Investment of between €6.7 and €8.6 billion needed if EU to meet its recycled plastics target

EIB study unpacks the ‘complex layers of the plastics value chain and proposes solutions to its inefficiencies’.

A study from the European Investment Bank (EIB) has found that if the EU is to meet its pledge of placing 10 million tonnes of goods based on recycled plastic on the market each year by 2025, then an investment gap of between €6.7 and €8.6 billion must be closed. In addition, an extra 4.2 million tonnes of plastic sorting capacity is required each year to meet the EU target.

The report Cutting plastics pollution – Financial measures for a more circular value chain looks at ten root causes of the plastics waste problem and identifies investment opportunities and policy measures that the EIB says will help address the world’s growing plastic problem.

The ten root causes found for the inefficiencies seen in the plastics value chain included: Design requirements of retailers and brand owners influencing the recyclability of plastic products; the variety of and heterogeneity of plastics making sorting and recycling more expensive and complicated; and the presence, capacity and standards of the sorting and recycling sectors contributed to inefficiencies.

The report says ‘The emphasis on product positioning and marketing is causing packaging material to be highly heterogeneous in terms of colour, material, format and delivery model. Although these packaging types are desired for their functionality, they do not have viable reuse or recycling pathways (Ellen MacArthur Foundation, 2017). The limited capacity of existing facilities or lack of capacity hinders sorting and recycling. Europe lacks sorting plants that can supply the recycling industry adequately.’

The report asserts that given the complexities of the plastics value chain, many the improvements needed require policy measures combined with targeted financial instruments. Policy recommendations put forward by the report include legislation to deal with difficult-to-recycle packaging, restrictions on composite packaging and imposing quotas on recycling while boosting public awareness campaigns.

Financial recommendations include support for research and innovation, as well as loans to corporate and mid-cap companies, and local authorities. Among the barriers cited to getting investment into the plastic recycling sector was a desire by investors for certainty regarding the stability of the supply and quality of feedstocks. Investors were also looking for stability in the end market for recycled content.

Ambroise Fayolle, EIB Vice President said: ‘Among the many crises the world is currently facing, one is hiding in plain sight: the plastics pollution crisis […]The circular economy agenda represents a key opportunity for addressing the problem, but this will not be achieved without significant investments and innovative policy measures. This study gives a clear direction of travel by unpacking the many complex layers of the plastics value chain and proposes solutions to its inefficiencies.’

Last month Neste, Borealis, and partners announced a collaboration in which they are recycling cross-linked polyethylene waste and turning it into material which can again be used to produce cross-linked polyethylene pipes.