Private equity giant Apollo (NYSE:APO) has committed $300m to support Texas-headquartered plastics recycler Circulus in expanding its recycling plants nationwide.
- Circulus produces post-consumer resin (PCR) from recycled low-density polyethylene (LDPE), which is widely used in consumer packaging.
- The process of recycling and retaining the value of recycled LDPE has historically been complicated, meaning most of it ends up in landfill.
- Production of plastics grows exponentially but only a small percentage is recycled, highlighting the crucial need for solutions.
What does Circulus do?
Circulus was founded by Ara Partners, a private equity firm specialising in decarbonisation investments, in 2019 and is majority owned by Ara. The start up has two plants producing PCR, one coming online soon in California, with another two in the pipeline.
It has developed technologies to transform olefin plastics into resins suitable for a variety of commercial and industrial applications. Its PCR is intended to be used in consumer-facing applications including plastic bags, shrink film, pouches and overwraps.
Circulus not only recycles plastics but has committed to minimise the carbon footprint of its operations, while facilitating water conservation, as 85% of the water in its plants is being reused.
The technology is ultimately intended to divert plastics waste away from landfills, incinerators and oceans.
Apollo’s commitment to sustainable projects
The structured finance from Apollo comes across as a strong vote of confidence in Circulus’s technology. Apollo is a huge player in the private equity sector with $515 billion of assets under management as of June 2022.
The firm announced in February 2022 that it would deploy $50 billion in clean energy and climate projects over five years, with the potential to reach $100 billion by 2030.
Apollo partner Corinne Still said: “With a seasoned management team, first-mover advantage in the North American LPDE market, best-in-class manufacturing technology and strong industry tailwinds, Circulus is well positioned to execute on its growth plans. We look forward to leveraging our deep relationships and experience within the petrochemical industry to support the company’s continued expansion.”
The challenge of recycling LDPE
LDPE is widely used in consumer packaging such as plastic bags, pouches, plastic wrap and film, but recycling it has historically been a challenge. This is because the recycling methods can affect the value of the new product made with recycled materials.
According to 2015 data released by the US Environmental Protection Agency – the most recent figures currently available – only 6.2% of LDPE was recycled that year. In comparison, 18.4% of polyethylene terephthalate (PET) was recycled.
Plastic waste, which is not biodegradable, is a huge threat for the environment as it affects ecosystems, animal and plant species. Landfills risk contaminating soil and water, while incineration releases toxic chemicals and microplastics into the air.
The plastic waste trade has emerged as a major social and environmental issue across the world, as high-income countries export their waste to low-income countries, where it is not disposed of in a sustainable way.
The plastics challenge is not going away
The consumption of plastics has quadrupled over the past three decades, driven by growth in emerging markets. According to a 2022 report by the Organisation for Economic Co-operation and Development (OECD), only 9% of global plastics waste is recycled, even though 15% is collected for recycling.
A fifth of plastics waste is incinerated and half of it ends up in landfill. The remaining 22% evades waste management systems and is either being burnt in open pits or dumped into land and sea.
All parts of the value chain need to address the plastics issue, by reducing or limiting consumption, promoting reuse, recycling and sustainable disposal.
