Manufacturers of plastic products are ditching recycled plastic for cheaper virgin plastic that is being dumped on the market, destroying circularity.
Plastic recycling is a business whose success depends on reliable markets for what it produces. Recyclers, the companies who sort scrap plastic and process it into post-consumer resin (PCR), rely on product manufacturers and brands to consistently buy PCR material. The PCR is used to make new products with recycled content. This is the foundation of plastic circularity.
The U.S. is experiencing a historic boom in new plastic (prime virgin) production driven by the low cost of natural gas. The availability of low-cost monomers produced from natural gas has driven the unprecedented expansion of the plastic industry. A plastics glut in the market means the price for prime virgin material is very low. In fact, the US is the cheapest place in the world to make prime virgin plastic.
Increased production also means a greater amount of wide-spec resin is available to the market. Wide-spec, or off-spec, is a by-product of prime virgin plastic production. It is produced when a plastic producer operating a polymerization unit, produces a virgin resin that is out of specification for prime products. The plastic producers sell wide-spec at a lower price than prime, often through a network of brokers. Wide-spec pricing is frequently at breakeven for producers who are primarily concerned with maintaining higher prices for prime resin. When the price of wide-spec gets low enough, many plastic molders will stop purchasing recycled resin and start buying wide-spec to increase profits. This practice clearly demonstrates that the short term gain of buying cheaper wide-spec outweighs commitments to the environment and maintaining a healthy recycling supply chain.
If product manufacturers and brands claim they are buying PCR for environmental reasons, but drop it when it is more expensive than other alternatives, they are in fact buying it solely on price. All other comments to the contrary are green washing.
The practice of switching from recycled plastic to wide-spec resin is devastating to the growth and stability of plastic recycling. Buyers choosing wide-spec resin over PCR means the interruption of circularity as fewer products are made with recycled content. Lower demand for recycled plastic reduces the economic viability of recycling, making it difficult for recyclers to operate profitably and attract the capital required to grow. This leads to a decrease in recovery and an increase in the amount of plastic waste that ends up in landfills or the environment.
So, how do we manage the problem of wide-spec and waste? Long term contracts that de-couple the value of recycled plastic from the price of virgin.
The environmental benefits of PCR are clear. PCR dramatically lowers green-house gas emissions, reduces energy use, and leads to less plastic in the environment. It should be used as an essential component to drive circularity. When we decouple the value of recycled plastic from the price of virgin, we acknowledge its environmental value, and we set the conditions for long-term contracts. Long-term contracts for PCR protect recyclers (and the entire recycling chain) from market volatility and act as a catalyst for capital investment, driving innovation, and, ultimately, plastic recovery.
It’s time that commitments to circularity go beyond lofty, unmet goals. The consistent use of PCR, demonstrated by long-term contracts, is a responsible investment in sustainability and a true, tangible commitment to circularity.
Greg Janson is the President and CEO of Granite Peak Plastics and Co-Chair of the APR Market Development Committee and Chemical Recycling Research Working Group.