The Plastic Crisis Is a Pricing Problem — and So Is the Fix

The seventeen states suing to block California’s plastic law are fighting the wrong battle, and the forfeiting economic gains, and the jobs, they could win at home.

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Late last month, attorneys general from seventeen states, joined by a national wholesalers’ association, asked a federal court to block California’s packaging law, SB 54, on the grounds that no single state should set packaging rules for the whole country. Their underlying frustration is real: a patchwork of disconnected state recycling mandates, each with its own targets, fees, and definitions, is expensive for businesses operating across state lines. But the lawsuit takes aim at the wrong target. The fight over California is, at its core, a fight about economics — and on the economics, the suing states have it backwards. The obstacle to solving plastic waste was never California’s ambition. It is that virgin plastic prices are too low — relative to recycled plastic and other more sustainable alternatives — for change to happen.

Consider a single, ordinary material: virgin HDPE, the plastic in milk jugs, soap bottles, and bag liners. In 2021 it cost a little over $1,600 a tonne. By 2023, a surge in US and Chinese petrochemical production had cut that nearly in half, to around $943. Recycled HDPE over the same period stayed near $1,631 — roughly double the price of the virgin material it competes with. As long as that gap holds, recyclers and makers of genuine alternatives cannot win on price, and the capital to scale them stays on the sidelines. Virgin plastic is cheap largely because its true cost — the cleanup, the lost recyclable value, the damage to waterways and health — is paid by the public, not priced into the product. That lost value is not hypothetical: one federal analysis put the market value of the plastic the United States sent to landfill in 2019 alone at roughly $7.2 billion, buried in the ground because barely 5% of the country’s waste plastic was recycled. The encouraging part is that the same force creating the problem, economics, is also the most powerful tool we have to solve it.

Reducing production is necessary, but it will not close this gap on its own or in time. Even a 40% cut from today’s output by 2050 would still leave the world with roughly 11 billion additional tonnes of plastic waste to manage, and the UN Environment Programme estimates the investment required to handle it responsibly at about $1.64 trillion — a figure current spending comes nowhere near. Bans and mandates alone do not summon that capital, and simple, tax-based approaches don’t incentivize the right investments. A price signal does.

We have run this experiment before, in energy. In 2010, solar power cost roughly four times what fossil-fuel electricity did, and was widely dismissed as a luxury only rich countries could afford. What changed was not physics but policy: tax credits, procurement standards, and guarantees created reliable demand and pulled in private capital at scale. Once that capital arrived, the ordinary logic of manufacturing took over — costs fell as volumes rose, by roughly 90% for solar. By 2024, solar and onshore wind were the cheapest sources of new electricity on earth, and more than nine in ten new renewable projects undercut the lowest-cost fossil-fuel alternative. And the states that gained most were not the ones with the loudest climate politics: Texas is now the largest producer of renewable electricity in America, generating nearly twice as much wind and solar power as California and about a quarter of all the wind energy in the country, while Iowa draws close to two-thirds of its electricity from renewables. The technology once written off as too expensive did not just get cheaper; it built a vast new industry and workforce, much of it in states that never set out to lead an energy transition.

Plastic sits roughly where solar sat in 2010, and the mechanism to move it is not exotic. Set source-reduction targets, and charge escalating fees when producers miss them, so that doing nothing keeps getting more expensive. Pair that stick with a carrot: let companies that beat their targets, buy verified recycled content, or fund credible waste-reduction projects capture financial value for doing so, including through tradable credits. It does what energy policy did — making the cleaner choice the investable choice, and letting a learning curve take hold in recycling and alternative materials.

I run a plastic-responsibility platform that helps companies navigate packaging regulations and act on plastic waste collection and responsible processing through a plastic-credit marketplace, so let me be direct about the obvious objection. Credits cannot become a license to keep polluting, and they are no substitute for using less plastic or ensuring it is managed more responsibly. Designed badly, they are greenwashing. Designed well — with standards, transparency, and trust — they are the opposite, which is why reduction obligations have to keep escalating so that buying credits never becomes cheaper than actually reducing, why every credit must clear a high bar of independent verification, and why no company should be permitted to claim its plastic footprint is somehow “neutral.” The point is to move capital toward solutions faster, and the early evidence is that it works. Where producer-responsibility rules have created steady demand, a Philippine recycler has raised output more than 15%, and a network of women-run collection shops has grown from four sites to 146 in four years, lifting incomes by nearly half. That is what a working price signal looks like on the ground: not just cleaner coastlines, but jobs.

Which is what makes the lawsuit a missed opportunity. Strike SB 54 and the patchwork it is accused of worsening does not disappear; the fragmentation continues, and the price signal capable of resolving it never gets built. Tellingly, California is being sued from both directions at once: while these seventeen states say the law goes too far, a coalition of environmental groups has sued arguing its rules were riddled with loopholes that make it too weak. When a policy is attacked simultaneously for overreach and for timidity, the useful question is not who wins the case, but what design would actually work.

And here the suing states may be working against their own interests. The investment this transition requires — recycling plants, materials science, and the jobs that come with both — has to be built somewhere. A $1.64 trillion gap is not only a cost to be avoided; it is a market to be won, and there is no reason those facilities and jobs should cluster only in California. They can as easily be built in Texas, Georgia, or Iowa — the same states that won the last energy transition — but only where there is a durable demand signal worth investing against.

So the right ask is not to strike California’s law and restore a vacuum. It is to replace the patchwork with a coherent, market-based framework — ideally national, or at minimum interoperable across states — that ends the compliance chaos businesses rightly resent and rewards the states that build the supply. Plastic has been a cheap commodity for too long. It is time to put a new price tag on it, one that reflects its true cost. The states now circling California can spend years litigating to preserve the status quo, or they can compete to capture the industry that is coming either way. Only one of those choices creates jobs.

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Sebastian DiGrande is CEO of PCX Markets, a plastic-responsibility platform and plastic-credit marketplace. He previously spent two decades as a senior partner and managing director at Boston Consulting Group and served as executive vice president of strategy and chief customer officer at Gap Inc., where he led more than $5 billion in digital and international businesses.