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What the new House bill on recycling and mass balance means for the circular economy in America
55 Plays27 days ago
Anthony, Mike, and Karthik discuss the proposed House bill "Accelerating a Circular Economy for Plastics and Recycling Innovation Act of 2024", which would create a unified framework for recycling in America but also dramatically change the definition of recycling. They discuss the impacts, the drivers, what the bill would mean for the chemicals industry, and what they hope to see in a finalized version.
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Transcript
Introduction and Podcast Overview
00:00:11
Speaker
Hello, and welcome to the Innovation Matters podcast. I am Anthony Schiavo. I am your host. This is the podcast about sustainable innovation brought to you by Lux Research. And I'm here with Mike and Karthik. Mike, finally back on the pod after many long weeks of absence.
00:00:31
Speaker
Really having a tumultuous period. <unk> cla c Glad I'm able to come back and steady the ship here.
Reflecting on Last Episode
00:00:40
Speaker
Yeah, returning champion. We do need you. I think we were we were veering into some pretty dark territory. We we got into ela back into Elon Musk last week's episode. yeah Last week's one yeah was a little tough. you need to You may need to listen to that and truly correct ah correct the boat here. Steer the ship, as you said. and We've also got
Personal Anecdotes and Birthday Shoutout
00:01:02
Speaker
Karthik on. Karthik, how are you doing?
00:01:04
Speaker
Yeah, I'm doing good. Just a quick shout out to my mom. It's a birthday day today on the day of the recording. So happy birthday, day mom. i't I know you don't listen to the podcast, but it's OK. It's OK. My mom does listen to the podcast and will appreciate you shouting out your mother. um And she's like, oh, Karthik's such a nice guy. you know So so that will this will really win you a lot of points with that particular part of our audience. Very, very sort of specific part of our audience.
Introduction to Circular Economy Bill
00:01:36
Speaker
Well, today we wanted to talk about, so it is, uh, we're recording this, I guess, I don't know if I should Doc's card, Dick's mom's birthday, but we're recording this in, in late October. And we just had a bill passed, not that, excuse me, very importantly, not best, not best proposed. yeah We just had a bill introduced into the United States house of representatives.
Bill's Objectives and Definitions
00:02:00
Speaker
The title of this bill being, The Accelerating a Circular Economy for Plastics and Recycling Innovation Act of 2024, which does not work out. Doesn't even have a clever acronym. Yeah, it does not come out to any type of clever acronym. So, you know, that's the first red flag, I think, immediately of this bill. um But that's what we want to talk about today. This is a new piece of proposed legislation in the House.
00:02:27
Speaker
um proposed by Representative Bushan of Idaho, I want to say. Indiana, I believe. Indiana. The Midwest Understanders is here. and yeah So we want to talk about this bill. It's pretty interesting. There's a lot to talk about. The bill itself is actually not that long. There's not a ton to it. um What there is is is pretty impactful, however.
00:02:54
Speaker
So basically the bill does three things if I had to boil it down. The first is that it, so in general, it is a national level bill, right? This is in the US House of Representatives. And it's very explicitly trying to create a consistent national market or playing field set of regulatory standards for recycling. um And particularly advanced recycling, so pyrolysis and other techniques.
Advanced Recycling Processes Defined
00:03:31
Speaker
Because right now there's about 50 different states with 50 different sets of regulations, right? And it's a mess. This is a question that we get from clients all the time, which is,
00:03:46
Speaker
Why is it dispatch work? Why is it dispatch work? What can we do about it? And up until now, our answer has been, there's not much you can do about it. The United States is just a patchwork, and we don't necessarily see that changing. So with this, a big part of it is we're trying to create a unified set of of regulations and rules. So that being part of everything that's happening,
00:04:13
Speaker
definitions are a big one. This defines a lot of things, including it defines recycling and recycled plastic. And it redefines them, I would go so far as to say, changes their meaning in a pretty substantially important way. So that's thing one. Thing two is it develops or instructs the government to create a set of national plastic recycling standards, which we'll get into what is and isn't covered there.
00:04:41
Speaker
And then the third thing, and probably the thing that is generating the most headlines, but is actually to me not that important or maybe some of the least important stuff is the minimum mandate for recycled plastic, right? So this would have a content target for recycled plastic, particularly in plastic packaging, not just limited to that actually. So definitions, national standards, recycling standards, and a mandate, a minimum content target.
