Max Babits Analyst at RRS Prepared for: Missouri Recycling Association Conference August 2017 CIRCULAR ECONOMY CONCEPTS AND THE VALUE CHAINS AS THEY APPLY TO FLEXIBLE PACKAGING

MATERIALS RECOVERY FOR THE FUTURE What if an economically viable and nationally scalable solution could be developed to increase the recovery of flexible packaging? That is the impetus for this research collaboration called Materials Recovery for the Future. Research Collaboration

Hosted By: Foundation For Chemistry Research & Initiatives: Emily_Tipaldo@americanchemistry.com, Materials Recovery for the Future brings together these partners in the value chain with a single shared purpose – to enhance recovery solutions through collective action. Initiated in 2014 by Dow, having completed a preliminary options analysis and strategy with consulting partner RRS, these members have participated in and funded the research program for the past two years. The Foundation for Chemistry Research and Initiatives, an independent research arm of the American Chemistry Council, was selected to host the research program. The sponsors provide both expertise and funding; RRS helps them develop the plan, perform the research, and engage key stakeholders in the process. Printpack also joined for our most recent round of end market manufacturing performance testing for exhibit at Sustainable Brands Detroit 2017

“ “ OUR VISION Flexible packaging is recycled, and the recovery community captures value from it. Members of this Collaborative share this simple vision. We are leading a multi-year research program to advance understanding of how flexible plastic packaging can be effectively sorted for recovery. Materials Recovery for the Future is an initiative focusing on recycling today’s generation of flexible packaging – a variety of light weight pouches, bags, and wraps that have grown in popularity.  The trend towards use of flexible packaging was driven by the sustainability movement years ago, as we sought to dematerialize packaging while improving product protection.  This brought benefits like a lower carbon footprint and less food waste. However, there’s one serious drawback – flexible packaging is not recyclable in most U.S. recycling facilities. The vision of MRFF is to leverage our collective strength (brands, manufacturers, retailers, and the recycling industry) to achieve recycling the material curbside.  We’ve researched how to automatically sort the material in material recovery facilities (MRFs), and are currently testing end markets that can make next life products from this recycled packaging. Some products that were manufactured last week from recycled flexible packaging.  The deck boards, pallets and posts on exhibit all contain 50-70% recycled flexible packaging (Note there is one exception – the tongue and groove boards on exhibit).

2 3 4 1 Baseline Test Equipment Tests 88% 90% MRF Test 2 MRF Test 1 of FPP was sorted from the test stream 88% 90% of FPP flowed with fiber Optical sorters extracted stream of mostly FPP Identified ejection and recognition challenges Screens and optical sorters were overwhelmed MRF Test 2 MRF Test 1 3 4 of the test material flowed through the optical sorters of FPP captured by 2 passes of optical sorting 82% 85% 88% of flexible plastic packaging flowed to the fiber lines, consistent with our research hypothesis. Optical sorters were able to extract a relatively clean stream of flexibles from the fiber However, the screens and optical sorters were overwhelmed…and a large quantity of paper was ejected with the flexible packaging. This was also an important finding for further equipment testing and adaptation. 70% Optical sorter efficiency (% of FPP recovered) 89% of FPP captured by 3 passes of optical sorting Large quantity of paper with the ejected FPP Still a sizable quantity of paper with the ejected FPP

THE KEY PATHWAY FOR MRFF RESEARCH – Can loose flexible plastic be separated in a MRF system? End Markets Collection System MRF Hand-Pulled Thermal Conversion Bagged Mixed Flexibles Bale Consumer Hand-Pulled Flexibles PRF The answer to the first research question was loose based on a net recycling system cost analysis performed in 2015 by RRS. Other pilot efforts are ongoing to recover bagged flexibles, such as the Dow/FPA Energy Bag. Current optical sorting technology has potential for sorting loose, but needs to be optimized with flexible plastic packaging in single stream: Data from this year’s research will provide proof points for MRFs Measures effects on all commodities Approach: Seed representative flexible mix into single stream and process in typical MRF environment Measure throughput of flexible plastic packaging on sorting equipment including separation screens and optical sorters Measure composition of resultant commodities Loose Marketable Grades Auto-Sorted Without affecting the other value streams?

