Carpet Mills Suspend VPS Recycling Subsidy Program

Dalton, Georgia, April 23, 2020--On April 21, the CRI (Carpet & Rug Institute) announced the suspension of the $4 million voluntary product stewardship (VPS) program, which had been paying subsidies to carpet recycling firms in all states other than California from an annual fund provided by carpet mills. The VPS funding will end June 30.

The VPS program, a CRI initiative administered by the Carpet America Recovery Effort (CARE), was launched in January 2015 as a stopgap to help the recycling network handle the massive and rapidly growing volume of PET carpet fiber to help keep these businesses afloat while end-use markets for PET fiber were developed. The fund started off at $4.5 million, though the annual contribution dropped to $4 million over the last couple of years.

“This is a serious blow to the nation’s collection network, and most of the ones outside of California won’t survive,” says Rachel Palopoli, co-owner of Planet Recycling. “We may have no other choice now but to landfill the carpet we were trying so hard to recycle.”

On behalf of the CRI, president Joe Yarbrough reports, “The CRI VPS (Voluntary Product Stewardship) program was created in 2014 as a voluntary, nationwide program to help fund sorters and recyclers that divert post-consumer carpet from landfills.

“Funded by CRI’s members, the program was originally intended to be a one-year incentive to help maintain the financial viability of carpet recycling during a critical period when market pricing alone (due to oil pricing and other economic headwinds) would not have likely allowed most recyclers and sorters to operate. We were fortunate that through continued funding by CRI’s carpet industry members that the program was able to continue for four and a half years with $15.5 million paid directly to recyclers.

“CRI and its members greatly value the critical role that sorters and recyclers play in making carpet recycling possible and appreciate the challenges these business owners are also facing during these unprecedented times. Earlier this month, VPS paid a one-time bonus to program participants based upon their average monthly pay-out over the past 12 months as we all prepared for the unknown impacts of COVID-19. 

“As dynamics rapidly evolve with the significant economic impacts brought about by COVID-19, CRI has made the difficult decision to terminate the VPS funding program June 30, 2020. A $2.5 million cap has been placed on the program to encompass funds paid from January 1, 2020 through that termination date (June 30). 

“CRI members will consider reinstituting some programs in the future. We remain confident about the future of our industry. This is a necessary prudent step we must take in the short-term."

One of the concerns is that carpet reclamation businesses, which have been practicing selective collection for several years-collecting only what they can sell, may double down and abandon PET collection entirely.

Most of the progress on developing PET end-use markets has been driven by the more robust California recycling strategy, which is also administered by CARE. California’s extended producer responsibility (EPR) legislation assesses a per-yard fee on all carpet sold in California, and the funding is used for subsidies as well as grants for developing markets for used PET carpet. And last year saw several significant breakthroughs, the result of years of development, from processes to yield high-purity PET to a range of products from firms like Eastman Chemical, Verdex Technologies and Arropol.  

These developments led CARE to report its best California results yet in Q4 2019, a 22.5% recycling rate, representing a 44% increase over Q4 2018 and just shy of the 24% goal. Last year, California carpet assessments topped $28 million.

Fortunately, CARE recently added an additional month of subsidy payments to carpet collectors and has doubled subsidies through June in an effort to help the network weather the COVID-19 storm. It’s also worth noting that carpet mills did leave the door open on reconsidering another program in the future. Nevertheless, it’s likely that the loss of the program will drive more carpet recyclers out of business.