00:05:13
Speaker
We'll start with the definitions, and here's the big one. this is To me, this is the most interesting or the most sort of impactful thing.
00:05:22
Speaker
They define a number of terms. um We've talked about this. They define advanced recycling and advanced recycling facilities. And within their definition, they specify um These processes include pyrolysis, gasification, so that's a form of recycling now. um So that's a meaningful change. Depolymerization, catalytic cracking, which is interesting, solvolysis, chemolysis, and other similar technologies.
00:05:55
Speaker
The recycled products produced in advanced recycling and advanced plastics recycling facilities include a bunch of other stuff, you know, monomers, these chemical outputs. So classifying those as recycled products and advanced, you know, it doesn't include incineration. It doesn't include municipal waste combustion. And it specifies that advanced recycling should be regulated at as a manufacturing process.
Inclusion of Post-Use and Industrial Plastics
00:06:25
Speaker
not as a waste process. And they go into the definition of a facility um and they specifically say advanced recycling facilities should not be considered solid waste disposal facilities. right um And this is important because this impacts where you can build them, what regulations you have to follow.
00:06:44
Speaker
so Yeah, which has has been a big priority for the industry for a while. And I think the American Chemistry Council, the kind of main industry, chemical industry lobbying body and some other actors have been kind of going state by state and and getting that um you know that classification of advanced recycling facilities as manufacturing rather than as waste management codified into law. And it's ah already the case in a couple of dozen states, I think by by this point. But this would this would make it true at the across the country at the federal level. Right. There's yeah also a lot of stuff in here on composting, which I want to touch on later.
00:07:28
Speaker
Yeah, there was one thing I, yeah, I just wanted to ask about the term post-use plastics because we are on the, on on the discussion on definitions. And within post-use plastic, it says that it's in a form that is not acceptable for mechanical and advanced recycling. Oh, sorry. My bad. It is in a form, um, acceptable for that. So yeah, my question is in a form that's acceptable for those things.
00:07:53
Speaker
Yeah, so that is a moot. We will come to the post-use stuff. The post-use stuff is important. We'll come to that in a second. well and and Yeah, but but what it says is post-use and recovered feedstocks. Post-use polymers and recovered feedstocks is the the exact phrase that's used in that that section of the bill. So to the point, it's it's covering, I think, your interpretation of this. and and mine Anthony, in mind is that that's meant to ensure that it covers post-industrial waste, not just post-consumer.
00:08:22
Speaker
Right, so that's the second big thing, is that a lot of the recycling mandates and recycling content targets, like I believe California's recycled content target, specifies that the recycled content needs to be post-consumer recycled. And I believe this is how it works in Europe as well.
00:08:42
Speaker
So, with this this definition change, when they get to the recycling targets that they lay out, these are recycled content targets that include both post-industrial as well as post-consumer waste. And I actually think this is fine for the most part.
00:08:59
Speaker
like There's a lot of post-consumer waste that's very difficult to access and will be very expensive to recycle. And there's a lot of post-industrial waste that's relatively easy to access and we should be encouraging people to recycle. And from a waste management standpoint, we do want to invest in post-consumer waste collection and waste management because that is where the gaps are in our current ecosystem. But from the perspective of a recycled content target per se,
00:09:31
Speaker
I don't think it's wrong to have it include post-industrial waste or whatever. like I think that's fine, in part because post-industrial waste is just somewhat limited in terms of the scale and the scope and the availability of it. right like it's not like what You're not going to create a lot of new industrial waste necessarily. to like well and That's actually kind of one of the risks.
