Addressing Market Challenges in Recycling Industry

𝗣𝗹𝗮𝘀𝘁𝗶𝗰 𝗥𝗲𝗰𝘆𝗰𝗹𝗶𝗻𝗴 𝗜𝘀 𝗥𝗲𝗮𝗰𝗵𝗶𝗻𝗴 𝗮 𝗕𝗿𝗲𝗮𝗸𝗶𝗻𝗴 𝗣𝗼𝗶𝗻𝘁 — 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗪𝗮𝗿𝗻𝗶𝗻𝗴 𝗦𝗶𝗴𝗻𝘀 𝗔𝗿𝗲 𝗖𝗹𝗲𝗮𝗿 Every new study on plastics reinforces a difficult truth: our recycling system is being overwhelmed by forces it was never designed to withstand. This is no longer about awareness, behavior or sorting alone — the failure is structural. 𝟭. 𝗩𝗶𝗿𝗴𝗶𝗻 𝗽𝗹𝗮𝘀𝘁𝗶𝗰 𝗶𝘀 𝗰𝗵𝗲𝗮𝗽𝗲𝗿 — 𝗮𝗻𝗱 𝗶𝘁’𝘀 𝗱𝗲𝘀𝘁𝗮𝗯𝗶𝗹𝗶𝘀𝗶𝗻𝗴 𝗿𝗲𝗰𝘆𝗰𝗹𝗶𝗻𝗴 𝗺𝗮𝗿𝗸𝗲𝘁𝘀  • C𝗵𝗲𝗮𝗽𝗲𝗿 𝘃𝗶𝗿𝗴𝗶𝗻 𝗿𝗲𝘀𝗶𝗻 in markets-leaving recyclers with high operating costs and shrinking demand.  • Several 𝗿𝗲𝗰𝘆𝗰𝗹𝗶𝗻𝗴 𝗽𝗹𝗮𝗻𝘁𝘀 𝗴𝗹𝗼𝗯𝗮𝗹𝗹𝘆 𝗵𝗮𝘃𝗲 𝗮𝗹𝗿𝗲𝗮𝗱𝘆 𝗿𝗲𝗱𝘂𝗰𝗲𝗱 𝗼𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝘀 𝗼𝗿 𝘀𝗵𝘂𝘁 𝗱𝗼𝘄𝗻, not due to lack of waste but because the economics no longer add up. 𝟮. 𝗧𝗵𝗲 𝘀𝘁𝗮𝘁𝗶𝘀𝘁𝗶𝗰𝘀 𝘀𝗵𝗼𝘄 𝗵𝗼𝘄 𝗹𝗶𝘁𝘁𝗹𝗲 𝗶𝘀 𝘁𝗿𝘂𝗹𝘆 𝗰𝗶𝗿𝗰𝘂𝗹𝗮𝗿  • Global 𝗽𝗹𝗮𝘀𝘁𝗶𝗰 𝗿𝗲𝗰𝘆𝗰𝗹𝗶𝗻𝗴 remains under 𝟭𝟬%.  • Only ~𝟵.𝟱% of plastics produced contain recycled content.  • A significant portion of “recyclables” are rejected at sorting or reprocessing stages due to contamination or polymer incompatibility.   𝟯. 𝗦𝗼𝗿𝘁𝗶𝗻𝗴 𝗰𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀 𝗽𝗲𝗿𝘀𝗶𝘀𝘁 — 𝗯𝘂𝘁 𝗱𝗲𝘀𝗶𝗴𝗻 𝗶𝘀 𝘁𝗵𝗲 𝗿𝗲𝗮𝗹 𝗰𝗼𝗻𝘀𝘁𝗿𝗮𝗶𝗻𝘁  • Improper segregation, mixed polymers and contamination still reduce recycling yields.  • 𝗨𝗽𝘀𝘁𝗿𝗲𝗮𝗺 𝗶𝘀𝘀𝘂𝗲𝘀—multilayer laminates, composites, colored plastics, and complex additives—render much packaging non‑recyclable in practice.  • 𝗡𝗼 𝘀𝗼𝗿𝘁𝗶𝗻𝗴 𝘀𝘆𝘀𝘁𝗲𝗺, 𝗵𝗼𝘄𝗲𝘃𝗲𝗿 𝗮𝗱𝘃𝗮𝗻𝗰𝗲𝗱, 𝗰𝗮𝗻 𝗳𝗶𝘅 𝗽𝗼𝗼𝗿 𝗺𝗮𝘁𝗲𝗿𝗶𝗮𝗹 𝗱𝗲𝘀𝗶𝗴𝗻. 𝟰. 𝗙𝗮𝗶𝗹𝗶𝗻𝗴 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝟮𝟬𝟮𝟱 𝗰𝗼𝗺𝗺𝗶𝘁𝗺𝗲𝗻𝘁𝘀   • Several companies revising or delaying their 𝗿𝗲𝗰𝘆𝗰𝗹𝗲𝗱-𝗰𝗼𝗻𝘁𝗲𝗻𝘁 𝘁𝗮𝗿𝗴𝗲𝘁𝘀 𝗱𝘂𝗲 𝘁𝗼 𝗹𝗶𝗺𝗶𝘁𝗲𝗱 𝘀𝘂𝗽𝗽𝗹𝘆 𝗼𝗳 𝗵𝗶𝗴𝗵-𝗾𝘂𝗮𝗹𝗶𝘁𝘆 𝗿𝗲𝗰𝘆𝗰𝗹𝗮𝘁𝗲.  • Without laws use of recycled content is in effective 𝗧𝗵𝗲 𝗰𝗼𝗿𝗲 𝗶𝘀𝘀𝘂𝗲 Plastic recycling isn’t failing simply because of contamination or poor sorting. The deeper issue is upstream: 𝗺𝗼𝘀𝘁 𝗽𝗹𝗮𝘀𝘁𝗶𝗰𝘀 𝘄𝗲𝗿𝗲 𝗻𝗲𝘃𝗲𝗿 𝗱𝗲𝘀𝗶𝗴𝗻𝗲𝗱 𝘁𝗼 𝗯𝗲 𝗿𝗲𝗰𝘆𝗰𝗹𝗲𝗱, 𝗺𝗮𝗿𝗸𝗲𝘁𝘀 𝗳𝗮𝘃𝗼𝗿 𝘃𝗶𝗿𝗴𝗶𝗻 𝗿𝗲𝘀𝗶𝗻, 𝗮𝗻𝗱 𝗽𝗼𝗹𝗶𝗰𝗶𝗲𝘀 𝗱𝗼𝗻’𝘁 𝗲𝗻𝗳𝗼𝗿𝗰𝗲 𝗰𝗶𝗿𝗰𝘂𝗹𝗮𝗿𝗶𝘁𝘆. 𝗪𝗲 𝗻𝗲𝗲𝗱 𝗽𝗹𝗮𝘀𝘁𝗶𝗰𝘀 𝗱𝗲𝘀𝗶𝗴𝗻𝗲𝗱 𝗳𝗼𝗿 𝗿𝗲𝗰𝘆𝗰𝗹𝗮𝗯𝗶𝗹𝗶𝘁𝘆, 𝗽𝗿𝗶𝗰𝗶𝗻𝗴 𝘁𝗵𝗮𝘁 𝗽𝗲𝗻𝗮𝗹𝗶𝘇𝗲𝘀 𝘃𝗶𝗿𝗴𝗶𝗻 𝗿𝗲𝘀𝗶𝗻, 𝗮𝗻𝗱 𝗿𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗼𝗻𝘀 𝘁𝗵𝗮𝘁 𝗺𝗮𝗸𝗲 𝗰𝗶𝗿𝗰𝘂𝗹𝗮𝗿𝗶𝘁𝘆 𝘁𝗵𝗲 𝗻𝗼𝗿𝗺. 𝗧𝗵𝗲 𝗳𝘂𝘁𝘂𝗿𝗲 𝗼𝗳 𝗿𝗲𝗰𝘆𝗰𝗹𝗶𝗻𝗴 𝘄𝗼𝗻’𝘁 𝗯𝗲 𝗱𝗲𝗰𝗶𝗱𝗲𝗱 𝗮𝘁 𝘁𝗵𝗲 𝘀𝗼𝗿𝘁𝗶𝗻𝗴 𝗹𝗶𝗻𝗲—𝗶𝘁 𝘄𝗶𝗹𝗹 𝗯𝗲 𝘀𝗵𝗮𝗽𝗲𝗱 𝗶𝗻 𝗯𝗼𝗮𝗿𝗱𝗿𝗼𝗼𝗺𝘀, 𝗹𝗮𝗯𝘀, 𝗮𝗻𝗱 𝗽𝗼𝗹𝗶𝗰𝘆 𝗳𝗿𝗮𝗺𝗲𝘄𝗼𝗿𝗸𝘀 that determine which systems thrive and which collapse. #CircularEconomy #PlasticWaste #RecyclingCrisis #WasteManagement #SustainableMaterials #ExtendedProducerResponsibility

Could some circularity policies go against competitiveness and environment?🤔 Ten years after the first EU circular economy roadmap, we face an uncomfortable truth: Europe's circularity rate has stagnated and recycling capacity in key sectors is declining. The paradox is that this isn't happening despite our policies. It's happening because of them. Take PET plastic. We set ambitious recycled content targets in the Single-Use Plastics Directive to drive investment in recycling infrastructure. The result? Approximately 1 million tonnes of recycling capacity lost or never