Supply Chain Council of European Union | Scceu.org
Supply Chain Risk

Significant risk of EU missing plastic recycling targets

LONDON (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 on Tuesday,
highlights that changes to the Packaging and
Packaging Waste Directive (PPWD), which was
updated as part of the European Comissions’
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 state. 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-us plastic continues to grow. As a
result many Fast Moving Consumer Goods (FMCG)
brands have announced ambitious recycled
content target 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 reycling
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.”

ICIS is prototyping a new Recycled
Polyethylene Terephthalate (Asia) price
report for more details and to receive a copy
of the prototype, please
contact [email protected]

Insight by Mark Victory

(Thumbnail picture: A recycling plant in
Sweden. Source: IBL/Shutterstock )

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