00:09:53
Speaker
is people trying to cheat the system, which I want to discuss some separate a little bit later, but assuming people don't like are not like actively trying to cheat the system. you would not expect this to create a lot of new post-industrial waste. right um That's a relatively to a narrow and limited and often already recycled fraction. so like There's just that supply there. We should give people credit for it, but this should still help drive supply theoretically for post-consumer recycling. I guess the drawback to that would be if if if people are able to meet at least for up to a certain point,
00:10:29
Speaker
ah standards and requirements just by using post
Mass Balancing and Recycling Efficacy
00:10:32
Speaker
-industrial waste. It removes some of the incentives to use um to to be as aggressive about building out that infrastructure we need for post-consumer. But I tend to agree with you. It it makes it makes sense to you know to make sure that we're incorporating that post-industrial race that isn't just being disposed over incinerated or something like that, as it could be in a lot of cases now. If you look at things like I mean, this is not exactly post-industrial, but it is, I mean, they use the phrase in here post-use rather than post-consumer. So that would include, I think, things like secondary packaging. So like just like the shrink wrap that might go around the boxes in a pallet or something when it was shipped from a warehouse to a store like this. There's a fair amount of that and that's stuff that, you know, or poly bags that are used to transport garments from the factory or the warehouse to the
00:11:23
Speaker
the retail location, like there's a lot of that stuff that that's produced and a lot of it isn't recycled today because it's thin films and other form factors that aren't easy to recycle.
00:11:35
Speaker
Um, I had a quick question on the, just sticking to the definition. So it does talk about third party certification systems. Um, and they do talk about mass balancing. I guess this is where you were talking about kind of cheating the system or finding that loophole, Anthony. Um, because I, we are not big fans of mass balancing, I suppose. Right. Yeah. So one of the things this does, I mean,
00:12:03
Speaker
One of the theoretical challenges with including post-industrial waste is that you could have people take virgin material, primary material, and either just label it as waste, post-industrial waste, or and minimally process it and then label it as post-industrial waste, right? Like intentionally sort of turn it into a waste product.
00:12:30
Speaker
um in order to to gain access to the recycled content target and and increase the value of that product. That'll happen around the margins, I think, but it's not super likely like I don't think that's going to drive relative to some of the other stuff that's going on in the bill. I don't think that's like the biggest problem in the world. um And then the big change um is the definition of certified. So certified recycled, the term certified recycled should have the same meaning as recycled plastics, right?
00:13:16
Speaker
And if we go down here to recycled plastics, the term recycled plastic means products that are produced from mechanical recycling, feedstocks or plastics, post-consumer, or from the advanced recycling of pre-consumer recovered feedstocks or plastics, and post-consumer plastics via mass balance attribution under a third-party certification system.
00:13:40
Speaker
the terms recycled content and certified recycled shall have the same meaning as recycled plastic. So this is basically collapsing the definition of mechanical recycled plastic and not just advanced recycled pyrolysis produced plastics or even gasification produced plastics, right?
00:14:03
Speaker
It's collapsing all of that, but it's also allowing implicitly, or actually explicitly, I should say, the use of mass balance certification in the development of these schemes, right? So there's a definition here of mass balance, right? It says, the term mass balance certification means an audible auditable chain of currency accounting methodology with the rules defined by a third-party certification system that enables the attribution of mass to advanced recycling plastic feedstocks.
00:14:33
Speaker
So there's this collapse of recycled plastic content between mechanically recycled plastic and mass-balanced certified plastic. right And then in the section under the the target the content target, you know there is a section on what third-party certifications are allowable. right And it says, in general, they should identify standards. um But we are pre-approving.
00:15:01
Speaker
right um
00:15:05
Speaker
the ISCC Plus, right International Sustainability and Carbon Certification, a couple others, and RedCERT. So these are the large scale, most commonly used mass balance certification schemes, and they're the ones that allow for free attribution. So this is, as written, an effective
00:15:29
Speaker
allowance of free attribution, mass balance content to A, count legally as recycled content, and B, count the same as mechanically recycled content. So this is a pretty seismic shift in the definition of ah recycling in America. or or Or would be should this bill be passed yes signed into law? Yes, would be should this bill be passed, which it is currently not, which is i wish we will talk about.
00:15:58
Speaker
but that's That's insanely huge, right? And if you compare that, d the other parts of the bill are actually not nearly as a impactful in my view. I mean, the National Plastic Recycling Standards, it's a little bit hard to say with what that would be, because what the bill does is it instructs, you know,
00:16:19
Speaker
the basically the government to create a national plastics recycling standard advisory committee for a period of four years, they should spend, you know, basically 18 months developing a report covering, you know, things like How do we incorporate these elements into our national
National Recycling Standards and Design Gaps
00:16:44
Speaker
standards? How do we harmonize our standards with international community? How do we, you know, do better collection? Blah, blah, blah. So like 18 months of that and then within 18 months of that report being
00:17:01
Speaker
you know Deliver, there should be standards step based on that report. Includes things like specs for advanced recycling feed stocks, minimum standards. They want to move to pay as you throw, which I think is like fine in isolation. you know Pay as you throw is basically adjusting the charge um based on how much waste you're generating, which is like,
00:17:29
Speaker
fine, depending on how you execute it as part of a broader a barner a broader recycling strategy. you know Maybe standards and guidelines on materials, um better record keeping, which is good. That's something I've talked about. you know Some educational programs. Nothing on design, which is kind of crazy, at least as far as I can tell.
