Glass Packaging Institute launching MRF equipment leasing program, eyeing Midwest and Southeast

Dive Brief:

The Glass Packaging Institute plans to launch a leasing program to help MRFs finance upgrades to their glass sorting and cleaning equipment, as Resource Recycling initially reported.
The program will provide upfront funding for equipment purchases a MRF can repay over time with the revenue it generates from selling additional glass throughput. The goals are to help MRFs invest in glass equipment sooner than they otherwise would and address curbside glass contamination levels, which GPI President Scott DeFife estimates range from 25% to 50%.
GPI is looking for regional opportunities to facilitate deals among partners, DeFife said. It’s initially targeting operators in regions such as the Midwest and Southeast that have unutilized processing capacity and could handle thousands of tons of additional glass.

Dive Insight:

The creative financing program supports GPI’s work to help recyclers recover more glass and get it back into the supply chain as feedstock for end markets. The industry aims to increase the glass recycling rate from 30% in 2018 to 50% by 2030.

Additional glass-handling equipment at MRFs increases material quality by reducing contamination, which is a leading problem for single-stream-program glass, DeFife said.

“While a majority of the glass that we get comes from bottle bill states, a majority of the glass that's collected is in single stream — and the yield we're getting from single-stream recycling is far lower than the yield that you get from [bottle bill programs],” he said. “A lot of MRFs don't even have any basic glass cleaning equipment in the first place. We need to get them to do that.”

Like recyclers of some other commodities, such as plastics, glass recyclers currently face challenges with securing an adequate supply of quality recyclable material. Both industry groups and private businesses have launched or expanded specialty collection or drop-off programs for glass in recent years, many of which originate at the local level, to help fill the gap.

“Industry — whether it's the bottle industry or the fiberglass industry or the aggregate industry — is consuming all of the glass that we can get our hands on; the glass that we can't get our hands on is what we need to find,” DeFife said.

Many bottle bill states are on the West Coast and in the Northeast, so those areas have a decent supply of clean glass. The financing program could especially benefit regions where gaps exist, such as the Midwest, where Michigan and Iowa are the lone bottle bill states, and the Southeast.

“We have way more plants in the Midwest than can get serviced by just the Michigan and the Iowa bottle bill glass,” DeFife said.

Getting the right financing model for the right equipment in the right places is a priority. Some recycling facility investment opportunities that other groups are offering are focused on adding robotics for positive sorting, but that machinery tends not to be the best option for handling glass, DeFife said. MRFs often handle glass as a negatively sorted material, so it needs to be treated differently than baled commodities, he said.

GPI will play matchmaker for the financing deals as opposed to simply handing out funding, he said.

“Because of the nature of the way the financing works, especially on the private-sector side, the leaseback arrangement is going to take a purchasing agreement to make sure the loop is closed and the equipment is financed over time,” DeFife said. “It’s not going to be the kind of thing where we say, ‘Hey, here’s a pot of money, and anybody who wants to apply should do that.’”

DeFife anticipates that GPI’s financing assistance initiative could work for either muncipally-owned or privately-owned MRFs, but the deal executions likely would differ. For example, making grants available could be a more appropriate mode for municipally-owned MRFs, whereas a leaseback system works for privately-owned facilities.

GPI’s program is similar to one the Can Manufacturers Institute launched earlier this summer, through which MRFs can receive funding to lease capturing equipment and pay it off with money they generate from the additional cans they capture with the new equipment. GPI is already working on its first program partnership, which it hopes to launch before the end of this year.