California passes recycled-content mandate for thermoformed packaging

California's legislature passed a bill Aug. 30 mandating up to 30 percent recycled content for thermoformed plastic packaging such as berry containers, but some industry groups say the plans won't work and they want Gov. Gavin Newsom to veto it.

Supporters of the legislation say it's needed to jump start weak markets for PET thermoformed packaging by requiring recycled materials to be used in the containers. Mandates would start in 2025, with 10 percent recycled content.

Some companies and industry groups, however, say the legislation puts the cart before the horse and that the bigger challenge is collection of thermoformed containers, not demand for recycled materials.

They say the fate of recycled thermoforms is tied into the state's complicated bottle bill payment structure, which they argue creates disincentives for local material recovery facilities to separate out thermoformed PET.

"The way the structure is set up there is no way for this bill to work," said Steve Alexander, president and CEO of the Association of Plastic Recyclers. "Unless there is incentive for thermoforms to be separated by the MRFs [material recycing facilities], there is no way to access the material for recyclers to have the ability to recycle it."

He said APR is urging Newsom to veto the legislation, Assembly Bill 2784.

But Californians Against Waste, one of the main backers of the legislation, said recycled content mandates will boost demand and create incentives for curbside recycling programs to start separating thermoformed PET.

CAW Executive Director Mark Murray said industry needs to provide financial incentives or other scrap value for thermoforms to support more curbside collection.

"The recycled content standards in AB 2784 offer the best — maybe the only — way to jump start this cycle," Murray said. "The manufacturers of thermoform plastic packaging and the food companies that use it must recognize that they face a limited window to demonstrate closed loop recyclability or this packaging will be phased out of the marketplace."

The bill, if signed by Newsom, would require many types of thermoformed plastic containers to have 10 percent recycled content starting in 2025, with that rising to 20 percent by 2028 and 30 percent in 2030.

If thermoforms have a recycling rate of between 50 and 75 percent, they can be exempted from some requirements.

But to do that, they would have to clear much higher bar than they can now. Some studies have said less than 10 percent of thermoform containers are recycled.

The legislation would exempt packaging for medical devices, drugs and infant formula.

It would also, in a move that CAW described as potentially as significant as the recycled content requirements, require companies to pay penalties for any shortfalls in the amount of recycled resin they're using below what the law mandates.

The legislation would set that at 20 cents per pound for all plastic types in thermoforms, except for expanded polystyrene, which would have a $1 per pound fee.

One of the chief authors of the bill, Assembly Member Phil Ting, D-San Francisco, compared the legislation to a similar law California passed in 2020 mandating recycled content in plastic bottles. It requires 50 percent recycled content in bottles by 2030.

Ting, who also was a key author of that 2020 bottle law, said the thermoform legislation has the same goal.

"We clearly are continuing to lead the way in plastics recycling," Ting said, in Aug. 30 remarks on the Assembly floor before the final vote. "This bill will also help us to make sure that we have a circular waste stream and that we get our thermoforms back."

The Assembly voted 41-24 Aug. 30 to pass it, one day after the Senate adopted it on a 22-11 vote.

Ting said the final version of the legislation included technical assistance funding from the state agency CalRecycle and "gives producers additional flexibility if they struggle to meet benchmarks in this bill."

Another key author of the bill, Assembly Member Jacqui Irwin, D-Camarillo, pointed to the large amount of thermoformed PET packaging that is discarded in the state.

"Nearly 200 million pounds of thermoform plastic is discarded each year in California and the rate of collection is very low," she said in a statement.

But one company that recycles thermoform PET containers in California, Green Impact Plastics in Vernon, Ca., said it opposed the legislation.

"The bill doesn't address the core problem that Green Impact has been fighting for the last three years — collection," said CEO Octavio Victal. "The bill will have very low impact on collection until the bottle bill's commingled rate gets fixed and CalRecycle stops incentivizing the commingling of thermoforms with PET bottles."

Victal suggested Newsom will notice industry concerns. The governor has until Sept. 30 to sign or reject the bill.

"I can't really speak for the governor but it will certainly get his attention to see how many industry stakeholders opposed the bill," he said. "Hopefully this bill will help the State realize they need to fix a bigger problem before mandating minimum content."

Opponents of the bill want California to change the state's bottle bill reimbursement formula, so MRFs have more of an incentive to sort out thermoform PET from bottle PET in the materials they process.

A 2022 study from the Plastic Recycling Corp. of California said that the state government overpays MRFs millions of dollars a year because of PET bale contamination from thermoforms and other materials not covered by the deposit system.

PRCC, an industry group which markets PET collected in California's bottle bill, recommends the state set up two separate reimbursement rates for MRFs, one for PET bales with thermoforms and one without, to create a financial incentive to separate out thermoforms.

While it did not take a position on the bill, PRCC called it a "lost opportunity" that AB 2784 or other legislation did not try to address that problem.

California lawmakers did approve a major overhaul of their bottle bill system in an Aug. 31 vote, putting wine and spirit bottles into the deposit system and making other changes.

But they did not take up changes in the PET reimbursement rate.

Heidi Sanborn, executive director of the Sacramento-based National Stewardship Action Council, said she sees collection as the larger challenge.

"The problem with thermoformed recycling is not a market problem, it is a collection problem," Sanborn said. "And the collection problem is partly due, in California, to the commingled rates in the bottle bill."

From mid-2020 until July, Sanborn also chaired California's Statewide Commission on Recycling Markets and Curbside Recycling, a body appointed to advise the state legislature.

She said the complications over how to improve thermoform recycling made it one of the few topics the commission was not able to issue consensus recommendations around.

CAW's Murray said the recycled content law is needed because the "vast majority" of California communities do not accept thermoforms for recycling.

"The scrap value and market demand do not support the processing costs," he said.

Still, he said Californians do put thermoforms into recycling bins, mistakenly thinking they can be recycled.

"Despite the lack of promotion, curbside programs inevitable receive thermoform plastic from a public wishfully hoping it can be recycled," Murray said. "Collection is clearly not the problem."

"The provisions of AB 2784 will increase market demand for potentially recyclable thermoform — such as PET thermoform — and create the needed financial incentive for all California curbside programs to accept and process PET thermoform for recycling," he said.