Governments Play Large Role in New Recycling Investments

States Take the Lead, While Federal Efforts Stall

Digital Exclusive

While private-sector investors search for returns in the growing circular economy, they note that the public sector also has a role to play.

Government policies often dictate what and how much recyclable material is collected, ensuring there is a supply. Policies can also help to stimulate demand by setting requirements for incorporating recycled material.

“Government is a key stakeholder in helping to enhance a circular plastics economy,” says Julianne Trichtinger, industry affairs manager for NOVA Chemicals, Inc. “To achieve our collective ambitious goals, it will require an enormous commitment from all stakeholders, with the right policies in place alongside new investments, innovations, and advancements in mechanical and advanced recycling.”

NOVA Chemicals currently sells both virgin and recycled polyethylene, but as separate product lines. The company also produces a portfolio of recycle-ready resins designed for use with a high percentage of recycled content, Trichtinger says. The company anticipates post-consumer resin will make up a growing share of its sales in the years ahead.

“Having regulations and legislation that increase the supply of post-consumer resin (PCR) and divert plastic from landfills and the environment supports the vision of a circular plastics economy,” Trichtinger says. 

New York City Partners with Private Funds

New York City is among the cities setting ambitious targets to eliminate waste—by 2030, the city is hoping to send zero waste to landfills. It will require expanded efforts from local companies like Sims Municipal Recycling, or SMR, which handles more than 600,000 tons of recyclable material in the New York-New Jersey metropolitan area. NOVA and other companies recently invested in SMR through funds managed by Closed Loop Partners, an investment firm based in New York.

“Sims Municipal Recycling will play a critical role in powering an inclusive circular economy in New York City by reducing waste and supporting a sustainable supply chain for new products,” says Maria Gotsch, president and CEO of the Partnership Fund for New York City, an investment firm. 

On the policy side, investors pointed to things like extended producer responsibility (EPR) and mandates for including a minimum amount of recycled material in new products. 

States Take Lead

EPR generally refers to laws that encourage recycling by requiring companies to account financially for any potential waste associated with their products. Under the laws, producers pay money into funds designed to bolster recycling efforts. In the U.S., the laws are moving most rapidly at the state level.

In 2021, Maine became the first state to pass an extended producer program into law. It calls for companies to pay into a fund based on the amount and recyclability associated with their products, according to the Maine Department of Environmental Protection, which is drafting rules for the program. If all goes as planned, companies would start paying into the fund in 2026.

Oregon was the second state to pass a law, also in 2021. Companies have until 2025 to develop plans for complying with that state’s law, according to the Oregon Department of Environmental Quality. 

At least eight states are considering similar bills this year, according to the National Caucus of Environmental Legislators, a group of state lawmakers focused on environmental protection. The states include Hawaii, Illinois, Kentucky, Maryland, New Hampshire, New York, Vermont, and Washington. “By coordinating a multi-state effort, these legislators are paving the way for bold and ambitious EPR policies that can be adapted in the future by other states and perhaps the federal government, as well,” says Jeff Mauk, executive director of the caucus.

Lawmakers in the U.S. Congress introduced federal EPR bills. However, they have yet to move.

Some States Requiring Post-Consumer Material

States also have been advancing legislation that requires plastic products to include recycled material, an effort intended to bolster the market for post-consumer material. 

The leaders include the state of Washington, whose law took effect this year and applies primarily to rigid plastic containers and trash bags. In New Jersey, Gov. Phil Murphy signed a recycled content bill into law in January. It also applies primarily to rigid containers and bags.

More efficient public collection systems for recyclables also are key, says April Crow, vice president of investor relations and external affairs for Circulate Capital, an investment firm based in Singapore. “Innovation, as well as unprecedented efforts in packaging design, infrastructure, and policy will be important to develop sustainable and scalable solutions,” she says.

European Governments Set Ambitious Goals

In the European Union, meanwhile, regulators have been strong advocates of a circular economy, according to Tero Saarno, director of Helsinki, Finland-based Taaleri, an investment firm focused on the circular economy. 

Saarno cited the European Green Deal, a set of broad policy goals approved in 2020. It includes a circular economy action plan that led to proposals for improving the recyclability of products.

But even as policies and regulations promote a circular economy, some challenges remain, such as when it comes to building out the recycling infrastructure. “Permitting is typically the most time-consuming part of these projects,” Saarno says. “In some areas, obtaining an environmental permit, for example, is impossible or takes far too long for investors.”

Joel Berg is a freelance editor and writer based in York, Pennsylvania.