00:17:53
Speaker
um yeah like
00:18:01
Speaker
Like the, the national strategy is supposed to quote prioritize innovation in product design and There is a line in here, standard and guidelines, you know, within the strategy or within the the standards. Standard and guidelines for the testing design manufacturer and re-recyclability of innovative materials used in pavement. So they want to get, you know, plastics at the pavement. But there's nothing on like the design of packaging or anything like that, which to me is nice and it's kind of a huge mess.
00:18:38
Speaker
Would, um if I may ask, would that come under the preservation part of the guideline? Because it says to be used in construction, rehabitulation, reconstruction of infrastructure, preservation. Would that come under that? Or is that just with infrastructure? Am I reading this wrong? I think that's of infrastructure.
00:19:01
Speaker
preservation of infrastructure. But this isn't design guidelines for the packaging itself. Like how do we make the, how do we design out recyclable elements? That's a major concern. So if you think about like America's plastic recyclers, they have a whole design guidelines set of of documents. And it's mostly about what you shouldn't do. right It's really shaped by, because that's what's problematic. It's like, okay, you have to stop doing all these problematic things. right like including multi-material design features, or including certain form factors, or having things that behave the same way as paper, you know, plastic products that behave the behave the same way as paper in our sort of, like that kind of thing, right? And there's no
00:19:42
Speaker
and explicit mention of those types of design guidelines in this law as part of the remit for the National Plastic Recycling Service. Within the considerations for the for the administrator that they want to establish, um they have said that the administrator shall take into consideration the cost of achieving a circular economy for plastics.
Lifecycle Analysis and Circular Economy Costs
00:20:02
Speaker
So what is that cost? What do you think that would look like?
00:20:06
Speaker
Yeah. The cost to who? that this This is why it's a little hard to say. There's a lot of ambiguity here. like The administrator could look, for example, at the entire economic cost of doing this and say that the the best way to establish a circular economy is to you know, eliminate plastic to the greatest degree possible, right? um Or you could look purely at, it assume the product mix doesn't change at all. And we're just looking at the waste, which is kind of the vibe I get off this bill. This is very, you know, focused on the the end of life. And um
00:20:41
Speaker
like If you compare this to the UN, it's obviously a different type of ah legal model, but the UN's ah proposed international treaty starts with this text that says, look, the entire lifecycle of plastics is important. We want this bill to address the entire scope of the lifecycle of plastics from production through use through end of life. And then there are specific elements that relate to each part of that set of lifecycles. And like you just don't see that here at all. right um So it's just not really clear what the the standards will really comprise. Yeah.
00:21:18
Speaker
Yeah, I mean, and it's it's as as we've talked about before, this is that the the perspective is very much, I think, that of the the chemicals in petrochemical industry, right? I mean, the representative who pro proposed this is known to have strong ties to that to that to that industry. um and And it reflects that industry perspective, right? Where it's sort of like, ideally, we would like to to change as little as possible about the system, except we had the the recycling.
00:21:48
Speaker
um onto the end. and and and And in particular, we're able to and and we're able to recycle that using a paralysis process, which, you know, as you've talked about a lot, Anthony, we've we've written about in various various contexts here at Lux,
00:22:05
Speaker
you know makes works really well for the existing chemicals and petrochemical industry because it converts that waste plastic into something that is a feedstock that fits very naturally into their existing infrastructure um as opposed to doing more mechanical recycling or something like that, which is you know it doesn't take advantage of the the crackers and the refineries and the you know the existing capital assets that a lot of the a lot of the industry has.
00:22:34
Speaker
so um I think that's that's the relevant kind of underlying background behind the context for this ah for the bill.
Recycling Innovations and Carbon Impact
00:22:44
Speaker
um but What I wanted to ask was related to the competitive study on carbon impact of these raw materials. so They want to perform this lifecycle analysis, as you said, from production all the way to end of life.
