PPWR(D): From directive to regulation – The potential impact on the chemical recycling industry

Plastic waste is a significant environmental concern for the European Union (EU), with an estimated 84.3 million tonnes generated in 2021 (corresponding to 188.7 kg per inhabitant – 11 kg more per person than in 2020). This represents a worrying increase, highlighting the growing challenge of managing packaging waste effectively.

This rise in packaging waste generation is attributed to several factors, including increasing consumption and the expansion of e-commerce, especially after COVID-19. The EU has taken steps to address this issue through the Packaging and Packaging Waste Directive (PPWD– Directive 94/62/EC), which sets targets for packaging waste reduction and recycling.

However, despite these efforts, the EU is still falling short of its recycling targets. The issue of packaging waste is not only an environmental concern but also an economic one. The cost of managing packaging waste is estimated to be around €60 billion per year in the EU, representing roughly 20% of the whole packaging industry turnover (€330 billion). 

The original scope of the directive

In its first issue, the main objectives of the PPWD(R) were to harmonise national measures in generating, using, re-using, recycling, and mitigating the loss of waste materials into the environment. In December 2022 the European Parliamentary Research Service (EPRS) issued an implementation appraisal on the effectiveness of the PPWD(R). The impact assessment generated, in conjunction with the appraisal, highlighted 3 major issues: 

• Growing packaging generation;
• Several barriers to packaging recycling and re-use;
• Low recycling rates and reliance on virgin materials.

Overall, the impact assessment has shown the partial effectiveness of the PPWD(R) and the marked differences in how it’s been implemented among different member states. This led to the preparation for a new proposal.

The official feedback period on the Commission proposal was open until April 2023. During the feedback period, the Commission has received 100’s of contributions from governments, NGOs and trade associations.

On Wednesday 22nd November 2023, the European Parliament adopted its position on new EU-wide rules on packaging. MEPs approved the report, which constitutes Parliament’s mandate for negotiations with EU governments. The report approved was based on the proposed amendments published by the Environment, Public Health, and Food Safety (ENVI) Committee.

The new draft regulation

The scope of the new draft was aligned with the original ones but presented a major focus on improving the functioning of the internal market. In addition, the draft is shaped to be a regulation and not a directive anymore, implying stricter obligations on member-states.  The draft presents several points regarding the end-of-life of packaging materials: 

• Revision of the new recycling targets, or addition of caveats and conditions for their implementation
• Introduction of the mandatory “design-to-recycle” principle
• Strict waste segregation and contamination containment measures
• Recycling Performance Grading
• Focus on the compostable packaging and its requirements
• Introduction of mandatory minimum recycled content for packaging applications.

All these elements may present a considerable impact on the regional recycling industry, and, on the rising chemical recycling sector.

What would be the impact on chemical recycling?

Given the current state of the plastic recycling industry, chemical recycling has been seen as an efficient complementary recycling technology to the existing recycling value chain (Mechanical recycling).  However, these technologies present several challenges, especially from a policy and regulatory perspective.

Chemical recycling definition

Chemical recycling is often associated with 2 specific technologies: Pyrolysis and Gasification. However, at the time of the writing, there are over 10 different technologies classifiable as chemical recycling on the market.

The wide variety of technologies constitutes a major obstacle for regulators, as they often tend to group them, and consequently generate a common set of requirements which may be ineffective or simply disrupting the technological development and its industrial applications.

However, for the first time, the new revision of the PPWD(R) (now a regulation) including its latest amendments, clearly enforces the use of chemical recycling as a viable recycling route for plastic packaging material. However, more should be done to clarify what exactly constitutes chemical recycling and what doesn’t.

Unclear recycling legal status

The current definition of recycling adopted by the directive 2008/98/EC has left the legal status of chemical recycling uncertain. The original draft of the regulation includes a new definition of recycling, implicitly clarifying the end-of-waste principles for “intermediates” often adopted in chemical recycling (Pyrolysis oil, Syngas).

However, the latest amendments adopted in November 2023 are reversing the proposed changes, bringing the legal-status ambiguity back. This represents a major lost opportunity for policy makers in enabling the technology development in the region.

Minimum recycled plastic content

The original draft of the PPWD(R) was setting a mandatory 10% recycled content for contact sensitive packaging made from plastic materials other than PET, except single use plastic beverage bottles by 2030.

