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We co-hosted the �鶹�� Sustainable Packaging Materials ESG Virtual conference this week; fireside chats with 11 corporates across the space both in the US and Globally. Overall our takeaway was that all companies were taking meaningful steps to improve circularity (through technology and recycling logistics investments) while also taking varying steps to reduce emissions largely driven by efficiency and heat source substitution (hydrogen, biomass). Opportunities to use Green/Blue Hydrogen and carbon capture, usage and storage (CCUS) were discussed as well.

Many of the Paper Packaging companies are implementing circularity by using recycled feedstock in their raw materials today. In the US roughly 70% of paper products are captured and can be reused roughly 5-7 times. That said, there are certain limitations to what recycled fibers can be used for (as they get shorter through each use); however, innovation has expanded the end use applications. The paper companies noted that they are seeing growth opportunities where some companies are moving away from plastic packaging to paper products. That said, there is unlikely to be a "greemium" as ultimate end use products need to be affordable for the consumer.

We also spoke with plastic packaging companies and while focus is also on circularity, the path there is different. Today only around 8% of plastics are recycled. This is in part due to challenges in effectively recycling certain types/forms of plastics. On mechanical recycling, we have seen a move towards simpler plastics and products using larger amounts of post-consumer recycled (PCR) material (usually around 40-50%) to blend with regular polyethylene. There has been a premium for circular products and demand is expected to exceed supply for the foreseeable future. Additionally, on the plastics side companies discussed steps to decarbonize their process via the use of carbon capture and storage (CCS) or hydrogen over time.

Many noted regulations are a driving factor in helping increase circularity. The EU is further along than the US. On the carbon emissions side, in the US many noted they are looking at cleaner fuels as well as carbon capture given the passage of the Inflation Reduction Act (IRA). Lightweighting has been an avenue taken by some, specifically on the rigid plastics side. Bioplastics were also discussed, with some noting increased demand as of late given the lack of supply from other applications. Notably there does not seem to be the need for capital investments to use bio plastics, advanced or mechanical recycled feedstocks.