Climate incentives are having a moment. In the U.S., the Inflation Reduction Act (IRA) unlocked $369 billion for climate and energy investments, fueling everything from solar farms and electric vehicles to hydrogen hubs and carbon capture. But while energy and transportation dominate the spotlight, one powerful solution continues to fly under the radar: turning organic waste into new, climate-smart materials.
Most federal and state-level climate support focuses on technologies that lower emissions after the fact. That means cleaner power grids, cleaner vehicles, and capturing pollution at the source. But what if we started earlier in the system? What if we kept materials out of landfills altogether by turning trash into something useful like bioplastics, fertilizer, or natural pigments? These types of circular innovations are still largely missing from the climate funding conversation.
The Climate Cost of Food Waste
Food waste is a massive climate blind spot. Globally, it accounts for an estimated 8 to 10 percent of all greenhouse gas emissions. In the U.S., food is the single largest input to landfills, making up about 24 percent of what gets tossed. Once there, it decomposes and releases methane, a greenhouse gas more than 80 times as potent as carbon dioxide in the short term.
The EPA estimates that U.S. food loss and waste represent roughly 170 million metric tons of carbon dioxide equivalent per year, even before factoring in landfill methane. That’s equivalent to the annual emissions of over 40 coal-fired power plants.
What’s Being Done
Plenty of strategies are already in play to reduce food waste’s footprint, though most focus on managing or diverting waste, not transforming it.
Cities like San Francisco and New York have curbside composting. California’s SB 1383 requires municipalities to divert 75 percent of organic waste from landfills by 2025. The federal tax code allows enhanced deductions for food donation, making it more financially viable for grocers and producers to give food away rather than throw it out. And the IRA expanded tax credits for anaerobic digesters, which convert food scraps and farm waste into biogas for energy.
These are good, necessary steps. But they mostly treat food waste as something to be dealt with at the end of its life. They don’t recognize its potential as a raw material for new production.
A Missed Opportunity
Across the country, startups are finding ways to turn organic waste into useful materials everything from compostable packaging and bio-based textiles to fertilizer and dyes. These companies aren’t just preventing methane from escaping landfills. They’re also displacing the need to produce virgin materials, which come with their own carbon costs.
But here’s the problem: these innovations don’t qualify for most climate incentives. They don’t fit the mold of “clean energy” and often fall through the cracks of current funding frameworks. Unlike solar or carbon capture projects, waste-to-material startups rarely get tax credits, large-scale grants, or recognition in carbon markets.
One example: Detroit-based Ecosphere Organics processes food scraps like citrus peels and coffee grounds into ingredients for packaging and textile products. Similar companies are turning orange rinds into fabric, spent grains into snacks, and food waste into biodegradable plastics. All are advancing circular solutions that reduce emissions at multiple points in the system. Yet few have access to the kind of public support that helped scale the solar and EV industries.
Where Policy Falls Short
Circular materials aren’t yet treated as a core climate strategy. Most climate plans reference waste reduction in terms of recycling or landfill diversion goals, not upstream innovation. Carbon credit systems don’t consistently reward avoided emissions from upcycled products, and most clean tech grant programs focus narrowly on energy, not materials. That’s a problem as it slows innovation in a space that could meaningfully shrink supply chain emissions while creating local jobs and reducing landfill burden.
What Needs to Change
To fix this, policymakers could start by asking a few key questions:
- Should waste-to-material strategies be considered climate mitigation?
- Could carbon markets credit avoided emissions from upcycling and substitution?
- Can federal and state programs expand eligibility to include circular manufacturing?
A handful of voluntary carbon market standards are experimenting with methodologies that reward waste reduction and diversion. Some public grant programs are beginning to support recycling innovation. But overall, support for circular material producers remains limited and fragmented.
If climate policy is going to match the complexity of the systems it’s trying to fix, we need to look beyond tailpipes and smokestacks. The lifecycle of food and packaging, how it’s made, used, and discarded, has enormous climate implications. And the companies working to close those loops deserve a real seat at the table.
After all, climate solutions aren’t just about where the energy comes from. They’re also about what we throw away and what we choose to make from it instead.