In a move that surprised some stakeholders, a revised California budget proposal includes more than $200 million for beverage container recycling, to help stabilize markets, improve material quality and expand redemption access.
CalRecycle’s proposal in the revised budget includes $75 million to extend the Plastic Market Development Payment (PMDP) program, which helps protect plastic reclaimers in the state from market volatility and competition from imported and virgin resin.
The proposal currently includes:
- An increase of $75 million from the Beverage Container Recycling Fund (BCRF) to expand in-state manufacturing for recycled products, $60 million of which goes to extend the Plastic Market Development Payment Program through July 1, 2029.
- One-time $100 million from the BCRF to provide Beverage Container Quality Infrastructure grants to improve sorting capacity for CRV materials.
- A one-time increase of $50 million from the BCRF to support rural programs that increase participation and promote equitable access to California Redemption Value (CRV) refunds.
“California is trying to stabilize and modernize a system that is handling more material, more complexity and higher public expectations than ever before,” said Heidi Sanborn, executive director and CEO of the National Stewardship Action Council (NSAC).
“Investments in redemption access, processing capacity and end market stability are critical if the state wants to ensure consumers can redeem containers conveniently and materials collected through the system become new products again.”
She added that the state’s long-term focus should remain on both recovery rates and circular outcomes.
Kate Bailey, chief policy officer at the Association of Plastic Recyclers (APR), said: “This is a very timely and significant commitment to PET recycling markets at a very challenging time.”
APR owns Resource Recycling, Inc., publisher of Plastics Recycling Update.
‘A half step in the right direction’
For close to a year, market players have been trying to get the legislature to extend the PMDP and increase the subsidy, said Mark Murray, executive director of Californians Against Waste (CAW).
Even so, the inclusions in the revised budget were unexpected, amid what Murray characterized as mixed messages from CalRecycle.
“The department now is basically saying completely the opposite of what they’ve been saying for the last two years,” Murray said of the agency’s current support for extending the PMDP. But “it’s very possible that CalRecycle was just not able to say anything” given the broader landscape of conservative government spending, before Gov. Gavin Newsom released the revised budget May 14, he added.
At press time, CalRecycle had not responded to a request for comment.
Despite optimism about the surprise proposal for more funding, several stakeholders emphasized that it was merely a starting point for constructing effective market supports.
The CalRecycle proposal is “a half step in the right direction” to start talks with the state legislature, Murray said, pointing to the distinction between grant funding and market incentives.
He said grants are better suited for areas lacking recycling infrastructure, and that providing market-based incentives for collection, processing and manufacturing is the industry-preferred approach.
Murray added that beverage industry recyclers and CAW environmentalists “are uniformly opposed to giving CalRecycle increased grant authority.”
“CalRecycle just does not have the market expertise or judgment to make effective grants in a recycling infrastructure that’s already pretty mature,” he said. “California has a robust infrastructure that is struggling. You don’t support that infrastructure by convening a beauty pageant to see who can enter the marketplace.”
Sally Houghton, executive director of the PET Recycling Corporation of California (PRCC), said she was pleased CalRecycle took the initiative to show support for the industry. But she said PRCC also would prefer that more of the proposed increases go to the PMDP itself than to grant funding.
“Reclaimers need the money now, and they need stability in the industry, and they need certainty about what the PMDP payments will be on a regular basis rather than having to apply for a grant,” Houghton said. “I’m not anti-grant money, but I don’t think that’s what is needed at the moment. How can you invest when you don’t know what your future is?”
Paul Bahou, president at PET reclaimer Global Plastics Recycling in Southern California, said the PMDP has been a great and necessary program, but the CRV conversation must now shift from whether the market needs institutionalized support for PET reclaiming, to the level of that support.
“In my opinion, just returning to the old program of $150/ton doesn’t cut it, because at that funding level, Evergreen and rPlanet Earth both closed,” Bahou said. “I am heartened to see that people are starting to move as if this thing is going to happen, but my hope is that we get the $300/ton we’re requesting in the bill.”
Murray also cited insufficient PMDP levels as contributing to California reclaimer failures last year, amid competition for curbside, or B-grade, PET bales, which received an “arbitrary” lower PMDP rate than for deposit bottle, or A-grade, bales.
Bahou added, “No one’s been investing in their businesses, because it’s been so unsteady and uncertain, so having a robust market development payment for PET processing will go a long way in ensuring that we have a closed loop system that’s going to be even able to handle all of these new regulations coming down the pipeline” with minimum recycled content mandates and SB 54 regulations. “You’re going to need people to actually process these recyclables. You can’t take it for granted.”
What’s next
The state Assembly subcommittee met May 19 to hear comments and to start shaping the final bill. The state Senate subcommittee meeting is scheduled for May 21.
The legislature will negotiate a final 2026-2027 budget, with the state Senate and Assembly reconciling their own frameworks with the governor’s revised proposal. Lawmakers have until June 15 to pass a budget bill to send to Newsom.
In addition, the Senate Environmental Quality Committee may hold a hearing this summer on AB 1149, which was recently amended on the Senate floor to focus on Plastic Market Development Payments for in-state PET recyclers.
The bill:
- Increases the payment from $150/ton to $300/ton for reclaimers that process PET collected in California and is washed and processed into flake, pellet, or sheet, and made available for manufacturing within the state.
- Caps annual spending at $35 million for these payments.
- Extends the program to July 1, 2029
- Takes effect as soon as Newsom signs it, rather than waiting for the standard start date of Jan. 1, and applies to PET collected from Oct. 1, 2025.
