California lawmakers, industry in talks about tough recycled content PET bottle rules

A push by lawmakers in California for 75 percent recycled content in PET bottles is moving some in the plastics bottling and beverage industries to sign on to something that's previously been hard for them to accept: government-mandated recycled content in bottles.

As California's Legislature considers several tough new plastic waste laws, a trio of industry groups — the Plastic Recycling Corp. of California (PRCC), the International Bottled Water Association (IBWA) and the American Beverage Association (ABA) — are telling lawmakers they are OK with a broad-based law requiring recycled content. Just not at the 75 percent level legislators want.

"We support the mandatory recycled [content] approach in this bill," said Mike Knudsen, a Sacramento, Ca.-based lobbyist for IBWA. "That's relatively new for us. This is a very challenging issue, and our primary objection to the bill is it's just too much, too fast."

Knudsen and others spoke at a July 3 state Senate hearing in Sacramento, held to look at legislation that would require 25 percent recycled content in PET bottles in 2021 and ramp up to 75 percent by 2030. All plastic containers covered by the state's bottle bill would be included.

Bottle makers and beverage companies support lower levels.

PRCC, for example, wrote in a June 24 letter to California lawmakers that it "can support legislation that provides a mandate of 10 percent by 2021 and steadily increases up to 25 percent by 2025," but warned that the current legislation "will cause market havoc, supply challenges and price spikes."

Advocates for the tougher California bill, however, say setting high legal requirements is a logical next step for recycling. They said it would help beleaguered recyclers by boosting demand for recycled PET and defer some taxpayer costs for recycling.

A coalition of PET recycling companies in California, including Carbonlite Industries and RePet Inc., have hired a lobbyist in Sacramento to support the bill.

"Our industry is in crisis and has been for the last seven, eight years," said Alex Delnik, president of Verdeco Recycling Inc., a maker of recycled PET in South Gate, Calif., and a member of the coalition.

Delnik said that growing U.S. production of virgin PET and subsidized imports of virgin resin have led to lower prices and hurt the economics of recycling.

"We have to compete on price with the hydrocarbon-based virgin PET industry," he said. "Virgin PET prices are lower today than they were eight, 10 years ago."

He argued that recycled content has benefits over virgin materials because it "significantly" reduces the carbon footprint of plastic packaging.

Beverage and bottling industry officials said a quick move to 25 percent recycled PET by 2021 is problematic, even if legislators point out that some bottled water companies in the state are already doing that.

Dennis Albiani, a lobbyist representing both PRCC and ABA, told lawmakers that both organizations prefer that California follow the lead of the European Union's plastics strategy, which requires 25 percent recycled content in PET bottles by 2025 and 30 percent by 2030.

"Those numbers are realistic," Albiani said. "We support moving forward with a more measured approach, similar to the EU."

He said PRCC supports doing more to help the recycling industry.

"We absolutely agree we should pump the markets and help the reclaimers out," Albiani said. "The PRCC has been involved in this for 33 years trying to build domestic markets in California."

Lawmakers appeared open to finding a compromise, and they and industry groups said talks are ongoing.

But Assembly member Phil Ting, D-San Francisco, one of the main authors of the bill, also suggested they don't want to set the bar too low.

He noted that the two largest bottled water makers in the state, Niagara Bottling LLC and Nestle Waters North America Inc., already have 40 percent and 37 percent recycled PET content, respectively.

"It's odd when you have the two largest bottled water manufacturers in California already well above the 25 percent saying the industry can't get there until 2025," Ting said. "We want to make sure that the percentage makes sense but we also don't want to be taken [for] a fool."

But Albiani countered that even if some companies currently exceed 25 percent, others like store brands are at zero percent. A legal mandate that's too aggressive could overwhelm the supply of recycled PET.

PRCC said the bill ignores recycled PET use in other markets, including the state's large farm sector.

Knudsen said IBWA worked with recyclers on what it considers a workable framework.

"We came up with 25 percent by 2025; we think that's doable," Knudsen said. "We also think that the market would have to operate in kind of unprecedentedly efficient ... ways to even hit that."

An economic analysis that the state Legislature prepared for the bill noted an alternate scenario of 15 percent recycled content in 2021, rising to 25 percent in 2023, 35 percent in 2025, 50 percent in 2027 and finally 75 percent in 2030.

Ting noted that the bill could have "off ramp" provisions at the 75 percent level that give the state agency CalRecycle the authority to relax rules if market conditions prove too tough.

But some, like Delnik, said they worried about any recycled content requirement getting too watered down with such off ramps. He said that's what happened with recycled content provisions in the state's 1991 Rigid Plastic Packaging Container law.

PRCC said PET recycling is already a success in California, with a PET bottle recycling rate of 74 percent. But Mark Murray, executive director of the environmental group Californians Against Waste, said the requirements would still offset costs cities pay to support recycling.

Another chief author of the bill, Assembly Member Jacqui Irwin, D-Thousand Oaks, said she was hopeful that talks with the industry could work out a compromise.

"We have had good negotiations," she said. "They are in favor of a mandate. We are just working with the numbers to make sure we can come to some sort of number that pushes them a little bit but that they can agree with."