More Recycling News. Hopefully More Recycling Action

The Dow, LyondellBasell, Nova, Closed Loop Partners announcement yesterday is worth some thoughts. Closed Loop Partners is a PE company focused on funding recycling opportunities, but by its nature, it is relatively risk-averse as it has return goals to meet for its investors – to date its investments have been low-hanging fruit and niche in nature, but steps in the right direction nonetheless. The investment from the majors perhaps gives Closed Loop some wiggle room to look at projects that are less of a sure thing and maybe require a leap of faith on untested technologies or at least technologies untested at scale – primarily in sorting and identifying polymers and cleaning. We would still expect each project to be small, simply because access to the clean and easily sorted polyethylene and polypropylene in the US is limited by very poor standards of recycling and the vast proportion of unrecyclable polymer that ends up in a waste stream. If the group can find locations with significant supply, it might be wise to build pyrolysis at the same site to deal with everything that cannot be recycled. Our hope for this investment is that it is not simply an ESG PR opportunity for the polymer producers and that it does the following:

• Provides a feedback loop to the group on what the constraints are in each project considered, availability, cleanliness, impurities, etc., and that this feeds back into the supply chain such that the consumers of polyethylene and polypropylene learn of the changes they could make to increase the recyclable volumes.
• Tests more of the early-stage technologies around cleaning and sorting
• This leads to more investment and more partners – we would like to see the packagers themselves get involved as they are the ones that make the polymer hard to recycle – not Dow, LyondellBasell, and Nova.
• This partnership is likely another nail in the coffin for Purecycle Technologies as any polypropylene stream that is attractive to Purecycle will likely be more attractive to this group because they also want the polyethylene.

We have said from the early stages of our climate and ESG work - click here to see more that some of the needs are so urgent and so complex that there is a need to try everything and not wait around for as yet undeveloped “perfect solutions”; at the very least this fits the “try everything” approach. We expect that the partnership will likely focus on geographies where pyrolysis for reuse as an ethylene feed is uneconomic – i.e. too far from an ethylene unit, but that does not mean that pyrolysis is a wrong move for large volumes of plastic waste that cannot be recycled, as the output has uses in fuel markets and this is still better than landfill.  We still believe that there are opportunities to build several large integrated waste “recovery” sites around the US, close to larger municipalities, or between several large cities, which include both mechanical recycling and pyrolysis. This might be a bridge too far for the Closed Loop team, but it may make sense in JV with one of its new partners.