How a recycling crisis is fueling innovation

Even before the COVID-19 pandemic, handling New York City’s household waste was a massive undertaking. Now, the Sims Municipal Recycling facility has had to add 16 hours a week to process the surge in cardboard packaging and plastic containers.

“More people are cooking at home, staying at home, keeping their kids at home,” said Tom Outerbridge, the general manager at Sims, noting that “the quantity of material we receive is up substantially.”

Cities across the United States are grappling with a similar rise in municipal trash and recycling. Households aren’t just having more goods delivered to their doorstep, they’re also churning through more single-use plastics, including grocery bags, takeout containers, surgical face masks, and disinfectant wipes. All these items are piling up just as the global recycling industry is reeling from another major disruption: China’s 2018 ban on solid waste imports. 

The United States and other countries are now reckoning with millions of tons of plastics—most of which is too costly or complex to recycle, and so winds up in landfills, incinerators, or as litter in rivers and oceans. In response, U.S. lawmakers are pushing policies to make manufacturers bear the costs of disposing of their products. 

Over the past year, startups and investors have accelerated efforts to create new materials and scale up novel technologies to keep trash from piling up in the world’s most wasteful country.

At nearly five pounds of trash per person, the United States generates more waste per day than any other nation, according to the U.S. Environmental Protection Agency. In 2018, that amounted to more than 292 million tons of total municipal solid waste, about half of which was sent to landfills. “People have started to pay more attention to waste,” said Charles Willard, a recycling industry analyst at Lux Research in Boston. “Less waste can be sent overseas and tucked under the rug, so a lot of new technologies are coming to the market.”

One sector quickly gaining traction is the broadly defined “upstream” category, which involves reusing materials or removing packaging entirely. At Apeel, a startup based in Goleta, Calif., that makes plant-based edible coatings to replace the shrink-wrap on fruits and vegetables, this is a part of rethinking its supply chains. 

Grove Collaborative recently launched its plastic-free products in Target stores, including concentrated cleaning solutions and reusable spray bottles. Startup Ebb has created foil sachets and recycled cardboard tubes to carry its THC powders, eschewing the plastic pouches that dominate the budding cannabis industry.   

As households become more wary of their environmental footprints, and as municipal waste systems struggle to keep up, the upstream space is becoming “significantly more relevant,” Tom Szaky, CEO of TerraCycle, a specialty recycling company in Trenton, N.J. “In a way, that’s really exciting.”

TerraCycle is expanding its Loop “reuse” platform, which offers 400 everyday products—including ice cream, hot sauce, body wash, and dish soap—in sturdy containers that consumers can return to be professionally cleaned, refilled, and restocked. Szaky likened the system to how beer kegs and propane tanks circulate, with customers paying a deposit on the containers. Last year, Loop launched a nationwide online service, and this year it’s beginning to put products in hundreds of retail stores in North America, the United Kingdom, France, Japan, and Australia. In December, TerraCycle raised $25 million to support the expansion, which will soon include baby clothing and a cloth diapering service.

Yet even as waste-cutting initiatives expand, consumers are still expected to toss out countless pouches, jugs, tubs, and tubes. To mine more valuable materials from the heap, recyclers are increasingly turning to robotics and artificial intelligence. At a Sims facility in Jersey City, the company is testing a system built by AMP Robotics, a Colorado startup with nearly $78 million in funding. AMP’s technology can discern an item’s shape, material type, brand, and whether it held food or, say, pesticides. Recently, the company equipped its systems to identify and sort K-cups, the single-serve coffee pods by Keurig Dr Pepper.

Matanya Horowitz, AMP’s founder and CEO, said recycling plants have accelerated adoption of robotics during the pandemic. With fewer people able to work due to illness or health concerns, robots have “augmented” the open positions in bustling facilities. The technology has also proven adaptable to changes in the waste stream, such as an influx of cardboard boxes. Along with deploying 150 systems, AMP is building a test center in Denver to sort through the flimsy, dirty, or chemically complex plastics that most facilities can’t handle.

AMP is among nearly 50 companies backed by Closed Loop Partners, a New York City–based investment firm that aims to deploy $100 million in venture, equity, and infrastructure funds to upgrade recycling systems and create markets for recycled materials.

In May, Closed Loop Partners launched a $25 million fund with major chemical companies to catalyze investment in plastics recycling—including so-called chemical recycling systems. This emerging industry uses different chemical processes to break down problematic plastics into their raw materials, which can then become ingredients for new plastics. 

Chemical recycling

Agilyx, which is backed by Virgin Group, is processing thousands of tons of polystyrene waste in its demonstration unit near Portland, Ore. Polystyrene is a common plastic used to make products ranging from foam coffee cups to petri dishes, but it’s lightweight and often soiled, making it difficult to recycle with conventional methods. Agilyx uses a heating process known as “pyrolysis” to turn polystyrene back into its precursor, styrene. In July, Agilyx said it supplied recycled polystyrene for Yoplait yogurt pots sold in Europe. More recently, the company announced plans to supply materials for high-performance tires.

“We’re finding new product pathways for plastics that have never been recycled before,” said Joe Vaillancourt, former Agilyx CEO and current president of Cyclyx, a subsidiary company. For instance, the new yogurt containers include material from agricultural-grade plastics, like fertilizer-tainted flower pots, he said.

In order for chemical recycling to make a significant dent in plastic pollution, companies will need to scale their demonstration plants into massive, multimillion-dollar facilities—something the industry has so far failed to do. 

Out of 30 projects worldwide, most are significantly delayed or struggling to ramp up, while some have shut down entirely, according to a Reuters investigation. Agilyx said its 2018 deal to convert plastic waste into jet fuel for Delta Air Lines was “put on hold” due to the pandemic.

Willard, the Lux Research analyst, said such setbacks aren’t surprising for such cutting-edge technologies. “These are processes that have never been [built] to the scale they’re going at today,” he said. “It’s messy.”

Companies that do manage to scale chemical recycling facilities—or robot-sorting systems or zero-waste product lines—will be met with rising interest from packaging companies and manufacturers, which are facing increased scrutiny from state and federal policymakers. In the United States and globally, a movement is building to compel corporations to make easier-to-recycle products and pay for the cost of handling all their plastic bottles, cartons, batteries, and electronics.  

Earlier this year, Maine and Oregon adopted the nation’s first Extended Producer Responsibility (EPR) policies, with the aim of shifting the financial burden of recycling from cash-strapped municipalities and taxpayers to manufacturers. Eight other states are considering similar proposals. In California this month, the state’s assembly passed a bill that would limit how companies can use the three-arrow recycling symbol on products, since often the triangular design is used on materials that still wind up in landfills.

Such policies are key to rebalancing today’s recycling market, experts say. In many places, it’s often cheaper to dispose of or burn trash than it is to collect, sort, and recycle waste or to design custom eco-friendly packaging. 

Making it more expensive to produce waste will begin to “create a more level playing field” for startups and innovative technologies, said Sara Wingstrand of the Ellen MacArthur Foundation, a U.K.-based nonprofit that promotes the circular economy. 

Willard described the growing U.S. momentum around EPR policies as “an absolute game-changer” for recycling, because the measures compel manufacturers to care about what happens once their products leave consumers’ hands. 

“The ultimate effect is that more money is going into ‘end-of-life’ technology,” he said. “It’s basically been a funding boost.”

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