Bob Peoples, executive director of Carpet America Recovery Effort or CARE, attended The Flooring Sustainability Summit held in Washington D.C. where he witnessed open and honest conversation regarding sustainability in the flooring industry and answered questions about lessons learned and how to prevent future mistakes. Here, he discusses the Summit, provides a deep dive into the history of CARE—its challenges and successes, and shares insights about California AB 863. The following are excerpts of our conversation, which you can listen to in its entirety below.

Floor Trends & Installation: You attended The Flooring Sustainability Summit in Washington D.C. What was that like? 

Bob Peoples: Well, it was an interesting experience. The first day was at a Washington, D.C. hotel with a whole cross section of speakers that span the gamut from all the floor coverings. You had the manufacturers there. You had representatives from the stewardship organizations. You had representatives from standards organizations, architectural firms, IIDA, AIA. It was a really interesting cross section of people there to share ideas, and it was convened by the North American Tile Council to bring people together for the first time, talk about the bigger implications of a circular economy, sustainability, that impact the flooring markets.

Floor Trends & Installation: What did you learn? 

Peoples: I learned that a lot of people are talking about this, but they talk in their silos. I believe you have a much higher probability of finding a workable solution when you have a very broad diversity of inputs. So, bringing together completely different industry sectors that never talk; sectors within companies that are in silos that never talk; government agencies that it's hard to get an audience with; the commercial world talks a lot to the architects and the designers, but a lot of times that doesn't make it over to the manufacturing side. This was an opportunity to tear down barriers and have some really deep cross-fertilization. 

I think everybody there came in that spirit and shared very openly. I didn't sense any element of competition or seeking an advantage or trying to push my company or my products over another. I think everybody sees sustainability the way I do, and that is, sustainability is a tsunami that's coming down on us. We can either work together to try to be prepared for it, or we're going to get caught up in the wash, and we may not like the outcome. 

CARE was invited to speak at The Flooring Summit because we're kind of the pioneers. We've taken a lot of arrows in the back trying to figure out how to do this, and we're getting ready to celebrate our 25th year. So a lot of questions were asked about what lessons have you learned? What can you share with us to help avoid making the same mistakes? How can we increase the probability of success going forward? 

Now, the other thing I'd say about the Summit is that some of the lessons learned that I shared would include the following: Ultimately, society has to bear the cost of sustainability. That's how our economic model is built. We're a free enterprise country. Number two, this is a marathon, not a sprint. Nature's had 5 billion years to figure out how to close the loop, have a zero-waste society. We're barely 150, maybe 200 years in, so we're just starting that marathon. Number three, I think it's really important to have dialogue and set realistic expectations. If the expectations aren't realistic, three, four, five years down the road, people are disappointed. They're pointing fingers and casting blame instead of celebrating success. 

You always tell people—I've got a number of decades of experience behind me, and I've had a lot of engineers, scientists, business people that have worked for me—and when they come in and tell me, we got this new project idea, however long they say it's going to take and however much it's going to cost, I will typically multiply by three or four times to set what I think is a realistic expectation for how long it'll take to do it and how much it's really going to cost to do it.

Floor Trends & Installation: There's so much conversation surrounding sustainability right now, but everything that you're telling me it sounds like there are still so many questions that people have. 

Peoples: The complexity that we're dealing with to solve these problems is sometimes mind-numbing. If you could see my office, I have four walls covered with papers, charts, tables, references to help me manage everything that's going on, both in the carpet recycling world, specifically in the larger plastics recycling world and as it relates to the economy and how that impacts what we do. It's tremendously stimulating from an intellectual point of view and at times frustrating because we're trying to solve very, very complicated, interrelated problems with stakeholders that come from wildly different backgrounds, experiences and ability to understand the details, which I think we need to invest more time in education to help people with their understanding. I often speak with state legislators or regulatory groups to say, "My job as a scientist is to bring you facts and information to help you make the best decisions you can going forward."

Floor Trends & Installation: And things keep changing, right?

Peoples: Keep changing daily. You know, it's a point that I wanted to make as I spoke with you today, so maybe I'll make it right now. And that is, so far, people are asking for changes and to make things happen faster than can realistically be put in place. But more importantly, by having unrealistic expectations about how fast you can implement these things, they get frustrated and they start trying to pass new laws or regulations to help you, if you will. What it does is it creates chaos because we cannot respond and adjust and implement that fast. If you talk to anybody that's run a manufacturing operation or run a business, they'll tell you, we're looking for continuity and stability. You can't just keep changing the rules of the game faster than we could possibly a), understand them and b), figure out what the solutions are and c), implement those solutions.

