May/June 2020
By Emilie Shumway
Lawmakers, manufacturers, brand owners, nonprofits, and consumers are all climbing on the circular economy bandwagon. The system sounds great for recyclers in theory, but policy approaches to support it have had mixed reactions.
To get an idea of how an idea catches on across the world, it’s helpful to look at Google Trends. The Google Trends chart for the term circular economy showed a low level of interest from 2004, when Google began tracking the data, until about 2015, when worldwide interest suddenly began to spike. Interest in the term peaked in most countries in the past couple years. In the United States, the term reached its height of Google search popularity to date in November; worldwide, it last peaked in February.
Put simply, a circular economy is one constructed around the elimination of waste. Materials that enter the resource stream stay in that stream at the end of their initial use through collection and reuse, systems of sharing and trading, repair and refurbishment, remanufacturing, and recycling (and, for organics, composting). The system stands in contrast with the current linear economy, the “take-make-waste” system in which most materials begin with production and end with disposal.
According to the Ellen MacArthur Foundation (Cowes, United Kingdom), a global nonprofit whose mission is to accelerate the transition to a circular economy, the concept incorporates a variety of thought leaders’ visions and “cannot be traced back to one single date or author.” It is based in part, the foundation says, on several earlier ideas:
• the Cradle-to-Cradle design philosophy of chemist Michael Braungart and architect Bill McDonough, which conceives of all material used in industrial and commercial processes to be “nutrients,” or food for another process;
• architect and industrial chemist Walter Stahel’s “performance economy,” which emphasizes job creation, economic competitiveness, resource savings, and waste prevention;
• Janine Benyus’ biomimicry concept, which advocates borrowing from natural processes to solve human problems; and
• on the notions of industrial ecology and natural capitalism, among other concepts. The ideas that form the basis of the circular economy have gained momentum since the 1970s, the foundation says.
The Ellen MacArthur Foundation has advanced the concept of the circular economy and attracted commercial interests to invest in it since the foundation’s founding in 2010. In 2013, the foundation and McKinsey & Co. published Towards the Circular Economy, a report that calls the model an “economic opportunity worth billions.” The report suggests the model is a winning approach for economies, companies, and consumers alike.
Government and private interest in circular economy initiatives has ramped up considerably in the past five years. In 2015, around the time public interest in the term began to surge, the United Nations Conference on Trade and Development began collaborating with the Ellen MacArthur Foundation to establish resource-
circularity potentials in large economies like those of India and China. In 2018, national governments and multinational corporations launched the Platform for Accelerating the Circular Economy, an initiative intended to “drive public-private action and collaboration,” at the World Economic Forum. As of early 2020, PACE has more than 75 members, including the CEOs of The Coca-Cola Co., Dell Technologies, Apple, Procter & Gamble, and government officials from Nigeria, Denmark, the United Arab Emirates, and Japan.
In the United States, the term gets used more and more on Capitol Hill, says Billy Johnson, ISRI’s chief lobbyist. Due to its emphasis on resource conservation, its economic practicality, and its embrace from the business community, the term has developed a nonpartisan appeal, Johnson says. “Fifteen years ago, if I had said circular economy, most of the Republicans would have rolled their eyes at me,” he says. “Now I don’t think there’s a single Republican who wouldn’t know what you’re talking about.”
Danielle Waterfield, ISRI’s chief policy officer, who works primarily with state and local governments, agrees that the phrase has caught on across the country, from California to Maine. “It seems to be the most popular term” in government sustainability discussions, she says. Like Johnson, Waterfield says the stakeholders she sees in a circular economy hearing room aren’t just environmental advocacy groups. “It’s an interesting bunch,” she says. “In the meetings that I’ve attended, there are many consumer product companies that are now part of the group in addition to plastic packaging manufacturers, retailers, NGOs, solid waste processors/haulers, and paper manufacturers, just to name a few.”
In the United States, the term has only recently begun to eclipse sustainable materials management, a sustainability framework embraced by the Environmental Protection Agency, say Johnson and Adina Renee Adler, ISRI’s vice president of advocacy. While the SMM and circular economy models are very similar, the latter includes the aspirational goal of reconceptualizing the entire economic system. It offers plenty of opportunity for recyclers, but efforts to create a circular economy require close attention to make sure recyclers can benefit, stakeholders say.
