The Infrastructure Investment and Jobs Act, Plus Plastics Recycling
On November 15th, 2021, US President Joe Biden finally signed his $1.2 trillion infrastructure plan, known as the Infrastructure Investment and Jobs Act (IIJA), into law. Biden's John Hancock-ing of the IIJA marked the end of a multi-month-long escapade of political wrangling, one-upmanship, and party infighting.
Fortunately for readers of this blog, we'll give an overview of how the US government may apply the IIJA to the broader American economy and dedicate absolutely no time, not a single word, to the political dealings that passing the bill entailed. Then, we'll review how the IIJA may affect the plastics recycling industry.
Because a total of 31 Republican Congress people voted for the Democratic-party-created IIJA, many also call it the Bi-Partisan Infrastructure bill. However, readers should not confuse the IIJA with Biden's "Build Back Better" proposal, an infrastructure spending package more than double the size of the IIJA, that ultimately failed in the US senate. Thus, we'll devote this blog to an overview of the IIJA only.
A BRIEF OVERVIEW OF THE INFRASTRUCTURE AND INVESTMENT JOBS ACT
One of the most significant bipartisan points of agreement was that both sides agreed America's entire infrastructure needed help. The most recent report card from the American Society of Civil Engineers (ASCE), which gave current US infrastructure a non-enviable grade of C-, aptly sums up the drastic need for an infrastructure overhaul. Several infrastructure-component categories comprise the ASCE's rubric—these include infrastructure's ability to meet capacity demand, its current condition, future funding requirements for maintenance and innovation, its operability and resilience, and its levels of public safety.
The fact that 12 legislators from the conservative side of the aisle were willing to support this bill speaks volumes considering the high levels of political polarization in America today. One resplendent point of agreement between the Democrat and Republican sides is the consensus that US Infrastructure needs an overhaul. So, what exactly does the IIJA contain that will most likely have a dramatic effect on US Infrastructure?
The US IIJA will infuse the American economy with $1.2 trillion over the next decade, making it the most significant expenditure on infrastructure in the federal government's 238-year life. Below is a brief overview of the amount of money allocated to each infrastructure sector, as well as an idea of what legislators hope to achieve.
Infrastructure Investment and Jobs Act Fund Allocation
$230 Billion: Roads, Highways, Rail, and Transit
Generations of neglect have hampered America's vast road, highway, and rail networks. Indeed, the above ASCE report notes that almost half of all American roads languish in a stagnant state of disrepair. For businesses, poor roads impede product delivery times, which hampers efficiency. However, the ASCE confirms that IIJA funding will help bring Americas' roads and bridges up to par. Furthermore, the IIJA provides capital to upgrade America's passenger and cargo rail networks. This injection of funding could potentially increase the efficiency at which goods flow between suppliers and buyers. Finally, this portion of the act also provides funds for electric busses and a national charging station network for electric cars.
$43 Billion for Maritime Ports and Airports
In what could be a potential remedy to the shipping crisis and a boost to supply chain efficiency, the IIJA allocates substantial funds to maritime ports and airports. Seaports could use this money to upgrade existing cranes to higher-tech ones and apply more AI software and systems to enhance berthing procedures. Thus, the potential implications that upgraded seaports could have on the plastic recycling industry and the commodities trade are substantial.
$146 Billion for Climate Change, Environment, and Cybersecurity
A good chunk of this allocation will prepare certain regions to absorb climate change's effects. For example, regions suffering from ongoing wildfires, coastal erosion, flooding, and drought will receive funds so that human settlement can endure the future's guaranteed climate-change effects. Notably, the IIJA allocates a sizeable financial sum to upgrading the electrical grid and securing it against bad-cyber actors.
Interestingly, this portion of the IIJA provides over $20 billion for protecting the environment. This allocation will most likely affect the recycling industry—more on this BELOW.