Floor Trends & Installation: Can you give an example of that?

Peoples: I like to refer to peeling the onion. I talk about what's going on in California in a different context than what's going on around the rest of the U.S. In California, by law, we have to run a carpet recycling program. The carpet industry asks CARE to administer that program on their behalf, to comply with the laws and regulations in California. We are now in the first quarter of 2024. We've just reported our recycling rate of 42%. That's calculated by taking how much recycled output we produce and divide it by the total amount of carpet that's discarded in that quarter. That is up 400% in the last nine years. But there are those in California that say that's not enough, too little, too late. 

I can't think of another recycling program that can look you in the eye and say, "They're up 400% in the last nine years." We even went up during COVID when the state of California was basically shut down for at least a quarter, if not longer. CARE took a very aggressive, very rapid step to do a cash infusion, in fact, two cash infusions, to the recyclers in California and increase the subsidy payments so that they can maintain their work staff, maintain their lease rates, their utility bills and not be forced to shut down and lose the infrastructure that we had been working at that point in time for eight-plus years trying to build up. The recyclers are very grateful for that.

We missed our targets in 2020. We got fined for that in 2020 with no recognition or thank you for having saved the collapse of the carpet recycling industry in California. But that's the world we live in, by people that don't quite understand the complexities and the challenges that we face. If you look at the rest of the U.S., our recycling rate is nominally around 5%. Why? Well, there's a couple reasons. 

One is that there's no subsidies for the non-California-based recyclers in this day and time. We did have a subsidy program that was working quite nicely, a voluntary subsidy program. But unfortunately, when COVID hit, that was terminated for a variety of reasons. The other impact is that national recyclers are forced to compete with the recycled material coming out of California, which is highly subsidized—very difficult to do. And if you think about it, the key to successful recycling, in addition to getting the economics right, is you better have products that will buy and absorb that output and markets to buy those products. And that is not a well-established, robust marketplace today that is in its infancy. So if you could recycle all the carpet that exists in the United States today, there would not be enough products and markets to absorb those. We're still on the steep part of the curve to grow those markets. I am still very optimistic that the chemical recycling programs are going to have a dramatic order of magnitude impact on plastics recycling in general, and carpet will go along for the ride. Why do I say that? 

Ultimately, it's only the manufacturing sector, the people who practice technology at scale, that could solve our problem. I told folks in Washington, "Don't beat up on industry. Figure out how to collaborate with industry." Industry kind of shuts down, doesn't want to hear it and goes into a defensive mode when you attack them. But they're the answer to the solution. 

Today if I've got a recycler that says, "Hey, I got a brand-new customer. He wants 10 million pounds this year," that's extremely exciting. But that's not enough demand to solve the problem. Chemical recycling plants, which cost hundreds of millions of dollars, are going to consume hundreds of million pounds of post-consumer plastic waste to feed those plants. That completely changes the landscape, completely changes the supply-demand equation. And I'm hopeful for the first time we're going to see the industry valuing the feedstock as opposed to pumping cheap oil out of the ground.

Floor Trends & Installation: Opponents of the California recycling bill AB 863 say it threatens to upend everything that CARE has accomplished over the course of the years. What brought about this bill?

Peoples: Like everything in the carpet recycling world, nothing is simple. This one's fairly complex. But I think what brought it about goes back to some of the comments I made earlier, that people don't have an understanding of the complexities of what we're dealing with, how long it takes to make things happen, and the fact that neither the state of California, the Cal Recycle agency that oversees us, CARE, or anyone else has any control over what happens in the marketplace. So, when markets swing, we have to try to read the tea leaves and adjust to those changes. 

An example, look what happened with COVID, right? Shut down the state. The flow of old carpet basically ceased to exist. Had CARE not taken extraordinarily aggressive and rapid steps, the carpet recycling infrastructure that we had invested in at that point in time—nine years—would have collapsed. We would have lost some of our recyclers. We spent more than $12 million over the next several years to sustain the carpet recyclers from the California program. We got no credit for that. In fact, for the year 2020, we were found noncompliant and were facing a fine from Cal Recycle despite the fact that the governor shut down the state for an extended period of time. Nobody wanted to go out to the store to buy carpet. They weren't going to allow an installer in their home to install carpet. And thus, no old carpet was being ripped out. It was a very challenging time. 

