Innovation and investments in circular economy - Another tool to prevent marine litter Closed Loop Partners, Programs Feb 2019 TABLE OF CONTENTS MARINE LITTER IN

HOLISTIC PREVENTION AND MITIGATION:

- MARKET AND INVESTABLE OPPORTUNITIES IN CHINA & THE U.S.

CLOSED LOOP PARTNERS OVERVIEW Two different outcome - Marine litter

A sperm whale that washed up off Indonesia in June 2018 was found to have 1,000 pieces If someone could collect and recycle of plastic in its belly, including more than 100 all the unrecycled plastic on earth, drinking cups. this person would be richer than any individual on the planet.

What can you buy with that? Apple, Amazon, Google, Microsoft, Walmart, Exxon, GM, AT&T, Facebook, Bank of America, Visa, Intel, Home Depot, HSBC, Boeing, Citigroup, Anheuser-Busch, all the NFL teams, all the MLB teams and all the Premier League Football teams. https://qz.com/1516317/southeast-asia-is-detoxing-from-imported-plastic-trash/

https://www.greenbiz.com/article/if-you-monetized-all-plastic-garbage-world-heres-what-you-could-buy

3 Potential market value of plastics that are not being recycled - In the U.S. and China

Assumption: 100% recycle rate, commodity value of plastic recyclables, not the investment return, added value generated China: through the whole supply chain) 1. Plastic recycling rate <10%; China figure: According to Closed Loop Partner China Program’s 2. Market value of internal estimation. recycled plastics in China reaches over 17 The U.S. figure: EPA report. 9.1% in 2015, dropped from 9.5% in billion in 2017; 2014. 3. Value of the 90%?-> $ 170 b The potential market value of unrecycled plastics in China & the U.S.: $ 230 b annually.

The U.S.: 1. Plastic recycling rate: <10% 2. Market value of plastic recyclables $ 6 b, b (PET $2 b, HDPE $2.8 b, PP $1.2). 3. Value of the 90% ->$ 60 b. The problems caused by linear economy

Tip of the iceberg: • Ocean plastic, microplastic for human health • Greenhouse Gas

• Landfill • Pollution: Soil, water, air

• Energy extraction • Deforestation

The Cause: • The crude oil industry and its byproducts(single use packaging, fast fashion) as well as an- unsustainable lifestyle are a main contributor to the environmental & health problems.

The past( before the ban of import of recyclables by China and other Asian countries) • Those problems are more severe for developing countries in Asia who have played the role of “outsourced recycler” for developed countries such as the U.S., Japan who export the majority of their recyclables overseas.

5 10 carry 90% of the plastic in the world that ends up in the ocean.

•7 of them are in Asia: the ; Indus; Hai He; Huangpu/Yellow , Ganges; Pearl; Amur; .

•The rivers all had two things in common:

1. a generally high population living in the surrounding

2. a less than ideal waste management process. Image: https://www.nature.com/articles/ncomms15611/figures/1

•The Yangtze is Asia’s longest river and also one of world’s most ecologically important rivers. The river basin is home to almost 500 million people (more than 1/3 of China’s population).

Source: National Environmental Analysis released by Tsinghua University and The Asian Development Bank in January 2013 A father and son (L) on a makeshift boat paddle through a garbage-filled river as they collect plastic bottles to sell in junk shops in Manila, Philippines, on March 19, 2015. NOEL CELIS/AFP/GETTY IMAGES Challenges of recycling in China: Low recycling rate, urbanization leads to increase in waste generation

• Low trash generation per person in China, compared to the U.S.

1. Low recycling rate in China; 2. Urbanization leads to increase in waste generation. MSW Generation Per Capita Total MSW Generation Recycle rate % (lbs/day) (tons/ year) America 5.7 228 m 34

China 2.2 190 m <10

Source: World Bank http://siteresources.worldbank.org/INTURBANDEVELOPMENT/Resources/336387-1334852610766/AnnexJ.pdf, China Ministry of Commerce, 2018 recycling report Investment opportunity in circular economy Linear vs circular economy

Linear supply chains are inefficient, unsustainable and costly.

We Are Leading the Transition Away From A Linear Economy by diverting waste generated from packaging, agriculture, fashion & electronics from landfill.