00:22:57
Speaker
and they want to see whether different and Within that lifecycle analysis, they're also including any method of recovery of these products, if I'm not mistaken. So I guess they're also going to include the contribution of these advanced recycling techniques or mechanical recycling technique into the life cycle analysis. And they're going to collaborate with national universities and research institutes to do this. Is there any room for innovation in terms of reducing the carbon footprint of these next generation technologies ah in terms of recycling? And how can a client, chemicals client, think about you know acting on this?
00:23:37
Speaker
Yeah, it's funny because I feel like the carbon footprints of all these processes are pretty well known. So it's not clear to me that this is really necessary. like The EU has already done a lot of carbon emissions on the circular economy, for example. But you know I guess we have to redo everything. you know We can't just look at the established studies that are out there. But I think it is I mean, this is an area, first of all, where mechanical recycling is very advantaged, right? And it's one of the enduring areas of advantage for mechanical recycling going forward, I think. It's about a 50% reduction in carbon emission. footide And it's the big risk for pyrolysis, right? Because pyrolysis is a fairly carbon emissions intensive um process. And depending on how you do the LCA, yeah that can vary a lot.
00:24:28
Speaker
And particularly, if you assume that you're avoiding landfill as opposed to avoiding incineration, pyrolysis looks like a huge net increase in carbon emissions. If you assume you're avoiding landfill, it's pretty much neutral. So you know a big part of this is how will thee what are the comparisons that they're going to choose to make? Because you can basically, with the LCAs, choose your endpoints and choose your alternatives.
00:24:56
Speaker
in a way that you can get to whatever outcome you want for whatever particular technology you want, more or less. so da Which is kind of the problem with LCAs in general, but it's especially true here because there's such a big delta in this one choice, right?
00:25:12
Speaker
But there is a lot of you can do. And like ah in particular, there's a lot of ways to reduce the operating temperature of plastic pyrolysis. You know, hydrothermal methods are a big one. We've seen our clients invest in those. Even catalytic processes or just slower, you know, approaches can work. And a part of it is also scale, right? A big, a big challenge is just even with the conventional technology is when you have the
00:25:40
Speaker
these systems operating at relatively small scales or operating inconsistently, they their carbon footprint goes way up because you have to, starting and stopping them is very energy intensive. That increases your carbon footprint a lot. The overall energy efficiency is a lot lower at smaller scales. So one of the best things, you know I mean, basically when you think about pyrolysis,
00:26:04
Speaker
If you're doing it at a large scale, there is a argument and you're doing it continuously. There's an argument that it's slightly better on carbon emissions, right? But if you're doing it at small scales, it's terrible. Like there's no argument that it's better at small
Challenges in Scaling Recycling Processes
00:26:17
Speaker
scales. So part of this is just pushing us from first of a kind to enthalpy kind projects at larger scales. so That naturally reduces our carbon footprint. So a big part of it is just getting a bit of hump there.
00:26:29
Speaker
Yeah, but I think the sort of the risk with that is, you know, mechanical recycling is going to be better on a carbon footprint standpoint. The benefit of pyrolysis is that you can effectively recycle materials and especially form factors that you can't readily recycle mechanically, most notably, you know, thin films, plastic wrap, really hard touches and stuff like that. It's still really hard to do a lot of stuff. Yeah, it's it's it's still challenging. And if so, I mean, to the extent that this you know really does lead to a lot more of those thin films and plastic bags and and stuff like that being't being recycled because of the support effectively that it that it gives for for paralysis. that's That's probably a good thing if instead it leads to just with all the caveats, but that's you know that's better to recycle that stuff than not.
00:27:20
Speaker
um if it's done efficiently in its scale. But if instead it leads to a lot of stuff that could be mechanically recycled, being diverted into a paralysis stream in order to you know in order to to give those those facilities the volumes and the uptime that they need, then it it could be a net negative from that from that carbon standpoint. Yeah.
00:27:48
Speaker
And so the last part of this is the minimum content target.
Recycled Plastic Content Targets and Incentives
00:27:53
Speaker
This is a specifically a minimum content target for plastic packaging, right? um And basically the way it works is that there will be a ramping content target through 2030 or up to 2030, I should say. And by 2030, it needs to hit 30% content target. I believe that is by weight because it's um in pounds. right And there is essentially a a mandate
00:28:26
Speaker
The way they describe it is, what is your shortfall? What is the gap between what you should be achieving with the content target and what you've actually done? So if you put a million pounds, right you need 330,000 pounds, let's say, content.
