Federal funding uncertainty hits recycling projects

Dramatic federal funding cuts have affected at least two plastics recycling efforts, contributing to a major project being canceled in Pennsylvania and forcing an accelerated timeline for self-sufficiency at an Alaska composite lumber operation.

In Pennsylvania, International Recycling Group canceled plans for its Erie plastics recovery plant, according to a recent press release. 

The company said a freeze of unspecified duration on federal funding commitments was among the financial challenges that contributed to the cancellation. The U.S. Department of Energy’s Loan Programs Office had guaranteed IRG up to $182.6 million in loans last summer, more than half of the $300 million required for the project.

Other financing challenges included recently announced tariffs on materials and equipment made outside the U.S., which increased anticipated costs “substantially,” according to the release. The company also cited difficulty in securing offtake agreements for recycled plastics from manufacturers and brand owners, “many of whom are cutting back on sustainability pledges.”

“I am personally devastated after 18 years of working to bring this vision to a reality that we have failed to overcome these challenges,” said Mitch Hecht, IRG founder and CEO. 

The Erie Regional Chamber and Growth Partnership “is frustrated by the financial pressure building due to economic uncertainty at the federal level, which IRG cited as the reason to cancel plans for its Erie plastics recycling plant project,” said CEO Brandon Mendoza in a written statement. “We recognize the significant economic opportunities it could have brought to Erie. This project had significant support at the state and local level, across public and private sectors, and to see it pulled is a significant loss.”

The plant would have converted 160,000 tons per year of post-consumer plastics into about 100,000 tons per year of recycled resin, and would have produced about 20,000 tons a year of CleanRed feedstock for steelmaking furnaces. 

IRG also discontinued its newBin collection service in Erie, and the company will remove any remaining collected material and attempt to find a buyer. 

Alaska Plastic Recovery speeds up timeline for self-sufficiency

Alaska Plastic Recovery had been receiving funding from the U.S. EPA for collecting recyclable plastics to use in its Grizzly Wood composite lumber. But under the Trump administration, such funding is uncertain.

“We were using grant income to subsidize our collection efforts, and that funding is no longer available,” said CEO Patrick Simpson in an interview with Plastics Recycling Update. 

In a recent letter to customers, Simpson said, “Due to recent changes in federal funding, we now need to accelerate our timeline and achieve breakeven within the next 9 months,” instead of the originally planned 18 months. The company also is raising prices for its lumber, and sales of Grizzly Wood also will need to double in 2025 to meet sustainability goals.

Residents also will be asked to pay $5 per visit to the community collection center to reach the financial breakeven point, Simpson said. The company partners with the city of Anchorage for recycling collection. “Previously, federal grants helped offset these expenses, but without subsidies, we must explore new ways to cover these costs,” the company said in the letter.

So far the company hasn’t received negative feedback about the $5 tipping fee, Simpson said, though he expects that some people simply won’t bring in their plastics. “But the vast majority of folks will,” he said, adding that collection was suspended seasonally for the winter, so residents have amassed stockpiles of plastics to recycle. 

The company also had originally budgeted for a “rather large project,” but when the U.S. House passed a continuing resolution in March, the funding was not included, he said. “I don’t book anything until I actually see the (funding) contract,” he said. “It’s so much safer to do it that way.

“We are transitioning more quickly from a subsidized or partially subsidized business to a completely sustainable business as a result of this,” Simpson said. “I don’t think any of that is necessarily bad. I think we’re a small business, and we need to learn to adapt. Things are going to happen, whether it’s in the political climate or something in the environment.

“Instead of a gentle glide path to full sustainability, it’ll be a little bit more of an abrupt climb, but we’ll get there,” he added. 

Despite the funding loss, the company could benefit from the new administration’s emphasis on oil and gas exploration, which is key to Alaska’s economic health. Simpson’s company collects and recycles plastic thread protectors for the metal fittings used in such projects as a proposed 800-mile trans-Alaska pipeline to move natural gas from the state’s North Slope to its southern ports for export, likely to Asia. 

If the project comes to fruition, “that’s actually going to be a boost for us,” Simpson said, adding that the company is also examining ways to leverage the potential increase in activity. He said planning is especially important given that a “tremendous spike in the number of plastic thread protectors” they can collect could last less than four years, if the political climate changes and reduces oilfield activity. 

The company wants to be able to clean and store additional volumes to help offset potential changes in political climate that could curb the supply of thread protectors – and hopefully help the company manage another significant shift, he said.  

As for what’s ahead, “no one has a crystal ball that good,” Simpson said. “But for today and for right now, we’re going to figure it out. We think that’s a good plan, and I think we’re going to get through this.

“Maybe we’re in a better spot than we would have been otherwise,” he added. “Who knows? So I’m going to remain optimistic about it.