EXTRACT & PRODUCE CONSUME COLLECT LANDFILL

9 We Generate Value From the Circular Economy

CONSUMER GOODS COLLECTION $500 Billion+ $5 Billion In annual U.S. revenues In savings annually by generated by the avoiding landfill disposal transition from linear fees via recycling manufacturing to circular manufacturing

SORTATION DESIGN & MANUFACTURING $15 Billion In annual U.S. revenues $3 Billion from investment In investment opportunities to build and opportunities to modernize recycling facilities design and in the U.S. manufacture using PROCESSING circular business models $4 Billion In investment opportunities to build and modernize facilities that process recyclable material

10 U.S.: -Recycling Generates Savings and Increase Revenues

In the U.S., over $5b is spent annually to landfill commodities that, with advanced recycling infrastructure, could be sold for over $15B. Advanced circular economy technologies and business models can enable municipalities and businesses to avoid landfill fees and harness the value of commodities in their waste stream.

Over $5 billion Over $15 billion spent disposing of commodities in landfills below: value of recyclable material sent to landfill in the U.S.. map of where waste is transported to find landfill space

CARDBOARD ALUMINUM $1,200,000,000 $1,400,000,000

PET HDPE $2,000,000,000 $2,800,000,000

TEXTILES PP $250,000,000 $1,200,000,000

ELECTRONICS ORGANICS $500,000,000 $5,000,000,000

11 Corporate Buyers Are Driving A Capital Shift To Circular Supply Chains

The largest consumer goods companies are transitioning to circular supply chains that utilize 2025 target: 2030 target: 2030 target: 100% reusable, 100% reusable, 100% of products to sustainable and recycled material recyclable or recyclable or be recyclable in order to reduce costs and compostable compostable globally and bottles plastic packaging plastic packaging use 50% percent volatility. recycled content.

In order to reach their targets, the largest consumer goods companies will transfer $500b in 2025 target: 2025 target: 2025 target: annual commodity purchasing 100% of for zero waste to for 100% packaging to be landfill from recyclable or from virgin to recycled recyclable, production reusable compostable or facilities and packaging by commodities. biodegradable offices 2025

12 The future: Circular economy development is of strategic importance for Chinese government

• The goal: Actions taken no. 1: Ban of imported waste ( followed by other - Ministry’s Urban Development Department’s target is for 35% of urban Asian countries) Imported plastic waste 20.66% drop from 2016 to household waste to be recycled by 2020. 2017 - China’s National Development and Reform Commission issued green Actions taken no. 2: Build national CE wide pilot cities/parks development guidelines which ordered cities and some towns to begin charging Over 100 CE pilot zones, over 42 CE pilot brands as of 2017. residents for waste disposal by the end of 2020. - 46 major cities have developed facilities for sorting, collecting, transporting and treating trash.

• Holistic approach to develop the whole CE eco-system: - Policy: improve classification, regulation & monitoring policies Upscale recycling - Enforcement: inspect illegal import, processing & trading of imported solid CE community/park

waste CE pilot city - Develop a long term scheme to end waste import Urban mining Restaurant organic waste pilot - Increase domestic recycling Rate: invest & develop recycling Actions taken no. 3: Extended Producer Responsibility Since 2017 June, Producers of electric vehicles are responsible for establishing facilities to collect and recycle old batteries Source: China’s National Development and Reform Commission report on CE, 2017 Dec Impact of National Sword within China

1/3 companies shut down (including consolidation); 1/3 aim for domestic feedstock within China: build their own recycling ecosystem & infrastructure 1/3 M&A overseas to secure supply of feedstock àplastic pellets to China. Investment opportunities for private sector

Market potential for environment protection Priorities supported by the government: 1% 1. Water pollution: market size for residential waste water treatment $ water pollution 1% 2% 41 B. 160millon households (suburb) waste water needs treatment. 2. Industrial pollution: waste gas, water, solid goods, energy industrial pollution 28% efficiency, monitoring for compliance. $ 1.4 trillion. air pollution 3. Air pollution: $ 30 b market. 4. Dangerous waste: Over 42 m tons of dangerous waste every year, 2% dangerous waste over 60% of dangerous waste hasn't been properly treated due to lack 0% 65% 1% of capacity & proper treatment method. Highly fragmented market, no trash burning major service provider. Treatment price $ 300 ton, $8 b market in 2020. 5. Increase trash incineration rate from 38% to 50%. Huge demand soil remediation for waste-energy power plants. $40 b market. 6. Soil remediation: $ 600 b environment monitoring 7. Environment monitoring: $ 10 b pollution prevention, waste 8. Pollution prevention, waste treatment, recycling technology, treatment, recycling technology, facility & service facility & service: $20 b

