LONDON (ICIS)–The events of this year may have
been unpredictable but 2021 offers no improved
certainty given the continuing effects of the
coronavirus pandemic and onset of a global
economic downturn.
Sustainability may have slipped in the focus,
if not agenda, of consumers to corporates alike
due to other priorities, but it is set to
return with fervour next year.
There had been an expectation that demand from
the packaging sector would grow sharply in 2020
from recycled high density polyethylene
(R-HDPE) and recycled polypropylene (R-PP) amid
the growing focus on sustainability, but much
of this growth was curtailed by the impact of
coronavirus.
Backlogs at testing facilities, concerns about
entering new supply chains amid the pandemic,
and workforce and financial pressures led firms
to concentrate on core products.
With ambitious recycling targets from Fast
Moving Consumer Goods (FMCGs) and brands for
2025, a current shortage of available recycled
material suitable for primary packaging use –
particularly food grade – across polymers
investment, as well as project delays, are
likely to make sustainability goals more
difficult to reach, increasing competition for
material.
The recycling supply chain and end users are
all looking to press restart on goals set at
the beginning of 2020, pushing onward projects
for capacity, technology and solutions that
will progress greater sustainability in plastic
products and packaging.
Although some projects began coming on-stream
in the second-half of the year, these have
typically been from the non-packaging sector,
with most of the packaging sector’s delayed
projects expected to come on-stream in 2021.
In the second half of 2020, several global
beverage brands made pledges to use 100%
recycled polyethylene terephthalate (R-PET)
across certain product lines in certain EU
countries from 2021 onwards, welcome news to
the R-PET market.
Even if overall beverage bottle demand is
impacted by further lockdowns or travel
restrictions, the volume of recycled content
going into these bottles should increase,
improving demand for food-grade R-PET next
year.
This will not be without challenges, especially
as financing at national government levels will
be unavailable so no investment in the waste
management system can be expected and industry
may potentially find itself contributing more
to costs in this area.
With steps to bulwark against the coronavirus
pandemic having depleted public finances it is
likely that governments around the world will
look to measures to recoup lost funds in the
coming years.
‘Social taxes’ such as those on plastics, and
revenue-raising measures like Extended Producer
Responsibility (EPR) schemes that can generate
public support, may well be seen as a more
favourable way to achieve this than regressive
taxes such as VAT rises.
In Europe, the challenge is heightened by
European Food Safety Authority (EFSA)
requirements 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
barrier to market growth.
The only currently available source of
post-consumer food-grade recycled polyolefins
(R-PO) currently available in the market is
limited to the UK R-HDPE market where used milk
bottles create a separable and easily
identifiable source of input material, but
there is a hard limit to this of around 100,000
tonnes/year of used milk bottles entering the
waste system. Milk bottles in the majority of
the rest of Europe are manufactured from PET.
There is also some food-grade mechanically
recycled polyolefins currently available from
post-industrial secondary packaging sources
from the meat and agriculture sector, but
volumes remain minimal and there is a limited
ability to scale up.
As a result, many players do not expect
industrial scale food-grade R-PO to be
available until chemical recycling reaches
maturity.
The growth in demand for more recycled material
in packaging could lead to issues around raw
material availability, which may increasingly
become a bottleneck in 2021.
ICIS data show collection rates for
post-consumer PET in Europe are still too low
to meet industry needs, and would be even lower
for the R-PO market. Only with improvements in
collection and sorting would the packaging
industry be able to find enough recycled
material to meet its growing needs.
However, the brands and FMCGs are one year
closer to targets set under EU regulation as
well as their own individual pledges and as
such, moving forward in achieving those goals
is crucial.
2021 offers as many challenges as it does
opportunities for the recycling sector.
With the pandemic hanging heavy over global
markets, there is much uncertainty around
consumption patterns, economic downturn, the
impact of national pandemic recovery packages
and most significantly the developments in
legislation.
Yet the resurgence in focus on sustainability
by both consumer and FMCGs will be the
motivation for the supply chain to strive for
improved volumes and quality of recycled
material to fulfil those ambitions.
Collaboration across the supply chain has
reaped rewards in progressing towards achieving
goals but also contributing to greater
circularity of resources, and strategies that
will certainly be built upon into 2021.
Insight by ICIS analyst Helen
McGeough
Additional reporting by Mark Victory and
Matt Tudball
Front page image: Shutterstock
