In South and Southeast Asia, a cottage industry of plastics recyclers has bubbled up to process the waste collected by thousands of women in the region’s informal economy. These small and mid-sized enterprises could handle much more waste — if they had capital.
SecondMuse, an “impact and innovation company,” is launching a fund to help the region’s recycling processors expand their capacity. The $8 million Revolving Fund, backed by the VISA Foundation, will offer flexible, zero-interest loans from $150,000 to $500,000 as well as technical assistance. By, er, recycling the capital, SecondMuse the fund aims to deploy as much as $18 million.
A key twist: The fund will make use of plastic credits to provide an additional revenue stream for recyclers and help cover the program’s costs. The credits, akin to those for carbon, are tied to plastic diverted from landfills or incineration. Second Muse will train recyclers on how to register and sell plastic credits and navigate the marketplace.
The evergreen fund grew out of a SecondMuse’s Future Economy Lab, which brings communities and other stakeholders together to design funding solutions to thorny challenges, in this case, financing gender-smart, climate-focused small businesses in Asia.
It will help companies like Mumbai-based ReCircle, which processes plastic waste into granules and pellets that can be upcycled into new plastic products. The company’s network of more than 2,500 waste collectors gather around 11 tons of discarded plastic an hour.
Stepping up
The initiative is the latest to combat the growing heaps of plastics pollution and shift to a circular economy.
The world has produced some 460 million tons of plastic a year, just a fraction of which is recycled. In addition to clogging landfills, ocean and land, petroleum-based plastics account for 3.6% of the global emissions, according to Bank of America research. Countries will need to invest more than $2 trillion by 2040 to address the mounting waste.
Investors are stepping up. Singapore-based Circulate Capital has raised a total of $250 million from some of the world’s largest plastic producers and users to advance a circular economy. It has already invested $100 million it has invested in Asia, and this week made its first move into Latin America — an investment in Polyrec S.A.S., a Barranquilla, Colombia-based recycler of flexible plastic, such as bags and wraps.
Elsewhere in Latin America, Impaqto Capital earlier this year backed Peruvian recycling services Sinba, which had attracted early financing and an equity investment from IDB Lab, the venture capital arm of the Inter-American Development Bank Group. Last year, Brazilian plastic recyclers Global PET and Green PCR raised a combined 600 million reais ($100 million) from private equity firm eB Capital.
In the US, New York-based Closed Loop Partners this week extended ‘catalytic credit’ to Eureka Recycling in Minneapolis. And the US Department of Energy’s Loans Program Office announced a loan guarantee of up to $183 million to IRG Erie to finance a plastics recycling facility in Erie, Penn. The plant will convert 160,000 tons of post-consumer waste plastic per year into 100,000 tons or so per year of recycled plastic materials that will be used to replace virgin plastics.
Global plastics treaty
The accelerated pace of investment is being driven by a spate of tough recycling laws enacted by governments around the globe. In the US, the single largest consumer of plastics in the world, the Biden-Harris administration this month announced an executive order to eliminate the federal procurement of single-use plastics from food service operations, events, and packaging by 2027, and from all federal operations by 2035. The order is part of a broader federal plan to tackle plastic waste.
More than two dozen countries in Latin America have passed laws to clamp down on such plastics, including packaging, water bottles and disposable utensils.
Countries including India, Vietnam, the Philippines and Singapore have adopted “extended producer responsibility,” or ERP, programs, which shifts responsibility for recycling from end customers to companies that use plastic for their products or packaging. (ERP is also being used for electronics and other recycling categories)
Another boost may come in November, when representatives from 175 nations meet in South Korea to finalize a global plastics pollution treaty that aims to phase out single-use plastics, among other goals.
