Drink Makers Seek More Recycled Plastic
June 30 2019 - 12:33PM
Dow Jones News
By Bob Tita
Beverage companies with ambitious goals to use more recycled
plastic in their packaging are facing a shortage of discarded
containers from recycling programs.
Less than a third of the six billion pounds of plastic most
commonly used for drink bottles and food containers is recovered by
U.S. recycling programs. Most of what is recovered becomes
polyester fiber for rugs and clothing or plastic sheeting. Just a
fifth, some 330 million pounds, ends up in new bottles and food
containers.
Big drink-and-food makers will need four or five times that much
recycled plastic to meet the targets they have set to satisfy
consumer calls to waste less and reuse more, according to the
Association of Plastic Recyclers. Coca-Cola Co. wants to use 50%
recycled plastic by 2030. Nestlé Waters North America, a unit of
Nestlé SA, is aiming for 50% recycled plastic in its domestic
brands by 2025. PepsiCo Inc. aims to use 25% recycled plastic in
all of its bottles and packaging by that year. Most of those and
other beverage companies use less than 10% recycled plastic in
their packaging now.
But the volume of plastic for bottles -- technically known as
polyethylene terephthalate, or PET -- has been stagnant for
years.
"We have to increase recycled PET. This is unquestionably one of
the biggest challenges in the U.S.," Simon Lowden, president of
Pepsi's snacks group, said in an interview.
Coke, Pepsi, and other bottled-beverage companies pay millions
of dollars annually to improve curb-side recycling through groups
such as the Recycling Partnership. In Atlanta -- through a grant of
$4 million from the Coca-Cola Foundation -- the Recycling
Partnership and city officials this spring deployed teams of people
to city neighborhoods to check recycling bins for contaminants
right before collection crews arrive.
"Most people want to recycle," said Bruce Karas, Coke's vice
president of sustainability and environment.
But beverage companies also have worked for decades against one
of the most effective recycling practices: deposit programs that
pay a nickel or dime for each bottle returned. They acknowledge
that deposits succeed at collecting cans and bottles for recycling,
but say the deposits are essentially a tax on their drinks that
give millions of dollars in unredeemed deposits each year to state
governments. The programs also create additional logistical costs
for beverage distributors and retailers that need to store and
collect the empty bottles.
"We can make curb-side better. That's really where we see the
future of recycling," said William Dermody, a vice president for
the American Beverage Association, the trade association for the
soda industry.
Ten states that charge deposits on beer, water and soda
containers have higher collection rates than states with curb-side
recycling programs. They collect a third of all the recycled PET
collected annually in the U.S., according to the Container
Recycling Institute. The group calculates these bottles also are
converted into new food and beverage containers at a higher rate
than plastic from curb-side programs that contain more unusable
material.
"If you have a deposit system, you get fantastic collection
rates," said Leon Farahnik, chief executive of CarbonLite
Industries LLC, a Los Angeles-based processor of recycled plastic
flakes used to make new bottles. In California, enough PET is being
recovered through the deposit program to make 70% of the new
beverage bottles sold there annually, according to the state's
recycling department.
Fees for curb-side recycling service have been rising to counter
falling prices for scrap materials caused by lower exports of old
paper, cardboard and plastics to China. Officials in China
tightened their standards for contamination in U.S. scrap exports
last year, leaving many recycling companies without a buyer for
their waste and causing a glut in domestic scrap markets.
Higher rates have helped stabilize collection programs, but the
increases could discourage municipalities from providing access to
recycling to the roughly one-third of U.S. households that don't
have collection service yet, industry analysts said. That would
further check the supply of recycled plastic for food-and-drink
companies.
Republic Services Inc., the second-largest trash hauler in the
U.S. behind Waste Management Inc., last year sold 240 million
pounds of PET harvested from curb-side programs, about 14% of the
total amount of PET recovered in the U.S.
Phoenix-based Republic is renegotiating municipal contracts with
higher rates that can be offset through the sale of recycled
material. Cleaner material and higher volumes of collection for
more valuable items such as aluminum cans will improve the
economics of recycling, Republic CEO Donald Slager said.
"People want to recycle, great. They have to have skin in the
game," he said.
Write to Bob Tita at robert.tita@wsj.com
(END) Dow Jones Newswires
June 30, 2019 12:18 ET (16:18 GMT)
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