Feature Photo – Top Row: Bill Caesar (Generate Upcycle), Meredith Mattson (Laurel Mountain Partners), Angel Veza (ReFED), Emily Coven (Circular Action Alliance); Middle Row: Abbie Webb (Casella), Linda Norris-Waldt (US Composting Council); Bottom Row: Daniel Brown (Rust Belt Riders), Yvette Cabrera (NRDC), Patrick Serfass (American Biogas Council), Susan Fife-Ferris (City of Seattle)

Paula Luu

Food waste diversion, composting, and anaerobic digestion are now established tools to manage waste and scale circularity. The harder question facing the industry is how to scale systems that are capital-intensive, operationally complex, and rooted in local conditions, while policy, markets, and infrastructure mature at uneven speeds.

To understand what it will take to move from momentum to durability, BioCycle spoke with leaders across investment, operations, advocacy, and government. Their insights reveal a sector navigating real constraints but also real opportunity, where success will hinge less on bold commitments and more on reliability, alignment, and disciplined growth.

Infrastructure: Policy Ambition is Meeting Physical Limits

Across responses, one theme surfaced repeatedly: policy goals are advancing faster than infrastructure.

Linda Norris-Waldt, Executive Director of the US Composting Council (USCC), described the last several years as an unprecedented funding moment, but one that is now shifting. “Relative to the opportunity that came from so many federal grants in the four years since COVID, [decreases in] federal funding is the biggest change we have seen,” she said. “We’re seeing opportunities grow with private sector funding for startups and increasing state-level grants through climate action plans.”

Norris-Waldt emphasized that the next phase requires stronger business fundamentals. USCC is working to ensure compost businesses are, “grounded as resilient businesses to decrease their reliance on grants,” she added.

From a municipal perspective, Susan Fife-Ferris, Director of Solid Waste Planning and Program Management for the City of Seattle, highlighted a looming capacity gap tied to food waste policy. “With Washington State’s Organics Management Laws, everyone will need to divert organics, and estimates show that the amount of organics collected for recovery by 2035 will triple,” she said. “Washington State currently does not have enough capacity for processing all the organic materials anticipated to come online over the next nine years.”

Fife-Ferris also warned that packaged food presents both opportunity and risk. “We’re seeing claims that packaged food can be collected as-is and depackaged elsewhere,” she said. “That opportunity needs to be proven. We don’t want to unintentionally contaminate clean streams or increase landfill disposal. We want to work together to find solutions that contribute to and ensure clean feedstocks, responsible diversion of packaging materials for recycling, and valuable finished products with ready markets to be sold into.”

Investor Meredith Mattson, VP of Sustainability at Laurel Mountain Partners, framed the challenge more bluntly. “The biggest bottleneck is the gap between policy ambition and real-world infrastructure deployment, particularly at the local land-use level,” she said. “Even where capital and demand exist, unclear zoning and under-designed systems can stall or constrain projects for years.”

Anaerobic Digestion: Opportunity Constrained by End Markets

In the biogas and renewable natural gas (RNG) space, infrastructure challenges are inseparable from offtake markets.

“The single biggest bottleneck right now is offtake,” said Patrick Serfass, Executive Director of the American Biogas Council. “Like any new project in any industry, the success of building organics recycling infrastructure depends on reliable revenue streams. Right now.. selling renewable gas is less reliable than it was last year, which makes revenue generation less reliable [as well as] lending for projects.”

Serfass noted that delayed guidance on incentives like Section 45Z in the tax code, an incentive for producers of low-emission transportation fuels like RNG, has contributed to near-term uncertainty. Still, he sees significant upside: “Last year and this year will be reset years, as the markets driving that record growth have slowed. The good news is the new markets we expect to open – maritime shipping and electricity – are orders of magnitude larger. Over the long term, that means a very bright future for biogas, RNG, and biogas-derived fuels.”

Bill Caesar, President of Generate Upcycle, echoed the need for predictable conditions. “The critical elements for success have been long-term stability and predictability of policies, data and market transparency, and accurate GHG accounting using full life cycle analysis. Those regulatory preconditions help developers, operators, and investors make rational investment decisions.” Caesar added that investment decisions in RNG projects tend to hinge on three forms of certainty: long-term offtake agreements that lock in revenue, reliable access to feedstock in an industry where long-term disposal contracts are still uncommon, and confidence in capital costs, which have risen sharply since COVID due to increases in construction, labor, and equipment prices.

Demand Is a Critical Part of the Puzzle

While infrastructure and energy markets dominate industry conversation, several respondents emphasized that demand for compost and soil products remains an unresolved limiter.

“What’s old is new again,” Norris-Waldt said. “The industry is refocusing on compost use as a demand driver for infrastructure expansion and as a pathway to new revenue through soil carbon credits.” She pointed to the Natural Resources Conservation Service’s (NRCS) Practice 336 as a major opportunity, adding that every compost producer should be engaging their local NRCS office. This could drive both compost pricing and production.

