Nova, Dow, LyondellBasell create recycling investment fund
The resin makers are establishing a $100-million investment fund to help finance recovery and recycling of polyethylene and polypropylene in Canada and the U.S.
Three leading resin makers – Canada’s Nova Chemicals Corp. among them – are establishing a US$100-million investment fund to help finance recovery and recycling of polyethylene (PE) and polypropylene (PP) in Canada and the U.S.
Nova, Dow Inc. and LyondellBasell Industries are contributing a total of US$25 million to start the Closed Loop Circular Plastics Fund, which they said they hope to grow to US$100 million with money from other corporate and financial investors.
The fund is being managed by New York-based investment firm Closed Loop Partners.
“The goal of the catalytic fund is to grow to deploy $100 million, through a combination of the fund’s founding investors, additional corporate investors and financial institutions, in order to attract additional capital beyond the fund’s own commitments,” the companies said in a May 26 news release. “At scale, the fund’s investments aim to recycle over 500 million pounds of plastic over the fund’s lifespan.”
The fund will focus on three areas: increasing access to collection; optimizing recycling systems to capture “high-quality” plastic like food-grade and medical-grade materials; and investing in manufacturing that uses recycled-content plastic.
One of the problems the fund hopes to solve, the companies said, is that the current supply of recycled plastics meets only six per cent of demand for the most commonly used plastics in the U.S. and Canada. “Systemic bottlenecks, misaligned incentives and policies, technological inefficiencies and outdated equipment across the plastics recovery system contribute to millions of tons of plastic going to waste in landfills and oceans,” the companies said. “Increasing the recovery and recirculation of plastics could help meet an addressable market for plastics with potential revenue opportunities of $120 billion in the U.S. and Canada alone.”
The companies claim that “significant opportunity exists” to bolster the recovery of PE and PP, based on these materials’ market desirability and expected production amounts, as well as their wide variety of applications across industries, including healthcare and food and beverage.
According to the news release, the fund will deploy a flexible mix of debt and equity financing, and will also aim to stimulate mainstream co-investments, including those from financial institutions, into circular solutions for plastics to further accelerate impact at scale. “With established facilities, extensive supply chain networks and markets, Dow, LyondellBasell and Nova are collectively well-positioned to help advance the transition to a new, more circular system,” it said. “Together, they create a precedent for a sustainable future for the plastics industry, building a runway for further investments and synergies with other stakeholders in the plastics recovery and reuse value chain.”