PPWR unpacked - Part 3: Minimum quotas for recycled plastics in packaging

Spain has them, Belgium wants them and now the Commission suggests to apply them throughout the EU. We are talking about quotas for the use of recycled plastics in packaging. Article 7 of the Commission's proposal for an EU Packaging Regulation contains very detailed quotas for various plastic packaging from 2030 onwards. The proposal is causing a stir, especially in the food sector and in the chemical industry, because so far there are hardly any recycled plastics that meet the strict safety requirements that apply there. In this third part of our blog on the EU Packaging Regulation (PPWR), we want to take a closer look at the proposed quotas and talk about safety measures in case of a recycling shortage. Here you can check part 1 and part 2 of this blog.

The Proposal

The idea behind

The idea of mandatory minimum recycled content quotas (exclusively) for plastic packaging is to secure a steady demand for plastic recyclates thereby making them independent of the new (virgin) plastics price and thus increasing investment security for plastic recyclers. There is broad consensus to this - if the quotas are set at EU-level. In fact, the price of plastic recyclates was and still is an important factor in the decision to use recyclates. Even though the industry's interest in recycled plastics has increased significantly over the last years, price remains an important factor.?

However, it is often overlook that there are also other factors which limit the uptake of recycled plastics in packaging, especially regulatory restrictions (e.g. for use in food contact and hazardous goods packaging), technical and qualitative hurdles (e.g. to processability, tear resistance, odour) and – last not least - the lack of quantities in consistent quality.

Quotas for recycled plastics in packaging

The Commission proposes that the following minimum requirements for the use of recycled plastics should apply to all plastics in packaging from 2030:

"Post consumer" recyclates only

The quotas are limited to ?so called "post consumer" recyclates (PCR) and exclude so called "post industrial" recyclates (PIR) obtained from production waste (for the distinction see here). Currently, the share of PIR in the use of recyclates in plastic packaging in Germany, for example, is about one quarter. The aim behind the Commission approach is to increase the collection, sorting and recycling of used plastic packaging. However, there is also the suspicion that production waste is intentionally produced to make recyclates from it – which by the way is legally not possible in view of the definition of waste. However, since the political focus is on household packaging anyway, the restriction to "post consumer" recyclates will probably stay.

"Plastic part in packaging"

As in the EU Single-use Plastics Directive (SUPD) adopted in 2019, not only packaging made entirely of plastic is covered, but also packaging that is only partly made of plastic, e.g. paper or cardboard packaging that needs plastic coatings to protect against moisture or grease. As in the SUPD, natural polymers that have not been chemically modified are excluded (see in detail the Commission's guidelines on the SUPD).

"Per unit of packaging" (!?)

Unlike in the SUPD, the recycled content in the PPWR should not be calculated "as an average placed on the market" in the Member State but instead apply "per unit of packaging". This is surprising because the Commission itself states in its impact assessment that technically it is not possible to calculate how much recycled plastics is in a unit of packaging. The only possibility to prove the use of recycled material is therefore the so-called "mass balance chain of custody" approach, i.e. an average for each economic operator, as it applies e.g. to the recycled material quotas for disposable PET beverage bottles in Germany. We will come back to this later.

What happens if not enough recycled plastics are available?

The Commission has recognised that a prerequisite for mandatory quotas is that sufficient recycled plastics are also available in 2030. Otherwise, the requirements would be a covert market access restriction, vulgo a ban. Therefore, the Commission proposes two corrective options:

Firstly, the Commission intends to investigate by 2028 whether the necessary "suitable recycling technologies" (in the sense of Commission Regulation 2022/1616) for the production of recyclates for food packaging are authorised and "sufficiently installed”. If this is not the case, the Commission “is empowered” (not must) to make exceptions to the quotas for contact-sensitive packaging (except PET and bottles, see above table: b)) and other plastic packaging (see for in Article 7(9)).

Secondly, the Commission provides for the possibility of changing quotas if there is a "lack of availability" or "excessive prices" of recycled plastics and this leads to "adverse effects on human or animal health, security of food supply or the environment" (Article 7(10)).

Exemptions for compostable plastics (!?) and medicinal products & medical devices

Finally, the Commission proposes that the recyclate quotas should not apply to compostable plastic packaging. Also, exemptions are foreseen for medicinal products & medical devices.