Where Recyclers Fit In
Circular economy efforts present an opportunity for recyclers to harness that energy and attention and direct it toward improvements that can help bolster the recycling system, according to recycling advocacy groups like The Recycling Partnership (Falls Church, Va.). Sarah Dearman, its vice president of circular ventures, works with her team and the Circular Economy Accelerator, an initiative to develop policies that build sustainable funding models for community recycling programs and create economic and behavioral incentives to recycle material instead of disposing of it. “[The cost of] recycling needs to be on par with the cost to throw things away,” she says. “If it’s cheaper to throw things away than it is to recycle, then it’s always going to be a challenge to get people to recycle.”
The initiative builds on The Recycling Partnership’s Bridge to Circularity report, released last October, which provides a road map for transitioning the United States to a circular economy for plastic packaging. The report finds that the speed of packaging innovation has outpaced the capabilities of the U.S. recycling infrastructure. The current recycling system cannot deliver the volume of material manufacturers would need to fulfill the New Plastics Economy Global Commitment—an initiative led by the Ellen MacArthur Foundation and signed by 20% of all global plastic packaging producers, it says. Further, intractable underlying challenges, like commodity market viability and insufficient funding, threaten the existing recycling system. It calls for investments in equipment and education, advocacy efforts to support materials recovery facilities, and recycling research and development.
The report also emphasizes the importance of working with producers on designing for recycling. “It can be a bit confusing, what’s recyclable and what’s not recyclable—not only at the consumer level but at the design level … what steps a company has to take to make something recyclable,” Dearman says. The report outlines a “pathway to recyclability,” a step-by-step process for designers and companies to take to move something from not recyclable at the bin, or not commonly accepted for recycling, to recyclable.
Recyclers and their advocates need to remain nimble as companies make decisions about sustainability that are intended to improve a product’s or package’s impact on the environment, Adler says. Recently, ISRI—long concerned with product design for recyclability—has taken the lead on developing a recyclability protocol and certification system for paper-based packaging products that make their way into the recycling stream. The goal is to help brand owners and other manufacturers ensure that their packaging is recyclable in practice and not just in theory, Adler says. ReMA members are working with paper recycling consultants Moore & Associates (Atlanta) to develop the protocol. ReMA also plans to engage the American Forest & Paper Association (Washington, D.C.) and the Foodservice Packaging Institute (Falls Church, Va.) to ensure it has considered all aspects of paper packaging recyclability.
Closed Loop Partners (New York) makes investments in every stage of the circular economy, from design and manufacturing to processing of recyclable material. “We really do span the whole value chain,” says Georgia Sherwin, the firm’s director of communications and strategic initiatives. “We need to be injecting capital across that value chain to bring the circular economy to life.” Closed Loop Partners’ investments have funded recycling carts for the cities of Moline, Ind., and Memphis, Tenn.; allowed glass recycler AeroAggregates (Eddystone, Pa.) to produce a lightweight construction aggregate from local MRF glass feedstock; and helped launch Emerald Coast Utility Authority, a MRF in Pensacola, Fla., to process the city’s recyclables, which had been going to landfill.
Balancing Stakeholder Interests
Internationally and in the United States, nongovernmental organizations and corporations are driving much of the conversation around the circular economy. Local, state, and federal governments are discussing it and creating policies as well, but the action is clearly not limited to one type of stakeholder.
“At this moment, there’s a lot of urgency around the subject matter,” Sherwin says (in an interview in mid-March, before the coronavirus pandemic). “We’ve seen increased interest from all the different stakeholders. Certainly, I think global brands and nongovernmental organizations have been leading the charge in the United States on the circular economy, and you’re increasingly seeing more cities show interest,” she says. “It will take a combination of stakeholders to scale something like the circular economy.” The tide of public opinion appears to have turned toward the concept, Sherwin says, mentioning Larry Fink, CEO of investment management firm BlackRock, who encouraged shareholders to invest in sustainable businesses in his 2019 annual letter to them.
Corporations are seeing the opportunities in designing for recyclability, one of the key components of the circular economy model, Johnson notes. They are seeing the potential for reduced costs, easier processing, and better marketing. “They’re coming at it as a fresh idea, instead of it being restrictive,” he says. Companies are reviewing how they manufacture products and wondering why they use certain materials in the first place, he says. In some cases, “they were able to remove the material, often hazardous material, and it made production cheaper and more efficient—and it also made [the product] easier to recycle,” he says.
