Child recycling

  • Tom Hesselink, Author |
  • Emiel van Duuren, Author |

Plastic is a vital material in the European economy and society. As it is light, strong and durable, plastic is an attractive packaging solution and an often superior alternative to metal in construction and automotive applications. However, the way we produce and dispose of plastic is detrimental to the environment: it depletes natural resources, pollutes oceans, squanders land, and contaminates the air through CO2 emissions.

Therefore, the European Union has marked plastics as a key priority in its Action Plan for a Circular Economy, meaning it is expanding its regulatory framework and targets regarding recycling of plastics. Meeting these targets will require major investments throughout the entire plastics (recycling) value chain, which will reshape the waste management, recycling and plastic production industry.

Supply of recyclable plastic waste to recycling companies will need to increase in the coming years as regulations will become stricter: a higher share of plastic (packaging) waste needs to be recycled. In order to comply with these and other recycling targets, governments should incentivize waste managers to (post-)sort residual waste and recycle the plastic fraction.

Until now, demand for recycled plastics has been limited due to low oil prices and a vicious circle of low quality and correspondingly low prices of recycled plastics, low profitability and investments in the recycling sector, which keeps quality and demand low. As part of the Green Deal, the EU is expected to introduce quota for minimum usage of recycled content in new plastic products, which will break through this vicious circle. High(er) quality recycled plastics is required to meet these quotas, which are highly scarce and expected to lead to significant price increases.

Sorting and recycling companies will need to invest in both capacity and technology in order to meet the increasing demand for high-quality recycled plastics and capture the opportunity of higher prices and returns, driven by the Green Deal quota. At the same time, plastic converters will need to adapt production to use more recycled plastics, and producers of virgin (petroleum-based) plastics will need to reconsider their strategy as they will lose market share.

In a new article by KPMG Netherlands, we elaborate on the implications of key EU recycling regulations on the supply of plastic waste, demand for (recycled) plastics and the implications for governments, extended producer responsibility (EPR) schemes, waste managers, plastic sorting and recycling companies, virgin plastic producers and users (brand owners).

Interesting