Giving credit where due: finding more value in plastic

There is a big discussion happening right now regarding the plastic waste crisis and the emerging plastic credit market.  It has become clear that the current efforts and funding from government and philanthropy cannot match the scale of the World’s plastic waste problem.  The plastic credit mechanism will bring private sector capital to help scale recovery and recycling efforts, which should have an immediate impact on the crisis. There are many questions being asked about this programme.  How do these credits work?  What are the risks and benefits?  Is it right for our company?  This article will explain how a plastic credit is generated and verified, what benefits can be brought to your company, and whether this can be a permanent fix for plastic waste.

What is a Plastic Credit?

A plastic credit is an environmental commodity that represents the collection or recycling of one tonne of plastic material, which can be transferred between organizations.  Credits are created when one entity, often referred to as the project developer, voluntarily implements practices that collect or recycle plastic waste. The recoveries generated can then be claimed by another entity.  Without these projects, this plastic would not be removed from the environment, nor would it re-enter a production stream that uses recycled plastic.

Companies who purchase plastic credits can use them to address a portion of their plastic footprint while supporting plastic waste recovery efforts.  This allows them to offset plastic in their business against the recovery of plastic waste in the environment or recycling it into a production loop.

Most plastic credit projects also address other interrelated problems, such as: ecosystem degradation, inadequate waste management, environmental justice, biodiversity loss, human health, and economic risks.  These projects also typically support a menu of UN Sustainable Development Goals, including No Poverty, Decent Work and Economic Growth, Industry Innovations and Infrastructure, Sustainable Cities and Communities, Climate Action, Life Below Water, and Partnerships for Goals.

In creating and issuing plastic credits, there should be rigorous processes in place and a standard to work from that is independent of the actual project to ensure that the plastic recovery and recycling is:

Additional - recovery or recycling that otherwise would not occur,

• Approved and individually-tracked on an independent protocol registry, such as Verra or the Ocean Bound Plastic Certification,
• Third-party audited & verified,
• Measured, recorded & tracked, and
• Assessed & documented for project social & environmental co-benefits.

“Using a public, independent, third-party verified standard means that all actors (the standard owner, the certification company, and the project issuing the credits) are distinct, non-related organizations, and that all information is publicly available,” says Adriana Amico, Co-founder of Zero Plastic Oceans. “This guarantees total transparency, absence of conflict of interest, and certainty of compliance.”

Plastic credits are tradable instruments and, once issued, prices are set and then change through demand and supply forces. A project that provides greater direct environmental benefits should be valued higher than a credit coming from a lower impact source. Some of these projects have allowed local women to become leaders in their community and own their own businesses, all while providing education on waste management.  These operations should not exploit labour but, rather, help those affected by plastic waste, which is often generated from developed countries yet finds its way to more impoverished communities, who likely did not create the material in the first place.

There are different types of projects that can generate plastic credits. Some examples are:

• Coastal and waterway debris removal by hand,
• Open ocean collection by boat,
• Debris traps set in rivers,
• Microplastic filtration collection, and
• Recycling materials collected from the natural environment, post-consumer & industrial waste, urban dumping, and unmanaged landfills.

There are a lot of factors that determine the pricing of plastic credits.  For instance, higher costs in the recovery of plastic from the ocean compared to the picking of plastic waste from landfills will be reflected in the pricing of those credits.  To some buyers, credits from a specific geography, polymer, or source that aligns with a company's operations are worth a premium. Meanwhile, projects that support more social progress in health, equality, employment, and environmental justice should have these attributes valued in the price of the credit.  Likewise, projects that pay workers a higher standard wage or provide healthcare benefits should reflect that added value.

What are the Benefits?

When considering plastic credits as an option, a business must first understand what is to be gained by supporting plastic waste projects and the co-benefits they bring to the local communities and environment.

How a company selects a plastic credit project to support depends on its plastic footprint profile and sustainability needs.  For instance, a plastic resin producer, a computer manufacturer, and a clothing retailer all have different uses for plastic in their business; each will have a different relationship with plastic and will require different ways to implement credits.  Depending on organizational goals and desired outcomes, the benefit options may vary but can include the following:

• Offsetting a product line, a specific amount, or the geography of a plastic footprint
• Offsetting a voluntary commitment or Extended Producer Responsibility obligation for plastic recovery or recycling
• Providing content for ESG/CSR/sustainability stakeholder communications
• Lowering the cost of recycling for a vendor
• Lowering the cost of recovering plastics for a materials supplier
• Certifying materials as being Ocean or Ocean-bound plastic
• Supporting projects that are solving UN SDG goal-aligned social and environmental challenges.