00:28:42
Speaker
um
00:28:45
Speaker
I guess it would just be 300,000 pounds. Yeah, 300,000 pounds. Yeah, 30%. Yeah, there we go. Put math. If you put a million pounds on the market, you need 300,000 pounds. of recycled content in your in your products, for every you know pound below that 300,000 pounds, you get assessed a fee.
00:29:06
Speaker
right so That fee is five cents per pound, ramping up to 20 cents per pound, depending on how um you how much you miss, right? So if you miss 75% of your target, it's 20 cents a pound. um If you miss 25% or less of your target, it's five cents a pound.
00:29:32
Speaker
So if you ignore this, it's quite steep. If you put in some amount of work, it gets a lot cheaper, right? It's four times as expensive. So yeah.
00:29:44
Speaker
And is that actually assessed against the plastic manufacturer, the packaging manufacturer, the the CPG company? I mean, I'm sure the cost gets passed down the value chain regardless of where it's supposed to be assessed. but That gets assessed against the quote marketer, which is a ah group that they defined earlier. And the idea with that is that is, um from I want to get this right.
00:30:12
Speaker
Basically, it is a person who manufactures or purchases consumer commodities, and then encloses those commodities in packaging for the purpose of selling into the United States. It's the CPG company. The CPG company, essentially. If you're Coca-Cola, you're PepsiCo, these types of companies. That's who it's assessed against. Got it.
00:30:37
Speaker
So my question here, and maybe I'm jumping the gun as well again, apologies. If the CPG company is the one that is getting penalized for this, um does this penalty still incentivize the B2B company that is actually supplying the plastics to a Coca-Cola to do this?
00:31:00
Speaker
Yes, in the sense that Coca-Cola's got to buy recycled plastics. um Somebody's got to sell it to them. Yeah. like it It pushes Coca-Cola. So basically, if Coca-Cola didn't meet their target, you know they would have to pay this money. And so presumably, anyone who can supply them recycled plastics under that cost point, yeah right?
00:31:23
Speaker
like you know, under essentially five cents, an additional five cents per pound. um up you know it was his It's creating a green premium for recycled plastic, right? It's like, if you can you can provide a recycled plastic at, you know, at or less than a 5%, 5 cent or, you know, 20 cent as it goes up, a premium per pound to the the existing plastic, then there's now an economic piece of that the for the buyer. So it's a demand side. Yeah. but my my
00:31:55
Speaker
creating demand for recycle. Yeah. My question was kind of looking at is that penalty worth it? Like this is similar to the carbon tax question, right? Like how expensive should it be to force someone to not emit carbon? So is the, is the bracket for penalties high enough to force someone to buy the recycled product? Like is that too expensive compared to just paying the penalty per metric ton. This is $110. Yeah. Right. That is.
00:32:25
Speaker
Pretty good, right, I would say. um The gap in price between food grade recycled plastic and um like food recycled PET and regular PET is already about $200.
00:32:43
Speaker
with food grade being more expensive. So there's already a higher demand for food grade. So this is basically 50% of that existing premium. and okay um right So it's a pretty significant value driver and it's you know, the price of HDPE is only $600 a ton. So you're talking about, let's say if you go, and that's at five cents, right? If you were to keep using your HDPE um at $600 a ton, right? And you were to just stay at 0% recycled content, you're talking about adding
00:33:22
Speaker
um you know Basically, $400 a ton of cost, $440 a ton of cost. So going from $600 a ton to $1,000 a ton yeah if you don't do anything. So that's like a it's a very meaningful penalty. And and like I do like the way that penalty is
Certification Controversies and Industry Alignment
00:33:42
Speaker
structured. right It really penalizes people who do nothing. right um
00:33:49
Speaker
Unfortunately, that's like the only thing I kind of like about it. like Also, this is this is sort of minor, but there's a line in here where it's like you have to develop record keeping and labeling and, and you know.
