The investment that companies are making in sustainability has never been higher. Despite this trend, many plastic recyclers are in dire straits. Competition from cheap virgin plastics and imports from countries such as China and the United States, where prices remain low, is putting pressure on the recycled plastics market. This is a worrying development for the future of plastic recyclate.
Is the blending obligation coming too late?
The industry previously sounded the alarm to Dutch politicians, and just before the end of 2024 the Lower House passed a motion proposing bridging funding for plastic recyclers until the blending obligation is implemented EU-wide in 2030. Can the blending obligation, as part of the PPWR, save the plastic recycling sector? Or rather, does it have the potential to make the use of plastic recyclate the new norm?
Plastic recyclers are struggling because of the low cost of virgin plastics. These new plastics are not only cheaper, but also offer other advantages. For example, virgin plastics are often of higher quality, and widely available. Furthermore, there are more options for color and transparency, and they are more easily used in the food industry because of their purity and safety.
Price pressure on recycled plastics is further exacerbated by low oil prices and subsidized production of virgin plastics. The latter aspect makes it extremely difficult for plastic recyclers to compete fairly. This is not only an economic problem, but also an environmental dilemma, as it represents a step backward in the transition to a circular economy.
As previously reported, the industry has sought the attention of politicians. There has been a call for a Circular Plastic Agreement. This agreement looks beyond just preserving the sector. After all, with the future blending requirement, more plastic recyclate will be needed. The aim of the agreement is to make renewable raw materials competitive against fossil raw materials, with cooperation throughout the chain as a central starting point. It also aims to harmonize all European regulations. The Netherlands, as the fourth largest producer of plastics in the EU, has a strong position in this. Harmonization of regulations reduces the risk of "leakage effects," with production shifting to countries without strict rules or taxes, as is happening with the plastic tax introduced in 2021.
Plastic recyclate in the near future
Demand for plastics will increase significantly in the coming years. This demand is expected to increase 117% by 2025. This fact, in addition to circularity goals, underscores the need to make plastic recyclate the norm. Export requirements, as stipulated in the Clean Industrial Deal, and the obligation to use plastic recyclate under the PPWR (admixture obligation) promote the standardization of plastic recyclate. The plastic recycling industry plays a major role in this. Not only to provide us with the needed plastic recyclate now and in the future, but also to encourage innovation and further development. A passive approach would result in significant delays in achieving circular ambitions for plastics and a undesirable dependence on fossil resources.
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