Serfass agreed that digestate and compost remain undervalued. “From a revenue standpoint, [digestate is] not seen as the valuable commodity it is,” he said. “We have work to do there as well to change that so that more often digestate production can help get more biogas projects built.” 

End markets need to be nurtured and developed, emphasized Fife-Ferris. “We are big believers that with composting food waste, the best way to truly make the market circular, is for the compost to go back to the agricultural sector. Developing these pipelines from processing to use in the agricultural sector takes time.”

States Shape the Next Phase of Organics and Packaging Policy

States continue to play a central role in advancing food waste reduction policy, with impacts that extend beyond diversion into economic development and infrastructure growth. From the food waste reduction perspective, Yvette Cabrera of NRDC underscored the importance of policy as a driver to push communities and businesses to prevent waste, donate surplus food, and compost what’s left.  “The payoff is big: reduced climate pollution, increased food security, new local jobs, and significant savings for households. Eleven states are already leading the way, but expanding these policies nationwide in 2026 would be a game-changer,” she said.

As federal funding becomes more constrained, the role of state and local policy in financing waste infrastructure and supporting programs is becoming even more pronounced. Evidence from states with established food waste diversion policies suggests that the economic returns can be substantial. Cabrera noted that “Massachusetts’ food waste diversion policy has generated a cumulative economic impact of $390 million,” highlighting how well-designed policy can deliver both environmental and economic value. Against that backdrop, some states are increasingly looking to Extended Producer Responsibility (EPR) programs as a way to help offset recycling costs and direct new funding toward infrastructure and education.

That policy evolution is now intersecting more directly with organics recycling systems as EPR programs begin to expand beyond traditional recycling streams to include certified, food-contact compostable packaging. Emily Coven, California Executive Director of the Circular Action Alliance, observed that while compostable packaging represents a relatively small share of the overall organics stream, its inclusion signals a meaningful shift in how policy approaches organics. Coven emphasized the importance of early operator engagement while EPR policies are still taking shape. “This shift creates an opportunity to establish the right baselines, influence [composter] acceptance criteria, and ensure funding reflects real-world facility needs,” she said.

Stronger EPR outcomes, she added, hinge on a harmonized definition of compostable packaging paired with consistent labeling and acceptance criteria across jurisdictions. “Taking this action would reduce contamination, build operator confidence, and support packaging design decisions for producers.”

Sorting and Separation Remain Major Bottlenecks

Innovation remains critical, particularly in sorting and contamination control.

“Contamination missed during manual sorting and limitations in mechanical separation can result in food still being sent to landfills despite best efforts, while also driving up costs and reducing end-market quality,” said Angel Veza of ReFED. “Innovations that improve sorting accuracy and separation performance can unlock higher diversion rates and more reliable [organics] recycling outcomes across the value chain.”

Veza also highlighted where capital can accelerate progress. “There is growing demand for on-site and near-site systems that reduce hauling costs and support regulatory compliance while minimizing operational burden,” she said. “Catalytic capital can de-risk early deployments and enable the fully managed service models these systems rely on, allowing them to scale faster and deliver broader diversion impact.”

Operators Call for Financing That Matches a Local Mission

For operators, financing structure is as important as technology.

“Organics recycling requires funding more akin to municipal bonds than short-term venture capital,” said Daniel Brown of Rust Belt Riders. “Regional organics recycling companies are aiming to build durable municipal infrastructure. This type of infrastructure has a long-term vision that aims to solve long-term, systemic challenges our communities face but are all too often forced to utilize financial vehicles that are: short term, high interest, dilutive, and widely speculative.” In his view, this is a recipe for failure and the composting industry needs new financing tools to ensure long-term durability.

With margins under pressure from inflation, Brown argues that hyper-localized, hyper-efficient solutions are poised to win out over multi-state models that offer fewer tangible benefits to clients. “When clients and operators can establish meaningful relationships that allow for the benefits of this work to be seen and enjoyed [locally], the durability of relationships are strengthened, and this work becomes less transactional and more transformational.”

Participation Is the Hidden Economic Lever

From a large operator’s perspective, Abbie Webb, Vice President of Sustainability at Casella, emphasized participation. “The biggest challenge to organics recycling economics is collection, which is a function of density and customers’ willingness to participate and pay for this service,” she said. “Ironically, widespread willingness to pay is the best way to make the service cost less.”

Webb stressed that innovation must be cultural as well as technical. “Organics recycling is not truly sustainable at participation rates of 2%, 5%, or 10%,” she said. “We need the type of innovation that allows organics recycling to becomes standard practice for homes and businesses of any size. This includes technological innovation but also the cultural innovations that capture more hearts and minds and change daily behaviors.”

What 2026 Demands

These perspectives suggest that 2026 will reward projects that prioritize reliability, demand alignment, and operational realism. The sector’s challenge now lies in building financial, regulatory, and physical systems that can perform reliably at scale.

As Mattson put it, “The shift underway is from building facilities that can run to building systems that can run reliably, recover quickly, and scale.” For investors and operators alike, that distinction may define who succeeds in the next chapter of organics recycling.