This was seen as a major driver for the chemical recycling sector given the unique advantage of this technology in dealing with highly contaminated plastics and being able to produce secondary raw materials for contact-sensitive applications. – However, the 2030 target has been reduced to 7.5% by the recent amendments. Despite the reduction, this may represent good news for the sector, supporting of this technology in achieving those targets.

Chain of custody and mass balance approach

One of the biggest unknowns related to the use of chemical recycling for polymer circularity is how the recycled content is allocated in multi-output productions. An example of this is using recycled plastics to generate pyrolysis oil. Pyrolysis oil can be adopted as a substitute for fossil-derived naphtha in conventional refineries. Naphtha is converted into several different products (I.e., Fuels, Monomers, and others) including energy-related output. Via the mass balance approach, producers can allocate, a certain percentage of the recycled material for each output stream.

Depending on the allocation method adopted, the producer may claim, a higher or a lower percentage to the monomer stream. Adopting a clear mass-balance allocation method is seen as an essential catalyst for the development and adoption of the technology in the region. It would also provide a higher degree of transparency in the whole value chain.

Major stakeholders supporting the introduction of an agreed industry-wise mass balance system emphasises that, to reach the minimum recycled content target for contact-sensitive packaging applications, chemical recycling is needed on a larger scale. This is mainly due to the strict compositional requirements associated with this type of packaging, which strongly limit the use of recycled materials generated by mechanical recycling operators.

However, major NGOs and other stakeholders, are suggesting enforcing a stricter mass balance allocation method, such as the “polymer only method”, would increase or simply clarify the real environmental benefits associated with chemical recycling.

Carbon footprint

Given the relative immaturity of these technologies and their application on a wider scale, their carbon footprints are still uncertain. Several studies have been published adopting Life-cycle Assessments (LCA) to evaluate the environmental benefits of the technologies proposed, focused mainly on “Long-loop” technologies (Pyrolysis and Gasification). 

However, these studies often present conflicting results, and their impact is only limited to the greenhouse gas potential while ignoring other impact categories (Water and Other Emission-related categories). In some instances, some studies present biased points of view or unclear data reliability, increasing the confusion in assessing the real benefit of the technologies.

The latest amendments to the PPWD(R) draft, include additional requirements to the identification of the environmental benefit of new recycling technologies, including a whole new range of impact categories. This would help in clarifying the real impact of those technologies. 

Feedstock

In the past few years, the possibility to export waste from the EU region has been considerably reduced, due to several internal and external factors.

China's waste import ban had a significant impact on the global waste trade, as China was once the world's largest importer of solid waste. Following the ban, several countries have decided to limit their waste import, adding more pressure on EU countries to manage their waste.

In addition, in a landmark move, the European Union has agreed to ban the export of plastic waste to non-OECD countries. This decision marks a significant step towards addressing the global plastic waste crisis and promoting responsible waste management practices. The ban, which was adopted by the European Parliament and Council in November 2023, is part of a broader effort to reform the EU's waste shipment regulations.

The increased amount of available waste material on the market should help in developing additional recycling solutions in the region. However, different stakeholders have highlighted the risk of competition between chemical and mechanical plastic recycling over the same waste polymers, neglecting other streams.

What about other products?

Chemical recycling can be adapted to produce fuels and chemicals, in addition to the intended polymer-to-polymer (P2P) loop. In fact, given the numerous uncertainties and the CAPEX needed to enable the P2P model, most of the current developers are focusing the use of chemical recycling for chemicals and Sustainable Aviation Fuel (SAF) production.

SAF and chemical from waste processes rely on plastic content in their feedstocks, given the high calorific value, and most importantly, the high ratio of carbon and hydrogen present in these streams.  In addition, plastics present a low content of ashes or incombustible materials, which would limit the solid residues of high-temperature technologies.

The revision of the directive has the potential to affect those waste streams, limiting their use in these processes, which may switch toward the adoption of waste biomass rather than municipal solid waste (MSW) to retain their sustainable status.

What’s next?

The legislation has not yet been finalised, as it must undergo the trilogue process, where it will be scrutinised and amended by the EU Council and other stakeholders. Given the apparent record-breaking level of lobbying related to this specific regulation and the current opposition of several member states, the final version may be substantially different from the proposed one.

Despite the potential additional changes, the new revision will inevitably generate a considerable impact on the market, and the application of new recycling technologies in the field. However, it's likely the new PPWD(R) will only be able to solve only part of the challenges the industry currently presents.

Speak to our waste management team