HB 143-ADVANCED RECYCLING AND FACILITIES  2:02:16 PM CHAIR MCKAY announced that the final order of business would be HOUSE BILL NO. 143, "An Act relating to the Department of Environmental Conservation; relating to advanced recycling and advanced recycling facilities; relating to waste; and providing for an effective date." CHAIR MCKAY explained that HB 143 would create a regulatory framework around a new industry known as "advanced recycling." This would take plastics which are not suitable for traditional recycling and convert them into high value products through various chemical processes. Without some regulatory processes governing the industry, these manufacturers are not able to evaluate the profitability of investing in Alaska. He mentioned that 23 other states have passed bipartisan legislation like HB 143, and this allows these emerging technologies to operate in their states. He stated that the proposed legislation would add Alaska to the list of states for manufacturers to consider when investing millions of dollars in advanced recycling. 2:04:07 PM TREVOR JEPSEN, Staff, Representative McKay, gave a PowerPoint presentation, on behalf of the sponsor, the House Resources Standing Committee, on which Representative McKay serves as chair, titled "Advanced Recycling" [hard copy included in the committee packet]. He directed attention to slide 2. He detailed that advanced recycling, also referred to as chemical recycling, is a relatively new industry which has been around for 10 years. He stated that advanced recycling takes discarded plastic and turns it into petroleum-based products. He mentioned that advanced recycling has been used in large scale commercial operations in the last 5 years. He reiterated that legislation like HB 143 has passed in 23 other states. MR. JEPSEN described the flowchart pictured on slide 3, which related that, using chemistry, post-use plastics can be converted to valuable products, and this extends the life of plastic. He suggested that using the basic building blocks of new chemicals, plastic feedstocks, and plastic additives, outputs can be asphalt roads, roofing, waxes, and lubricants. 2:06:11 PM REPRESENTATIVE SADDLER asked if HB 143 allows recycling centers to break down plastic to return it to its component parts. MR. JEPSEN confirmed plastics can be broken down through a process called depolymerization and rebuilt into other materials. 2:07:34 PM REPRESENTATIVE RAUSCHER, referring to slide 3, questioned which states are currently utilizing plastic additives to asphalt roads. MR. JEPSEN deferred to Prapti Muhuri. 2:08:21 PM PRAPTI MUHURI, Manager of Recycling and Recovery, American Chemistry Council, answered that advanced recycling is being used to produce additives in asphalt roads in other states, including Missouri. REPRESENTATIVE RAUSCHER asked if asphalt requires higher temperatures to lay. MR. JEPSEN responded that many different products can be made from plastics through advanced recycling. 2:09:44 PM REPRESENTATIVE MEARS mentioned that, because of a lack of critical mass and low population, recycling in Alaska is difficult to manage in remote communities. She questioned the minimum critical mass needed to be recovered from the waste stream to make advanced recycling practical in Alaska. MR. JEPSEN stated that an economic model later in the presentation would address the question. He continued his presentation with slide 4, addressing the process of advanced recycling. He stated that there are different processes used to break down plastic polymers into base chemical components, such as gasification, pyrolysis, and solvolysis. He further detailed that advanced recycling is non-combustive and should not be confused with incineration. He said that there are some air emissions associated with advanced recycling, and this is regulated in accordance with the Clean Air Act. It would also be subject to the Alaska Department of Environmental Conservation (DEC), just like any other manufacturing plant. 2:12:02 PM MR. JEPSEN moved to slide 5 and detailed the advanced recycling processes. He stated that the primary product from gasification is synthetic gas or syngas. The primary product from pyrolysis is petroleum liquids, diesel, and naphtha. He pointed out the flowchart on slide 6 and said that plastics are first collected, washed, sorted, and shipped to an advanced recycling facility. He continued that naphtha is a precursor to plastics, and it is produced through pyrolysis. This can then be sent to a cracker producer or plastic resin producer to be thermally broken down into components which can be sent to various manufacturers. These manufacturers will eventually produce this into consumer goods. 2:13:53 PM MR. JEPSEN, in response to a question from Representative Armstrong, explained that "cracker producers" are facilities which thermally break down naphtha. 2:14:24 PM REPRESENTATIVE DIBERT asked where the nearest manufacturer is located. CHAIR MCKAY, in continuation of Representative Dibert's question, asked whether all the steps pictured in the flow chart on slide 6 are meant to take place within Alaska. MR. JEPSEN answered that slide 6 displays only a hypothetical example. He said this would depend on the economic activities that transpire as a result of the legislation. MR. JEPSEN advanced to slide 7, which addressed whether advanced recycling is necessary. He pointed out that it is estimated that as little as 8.7 percent of recycled plastic is reused. He stated that China is no longer taking plastic recyclables. He remarked that, if the committee is concerned with efficiency in recycling, conserving landfill space, and creating relatively low greenhouse gas emissions [GHG], then it should be in support of advanced recycling. 