Dearman sees a role for all stakeholders in moving to a circular economy: companies taking action on their own, government making policy to ease the transition, and individuals recycling at the residential level. She’s careful to not recommend that the United States adopt approaches taken elsewhere in the world, however. “We believe that we need a uniquely American system,” she says. “It’s really important to capture learning from other places around the world, but ultimately our system, or geography, is different from anywhere else.”
The Bridge to Circularity report addresses a few commonly recommended U.S. policy changes, including deposit laws and extended producer responsibility. While deposit law states have reported high degrees of success in their collection rates, these programs only target some of the most valuable material in the stream, the report notes, and “the goal should be to maximize the recovery of all materials of value in waste streams.” In addition, while EPR schemes for packaging may provide funding to support recycling, they all take very different forms and provide variable results. EPR laws in place across Europe, Canada, Asia, and other regions have failed to protect markets from the impacts of scrap import restrictions, the report says.
Waterfield echoes those concerns about EPR schemes. “You are looking at very different models within the recycling business,” she says. For instance, electronics recyclers have had difficulty with EPR programs, some of which have resulted in stockpiles of materials such as cathode-ray tube glass, which sham operators collected and were paid for but they failed to actually recycle. On the other hand, some recyclers of materials that travel through the residential system believe EPR would provide needed support in difficult markets. A working group of ReMA member companies addressed EPR in a January meeting. While opinions varied, “the consensus was that the government shouldn’t [impose] this type of system unless absolutely necessary,” she says.
Instead of implementing EPR schemes, governments should focus more on improving the public’s understanding of how to recycle, both Waterfield and Johnson say. “Education is universally needed,” Waterfield says, noting that she can’t think of a single recycler who has opposed the concept of grants for municipalities to improve education. Getting stakeholders across the country together to improve conformity to certain recycling standards would also be a useful approach, she says. ISRI, along with other groups, is developing standards based on science and practical factors—such as technological, logistical, and economic realities—to help producers ensure their materials will actually be recycled. “Collection alone is not recycling,” Waterfield says. “The materials must actually be accepted and processed by recyclers, without which the material would go to landfill or incineration.”
ISRI has advocated for manufacturers to design their products for recycling for decades. With this new focus on the circular economy, other organizations are jumping on the Design for Recycling™ bandwagon, Waterfield says. “There needs to be more focus at the front end by producers on how their materials and products can be recycled economically,” she says. Less than 10 years ago, recycling was likely one of the last things considered in the manufacturing process, if it was considered at all, she says. “The good news is that producers are now investing in research and engineering solutions to make their products more recyclable, and their interest in the circular economy discussions is a positive indicator that Design for Recycling is on the path to go mainstream.”
Circularity Around the World
In Europe, the circular economy concept became familiar around the turn of the millennium. The European Commission introduced its new Circular Economy Action Plan in March—replacing an earlier action plan from 2015—as part of its European Green Deal, a bundle of policies intended to address climate change by making Europe carbon-neutral by 2050.
The new Circular Economy Action Plan proposes policies intended to increase and support recycling. Introducing requirements for recycled content in products “will contribute to preventing a mismatch between supply and demand of secondary raw materials and ensure the smooth expansion of the recycling sector in the EU,” it states. The Bureau of International Recycling (Brussels) is cautiously optimistic about the adoption of circular economy policy across Europe. Recyclers “should generally welcome the circular economy,” says Ross Bartley, BIR’s trade and environment director, “as overall, the very many associated government policies, and so intervention, are supportive in both volume and economic terms.” But he adds that interventionist government policies will have some losers as well as winners, and recyclers will have to watch how the policies are enacted to ensure they’re working as intended.
Bartley uses EPR laws as an example of a policy that is supportive of private-sector recyclers in theory but has been more mixed in practice. In some countries with EPR laws, producers fulfill their responsibilities through a producer responsibility organization. “BIR is very concerned about good governance and transparent governance of EPR schemes,” Barley says, and it “advocates that PRO contracts with recyclers should be fairly offered and awarded.”
The ability of recyclers to benefit or lose out from EPR schemes is ultimately tied to the health of the market, Adler says. During market lows, she says, they can insulate or protect recyclers, but during market highs, recyclers are unable to reap the profits to which they would otherwise have access. “One of the reasons we don’t generally support EPR schemes is we’d prefer people be able to take advantage when the markets are in a good place,” she says.