Fast forward to today. Five new caprolactam plants have been built in Asia. They're dumping caprolactum and nylon 6 on global markets at prices that are the lowest I've seen in my entire career for nylon 6 polymer. It's virtually impossible for the nylon 6 post-consumer material to compete against these really, really low, virgin, colorless or white polymer chips that are being put on the marketplace today. So that contributed to it. And I think there were some decisions made by some of the recyclers that proved to be not the best business decisions for the implementation of recycling plants shutting down, and CARE being blamed for those plants being shut down. 

CARE’s position all along is: "Our goal is to do everything we can to help recyclers be successful. But we cannot be responsible for their business decisions, their business strategy, and how it's implemented. We can't guarantee a certain amount of carpet to every one of the recyclers, but CARE got blamed for that. And then that got to some of the legislators in that district in California, and they saw it as CARE was responsible for the shutdown of the plant. CARE was responsible for the loss of jobs in that district. Kind of unfair, in my opinion. And then the old "too little, too late" argument that doesn't understand what it takes to make these programs work and how long it takes to make them work. 

I may have referred to it earlier, but this will be the fourth major carpet law in the last eight years. Anybody that's run a manufacturing operation or runs a business knows you need two things: You need some stability so you can plan. You don't want unplanned changes occurring. And that's what these laws do. And number two, you have to allow systems to line out and reach equilibrium before they can perform. When you don't allow that to occur, you create chaos in the system, and it's like chasing your tail. You never can quite get to where you need to get to because about the time you may be getting there, they've changed the rules of engagement, and you got to do something different.

Floor Trends & Installation: Can you explain to people how this is going to impact the flooring industry?

Peoples: We don't know quite yet because AB 863 is under heavy negotiations. A litany of changes was produced about two weeks before the Environmental Quality hearing took place in California. A lot of the stakeholders submitted comments. They were extremely upset. They didn't get it in until the last minute. They had no chance to understand it. They asked for engagement with the legislators, and they were not given the opportunity to do that. 

It fails to recognize the success that the program has had and the progress that we've made. And it basically wants to throw the program out, come up with a completely new program—that's unproven—plus, there's no established infrastructure or technology to recycle any of the other materials that they're talking about. So, one of the provisions of the bill is to do a needs assessment. That needs assessment will take between one and two years to accomplish. Once that's done, then they'll have to write a statute to implement what's required, and Cal Recycle will have to do regulations. So, you're talking about years down the road before that could be implemented. There's a lot of ambiguity. 

One of the other big changes was obviously encompassing all floor covering. Most recently, they've removed synthetic turf from the bill, so it's not being considered. But they're talking about switching from an EPR bill, an extended producer responsibility bill, where the consumer sees this fee on their invoice and pays for building the circular economy to a no-visible fee, and the carpet industry has to pay the full load to make that happen. But that's still going to result in increased costs for carpet in the state of California, and it'll be years before the other flooring options are in a position to do the same thing. We'll have an uncompetitive marketplace from that point of view as well. 

This bill will come in for its third committee hearing on August 5 in the appropriations committee, and we're hopeful that all of the comments that have been submitted will convince the committee that this bill is far too complex. It's been evolving far too rapidly for people to comprehend it and give their valuable stakeholder input on it, and they'll put it into suspense, which moves it into 2025 or will kill the bill. 

Unfortunately, if it gets passed and it gets to be voted on in the two chambers, we could see this bill come forward with a lot of demands that are going to just completely upend both the retail sector in California, the flooring industry, or certainly the flooring industry and the carpet industry. It's going to have an impact on consumers, but nobody knows what the consequence of this is going to be. I would tell you that just for carpet, we have 84 people registered to do business in California today under our approved plan. My guess is that at least half of them are going to throw up their hands and say, "I'm out of here," because the view is not worth the climb to try to comply with the California requirements. I think you're going to see that happen again and again because the complexity is just too much, and nobody understands the consequences.

Transcribed using Edisource International Newsdesk with AI Smart Assist.