developed. Why? Because we designed mandates that can be met with cheaper imported recyclate rather than European post-consumer waste. European recyclers can't compete. Facilities close. Collected plastic goes to incineration. Bad for competitiveness, bad for the environment. This forces us to confront what we're actually trying to achieve: - Are we maximizing global circularity metrics—even when that undermines European recycling industries, exports jobs, and results in incinerating perfectly recyclable collected waste? - Or is circularity supposed to be at the core of our industrial policy, creating resilient local value chains and aligning economic with environmental goals? Current policy suggests we've chosen the former while claiming the latter. I understand the legal constraints. WTO rules create real limitations. But when France announces it will implement proximity principles for recycled content in 2026, it shows member states are filling the void left by EU-level creativity. We found WTO-compatible solutions for CBAM, for critical raw materials, for countless other challenges. Why not for circularity? The US Inflation Reduction Act and China's Five-Year Plans show what happens when industrial policy is backed by state apparatus. The EU has detailed regulations but minimal financial commitment and little integration with trade, state aid, or procurement policy. The main problem is that we regulate circularity while continuing to subsidise the linear economy. Unless the EU changes the economic incentives, the market today favours linear over circular products. After ten years, we need honesty about trade-offs between supporting European industry vs. providing cheap inputs, local resilience vs. global efficiency, ambition vs. WTO compliance and real commitment for circularity. If circularity is truly core to EU industrial policy we must design policies that actually build European market for circularity. The current path—ambitious targets, cheap imports, minimal investment—is failing both competitiveness and the environment. What are your ideas on how to fix this? I have elaborated on potential ways to address this challenge in a substack article: https://lnkd.in/eiZs_sT7 #CircularEconomy #EUPolicy #Recycling #Sustainability #IndustrialPolicy #GreenDeal

Why Recycling Plastic Film is Challenging (and Why We Do It Anyway) Recycling flexible film into a product that can be used again in flexible packaging is a complex process.  Despite the challenges, NOVA Circular Solutions is making significant strides to increase the supply and improve the quality of recycled polyethylene (rPE) made from flexible films to enable circularity.  Here's why recycling plastic film is so challenging and why we continue to pursue it. The Challenges of Plastic Film Recycling 1. Securing the Feedstock: Plastic films are thin and light and often intermingled with other materials making collection and sorting a critical task. Ensuring a consistent supply of clean plastic film feedstock requires either meticulous manual sorting or state-of-the-art automated sorting technology to ensure the consistency of feedstock necessary to produce a high quality rPE. 2. Specialized Equipment: Recycling plastic film requires specialized processing equipment that can shred, wash, dry and extrude the thin, flexible material without causing jams at high production rates. 