In many cases, environmental justice is central to the plastic waste crisis. The most acute plastic waste problems occur in the developing parts of the world in communities least equipped to deal with it. Therefore, successful plastic projects also provide many social and environmental co-benefits, such as providing above-average paying jobs for collection workers, providing new employment opportunities for women, promoting education, improving water quality and community health, protecting food supplies, and enhancing biodiversity.

The World's First Plastic Credit

ClimeCo, a leader in the management and development of environmental commodities, has partnered with TONTOTON, a plastic project developer in Vietnam that removes no-value plastic from the environment to generate the world's first plastic credits through an independent standard and 3rd party verification auditing process.  These credits have achieved the Ocean Bound Plastic Neutrality Certification, an independent protocol of French-based NGO Zero Plastic Oceans, and have been 3rd-party verified and audited by leading global certification specialist Control Union Certifications.

"The Ocean Bound Plastic Neutrality Certification is focused on ocean-bound plastic that is non-commercially recyclable," says Vincent Decap, Co-founder Zero Plastic Oceans, "which means abandoned plastic waste that nobody would ever collect since they have no market value."  The TONTOTON project had to adhere to the protocol requirement set by Zero Plastic Oceans and audited by Control Union Certifications, as will other projects seeking to obtain the Ocean Bound Plastic Certification. The plastic handling operations utilize a control and tracking system with RFID tags, GPS, and image recording on collected plastic during warehousing and transportation to monitor and record movement and processing.

TONTOTON projects recover post-consumer, non-recyclable, ocean-bound plastic waste and co-processes it into AFRM (Alternative Fuels & Raw Materials), which is being used as a replacement for coal at a local manufacturing site to reduce the site’s GHG emissions.  TONTOTON’s program is built on economic benefits for all parties, from the informal waste pickers to the funding companies.  They realized the need to create a new market for orphan plastic (non-recyclable plastics) to create environmental impact. By giving market value to these materials, TONTOTON can initiate a process in which waste pickers collect this orphan plastic in parallel with recyclable plastic, and manufacturing sites can use it to provide an alternative energy source, reduce CO2 emissions, and avoid landfill disposal.

"It all started with a product I saw with an environmental claim related to ocean plastic," says Barak Ekshtein, Founder and CEO of TONTOTON. "I researched the source of the material in-depth, and it became clear to me that there is no truth in the claim. This led me to think about how to develop a product that will have a proven environmental impact.  I learned that, while recyclable plastic is collected in very high percentages, non-recyclable plastic is not collected efficiently and is a major pollution source. I realized that I could create a proven environmental effect by focusing on collecting and treating non-recyclable plastics and, at the same time, helping companies reduce their environmental footprint.  And that the most effective way to do this is by a plastic credit system."

This project provides significant co-benefits for economically stressed local workers who voluntarily gather waste.  Under this program, these workers, who are primarily female, will receive additional revenue and personal protective equipment, and those who are not already covered will be offered primary health insurance.  The project also strives to provide a toolbox and guidance to local governments to build sustainable waste management infrastructure in places that do not exist for non-recyclable orphan plastic.

"We expect the TONTOTON project to recover and repurpose approximately 600 tonnes of ocean bound plastic waste," says Ekshtein.  "This will be possible because of companies purchasing their issued plastic credits.  The proceeds will help to start expansion to additional areas."  Currently, TONTOTON has 3 locations in South Vietnam, with expansion plans into North Vietnam.

The Future of Plastic Credits

There are some concerns about plastic credits that are being discussed out in the marketplace.  For instance, can companies find projects in the general location of their businesses?  Companies are already interested in supporting local projects; however, conveniently located projects near their operations are limited.  As the market develops and expands, companies will have more options to use credits to match footprint for geography and polymer types.

Another concern is: will there be greenwashing?  To avoid this, companies who use plastic credits should be as specific as possible on what they report.  They should give a precise explanation of what their use and support through plastic credits will achieve.

Like carbon offsets, buying plastic credits should not replace a long-term circular business model, but they will play a role in transitioning to a circular economy. For companies, credits can be part of an overall program to redesign how their business uses plastic in operations and their products. The ideal solution for future plastic waste is a closed-loop system, a plastic recycling system that is a full-scale, comprehensive, and robust system that will remove the need to produce virgin plastic.  The emerging plastic credit market can be a powerful bridge that can be used while working toward a close-loop system, deploying funds to front-line projects, like TONTOTON, to create circular economies and restore ecosystems.