McKinsey says changes needed to meet 2030 recycled PET demand

Supply of recycled PET will not come remotely close to meeting demand in 2030 if brand owners keep to their public commitments to use more recycled content, according to one consulting firm.

McKinsey & Co.'s look into the market predicts demand will exceed supply "by about three times" in 2030 as the market has been slow to unlock additional recycled PET supply.

The market, which relies on recycled bottles, serves a variety of end markets that include films, textiles, strapping, and food and beverage containers.

"Over the past few years, there has been no step-change increase in PET collection or sorting. As a consequence, rPET supply has only grown at approximately 1 percent per annum over the 2012–22 period in North America," an article recently published by McKinsey states.

"While there have been some new entrants in the reclamation and reprocessing section of the value chain, there have been no significant corresponding reductions in process losses," it says.

McKinsey states PET has a recycling rate of 27 percent, but about one-third of the material collected is lost during processing, leaving the category with an actual recycling rate of 18 percent.

"Historically, over the 2012–22 period, we have seen rPET supply grow at only about 1 percent per annum, while consumption has increased by approximately 4 percent per annum over the same period," the article states.

"If brands move ahead to fully meet their stated recycled-content commitments for 2030, demand for rPET will rise by some 15 percent per annum between 2022 and 2030; over the same period, supply is expected to continue growing at only around 1 percent, resulting in demand being three times the level of available supply by 2030," McKinsey writes.

This imbalance could lead to price premiums as recycled PET demand grows in the years ahead.

"Future rPET availability will be determined by a combination of supply, demand and regulatory factors, with plateaued supply being of greatest concern," the article states.

The report indicates three ways to combat the issue, including boosting recycled PET supply through increased recovery. The market also has to ensure access, and the report suggests that brand owners could vertically integrate with recyclers or create long-term strategic partnerships or contracts.

"There have also been several small-scale efforts by brands to directly recover their own bottles from consumers. Although currently uneconomic, this approach may become viable if the value of recycled materials continues to climb and access to supply becomes more difficult," the article states.

Brands also can be their own best friend to help boost the recycled PET supply by designing their packaging to be recyclable.

"Solutions here could range from moving away from colored PET to improving labeling and product design to encourage higher rates of consumer recycling," the article states, pointing to Coca-Cola Co.'s recent decision to stop using green PET.

McKinsey's Maimouna Diakhaby, David Feber, Yasir Mirza, Daniel Nordigården, Brian Shields and Jeremy Wallach are listed as authors, with Jacob Berning, Thomas Frost and Emily Roeper contributing.

"Sustainability in packaging is a time-sensitive priority for leaders in the packaging industry. Achieving true circularity through higher concentrations of recycled materials is a critical enabler. However, the significant challenge will be for the supply side to keep pace with demand during the remaining years of this decade. There is no time to waste, with multiple ambitious sustainability commitments scheduled for 2025 fast approaching," the article states.