Finance & Investment
US’ Outdated Composting Infrastructure Offers Golden Investment Opportunity

Published 1 month ago. About a 4 minute read.
Image: Eva Bronzini

New report from the Composting Consortium provides landscape analysis of existing compost infrastructure, markets and business models; and blended-finance opportunities to scale organics circularity.

As we continue to weather what could be the hottest year on record, enacting immediate, available ways to help mitigate climate change is top of mind for many.

Look no farther than food waste: According to WWF, 6-8 percent of all human-caused greenhouse gas emissions could be reduced if we stop wasting food. In the US alone, the production of lost or wasted food generates the equivalent of 32.6 million cars' worth of greenhouse gas emissions. Project Drawdown’s 2020 Review cites food-waste reduction as the #1 solution in a list of 80+ solutions for combating climate change.

Industry has rallied with a growing wave of tools, apps, technologies and other initiatives; and campaigns, apps and gadgets are helping consumers waste less food at home; but only 4 percent of the remaining food waste in the US is diverted to compost sites.

To help increase awareness of and help address this gap, a new report from the Composting Consortium — an industry collaboration to strengthen the composting system in the US, managed by Closed Loop Partners’ Center for the Circular Economy — outlines investment recommendations for scale composting infrastructure and increasing the recovery of food waste.

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Developed with investors, policymakers and composters in mind, Unleashing the Economic and Environmental Potential for Food Waste Composting in the US delves into the compost market and opportunities for public and private capital investment amidst rising landfill costs, federal attention on food waste and organics recycling, and state-wide organic-waste bans.

Food-waste composting is on the cusp of major growth as the economic, environmental and social consequences of food waste grow more apparent. Macrotrends include the rising cost of landfilling across the country and mounting attention linking food waste in landfills to methane emissions — a major driver of climate change. Corporate and municipal zero-waste and food-waste policies and climate goals are putting a spotlight on composting — an age-old, available solution well suited to divert complex post-consumer food waste with food-contact compostable packaging from landfills, while creating compost to sequester carbon, support healthy soils and contribute to agriculture.

While food-waste composting infrastructure has remained stagnant in the US for the last six years, the composting industry stands at a critical juncture. Today, there are ~200 compost facilities in the US that process food waste, and another ~2,700 facilities that only process yard trimmings — but many of the latter can be retrofitted to accept and process food waste.

Food-waste composting’s potential for social, environmental and economic benefits is well-established; and many individual food-waste compost manufacturers have proven the success of the model. However, scaled operations — particularly, for large-scale food-waste composting facilities — remain hindered by hyper-local logistics, variable municipal engagement and lack of financing tailored to the business model’s dynamics. Blended financing is needed to support large-scale infrastructure that can handle complex food-waste streams such as post-consumer food scraps with compostable packaging.

According to the Composting Consortium’s report, public and private capital — a mix of grants and philanthropic funding, patient capital, loans and private equity — can work alongside each other to build large-scale composting facilities while nurturing the growth of smaller, established operators. Each type of capital caters to the needs of a particular region and composting business and addresses critical bottlenecks across the entire composting value chain — from establishing efficient collection programs to fostering the development of next-generation technologies and expanding the demand for compost.

“Since the inception of the Composting Consortium, we identified the need to strengthen US composting infrastructure — particularly, those solutions that can accept increasingly large and complex organics streams. Investment, alongside policy and multi-stakeholder collaboration, is critical to achieving this,” says Kate Daly, Managing Director and Head of the Center for the Circular Economy at Closed Loop Partners. “After years of on-the-ground work and industry collaboration, the Consortium has identified opportunities for capital to catalyze scale and impact, and advance progress toward zero-waste and climate-mitigation goals.”

The composting industry presents a compelling opportunity to generate positive social and environmental impact alongside financial returns. By deploying well-placed private investments, investors can play a pivotal role in scaling the industry and creating a lasting positive financial and impact return. By enacting food-waste diversion mandates, providing financial incentives for composting infrastructure and collection programs, and supporting research and development of technologies, federal and state governments can play a critical role in enabling the widespread adoption of composting.

By addressing financing hurdles and fostering a supportive ecosystem through collaboration between composting businesses, municipalities and investors, the US composting industry can further scale to advance a more circular economy for organics, reduce our environmental footprint and build a more sustainable future for generations to come.

Closed Loop Partners