Whilst in the middle of executing the PlastiCity project, recycling rates of plastics suffer a major setback. The coronavirus pandemic has boosted plastic waste. At the same time the pandemic has caused a demand drop in recycled plastics. ICIS (the Independent Commodities Intelligence Services) reported a decrease in the demand for recycled material of 20-30% in April and May year-on-year. This has been driven by a substantial fall in the oil prices and thus the prices of virgin polymer, by supply concerns and by a shift in short-term focus away from sustainability.
Due to the drop in demand for recycled plastics, stocks have been piling up at the recyclers' premisses, causing a logistic headache for recycling companies as Van Werven, partner in the PlastiCity project. Additionally, many companies are struggling with a lack of liquidity. Recycling producers typically have lower cash reserves than petrochemical firms and a lot of them have invested heavily following a positive demand outlook before the pandemic. The lack of cash and the burden of debt is placing recycling manufacturers under very high pressure.
Addressing the Bureau of International Recycling Plastics eForum on June 10, Clément Lefebvre, vice-president at Veolia Propreté France Recycling, described the combination of low oil prices and the COVID pandemic as “a nightmare” for the plastics recycling sector. He believed that a legal framework promoting recycled content represented “the only way to ensure people are going to use recycled resin more than prime material”.
Government intervention and a collaborative approach on plastics
In an earlier Steven De Meester and Kim Ragaert, experts in plastic recycling at Ghent University called for government intervention in a sector that has never had huge profit margins but has a huge added value for the climate and the circular economy. Government intervention should be directed to help this sector and reduce our dependence on crude oil. It is not oil, but the accumulated quantity of plastics in our society that should be the raw material for new plastics. Some of their proposals:
- Make sure the competition between fossil plastic and recycled plastic stops. This is the only way to create a stable market for recycling at a decent price.
- Accelerate the (European) targets for recycled plastic in new products.
- Support plastic recycling activities, or set a bottom price for new plastic based on oil.
- Offer free loans for the relaunch of the economy.
On her visit to Van Werven, the Dutch State Secretary for Infrastructure and Water Management Stientje van Veldhoven backed the need of support for the plastics recycling industry and their role in the greening of the economy.
Aside from government intervention, another way to stimulate plastic recycling is by taking into account of recycling as far back as the design stage. During the Plastics eForum, Andrei Mihai Sofian, engineer at Rematholding Co. SRL in Romania, stressed the importance of co-operation along the plastics value chain to help ensure products were as easily recyclable as possible. Material mixtures in some products rendered them “almost impossible” to recycle, he maintained.
Clouds over the plastic recycling sector
The corona pandemic has interrupted progress on tackling the plastic problem around the world. But we cannot let the temporary pause become an excuse for ongoing inaction. While consumer pressure is not as sharp in current circumstances, ICIS believes it is likely to return as soon as the crisis is over.
However, clouds will remain over the industry for a while because of delayed investments, delayed projects, bankruptcies and post-corona recession. There is also the fear that petrochemical companies could increase production of virgin plastic to stabilise the demand for crude oil. To avoid such scenarios governments and businesses will have to show perseverance and stick to their efforts to reduce single-use plastics and increase plastic recycling rates.
Local as the new normal
For the PlastiCity project, the low price for virgin materials complicates the chances of realizing new value cases with lost plastics. But there are developments that also provide a hopeful perspective in these troubling times. The latest successes of the project have shown that locally new value cases can be realised. Using lost plastics locally or regionally has multiple advantages, like reduction of transport (costs), relatively clean plastic waste streams, the option of higher quality separation and thus higher quality resource plastics and thus improving possible business cases. Working with local stakeholders could prove to be key in realising higher plastic recycling rates.