The current market
As of early June, we are coming out of the COVID-19 lockdown period in Europe. It is clear our shopping habits have changed beyond all recognition, some would say forever, and we are adjusting to the reality of a new world. In the UK, the online grocery delivery market has reportedly doubled as a result of the lockdown and, as of mid-May 2020, 10.4 million households are shopping online in the UK, compared with 4.8 million a year ago.
What this means for the consumer goods packaging industry is now becoming clearer. New research published by Amcor in late April forecast that the European online grocery market would grow by 66% by 2023. It also revealed that the biggest packaging consideration for consumers is sustainability – this being the primary packaging focus for 65% of those who were surveyed. Recyclable packaging was the most important feature online shoppers were seeking. The research covered 1,000 online grocery shoppers in France, UK, Germany, the Netherlands and Sweden.
European sustainability programs
Despite this good news, it is clear that the global economy has taken a huge hit. Estimates on the decline in GDP for the current year vary from -3% to -12%, depending on which forecasts you read, with the most likely outcome being somewhere in the middle. My own belief has always been that the recovery when it comes in 2021 will be considerable – but to get there we have to go through a period of economic difficulty. This will inevitably impact on current European sustainability programs.
It was therefore encouraging that on 29 May, the European Commission unveiled a €750 billion COVID-19 recovery plan to revitalize the EU economy. This included the opportunity to invest in the European Green Deal, a key component of the recovery plan. This was recently reinforced with a new Circular Economy Action Plan which will look at mandatory requirements for recycled plastic content and waste reduction measures for key products such as packaging. Reductions in overpackaging, designing reusable and recyclable packaging and reductions in the complexity of packaging materials used were also prioritized.
COVID-19’s impact on recycling
The point about the complexity of materials is important. Many in the industry, including the author, have long argued that to meet demanding plastics recycling targets, several things had to change. One of the key requirements (apart from the obvious one of greater investment in infrastructure) was the need to commit to the use of one or two plastic polymers as the materials of choice in the packaging supply chain to facilitate a more efficient recycling stream. The reduction in complexity of packaging materials, including the number of polymers and laminates, has to be a key focus over the next 10 years. However, COVID-19 might harm the speed of take up for several reasons.
Firstly, there is a glaring issue facing the plastics industry, with Plastics Recyclers Europe, the association for the European plastics recycling industry, warning that many plastic recyclers had closed production as a consequence of COVID-19. The major problems were the lack of demand due to the closure of converting plants, the low prices for virgin plastics (as a result of record low oil prices) and decreased global market activity. The industry fears that more plastic waste will finish up in landfill or be incinerated. As of late May 2020, Plastic Recyclers Europe was also calling on the EU and its Member States to include recycling as one of the sectors supported by its recovery plans.
There is another factor in the challenging situation currently facing the recycling industry. The author has long argued that the amount of low-grade plastics being shipped out to South Asia and Eastern Europe was unsustainable if a truly Circular Economy was going to be created in Western Europe. The Chinese may have banned all imports of these materials as a result of its National Sword program, but other countries in the area were quite prepared to take our poorer plastic materials.
There are signs that other countries will follow China`s example and ban these materials, so we will finish up with the landfill problem back on our doorstep without a ready solution and multiplied many times over. Indeed, the UK government`s Environment Bill, unveiled in January 2020, includes a measure to create new powers to stop exports of plastic waste to developing countries. It is believed that as much as 67% of low-grade plastics are being shipped out to other countries from the UK, so the problem is set to be compounded even more.
These issues demonstrate the challenges the plastics packaging industry is facing post–COVID-19. To achieve the objective of ensuring all plastics packaging placed on the EU market is reusable or easily recycled by 2030 requires much work and commitment by all in the supply chain. The vexed issues of the quality of recyclate, investment in infrastructure and separation of materials in the system still require much technical and commercial support.
US plastic recycling issues
Similar challenges face other global economies. In late May 2020, the Consumer Brands Association, a US based trade association of major consumer brands including Coca-Cola and PepsiCo, proposed a fee on virgin resin in the US. The objective was to help the recycled plastics industry and pay for improvements in the recycling infrastructure. Companies in the consumer goods sector are committed to using more recycled plastics in the US but are currently being held back because of low rates of recycling. The proposal did not give any details about the level of resin fees.
Nevertheless, it demonstrates the concerns within the industry and the measures that are being considered. Since the National Sword program was introduced by China, investments of US$ 4.6 billion have been announced for both mechanical and chemical recycling in the US in the last three years, according to The American Chemistry Council. It is clear the consumer goods industry is committed to improving every aspect of the recycling system. However, as in Europe, there is still much to be done.
The COVID-19 pandemic has impacted on the US economy as much if not more so than Europe, with most countries in the latter appearing to have reacted more quickly and methodically than the US in their response to the virus. What cannot be doubted, as we appear to be coming to the end of the lockdown, is the desire of the global industry to place improvements in the recycling of plastics packaging materials high on the agenda in a post–COVID-19 world.
Neil Farmer, Founder/Owner, Neil Farmer Associates