2:16:52 PM REPRESENTATIVE SADDLER noticed a discrepancy on slide 7. MR. JEPSEN clarified that slide 7 is from a previous presentation and mentioned that some of the figures may not be precisely accurate; however, the estimates demonstrate that the amount of plastic currently being recycled is relatively low. Mr. Jepsen described the concept of a circular economy on slide 8. He pointed out that advanced recycling would incentivize markets to reuse products and allow plastic waste to be returned to the economy to be used more efficiently. He expressed the opinion that the issue of conserving space for waste and using resources more efficiently transcends party lines. He added that the industry is economically sustainable without government subsidies, and advanced recycling would complement mechanical recycling, not replace it. MR. JEPSEN moved to slide 9, which addressed the economic benefits of advanced recycling and recovery. He stated that one advanced recycling facility in the state could process 50 percent of the 59,700 metric tons of landfill plastics. He stated that these figures resulted from the use of the Impact Analysis for Planning (IMPLAN) economic modeling software. He explained that the 59,700 metric ton figure was calculated using 2020 census data with a weighing factor of 8.7 percent, which is the estimated recycling rate. 2:20:42 PM REPRESENTATIVE SADDLER asked to clarify if the nearly 60,000 metric tons is calculated or a real figure of how much plastic waste is produced. MR. JEPSEN, in response, confirmed that the figure is just a calculated estimate, not a total measurement. MR. JEPSEN, in response to Chair McKay, stated that Alaska currently does not have an advanced recycling center and the figures are based on IMPLAN. He continued, explaining the table on slide 9 and said that should an advanced recycling center be implemented in Alaska, the IMPLAN modeling analysis shows there is a potential for 100 new jobs with a total economic output of $34.2 million. He explained that the downstream employment, or as seen on the chart as the "Indirect Effect," through business- to-business purchases within the supply chain would create [90 more jobs with $6.7 million in payroll and $24.7 million in output]. He explained that the "Induced Effect" on the chart is the value stemming from household spending [and is projected to create 60 jobs with a payroll of $3.8 million and an output of $11.3 million]. MR. JEPSEN addressed the earlier question concerning the minimum critical mass in Alaska and said it would be difficult for the House Resources Standing Committee to fully calculate the critical mass and doing so would be outside the scope of the bill. He said that HB 143 would only set up a regulatory framework, and the creation of an advanced recycling facility would involve a private enterprise which would conduct their own feasibility studies. He concluded that HB 143 sets up the regulatory framework for investors who may wish to start an advanced recycling facility within Alaska. 2:23:19 PM REPRESENTATIVE SADDLER asked about the primary components of recycled plastics. MR. JEPSEN responded that plastics are separated into 7 different categories. Types 1 and 2 can be mechanically recycled. The remaining 3-7 types of plastics can be used in advanced recycling. He offered, for clarity, to create a written document with information about the 7 types of plastic. In response to a follow-up question, stated that because plastic bottles are made from types 1 and 2 plastics, they are preferred for mechanical recycling. 2:25:15 PM MR. JEPSEN, in response to a series of questions from Representative Armstrong, stated that the 59,700 metric tons figure on slide 9 assumes Alaska's share of landfill plastics throughout the country. He responded that plastics could be retrieved from a landfill, or diverted from going to a landfill, and brought to an advanced recycling facility for processing. In response to whether the success of an advanced recycling program would necessitate better consumer and corporate recycling programs, he expressed the belief that monetizing plastics would increase plastic recycling. 2:27:03 PM REPRESENTATIVE MEARS asked about the program's feasibility. She gave her professional expertise in recycling and mentioned the possibility of a more practical method of diverting plastics from landfills in Alaska. She voiced concerns about the bill. CHAIR MCKAY replied that HB 143 is only a discussion of the regulatory framework of advanced recycling. He continued that private entities interested in investing in advanced recycling would need to decide if it was economically feasible. REPRESENTATIVE MEARS expressed her concern that HB 143 could harm existing industries. 2:29:48 PM MR. JEPSEN, pointing out the value of advanced recycling on slide 10, stated it would be a low GHG process to create petroleum-based products, decrease landfill space taken up by plastics, greatly increase the percentage of recycled plastics, and bring economic benefits to Alaska. He reiterated that these benefits are contingent on the passage of HB 143. Concluding the presentation, he further outlined the contents of HB 143 in slide 11, which read as follows [original punctuation provided]: • Delegates authority to the DEC to develop manufacturing regulations related to air emissions and water discharges from advanced recycling facilities • Clarifies that advanced recycling facilities will be regulated as manufacturing facilities not as waste disposal facilities • Clarifies that plastic feedstock and products will not be classified as industrial, solid, or other waste • Defines terms 2:31:18 PM MR. JEPSEN gave the sectional analysis of HB 143 [included in the committee packet], which read as follows [original punctuation provided]: Sec. 1 Designates the Department of Environmental Conservation with the power to develop manufacturing regulations related to advanced recycling. Sec. 2 - 6 Provides clarification that certain definitions currently in statute do not apply to advanced recycling materials, products, and facilities. Sec. 7 Provides new definitions to define advanced recycling and the chemical processes associated with it. Sec. 8 Provides for an effective date. 2:32:01 PM REPRESENTATIVE ARMSTRONG questioned the difference between managing the regulations for a waste facility versus a manufacturing facility. She questioned whether there are other advanced recycling facilities which are classified as both a waste facility and a manufacturing facility. MR. JEPSEN expressed the opinion that regulating advanced recycling as a manufacturing facility would make more sense, as this would be consistent with the regulation of these facilities in other states. CHAIR MCKAY acknowledged Representative Mears' expertise on the topics presented in HB 143 and invited her to testify at the next meeting. 2:33:30 PM CHAIR MCKAY announced that HB 143 was held over.