For many months the spotlight has been well and truly on the plastics recycling sector. There is no doubt that it has been tough.
Take the sector as a whole and UK plastics recycling is still a success story. Since 2010, plastics packaging reprocessing in the UK has almost doubled and, if the new volume of plastic packaging estimates are adopted from the Plastic Flow report, we are looking at a recycling rate of 37%. This is good news.
This time last year I was talking about how plastics recycling in the UK was gathering momentum. That is still true. A lot has happened in the past 12 months and the next 12 will have their challenges, but there are also real opportunities for the sector.
The price of oil has dominated conversations in this sector, reaching the lowest price point since 2009 and significantly affecting the price of virgin plastics – in some cases making it seem the better buy over recycled plastics. The effects of this have been clear, with a number of re-processors struggling; a key recycler of HDPE milk bottles, Closed Loop Recycling, has received lots of media attention in recent weeks.
But in the case of milk bottle recycling, the difficulties cannot be entirely pegged to low oil prices: a number of other factors have played a role.
While the price of virgin HDPE tumbled, the price of the reprocessors’ raw material – the recovered HDPE bottles – remained buoyant and in fact was driven higher. In 2014, temporary supply disruptions in the US caused by industrial action prompted Asia to look to Europe for its recovered HDPE bottles, pushing up its price.
Not only were UK reprocessors having to compete with selling their end product against the low price of virgin HDPE, but they were also having to pay more for their raw material, resulting in a squeeze on margins at both ends.
In addition, producing a high-quality, food-grade product incurs high processing costs, leaving little room for movement when margins are tight. This created a difficult environment for Closed Loop, but I am delighted that a new investor has been found, saving jobs and allowing the business to continue to produce recycled food-grade HDPE. This is a truly positive outcome for the reprocessing industry.
For future viability, this sector of the market needs a different commercial model. Recycled food-grade HDPE is a different product from virgin HDPE, with a completely different cost basis and should be priced differently. This would create far more stability and reduce price volatility.
To do this requires support from the entire supply chain. We need the dairies and retailers that have committed to using recycled plastics in their packaging, through initiatives like the Courtauld Commitment and the Dairy Roadmap, and who have been making great progress, to demonstrate their commitment and give confidence to the market.
But let’s take a step back. It is important to have perspective on the sector. Recycling to food-grade plastic accounts for less than 10% of plastic packaging recycling in the UK. We also need to make more of the other plastic packaging in our waste stream.
We need to focus on developing vital pull-through for materials, alongside healthy and sustainable reprocessing operations.
One of the biggest opportunities for us to do this is with mixed plastic packaging. We are collecting around 124,000 tonnes of pots, tubs and trays (PTTs) from UK households, but there are still around 400,000 tonnes ending up in the municipal residual waste stream. With councils potentially facing annual disposal costs for PTTs of up to £40m, there is a clear financial incentive here to divert PTTs from residual disposal or energy from waste1, creating a feed-in for new end markets.
Robust end markets for this material – which could be anything from paint pots and garden items, to automotive parts and railway sleepers – are crucial to achieving future targets.
WRAP’s research has already identified that the potential for clear PET PTTs could be around 40,000 tonnes a year, but potentially much higher once economies of scale are developed. We are now looking to run more trials to identify further end markets, and in turn drive demand and give confidence to the market to collect more.
We are already making great strides towards collecting PTT. Currently an estimated 63% of local authorities offer household collections for this material, which is up from just 20% in 2008-09, but we are still only collecting and processing 24%1 of what is available.
And when it comes to collecting more, the consumer has a key role. To encourage people to recycle more, as well as reuse and prevent waste, WRAP has been reviewing its ‘Recycle Now’ campaign. A refresh of the brand, based on findings from consumer research, will be launched during ‘Recycle Week’ on 22-28 June.
This will include new visual resources and communication messages, which our partners can use to communicate with residents, providing greater clarity on what can and cannot be recycled and aiming to instil confidence in the householder to do a bit more.
Another area which could be seen as an untapped source is that of post-consumer films. We now have a dedicated film reprocessor in the UK, PlasRecycle, which takes most of its material from commercial sources. At present there is no clear route to collecting these films directly from the householder, so we need to find sensible and viable ways to collect consumer film and open up the market.
To realise these opportunities and create a stable market for recovered plastics, the sector needs to work together.
I am confident the imminent launch of the Plastics Industry Recycling Action Plan will do just that, bringing together stakeholders from across the plastics recycling value chain, including trade associations, local authorities, recyclers, brands and retailers. Together they can take action on improving collection rates, optimising sorting and reprocessing, and further developing the crucial end markets. I urge the sector to sign up and get involved.
Significant improvements have been made towards achieving a circular economy for plastic packaging, but more still needs to be done if we are going to meet the 2017 plastic packaging recycling targets and support the overall EU recycling target of 50% by 2020.
But, more than that, we should want to develop healthy plastics recycling markets to build a level of resilience that is becoming ever more important in an increasingly unstable world.
As we see the oil price creep up, this should start to take some of the pressure off our recycled equivalents. But what we do now – building the markets, the reprocessing and the collections of a variety of plastics – will help put the UK in a stronger position in the future, no matter what happens to oil prices. We need to seek out these new opportunities and work together to drive forward plastics recycling in the UK.
Timeline: Two months of turmoil
Defra calls representatives from waste, resources and plastics industry associations, retailers and dairies to discuss the parlous state of the market
WRAP chief executive Liz Goodwin urges the supply chain to “stick with” the voluntary Dairy Roadmap
Closed Loop Recycling “overwhelmed” by support across the supply chain
Friends of the Earth calls on supermarket chains and dairies to pay an extra 0.1p for each two-pint plastic milk bottle to support processors
WRAP convenes meeting of all parties, but dairies decline to attend on grounds of competition
Closed Loop Recycling is acquired by Dubai-based investment firm Euro Capital after entering administration
Marcus Grover is director at WRAP