PETpla.net Insider 04 / 2018

MATERIALS / RECYCLING PET planet Insider Vol. 19 No. 04/18 www.petpla.net 15 Cleaning the rPET stream U.S. PET Recycling A new report calls for investment in recycling infrastructure to raise rates from less than 30% and to develop pathfinding closed loop systems to recycle an additional 80 million lbs (36.4 million kg) of PET bottles each year. Towards the end of 2017, the publication of a study entitled “Clean- ing the rPET stream”, conducted by Closed Loop Partners with Resource Reycling Systems, Inc (RSS), drew attention to major gaps in PET bottle recycling in the United States of Amer- ica. RRS researched and compiled 12 years of data on U.S. pricing trends and cost structures for both virgin and recycled PET (rPET), including sort- ing, processing, contamination levels, and yield loss. It also evaluated mul- tiple interventions that could improve the cost structure for rPET with imple- mentation by materials recovery facili- ties (MRFs), reclaimers, reprocessors, and end users. “We believe there are investable opportunities that benefit municipali- ties, the PET recycling industry, and end users by making rPET a more desirable material that competes with virgin,” said Ron Gonen, Closed Loop Partners managing partner. Before the industry in the country gets to that positive state, however, there are several major issues that need to be addressed. Use of virgin PET has grown but recycling rates are low Less than 30% of the PET used in bottles and jars is recovered in the U.S., and just 6% is re-used as rPET in new bottles. This is despite the fact that PET is the most common resin type used in plastic packaging and the most universally accepted plastic in U.S. municipal recycling programmes, and the recycling infrastructure for post-consumer PET is also the most mature. The report found that, in the past decade, virgin PET consumption has grown, which is the common experi- ence across most – if not all – of the world. In the USA, production has been consolidated among a few, privately-held market players, such as DAK and Indorama. Virgin PET is produced at scale by combining raw material inputs (PTA, MEG) in a poly- merisation process. Post-consumer rPET, in contrast, must travel from consumer to MRF (material recovery facility) to reclaimer/reprocessor to end user. There is potential for yield loss and inefficiency at each stage. Cost considerations These two, very different, pro- cesses result in quite divergent cost structures. At the time of the study, the estimated average cost to pro- duce virgin PET was $0.52-0.56 per lb ($1.14-$1.23/kg), while the cost to process and produce rPET was esti- mated at $0.60-0.65/lb ($1.32-$1.43/ kg). The existence of this cost differ- ential means that it is not surprising to find that end users tend to opt for virgin PET. If rPET is ever going to be competitive with virgin at scale, ways have to be found to make improve- ments, across the system. Supply and demand; capacity excess The price of rPET closely follows that of virgin PET, which has seen con- siderable volatility, along with global oil prices, over the past 10 years. Through all this volatility, the national recycling rate for PET has hovered around 30%; this tends to reflect an inelastic supply, the report says. Over the same period, capacity for processing post-con- sumer rPET has also fluctuated. The recent closure of a number of facilities removed 400 million lbs (182 million kg) of capacity. Although at least 350 million lbs of new PET processing capacity is expected to come online in the next few years and the total is expected to return to about 2 bn lbs/ year (910 million kg) by 2018, existing facilities are operating at only around 75% capacity. Convertors and bottle manufac- turers will be inclined to increase the amount of rPET they use in bottles and containers only if that material is price-competitive with virgin, and of appropriate quality specifications. The U.S. doesn’t seem to have a collection problem; it has a usage problem. In 2016, 1,753 million lbs (796 million kg) of PET was collected for recycling but only 370 million lbs (168 million kg) of rPET was reused for food and bever- age bottles. Ideally, demand pull from end users should encourage the recovery and reprocessing of post-consumer recycled PET; however, the market is constrained by the ability of suppliers to offer rPET at prices that can com- pete with virgin PET resin. rPET versus virgin PET production processes (Closed Loop Partners)