$131 Billion for Public Health and Safety
All levels of government have failed to provide a large number of citizens with safe drinking water. The IIJA aims to fix this by removing alarmingly-still-in-use lead piping and replacing it with safer piping. There will also be money allocated for cleaning up other chemicals that currently taint some water supplies.
This portion of the IIJA will also extend broadband access to communities not currently covered by existing broadband networks. Expanding broadband access should give people greater connectivity to the world.
Math
If you added up the above numbers, you probably said, "Wait, that only came to $550 billion. I thought the IIJA was $1.2 trillion. What's going on?"
Yes, the IIJA does have a total value of $1.2 trillion. The nuance is this: $650 billion of this $1.2 trillion is the annual amount always allocated for infrastructure maintenance, so this $550 billion is new spending. How much potential does this new spending have to affect the recycling industry positively?
Infrastructure Investment and Jobs Act and the Recycling Industry
When one glances at the above allotments, he or she will probably guess that government grants intended to bolster the recycling industry fall under the $146 billion allotment that includes climate change and environment. This is the first place where the US government will make funds available for those involved in the recycling industry.
Out of that $146 billion, the federal government will make about $350 million (0.002%) available for the recycling industry. Of this $350 million, about 80% will go to funding recycling infrastructure under the Save Our Seas Act 2.0. The remaining 30% will educate the public about recycling under the RECYCLE Act. The latter aims to make it easier for citizens to contribute to the closed-loop economy. At the same time, the former will implement methods to prevent US-generated plastic waste from entering the ocean. How might this allocation of funds pan out in reality?
Save Our Seas 2.0
Let's take a closer look at the Save Our Seas Act and its goals. Like the IIJA, a bipartisan majority passed the Save Our Seas Act in 2018 and 2020. Thus, the law's latest iteration is Save our Seas Act 2.0, passed in 2020. According to the official government news release, Save Our Seas 2.0 aims to accomplish a few crucial things to address the plastics pollution conundrum.
First, Save Our Seas 2.0 sets out to accomplish what the act's name implies: to rescue the oceans from plastic pollution. The act created a non-profit agency called the Marine Debris Foundation, which serves as both a think-tank and a driver of innovation. Functioning as a think tank, it will work with state, tribal, and federal governments to determine the optimal way to clean up existing plastic waste and prevent more plastic waste from entering the oceans. The Foundation will drive innovation by awarding the “Genius Prize” to individuals or groups who conceive methods to solve plastic pollution issues effectively. Detailed information about the Genius Prize can be found here.
Taking a foreign-policy angle, Save Our Seas 2.0 encourages the federal government to reach marine-plastic-pollution-preventing agreements with other countries. Oceans obviously know no boarders because they touch the shores of multiple countries. Oceans also provide food for billions of humans and host complex zoological ecosystems, and therefore have extreme implications for humanity's future. Thus, governments need to work together to solve the complexities that plastic pollution brings to marine ecosystems, and this section of Save Our Seas 2.0 sets out to do just that.
Finally, and probably most applicable for the $275 million, is the part of the act dedicated to improving domestic infrastructure to prevent plastic debris from entering the oceans. Under the act, the government could theoretically grant money to recycling businesses and those involved in the circular economy.
The RECYCLE Act
Part of the IIJA made the RECYCLE act, first introduced as the RECYCLE bill in Congress in early 2020, into law. The RECYCLE act tasks the Environmental Protection Agency (EPA) with educating Americans about recycling best practices. The RECYCLE act aims to improve scrap feedstock quality. Scrap is the raw material for plastic recycling, and it flows from American households to processors. Through knowledge dispersed from the RECYCLE act, Americans can make better decisions in sorting their plastics, providing processors with higher-quality feedstock, potentially resulting in more plastics being kept out of the ecosystem, and higher quality raw material going to processors.
Water
Remember that $131 billion meant to fund replacing America's rat's nest of toxic-lead piping? Herein lies major potential for recycled-plastics applications. Part of this web of replacement piping could come from recycled HDPE. However, because about seven other materials are used for water-line piping, it's hard to say how much HDPE, specifically recycled HDPE, will be used to make new water lines.
