Developing circular solutions for plastics

Earlier this year, Dow, LyondellBasell and Nova Chemicals established the Circular Plastics Fund with an initial investment of $25 million. Closed Loop Partners, New York City, is managing the fund, which will invest in scalable recycling technologies, equipment upgrades and infrastructure. The fund is seeking additional investments from businesses across the plastics value chain, with the goal of growing to $100 million to help advance the recovery and recycling of plastics in the U.S. and Canada.

Julie Zaniewski, Packaging & Specialty Plastics sustainability director, North America, at Dow Chemical Co., which is headquartered in Midland, Michigan, says the fund grew out of the founding funders’ recognition that they were each involved in pilot projects to advance plastics recycling and that it made sense to share their experiences. The Circular Plastics Fund is designed to help the supply chain understand what works from a technological perspective to accelerate and scale these developments, she says. “There is a multiplier effect with this type of funding,” Zaniewski adds, which is concentrated on plastics that typically haven’t been the focus of funding—polyethylene (PE) and polypropylene (PP).

The Closed Loop Circular Plastics Fund’s investments aim to recycle more than 500 million pounds of plastic over its lifetime, which will be 10 years, Closed Loop Partners Director of Communications and Strategic Initiatives Georgia Sherwin told Recycling Today when the fund was launched.

Closed Loop Partners says the Closed Loop Circular Plastics Fund will invest in three strategic areas to increase the amount of recycled plastic available to meet the growing demand for recycled content in products and packaging: access, optimization and manufacturing.

The fund’s investments seek to increase collection of PE and PP by advancing material collection systems, including transportation, logistics and sorting technologies and infrastructure. The Circular Plastics Fund also seeks to upgrade recycling systems to more efficiently aggregate, classify and sort targeted plastics to increase the total amount of the material, including food-grade and medical-grade plastics, sent for remanufacturing. Additionally, the fund will invest in facilities and equipment that manufacture finished products, packaging or related goods using recycled content.

The fund will make investments throughout the value chain rather than concentrating on one area to elicit the most impact. “There will be a breadth and depth of investments in the mix. The goal is to improve the entire system,” Zaniewski says. That could mean providing funding to improve technology in one instance or to support an end market in another.

“We see this as catalytic,” she says of the Circular Plastics Fund, noting that it is a way to bring other stakeholders to the table.

Projects that receive funding must track and meet impact metrics. Impacts to be measured include tons of PE and PP diverted from landfill and tons of greenhouse gas emissions avoided or reduced, Zaniewski says.

Dow is mindful that greenwashing is a concern in the plastics recycling sector, which is why impact metrics are important, she says.     

Zaniewski adds that the potential impacts of prospective projects also will influence where funding goes.

The fund will deploy a flexible mix of debt and equity financing in the form of below-market-rate loans and will aim to stimulate mainstream co-investments, including those from financial institutions, Closed Loop Partners says. The minimum investment size will be $1 million, while the average investment period will range from three to five years, with the exception of bridge loans, Sherwin told Recycling Today when the fund was launched.

Zaniewski says an advisory board will have input on the projects to be funded. “One of the things that we liked about this structure is that it is not necessarily left up to the funders to make those decisions. It’s really a collective of understanding what the best options are. It also provides speed, quite honestly.” While representatives of the funding companies will be advisors, they are not necessarily the decision-makers in terms of the investments, she explains.

The Circular Plastics Fund also will work with other funds that Closed Loop Partners manages, complementing each other’s efforts, which Zaniewski says is critical from an impact perspective and in terms of being “swift and purposeful” in where the funding goes.   

She adds, “We also hope that this can be looked at as a demonstration of how some funds can be used to create systems change,” particularly as extended producer responsibility, or EPR, programs for packaging are brought online. “We see this fund as working with those types of systems. Once you have funds in a system, how do you best allocate those funds in a system to improve and progress it?”

Zaniewski adds that Dow supports EPR, provided such programs are “fair, flexible and fix the problem.”

When it comes to how the fund will help Dow achieve its circular economy goals, Zaniewski says, “There are a number of ways we’ll see that impact. We have specific goals around collecting and recycling 1 million metric tons by 2030. Then we also have a goal to what we call ‘close the loop,’ and that is enabling the recyclability of 100 percent of our products that go into packaging. Ensuring that the needs are met on a systems end and throughout the value chain is a key enabler to both of those goals.”

Zaniewski says the fund seeks to provide a space for advancing new technology that will further its adoption. She says new technology can bring support and improvement at the material recovery facility level. “Necessity really breeds resourcefulness and innovation, and [innovation] is what we want to see in this space. We want to see that our supply chains are ready for that evolving ton and ready for that evolving system.”

Dow is interested in bringing as many stakeholders to the table as possible through the fund. “I would invite anyone who is interested in bringing solutions forward. The opportunity is across the value chain. It is not necessarily about one particular end market or one particular technology. It is creating movement in the systems across different levers.”

Those interested in applying for funding can do so at www.closedlooppartners.com/closed-loop-circular-plastics-fund-apply-for-funding.