Another concerning aspect of Europe’s approach to the circular economy for U.S. recyclers is the likelihood that it will create a closed system, Adler says. “It’s ‘How do we basically just create it within the borders of the European Union?’” she says. “So ‘How do we collect [postconsumer resources], how do we get them recycled, get [them] back into useful commerce—or maybe just burn [them] for energy’—but it does not necessarily include trade in that equation.” The plan does not address the movement of scrap materials to or from Europe, Adler says, which could have major implications for free trade and the continent’s other climate goals. “They do talk about international cooperation,” she says, but with a focus on advising other countries—an approach that would be insufficient and shortsighted, she says. For countries like Papua New Guinea, without a developed manufacturing sector, “you can talk to them about the circular economy, you can talk to them and help them with better collection,” but “if you don’t have a company in that country that will use the material after it’s been recycled to make something new, then the circle is broken.”
While Europe has been the center of circular economy activity to date, Adler says China has been developing a similarly self-sufficient approach to growing its recycling industry, eliminating imports as a means of developing recycling systems internally. For China, however, the primary motivation may be industrial development—not circularity. “People may use the term in a meeting,” she says, “but I don’t see it in government statements.”
Carving Out a Strong Role
One recycler that deliberately messages its role in the circular economy is GreenMantra Technologies (Brantford, Ontario), which uses chemical recycling to turn postconsumer polyethylene and polypropylene into additives for use in roofing shingles, roads, plastic composites, and other materials. The company is creating a product of even higher value than the virgin polymer, says Domenic Di Mondo, vice president of technology and business development for GreenMantra. It has drawn investment from Closed Loop Partners, and it won the Association of Plastic Recyclers’ (Washington, D.C.) Showcase Award, which recognizes an “innovative and game-changing idea in the world of plastics,” earlier this year.
Sustainability is important, Di Mondo says, but for the circular economy to be successful, businesses need the proper investment and technology to create value for consumers. “If it’s going to have long-term success … the products that we’re creating have to be able to stand on their own. They have to create value for their customers, they have to create performance,” he says.
Di Mondo agrees that all stakeholders have a role to play in the circular economy, but like some other recyclers, he worries about government taking action without properly understanding the recycling industry. “We need government and businesses working together,” he says. “Right now, there’s too much isolation.” He mentions the popularity of proposed bans on single-use plastic. “I’ve talked to different individuals on the nonprofit side who feel we should just eliminate all plastics, but that creates a whole set of new problems that we’re then going to have to deal with 20 years from now,” he says. “We don’t want to just repeat the current issues we are facing with plastic with a different material.”
Recently, GreenMantra developed a financially viable pilot project for recycling expanded polystyrene, which Ontario allows residents to recycle in the bin. Using its depolymerization process, the company is transforming the postconsumer EPS into an additive for inks, coatings, and insulation materials. Polystyrene is a popularly targeted plastic for bans, Di Mondo says, because of the lack of recycling infrastructure currently in place to process it. “[A ban is] maybe something easy for the general public to see as a solution and understand,” he says. “But practically, these bans cause a ripple effect into different businesses, applications, markets, and the environment when there is no suitable alternative material to the banned plastic.”
More vigorous communication may be the key for recyclers to get themselves to the center of the circular economy conversation, Di Mondo says. “For the circular economy to take off, apart from [the importance of] government and business initiatives, the average individual needs to make informed purchasing decisions,” he says. “It starts and ends with the consumers. Recyclers should take time to really distill down what it they do and how it relates to the lifecycle of a piece of plastic so that [the] average individual can understand and make informed decisions—I think the more they understand it, the more engagement there’s going to be in that system.” Di Mondo suggests recyclers find more direct ways to tell their stories—by creating infographics for their websites and using social media and other online outlets. He also recommends writing op-eds for local or national newspapers to get on individuals’ radars and educate them on what recycling can offer for a circular economy and what needs to happen to expand its role.
Dearman agrees that education and messaging are central to recyclers’ role. The circular economy is on its way—the world’s finite resources all but guarantee it—and recyclers have a critical hand to play. “Recycling can happen without a circular economy,” she says. “But a circular economy cannot happen without recycling. It’s the largest at-scale, consumer-facing reverse logistics system in the United States. What we can do right now is make sure that we’re all working together to make it the strongest system that it can be.”
Emilie Shumway is senior editor/reporter for Scrap.