Consumer goods makers propose virgin resin fee to boost recycling

Washington — A trade association made up of major consumer brands including Coca-Cola Co., PepsiCo Inc. and Clorox Co. is proposing a fee on virgin resin in the U.S. to level the playing field for recycled plastic and pay for improvements in the country's recycling system.

The proposal from the Consumer Brands Association is part of a broader recycling policy platform it put out recently that included five other funding options, such as higher landfill charges, and does not get into details on resin fees.

But having some of the world's biggest corporate buyers of plastics endorsing a virgin resin fee is a major shift and could move an idea previously limited to environmental groups and academics to the front of the debate around how — and who — pays for better recycling systems.

CBA argues a virgin plastics fee would make it more economical to use recycled content, and it comes as many of its member companies in the consumer goods industries have made commitments to use more recycled plastic in the U.S. but say they'll struggle to find enough material because of low recycling rates.

"Virgin resin, which is used to make plastic, is currently less expensive than recycled resin," CBA said in its mid-April document, Achieving America's Recycling Future. "A fee for virgin resin would put it on price parity with recycled resin, making it more cost-effective for use in packaging."

CBA, which changed its name from the Grocery Manufacturers Association in January, included the virgin plastics fee as one of six funding mechanisms, along with packaging fees, waste generator fees, landfill tipping charges, per-bag fees for residential trash and voluntary industry fees to support education.

Meghan Stasz, vice president of packaging and sustainability for the Arlington, Va.-based group, said a resin fee "could be a good tool" to address the price disparity between virgin and recycled resins.

"This is one of the newest ideas in the financing conversation, so we don't admittedly have all of the details hammered out," she said. "But what we wanted to do was get that concept out … so that we can have exactly those kinds of conversations with stakeholders. It's a concept that we have talked about as an industry."

The American Chemistry Council said the announcement was unexpected and believes a better approach would be to use chemical recycling technologies under development by virgin materials makers and others.

"It was surprising," said Keith Christman, managing director of plastic markets at ACC. "We don't think it's the right approach, and it definitely would have been nice to talk about it beforehand.

"We don't think it's the right approach to make recycled resin more competitive by artificially increasing the cost of virgin plastic," he said. "Instead, we're focused on scaling up advanced recycling that will make recycled resins meet both the brand quality needs for packaging as well as be more cost-effective by bringing the scale of large plastic resin producers to recycled materials."

He said investments totaling $4.6 billion have been announced for both mechanical and chemical recycling in the United States in the last three years, since China's National Sword program essentially ended exports of lower-value plastic scrap and upended recycling markets.

"These kinds of programs using advanced recycling are going to give us the scale we need to be cost-effective in the future," he said.

The CBA plan does include chemical recycling, and Stasz said there is a "real opportunity" for it.

It's hard to predict if CBA's proposal would become part of any legislation.

But consumer product companies have been making a stronger push in Washington to urge the federal government to take a larger role around recycling policy, and they're getting some high-profile audiences in the capital.

In announcing its new platform, CBA said its members support "a national solution to fix the country's broken recycling system" with three goals: harmonizing the more than 10,000 local recycling programs in the U.S., a long-term financing plan and strong end markets to meet demand.

"I think one of the major goals or points of our policy platform is that we want to elevate this conversation to a national one," Stasz said.

Consumer product companies have been feeling more political pressure in state legislatures. California, in particular, almost passed legislation last year that would have required specific packaging types to achieve a 75 percent recycling rate by 2030 to be sold in the state.

CBA organized a new group, the Recycling Leadership Council, along with more than a dozen other business associations and environmental groups, earlier this year.

In January, the RLC had a kickoff meeting in Washington and, according to a CBA statement on its website, had a bipartisan group of members of Congress at the meeting to hear from CBA, the council members and each other on recycling policy.

They included the Republican and Democratic heads of the Senate Recycling Caucus; the bipartisan sponsors of the plastics industry supported Save Our Seas legislation; Sen. Tom Udall, D-N.M., an author of the Break Free From Plastic Pollution Act, which is strongly opposed by industry; and Rep. Haley Stevens, D-Mich., an organizer of the Congressional Plastics Solutions Task Force.

RLC plans to put out a position paper in the fall, Stasz said. The CBA's policy platform with the virgin resin fee is not endorsed by the RLC.

Christman said that while ACC is not a member of the RLC, he attended the January meeting with lawmakers.

"I attended that meeting that they had on Capitol Hill," he said. "There was no hint of a proposal of a resin fee at that meeting and no discussion since."

Christman pointed to his testimony at an early March hearing in Congress as examples of efforts the ACC supports, including the Save Our Seas Act; the Recover Act, which calls for at least $500 million in federal money to support local recycling; and the Recycle Act, which would boost recycling education spending.

"There's a lot we're doing around recycling and improving recycling in the U.S.," he said.

The Plastics Industry Association, for its part, said it looked forward to working with the new CBA council and also supported the Recover and Recycle Acts.

There are strong business pressures on the consumer product companies in CBA to boost recycling, particularly around plastics.

Major consumer product companies have made sizable public commitments to increase recycled plastic in packaging, but there's not nearly enough available to meet that demand, said Allison Shapiro, executive director of the recycling investment fund Closed Loop Partners, in a May 19 webinar for the conference Circularity 20 Digital.

She noted estimates from the New Plastics Economy project that the post-consumer recycled resin content of packaging was 4 percent in 2018 but would have to rise to 22 percent by 2025 to meet those goals, for 400 companies and retailers in that program.

"That's a tremendously ambitious goal in seven years," Shapiro said.

While Shapiro said that some are nervous that major companies will back away from those commitments as a response to the coronavirus pandemic, she also noted public statements from major companies that they will keep them.

Stasz also said she believed the consumer goods industry will keep those commitments. The pandemic has reinforced the value of packaging for food safety and for protecting products, but it has also shown that better recycling systems — and funding to support it — are needed, she said.

"COVID has certainly not changed the consumer packaged goods industries' commitment to sustainability, its commitment to improving packaging," she said. "Packaging has a really critical job to play. And we need recycling systems that can handle that packaging."

The CBA proposal is not the first to suggest new approaches for funding. ACC last year endorsed a fee on single-use disposable foodservice packaging in California and also proposed it in New York and other places.

As well, the Recycling Partnership, an industry-funded group, also said earlier this year it was getting ready to release a funding proposal and suggested it could include fees on packaging to close what they estimate is a gap of at least $9 billion to improve recycling systems in the United States.

Dylan de Thomas, vice president of industry collaboration for the Recycling Partnership, said debates around financing recycling are moving into much greater detail, both in the public and private sectors.

"A lot of the conversations like [these]… would be unthinkable three years ago," he said. "The industry at large and all the various stakeholders recognize that they need to play a greater role. … It's going to take a lot of effort, ingenuity and cash."