These startups seek to close the supply-and-demand gap for recycled plastics

Plastics have spiraled exponentially throughout society and the environment to the point that we literally eat and breathe them on a regular basis. More corporations are responding to consumer outrage by using fewer virgin plastics to produce goods and packaging.

Using post-consumer plastics instead of raw petrochemicals is one important strategy within a suite of solutions to the global plastics crisis, but waste plastics are expensive, their makeup is hard to decode and the supply has not been reaching companies demanding them.

A 2021 report commissioned by Google projected a global investment of between $426 billion and $544 billion needed to close by 2040 “the plastics circularity gap,” defined as the difference between the volume of plastics produced and the sliver of plastics available from circular supply chains. Boosting the infrastructure to support these circular supply chains is key, the report found.

Chart from the 2021 Google report, "Closing the Plastics Circularity Gap"

Chart comparing business-as-usual (BAU) scenarios against circularity goals. From the 2021 Google report, “Closing the Plastics Circularity Gap

Among a growing number of circularity startups focusing on plastic, three young companies gaining funding and attention are seeking to build some of this infrastructure and help channel more waste plastics into the manufacture of new goods.

Circular, launched in June and based in Palo Alto, California, is an online marketplace for buyers and sellers of post-consumer recycled plastic. Cirplus has been doing that since 2018 out of Hamburg, Germany. Circularise, founded in 2016 in The Hague, Netherlands, plays a different role, helping buyers and sellers to determine the origins and ingredients of a variety of materials, including recycled and renewable plastics, through its blockchain technology. In May the company announced that it is teaming up with plastic producer Neste.

The backdrop

These companies are entering the growing space of firms seeking solutions to strengthen sustainable plastic supply chains and recycling infrastructure. They have an uphill climb against the expectation that plastic production will double by 2050, after it already quadrupled in three decades to 460 million metric tons by 2019.

Only 4.5 percent of plastic was recycled in the United States in 2018, according to the U.S. Environmental Protection Agency. Globally it’s just twice that, according to the Organization for Economic Cooperation and Development, which blamed plastics for more than 3 percent of global greenhouse gas emissions.

Meanwhile, more than 1,000 businesses, government agencies and organizations representing 20 percent of the market for plastics packaging have signed on since 2018 to the Ellen MacArthur Foundation’s (EMF) Global Commitment to galvanize a circular economy for plastics. Among the organizations setting various targets for 2025 — including Apple, Coca-Cola and Walmart — the adoption of recycled plastics, especially PET for packaging, has accelerated the decline in the use of virgin plastic. 

Between 2018 and 2019, the signatories’ virgin plastic use dropped by 1.2 percent. Between 2019 and 2020, the decline was .6 percent. This will add up to a 19 percent reduction by 2025 from 2018 levels, eliminating the need to produce 40 million barrels of oil for plastics, according to EMF.

EMF progress on PCR plastic

Chart from the Ellen MacArthur Foundation 2021 Global Commitment progress report (Source: EMF)

Hustling to meet their 2025 deadlines to phase out a variety of levels of virgin plastic, signatories to the commitment pumped up post-consumer recycled material in their packaging by 60 percent between 2018 and 2020, according to EMF. However, among recyclers in the Global Commitment recycled plastics output needs to grow by 27 percent annually between 2020 and 2025 to reach their targets — and by 29 percent annually among plastics producers, according to EMF.

Here are more details about the approaches by Circular, Cirplus and Circularise:

Circular

Circular is something like an eBay for buyers and sellers of spent plastics. After a year of tests behind the scenes, it opened shop in June with the promise of 10 million pounds of “recycled PET, HDPE, LDPE, and PP in bale, flake and resin to trade” from U.S. and international sources. (That is, recycled polyethylene terephthalate, high-density polyethylene, low density polyethylene and polypropylene.)

Plastic collectors, manufacturers and both mechanical and chemical recyclers and processors are using it, with a strong response from consumer packaged goods companies, according to Circular. Brokering in waste plastics now, the startup has long-term aims to broker in what it called “other environmentally preferred manufacturing inputs.”

“We focus on plastics first as it’s the largest, closest economic and environmental opportunity,” Circular founder and CEO Ian Arthur said in an email. “Also the industry dynamics are right, right now: Every major brand struggles to meet sustainability goals, partly because it’s so hard to buy quality products at scale,” he said. 

A snapshot of Circular's "concierge" assistance (Source: Circular)

A snapshot of Circular’s “concierge” assistance (Source: Circular)

The company pitches real-time, transparent and efficient global trades. Circular offers to provide customers with the heavy lifting of locating and vetting the material they need, in addition to managing contracts, shipping and billing, with help from a “concierge” that can communicate via text chat, calls or video. The company makes money through its subscription service and transaction fees.

“We match buyers and sellers to trade sustainable materials at scale,” Arthur said in an email. “That means we primarily offer a contracts market, which as the industry commoditizes, will become a futures market. Eighty to 90 percent of all plastics traded today work on contracts (rather than spot markets), so we meet the market where it is and help it become more efficient.”

