is part of the Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Despite roadblocks, Cereplast sees opportunity in bag bans

Back in April, after passing a nationwide plastic bag ban, the Italian government published a plastic bag decree in the Official Journal, with enforcement planned to begin on May 27, 2013. According to the decree, merchants must discontinue the use of traditional single-use plastic bags in favor of bioplastic bags or other alternatives. The law prohibits the use of Oxo biodegradable additives and requires Italian merchants to only use compostable applications as defined by EN 13432.

Back in April, after passing a nationwide plastic bag ban, the Italian government published a plastic bag decree in the Official Journal, with enforcement planned to begin on May 27, 2013.

According to the decree, merchants must discontinue the use of traditional single-use plastic bags in favor of bioplastic bags or other alternatives. The law prohibits the use of Oxo biodegradable additives and requires Italian merchants to only use compostable applications as defined by EN 13432.

With this news, biobased polymer maker Cereplast saw nothing but opportunity. In fact, Cereplast's management estimates its total opportunity in Italy exceeds $50 million.

"Basically, with the number of bags issued, this is really something that will force people to use an alternative, and clearly, the alternative is in bioplastics, which we look at as a good thing for us," Cereplast Chairman and CEO Frederic Scheer told PlasticsToday. "I would expect by 2015 and 2016, you're going to see more growth in bioplastics for PE applications in Europe."

However, Italy's approval was suspended when the British government objected to the fines that Italy was to impose on violators of the plastic bag ban. Britain says that because the EU does not outlaw the bags, they can't be banned by another member state, according to The Daily Telegraph.

"While we are determined to tackle the blight caused by discarded carrier bags, the proposed Italian scheme is illegal under EU packaging laws," a spokesman for the Department for Environment, Food and Rural Affairs, told the publication.

Cereplast anticipates that this move will delay the law from going into full effect until summer or fall 2013.

"When dealing with government bodies and new legislation there are often times hurdles that occur, particularly when there is lobbying pressure from the traditional plastics industry," Scheer said. "I am not overly concerned about the timing of the outcome, and expect that this is a minor pause in the full impact of the law."

Currently, according to Cereplast, there are four competitors who produce compostable blown film that are predominantly based in Europe, each varying in size from approximately $5 to $120 million in revenue. Scheer said Cereplast has tested its products with approximately 50 blown film converters in Italy.

Cereplast hired about seven sales agents to promote the company's products in Italy and neighboring countries. The sales agents are not employees of the company and have been retained with a commission based suctuture, so there is no cost to the company unless the agent successfully closes sales.

Despite the delay in legislation, the company still expects continued growth in demand for blown film. Scheer said that Italy and Europe remain the main targets for its efforts in compostable applications.

"We do expect the number of clients to increase, which is a very good thing," Scheer said.

Cereplast's compostable blown film series recently received both DIN CERTCO and Vinçotte certifications for meeting EN 13432, the European standard for industrial compostability. Compostable 3002, 3010, 3015 and 3020 are Cereplast compostables blown film grades, which are used for the manufacture of single-use grocery bags and trash bags. These grades also meet the ASTM D 6400 standard in the U.S., and are certified up to a maximum 1.0 mil (25.4 micron) thickness.

Manufacturing capacity of Cereplast's Seymour, IN plant is currently 3000 tons per month based on current market price of about $4500 per ton. This plant is capable of producing in excess of $10 million of material per month at full capacity. The Cereplast compostable blown film resin can be processed on traditional equipment without requiring modifications and the company says the resins do not emit problematic fumes.

The company plans to close its offices in El Segundo, CA and relocate its headquarters to Seymour. The company is also moving its European headquarters to its office in Milan, Italy and is closing the office in Bönen, Germany.

Targeting other geographical locations

India has several plastic bag bans, including one in Delhi, and the government is looking toward legislation toward more of a widespread anti-plastic legislation. Scheer said the company has begun receiving orders and payment for compostable 3002 for the manufacture of single-use bags and it expects to see more orders in the near future.

"There is long-term opportunity due to growing anti-bag legislation in India and we also believe that going forward the Indian market will be fairly substantial," he said. "It is something of interest to us and kind of exciting for us as well."

Scheer also said the company is seeing movement in Brazil and Argentina.

U.S., not so open

Still, when it comes down to it, Cereplast is an American-based company selling its products abroad.

"Frankly, we hate that we sell this product overseas when it's made in America," Scheer said. "The U.S. market continues to be our biggest frustration."

Despite some select bag legislation in places such as San Francisco and Seattle, Scheer said American consumers have been slower to demand "environmentally friendly" alternatives.

While he still sees opportunity in the states, he believes it will take more time.

"This is a society where money talks and people don't want to spend more, even if it's solving an environmental problem," he said. "I think as more time passes, it will make more sense for some to go with the bioplastic alternative. It's happening. It's just happening slowly." 

TAGS: Packaging
Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish