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About 3 billion kilograms of polystyrene goes into disposable products in North America annually and only about 5 per cent of it is recycled.Babur Saglam/Getty Images/iStockphoto

Stewardship Ontario, the organization responsible for processing and finding markets for materials collected in Ontario's blue boxes, has opened a new front in its efforts to improve recycling. It will invest in companies developing technologies that can help increase recycling and lower costs.

Its first announced investment is in Switchable Solutions Inc., a Queen's University spinoff that has developed a solvent that can efficiently clean up used polystyrene – think foam coffee cups – and plastic bottles contaminated with stubborn materials such as motor oil.

Stewardship Ontario has previously given a few grants and loans to companies doing promising work in recycling tech. The organization handed out this money from a Plastics Market Development Fund – funded by levies on businesses that package products in plastic – in the hope of improving Ontario's recycling process and to see if such businesses could be commercially viable, says Lyle Clarke, Stewardship Ontario's vice-president of innovation and blue box.

"We concluded from that activity that commercial recycling can be very viable in Ontario," Mr. Clarke says.

So Stewardship Ontario decided this year to move on to a new phase. It won't give money away, but it will invest in companies through such means as equity stakes, convertible debentures or commercial loans. In short, Stewardship Ontario is becoming a kind of angel investor for entrepreneurs with promising recycling technologies.

Like its previous grants and loans, Stewardship Ontario's first investments under the new strategy are coming from its Plastics Market Development Fund, set up as a four-year program with about $11-million and now in its third year, Mr. Clarke says. The initial focus is on plastics, though the organization also has smaller paper and glass development funds. Its board will look at future sources of investment funding, he says.

In the spring, the organization put out a call for expressions of interest. It got about 60 responses, Mr. Clarke says, and a newly formed committee of Stewardship Ontario's board is working through those.

The goal is to support new technologies that help Stewardship Ontario meet its waste diversion targets cost-effectively, says Ian Anderson, chair of the investment committee and president of CKF Inc., a pulp and foam products producer in Toronto. That could include making it easier to recover hard-to-recycle materials, creating new uses for materials or making sorting and processing recyclables more efficient.

Switchable Solutions is a good example. The company was set up to commercialize solvent technology discovered by Dr. Philip Jessop, Canada research chair in green chemistry at Queen's University. This solvent can be switched between two states. In one, it will combine with contaminants such as oil, thus removing them from recyclable plastic. In the other, it will separate from the contaminants, so the solvent and sometimes the contaminants can be reused.

Unlike conventional solvents, Switchable's product does the job at more or less normal temperature and air pressure, says Mark Badger, the company's president and chief executive. Other solvents can remove contaminants from plastic, but only at high cost because they require heat or pressure to work – so they aren't economical for cleaning up recycled plastic, Mr. Badger says. Instead, recyclers have relied on mechanical processes, but they can't get the plastics nearly as clean.

An added benefit of Switchable's process, Mr. Badger adds, is that when used to remove oil from plastic bottles it can recover the oil for recycling. An "empty" motor oil bottle still has more than an ounce of oil stuck to its inside, he says, and there is money in recovering it.

Stewardship Ontario, which has taken a minority stake in Switchable Solutions, also has connections with major recyclers all over the world that will be important to Switchable as it grows, Mr. Badger says.

"To me, they're one of the keys to success," says Ellen McGregor, president and chief executive of Switchable Solutions founding partner Fielding Chemical Technologies Inc. in Mississauga, Ont., and a member of Switchable's board. "If you don't have the material to recycle, then you just have a cool technology."

Switchable Solutions is building a demonstration plant at Fielding's Mississauga facility and some time next year will start processing polystyrene and contaminated plastic bottles, initially from the Greater Toronto Area. That will allow the company to prove its technology to potential buyers.

"You must score a first home run," Ms. McGregor says.

Meanwhile Switchable Solutions' technology could help Stewardship Ontario keep more polystyrene and polyethylene bottles out of landfill. Mr. Badger says about 3 billion kilograms of polystyrene goes into disposable products in North America annually and only about 5 per cent of it is recycled. About 185 million kilograms of oil bottles are discarded each year and hardly any are recycled.

Mr. Anderson says Switchable's technology has "potential to change the game."

At the same time, Stewardship Ontario's investments in this kind of company could bring a share of the profits if they find commercial success. That money could help finance future investments as well as offsetting the cost of recycling.

But the first priority is improving recycling, Mr. Clarke says. "Absolutely we're interested in getting a return on our capital, but that's not the primary opportunity."

Special to The Globe and Mail

Mark Evans is the principal with ME Consulting, a communications and marketing strategic consultancy that works with startups and fast-growing companies to create compelling and effective messaging to drive their sales and marketing activities. Mark has worked with four startups – Blanketware, b5Media, PlanetEye and Sysomos. He was a technology reporter for more than a decade with The Globe and Mail, Bloomberg News and the Financial Post. Mark is also one of the co-organizers of the mesh, meshmarketing and meshwest conferences.

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