Closed Loop Partners launches circular plastics fund

Closed Loop Partners, New York, will manage a fund established by Dow, LyondellBasell and Nova Chemicals that will invest in scalable recycling technologies, equipment upgrades and infrastructure solutions.

The companies invested $25 million initially in the Closed Loop Circular Plastics Fund. The fund is seeking additional investments, with the goal of growing to $100 million, from businesses across the plastics value chain to help advance the recovery and recycling of plastics in the U.S. and Canada. At scale, the Closed Loop Circular Plastics Fund’s investments aim to recycle more than 500 million pounds of plastic over its lifetime, which will be 10 years, Closed Loop Partners Director of Communications and Strategic Initiatives Georgia Sherwin says.

According to Closed Loop Partners, the Closed Loop Circular Plastics Fund will invest in three strategic areas to increase the amount of recycled plastic available to meet the growing demand for recycled content in products and packaging: access, optimization and manufacturing.

The fund’s investments seek to increase collection of targeted polyethylene (PE) and polypropylene (PP) plastics by advancing material collection systems, including transportation, logistics and recycling sortation technologies and infrastructure. It also seeks to upgrade recycling systems to more efficiently aggregate, classify and sort targeted plastics to increase the total amount of plastic, including food-grade and medical-grade plastic, sent for remanufacturing. Additionally, the fund will invest in facilities and equipment that manufacture finished products, packaging or related goods using recycled content.

The fund will deploy a flexible mix of debt and equity financing in the form of below-market-rate loans and will aim to stimulate mainstream co-investments, including those from financial institutions, Closed Loop Partners says. With established facilities, extensive supply chain networks and markets, Dow, LyondellBasell and Nova Chemicals are well-positioned to help advance the transition to a new, more circular system.

Sherwin says the minimum investment size will be $1 million, while the average investment period will range from three to five years, with the exception of bridge loans.

Those interested in applying for funding can do so at www.closedlooppartners.com/closed-loop-circular-plastics-fund-apply-for-funding. 

Closed Loop Partners says the Closed Loop Circular Plastics Fund will work closely with the company’s Closed Loop Infrastructure Fund and Closed Loop Beverage Fund as part of a broader Closed Loop Infrastructure Group that aims to bolster recovery infrastructure in North America. At the same time, the company’s Ventures Group will focus on upstream solutions, such as scaling reuse models and innovative new materials, to holistically address plastics waste. This requires consciously designing systems and products to use fewer materials, harnessing alternatives to plastics where appropriate, implementing circular business models such as refillable and reusable products and investing in recovery infrastructure, Closed Loop Partners says.

The performance of the Circular Plastics Fund will be benchmarked according to a combination of financial and impact outcomes, including tons of PE and PP diverted from landfill and tons of greenhouse gas emissions avoided or reduced, Sherwin says.

“The plastic resin manufacturers that create value for their shareholders now and in the future will be the ones that ensure that 100 percent of their products are safely recycled or reused, and never discarded in a landfill or elsewhere in our ecosystem,” Ron Gonen, founder and CEO of Closed Loop Partners says. “We look forward to investing in sustainable infrastructure and innovations that enable and encourage other companies, including investors in the Closed Loop Circular Plastics Fund, to deploy significantly more of their own capital to further scale these critical solutions. Alongside championing scalable reusable packaging models and innovative new materials, growing recycling and circular economy infrastructure in the U.S. and Canada plays a critical role in eliminating plastic waste and reducing the need for the costly extraction of raw materials.”

According to Closed Loop Partners, the current supply of recycled plastics meets only 6 percent of demand for the most commonly used plastics in the U.S. and Canada. 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 company adds.

“Dow is investing with Closed Loop Partners as another way to catalyze additional investment in recycling technology and infrastructure in the U.S. and Canada. Plastic materials are essential to a sustainable, low carbon economy and this fund, alongside other investments and collaborations we are engaged in, will help move society toward a circular economy, ensuring plastic is not lost to the environment,” says Jim Fitterling, chairman and CEO of Dow, Midland, Michigan. “But our commitment and capital alone are not enough to end plastic waste. We urge others, across all sectors of society, to join us and scale the technologies, partnerships and capital needed to build the circular plastics supply chains of the future.”

“Addressing the challenge of plastic waste in the environment requires collective action on multiple fronts,” Bob Patel, CEO of LyondellBasell, with U.S. operations based in Houston, says. “As a company, we have been executing a multipronged strategy that includes innovations in mechanical recycling, the advancement of molecular recycling technologies and the incorporation of renewable feedstocks into our manufacturing,” says. “In addition to our company’s efforts, further enhancements to recycling infrastructure are critical to capturing the value of used plastics and advancing the circular economy.” 

Luis Sierra, president and CEO of Canada-based Nova Chemicals, says, “Innovation is key to our collective success. If we can create plastic products that are easier to recycle, perform with less materials, incorporate more recycled content and invest in the recycling and recovery infrastructure, we will achieve a zero plastic waste future. We are ready to work across the value chain, developing new solutions that will shape a better tomorrow.”

Since its founding in 2014, Closed Loop Partners says its existing portfolio of more than 50 investments has diverted more than 4.6 billion pounds of material from landfills and back into manufacturing supply chains.