Dow, LyondellBasell and Nova Chemicals jointly launch Closed Loop Circular Plastics Fund in North America
31 May 2021 --- US-based investment firm Closed Loop Partners is joining leading plastic polymer producers Dow, LyondellBasell and Nova Chemicals in launching the Closed Loop Circular Plastics Fund.
The investment fund is aiming to raise US$100 million for scalable recycling technologies, equipment upgrades and infrastructure solutions in the US and Canada.
The companies have already pledged an initial US$25 million and are inviting businesses across the plastics value chain to join the fund.
The partners say they hope to raise the total amount through a “combination of the fund’s founding investors, additional corporate investors and financial institutions, to attract additional capital beyond the fund’s commitments.”
Closed Loop Partners says that once at scale, the investments will fund the recycling of around 500 million pounds of plastic over the project’s lifetime.
Three-pronged strategy
The fund will focus investments on three strategic areas to increase the amount of recycled plastic available so manufacturers can meet the growing demand for high-quality, recycled content in products and packaging:
- Access: Increasing the collection of targeted polyethylene (PE) and polypropylene (PP) plastics by advancing current and next-generation material collection systems, including transportation, logistics and recycling sortation technologies and infrastructure.
- Optimization: Upgrading recycling systems to more efficiently aggregate, classifying and sort the targeted plastics to increase the total amount of high-quality plastic, including food-grade and medical-grade plastic, sent for remanufacturing.
- Manufacturing: Investing in facilities and equipment that manufacture finished products, packaging or related goods using recycled content, including recycled PE and PP.
The fund will deploy a mix of debt and equity financing and aim to stimulate mainstream co-investments, including those from financial institutions, to create further impact, says Closed Loop Partners.
Initial investors Dow, LyondellBasell and Nova Chemicals have established facilities, extensive supply chain networks and markets, and are collectively well-positioned to help advance the transition to a “new, more circular system.”
The announcement comes shortly after a Minderoo Foundation report suggested global polymer producers and banks are the “true culprits” in the plastic waste crisis, a claim refuted by the American Chemistry Council.
Lucrative opportunity
Last year, Closed Loop released an interactive map of plastic waste in the US and Canada, revealing the current supply of recycled plastics meets only 6 percent of demand.
According to the study, with 11.5 million metric tons of plastic being sent to landfills each year in these countries, the recycling systems capture just 18 percent of disposed of packaging.
Systemic bottlenecks, misaligned incentives and policies, technological inefficiencies and outdated equipment across the plastics recovery system are contributing to landfill and ocean waste, Closed Loop Partners maintains.
Increasing the recovery and recirculation of plastics could help meet an addressable market for plastics with potential revenue opportunities of US$120 billion in the US and Canada alone, the organization says.
Within this, significant opportunity exists to bolster the recovery of PE and PP, based on these materials’ market desirability, expected production amounts and wide variety of applications across industries, including healthcare and food and beverage packaging.
Manufacturers drive circularity
Ron Gonen, founder & CEO of Closed Loop Partners, says the plastic resin manufacturers involved in the fund will be ensuring 100 percent of their products are safely recycled or reused and never discarded in landfills or elsewhere in the environment. This ambition will moreover contribute to a reduction in reliance on fossil fuels.
“Alongside championing scalable, reusable packaging models and innovative new materials, growing recycling and circular economy infrastructure in the US and Canada plays a critical role in eliminating plastic waste and reducing the need for the costly extraction of raw materials,” says Gonen.
However, Dow’s CEO and chairman Jim Fitterling says the fund alone will not be enough to tackle the plastic waste issue in the region and stresses that as many industry players as possible must become involved to drive infrastructure forward.
“Our commitment and capital alone are not enough to end plastic waste. We urge others, across all sectors of society, to join us and scale the technologies, partnerships and capital needed to build the circular plastics supply chains of the future.”
Edited
By Louis Gore-Langton
To contact our editorial team please email us at editorial@cnsmedia.com
Subscribe now to receive the latest news directly into your inbox.