As negotiations on The Packaging and Packaging Waste Regulation (PPWR) are progressing, Dr Martin Engelmann, director-general at plastic packaging association Industrievereinigung Kunststoffverpackungen e.V (IK), told Argus the regulation has become heavily focused on plastics, and reaching a conclusion at any cost could negatively affect the plastic packaging market.
Do you expect PPWR to be finalised before the change in EU Parliament?
That is the number one question. The discussions have been very difficult. Even for member states to find a solution was hard. The EU Council needed a break in negotiations to deal with last-minute changes. The biggest hurdle is that the Parliament has taken a very different position with regard to reuse quotas and bans by suggesting many exemptions based upon life-cycle assessment (LCA), which is completely opposite to what many member states want.
So I expect the discussions to be very, very challenging, and we will have to see who is in the stronger position. To close the deal before the elections to the European Parliament they would have to find a compromise by the end of February at the latest.
How do you expect a compromise to be found?
It is very high on the political agenda, but trying to find a conclusion at any cost is concerning as it could negatively impact the packaging market, and the plastic packaging sector in particular, because the PPWR has become more a "Plastic Packaging Waste Regulation" instead of a material-neutral approach that was originally attempted by the European Commission.
The tendency is to solve conflicts with regard to specific rules by allowing member states to go their own ways, and the Council presidency has used this method a lot to come to a solution. This approach will increase the already existing patchwork of national packaging regulations and thereby weaken the European internal market.
Industry at the very beginning was very much in favour of the PPWR, since it seemed a way to return to to harmonised packaging rules across the entire internal market. But the worry is we may end up with an increased patchwork of national packaging regulation plus a whole tonne of bureaucracy from this proposal, so the industry would get the worst of both worlds. It is very frightening.
What are the main challenges of a patchwork of European regulations?
The Europe internal market is the home market for many companies. In the past, companies did not need to worry where the packaged product appears within the region because all the packaging rules were the same for every European country. But this has changed over recent years.
There are plastic packaging bans in France in regard to fruits and vegetables for instance, and recycled content quotas in Spain coming into force in 2025, and we had a challenging labelling discussion in Italy.
If the PPWR will be decided according to the Council proposal these differences by countries will increase. For companies it makes life very difficult, because they have to check in which countries their packaging is being used, and if it complies with the specific rules of those countries.
The inclusion of reuse targets in the proposal has been highly debated. Could you outline the different positions that currently exist and the challenges?
The main problem with the Commission proposal on reuse quotas is that there is no underlying LCA that would look at a product or packaging format and then say whether certain reuse quotas would make sense overall.
Now the EU Parliament has suggested grant exemptions to reuse quotas based on LCAs, but it is a very difficult approach. Using LCA as a possibility for exemptions afterwards would allow entire sectors to completely get rid of the reuse quotas by producing an LCA that demonstrates their packaging is better in single use.
There are certain sectors where reuse quotas do not make sense, in particular the industrial and commercial packaging mentioned in Article 26 paragraphs 12 and 13. For the rest of the reuse quotas it is immensely important they are at least material neutral, which is not the case at the moment.
Regarding the recycled content quotas for plastic packaging proposed in the PPWR, are both the Commission and Parliament, as well as the member states, all in support?
Yes, the institutions are pulling in the same direction.
Parliament and Council have amended the approach to the calculation for recycled content, from ‘per unit' to ‘average per manufacturing plant by year'. But the quotas themselves remained basically unchanged, except the recycled content quota for contact sensitive packaging, which has moved down from 10pc to 7.5pc by Parliament, which has also introduced a new recycled content quota for non-PET packaging for 2040. It remains open whether the Council will accept that.
The problem for plastic packaging is that recycled content quotas in particular for content-sensitive packaging, have been set with the assumption that recycled plastics from chemical recycling will be broadly available in 2030. It is still unclear whether that will be the case. From the very beginning our industry pointed out it is unlikely there will be enough recycled material, in particular for food contact packaging, to fulfil quotas. We therefore demand more flexibility by applying the quotas.
What are the latest developments you have heard about discussions on the legal status of chemical recycling?
The discussion is still focusing around the calculation methods permitted for allocating chemically-recycled content.
The Commission has not proposed to allow mass-balance accounting by the more flexible "fuel-exempt" approach as suggested by the entire industry, but instead a "polymer-only" approach, which would allow just a limited credit-based system. The worrying thing is that the chemical industry (Cefic) and plastic industry in Europe (Plastics Europe) have already announced that investments in chemical recycling will not be achieved based on a "polymer only" calculation method, since the output would be too small.
So the quotas we get for recycled content are based on the assumption of chemical recycling capacity, but the chemical industry says they do not have a business case to invest, because the calculation methods allowed for allocating recycled content could make chemical recycling unprofitable in Europe.
The EU Technical Committee will meet to make a decision in January, which will need to be support by a majority of member states. Because the polymer-only approach is seen as a compromise between the fuel-exempt model and the very narrow proportionality approach that some non-governmental organisations are pushing for, if you ask me, there is a high chance that it will go through.
We heard that Germany is considering implementing a plastic packaging tax — have you heard any more details?
Simply, we don't know.
The government pulled this out on 13 December as an idea to easily generate €1.4bn per year. The government needs the money urgently for the 2024 budget. So a proposal is expected in the next couple of weeks, early in the new year.
The idea of a plastic packaging tax was already in the coalition agreement that was decided on two years ago. It is unknown whether it will be a levy or a tax — taxes usually generate revenue for the general budget, whereas levies typically can be reinvested into the industry that pays into the fund. Any plastic levy that will be paid for by the industry, and by the consumers in the end, is bad for the environment because it will increase and further strengthen the trend away from good-to-recycle plastic packaging towards difficult or non-recyclable laminated paper composite packaging.
So there are a lot of questions. Will it be a tax or a levy? Will it only be applied to consumer packaging? What about commercial and industrial packaging? Is it only for plastics or other packaging materials? We will follow the issue closely and our member companies are heavily involved.
