Businesses and the general public are increasingly feeling the effects of the conflict in Ukraine. Gas and electricity prices have risen to record levels and inflation in the Eurozone has already exceeded 17% in some countries.
These high energy costs are slowly but surely taking their toll throughout society. With winter approaching, many people are worried about how much they will have left to spend - or rather, will not have left to spend - once energy bills have been paid. And the public are not alone in being hard hit by the current situation: businesses are also experiencing mounting problems owing to high energy costs, including in the recycling industry.
Electricity prices have risen so high that it no longer pays for companies to continue production, leading them to significantly reduce their capacity by shutting down machines. Since it is virtually impossible to pass on the electricity cost increases, it simply no longer pays to produce at full capacity. In some European countries, capacity has fallen by as much as 40%.
End-producers are also being forced to increase their prices in response to rising electricity/production costs. Consumers are finding those increases hard to swallow, resulting in lower sales. As a consequence, demand for recycled raw materials is substantially lower than in the previous six months.
All these problems are increasing the pressure on regranulate prices in Europe. As demand for recycled raw material declines, there has been an increase in the supply of feedstock materials. We are again seeing surpluses here and there which are exerting downward pressure on prices. Feedstock prices have fallen in some cases by more than 35%, with polypropylene remaining especially low while HDPE, LDPE, HIPS and ABS are also under considerable pressure.
There is a pressing need for power cost compensation for the recycling industry; we should be considered a “key industry sector”. A lot of hard work is being done on all fronts to build a Circular Economy, but the current situation could easily - and seriously - disrupt this process. If waste streams can no longer be mechanically recycled economically, it is inevitable that certain streams will have to be incinerated. It is vital to prevent this from happening.
Chemical recycling is still a very hot topic, with many companies investing heavily in this technology. But a recent report commissioned by Zero Waste Europe (ZWE) has concluded that chemical recycling emits up to nine times more CO2 than mechanical recycling. The document shows that mechanical recycling should be prioritized over chemical recycling where possible and also that more effort should be put into “design for recycling”.
ZWE urges the European Commission to consider the report’s findings in the next review of the Packaging Waste Directive.