Up to $3 billion in additional capital investment would be required to achieve current U.S. recycled plastics content goals by 2030, according to new analysis by Wood Mackenzie Chemicals.

“The issue of sustainability has become an important driver over the past few years, as more brand owners, packaging companies and retailers have announced sustainability targets. These goals have placed an emphasis on using recycled plastic, primarily RPET, as the central component of their products. However, this raises the question of whether there will be enough PET bottles recovered to meet these ambitious bottle-to-bottle requirements,” said Michael Bermish, Wood Mackenzie Chemicals Principal Analyst.

U.S. PET recycling rate lagging behind

The U.S. recycling rate of PET bottles – calculated by PET bottles collected divided by total PET bottles consumed – has historically been sluggish, with little-to-no apparent growth. In 2017, the U.S. recycling rate sat at 29.2% according to NAPCOR, while the global average was estimated at just under 56%.

Wood Mackenzie Chemicals’ baseline forecast shows a slow but steady growth rate in both the U.S. recycling rate and the number of RPET bottles collected. PET bottle consumption is projected to grow at a modest 2.5% per annum through 2030. In total, this will add an additional 505kt of PET bottles by 2025 and 931kt by 2030. With current projected recycling rates of 33.3% in 2025 and 36% in 2030, this will add approximately 150kt and 277kt of additional recycled RPET bottles for these two periods.

Based on the projected total number of PET bottles consumed through 2030, this will add nearly 115kt of RPET recycled by 2025 and approximately 228kt by 2030. In total, Wood Mackenzie Chemicals currently projects the available pool of RPET recycled bottles to increase by approximately 265kt by 2025 and approximately 505kt by 2030. Using this baseline forecast, Wood Mackenzie Chemicals’ researchers developed two scenarios - assuming a 25% recycled content goal by 2025 and a 50% recycled content goal by 2030.

Scenario #1: RPET required to meet sustainability goals for carbonized soft drinks and water PET bottles only

In the first scenario, the analysis estimates that an additional eight RPET processing plants – at 45kt of output per plant – would be needed by 2025 and 27 new RPET processing plants by 2030. Taking an average of $70 million per 45kt plant, the additional capital investment required to achieve these sustainability targets would be approximately $560 million by 2025 and nearly $1.9 billion by 2030.

Scenario #2: RPET required to meet sustainability goals for all beverage PET bottles

In the second scenario, the analysis estimates that an additional 14 RPET processing plants will be required by 2025 and 43 new RPET processing plants by 2030. At $70 million per 45kt plant, the additional capital investment required in this scenario would be approximately $1 billion by 2025 and $3 billion by 2030.

“Both scenarios clearly suggest that the current amount of RPET bottles collected - on a tonnage basis - will fall far short of what is needed to meet current plastics recycled content goals. The capital investment costs to build the plants required to process the additional RPET bottles collected would be substantial, assuming the RPET bottle collection goals are met in the first place.

“Clearly, a huge gap exists between existing corporate sustainability goals and the current state of the U.S. RPET market. Additionally, brand owners in other RPET end-use sectors, such as fibres, have made similar commitments. As such, there is likely to be increased competition for RPET material, with some cost-focused material priced out of the market,” concluded  Bermish.