3. Quality Control: Maintaining the quality of rPE to meet industry standards for flexible packaging requires robust manufacturing practices and sophisticated quality control testing. 4. Regulatory Compliance: Navigating the complex web of regulations governing plastic recycling for food-grade materials requires meticulous attention to detail and adherence to stringent traceability standards. It is important to make sure rPE is certified and compliant for its intended use, especially for food contact applications. Despite these challenges, the benefits of recycling plastic film are undeniable: 1. Environmental Impact: Recycling reduces the amount of plastic waste in landfills and oceans, mitigating pollution and conserving natural resources. 2. Economic Benefits: Creating a market for recycled plastic film can stimulate economic growth and create jobs in the recycling industry. Our Approach NOVA Circular Solutions is at the forefront of tackling these challenges. Our first mechanical recycling facility for PE film is now online. The SYNDIGO1 facility located in Connersville, IN represents a significant step forward in the recycling industry, aiming to produce high quality SYNDIGO recycled PE. We employ cutting-edge technologies and rigorous manufacturing processes to ensure the quality and safety of the recycled products. By working closely with regulatory bodies and industry partners, NOVA Circular Solutions is setting new standards for plastic film recycling. While recycling plastic film is challenging, the environmental and economic benefits make it a worthwhile endeavor. NOVA Circular Solutions is leading the way, demonstrating that with innovation and commitment, we can overcome these obstacles and make a positive impact on our planet.

Only 10% of the 500,000 tons of flexible film generated annually in California finds a second life in today's end markets. So how do we prove that a scalable, circular system for this material type is actually possible? That’s the central question a new coalition of brands is seeking to answer. The recently launched U.S. Flexible Film Initiative (USFFI) goes beyond traditional grant funding for new equipment, which is often a one-time capital expense. Instead, they are directly addressing the "operational costs" that have long made flexible film an unattractive material for many recyclers. Member brands include General Mills, Mars, Mondelēz International, Nestlé, Hill's Pet Nutrition and PepsiCo. By offering multi-year contracts, they are helping to: 🟢 De-risk investment for MRFs and reclaimers by guaranteeing a revenue stream. 🟢 Create a consistent supply chain for flexible film bales, encouraging downstream market development. 