LONDON (ICIS)--Consequences brought on by the pandemic have posed a severe threat to the global recycling industry and its future remains in jeopardy without support.
Speakers at a webinar hosted by the Bureau of International Recycling (BIR) this week discussed the immediate challenges facing the plastic recycling sector.
All speakers were in agreement that the current situation presented problems, with BIR chairman Henk Alssema dubbing it “one of the most challenging times ever seen” for the sector.
In 2019, the tide of public opinion was against single-use plastics and concerted efforts were channelled to environmental issues, but the coronavirus and ensuing economic decline has forced a shift in priority.
As countries have implemented quarantine measures to prevent infection rates from rising, this has weighed on industrial production on a global scale.
This, coupled with travel restrictions, left crude supply reeling and prompted OPEC to call for further production limits to salvage prices.
“Five months ago, we though the price of crude was at the bottom and that the condition couldn’t be worse than it was, but unfortunately it was not at the bottom,” said director of plastic recycling development at waste management company Veolia Clement Lefebvre.
“The coronavirus and crude oil are having a big impact right now, but maybe the latter has the bigger impact. It is hard to be a recycler today as there is very low demand.”
While this length caused prices throughout the chemicals industry to collapse to record lows, the market dynamics in the recycling industry have suffered the inverse reaction.
Forced to compete with cheaper virgin material, prices of recycled plastics are under pressure, and the industry faces further adversity as supply is constrained.
Before the pandemic had hampered our way of living and Greta Thunberg was free to travel the globe how she saw fit to warn the world of the danger emissions caused to the environment, brands were happy to make commitments, pledging to use recycled material.
“Unfortunately, all the buyers and procurement teams in the world just buy recycled resin if they have to,” said Lefebvre.
“Commitments are all good and well but when it comes to economics, people will chose cheaper option,” said Plastic Recycling Corporation of California manager Sally Houghton.
“Recycling industry is on its knees and without some firm pull through of demand there needs to be some intervention to meet environmental goals we have set.”
While attention has been drawn away from the recycling industry, there is still an assertion that this is important.
Sustainability targets need to be met, with the EU exploring the possibility of dovetailing financial recovery with the green agenda.
“The coronavirus pandemic hit our industry extremely hard, but after it the world will need solutions to repair the economy in a way to protect planet and its people. The circular economy has a vital role to play, and the circle is not possible without recycling,” said chairman of the German Association of Plastics Recycling (BVSE), Dirk Textor.
“There are no normal times for recycling companies today or in the future, legislation is essential for the survival of our industry.”
There is a consensus that in order to support consumption of recycled material, there needs to be legislative push to help to make this happen.
As lockdown measures ease, manual sorting projects will be able to open to increase the amount of material available to be recycled in the short term, but it will still be difficult for recyclers to compete on price.
Taxing producers for use of virgin material may be one way of clamping down on the use of plastics, but this would not necessarily help the uptick of recycled materials, which would be better served through government subsidies.
“We have to push governments to understand that if you want to make a difference in the current economy, you have to treat the raw materials as different,” said Lefebvre.
Although virgin and recycled products are made from the same material, they are influenced by different market dynamics and supply chains.
The buck does not stop with legislators, as further changes need to be made throughout the value chain as well, from ensuring virgin material is made to be re-used, to increased communication with converters, to find out what works.
“Everything can be recycled, it is a matter of cost and demand and we need to do more than we are doing now,” said Steve Wong of the China Scrap Plastics Association.
This does not mean the recycling industry can afford complacency and help from governments, it will have to remain competitive.
“In years to come there will be less demand, especially after this pandemic, and the only thing that will increase consumption of plastic is the increase in population,” said Wong.
“If you produce high quality resin you have a chance to make business and money, but that is the only exception, it is time for us to change if we want to make money,” said Lefebvre.
Only material of a high quality will be able to compete with prime material, and some of the work may come from marketing teams finding solutions to make greying material more appealing to consumers than its virgin-white counterpart.
While the pandemic has blunted global supply chains, it could encourage more localised trading.
This would be good for the environment but would also be a boon to the recycling industry, as material is locally sourced from domestic waste to be repurposed.
Industry is still being shaped by many volatile drivers, but longer-term sustainability concerns have not dissipated, meaning the recycling industry will have to adapt to tackle the same challenges presented to virgin producers.
This, coupled with travel restrictions, left crude supply reeling and prompting OPEC to call for further production limits to salvage prices.
Front page picture source: Michael Weber/imageBROKER/Shutterstock
Insight by Morgan Condon