The European recycling industry is going to miss a 2025 target for recycling PET bottles, says a new study by ICIS, a global petrochemical market information provider, unless there is a reversal of the slowing growth rate in recovery.
In March, the European Parliament adopted a Single-Use Plastics (SUP) Directive proposed by the European Commission to increase the recycling of polyethylene terephthalate (PET) – the main component in plastic bottles and containers for packaging foods and beverages and personal care products.
This development has been supported by a range of international brands through their own recycling pledges, particularly through the joint Ellen MacArthur Foundation and UN Environment New Plastics Economy Global Commitment. Launched in October 2018, the Global Commitment now includes more than 400 organizations that share its vision of a circular economy for plastics.
These include six of the world’s top 10 fast-moving consumer goods producers (Nestlé, Pepsico, Unilever, The Coca-Cola Company, L’Oréal, and Mars), along with seven of the world’s top 10 plastic packaging producers (Amcor, Sealed Air Corporation, ALPLA Group, Aptargroup Inc., Berry Global, RPC Group and Bemis).
The 2018 ICIS study looked at the PET supply chain in Western Europe and is a collaborative effort by national authorities, compliance agencies, deposit return schemes and recyclers.
Missed collection targets
The study found the PET bottle collection rate in Western Europe has risen from 58 percent in 2016 to 63 percent in 2018 and is projected to reach 65 percent in 2019. Under the SUP Directive the industry is required to reach recovery rates of 77 percent by 2025 and 90 percent by 2029. However, the collection volume growth rate is currently falling. ICIS estimates that the volume of collected material will need to increase by seven percent per annum if the 2029 target is to be met.
“The rise in demand for RPET (recycled PET) began early on in 2018 as supply issues for virgin PET resin carried over from the end of 2017; this pushed up demand from sectors that could easily use either feedstock,” said Helen McGeough, ICIS senior analyst, plastics recycling.
Collection not keeping up
“This in turn pushed up prices as supply was constrained, since collection activity did not increase in line with demand. The drive for food-grade RPET came later in 2018, once the SUP Directive was passed.”
Despite the boost in demand for RPET, collection failed to match those growth rates, reaching 2.1 million tonnes in 2018 – just 2.4 percent growth on 2017 volumes. The report notes that nearly 40 percent of PET bottles are uncollected, with unconfirmed volumes going through end of life routes including incineration, landfill or escaping into the environment as litter.
Tight supply saw PET bale prices rise 20 percent in 2018, compounded by the growth in reclamation capacity that expanded to meet the downstream demand for RPET products. Reclamation utilization decreased however, partly as a result of decreasing yield in bales thanks to contamination. This was the result of the China ban causing lower quality bales to remain in the European market.
“The reclamation industry increased production of RPET products by 17 percent to 1.4 million tonnes and packaging applications absorbed two-thirds of that total,” McGeough explained. “The capacity of food-grade RPET barely had time to build prior to the rush of supply inquiries following the signing of the SUP Directive.”
As a result of the Directive, there was an increase of 13 percent in food grade RPET prices, which were generally accepted because they were only seven percent higher (on average) than virgin PET prices. However, this has changed considerably in 2019 with premiums of over 30 percent on average, peaking at nearly 50 percent so far this year.
Looking ahead, collection volumes are projected to grow by less than four percent per annum from 2019 through 2020. If this growth rate is sustained in the longer term, the SUP Directive recovery targets will not be met.
Deposit return systems work
The top seven highest collection rates in 2018 were found in countries with a deposit return scheme (DRS) in place for PET bottle collection, which the report suggests is evidence that such systems are needed to produce the sought-after outcomes in terms of quantity and quality improvements.
Regulation is seen as the most effective way to drive investment in recycling the report notes, but “with cash-constrained governments and concerns about where we are in the recessionary cycle, this investment is unlikely to materialize from the public sector.”
The survey was conducted in 28 Western European countries – 28 EU member states, without Malta and Cyprus, and with Norway and Switzerland – between May and July 2019.