The company shows off a leadership lineup with deep Silicon Valley experience, including at Google and Airbnb. Circular has raised more than $5 million, led by Eclipse Ventures. Advisers include Method and Ripple veteran Adam Lowry, who applauded companies slashing virgin plastic. “Now is the time to take real action on those pledges,” he stated. “With positive economics, recyclers are investing in more capacity, and Circular’s digital platform gives buyers and sellers more options, making trading easier.”

Cirplus

A similar effort to Circular is Cirplus, based in Hamburg, Germany, with 15 employees. Its trading marketplace counts 1,200 companies in 100 countries and 1.3 million tons of material, with more than 35 types of polymers. It has received $3.7 million in funding, according to Crunchbase, with early support by venture capitalists in the U.K., Sweden and Germany.

A Cirplus spokeswoman described the company’s mission as building “a one-stop shop for finding, negotiating, contracting, shipping, insuring and paying for recyclates and plastic waste trades across the globe.”

Cirplus launched a standard for recycled plastic in Germany. (Source: Cirplus)

A representation of a bag of HDPE displaying a sustainability standard that Cirplus developed (Source: Cirplus)

Cirplus was co-founded by Volkan Bilic, a blockchain guru, and Christian Schiller, the first employee of BlaBlaCar Germany, which has 80 million ride-sharing users. The origin story of Cirplus comes from Schiller’s dismay at witnessing plastic pollution during a year of traveling around the world.

Part of the company’s goal is to make recycled plastic more appealing and easier to purchase. However, virgin plastic is cheaper, which Cirplus blames on the lack of transparency in the highly fragmented markets for recycled and waste plastics.

“Qualities and quantities are inconsistent and the market participants are often digital dinosaurs — many still hesitate to update to more modern operation systems,” according to the company.

Cirplus dashboard showing recycled PET for sale

Results from a Cirplus search of waste PET for sale (Source: Cirplus)

Beyond building its digitized procurement service, Cirplus worked with 15 plastics industry companies and the German Institute for Standardization to create the first industry standard for high-quality recycling, designed to simplify identifying the properties and quality of recycled plastics. It hopes to apply the German DIN SPEC 91446 standard, launched in late 2021, more widely across Europe and internationally.

Circularise

Blockchain software player Circularise seeks to provide digital infrastructure to enable a circular economy, lately by helping companies understand the provenance of plastics in supply chains.

It teamed up with Neste in May to make its technology available to a wide range of Neste’s renewable plastics and sustainable fuels.

Driven by the notion that a company can’t decarbonize something it can’t measure and that circularity is impossible without transparency, Circularise seeks to centralize supply chain data that was often scattered across corporate PDFs, emails or spreadsheets.

“Being able to track and trace all the materials going into a product provides a solid basis for gaining that trust and credibility,” Isabella Tonaco, VP of strategy execution and marketing at Neste Renewable Polymers and Chemicals, said in a statement. “We are looking forward to working with Circularise to provide the polymers and chemicals industry with a traceability solution to bring the necessary transparency into the value chains.” 

Circularise product passport

Circularise’s representation of its Digital Product Passport (Source: Circularise) 

It’s the latest in Circularise’s parade of corporate partnerships. In a 2020 project with Porsche, Circularise explored how to trace and display on a smartphone the origin of each gram in all 30,000 parts of a sports car. The startup has also worked with materials suppliers including BASF, Covestro, Mitsubishi Chemical, UL, Borealis, Boge, Asahi Kasei and ZKW, and brands such as Stanley Black and Decker, Xindao and Arcelik.

“Circularise enables traceability, which enables Digital Product Passports, which enables circular economy,” co-founder Mesbah Sabur (a 2020 GreenBiz 30 Under 30 honoree) said in an email.

The company uses a digital twin to provide users access to data points without storing, generating or sharing them itself. Its “digital product passport” connects materials data such as the origin point, CO2 emissions, chemical makeup, percentage of recycled content and method of manufacturing. 

Considering supply chains too big to entrust to closed systems, Sabur strives to offer one public blockchain for all manner of material suppliers, sources, industries and manufacturers. Circularise’s open infrastructure is similar to IMAP and SMTP protocols for email, using the same principle that allows a Gmail user to dash off messages to a Hotmail address.

Sabur calls material marketplaces such as Circular and Cirplus complementary to his efforts. “We don’t do matching and trading,” he said. “They (often) don’t offer full end-to-end traceability services. Customers however want to have both, a) find sustainable plastics and b) have them traced fully from feedstock to final products and back to feedstock.”

Virgin and recycled plastic resins or pellets look identical on the surface, so there is a demand for plastics with sustainable certifications, such as ISCC PLUS from the International Sustainability and Carbon Certification), he added. And Circularise uses blockchain to make those certifications easier and faster.

Sabur intends for Circularise’s current focus on plastics and chemicals to broaden to batteries and critical materials, such as aluminum.

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