During our BIR Plastics Committee webinar in October last year, my fellow board member Sally Houghton used the entirely appropriate phrase “perfect storm” to describe the combination of factors that had blown the recycling sector way off course in 2020. On top of ever-increasing regulation (and the promise of more to come at the start of 2021), our markets were suddenly confronted not only with a pandemic but also with far cheaper competition from virgin plastics as a result of nosediving oil prices.
The slump in oil, triggered by the demand impact of the pandemic and by a production/price dispute between Russia and Saudi Arabia, was unlike anything most of us had witnessed during our working lives: famously, the benchmark WTI crude oil price had traded as low as minus US$ 40.32 per barrel at one point in late April 2020.
Demand for recycled plastics had already been weakened hugely by the pandemic and so the slide in virgin plastic prices left our sector to contend with a steep fall in the value of our products, far fewer orders, massive stocks and inevitable liquidity problems. As pandemic-related restrictions began to bite around the world, there was also an inevitable decline in collection volumes.
Demand and prices for recycled material mounted a recovery as 2020 progressed, boosted by an improvement in oil values. However, our prices never regained all of the ground they had lost since the start of the pandemic. Conditions for our sector were not helped by tighter enforcement of China’s existing regulations on importing recycled pellets and the prospect of steeper financial penalties for any transgressions.
But despite this tide of negatives in 2020, our resilient plastics recycling sector has always retained its ability to see the wider picture and to identify opportunities. During the October webinar, for example, there was discussion of a growing and encouraging disconnect between recycled plastics prices and those of oil and virgin plastic: Sims Lifecycle Services’ Global Plastics Manager Jan-Hein Stiens pointed out that, to an ever-increasing extent, brand-owners’ corporate and social responsibility programmes are committed to using recycled material, irrespective of cost considerations; and our board member Max Craipeau confirmed that government moves towards mandating recycled contents were also helping to decouple recycled prices from that of oil.
To this I can add that demand for recycled material is certainly on the increase as more and more companies are seeking co-operation along the value chain to ensure maximum recycled contents as well as packaging designs that take best account of recyclability.
The need to find new outlets for recycled materials in the mammoth packaging sector was underlined by Dr Dirk Textor of German recycling association BVSE in his guest presentation to our eForum in June last year. One of his key points was that legislation should be used to assist rather than burden the recycling sector, such as through the use of carbon emission taxes or financial benefits for users of recycled materials.
The introduction last year of the European Commission’s Circular Economy Action Plan would appear to provide a clear signal that forthcoming legislation should include not only recycling targets but also recycled content targets in order to stimulate demand. At the same time, there is a growing appreciation among governmental authorities of the CO2 emission savings achieved through the use of recycled materials.
Unfortunately, actual regulation appears slow to capture this positive mood. Indeed, the very first day of 2021 brought new UN Basel Convention listings for transboundary movements which, experts agree, could hamper necessary flows of plastics. Patricia Whiting, Senior International Policy Analyst at Sims Lifecycle Services, had told our webinar in October that the new criteria would affect all but a few types of scrap plastic shipments, leading to “negative implications” for the Circular Economy through limits on plastic waste available as inputs for recycling facilities and limits on the availability of recycled plastics.
To ensure that plastics recycling plays its fullest possible role in the green revolution desired by politicians, there needs to be some rebalancing between incentive and disincentive.
Available today in many shapes and forms, plastics have become part of everyday life. However, their popularity and almost endless applications present a series of challenges for the recycling industry. Certain post-consumer products contain as many as 20 different types of plastic material. This widespread use of all kinds of plastic makes it difficult to collect large enough quantities of certain types to render recycling viable. At the same time, each variety has a particular molecular composition and, as a result, a different recycling process must be employed. Identification and separation technologies are crucial for efficient and effective plastics recycling.
Recycling helps to reduce energy consumption, air/water pollution and also the amount of plastic that ends up in landfills. Plastics are polymers composed primarily of petroleum, thus the recycling industry plays an important role in preserving this vital natural resource. At the same time, issues surrounding plastics waste, and particularly the effects of single-use plastics on the marine environment, have been regularly catapulted into the world media spotlight.
The reality is that plastics recycling offers plenty of upside potential. Global plastics production approached 350 million tonnes in 2017. According to the OECD environmental policy paper of September 2018 entitled “Improving Plastics Management Trends, policy responses, and the role of international co-operation and trade”, plastic recycling rates are between 14 and 18% at the global level. The remainder of plastic waste is either incinerated (24%) or disposed of in landfills or the natural environment (58-62%). Also in 2018, however, the United Nations put the global recycling rate for plastics at just 9%.
Plastic recycling rates vary significantly across different countries, as well as by waste stream and polymer type. Recycling rates in the European Union average 30% but are thought to be considerably higher in some member states, according to the OECD paper. However, it adds, plastic recycling rates in other high-income countries are typically of the order of 10%.
THE SORTING CHALLENGE
The biggest problem with plastics recycling is that it is labour-intensive because of the difficulties of automating the sorting process. Numeric codes are used to indicate different types of plastic. Mechanical sorting processes using spectrometry and other technological innovations have helped to increase plastic recycling capacities and efficiencies.
Containers are usually made from a single type of plastic, making them relatively easy to sort. But mobile phones, for example, usually have various components made from different types of plastic. Research and development programmes have been designed to improve disassembly technologies and to increase the recovery and recycling rates of plastic-containing products.
RECYCLING MARKET VARIATIONS AND SHIFTS
Various researchers believe the global plastic recycling market will register a compound annual growth rate of well over 6% in the coming years, pushing its value from approaching US$ 40 billion at present to nearer US$ 60 billion by the middle of the next decade.
Of the 300 million tonnes of plastics waste generated in 2015, only around 14 million tonnes (or 4%) was exported outside the country of origin. Imports of plastics waste are concentrated in a small number of countries; for many years, China imported more than half of the internationally-traded plastics scrap. However, the market has undergone massive disruption of late as the introduction of severe new restrictions led to a 99% drop in Chinese imports of plastic scrap in 2018. Initially, other Asian countries increased their imports hugely but a number have since implemented bans or import restrictions of their own.
Reflecting the supreme adaptability of the recycling industry, this loss of key overseas markets for scrap has led to the development of new plastics recycling capacities, particularly in the major traditional exporting regions of the world such as North America and Europe. This trend benefits the environment because more plastic scrap is processed closer to its point of origin rather than being shipped potentially vast distances for recycling, thereby saving resources and reducing greenhouse gas emissions.
The plastics recycling industry helps protect the environment by supplying other sectors - for example, packaging producers - with quality, often tailor-made recycled resins for incorporation into their products, thereby helping to build a circular economy where resources are kept within the usage loop for as long as possible. The recycling industry can also provide valuable expertise at the design stage to help ensure that products are made with their recyclability in mind.