WRAP targets mixed plastics with 2m loan fund

The Waste & Resources Action Programme has today (July 20) unveiled a £2 million loan fund aimed at helping overcome investment barriers for mixed plastic reprocessing capacity in the UK.

Under the loan system, WRAP will award applicants from the private sector with funding which will then be repaid once that company begins making a profit. WRAP will then reinvest the funds back into the mixed plastic recycling market.

The fund follows on from intentions set out in WRAP's business plan for 2008-11, which included plans to help foster the development of 40,000 tonnes-a-year of mixed plastics recycling capacity in the country by 2011.

This was backed by research published in June 2009 which claimed that the commercial scale collection of mixed waste plastic is economically viable (see letsrecycle.com story).

Risk

Marcus Gover, WRAP's director of market development, said: “A reduction in available capital brought on by the current economic climate together with recent market price volatility in recovered materials has meant that the risk-reward balance is still a barrier to private sector investment in mixed plastics recycling in the UK.”

The loan fund comes in the wake of a one-off mixed plastics capital grant scheme launched by WRAP in July 2009 – which saw the organisation award Redcar-based Greenstar WES £1.178 million to develop a 20,000 tonnes-a-year mixed plastic recycling facility (see letsrecycle.com story).

A spokeswoman for WRAP told letsrecycle.com that loans were an “innovative way” of issuing funding support and could become a staple of future WRAP plans.

She said: “It is probably the way that WRAP will be looking to us financing in the future because we think it is a smarter way of using taxpayers' money but that is not to say we wouldn't do that through grants in the future.”

The loan will be administered by WRAP's subsidiary the Accelerating Growth Fund, with applicants accepted until December 31 2010.

Collections

WRAP said, at present, around 20% of local authorities in the UK offer mixed plastic recycling at the kerbside but increased resident pressure for a wider range of material to be collected was driving the need for further domestic capacity.

Paul Davidson, plastics sector specialist at WRAP, added: “We know that that general public wants to recycle items such as plastic yoghurt pots, margarine tubs and rigid plastics like food trays, but at present there is only roughly a 4% recycling rate on these items.”

“At the moment the UK exports all of its recovered non bottle plastics, mostly to China,” she said, “If we closed the loop through increased collections and reprocessing of mixed plastics here in the in the UK, the economic benefits could be startling,” he said.

Some in the sector have questioned the merits of continued support for mixed plastic collections, with it being stated that the focus should fall on retrieving quality PET and HDPE bottles as opposed to mixed rigid plastics, which are of a lower value.

And, Stuart Foster of plastics recycling body Recoup warned earlier this month that increased collections of mixed plastics by local authorities could lead to a reduction of available PET and HDPE for reprocessors. He claimed this situation was already partly responsible for the current high PET prices (see letsrecycle.com story).