Georgia-Pacific, a Koch Company, found a way to recycle coated paper cups from places like Starbucks and McDonalds and turn them into toilet paper, napkins and paper towels. John Mulcahy, the VP of Sustainability at Georgia-Pacific joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss.

Video Transcript

ALEXIS CHRISTOFOROUS: It's the holy grail of recycling, those coated paper cups we get coffee in from places like Starbucks and McDonald's. You didn't used to be able to recycle them, because of that coating. But Georgia-Pacific has now found a way to do it and turn those old cups into toilet paper, napkins, and paper towels.

John Mulcahy, the VP of Sustainability at Georgia-Pacific, a Coke company, joins us now. John, good to see you. Pretty fascinating stuff. Explain to us how this works. How do you turn those coated cups into paper goods?

JOHN MULCAHY: Good morning, Alexis. Thanks for having me. Paper is a very highly recycled commodity. But when you get to items that have coatings on them, it's difficult to separate the plastic from the paper itself.

Typically, when you put it into a recycling stream, the cup essentially stays together. And then it gets cleaned out and ultimately ends up in a landfill, even if it's put in a recycling bin.

What we've done is looked at some different technologies that enable us to separate the poly from the paper itself and recover the paper for further use.

BRIAN SOZZI: John, this looks to be a landmark or some form breakthrough in the recycling process. Is this-- is this technology something you would license out to other players? Because it certainly would help society at large.

JOHN MULCAHY: Yeah, so a lot of the technology is existing recycling technology that's out there. And what we have done-- and we've been working on this project for about 10 years now-- is looking at the different re-pulping technology that's there and determining which works best for which types of fiber streams.

And so the way you would process copy paper is very different than the way that you would process cups. And what we're seeing is that the vast majority of cups were not being recycled. Those cups have good quality virgin fiber in it. And it is a good return to go ahead and invest in that technology that would allow us to capture that paper and reuse it.

ALEXIS CHRISTOFOROUS: John, I know that you have these new coated cups that are easier to recycle. But what about those coated cups that are already on the market? What are you doing with those?

JOHN MULCAHY: Well, this technology does address the existing cups that have been on the market for a long time. The paper cup is more than 100 years old. And it helps to provide a number of benefits, including hygiene and convenience. You can take it on the go.

It has a layer of polyethylene on it, which prevents the liquid from soaking into the paper, which has been the historical challenge. And so we worked with a number of partners over the years trying to get the existing cups to be more recyclable.

BRIAN SOZZI: John, it's our understanding that you are working with Starbucks and McDonald's to develop new cups. When might we see those, and how will they be different?

JOHN MULCAHY: There is an organization called the NextGen Consortium, which is funded out of the Closed Loop Partners. Georgia-Pacific helps to support that. Also, through our industry association, the Food Service Packaging Institute and Starbucks and McDonald's

And so Next Gen has launched a challenge, and a number of different entrepreneurs and companies are trying to develop different items that can meet that need. The balance that we need to try and do is you need a cup that functions well, that will hold a liquid in it for a significant length of time, that is cost-effective and price-effective. And meeting all those three has been a little bit of a challenge.

ALEXIS CHRISTOFOROUS: John, where are we right now as a country when it comes to recycling, especially during the pandemic? Are more businesses and residences recycling or are they recycling less? Where do we stand?

JOHN MULCAHY: So that's been a bit of a challenge too. We're seeing a number of dynamics. One is-- one of the main sources of recovered fiber is office papers. And with schools and office buildings remote, we're seeing less generation of the feedstock to source our mills.

The other thing that's interesting is in the cardboard box market as well. Historically, that had gone through the major retail channels. You ship a case of product to a Walmart. It gets unpacked, put on the shelf, and that box gets baled and recycled.

With the growth of e-commerce, we're seeing a lot more of those boxes moving from the retail channel to the residential channel. Then you have, one, a lower recycling rate by residents versus commercial organizations. And you see that those boxes being mixed with other recyclable. Single-stream will have glass and plastics and metals and paper all in that same blue bin, which makes it a bit harder to process.

ALEXIS CHRISTOFOROUS: All right. Well, John Mulcahy, the VP of Sustainability at Georgia-Pacific. Thanks for being with us and for the work that you're doing for the environment.

JOHN MULCAHY: Thanks for having me.