The EU has finally accepted that recycled content in plastic packaging can come from chemical recycling, but the rules imposed risk stifling the technology before it can even be implemented. Chemical Recycling Europe, broadly welcomed this recognition earlier in the year, but since the details have emerged, two of its members have announced potential plant closures (Quantafuel) or have gone into administration (Plastic Energy). What is the reality behind these news stories?
At the route of the problem are the laws of chemistry. In chemical recycling, the process of breaking down the polymer molecules, and then rebuilding them, is not selective and the recycled content becomes distributed through all products, not just those that will be reprocessed back into new plastics. Some recycled content ends up in molecules that are used for fuel or products that are not subject to recycled content requirements, so value is lost. The industry wants to be able to allocate the recycled content in other molecules, back to plastics, to keep costs down. They make the argument that recycled molecules in other products replace virgin material, so greenhouse gas emissions are saved.
The EU doesn’t buy this argument, but it has come up with a compromise. The implementing decision for beverage bottles allows chemically recycled material to be attributed via certified mass balance, calculated using the “fuel-use exempt” method. This means that any recycled content that ends up in byproducts which a company can prove are not used for fuels, can be reallocated back to recycled polymer building blocks that will be made into plastics. The complication here is that many byproducts are used for both chemical intermediates and fuels. This outcome may be manageable for large producers that are integrated from the first production step, usually the steam cracker, right down to polymers, and other final products, because they have complete sight of the whole supply chain. Smaller operators would have to do a lot of due diligence to find out whether these ‘dual use’ products enter the fuels market. And the whole calculation and proof of usage must be certified by an independent auditor.
Despite the compromise, enough additional constraints have been written in, to make the economics unattractive. And although the decision only applies to a small part of the market, PET bottles, the rules are expected to be applied to other plastic packaging in the future. So it is not surprising that producers and their customers seem to be hanging back from purchasing commitments.
The short mass balance period specified in the implementing decision makes it harder to get a new technology up and running. The duration is only three months, so any recycled content not sold at the end of this period is likely to be lost. Transfer rules are another barrier to implementation. Virtual transfer of recycled content between sites is not allowed, meaning costly physical transportation, from the first sites to scale up the process, to customers all over Europe.
And then there are the economics of waste plastic collection and processing. Experience from implementation of the circular economy shows that European recycling companies are consistently undercut by imports from countries that have much weaker environmental laws. In trying to overcome this problem, the implementing decision creates a new category of imported post-consumer plastic waste that can count towards the recycled content targets, whilst allowing the continued importation of material that is not eligible. There is considerable potential for confusion. Imported waste plastic from certain countries will not be eligible until 2027, but parts of the decision that allow products with ‘attributed recycled content’ from outside the EU to count to targets, seem to offer a loophole.
The companies developing the new technologies for treating waste plastic tend to be small start-ups. To grow and contribute to the ideal of the circular economy they have to negotiate offtake agreements, and source eligible waste plastic, both of which are make-or-break tasks. Although guardrails are necessary, they should not be so onerous as to strangle the technology before it can prove itself. And while importation protocols are difficult to modify, only a few changes to mass balance and allocation rules could make the difference between success and failure.
Published: 27 May 26
