The U.S. Department of Energy plans to loan up to $182.6 million to International Recycling Group in Erie, Pennsylvania, the agency announced Tuesday. The loan, which both parties plan to finalize in the coming months, will support what is expected to be one of the largest plastic recycling facilities in the U.S.
The project was first announced in 2020 and has earned the support of local and state-level backers. In 2022, it earned a $509,000 grant from the state to construct a rail siding as well as a $5 million redevelopment grant.
As outlined in the DOE's announcement, the project would take in 160,000 tons of mixed plastic waste per year. The facility would pull out PET, HDPE and polypropylene, generating an estimated 100,000 tons of mechanically recycled plastic flake. The rest would be turned into “Clean Red,” a proprietary product that can be used to replace coal in the steelmaking process. IRG is already under contract with a steelmaking plant in Northwest Indiana, which plans to construct an injection system to use the Clean Red material.
This project joins two previous recycling projects from Redwood Materials and Li-Cycle that have received the support of the DOE's Loan Programs Office, which is tasked with disbursing billions of dollars in funding to boost the American manufacturing and energy sectors. The loans are targeted toward projects that use innovative technology, reduce greenhouse gas emissions and need at least $100 million in financing, which are rare in the world of plastic recycling, according to Mitch Hecht, co-founder and CEO of IRG.
"They thought we were a great candidate," Hecht said. "It's a game-changer in terms of being able to access capital."
Hecht said the IRG project will cost over $300 million in total. He now hopes to receive the remaining funding from private sources by the end of the year. Assuming IRG meets that target, the project’s construction could begin next year and operations could begin in the second half of 2026. IRG has already acquired the site of the plant, a now-shuttered paper mill in a low-income section of Erie that deals with relatively high levels of certain pollutants, according to U.S. EPA data.
DOE touted the project as part of the Biden administration's Justice40 pledge, which commits federal agencies to direct 40% of investment from certain programs toward disadvantaged communities overburdened by pollution.
Jigar Shah, who leads the Loan Programs Office, said the project fits the criteria by offering jobs and an economic boost to the city of Erie. He also highlighted the project as a chance for the administration to act on plastic waste, supplementing commitments to reduce the use of plastic in the federal government.
“We're excited about this process because it converts plastics pollution that people work hard to sort at the curb, and ... it helps to decarbonize our steel industry,” Shah said.
IRG signed a community benefits agreement with the Urban Erie Community Development Corporation after receiving pushback from residents and environmental groups centered around plastic pollution. The facility has been scaled down from its initial plans after those groups expressed concerns about the amount of truck traffic required. IRG plans to hire more than 200 employees for the facility once it’s operational, with a commitment to prioritizing local workers at prevailing wages.
Gary Horton, who leads the local chapter of the NAACP and is involved with UECDC, said he is supportive of the project and the jobs it will bring to his community. He said he was also glad the federal government was using his tax dollars to fund infrastructure to address plastic waste.
"It's a powerful antidote to the chronic disinvestment that has plagued our community," Horton said.
Shah said a community benefits agreement was a good sign for a project like IRG’s. Because the DOE is offering loans, not grants, it expects projects to have a reasonable chance of repayment. In Shah’s view, projects that take the time to engage with their community and come up with local support are more likely to succeed and more deserving of taxpayer dollars.
“You're going to have impacts,” Shah said. “But making sure that those impacts are discussed with the community and making sure the community has signed up to the positives and the negatives, I think, is critical as we continue to do big things for the country.”
