California’s recycling deserts: PepsiCo finances mini-MRFs as producer-pays pressure builds

28 Jan 2022 --- The Closed Loop Local Recycling Fund in California has received a US$35 million injection from PepsiCo Beverages North America (PBNA) to bring relief to the region’s “recycling deserts.”

The circular economy initiative aims to bring small-scale modular recycling systems to communities across the US and cut virgin plastic by 50% from non-renewable sources across F&B portfolios by 2030.

Non-profit Californians Against Waste approves of the initiative, emphasizing the way forward is for packaging manufacturers and brand owners to pick up the recycling tab.

“Packaging manufacturers and brand owners – like Pepsi – should have the primary responsibility for financing the collection, processing and recycling of their packaging waste back into new packaging,” Mark Murray, executive director of Californians Against Waste tells PackagingInsights.

This is a view shared by New York’s new governor Kathy Hochul, who recently revealed that Extended Producer Responsibility legislation for packaging will be a priority for her first term. “Producers, not taxpayers, should cover the cost of recycling,” said Hochul.

Producer pays policy
The California fund will provide recycling opportunities in areas with limited or no access. It will also advocate for the supply of recycled plastic, as part of PepsiCo’s environmentally sustainable packaging goals. 

While regions such as California, Canada and the EU have legislated “producer responsibility,” many regions – including most American States – have not yet done so. The fund will provide recycling infrastructure in limited access areas – so called “recycling deserts.”

“We are appreciative of PepsiCo and others’ efforts to not wait around for government action and instead step up to their financial responsibility,” says Murray.

The US national action plan to reduce global plastic marine pollution was termed “grossly insufficient” by the National Academies of Sciences, Engineering and Medicine in 2021. 

The plan called for the US to set up a coordinated monitoring system to track plastic pollution in its report “Reckoning with the US Role in Global Ocean Plastic Waste.”

“While solid waste collection and disposal has been viewed as a ‘government responsibility,’ the collection, processing and recycling of secondary materials has long been a private sector, marketplace function, and should remain so,” Murray asserts. 

“The financial responsibility for making that work has always, and should continue to fall on the marketplace and the producers of materials and products that are sold to consumers.”

“When the market place is facilitating this effectively, the only responsibility of the government is to require companies to step up financially and operationally as a condition of sale.”

Scaling recycling infrastructure
The gap in recycling access has been attributed to lack of funding or not being in the vicinity of processing facilities. The new localized Materials Recovery Facilities (MRFs) will enable recycling in the future. The units are less capital intensive, reducing the need for expensive transport of materials to larger MRFs.

The small-scale, modular MRFs will be deployed at locations where there is no access to larger municipal MRFs. The Closed Loop Local Recycling Fund aims to bring recycling to areas with little or no access to existing infrastructure.

“We need to develop the infrastructure that makes recycling available to more Americans so we can recover the high-quality material that can be used in our packaging,” says Jason Blake, chief sustainability officer and senior vice president at PBNA.

“As the exclusive investor in the Closed Loop Local Recycling Fund, we are actively driving the changes needed to transform the US recycling system and move toward a circular economy.” 

According to CAW, PepsiCo and other Consumer Product Companies are making investments in recycling because they have been mandated by California, the EU and other jurisdictions to utilize increasing levels of recycled content in their packaging as a condition of sale. 

“While the levels of material collection, sorting and processing of secondary materials may vary across the country, we don’t see this as a regional recycling problem any more than the lack of a PepsiCo bottling plant in a region might be perceived as a consumption problem,” says Murray.

He argues that both represent a “market place problem.” “Pepsi and others need increased supplies of secondary PET plastic to make their soft drink and water bottles.”

Small MRFs’ big impact
The small-scale MRFs will recapture recyclables such as paper, plastic, glass and metals, thus reducing waste sent to landfill. Each individual system has the capacity to recycle about 8,000 tons of recycling material annually.

Moreover, the infrastructure will keep 400 metric tons of recycled PET in circulation every year. The MRFs are expected to yield higher quality plastic while reducing greenhouse gas emissions and costs.The small-scale MRFs will recapture glass, paper, plastic and metals for recycling.

“This investment ushers in a new future for local recycling, empowering communities across rural America and small cities to reduce waste and harness the value of their recycled commodities,” says Ron Gonen, founder and chief executive officer of Closed Loop Partners.

“By closing the loop on these commodities, which can then re-enter local manufacturing supply chains, we are better equipping communities with the tools needed for resilience against a globally changing climate, while also creating new revenue opportunities and jobs.”

Closed Loop investment
The announcement comes shortly after a US$15 million PBNA investment in Closed Loop Partners’ Leadership Fund, a private equity fund that acquires and grows companies, including those in the packaging value chain.

The investments are part of PepsiCo’s collaboration with Closed Loop Partners to boost material recovery and advance recycling infrastructure. 

The Recycling Leadership Council recently published a blueprint scrutinizing the disparity in recycling systems across the US, in what has been called a “plastic waste crisis.”

By Inga de Jong