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California Legislature passes world's toughest recycled content mandate for plastic bottles

Highlights

Legislation to require 25% PCR in plastic containers by 2025, 50% by 2030

Bill garners widespread industry support from recyclers to beverage companies

Recycled content mandates key to boosting domestic end markets

Houston — California lawmakers made significant strides toward reaching lofty state sustainability goals after approving legislation in late August that would require beverage manufacturers to use recycled content in all plastic bottles.

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Assembly Bill 793, passing the Senate on Aug. 30 by a unanimous vote, would implement a tiered plan requiring all plastic beverage containers under the state's redemption program to contain a specified amount of post-consumer resin (PCR), starting with a minimum of 15% by 2022. The mandate would increase to 25% in 2025 and 50% in 2030.

The bill would also require glass container manufacturers to use 35% of postfilled glass in all food, drink, and beverage containers.

The bill, if signed by Governor Gavin Newsom, would impose some of the toughest recycled content mandates in the world, far outpacing the European Union's target of 30% recycled content by 2030. The bill would also set a precedent as the country's first-ever recycled-content law for plastic bottles in the US.

Under the bill, beverage manufacturers who do not meet minimum PCR requirements are subject to penalties such as a 20-cent fee for each pound of required PCR that is not found in newly manufactured bottles. The penalty fees collected will be directed towards a "Recycling Enhancement Penalty Account" under which the money will be invested in recycling infrastructure, collection, and processing, said the bill.

Beginning in 2025, the beverage manufacturing industry will be allowed to petition for an annual review and adjustment of the required PCR percentage based on such factors as recycling rates, changing market conditions, including supply and demand trends for post-consumer recycled plastics, and domestic and global bale availability.

WIDE-SPREAD INDUSTRY SUPPORT

The Bill's authors state that such legislation is necessary to boost domestic end markets for recyclables which have been struggling to stay afloat since the implementation of China's 2018 National Sword policy which effectively banned all plastic imports from the US.

In addition, the bill's passing would reduce reliance on "unpredictable foreign markets" and would essentially "close the loop" in the recycling stream.

Previous versions of the legislation which called for even steeper PCR requirements (starting at 25% by 2021 and increasing to 75% by 2030)were rejected in mid-2019 by Newsom as well as the American Beverage Association.

However, Bill 973, with its lower and more-realistic content requirements, has garnered widespread support from environmental groups, local governments, recycling organizations, as well as from beverage companies that have ambitious 2025 sustainability commitments of their own.

The bill comes at an opportune time when much of California's recycling sector has been negatively impacted by COVID-19, which has brought drastic collection cuts, deposit program suspensions, and an estimated 30% volume drop in redeemed beverage containers reclaimed from March 14, 2020, to May 22, 2020, compared with 2019, according to preliminary data from the Department of Resources Recycling and Recovery.

Additionally, record-low prices for virgin plastic seen in the first half of 2020 have essentially slashed demand for recycled material, putting many California recyclers at risk of shutting down.

Market participants view recycled content mandates, such as those imposed under Bill 973, as the industry's best chance to spur demand for recycled material and to help facilitate economic and environmental recovery in the state.

Governor Newsom has until Sept. 30 to sign or reject Bill 973.