Plastic recyclers say suspending California bag ban ‘evaporated' film market

When California suspended its plastic bag ban in late April, recyclers say they took an unexpected hit — the state's market for recycled plastic pellets used in shopping bags basically evaporated.

California and other states suspended their bag bans in recent months to try to protect grocery workers from coronavirus exposure through reusable bags.

But the Golden State's bag ban also has a unique side provision that mandates that the thicker reusable plastic bags that were still allowed in stores had to be made with 40 percent recycled plastic.

Recyclers say without the law in force, demand for recycled resin there plummeted, hurting an already fragile market.

"What we saw … was at least five companies immediately saw all their orders for recycled content evaporate overnight," said Steve Alexander, president and CEO of the Association of Plastic Recyclers.

As a result, APR is asking California Gov. Gavin Newsom not to renew his bag ban suspension order and reinstate the recycled content mandate when it expires June 21. But other recycling executives expect that Newsom will continue the policy while the COVID-19 situation remains uncertain.

Sunil Bagaria, president of GDB International in New Brunswick, N.J., which sells recycled low density polyethylene into California's bag market, said he understands the business reasons the bag industry would shift away from recycled content in a crisis like COVID-19.

Virgin PE is inexpensive, especially as COVID-19 has slowed the economy, and it's more standardized and easier to process than the variances that come with recycled resin, he said.

But the abrupt move away from recycled content shows how fragile that market is, he contends, without laws or firm commitments from big brand companies to back it up.

"If there was no legislation, then we would be screwed," said Bagaria, who is also president of the plastics division at the Institute of Scrap Recycling Industries Inc. in Washington. "We're selling our recycled resin to bag manufacturers. The moment that law was put on hold, every single manufacturer, every single manufacturer of plastic bags, immediately switched to virgin resin."

California's law meant that recyclers were getting the best prices for their materials in the state, he said: "It was a big demand driver for companies like us."

Bagaria said that other recycled plastics markets for PET bottles and high density PE bottles strongly benefit from commitments from companies like Coca-Cola and Clorox Inc. to use recycled material, allowing plastic recycling companies in those markets to sometimes sell their material for a premium over virgin resin.

But there's not been a similar situation for recycled LDPE in film and bags, he said.

"PET recycling and HDPE bottle recycling is being supported because the big brands need to go in front of the consumer and the environmentalists," Bagaria said. "But for a grade like linear low density PE, there are no such big announcements."

CalRecycle, the state agency that monitors the bag ban, said in a statement that it does not collect real time data on use of post-consumer recycled material in bags, so it had no comment on market conditions.

But in a 2019 report it had urged expanding recycled content requirements.

It said markets for plastic film scrap face challenging conditions and recommended the Legislature expand the law to have recycled content mandates apply to the local bag ordinances that predate the state law, and were grandfathered in.

With the closing of China and export markets for plastic film waste, CalRecycle urged lawmakers to find ways to strengthen local markets and provide industry with the "responsibility and flexibility."

"Recycled products support markets for post-consumer material, expand local remanufacturing infrastructure to create jobs and diversify local economies, and bring California closer to achieving a more circular economy," CalRecycle said in a statement.

CalRecycle noted that even with the lifting of the bag ban, stores can still choose to use recycled content bags. As well, it said that Newsom's suspension of the bag ban expires June 21.

But Bagaria said he expects that with current conditions, Newsom will extend his suspension of the bag ban.

Alexander said APR would like Newsom to lift the suspension.

"We want to make sure that order isn't extended for another 60 days, because the supply of materials in California has been completely upended," Alexander said. "We're continuing to work with the governor on that."

The plastic bag industry does have its own plans to use more recycled content.

The American Recyclable Plastic Bag Alliance in January announced an industry-wide voluntary commitment for bags to have 20 percent recycled content by 2025. As part of that, all bags would have 10 percent recycled content in 2021.

ARPBA Executive Director Matt Seaholm said the group supports "reasonable" recycled content laws.

"As long as legislated mandates are reasonable and achievable without overburdening end users and manufacturers, recycled content has been something we have suggested as an alternative to bans and taxes for years," said Seaholm, who is also vice president of government affairs at the Plastics Industry Association.

ARPBA sees its industry-wide voluntary recycled content plan as a "great start" and "hopes to build on that momentum going forward," he said.

Bagaria, though, said his company had not yet seen an impact from the ARPBA commitment.

He said the situation in California shows that all parts of the recycling supply chain need to be financially healthy to build a more circular economy in plastics.

"This is not about government intervention," he said. "This is about if, as a country, we are saying we need to recycle more to take care of the environment and take care of plastic pollution … it will only happen if all of the people in the chain are making money."