Rigid plastics circularity: Industry fights for control of recyclate prices and availability

25 Oct 2023 --- Rigid fossil-based plastics like PET, which are currently essential in protecting F&B packaging and preventing the methane emissions that result from food spoilage, are being heavily contested within the European industry. How should market designs and regulations ensure advances in financial and environmental sustainability, and what can the industry do to improve material solutions?

As next year’s revisions to the Packaging and Packaging Waste Directive (PPWD) draw nearer, industry stakeholders are vying for access to recycled PET (rPET), for which mandatory levels will be stipulated and for which many major companies have pledged dramatic increases to boost their green credentials. 

Changes to the PPWD will have long-lasting ramifications for recyclate supplies within the packaging industry and how free-market competition is conducted within the bloc. In turn, the prospect of a circular economy — one of the pinpoints of the EU Green — will be impacted in a number of disputable ways. 

Alongside these industry reforms, designers continue to develop more easily recyclable and reusable rigid plastics by addressing issues such as labeling, pigmentation, odorization and filtration standards. 

Closing the loop or stifling competition? 
UNESDA Soft Drinks Europe has made repeated calls over several years for priority access (also known as “the right of first refusal”) to Europe’s rPET supply because deposit return schemes (DRS) established by the beverage sector create the majority of rPET used in various other industries like fashion. 

Beverage bottlers produce the majority of EU rPET, but should they have priority access to supplies?But, the sector is priced out by these industries and receives a disproportionately low amount (compared to production) in return. The association has claimed this situation has led to rPET prices similar to gold or white truffles, threatening smaller European businesses. 

Yesterday, the European Parliament’s Committee on Environment (ENVI) announced its support for priority access and for the wider rollout of European DRS, prompting praise and encouragement from UNESDA. 

However, other industry associations Plastics Recyclers Europe, EuRic and FEAD have said that the issue of PET bottle downcycling, like into garments, is “a myth” disseminated by the bottling industry to gain a monopoly on the market. In a recent statement ahead of the ENVI meetings, the groups also asserted that the pricing issue for bottlers does not exist. 

“The PET recycling industry already has the capacity to satisfy the European rPET demand, as it has massively invested in costly food-contact recycling technologies, equalling to an increase of over 50% between 2019 and 2022,” say the organizations.

“The installed capacity for food-grade [PET] in 2022 was already at 1.4 million tons, while the beverage industry would require 800,000 tons to meet the 25% mandatory recycled content target in 2025, and about 1 million tons in 2030.” 

“If [priority access] is implemented, it would be detrimental to the development of recycling capacities in Europe, promoting monopolistic control of recycled polymers and going against free-market principles.” 

Recyclers would have no levers to negotiate recyclate prices at a sustainable level of profitability, and this would stop investment and innovation in the recycling industry, the bodies claim. 

“The current market challenges require a multifaceted approach that encourages competition and innovation while addressing the existing systemic barriers. It is the crucial step in boosting further investments in recycling and the maturing of the market for recycled materials in the EU.” 

Breaking the cycle? 
However, Nicolas Hodac, director general of UNESDA Soft Drinks Europe, says that the hard-built DRS created by the bottling industry in Europe should be rewarded for its economic circularity and should be protected to encourage recycling loop systems in other sectors. 

“PET beverage bottles are the only sources we can use to incorporate rPET in new PET beverage bottles. There is simply no other source that would be authorized by the current EU legislation on recycled materials and food contact materials,” he says. Nextek’s founder Ed Kosior explains that improving design for recyclability and lowering food grade standards are key for advancing sustainability.

“Once those bottles have been used as recycled materials in other non-food products, they can no longer become new beverage bottles.”

PET bottles also have higher mandatory recycled content targets [25% by 2025 under the SUPD), which has caused the high investments in beverage DRS systems, he explains. 

“It is therefore only fair that a mechanism of priority access to such materials is provided by the EU legislation. This is the only way to enable closed-loop recycling when it’s technologically feasible and when it makes sense from an environmental point of view but also to allow our sector to meet its mandatory and voluntary targets.” 

Priority access systems are already in place in Slovakia and will soon be integrated in Austria as well. “We now need to make this a European best practice and to put it in place in every single Member State,” says Hodac. 

Professor Ed Kosior, founder of Nextek and Nextloop, says that the wide applicability of rPET for packaging or textiles “should be checked with LCA arguments since the big challenge is to reduce carbon emissions dramatically while finding a home for recycled plastics.”  

“The LCA comparison of long-term textiles versus cotton growth or short-term packaging would allow these decisions to be simply made.” 

Competition from foreign markets 
PRE maintains that the greatest threat to packaging circularity is not access to rPET but an extremely low demand for rPET in the EU, coupled with major price fluctuations. 

“The European rPET market is facing a surplus status, with very low demand from the beverage industry, consequently forcing European recycling plants to run well below their capacities. This is also linked, among other reasons, to an increase in imports of both low-priced virgin and recycled PET,” says the association. 

Imports of cheap virgin plastic make boosting recyclate levels increasingly difficult.Imports have cut recyclate prices by up to 50% in 2023, says PRE, which is a result of self-declaration by industry players and must be controlled through third-party certification. 

“The future of the recycling industry is at stake, and immediate action in the form of enforcement measures is needed to avoid a shutdown of recycling plants across Europe,” comments Ton Emans, PRE president. “Ceasing recycling activities would have knock-on effects on jobs, the overall economy in Europe and the environment,” he adds.

Kosior agrees that cheap imports from foreign markets threaten EU plastics circularity. 

“The lower priced virgin resins from Asia are challenging brand owners seeking to contain costs and, in some cases, switch from recycled resin to virgin, which will not only impact the achievement of recycled content targets it will also reduce the commercial viability of plastics recycling,” he says. 

Design for recycling 
Regardless of market legislation, Kosior explains that the industry still needs to properly implement recycling-designs in the majority of resins and products, which instead have been produced with a single-use approach. 

“The resin and stabilizer need to be formulated for circularity. High-performance sorting of packaging into mono-polymer food-grade fractions is required for food-grade recycling processes,” he says. 

Another problem in achieving recycled plastics is in the pigmentation of packaging and the printing and decoration with adhesive labels, which often reduces recyclability. 

“Elimination of pigmentation would greatly enhance the quality and yield of recycling. Polyolefin recycled plastics also frequently require deodorization to remove odors,” he continues. 

Filtration of recycled plastics to below 100 microns is required to reduce the incidence of particulate contamination. “This can be challenging for viscous materials.” 

Ultimately, the EU’s design specifications for food-grade recycled polyolefin polymers are difficult to achieve, says Kosior, which limits the opportunity for high-value markets.

“The new process for recycled plastics for direct food contact can take up to seven years to gain final assessment from the European Food Standards Authority, which is unworkable from a business viewpoint and urgently needs to be revised.” 

By Louis Gore-Langton