00:34:02
Speaker
record keeping for all this content turn stuff. And one of the thing is develop a label that shall use the language blank percentage EPA certified balance for psycho plastics on the label, which is just like to me, that's just like such evidence of like evil intent. You know what I mean? Because it's like the EPA is not certifying this dog. Like, what are you talking about? You know what I mean? like like You're allowing people to like do mass balance like chemical companies to use their own certification systems from third parties to do mass balancing, allowing that to count as recycle like one-to-one with mechanically recycled plastic. and Then you're putting a label on it that says, EPA certified recycle companies. Isn't the certification by EPA certified third-party certifiers?
00:34:53
Speaker
I mean, the EPA is certifying the third party certifiers, I guess, or they're certifying, who knows what they're doing. I mean, the third party certifiers are just written into the bill. Yeah, exactly.
00:35:05
Speaker
I mean, so the EPA will or the epa has oversight into including, you know they they are confirming that the marketers, the individual marketers have met their recycle content targets. right And that is what is being certified. right Yeah. So does this mean we are. But the actual evidence for that would be, you know, chain of custody documentation from like red cert or ISCC. Yeah. So overall, does this mean something good because they have clearly defined what the processes that you should be using are, you know, what is the feedstock? I mean, things like that. So are we going to see, you know, a random, like a not random, it's not the right word, a rapid scale up of recycling in the US.
00:35:55
Speaker
So this is like a pyrolysis player's you know dream. yeah you could say dream right This is a dream scenario. This is everything they want. um And there's nothing in here that they didn't they don't want. right There's no restrictions on you know that the kinds of mass balancing that can be used. There's no restrictions on the kinds of claims. you know it This collapses the claims of pyrolysis against mechanical recycling.
00:36:25
Speaker
And so, I mean, the question is just, if you think the spill is good, it's just a question of do you think pyrolysis is good, right? And like, we think pyrolysis is pretty mid, I would say.
00:36:38
Speaker
Like it's useful in some scenarios and it has some real drawbacks. um And I think the problem with this bill is that it doesn't address it's not a systemic it doesn't address the whole system.
Systemic Solutions and Potential Improvements
00:36:55
Speaker
It doesn't address the design of plastic packaging.
00:36:58
Speaker
It doesn't address demand or use of plastic packaging. How do we drive down the use of plastic packaging, right? It doesn't address um the relative value of these systems against each other, right, at all. Like it just says, plastic recycling, um you know, recycled content from pyrolysis and mass balance is the same as mechanically recycled plastic. It doesn't really address any of the issues of, you know,
00:37:30
Speaker
carbon emissions basically at all. Like it says we're gonna do this thing, but like, oh, we should do a study like on the carbon emissions of stuff is like not the same as, you know, the huge handouts they've given to these very carbon intensive processes, right? It's just not balanced in that way. So it doesn't address these these issues. and And that's why it's frustrating or I don't think it's a good bill. um Yeah, I think it's, I mean, it you know, as you said, paralysis has a role to play. And it's even mass balance, I think has a role to play because some of these processes can't, you know, it's not really practical to have the plastic waste based feedstock totally segregated from the
00:38:15
Speaker
ah you know the virgin feedstock, at least not in the you know kind of foreseeable future um where where plastic waste is is only going to be a minority of the of the feedstock that the industry overall uses. And it does, if you allow that type of attribution, it does create an incentive structure for the the companies to invest in using more more plastic waste as feedstock.
00:38:44
Speaker
I think there's you know the concern with it more is, you know one, as you said, it doesn't really address all these other aspects of the problem. And then two, like we mentioned earlier, if it if it doesn't if it if it if it creates incentives that go beyond you know using paralysis where paralysis is appropriate to you know kind of diverting things from other better approaches into, that could be used in other better approaches into paralysis, that would be the concern.
00:39:12
Speaker
Yeah, I think a lot of what's in the bill to me is relatively not objectionable. A lot of what I have problems with via the bill is the gaps, the things that are not in the bill. I think the things that are really objectionable, the only thing that's really objectionable in the bill is the collapsing of the definition of mechanically recycled plastic and mass balanced recycled plastic. But even there's ways to even set up a system where you do that and like you still do a fine job.
00:39:41
Speaker
like or like the systemic outcomes are still okay. like yeah You can imagine doing that, but like having a very strict like carbon tax. well and That's why I think you know that you could be a little optimistic about this in the sense that, like you said, this is brand new. It's just been introduced. It's still in committee.
