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Lakeshore Recycling Services

Closed Loop Fund’s First $20M Recycling Investments Show ‘Recycling Makes Economic Sense’

Lakeshore Recycling ServicesLakeshore Recycling System’s Heartland single-stream recycling facility is already generating a profit, just six months after opening, and is expected to divert more than 1 million tons of material from landfills by 2025, according to a Closed Loop Fund report.

The investment fund that finances recycling infrastructure and technologies announced its $1.5 million investment in Lakeshore Recycling Systems in March, bringing a high-tech material recovery facility to Chicago.

The Closed Loop Fund has amassed millions of dollars from leading companies including 3M, Coca-Cola, PepsiCo and Walmart and it invests in the form of low-interest loans to companies and zero-interest loans to cities. Its goal is to invest more than $500 million in US recycling projects by 2020.

According to its first public progress report, released today, the fund has invested nearly $20 million in nine projects to date, and this has generated more than $50 million in co-investment from municipalities, banks and impact investors.

The report says investing in the recycling industry yields environmental and financial returns for cities, companies and private investors, despite low commodities prices.

“We are seeing municipalities and private companies — especially those with integrated models — generate savings, revenues, and profit as a result of improving recycling infrastructure,” said Closed Loop Partners managing partner Ron Gonen. “And so far, each investment is paying back as expected.”

Since the fund first opened its application process for US corporations and municipalities in October 2014, it has received more than 150 inquiries for more than $350 million in financing, the report says.

Four of its “live” projects have already diverted about 50,000 tons of material, avoiding the equivalent of 112,000 metric tons of GHG emissions. In addition to the Lakeshore Recycling System investment, the Closed Loop Fund has invested a total of $24 million in three other projects that are already online. These include a joint venture between QRS and Canusa-Hershman to create a one-of-a-kind plastic recovery facility in Baltimore, Maryland that recycles the #3-#7 hard–to–recycle plastics such as yogurt containers and lawn furniture. The two other investments, made last year, are in Quad Cities, Iowa, and Portage County, Ohio, allowing both communities to convert from dual-stream recycling systems to single-stream, making it easier for citizens to recycle.

While its latest investment isn’t live yet, in September the fund awarded about $150,000 each to two plastic film recyclers, Zzyzx (pronounced “ziziks”) and Drought Diet Products.

In addition to helping the private companies in which it invests generate profit, the Closed Loop Fund says its loans have also produced about $250,000 in economic benefits to municipalities.

Gonen says the fund is committing 20 percent of its capital to develop robust end markets to ensure the system economics work. “You can expect to see several end market investment announcements from us in 2017,” Gonen said. “We have some great business models in our pipeline that will maintain value across a range of commodities. Stay tuned.”

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