Last week at the Plastics Recycling Conference in Grapevine, TX, I joined moderator Colin Staub from Resource Recycling and Georgia-Pacific’s Hubbit, Blake Gordon in a panel discussion, “Commodity Trading Goes Digital.” It was quickly clear that Blake and I share a view that transparency is key to overcoming the fragmentation, inefficiency and volatility that plagues the industry today and helping it to reach its full potential.

I had the opportunity to share with our audience how Circular is making this transparency a reality through data. With recent advances in AI technology, we’ve extracted data from >50k technical records from 9k global suppliers, giving us a clear view of what’s available in the market, at what spec and its expected price. Through our software, buyers and suppliers can connect with unprecedented speed and efficiency. As a result, we’re seeing sourcing events completed in weeks, not months and significant savings vs. market indices. More importantly, we believe that this level of transparency creates the stability and predictability needed to pave the way to a commoditized and liquid market.

This optimistic view of what’s possible served as a counterpoint to the many headwinds facing the industry today. Here are a few takeaways compiled from several of the informative sessions during the conference:

• Limited feedstock is driving a lack of post-consumer recycled material (PCR) supply. The president of the Association of Plastic Recyclers (APR) said that only 19% of recyclable material gets recycled today despite industry capacity to take that number to 43% immediately if more waste is collected. The issue, he says, is that consumers aren’t educated about what and how to recycle and that only 9,000 of 15,000 communities in the US have recycling programs at all. As he said, “We can’t recycle material we don’t have.”
• Extended Producer Responsibility (EPR) is helpful but not enough. Globally, there are almost as many variants of EPRs as there are jurisdictions. In the US, a few states have implemented legislation with more pending. The gripe is that this legislation is punitive, not an incentive like the subsidies provided for solar, wind and EV infrastructure. Recycled plastic is “being left behind,” despite being one of the best things we can do to reduce greenhouse gas emissions.
• Massive overproduction of virgin plastic has prices plummeting, making it hard for recycled plastic to compete. A significant increase in Chinese and North American capacity has flooded the market with virgin plastic for a myriad of reasons too complex to list here. The argument is that with a low-priced alternative, companies will have a hard time making the business case to shift to more sustainable PCR. Despite the government’s efforts to implement tariffs to even the playing field for US suppliers, global suppliers seem to have virtually no floor to the prices they are willing to accept.
• Demand just isn’t there…or is it? Two different perspectives emerged regarding PCR demand: one side says that buyers won’t commit and the other claims there is almost insatiable demand. The former claims that the “green premium” prevents buyers from shifting to PCR. When they do engage, it’s through spot buys rather than long-term contracts, making it hard for suppliers to get reliable revenue. On the flip side, Jon Vander Ark, the CEO of Republic Services talked about the $160M investment they are making in new recycling facilities - an investment they would never have made without confidence that there is “demand for every molecule that gets produced.”

These issues feel intractable and I began to wonder if the only answer is to hunker down and wait for these external factors to change.

But then I caught myself. We know, thanks to a recent McKinsey report, that brands with ESG claims grow almost 2% faster per year than brands that do not make those claims. And, EPRs that will make the switch mandatory are coming soon. I think we can make the same conclusion that Republic Services has: demand is strong and will continue to grow. On the other side, we hear suppliers asking for long term contracts to offload inventory. So, we know supply is strong too. That’s good news: if supply and demand exist, we just need to provide the market infrastructure to allow buyers and suppliers to connect in a more efficient way. And, the results we’re seeing from brands that work with Circular tell us that data and transparency make that efficiency possible.

So, before we fall into a trap of inaction, I propose an alternative, a ray of hope in an otherwise dismal outlook: embrace the change. Historically, industry has provided the innovation needed to accelerate markets in transition and I believe that recycled plastics is no different. I was encouraged by the many entrepreneurial suppliers we met at the conference that join us in our optimism and look forward to building the future of sustainable sourcing with them.

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