Julian Buckley: Can you give me a brief outline of Plastic Energy?
Carlos Monreal: Plastic Energy was incorporated in 2012. Since then we've been developing our technology. We've built a couple of industrial plants to validate the technology and incorporate different solutions to the challenges. They're operating 24/7.
Can you give me an example of problem/solution – are you looking at working with one type of plastic waste, commercial, household, does it matter?
We want to focus on plastic waste which cannot be mechanically recycled.
So source is not that important, it's more about the waste which cannot be recycled mechanically?
If something can be reused, it should be reused. If it can be mechanically recycled, then that's the way to go. If it cannot be mechanically recycled, which happens with domestic waste plastics because of colours, different layered types of plastics which have to be separated, then this is where chemical recycling fits and where we can provide a solution.
Where will this waste come from? Will you work with councils to take the waste they can't recycle mechanically?
We will get the feed stock from the municipalities. This is collected by a service company and they either sort it themselves or another company will do it for them. We need to get our feedstock from those sorting facilities. The question is whether we can fit in with the existing contracts between the municipalities and the sorting facilities. We're hoping they will be motivated to separate plastics which they have not so far, as they knew they could not be recycled.
Will those sorters need investment to put that additional sorting process in place?
Yes, most likely. As with any industry the machines are designed to do a certain job. The machines they have now are designed to fulfil the existing agreements between the counties and the operators. Those contracts can be anywhere between five and 20 years old and they were not addressing the challenge of sorting difficult to recycle plastics.
So now we have the situation where MRF recyclers will need to update their plants to increase recycling. It's not a big amount of cash, it's quite a simple process. It's basically sucking the plastics off the conveyor. But it will give the UK a tremendous opportunity to increase the percentage of recycled plastics.
Do you have a figure that Plastic Energy plans to invest in the UK, with the new technology headquarters and the recycling plants?
Yes. We have plans for multiple plants which can process 200,000 tonnes of plastics by 2020. Because this is a new industry, we want to do that in multiple countries to showcase the solution and the UK is one of the locations. We have invested close to £100m already in development of the company and we need to secure a further £250m to be able to deliver our goals. We are going to do that internally and with external sources. In the UK, we would like to start the project as soon as possible.
Will there be any government support?
We have spoken to several government departments, including DEFRA. [Financial support] would be welcome, but we have to be self-sustaining over the long run to compete with market prices. From the government point of view, it would be best to facilitate a quicker rollout of solutions to quickly increase recycling capacity in the UK. That can be temporary solutions to promote further investments in recycling.
Have you spoken with the government to this date?
Our approach has been to have operations in place before communicating anything. We are trying to see what has to happen from a government perspective to speed up solution implementation. We believe that we're getting close to understanding what will be requested but there will have to be some form of regulation. Our technology produces an output which can be used as feedstock to produce new plastics, but the first thing that has to happen is to change the regulations so chemical recycling is included in the quotas of recycling in the UK.
I didn't know that it wouldn't be included in recycling quotas.
The only country in Europe that includes that in the regulations is the Netherlands. Everyone could copy and paste that. But as it stands, if you are the manager in a county, what is your incentive to do better? Social media wants you to, packaging companies want you to do it. But if it doesn't count towards your objectives, then what's the point? It's not a criticism, maybe the government and people don't know these solutions exist, they're only theoretical. Now we have the opportunity to showcase the reality.
It's better than taking it to landfill, or exporting it so people can burn it or bury it. So there has to be some incentivise the industry to change what's in place.
Are you hopeful that the Waste Strategies announcement from DEFRA will help with widening what can be included as recycled waste?
Look at it this way, we don't have an industry. We are trying to create an industry. Nobody knows anything about us. People have been trying to perfect chemical recycling for 10 years, but never brought it to market.
It's so new, it's not on people's radar?
Yes, but it's a reality. It's not science fiction. But people don't know it exists.
Recycling Technologies is in end development of the RT7000, which produces Plaxx oil. It's similar to what you're doing?
RT is doing a great job in the UK. They're starting to communicate a potential solution. But they've only been using a pilot set up to this point, they don't have industrial plants, so that makes it difficult. If people only see pilot plants, they think the technology still has to evolve. You have to build the industrial plant and process waste to the industrial level, using possibly impure stock. Then you build a second industrial plant that you fine tune using the knowledge from the first plant. RT has a good team of people and I hope they soon have an industrial plant which will support delivery of industrial solutions to the market.
The chemical recycling business is a big enough pie for everyone in the UK to have a slice?
Of course! You have the numbers in the UK. We are exporting more than 400,000 tonnes of plastic. That costs UK taxpayers more than £600m/year. That 400,000 tonnes of plastic is more than enough to support an industry in the UK. It's a huge opportunity that has the potential to support many companies.
How does Plastic Energy's TACoil product differ in usage from other polymer products?
TACoil is produced using a patented process. Any kind of chemical recycling will produce an output with certain characteristics which have to be acceptable to the customers. If the oil only has basic specs then the customer will only pay a little for that, as they'll need to incorporate processes to use that product.
So it's a base product which has the potential to be built up to be used as an end product?
Correct. In our case, the difference is that after three years of producing more than 6m litres of what petrochemical and oil companies want, we now have a value in the product. It has been a painful process, which will take any other company the same time in operational experience. It will take them the same time to produce a product with the specs demanded by oil companies, so they will buy the product. Otherwise, it will be a very low value product which will not support the initial investment.
TACoil is a final product, reached through three years of trial and error.
You've perfected the process?
Yes, otherwise we would not be talking.
Does the process require any proprietary equipment, machinery?
We have a great team in the UK where we have the technology centre. We have 13 nationalities in the UK team and I'm very proud of what they have achieved. We have patented the process.
Lastly about TACoil, will you license the process to other recyclers?
I think it's important that development is carried out by all parties involved in plastics recycling. There's no sense in operating alone, but it will be difficult for other recycling companies to invest in one of our plants, the finance and it being a greenfield-type project. So it will be a few years before we see companies willing to invest in the technology. That's why we have to lead, we're ready to do it, get examples in different places, show the technology works.
Do you have sites in mind in the UK where you can set up operations?
We are looking at different sites and I hope to have more details in Q1 next year.
Does the quality of the plastic recyclate delivered to you affect the end product?
The beauty of our process is that we don't have to separate material by type of plastic. We don't separate by colour, or how many times the plastic has been used. For every 100kg we will convert that into 85 litres of output. That has been validated by the more than 6m litres produced.
Will the Brexit decision, whatever it may be, have any effect on your decision to invest in the UK?
No, the UK is a market that needs plastics recycling. It's time the industry gives something back, there has been a lack of education around the world about the need to recycle. The UK has some big challenges ahead, which itself is a big opportunity, to be able to avoid paying somebody else to take care of our waste. Regardless of Brexit, nothing will change. It's a great market opportunity.
What do you think of the government plan to enforce 30% recycled content in consumer packaging?
Like anybody, I'll say I don't like taxes. But we need to increase recycling. To set that 30% level, enforced by taxes and regulations, they're only mechanisms to achieve the objective, increase the amount of recycled material used in packaging.
But behind that we need to invest in the UK to increase the recycling infrastructure. Otherwise nothing will be sustainable long term, particularly if the revenue from enforcing this 30% ends up somewhere else instead of improving internal processes.