Europe is experiencing a shortage of recycled PET bottles and announced that it will miss the 2025 target for recycling PET bottles unless there is a reversal of the slowing growth rate in recycling, according to a new study by ICIS. The study also found evidence that bottle-deposit schemes are working better as an incentive than market prices for recycled material.
In March, the European Parliament adopted the Single-Use Plastics (SUP) Directive to increase recycling of polyethylene terephthalate (PET), the main component in plastic bottles and packaging for foods and beverages and personal care products. This development was already supported by a range of international brands through their own recycling pledges.
The study, conducted by ICIS across EU member states (excluding Malta and Cyprus, but including Norway and Switzerland) between May and July 2019, looked at the supply chain: Collection, recycling and end-use of PET. A collaborative effort involving national authorities, compliance agencies, deposit return schemes and recyclers, the study concluded that the PET bottle collection rate in Western Europe had risen from 58% in 2016 to 63% in 2018 and is projected to reach 65% in 2019.
Under the SUP Directive, industry is required to reach recovery rates of 77% by 2025 and 90% by 2029, but the collection volume growth rate is currently declining. ICIS estimates that the volume of collected material will need to increase 7% per annum if the 2029 target is to be met.
Helen McGeough, ICIS Senior Analyst, Plastics Recycling, explained the dynamics. “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. 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 tons in 2018—just 2.4% growth on 2017 volumes. Tight supply saw PET bale prices rise 20% in 2018, compounded by growth in reclamation capacity during the year that expanded to meet downstream demand for rPET products,” McGeough continued.
“The reclamation industry increased production of rPET products by 17% to 1.4 million tons. Packaging applications absorbed two-thirds of that total. 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, there was an increase of 13% in food-grade rPET prices, which were generally accepted as these prices sat only 7% higher (on average) than virgin PET prices. However, this has changed considerably in 2019, with premiums of over 30% on average, peaking at near 50% so far this year.”
Looking ahead, collection volumes are projected to grow by less than 4% per annum over 2019 and 2020. If this growth rate is sustained in the longer term, the SUP Directive recovery targets will not be met.
The top seven highest collection rates in 2018 were found in countries with a deposit return scheme in place for PET bottle collection, perhaps evidence that such systems are what is needed to produce the required outcomes. Regulation is seen as the most effective way to drive investment in recycling, but agreeing on who pays within the supply chain is an argument that will run for some time.
ICIS, which conducted the study, states that it is the world’s largest petrochemicals market information provider, with divisions spanning energy and fertilizers. With a global staff of more than 600, ICIS has employees based in the world’s major cities including London, Houston, New York Singapore, Dubai, Shanghai, Guangzhou, Beijing, Mumbai, Tokyo, Karlsruhe and Milan.
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