Innovation

Rennueva is the first Styrofoam collection center in Latin America. Styrofoam is made of 95-98% of air and the rest of polystyrene. For these reasons, it is expensive to transport and a less attractive material to recycle. There are only few global companies that recycle EPS, all of which are supported by government subsidies. One of the innovations of Rennueva is the advanced technology of its compacting machine. This machine compacts the EPS and converts it into pellets of polystyrene that will be sold as raw material to producers of photograph frames, geometry sets, clothes hangers and other finshed products. Even though similar machines exist in other countries, they are not energy efficient. The design of this machine, mainly in its compacting process, allows it to consume less energy making it more sustainable. Another innovation of the business is their operating model. Since no subsidies are given in Mexico, Rennueva has partnered with the private and the public sector to build the proposal for the National Plan to Handle EPS. The objective of this law is to foster the valuation of Styrofoam residues and create a circular value chain. This law, mandates large and medium EPS waste producers to deliver their wastes to the collection centers and pay to have their residues treated. Citizens are incentivized to donate as well. With this model, Rennueva either gets their raw material for free or gets paid to receive it. This is in addition to the income generated by selling the pellets to producers of polystyrene products makes it a profitable business.

Inspiration

As mentioned, Rennueva was founded by two college students, Hector Ortiz and Jorge Luis Hinojosa. Héctor and Jorge were part of the University´s Energy and Environment Society (SOEMA). One day at the university, they observed that waste pickers collected aluminum cans, plastic bottles, cardboard, glass but not organic nor Styrofoam wastes. After inquiring as to why, they discovered that nobody payed for these residues, so it was no financial benefit for performing the job. Having the general knowledge that EPS remained in the landfills for hundreds of years, they thought, “why don`t we invent a machine to recycle Styrofoam; after all, how difficult could it be?” During their research, they found that there wasn`t much literature about Styrofoam recycling. They only found two books that talked about how to recycle certain kinds of plastics, but not necessarily Styrofoam. The students, with a background of Mechanical and Mechatronics Engineering, decided to take on the challenge and began a school project. This project resulted in the existing machine’s prototype that became Hector’s thesis. Héctor was encouraged by some of his professors to turn this invention into an entrepreneurship. The director of his thesis then told him: “Hector, you can do this. Go ahead. Nothing is impossible. I trust you.” And after that, they decided to take a more active role in the environment and society.

Overall impact

The creation of Rennueva´s technology has opened the possibility in Mexico to recycle a material that typically goes directly to landfills, water bodies and streets. It is contributing to the reduction of one the biggest problems in Mexico City, flooding, as well as the increase of the lifespan of landfills. In the medium term (3-5 years), 10% of the country`s polystyrene consumption (125,000 MT/year) could be replaced by recycled material of Styrofoam processed by Rennueva, while increasing the margins of polystyrene-based product producers by offering cheaper raw material and local currency based pricing. Today, producers typically buy polystyrene in US dollars and are impacted by exchange rate fluctuations.

Business benefit

Rennueva’s technology and business model make it for a profitable business within the recycling market. In comparison to other countries, utilities for these types of companies are usually partly or fully subsidized if they focused on environmental protection processes. Rennueva doesn´t operate with subsidies from federal or local government entities. Instead, thanks to the National Plan to Handle EPS, they have revenue streams that come from the reception of residues and from the sale of recycled polystyrene. This allows them to operate with a bootstrapping approach and without financial aid. This will support their expansion through the Mexican territory in the medium term. Thanks to the business model and “Know How”, they have the “first mover” advantage in a new market in Mexico (recycled polystyrene from Styrofoam). Additionally, the energy efficiency generated by their innovative compacting process reduces energy consumption which also reduces the impact to the environment and creates improved operating margins.

Social and environmental benefit

The environmental benefits are the direct impact of less Styrofoam waste. Styrofoam is a non-biodegradable material that pollutes inland and outland waters and soils, and is harmful to wildlife. With the establishment of collection centers, EPS generators will have a socially responsible way to dispose of their residues. These centers will reduce the risk of these materials going to the landfills, extending the lifespan of these places. Furthermore, by recycling Styrofoam, they reduce the carbon footprint by 60 to 78%. From a societal point of view, it is important to note that the waste pickers in Mexico are a key component of their business model. As of today, the waste collector’s industry is one of the social sectors that are highly marginalized from most social and economic structures. Even though Rennueva’s capacity is managed only by a handful of workers, the collection centers are providing the waste collectors an opportunity to generate greater income by collecting Styrofoam.

Interview

Hector Ortiz, General Manager and Founder

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