Source: China’s National Development and Reform Commission report on CE, 2017 Dec Trends in circular economy innovation, investments in China:

1. Improvement on recycling infrastructure: Reverse logistics, e.g., Huishoubao; Logistics+ internet, e.g., Little Yellow Dog. 2. Increasing interest to investment in innovative circular economy and technologies and business model.

Little Yellow Dog

Huishoubao Closed Loop Partners and partnership opportunities Closed Loop Partners: Overview

WE ARE AN INVESTMENT FIRM FOCUSED ON BUILDING THE CIRCULAR ECONOMY

• Our firm has completed over 41 investments in the circular economy space since 2014. • The LPs in our funds include the world’s largest retailers and consumer goods companies.

WE HAVE FOUR INVESTMENT PLATFORMS Innovate Commercialize Grow Scale

Center for Closed Loop Closed Loop Closed Loop Circular Ventures Fund Leadership Fund Economy Venture Capital Project Finance Private Equity Research & Development

18 Investment Strategy and Current Portfolio

CONSUMER GOODS COLLECTION

For Days City of Memphis HomeBioGas City of Waterbury Linhaus CurbMyClutter Loliware Portage County Natural Machines Waste Commission of Scott Preserve County

DESIGN & MANUFACTURING SORTATION

Aero AMP Robotics Aggregates Council Bluffs Evrnu PROCESSING Easy Aerial GreenMantra ITR Atlas Organics IntegriCo ColoadX ECUA Rebound Eureka Recycling Momentum rPlanet Earth FirstStar Fiber PureCycle Technologies Lakeshore Recycling Technologies Systems The Renewal 19 TradeLanes Workshop Our investments to tackle food waste and film packaging: Cambridge Crops • The problem: Nearly 50% of Fruits and Vegetables are lost globally. Two thirds of these losses come from logistical issues in post-harvest storage and transportation due to inefficient methods of food preservation. • The solution: Replace plastic film packaging with edible coating made from silk that extends the shelf life of foods: Fruit, seafood. This can be very interesting for South East Asian countries in tropical region whose major export are fruits and seafood.

20 Our investment to recycle plastics: - rPlanet Earth

• rPlanet Earth is the world’s first completely vertically integrated manufacturer of post-consumer recycled PET (rPET) and multiple high rPET content packaging products, creating a much needed market for PET packaging collected from curbside recycling programs across the state. • The carbon footprint associated with rPlanet's packaging will be the lowest in the industry! Our investment to increase recycling rate: AMP Robotics

22 Our investment to recycle plastics: Green Mantra • Waste plastic--> waxes & chemicals for industrial applications

23 How we help corporates to seize business opportunity during market shift

1. Investments in innovative recycling technology

2. Solution search: Hackathon, industry roundtable.

3. Cross border M&A & advisory for Chinese companies who are expanding in N. America. U.S. companies expanding in China.

24 We are also running solution search to help brands to be more circular

25 Thank You [email protected] Appendix: Thought Leadership

Papers published by Closed Loop Partners

Capital Landscape Study Glass Study Cleaning the rPET Stream Study looking at the trends, gaps Report on the ROI from investing Report that identifies recycling and impacts of financing for in glass clean-up systems at MRFs system interventions that reduce recycling infrastructure. and found that an investment at a the cost of processing post- MRF could yield higher value consumer PET, compared to commodities and significant producing virgin resin. savings.

ReFED Plastic Film Recycling Used Electronics Recycling Founding partner and supporter National study to understand Report to provide a view of the e- of ReFed, a report determining bottlenecks holding back waste landscape within the food waste solutions based on recycling of post consumer LDPE United States in order to their ability to merge strong film and multi-laminate film understand types and quantities economic returns with optimal packaging recycling. moving into the waste stream social and environmental benefit. today and in the future.

27 Appendix: Public-Private Partnerships in America & China INDUSTRY

ACADEMIC & RESEARCH

STATE AGENCIES

FIRMS WE CO-INVESTED WITH

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