Plastics Recyclers Europe (PRE), the European Waste Management Association (FEAD), and EuRIC, a confederation representing the interests of the European recycling industries, have objected to a proposed “right of first refusal” in the Packaging and Packaging Waste Regulation proposal (PPWR) legislation.
“Right of first refusal” would give priority access to recycled plastics, including recycled PET, to companies in the packaging industry. In September 2022, Unesda, the pan-European association representing Europe’s soft drink industry, proposed introducing the measure in the upcoming revision of the PPWR. At the time, the association said recycled PET was becoming ‘almost as rare and expensive as white truffles or gold’ in the European Union, with demand purportedly significantly exceeding supply.
Beverage companies, particularly small to medium-sized enterprises, expressed concerns of not being able to meet the obligations arising from the EU Single-Use Plastics Directive, as many cannot cover the very high prices of recycled material. They argued that right of first refusal would give every producer, from large to small, the option to buy the recycled material issued from the recyclable packaging it put on the EU market — after adjustment for collection and recycling rates.
This would arguably put all beverage producers, including SMEs, in a position to meet mandatory recycled content targets, considerably reduce the downcycling of PET bottles by promoting bottle-to-bottle recycling, and incentivize all sectors, including those outside the beverage industry, to invest in the recyclability and collection of their products.
However, recycling organizations argued in an Oct. 23 statement that the risk of PET bottle downcycling is a "myth" that "could ruin European efforts toward packaging circularity." PRE, EuRIC, and FEAD warned that the provision, if implemented, would be detrimental to the development of recycling capacity in Europe, promoting monopolistic control of recycled polymers, and going against free-market principles.
“Granting priority access to specific market players would result in a stable source of recycled materials to be used in certain categories of new packaging, but the beneficiaries of the priority access would be granted a monopolistic power to set prices for recyclates,” PRE said in a statement. “Recyclers would have no levers to negotiate recyclates prices at a sustainable level of profitability, and this would stop investment and innovation in the recycling industry.”
The organizations argued that the claim that there is a shortage of recycled PET in the EU for the beverage sector is backed by the faulty idea that non-beverage industries, in particular the fiber market, are using a significant share of food-contact recycled PET.
“However, since the introduction of the mandatory recycled content target for PET beverage bottles in the Single-Use Plastics Directive, the share of the fiber market has dropped sharply,” PRE said in a statement. “In 2022, it accounted for only 5 percent of the total rPET market, as purchasing high-priced food-contact rPET is not financially viable for the fiber industry. Consequently, the right of first refusal intends to address an issue of availability which does not exist,” the association claims.
In fact, the association said, the European PET recycling industry already has enough capacity to meet EU demand. The installed capacity for food-grade material in 2022 was already at 1.4 million metric tons, while the beverage industry would require 800 thousand tonnes to meet the 25 percent mandatory recycled content target in 2025, and about 1 million tonnes in 2030.
The real threat to the European packaging industry, the associations argued, is the "extremely low demand in the EU rPET and major price fluctuations." On Oct. 12, PRE said urgent measures are needed to avoid a shutdown of recycling plants across Europe. It called for enforcement measures to restrict the import of untraceable, unverified products from non-European countries, without elaborating how the mechanism would operate within the free-market principles it advocates for.
“The current market challenges require a multifaceted approach that encourages competition and innovation, while addressing the existing systemic barriers,” PRE, FEAD, and EuRIC concluded, adding that increasing collection of plastic packaging and designing for recycling are the fundamental bottlenecks that need addressing.