Significant risk of EU missing plastic recycling targets

By Mark Victory, Senior Editor, Recycling, ICIS

The European Court of Auditors (ECA) has assessed a significant risk that the EU will not meet its plastic packaging recycling targets for 2025 and 2030.

The report, which was released last week, highlights that changes to the Packaging and Packaging Waste Directive (PPWD), which was updated as part of the European Commission’s adoption of its plastic strategy in 2018, could see current reported plastic packaging recycling rates of 42% across EU member states revised down to 30%.

Current reported recycling rates are “far from being accurate or comparable across Member States,” the report concludes.

It also highlights that impending changes to the ‘Basel Convention’ which from 2021 will see strict restrictions come in to force on the export of plastic waste. It argues that, at present, member states are reliant on waste exports to non-EU countries to meet their recycling waste commitments.

The ECA estimates that nearly a third of the EU’s reported plastic packaging recycling rate is down to exports to non-EU countries.

Although not mentioned in the report this has significant implications for the EU plastics charge of €800/tonne which is due to come into force in January and paid by member states. The charge will use the PPWD and its implementing Decision to calculate the amount each member state is required to pay. If recycling rates are revised down due to changes in reporting this will result in a heavier financial burden for each member state.

The charge is not a tax, although commonly referred to as one, because it is payable at state level rather than by individuals or corporations. Nation states could, however, seek to recover the cost of the charge through taxation.

The methods used to meet the cost of the charge will be up to individual countries, and the EU Council has not proposed any regulatory stipulations around this.

Individual countries are free adopt different approaches and could seek to recoup the cost of meeting the charge from differing parts of the supply chain, leading to potential regulatory divergence.

Coupled with this, it takes on average 12-18 months to build a recycling processing facility and average testing times at packaging firms are around 18-months, meaning that any additional recycling capacity resulting from the bill will not enter the market by the time the bill takes effect. This runs the risk that any cost relating from the charge will simply be passed on to the consumer or will encourage a shift to other materials regardless of whether the environmental impact is greater or smaller.

The only country which has so far announced how it will pass through the EU plastics charge to the supply chain is Austria, which will implement a tax on plastic packaging manufacturing, reusable quota and a Deposit Return Scheme (DRS).

Regulatory and consumer pressure against single-use plastic continues to grow. As a result, many Fast Moving Consumer Goods (FMCG) brands have announced ambitious recycled content targets for plastic packaging, which typically go beyond regulatory requirements, with a target of 50% recycled content common.

ICIS has repeatedly highlighted the current shortages of waste collection infrastructure and recycling capacity to meet these targets. The effects of the Covid-19 pandemic – which has seen delays to investment and limited underlying growth in 2020 – have made these targets even more difficult to achieve.

“The conclusions from the ECA are unsurprising,” says ICIS, Senior Analyst Plastics Recycling, Helen McGeough,

“Having assessed the recycling industry, particularly for the more mature RPET market, ICIS found the 2025 targets were clearly challenged due to slowing collection rates and increasing contamination levels, alongside the continued trade of waste despite changing regulations.

The standardisation of recycling rate measurement clearly exposes some of the challenges in the recycling chain.”

Meeting food packaging targets presents a particular problem for most polymers because of the absence of large quantities of suitable waste volumes. This is due to contamination, the prevalence of mixed-recycling chains, the economics of sorting and separating, and tensile strength weakening during the recycling process.

In Europe, the challenge is heightened by the European Food Safety Authority (EFSA) requirement that 95% of material used in food-contact approved recycled material must have originated from a food contact source. For recycled polyethylene terephthalate (R-PET) this is relatively easy to ensure since the bulk of collected material is from post-consumer drinks bottles.

For other polymers, where end-use sources are varied and typically collected in a single input stream, it is an intense challenge and a barrier to market growth.

Even with R-PET there is only currently around 350,000 tonnes/year of food-grade pellet capacity.

Structural shortages have seen prices of recycled polyethylene terephthalate (R-PET), recycled polyethylene (R-PE) and recycled polypropylene (R-PP) for grades serving the packaging sector increase and exceed virgin values in Europe in recent years.

Many players see chemical recycling as a magic bullet. Nevertheless, it remains in its infancy, can increase competition for mechanical recycling plastic waste bales due to contaminant and moisture limitations for some depolymerisation processes, and can be cost-intensive and low yield. Coupled with this, the legal status of chemical recycling remains uncertain.

At any rate, with sources estimating it will take at least 5-10 years for chemical recycling to reach industrial scale, it may come too late to assist with legislative targets.

“Relying on chemical recycling to address the supply gap is unrealistic given the timeframes as already discussed,” said McGeough.

“It is clear that the near-term challenges for the plastic packaging industry rely on combatting the entrenched issues that continue to impede the long term development of the recycling industry.

“Investment in the front end of the supply chain is key but also the least likely to happen in a time when governments are facing the financial hurdles of a pandemic and global economic downturn.

“It should not come as any surprise that the plastic packaging industry is in line to bear the bulk of the costs of recovery and recycling. However, there is the risk that the reaction will be to switch to potentially more harmful materials rather than address the end of life issue of packaging altogether.”

By Mark Victory, Senior Editor, Recycling, ICIS.