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In the Loop

Circular Services is poised to expand the circularity ecosystem

This new company wants to prevent the need for extraction and landfilling.

Electronic waste management worker in the uniform

Image via Shutterstock/Sutipond Somnam

This article originally appeared in our Circularity Weekly newsletter. Subscribe to the newsletter here.

Recycling may be the lowest-priority action in the circular economy. But there’s no denying that it is a necessary component in the shift away from the current linear economy.

With its recent launch of Circular Services, a recycling and reuse company, it’s clear that Closed Loop Partners (CLP) agrees. The investment firm majority-owns and manages Circular Services. And through its Global Transition Fund (BGTF), Brookfield Renewable, it has made a $700 million investment in recycling infrastructure, with an initial $200 million to establish Circular Services and $500 million earmarked for growing the ecosystem.

"We cannot create a net zero economy without significantly scaling the infrastructure required for a circular economy," Natalie Adomait, managing partner and chief investment officer of BGTF, said in a statement.

When it launched Nov. 15, Circular Services became the largest privately held recycling company in the U.S. It has 12 facilities across the country — in New York, New Jersey, Florida, Pennsylvania, Colorado, Texas, Arizona and Arkansas. And it’s adding to that infrastructure, according to Jessica Long, managing director and chief strategy officer at CLP.

To be sure, CLP is thinking about more than recycling with Circular Services. It already has a lot of infrastructure for that at this point and is adding to it.

One example is a localized modular materials recovery facility (MRF) business on the East Coast that's focused on building out the smaller-scale systems. (A MRF is a plant where recyclable materials are sorted and prepared for end buyers.) "If you imagine a typical MRF is about $30 million to $50 million to build, it's pretty capital intensive," Long said, noting that one of these small-scale MRFs costs about $2 million to $4 million. "It's especially good for rural communities, underserved communities, areas that maybe don't have the population or the ability to fund one of these large recycling systems."

It also has a textiles and electronics doorstep collection business that operates in Philadelphia and Denver, and a small-scale, modular anaerobic digestion business for organics.

"We're kind of combining all of those elements to create holistic services from a circular economy perspective," Long said. "We're trying to keep valuable materials in circulation as long as possible — really preventing the need for extraction and landfilling."

Long said it’s taken years, trust-building with partners and trial and error to get to this point. "If you're in the world of recycling, or you're in the world of circular economy, [the work] requires figuring out what kind of incentives actually get people to want to participate in the system, especially for something like reuse."

The operations that make up Circular Services are a mix of companies that were previously part of CLP’s buyout fund and businesses or ideas that the investment firm has been incubating internally.

With the $500 million dedicated to growth, Circular Services will continue to build out infrastructure for recycling, reuse and other processes needed for a circular economy.

"It’s a lot of money, and we're really excited for the backing of capital," Long said. "You also need a lot of money, a lot of capital and a lot of patience and a lot of skill to build this thing out."

Long said there's a massive amount of opportunity both to scale existing operations that process packaging, as well as other materials such as organics, textiles and electronics.

For some perspective, the U.S. Environmental Protection Agency estimates that less than 15 percent of the textiles created in 2018 were recycled. Researchers from the Global E-waste Monitor reported that 17.4 percent of electronics are collected, refurbished or recycled worldwide.

And in the United States, 63.1 million tons of food waste was generated in the commercial, institutional, and residential sectors in 2018, according to EPA estimates. In California, a law aimed at organic waste reduction is encouraging landfill owners to pivot their operating models.

Shifting business models is on the agenda for Circular Services, too. It wants to disrupt the way things are done and keep developing a model where all of the materials discussed can be collected for its next life in one place. "I can now go to a municipality and say, ‘Hey, I'm not only going to help you with your plastic recycling, I'm also going to do organics, textiles, electronics, so I'm doing it all together,’ it's a much greater value proposition for the city," Long said. "And it's the type of thing I think we need to do in order to get to the scale that those materials need."

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