Unlocking the potential of HDPE and PP recycling

Whilst End-of-Life Vehicle (ELV) regulation proposals, are just that, the Packaging and Packaging Waste Regulation (PPWR) has now entered into force as law.  The requirements of packaging producers to increase the circularity of materials with the first set of targets by 2030 has already impacted the market with packaging grades for recycled polyethylene and polypropylene rising in prices as demand scales faster than supply.
 

The application driven legislation and the differences this generates in demand has also impacted the willingness to pay for recycled materials. Often this is leading to competition for the same material, which has resulted in a widening in the price ranges over the past 2-3 years. While sustainability drives demand for packaging, other key end-uses such as construction, horticulture and outdoor furniture are mainly driven by cost-saving. This is incentivising suppliers to move up the value chain and differentiate themselves in the market. Offering tighter specification and sub-dividing the packaging, which is going some way to address the needs for a wider range of packaging grade recyclates.
 

Notably the publication of the first draft of the PPWR by the EU Commission in 2022, and the first indicators on minimum recycled content targets, had an immediate impact on prices, especially rHDPE. The average yearly spread between blow-moulding rHDPE pellets and virgin HDPE almost €350/tonne higher than years prior to 2022. Whilst for rPP, the spread for natural post-consumer rPP pellets closer to €570/tonne above 2021. 

The PPWR sets targets for packaging, including HDPE and PP rigids, of at least 35% recycled content required for non-contact packaging by 2030, increasing to 65% by 2040. For contact-sensitive packaging, the required recyclate content will be 10% by 2030 and 25% by 2040.
 

The current capacities for collection, sorting and recycling of rHDPE and rPP are unable to support the growth in demand. Despite recycling capacity doubling since 2018, growth stagnated between 2022 and 2023 due to weaker demand from non-packaging sectors (which still currently make up the bulk of end-use) amid a global polyolefin oversupply. This sat alongside high inflation, rising energy costs, and competition from lower-cost imports of both virgin and off-spec materials. This impacted investment appetite for, if not capability of, the value chain to 2023.

Recycling capacity reached 3.5 million tonnes across the region in 2023, with around 300 facilities according to the ‘State of Play: HDPE and PP rigids recycling study for 2023’ compiled with ICIS and published by PRE.  The recycling industry remains relatively fragmented with an average plant capacity of 14,000 tonnes per year, and only a small proportion of large-scale facilities in the market. There is disparity in those capacities which equally creates intra-Europe competition for supply, with the majority of installed capacity (70-80%) represented by 8-9 countries for each of the HDPE and PP recycle markets.

To meet 2030 recycled content targets for rHDPE and rPP under PPWR, installed recycling capacity requires an additional 2 million tonnes of packaging-suitable recycling capacity. This extends by a further 5.7 million tonnes for the 2040 targets.

To achieve this expansion in capacity, the feedstock supply must be available in terms of both quality and quantity.

However, collection rates have stalled in Europe. In 2023, 51% and 50% of HDPE and PP wastes respectively were collected for recycling, the predominant source being packaging (90%). Collection from other sectors, such as automotive, is currently limited - although set to change with further developments in regulation. Sorting systems suitable for detecting the plethora of sizes and shapes of polyolefin rigids are lacking and contribute to just 42% of collected volumes reaching recyclers as a sorted stream.

Therefore, the flow of wastes from collection through to recycled product remain restricted but does provide the opportunity for improvement.
 

Rigid plastic packaging waste, including HDPE and PP items, is collected at the household level with most countries in the region operating separate collection systems. However, the systems vary significantly from country to country, and internally between municipalities of the same country. Greater harmonisation of systems will go some way to support higher collection rates. Equally important as the convenience and accessibility of the collection infrastructure is the communication and education of consumers on what and how to discard these wastes for recycling.

Looking forward, a key step in this transition is the implementation of Extended Producer Responsibility (EPR) schemes, which all member states are mandated to establish for packaging by the end of 2024. These schemes will not only boost collection rates but also enhance recyclate quality by encouraging the use of more recyclable materials, contributing to the progress of the industry towards meeting the PPWR targets.

A design for recycling framework and advancements in sorting technologies are also required to increase recyclability and availability of feedstocks. Initiatives here are developing but require full scale adoption in the near future in order to make the difference to the supply chain achieving the 2040 PPWR goals.

During which time the ELV Regulation is anticipated to have progressed, which currently proposes that new vehicles will need to incorporate a minimum of 20% recycled plastic content by six years after adoption, with 15% of that needing to be sourced from post-consumer plastic waste recycled from end-of-life vehicles or waste from vehicle workshops, and pre-consumer waste from vehicle production. Demand is expected to concentrate on rPP, as it is easier to incorporate recycled material in non-technical areas of the car (commonly composed of PP).

All together these regulatory developments are driving demand for the recycle polyolefin market and it is likely that other vertical sectors will get the same attention from legislators as the region pushes forward to a circular economy and tackling the issues of plastic waste. The value chain will be the central point to drive the changes needed to bring the supply to market, with collaboration key to delivering those solutions. Taking those same consumers, lobbyists and legislators along on the journey to more circular plastics.