Three resin makers and the Closed Loop Partners said May 26 they're launching a $100 million investment fund to help finance recovery and recycling of polyethylene and polypropylene in the U.S. and Canada.
Dow Inc., LyondellBasell Industries and Nova Chemicals Corp. are kicking in a total of $25 million to start the Closed Loop Circular Plastics Fund, which they said they hope to grow to $100 million with money from other corporate and financial investors.
The group aims to fund projects that recycle more than 500 million pounds of both post-consumer and post-industrial plastics over its 10-year lifespan.
The fund will focus on three areas: increasing access to collection; optimizing recycling systems to capture "high-quality" plastic like food-grade and medical-grade materials; and investing in manufacturing that uses recycled-content plastic.
The group said the current supply of recycled plastic meets only 6 percent of the demand for the most commonly used resins in the U.S. and Canada, because of bottlenecks, misaligned policies and outdated equipment.
Ron Gonen, the founder and CEO of CLP, said he hoped the fund would encourage plastics firms to "deploy significantly more of their own capital to further scale these critical solutions."
"The plastic resin manufacturers that create value for their shareholders now and in the future will be the ones that ensure that 100 percent of their products are safely recycled or reused and never discarded in a landfill or elsewhere in our ecosystem," Gonen said.
In the announcement, CLP said the new fund fits into other work its financing to build more circular use of plastics, including scalable reusable packaging models and developing new materials to reduce the "costly extraction of raw materials."
New York-based CLP raises capital to invest in projects, products and infrastructure to build more circular economic models across different materials.
The three founding companies in the plastics fund urged others in the industry to make financial commitments, saying more joint work is needed to boost recycling infrastructure.
"In addition to our company's efforts, further enhancements to recycling infrastructure are critical to capturing the value of used plastics and advancing the circular economy," said LyondellBasell CEO Bob Patel. "We believe successful joint investment can transform the challenges of plastic waste into sustainable business opportunities."
Georgia Sherwin, CLP's director of communications and strategic initiatives, said the plastics fund will work closely with its Closed Loop Infrastructure Fund and its Closed Loop Beverage Fund.
She said the plastics fund is unique in targeting investments to bring recycled PE and PP back into manufacturing supply chains, including for flexible plastics.
Sherwin said it will also be taking a "flexible, risk tolerant" approach to try to spur more mainstream sources of capital to invest, and she pointed to the involvement of the large resin makers for the scale and supply chain networks.
"We need this industry for a green transition given their existing knowledge, expertise, infrastructure and capital," she said.
Nova President and CEO Luis Sierra said he sees the fund as part of a change in how plastic is used.
"If we can create plastic products that are easier to recycle, perform with less materials, incorporate more recycled content and invest in the recycling and recovery infrastructure, we will achieve a zero plastic waste future," he said.
The 500 million pounds the fund estimates its investments could recycle over its 10-year lifespan, however, is relatively small compared to the 15 billion pounds of PE or the 3.6 billion pounds of PP that the EPA estimated was used in packaging in the United States in 2018.
As well, one recent report said it will cost several billion dollars to upgrade the U.S. residential recycling system to handle flexible plastic packaging, one of the targets of the new plastics fund's work.
A May 18 report from the Recycling Partnership estimated that it would cost $4 billion over five years to upgrade residential collection systems to be able to recycle flexible plastics and films that they currently can't process.