Plastic recycling crisis: new plastic is too cheap

It’s a party at Umincorp in the summer of 2022. The company has just won two Waste Fund Packaging Awards for its innovative reuse of packaging waste. Partly thanks to Umincorp, Albert Heijn sells pieces of fruit in containers made of recycled plastic.

Eighteen months later, the Umincorp factory in Rotterdam is closed, and the factory in Amsterdam continues to operate only in the hope of a restart. The company had to request a deferment of payment last week and is on the brink of bankruptcy.

Umincorp thus illustrates how major political goals, in this case a circular economy, are still miles away from reality. The biggest problem for recycling companies: packaging manufacturers prefer to buy new plastic rather than recycled. New plastic is simply cheaper. And it has only become more tempting with the recent sharp drop in prices. That’s according to the business newspaper Financial Times due to the growth of petrochemical production in China and the US. For example, Shell opened a gigantic factory in Pittsburg in 2022. American oil giants have also increased plastics production, partly due to the ample availability of shale gas. As a result, there is now a global oversupply of plastics.

The Waste Companies Association confirms that European sorters and recyclers of plastics are having a hard time. The Dutch trade association fears that “more plastic recycling companies will go bankrupt and the sorting market will also deteriorate as a result.” The result is that more recyclable waste goes into the incinerator.

About 40 percent of new plastic is used for packaging. Once they reach the consumer, they usually disappear into the trash bin. Little use is made of recycled plastic for new packaging.

branch organizationWaste Companies Association We fear that more recycling companies will go bankrupt and that the sorting market will also deteriorate as a result

Umincorp is trying to make packaging more circular. The company processes plastics from residual waste from cities such as Rotterdam, Amsterdam, Utrecht and The Hague. It cleans them and finally sorts them by type of plastic with a magnetic particle separator.

For example, filtered-out PET waste (polyethylene terephthalate) was made into plastic granules again, suitable for new packaging. Normally this only happens with soft drink bottles made of this material, but not with cups and containers. And it is precisely those cups and containers that are common – think of the meal salads in supermarkets.

To burn

“We receive a lot of calls,” says Arjen Wittekoek, CEO of Umincorp. “For example, from a large client from Belgium. They say: if you are no longer here, I will have to burn these kinds of containers again.”

In addition to PET granules, Umincorp sells shredded plastic of the type PP (polypropylene, such as flower pots) and HDPE (high-density polyethylene, such as shampoo bottles and toys).

Recycling companies have to compete for their sales with suppliers of new plastics. Its price fluctuates and is now at a particularly low level. While a ton of PET still cost 1,700 euros in August 2022, today that is according to Plastics Information Europe about 1,300 euros. “Plastic recycling companies are having a hard time financially,” says Wittekoek. “They don’t build any factories, but they are happy if they can keep their heads above water.”

In Germany, Veolia closed its PET recycling plant this winter due to erratic market conditions. The company was unable to conclude too few long-term contracts. The factory had the capacity to recycle approximately 36,000 tons of PET bottles per year.

In addition to competition from new plastic, recycling companies are suffering from rising costs, says Wittekoek. Energy has become more expensive and wages have become a lot higher. “You can’t maintain that in a period when you can sell very little, or at far too low a rate.”

New rules

The Umincorp director also understands the packaging companies a bit, he says. “They compete with each other down to the last cent. Ultimately, this can only be solved through regulation. Otherwise, people will continue to choose the cheapest solution – and that is not recycled plastic.”

Rules are being drawn up for the use of partly recycled plastic in new packaging, whereby plastic producers must ‘mix’ some recycled plastic. But they will only apply in the Netherlands in 2027 and in the entire EU in 2030. Presumably they arrive too late for Umincorp. Such rules would make a big difference, says Wittekoek. “We are now competing directly with new plastic. But then you get a separate market for recycled material, and the prices become decoupled from each other.”

There is currently no incentive to buy recycled plastic, writes the Waste Management Association. “Our sorting and recycling companies depend on this goodwill to sell their products. They cannot wait years for market improvements to occur.”

CEO of UmincorpArjen Wittekoek Ultimately, this can only be solved through regulation

An obligation to use recycled material can also be arranged through extended producer responsibility, Wittekoek believes. The UPV already requires companies that use plastics to contribute to collection and recycling. “It would be very logical to immediately oblige them to use recycled plastic in their new products.”

But for the time being, the rules are mainly against recycling companies. For example, there is new EU legislation that virtually prohibits recycled plastic from residual waste from coming into contact with food, for fear of pollution. This law, for example, prohibited Albert Heijn’s fruit pieces from being sold in the recycled plastic containers that were on the market thanks to Umincorp.

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Filter

The Waste Management Association is also disappointed with this legislation. The Netherlands in particular has a strong post-separation infrastructure, she writes, and is good at filtering and cleaning plastic from residual waste. The trade association wants to conduct research into the quality (of this plastic) together with manufacturers of plastic packaging in order to be able to adjust (the rules) at the European Food Safety Authority. This is a process that takes years.”

The goals for a circular economy in the Netherlands remain ambitious. By 2030, the use of fossil raw materials for plastic must be halved compared to 2022, according to the National Circular Economy Program. “But that doesn’t happen automatically,” says Wittekoek. “It is a misconception that the market will arrange this itself.”

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