The Evaluation

The requirements for quotas

Given the level of detail of the various packaging formats and different quotas, one is inclined to assume that the whole thing is the result of a strictly scientific process. Unfortunately, the opposite is the case: In the underlying Commission's impact assessment there is no analysis of which plastic packaging already contains recyclates and which factors hinder the use of recyclates so far. Furthermore, the technical and legal potential for the use of recyclates in the various types of packaging has not been investigated, although detailed studies had been published by third parties before. Nor was it investigated whether enough recycled plastics will be available on economic terms to be able to meet the quotas.

Instead, by referring to the 55% recycling target for plastic packaging by 2030, the impact assessment tries to give the impression that sufficient recycled plastics would be available if only the Member States met this target. At the same time, however, the impact assessment also shows how far away most Member States are from this target:

Can chemical recycling solve the issue?

For food and other contact-sensitive packaging, which make up about half of plastic packaging, the preconditions for mandatory recycled content quotas are not met due to the high safety requirements. For them, suitable plastic recyclates (except PET) will probably only be available in the future via chemical processes, since recyclates obtained e.g. via pyrolysis are not subject to the strict requirements for food contact. Unfortunately, the impact assessment lacks an analysis of the preconditions (e.g. technology readiness level, necessary infrastructure) and the consequences of a massive expansion of chemical recycling processes, especially regarding existing mechanical recycling processes, climate protection and costs for consumers.

One thing is clear: chemical recycling processes will play a greater role in the future, especially for food and other high-quality packaging. However, whether chemical processes can recycle additional waste volumes (e.g. from sorting residues or the residual waste) that cannot currently be recycled mechanically remains open.

Exemptions for contact-sensitive packaging as long as prerequisites are not met

To protect important supply chains (e.g. for food and pharma) and to avoid a misdirection to more energy-intensive chemical processes, IK recommends exemptions for contact-sensitive packaging until chemical recycling processes have technically matured to the point where they can recycle non-mechanically recyclable waste streams. This requirement should be re-examined by the Commission in five years time.

Safety nets are insufficient

The problem with these proposed "safety net" provisions is that they should only be checked retrospectively to see whether the conditions for quotas exist at all. It would make much more sense to set quotas only when the conditions are met. Moreover, the requirements do not guarantee that additional quantities of recyclate are obtained via chemical recycling. Also, the protection of supply chains other than food supply plays no role in the proposal, nor does the existence of the companies concerned. Therefore, the safeguard mechanism should be made binding before the shortage occurs and not afterwards.

The need for flexibilization

In the area of both contact-sensitive and non-contact-sensitive plastic packaging, there are packaging types for which no suitable recyclates are currently available. To reduce the economic and ecological risks and to level the very different conditions for the use of recyclates, the use of recyclates should not necessarily apply per unit of packaging but should be designed more flexibly.

Since there is no analytical method to reliably measure the proportion of recycled plastics in an individual package, compliance with the quotas can anyway only be proven based on auditing methods along the companies in the supply chain (chain-of-custody approach, fuel exempted). A method that is indispensable for the recognition of recyclates from chemical recycling is mass balancing, in which the proportion of secondary raw materials in the raw material mix of a plant is accounted for and "credited" to the products produced via allocation procedures.

This approach should not only apply to chemical recycling processes but also to mechanical recycling. This would allow producers and distributors to use the total mass of a type of plastic packaging they put on the market in a calendar year as an alternative benchmark for calculating the average recycled content.?

Compliance with the quota requirements should also be possible by means of a credit-transfer method, whereby a company acquires credits from another company that has used recyclates of the corresponding quantity and polymer type - over and above the statutory minimum quotas - in its products.

Promote bio-based (!) plastics

The proposal for exemptions from the quotas for compostable plastic packaging contradicts the result of the impact assessment, according to which only an exemption for products which are to be compostable on a mandatory basis in the future, e.g. tea and coffee bags (see Article 8(1) and (2)) is recommended. An exemption of all compostable packaging from the quota requirements is - rightly - not recommended. This is because such an exemption could have an unintended steering effect towards compostable packaging in applications where this is not beneficial and through which recycling yields or even the quality of the packaging could be compromised.

Compostable or biodegradable plastics are clearly distinguishable from biobased plastics. Since the latter are not produced from fossil raw materials, no climate-impacting CO2 is released during their decomposition. An exemption from the minimum recycled content quota therefore only makes sense for biobased plastics. In view of the scarcity of high-quality recyclates, especially for contact-sensitive packaging, IK also recommends that biobased plastics be considered when meeting the recyclate quotas. More on this discussion you can find here.

In the fourth part of this blog we will look at the highly controversial reuse and refill quotas for packaging.