Virus hurts quest for a greener plastic bottle
Pandemic disrupted recycling industry and hit oil prices
The quest to make greener plastic bottles — the core of beverage giants’ sustainability efforts — has become harder and more expensive in the pandemic.
Nestlé SA, Danone SA, CocaCola Co. and PepsiCo Inc. all set ambitious targets for using more recycled plastic in their water, soda and juice bottles in a bid to allay consumers’ and lawmakers’ worries about the environmental impacts of singleuse plastic.
Several of those target dates came and went unmet this spring as the coronavirus led to the suspension of some recycling programs, reducing the supplies of used PET, the plastic drinks bottles are made from. And slumping oil prices have made new plastic far cheaper than recycled, meaning that the cost of making a bottle with recycled plastic is significantly higher than making one from new plastic.
Coca-Cola missed a self-imposed May deadline to use 50 per cent recycled plastic in all its drinks bottles in the U.K., while Danone failed to hit an April target for its Volvic bottles sold in Germany to be made entirely from recycled plastic. Danone also missed similar targets in the U.K. and France.
Both companies blamed COVID-19 for the delays, and said they hope to meet the goals later this year.
The pandemic is exacerbating what was already a tricky problem for drinks companies: getting enough clean, food-grade used plastic to make new bottles. Despite being easily recyclable, less than a third of PET bottles sold are collected for recycling in the U.S. and just four per cent are used to make new drinks bottles, according to the Container Recycling Institute, a non-profit.
More than 100 municipalities in the U.S. halted curbside recycling programs as the pandemic struck, while nine out of 10 states with deposit programs — where shoppers get cash back for returning containers — have suspended requirements for retailers to participate.
“Our analysis is that the industry will fall far short of collecting enough bottles to meet their requirement,” said Michael Bermish, a senior consultant at chemicals and energy consulting firm Wood Mackenzie. “There is a huge gap.”
Coca-Cola chief executive James Quincey said in April the squeeze on recycled plastic would be temporary. “Maybe we’ll have to make adjustments to the process, but it will resume,” he said.
Danone, Coca-Cola and others were already racing to meet their global goals for using greener plastic. Danone has pledged to make 25 per cent of all its plastic packaging from recycled plastic by 2025, up from 6.4 per cent in 2018, while Coca-Cola plans to achieve 50 per cent recycled content in its bottles and cans by 2030, up from about 10 per cent today.
Such efforts have been set back by a year at least, according to Scott Mouw, senior director of strategy and research for the Recycling Partnership, a non-profit. He says some legislation aimed at spurring recycling has been delayed and expects pressure on U.S. municipal budgets to hit existing programs.
A Washington state bill mandating drinks containers use at least 10 per cent recycled content by 2022 — a move widely expected to spur investment in recycling — was vetoed by Gov. Jay Inslee in April due to budget constraints caused by the virus. A container-deposit program in Scotland has been delayed by over a year.
Companies have failed to hit sustainability targets before, but executives say this time there is more at stake. The efforts, announced with much fanfare, are being tracked by independent organizations. European Union rules call for countries to achieve a 90 per cent collection rate for plastic bottles by 2029 and use 25 per cent recycled plastic in bottles by 2025. Companies are also trying to stave off bottled-water bans by highlighting their recycled-plastic efforts.
“People don’t want to be seen with a plastic bottle anymore, and recycled plastic is a much more acceptable — in terms of social norms — solution,” Danone CEO Emmanuel Faber told investors earlier this year.
Drinks companies have explored alternatives. Efforts with plant-based plastics have largely stalled, while chemical recycling technologies, which promise to turn even dirty and coloured plastic into clear, food-grade material, remain expensive and niche. For now, collecting, washing and melting old bottles to make new ones is the best way to produce more sustainable bottles, executives say.
The costs of making those bottles have been rising for some time, and the current oil-price slump has made new, or virgin, plastic cheaper, increasing the price gap. In Europe, recycled plastic cost 95 per cent more than new plastic in May, up from 35 per cent a year earlier, according to data from Wood Mackenize.
In the U.S., the premium has risen to 22 per cent from seven per cent.
The Consumer Brands Association, a U.S. trade group whose members include Pepsi and Coca-Cola, is recommending policy-makers levy a fee on virgin plastic to finance recycling programs and make recycled material more cost effective. It says U.S. supplies of recycled plastic meet only six per cent of current demand.
Drinks companies have so far shown willingness to pay higher prices. Nestlé, the world’s biggest bottled-water maker, in January said it would invest more than 1.5 billion Swiss francs ($1.58 billion U.S.) to pay for food-grade recycled plastic over the next five years.
Yet smaller beverage companies might not be able to afford to use recycled content in their packaging, waste-reduction advocates say.
“For them the question is ‘Do I try to increase recycled content or do I go for virgin which is so incredibly cheap?’” says Sander Defruyt, who works on plastics issues at the Ellen MacArthur Foundation, a non-profit.
Jason Farahnik, director of brand partnerships at CarbonLITE Industries LLC, says the plastics recycler is having fewer conversations with new customers who had set targets but hadn’t initiated plans to source material. “New entrants to the marketplace have slowed down,” he said.