Misery loves company: The plight of low recycling in plastics

The National Association for Polyethylene Terephthalate (or “PET”) Container Resources (NAPCOR) has released its 2024 PET Recycling Report, and the results show performance even worse than aluminum’s.

NAPCOR reported the PET bottle recycling rate fell to 30.2% in 2024, down from 32.5% in 2023. The figure is only slightly above the trailing 10-year average of 29.5%.

The organization put a positive spin on the data despite what it described as “market corrections and shifting supply dynamics.”

“Despite ongoing market pressures, the 2024 PET recycling rate reflects the resilience of North America’s domestic reclaimers,” says Tom Busard, NAPCOR board chair and chief polymers and recycling officer for Plastipak Packaging Inc., as well as president of Clean Tech, Plastipak’s recycling affiliate.

“The data also underscore the importance of strengthening domestic recycling infrastructure, expanding recovery of all PET packaging formats and ensuring policies that support reliable end markets for recycled material.”

NAPCOR reported that pounds of post-consumer PET bottles collected for recycling in the US declined by 3.9% year over year. However, total reclaimer inputs across the US and Canada increased by 1%, driven by sharp growth in non-bottle feedstocks.

A Shared Problem of Recycling “Inconvenience”

As aluminum advocates, AMU could easily take the “low ground” and point out the futility of plastic, arguing that aluminum has a superior sustainability profile. However, it is difficult to make that case when aluminum is only recovering 43% of its material.

Generations Y, Z, and Alpha (spanning 1981-2024) are dissatisfied with the sustainability performance of both materials and will demand improvement in the future.

NAPCOR’s emphasis on improving domestic recycling infrastructure echoes what participants in the aluminum sector have been calling for over the years.

Numerous schemes have been proposed to address the problem, including expanded curbside recycling, extended producer responsibility (EPR), and deposit legislation.

The common denominator across these approaches is the need for a combination of extreme convenience for consumers and financial incentives that drive behavior.

Those financial incentives must extend to both the producers supplying the packaging and the consumers generating the by-product.

This is where the concept of collective failure applies equally to plastics and aluminum.

Deposit Legislation Going Nowhere

Deposit legislation has been debated for decades. The most recent new deposit bill was enacted in 2002, in Hawaii.

Since then, attempts to introduce new bills have been vehemently opposed by a powerful lobby of beverage companies, beverage wholesalers, and retailers. EPR proposals have faced similarly entrenched opposition.

The logic underpinning this resistance remains consistent: such policies are framed as a tax on the end consumer and as adding cost and complexity to the distribution and sale of beverages.

To date, this argument has successfully blocked every new bill. Meanwhile, aluminum and plastic recycling rates continue to flounder, and large volumes of valuable material end up in landfills.

A Path Forward

Ultimately, the issue comes down to money.

Any effort to overcome the powerful lobbying opposition to deposit or EPR legislation must offer a financial compelling enough to change behavior. In practice, this means gainsharing the financial benefits associated with higher recycling rates of plastic and aluminum.

Historically, beverage companies have opposed deposit and EPR legislation because they see no direct benefit accruing to them. Instead, they perceive the benefits as flowing primarily to aluminum rolling mills.

That benefit is visible in current aluminum market conditions.

UBC prices are approximately $1.03 per pound ($/lb), compared with a Midwest transaction price of $2.17/lb. At the same time, aluminum can body stock is valued at roughly $2.62/lb.

This implies a gross conversion margin of approximately $1.59/lb for can sheet mills.

Beverage companies are capable of doing the math, and it frustrates them.

Aluminum rolling mills often justify these margins by pointing to decades of poor returns on invested capital. From their perspective, today’s margins are long overdue compensation for that extended “profit drought.”

Any discussion of gainsharing between mills and beverage companies invariably turns into a debate about risk-sharing.

In one conversation, a senior executive of a major mill put it this way: “Beverage companies want to participate in the UBC market when the discounts are very wide, but they get cold feet when discounts narrow during periods of seasonal tightness.” His point was that beverage companies must be willing to accept UBC price volatility during both good and bad market conditions.

That volatility could be reduced through deposit or EPR legislation, as one or both approaches could increase supply available to the market. Greater supply should help stabilize pricing and enable more equitable gainsharing across the value chain.

Why This Matters

Solving the problem of plastic and aluminum recycling is a very tough task.

It will require everyone in the supply chain to suspend traditional biases about what works and what does not work. It also means people must stop “counting the other person’s money” and instead work toward a collective solution that gives all participants an incentive to engage.

That will be difficult, given how deeply entrenched many points of view remain.

Plastics would benefit from collective action around deposit legislation and EPR. While aluminum and plastics will continue to compete fiercely for market share, they share a common need to increase their recycling rates.