🟢 Prove out a scalable model that could be replicated in other states with emerging EPR programs. We often talk about the circular economy in a grand, theoretical sense, but the reality is that its success hinges on solving very granular, unglamorous problems. --> How do you convince a facility to take on a low-value, difficult-to-sort material? --> How do you build a business case for a product that has no reliable buyer? The answer is by intentionally building the economic incentives, not just hoping they emerge. The USFFI’s work is a proactive, market-driven effort to change the status quo. It's a prime example of strategic sustainability in action—leveraging collective industry capital to solve a systemic challenge and build a new, circular market. This kind of pre-competitive collaboration is vital. Read more here: https://lnkd.in/gXCdKgdS #EPR #CircularEconomy #SustainablePackaging #WasteManagement #FlexiblePackaging

The U.S. PET recycling system is under real pressure right now. In the past 18 months, multiple closures have taken out about 25% of domestic PET reclaiming capacity. That is not a small disruption, and it is not something brands should ignore. But it's also not inevitable. If your company has made public commitments around recycled content, now is the time to look past the headline goal and into the procurement decisions underneath it. In markets like this, commitments do not hold on their own. They hold when purchasing behavior, supplier relationships, and sourcing strategy actually support them. As Chris Wirth of The Recycling Partnership pointed out, there are some very practical places companies can focus right now: 🔸 honor existing contracts with domestic suppliers 🔸 avoid retrading or reallocating committed volumes during market stress 🔸 ask harder questions about RPET origin, including whether material is domestic or imported and how region-of-origin is tracked 🔸 consider temporarily prioritizing domestic RPET in procurement decisions 🔸 talk directly with suppliers about near-term risks, inventory dynamics, and operational pressure rather than relying only on generalized market signals The good news is that this is addressable. The challenge is not just technical; it is commercial. And commercial problems can be improved when brands follow through with more disciplined procurement, stronger supplier engagement, and a clearer view of what it actually takes to keep recycling systems operating. The same reporting ties the current strain to cheap virgin resin imports and subdued demand, which is exactly why buying behavior matters so much in moments like this. Thanks to everyone working on practical solutions to keep PET recycling viable in the U.S. If your team is trying to make sense of RPET sourcing, supplier strategy, or recycled content commitments in this market, this is exactly the kind of work I help with. https://lnkd.in/gb2QdyJb

