On August 30, 2020, as one of the last acts of the California legislature this year, the Senate unanimously passed Assembly Bill 793 requiring 50% post-consumer recycled content in plastic beverage bottles by 2030. The bill, signed into law by Governor Gavin Newsom on September 24, has been hailed as the most aggressive recycled content mandate in the world and is expected to serve as a bellwether for other states. Prior to the passage of AB 793, AMERIPEN had already been tracking 17 different bills related to recycled content in packaging across seven states. We recognize that the interest in increasing the supply and demand economics of recyclables is strong, and we anticipate 2021 will see further legislative activity along these lines.
In a time when we are looking at creating circular economies and reducing waste during a period of collapsing government budgets and a downfall of global commodity markets, the idea of using recycled content mandates to increase demand for domestic recyclables appears compelling. Recycled content demands are subject to market economics: When virgin materials are high, recycled content can offer a cheaper alternative, but when virgin prices are low, the opposite can occur. So unless there is pressure from consumers or government, producers (brands and converters) will tend to pick the cheapest option.
See: Planning for Recovery Systems Change
Recycled content mandates offer a regulatory push to ensure producers buy recycled regardless of price, thereby increasing and stabilizing demand, as well as increasing the pricing for these commodities. It appears a straightforward logic, but as with most things related to sustainable packaging, there’s a lot of nuance to ensure we don’t inadvertently create unintended consequences.
Mandates operate within a system
Recycling comprises a series of interconnected systems: collection, sortation, processing, and end markets. Inconsistent collection and sortation decrease the value of processed materials, which limits end-market demand and use. Limited end-market demand can reduce investments in collection, sortation, and processing. Considering the complex interplay of systems involved in recycling, AMERIPEN believes policies enacted to create system efficiencies should consider impacts and opportunities across the entire system.
Exploring demand and supply: A 2017 study, “End Market Demand for Recycled Plastic,” from More Recycling noted that the most significant barrier to a converter’s use of PCR material was not always price (as assumed) but an insufficient supply of material that matches their specifications, with quality an issue for many applications. This finding was further echoed in their more recently released 2018 study, where they noted that the quality and quantity of PCR bottle material available to U.S. reclaimers dropped for the fourth consecutive year.
Quality specifications vary depending on the end use and regulatory requirements; some materials require more robust specifications than others. This variability plays a role in influencing pricing and demand. Mandates that do not consider these factors may inadvertently create market distortions.
Evaluating market opportunities: People often speak of a circular economy as a closed loop, assuming that recycling should be redirected back to the same product. However, when we examine the history of recycling, we find that the most efficient use of a material often includes redirection to another purpose rather than direct reuse.
The 2017 More study also noted that the end markets most capable of absorbing recycled material were not closed-loop systems, but rather examples of remanufacturing into alternative products. Some plastic packaging and containers, for example, may have a threshold of 25% or less flexibility in using PCR content. In contrast, alternative end uses such as plastic lumber and fencing could function with 100% PCR material. This is further reinforced by a study from the Materials Recovery for the Future Initiative (MRFF)—an industry-funded collaborative designed to increase the recovery of hard-to-handle plastics—that found that 48% of the post-consumer plastic material collected through curbside programs and processed domestically is directed toward the manufacture of plastic lumber or agricultural films. Clothing and carpet are also high users of recycled polyethylene.
The challenges of thresholds, regulatory restrictions, and quality can significantly impact how material is used and will influence whether a mandate creates unintended consequences.
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Exploring lifecycle impacts: The ability to absorb recycled materials while reducing environmental impact will vary significantly depending upon the material and on product-specific needs. A study led by the American Forest & Paper Association (AF&PA) evaluating the use of post-consumer content within different paper products demonstrated that recycled content produced significant value for less-refined products, such as paperboard and corrugated, but more refined products, such as office paper and magazine sheets, resulted in an increased environmental impact compared to the use of virgin fiber.
Directing recycled paper toward paperboard, for example, resulted in an 85% to 95% fiber usage versus 50% to 70% fiber usage when recycled content was directed toward the manufacture of office paper. Additionally, the higher processing involved in office paper over paperboard resulted in an increased use of chemicals to “whiten” paper as well as higher greenhouse gas emissions. Evaluating where and how recycled material can drive the greatest economic and environmental impact is a necessary strategy to ensure sustainable value.
Increasing recycling: One of the frequently understated goals behind many state bills regarding recycled content mandates is the desire to increase recycling rates or reduce materials mismanaged through littering and ocean debris, for example. The U.S. Environmental Protection Agency (EPA) and More Recycling both note that the recycling rate for plastic bottles in 2018 sits between 28% and 29%, indicating that significantly more bottles are discarded by consumers than are recycled. As More notes, “Too many consumers continue to be unaware of the significant usefulness, demand, and value of recycled plastics.”
Mandates can help reinforce the value of recycling, but support in educating consumers to reduce contamination and recycle correctly and in increasing recycling through improved access and clear messaging are complementary and necessary approaches.
Qualifying recycled content: We’ve been fortunate to date that the states that do have recycled content mandates have harmonized their required percentages, making it easier for manufacturers working at a national level to create consistency. But as we move to variable rates across different states—led by the recent California bill—the need to qualify and provide assurance of recycled content claims is needed to ensure transparency and accountability within the system. The paper industry has a robust process to verify recycled content claims, but currently no such programs exist for plastics and some other materials. Establishing a methodological verification of claims is needed to ensure confidence.
Mandates require careful consideration
The packaging industry appreciates the value of recycling. We believe robust waste management systems contribute to the reduction of litter and marine debris and contribute to the vitality of the American manufacturing sector. We understand that as global commodities have decreased in value over the years, the pressure on municipalities to pay for essential recycling services is a challenge. Increasing demand and the economics of material movement is a valued strategy. But if we are to support recycled content mandates, they should support our collective goals and avoid unintended consequences. Policies that incorporate the systemic interplay required across the entire packaging value chain will, at the end of the day, be the most successful.
An effective recycled mandate policy should explore ways to reduce contamination. This can be done through design, such as encouraging the use of The Association of Plastic Recyclers’ (APR) design guides and through consumer education programs like The Recycling Partnership’s bin tags or use of the How2Recycle label to reduce contamination at curbside.
See: Five U.S. Packaging Bills Under Consideration
If a significant barrier to packaging manufacturers’ use of recycled content is not finding sufficient volume to meet their specifications, then we need innovation to improve the quality of post-consumer resins. More innovations like the industry-funded PureCycle Technologies, which removes odor and color from resins, are needed. Support through government tax credits and academic R&D, for example, could scale up more innovation in this area.
We also need to understand that the highest and best use for recycled content may not always be in closed-loop processes. Targeting recycled content to other uses may drive more benefits from both a market and an environmental perspective rather than creating mandates that require high processing. In fact emerging data suggest that flexible films may be a valued material in road asphalt.
Lastly, we need clear communication with consumers to encourage their participation to increase the quality and quantity of recycled feedstock and also to provide them with transparent and accountable systems that increase their appreciation for the value of recycled content.
The diversity of the packaging industry creates challenges in aligning different materials and packaging formats around various policies, but we believe recycled content mandates that look holistically at demand and supply from the perspective of sustainable materials management could drive significant change. The Institute of Scrap Recycling Industries (ISRI), for example, recently released principles around recycled content. These principles support flexibility for many of the concepts we outline, while noting the value in creating improved demand. Translating these principles into legislative action to proactively help our states develop innovative policies and shared value is needed. AMERIPEN members are currently working through this process.
AMERIPEN represents the U.S. packaging value chain by providing policymakers with fact-based, material-neutral, scientific information.
