WPC: Legislation needed to spur investment in US plastics recycling infrastructure

The plastics industry faces a stark imbalance of supply and demand starting in 2025, when the first brand targets for recycled plastic content will take effect, according to executives speaking at the World Petrochemical Conference by S&P Global in Houston, Texas, March 19.

The strategies required to successfully transition from non-renewable resins -- such as polyethylene, polypropylene and polyethylene terephthalate -- include legislation and industry collaboration, they said during the WPC circular plastics and recycling programming.

In 2025, when brand owners will implement the first phase of voluntary targets for post-consumer recycled content, demand is projected to outpace available supply by about 1.4 million mt/year, according to Olivier Maronneaud, head of research for methanol and plastic circularity at S&P Global.

By 2030, when the second phase of targets come into effect, that shortfall will grow to 2.3 million mt/year, Maronneaud said.

Although brand owners are already seeking to secure supply of circular plastics ahead of 2025 targets, virgin resin prices are difficult to compete with, according to recycling market sources.

For example, recycled high-density PE resin was 25.5 cents/lb more expensive than virgin resin, according to S&P Global Commodity Insights data March 19. Although this price spread is much lower than in early June 2023, when Platts assessed recycled resin at a premium of more than 90 cents/lb to virgin pellet, sellers have yet to see an increase in demand. Platts is part of S&P Global Commodity Insights.

One mechanism to help spur the required infrastructure and investment is legislation, said executives from Cyclyx, ExxonMobil, LyondellBasell and NOVA Chemicals at the WPC panel.

"Sound policy is needed, one we can help influence and educate to help transition to fulfill global needs for sustainability," said Joe Vaillancourt, CEO of Cyclyx International.

Cyclyx announced in December it had reached final investment decision on its first circularity center, which will be commissioned at the end of Q1 2025 in Houston.

"When brand owners made these commitments years ago, there wasn't an appreciation of what it would take to incorporate PCR [post-consumer recyclate]," said Alan Schrob, director of mechanical recycling at NOVA Chemicals.

Unlike many polyolefin producers, NOVA focuses on mechanical recycling to lead the transition into PCR content, he said.

NOVA's joint venture with Novolex in Indiana will recycle post-use low-density PE film, and is expected to be operational in 2025.

Another pillar to supply security is innovation in both technology and partnerships.

For example, ExxonMobil is part of the Cyclyx joint venture, along with LyondellBasell and Agilyx, to focus on addressing supply challenges, said Mario Chavez, global advanced recycling ventures executive at ExxonMobil.

Regulations help spur investment in recycling infrastructure, said Yvonne van der Laan, EVP of circular and low carbon business solutions at LyondellBasell.

"Policies recognizing advanced recycling boost capacity expansions," she said, adding that Extended Producer Responsibility (EPR) schemes enable greater feedstock access and grow recycling rates.

Only four US states have passed legislation regulating recycled content: California, Oregon, Colorado and Maine.

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