Today, the US Plastics Pact released “Overcoming Barriers to Increasing the Use of PCR in the U.S.” This resource delves into the key cost drivers and market dynamics affecting PCR availability and affordability. It also presents actionable policy and industry strategies aimed at accelerating the adoption of PCR, empowering businesses and policymakers to foster circularity in plastic packaging. A few highlights: 1. Consistent demand for domestically sourced PCR is necessary to drive investments in U.S. recycling infrastructure and collection systems. 2. Long-term purchase contracts for PCR help stabilize demand, reduce market volatility, and incentivize investments in collecting and processing 3. Oversupply of virgin resin leads to low prices, making it challenging for PCR to compete economically. 4. Market dynamics, cost drivers, and collection challenges vary by packaging type. Achieving circularity across all formats requires multiple targeted interventions. Learn how to overcome PCR barriers today: https://lnkd.in/guSDBThf #PCR #USPlasticsPact #circularity

𝗣𝗘𝗧 𝗯𝗼𝘁𝘁𝗹𝗲 𝗿𝗲𝗰𝘆𝗰𝗹𝗶𝗻𝗴 𝗶𝘀 𝗮𝗻 𝗲𝗺𝗲𝗿𝗴𝗶𝗻𝗴 𝘁𝗵𝗲𝗺𝗲 𝗶𝗻 𝗜𝗻𝗱𝗶𝗮. 𝗧𝗮𝗶𝗹𝘄𝗶𝗻𝗱: As per the Extended Producer Responsibility (EPR) norms, brand owners and manufacturers are required to have a minimum of 30% recycled content in their plastic packaging (incl. PET bottles) in FY26. The requirement increases by 10% every year to 60% in FY29. This is a huge demand driver for companies making recycled chips by using scrap PET bottles. However, on paper, the demand -- driven by this regulatory compliance -- is outstripping supply. There is not enough recycling capacity to meet this growing demand. 𝗛𝗲𝗮𝗱𝘄𝗶𝗻𝗱 (temporary): Ministry of Environment, Forest and Climate Change of India recently issued a draft notification proposing that any shortfall in the mandatory usage of recycled content in FY26 can be made up over the next 3 years, though that makeup would be over and above the individual targets of the respective future years. 𝗖𝘆𝗰𝗹𝗶𝗰𝗮𝗹𝗶𝘁𝘆: Currently, the prices of recycled chips required to make PET bottles is very high vs the virgin raw material. Why? A lot of the recycled intermediate raw material was exported leading to a shortfall in India. Moreover, the prices of virgin raw material have fallen due to the cooling off of crude prices – further widening the pricing gap between recycled and virgin raw material. 𝗥𝗲𝘀𝘂𝗹𝘁𝗶𝗻𝗴 𝗜𝗺𝗽𝗮𝗰𝘁: The temporary headwinds + unfavorable cyclicality has pushed FMCG companies and PET bottlers like Varun Beverages etc. (incl. the ones starting consumption very soon) to cut down down their recycled raw material purchases – leading to low / no growth (and significant market value decline) for the PET bottle recyclers. "In the short term the stock market is a voting machine, but in the long run it is a weighing machine" – Benjamin Graham In the video linked in the comment section, I discuss a framework on how an aspiring equity analyst or a budding investor can carry out end-to-end analysis of this industry (or any industry for that matter) and business fundamentals. #investandrise #equityresearch #valuation #industryanalysis #fundamentalanalysis #ESG #impactinvesting #sustainableinvesting #greeninvesting #valueinvesting #EPR #ganeshaecosphere