OUR PREDICTIONS
While the fact that both sides of the political aisle converged and ostensibly agreed that the US needs an infrastructure upgrade, we see the IIJA as merely an-early stage stepping stone rather than a radically transformative mandate to a more sustainable future.
The Past Effects of Recycling Education
Federal and state governments have educated K-12 students about reducing, reusing, and recycling for well over thirty years. Unfortunately, according to the most recent EPA data, less than 10% of all plastic waste enters into the closed-loop system; in fact, rates of recycling have significantly lost momentum since 2015. More than 16% of recyclable plastic becomes converted energy, while over 75% of this valuable commodity gets wasted in landfills. When looking at these past results, one easily comes to the conclusion that recycling education reached it zenith years ago.
Unfortunately, humanity’s reliance on plastic is indispensable. There’s no getting away from plastic use: plastics keep food fresh, serve as primary packaging for all kinds of goods, and have an almost limitless array of other life-enhancing applications. Although practicing personal responsibility and refraining from purchasing single-use bottles can drastically reduce the amount of plastic in the waste stream, humanity will always use plastics. Therefore, citizens and governments must make a Herculean effort to keep plastics out of the oceans and ensure the vast majority of all plastic waste arrives in the closed loop system.
Suggestions
Some members of congress have introduced a bill called the Break Free from Plastic Pollution Act. A few notable things the bill advocates is for a national bottle refund scheme and a moratorium on building new virgin-plastic manufacturing plants. Because of the later point, passing this bill into law will be incredibly daunting. So, we believe that legislators need to think outside the box when determining methods to solve the plastics pollution crisis. We thus advocate these points below.
1. Provide Tax Incentives for New Businesses Involved in the Circular Economy – This is obviously a no-brainer. Brand new businesses that pelletize, sort, engage in chemical recycling, produce bio-degradable plastic products, or innovate new collection methods would all benefit from tax-incentive windfalls.
2. Provide Federal Grants and Subsidies to New Technologies – Ultimately, the dream idea would be to take the almost $6 trillion given each year in subsidies, tax breaks, and environmental costs to the fossil fuel industry and transfer it to fledging businesses and out-side-the-box-thinking innovators involved in the circular economy. Even a direct injection of the actual amount of money that goes to the fossil fuel industry, about $500 billion, could make a significant difference. Recipients wouldn’t be just traditional recycling plant start-ups, such as shredders and pelletizers. Here, legislators and government officials need to seriously embrace chemical recycling, which will definitely play a role in the future of waste management. Chemical recycling has major potential.
What is chemical recycling? In a nutshell, chemical recycling plants can receive ALL forms of plastics as inputs (you heard it right—PP, PET, HDPE, LDPE, ABS, PVB, and more) and then break them down to their original hydrocarbon form, and build them back up to plastics. While the recovery rate isn’t as high as traditional recycling, and the process requires substantial energy, chemical recycling technology shows particularly mammoth potential to solve the plastic waste conundrum.
Additionally, government officials and industry leaders must also continue to support biodegradable plastics already available on the market. Some single-use plastic items, such as straws, are so ubiquitous that ensuring all of them reach the closed-loop system amounts to a Sisyphean Task. Substituting biopolymers for straw applications would constitute a leap in the right direction. We estimate that the vast majority of consumers would prefer straws that compost like banana peels over plastic ones that tragically choke sea turtles.
The United States still has many tasks to tackle before at least 51% of post-consumer plastics make it into the closed-loop system. While the recycling industry is quite strong in the US, there is lots of room for improvement, and even more room for thinking outside the box and innovating. Luckily, innovation has traditionally been a key strength of American business culture.
Island Leaf Commodities has close ties to American businesses involved in plastics recycling. Additionally, we’re leading the charge toward the usage of biodegradable plastics, as we offer an innovative biodegradable polymer made from bamboo. The future is bright with Island Leaf!
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