THE PACKAGING STREAM HAS EVOLVED 1990 to 2012 * Flexible plastic packaging provides outstanding product protection in innovative formats, and its popularity has grown rapidly in the marketplace. As you can see in the chart, it has displaced many types of packaging. Characteristics such as lightweighting carry sustainability benefits, but one big disadvantage is that it is not currently recycled curbside. *% of waste stream | Source: RRS

Recycling of packaging - Not an easy equation... PACKAGING RECYCLING Sorting efficiency and quality Recycling-ready packaging design Competing waste treatment methods Collection infrastruc-ture End markets for recyclates Financing systems Legislation Alternative treatment methods Competition from virgin materials Recycling flexible packaging is not easy, and requires all parties involved to partake in finding the solution as there are a number of variables that push and pull the tides of material recyclability. This infrastructure aids in formation of the circular economy where all components play a role and keep everything rolling forward. Different forces on the recycling side of the materials spectrum compete with virgin material prices and quality, Legislation and alternative treatment methods can help or hurt depending on their goal, to congregate recyclable material with virgin for products vs. wte for mixed plastics over working to find end markets, etc. End consumers’ attitude towards recycling

RECYCLING SYSTEM BEST PRACTICES The Circular Economy is both a best practice for the entire recycling system and for its components. Program guidelines and municipal policy coupled with education and engagement allow processing facilities to provide more, less contaminated materials to end markets. Public and private coordination, organizations, corporations, policies, and consumers who are environmentally conscious aid in value creation which in turn helps fund municipal programs, education, and recycling infrastructure. As long as there is continued effort the cycle continues forward.

WHAT DOES THE CIRCULAR ECONOMY MEAN FOR PLASTIC PACKAGING? To shift from “take-make-waste” linear processes towards a closed loop system, it means building local value chains Recovering plastic packaging has potential value for new products or energy

What can one company do to help realize the circular economy vision? Set ambitious, public commitments for source reduction, waste avoidance and use of recycled feedstock Promote responsible consumption by consumers Collaborate with like-minded companies in the value chain to improve value capture and accelerate local end markets Support sustainable materials management and use of recycling best practices where you operate Not something that is the same for every company but there are general guidelines.

Recovery Value Chain Value Chain approach an accelerator How can the value chain help increase the recycling rates of plastic packaging and the resilience of the recycling sector? This inventory of key players and drivers forms the basis for identifying shared interests. This is the first step. The grey area: Municipalities and collaboratives driven by concern for a clean environment, and Haulers offer a cleaning service for them. MRF and Composters cover some or all of their costs of sorting with the value of materials, but this becomes difficult as packaging changes over time. Reduce residuals and increase efficiency is one reason they seek an answer to recycling flexible packaging.

What is required to take local economies to the next level of recycling best practices? The solution is found through building regional systems and applying all 6 best practices in a ‘hub and spoke’ model 1 COLLECTION 2 PROCESSING 3 END MARKETS 6 FINANCING PARTNERSHIPS 4 EDUCATION & ENGAGEMENT 5 SUPPORTING POLICY © RRS 2017 Source: Ameripen 100 Cities Study, RRS Benchmark Data Base

4. Education & Engagement 6. Public + Private Partnerships EVERYONE IN THE VALUE CHAIN HAS A ROLE TO PLAY TO IMPROVE RECYCLING. Brand Owners/ Manufacturers Local Government 2. Processing 3. End Markets 4. Education & Engagement 5. Supporting Policies 6. Public + Private Partnerships 1. Collection Reprocessors/ Manufacturers MRF Owners/ Operators Retailers State Government © RRS 2017

THANK YOU ! Max Babits rbabits@recycle.com