The German Federal Government has published its National Circular Economy Strategy (NKWS).
The policy sets out Germany’s vision to transition to a circular economy across various sectors. The government’s coalition partners, which have recently broken up resulting in the call of snap elections, agreed to draw up a NKWS to bring together existing raw material policy strategies.
The plastics section starts with a brief description of the current state of the plastics market in industry. It says that out of the 5.7 million tonnes of plastic waste generated annually in Germany, 64% is incinerated, and only 35% recycled. The recycling rate for post-consumer plastic waste stands at 33%. It adds that most plastics are recycled mechanically in Germany, with chemical recycling accounting for only 26,000 tonnes per year.
The document outlines two goals for plastics by 2045: (1) gradually increasing the proportion of post-consumer recycled material, combined with an increase in sorting and recycling capacity; and (2) increase the use of recycled materials in the production of plastics, differentiated by material type (e.g. PET, PP., PVC, and PS).
It then goes on to suggest five measures to achieve those goals.
Reducing material diversity
First, the NKWS considers starting a dialogue with industry on ‘material diversity’. It says the federal government will ask the industry to voluntarily reduce material diversity, particularly for thermoplastics. This, the strategy argues, would make it easier to obtain pure waste flows and reduce required investments in recycling infrastructure for different types of materials.
Plastics Europe Germany reaction to the NKWS includes a request to make the recommendations for circular product design more concrete, particularly with regard to polymer diversity.
“In order to make products more recyclable, it is important to maintain polymer diversity in research and development,” said Dr. Alexander Kronimus, managing director of Plastics Europe Germany. “Material diversity is a guarantee for material innovations and property improvements in products. If the circular economy strategy is actually to intervene in the market and set requirements for polymer use, it must be made clear that these requirements only apply at product level. Otherwise, the federal government will be shooting itself in the foot with the circular economy strategy.”
Minimum PCR content
The NKWS also advocates for stronger minimum PCR contents, to be agreed at EU-level in the medium to long term. It says these could be determined at either product- or polymer- level.
Feed-in tariffs
The document also proposes to examine the introduction of a feed-in tariff for the plastics sector. So far, feed-in-tariffs have been applied in the renewable energy sector and proved immensely popular in accelerating investments. These policy mechanisms promise renewable energy producers an above-market price, provide price certainty and long-term contracts that help finance projects with large upfront costs.
“The level of the tariff could be linked to the savings in greenhouse gas through the use of recycled materials compared of the production of new plastics, based on the carbon contracts for difference model, and permanently increase the competitiveness of recycled materials. The market then itself regulates in which product applications the recycled materials are used,” the NKWS reads.
Carbon contracts for difference are also based on the energy sector. A contract for difference is a subsidy model in which both positive and negative deviations from a fixed reference price are paid out to the contractual partner. This means that a minimum compensation is guaranteed, but revenues are capped.
Germany launched its first carbon contracts for difference this October 2024. Under these contracts, the public funding that companies receive varies and is based in each case on the additional cost of the climate-friendly plant compared with a conventional one. Once the cost of climate-friendly production falls below that of its conventional counterpart, the payment flow will be reversed. The companies receiving funding will then have to pay the difference back to the state.
Standardisation
Another measure proposes to reduce barriers to the use of recycled plastic through standardisation. The NKWS proposes that DIN, the German Institute for Standardisation, introduces new standards for life cycle assessments (LCAs) and reusability.
Chemical recycling
Finally, the strategy proposes to further develop mechanical and chemical recycling to significantly reduce plastic waste incineration rates.
The NKWS is clear in its endorsement of chemical recycling as a complementary technology to mechanical recycling ‘for waste streams that have so far only been incinerated’.
The government also made clear that the fuel-exempt mass balance method is a ‘pre-requisite for investments in chemical recycling’. The NKWS says that the Federal Government ‘supports this mass balance method and has advocated for it in coordinated processes at EU level.”
Plastics Europe Germany has welcomed the endorsement of chemical recycling in the NKWS.
“It is important that we make faster progress in establishing circular raw materials,” said Kronimus. “It is therefore positive that the circular economy strategy recognises new recycling processes such as chemical recycling as a useful addition to mechanical recycling.”
The German Industrial Association for Plastics Packaging (IK) also welcomed the NKWS.
"We support the goals of the NKWS: less consumption of primary raw materials and better recycling of materials,” said its president Georg Pescher. “A policy that promotes the circular economy is not only ecologically sensible, but also creates jobs in a crisis-proof economic sector: the production of plastic packaging and material recycling. The NKWS offers sensible goals for this. Our industry has proven that it is ready to make its contribution. Now it is up to politicians to clear the way together.”