Q&A: Closed Loop Partners CFO talks China and extracting value from the supply chain
For about two years, the Closed Loop Partners have worked with advisory boards to find and fund projects and ventures that seek to move the U.S. — and eventually the world — to a more circular economy. Currently, the partners look at three areas of the supply chain: collections, sortation and processing of material. According to Margot Kane, the chief investment and financial officer for the Partners, they have about $30 million committed and about $26 million "out the door" for projects.
Kane spoke at WASTECON in Baltimore last week on a panel about marine litter. Later, Waste Dive sat down with her to talk about the global movement toward a circular economy and what challenges might be in the way.
This conversation has been edited for clarity and brevity.
WASTE DIVE: In those areas that you look at — collections, sortation, processing — what kinds of projects are you typically targeting?
MARGOT KANE: They all need targeted dollars, but for different problems. In the sortation world, in the MRF world, that's a fairly mature industry, you've got extremely sophisticated companies. These guys have access to big capital. Their problem is not money, per se. But they're operating on aging infrastructure that hasn't been optimally for the evolving bale. Their yields are suffering. Their output is suffering. If they could operate at maximum efficiency, because of better technology, better processing operations, and probably better collection processes, they would be in fine form.
"The concept of loading your trash in the back haul, because it's cheaper than tipping it into a landfill, that mentality has got to go."
Chief Investment and Financial Officer, Closed Loop Partners
The advanced technologies and manufacturing side needs a ton of attention. It needs early-stage capital, which is one of the reasons we launched our venture fund. None of these technologies are operating at a commercial scale. They desperately need investors that are focused on business models that are taking reclaimed or recovered materials and turning them into something higher value.
What about in processing specifically? What should the industry be looking at there?
KANE: Processing, it's the commercialization of the technologies. Especially in chemical recycling opportunities. There's almost no early-stage investors that are focused on this exclusively, which is why we launched the ventures fund. New technology and approaches to material recovery within a supply to chain, to circular supply chains. You can't just develop something in a lab and think, like, you've solved a problem.
What sorts of things should the industry be looking at now, to prepare for the next five or six years?
KANE: I would pay a lot of attention to cities that are trying to recover value from organics and get that out of the waste stream. That will radically change the incentives and the levers at hand, in regard to waste collection and volumes. It will upend some business models, and it will create new ones. That's something I'd pay a lot of attention to. The growth of seeing organics as a resource, instead of as a waste stream.
[And] I don't think the National Sword activity in China is a one-off. The concept of shipping our trash to other countries or across state lines ... Let's own our own waste and figure out what to do with it on site. I think you'll get a lot of creativity and innovation around that. The concept of loading your trash in the back haul, because it's cheaper than tipping it into a landfill, that mentality has got to go. And it will. It's only a matter of time. Land is a finite resource. International borders are going to become increasingly sensitive to this, especially with the marine litter problem.
I'm glad you mentioned China, because that's a topic we've been spending a lot of time with. How might China's new import restrictions impact efforts to close the loop and move to a more circular global economy?
KANE: I think there will be multiple impacts. I think there's going to be some short-term economic pain for people who are running businesses to the best of their ability, and they've got really good margins, and their ability to unload their mixed paper was a really big part of making that work. And these are peofple who are doing their best to reclaim and recover material, and that business model is just really tough right now. We're going to see some of those businesses really suffer.
On the flip side, I think, I hope one of the things that will come out of this is an [improved] quality on bale yield. People now pay more attention to extracting as much value as they can, per ton, of whatever it is they're processing, getting the highest quality so they can get the highest price, which ultimately helps the entire supply chain. The better the quality the stuff, the more that actually gets reused, the less that actually ends up going to the landfill.
I know right now you're domestically focused, but there's also some interest in expanding globally, right? Where would that be focused?
KANE: We have interest in some areas in Latin America, but the drive is southeast Asia, because that's where most of that marine plastic debris is originating. We want to be instrumental in stemming that tide. But of course, integrated waste management is a problem globally.
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