AMC Research Report

Each year, roughly 130 million tonnes of plastic pollute the environment each year, and this will reach 280 million tonnes by 2040 without ambitious action. Solving this challenge will require significant investment across a range of solutions, including recycling.

A growing number of multinational companies have made commitments to increase their use of post-consumer recycled content (PCR), yet a greater supply of recycled material has not yet materialized, as recyclers hesitate to build new capacity based on commitments alone – they want to see firm purchase orders from customers. 

In this research report, The Circulate Initiative examined how advance market commitments (AMCs) and other collective demand mechanisms, including public commitment platforms and buyers’ clubs, could help bridge this supply-and-demand gap with PCR plastic. We explored the structure of AMCs and other collective demand mechanisms, their potential applicability to addressing this gap, the scenarios in which AMCs could work, and what  implementation of AMCs could look like in practice.

Key takeaways from this report include:

• Procurement approaches for virgin and PCR resin vary across companies of various sizes and buying power. Larger brands and packaging companies may deploy several strategies, including index-linked contracts, offtake agreements, and spot market. 
• AMCs have potential to address the supply-and-demand gaps for materials where recycling is less mature and additional R&D is needed. Three promising applications are mixed plastic waste, textile waste, and paper-based alternatives for flexible packaging.
• Mechanisms like AMCs still require supportive government policy on both the demand side, such as recycled content mandates that drive PCR demand, and the supply side, such as extended producer responsibility (EPR).
• Key hurdles to implementing AMCs include determining the appropriate arrangement, aligning specifications across multiple companies, and addressing the price gap between virgin and recycled or alternative materials.
• By compiling binding purchase commitments, AMCs can offer several advantages over other collective demand mechanisms, including spreading procurement risk, helping align material specifications, and supporting price discovery.