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Packaging market review

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4 minutes

The validated Quarter Two obligation and reprocessing data, indicates that the UK is on track to meet its obligation for all packaging materials.

Plastic Packaging: a brief history

Those that have been involved in packaging waste since the Regulations were first implemented in 1997, will recall that in 1998, the recycling target for every packaging material (which at the time did not include wood), was 7%. Achievement of this was forecast to be particularly challenging for plastic, necessitating significant investment in infrastructure and collection systems and with plastic PRNs attracting values of £200/t for much of that year. Fast forward almost 25 years, we have seen plastic PRN values fall to below  £10/t, fluctuate widely between this price and much higher prices, and have UK plastic recycling targets of 59% which appear to be achievable.

During this time, end-markets for plastic recyclate have also changed significantly, from being primarily reprocessed in China and Asia , to new markets needing to be identified when restrictions were put in place. Since then, several markets have opened up and subsequently closed, South Asia and more recently, Turkey being examples of this. Despite increasing challenges in identifying new export markets, the UK has predominantly remained an exporter of plastic recyclate; until now.

Plastic Packaging: the 2021 position

The data published by the Environment Agency on 26th August 2021 shows that the quantity of plastic packaging reprocessed in the UK in Quarter Two 2021 (155, 540t), exceeded the quantity that was exported (132, 652t ). In 2021 year to date, 50.9% of plastic recycling has occurred in the UK. The reasons for this shift are numerous: social drivers such as consumer pressure and corporate responsibility to ensure high standards of recycling; fiscal drivers such as the pending plastic packaging tax stimulating a demand for recyclate; and legislative barriers such as the Basel Convention changes restricting exports. These have impacted on the types of plastic waste collected, where it is reprocessed and, specifically, have stimulated development of increased UK reprocessing capacity and demand for plastic recyclate.

The graph below shows by plastic packaging type, the quantity that was exported and reprocessed in the UK in Quarters One and Two 2020 and for the same period in 2021.

The blue columns in the graph show the packaging that was exported, the first column in 2020 and the second in 2021. With exception of HDPE bottles, the quantity exported was lower in 2021. Similarly, the orange columns show the packaging that was reprocessed in the UK, here the reverse applies and with exception of HDPE bottles, the quantity reprocessed in the UK was higher in 2021.

Some of these changes are likely to be a direct impact of the Basel Convention changes, which took effect on 1st January 2021. The changes meant that, with the exception of mixtures of separated polyethylene, polypropylene and polyethylene terephthalate that will be separately recycled, only plastic that consists almost exclusively of one polymer and is almost free of contamination can be exported under green list controls. Exports of all other plastics are either prohibited or subject to notification controls, which adds cost, complexity and regulation. Whilst not necessarily evident from the graph, the most significant reductions in exports in 2021 compared with the same period in 2020 are, in percentage terms, mixed bottles and pots, tubs and trays. These will be potentially comprised of several polymers and, unless they are the polymer types above, almost contamination free and will be separately recycled, can no longer be exported under green list controls.

The overall increase in “other plastic packaging” and pots, tubs and trays shown in the graph is also of note; many large grocery retailers have implemented front of store recycling, either on a trial or permanent basis, through which consumers can return plastics that are not typically collected through Local Authority kerbside schemes in preparation for Extended Producer Responsibility for packaging. An increasing number of Local Authorities are also now collecting these as UK end-markets are developed.

And in future…

The Plastic Packaging Tax (PPT), which takes effect on 1st April 2022 applies a £200/t levy for plastic packaging placed on the UK market that does not contain a minimum 30% recycled content. This is widely expected to increase the demand for UK recyclate. A decline in plastic usage is also likely as light weighting and replacement with other packaging materials take effect driven by the PPT and also in anticipation of higher modulated fees for difficult to recycle plastics under future EPR changes. The data published by the Environment Agency referenced above may be indicative of this already happening, although it is impossible to say with certainty. This shows that the quantity of packaging reported by obligated producers in 2021, as measured by activity undertaken on packaging handled, reduced most significantly for plastic than any other packaging material with exception of wood between 2020 and 2021.

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