycled content, they are not affected by mandates. However, this market traditionally has been able to pay more for PET bales because less processing is involved compared with producing food-grade rPET. “That could flip with the mandates,” she said.

While Bahou said, “Fiber has its place,” he added that collection is the bigger problem. “We need more material. It’s there and going to the trash.”