00:40:00
Speaker
it If it passes, it's going to get changed a lot and ah along the way. There's going to be a lot of negotiations. And I think if the biggest problem is the stuff that's missing, then there's opportunity for that that some of those missing things, consideration of design, consideration of um you know ah plastic reduction even to get incorporated into into future versions of the bill. um And it it it does have you know that that establishing of the that
00:40:31
Speaker
fairly significant charge on use of un-recycled plastic could be could make a pretty big difference. But compare this to like an EPR scheme right with fees. This really incentivizes the people to just get as much recycled content, probably via mass balancing, into their products as possible.
00:40:53
Speaker
Whereas an EPR scheme, and you know, one way to do that is to reduce, you know, your plastic, your plastic. Right. So there is an incentive in here for plastic consumption reduction. Right. That's good. But an EPR system, you can set fees, not just based on the weights of things, right. And the amounts of recycled plastic, which you can do, but you can also set fees based on the cost that object imposes on the waste system, right? And so you can set fees differently for films versus widgets, right? Bottles versus shrink rack. That's not part of this, right? And without that, you don't have the incentive to switch form factors, right? um You know, you can keep selling products that are these mixed multi-material products with this system and
00:41:50
Speaker
as long as you have enough recycled content in them, in your package, even though that product itself is not recyclable, you can keep using it. And of course that's something that theoretically that could be addressed via the standards. It's a little hard to know without the standards actually being in place, right? But like, yeah.
00:42:08
Speaker
i mean think it Yeah, I guess I'm not sure though. that if it's in the The focus on mass is maybe not such a bad idea. mean idea right One of the one of the the biggest benefits I think that you can have both in you know in terms of carbon footprint in particular is to just reduce the amount of plastic that that's being used and doing something like going from a rigid bottle to a stand up pouch or form factor.
00:42:31
Speaker
Yes, the pouch is harder to recycle, but it uses a lot less plastic by mass than than some of the other form factors. so there is i mean There is a real trade-off to consider there, and I think kind of focusing on the mass as opposed to on the form factor is not necessarily a crazy idea.
00:42:52
Speaker
yeah yeah it's not Would that... Like... It's possible. I'm very open to this bill that sucks and I hate it. Is...
00:43:04
Speaker
probably better than what we have. like I think that's a pretty fair argument, just because what we have going on currently is 50 different. Yeah. Setting a common standard has a real inherent value to it, even if it's not an ideal standard. That ideal standard is probably a step in the right direction.
00:43:26
Speaker
um
00:43:29
Speaker
It's possible it's a step in the right direction. you know I think my biggest concern here is that this this undercuts mechanical recycling to a really large degree. That's the biggest risk here.
00:43:42
Speaker
Yeah, though I think it's not a give. i mean if it In mechanical recycling, if it becomes, you know we are already seeing, I think, a lot of players in the industry, some like you know your line delvessels and dows and companies are actually getting more into investing in and working with with with mechanical.
00:43:58
Speaker
recyclers as well. and And if they are finding that that's that's just a more economical route to to providing recycled plastic, which I think in a lot of cases it could be, then then at least the incumbent paralysis processes, then that's you know that will also benefit from these from some of the provisions in this bill. But it is the risk.
00:44:23
Speaker
All right. Well, we talked about plastics for almost an hour. I love talking about plastics. Many, many such cases. Many such cases. If you want to hear us talk about plastics. Anthony talked about plastic.
00:44:37
Speaker
Okay. If you want to hear me talking about plastics, you can do that. We have lots of hours of me talking about plastics on our Spotify, on our Apple podcast feed. i any other topics Many other extendular topics topics, including but not limited to Elon Musk.
00:44:59
Speaker
Yeah, check it out. Check out our website, www.luxresearchinc.com. We have a lot of great resources there, blogs, webinars. We're going to be doing a webinar on the UN Plastics Treaty in about a month, a little more than a month, when that you know gets actually signed and ratified, lord willing. We'll see if that actually happens or not. um But yeah, check us out, and thanks for listening.
00:45:27
Speaker
Innovation Matters is a production of Lux Research, the leading sustainable innovation research and advisory firm. You can follow this podcast on Apple Music, Spotify, or wherever you get your podcasts. If you want more, check out www.luxresearchinc dot.com slash blog for all the latest news, opinions, and articles. so