All plastic bottles made from polyethylene terephthalate (PET) moving through the California recycling system must contain at least 15% post-consumer resin, or PCR, by 2022. California is the first state to impose a PCR mandate, under Assembly Bill 793 signed by Governor Gavin Newsom in September 2020. That percentage will increase to 25% by 2025 and 50% by 2030.
But with less than a month until the implementation of this new requirement, data reveals that only seven out of the 69 beverage manufacturers in California meet the first recycled content threshold.
According to the state's Department of Resources Recycling and Recovery (CalRecycle) report published in early September, these companies are:
- Premium Waters (72%)
- Chameleon Beverage Co. (48%)
- CG Roxane-Crystal Geyser Alpine Spring Water (37%)
- Nestle Waters US (33%)
- Danone Waters of America (23%)
- Niagara Bottling (20%)
- Pepsi Cola Bottling Group (18%)
Close to half of the companies listed either reported using 0% PCR or failed to report data entirely — a breach of law under the 2018 California Beverage Container Recycling and Litter Reduction Act.
The companies that did report their usage recorded at least a 20% year on year decrease in PCR content compared to 2019, including those with some of the most ambitious sustainability goals such as Coca-Cola North America, Niagara Bottling, PepsiCo and Nestle Waters.
Under AB 793, manufacturers that fail to meet the minimum requirements are subject to a 20-cent penalty fee for each pound of PCR they fall short of, barring certain exceptions.
However, some participants believe manufacturers that fall short of reaching PCR goals will simply foot the additional charges, especially if virgin PET is currently priced at a discount to recycled.
"The penalty will just keep going up and people will just keep paying, I believe, at least until the requirement reaches 50%," a California reclaimer said.
Supply-demand gap continues to widen
While California's recycled-content law is the first in the nation, other states are already following suit. Washington state enacted its own PCR bill in May 2021, which will take effect in 2023.
In addition to government mandates, hundreds of large consumer brands across the value chain have made voluntary PCR commitments of their own — most commonly to incorporate 25% or 30% recycled content by 2025.
"We do not have a minimum content issue, we have a collection issue," said Darrel Collier, executive director of the National Association of PET Container Resources (NAPCOR).
According to the latest NAPCOR report released in early November, end-use consumption of R-PET increased by 10% in the US and Canada in 2020. The same report, however, showed a 2.3% decrease in PET bottle collection in the US alone, bringing the US 2020 recycling rate down to 26.6%.
R-PET is currently a finite resource that is completely price inelastic as feedstock availability is directly tied to recycling rates, which vary tremendously by municipality and are subject to local budget cuts and different recycling rules.
Although the recent rise in demand has created valuable end-markets for recycled materials, the entire recycling supply chain – from recyclers to brand owners — now faces a large gap between demand and what the current US infrastructure can supply.
"It used to just be about which material was cheaper, but it's not anymore," a West Coast recycler said. "Now it's either about how do I comply with mandates or make my product as green as possible so the consumer will buy."
To meet the announced company brand commitments for PET, reclamation capacity in the US would, at a minimum, need to increase by 50% from current capacity, according to a 2021 study by the American Institute for Packaging and the Environment.
"When you put in a minimum content mandate without having some kind of corresponding collection improvement process, you're definitely headed towards failure," said Collier.
Commitments hindering commitments?
In addition to packaging, R-PET has other end uses such as polyester fiber to make apparel and textiles. For example, brands such as Patagonia and Nike have launched product lines made from recycled water bottles.
Often, these types of consumer goods have better profit margins than bottles or food packaging, allowing manufacturers of such products to pay more for R-PET than bottle manufactures.
Brand owners often elect to use water bottles in their "sustainable" product lines over less widely known types of plastic or from existing apparel items, in part, as a marketing tactic, but also because there is limited scalable technology for recycling post-consumer textiles.
Polyester fabrics are rarely recycled and fashion brands, despite their circular-economy intentions, often interrupt the closed-loop system by using plastic bottles that could be otherwise turned into more recyclable products, such as other plastic bottles.
Examining R-PET demand by specific end-market, NAPCOR's 2020 report showed Food/Beverage and Non-Food/Beverage Bottle categories grew by 32% in total, surpassing fiber for the first time as the largest user of post-consumer PET bottles.
Still, as PCR requirements for bottlers increase, it is unlikely textile companies will reduce their own PCR consumption to allow beverage and packaging manufacturers to meet their government-mandated requirements.
"The market will ultimately decide on the way they split between the applications," said Collier. "Again, our job is to increase the collection so everybody has a bit more balance to choose from as opposed to a kind of a ration system."
As awareness of the ever-widening supply-demand gap rises, many industry associations have launched initiatives to redress some of the underlying and systemic issues.
One such strategy is the US Plastics Pact's Roadmap to 2025, led by The Recycling Partnership and World Wildlife Fund as part of a global initiative by the Ellen MacArthur Foundation. The roadmap, launched in June, is a national and collaborative effort of over 100 private and public stakeholders — typically disconnected from one another — such as brand owners, research entities, governments, recyclers, and producers.
The 36-page document outlines four ultimate end-goals:
- to define and eliminate problematic and unnecessary packaging
- to make newly produced plastic packaging 100% reusable, recyclable or compostable
- to effectively recycle or compost 50% of plastic packaging
- to incorporate 30% PCR or responsibly sourced bio-based content in plastic packaging
"We've got some pretty ambitious goals that have come out in the roadmap around the PET," said Collier. "Which quite frankly, we see as attainable because we have experiences around the world that demonstrate that, but we've got a long way to go in the US."
More than just a list of broad claims, the roadmap provides a step-by-step guide on how to achieve each goal through actions such as better packaging designs, education campaigns, and policy development. Specific timeframes and responsible parties (e.g. lead, co-lead, and support roles) are given for each target.
However, to reach any of these four end goals, the roadmap itself states that both significant and smart infrastructure investment is needed.
Specifically, to meet PCR requirements, recycling facilities need to be equipped with the proper sorting and washing technology to produce high-quality R-PET flake that can then be processed into food-grade pellets. To use this post-consumer resin in food and beverage packaging, both mechanical and chemical recycling technology must receive a letter of no objection from the FDA. This technology can be quite expensive and is usually of limited availability.
"There needs to be an economic incentive to convert more curbside bales into food-grade quality material," said Robert Stier, senior lead for quantitative analysis for petrochemicals at Platts Analytics. "Without that investment, prices are going to keep going up as people bid against one another for the same limited volumes."