After a solid but slightly underwhelming second half of 2024, this year brings a range of possibilities for the European rPET market. For the first time, there is an obligation for EU member states to reach a 25pc recycled content threshold for PET beverage bottles placed on their market, which should support demand. But cheap virgin PET prices increase the incentive for non-compliance, and European recyclers have called for more clarity over issues including how targets will be enforced and how imported recyclates and chemically recycled material will be allowed to count towards them, to stimulate investment. Argus spoke to PETCORE Europe president Antonello Ciotti this week to understand his views on these topics and the outlook for 2025.
What are your expectations for PET recycling in 2025, and how recyclers can deal with challenges such as rising fixed costs and energy prices, as well as cheap virgin prices, in the current market environment?
Unfortunately, my expectations are not high. We face two basic challenges. Firstly, we face a structural issue because collection costs in Europe are far higher than outside Europe — some 10 times higher compared with countries such as Egypt, Morocco and China. European recyclers cannot close this gap simply by higher technical standards and innovation — they need protection to compete on a level playing field.
Secondly, we are grappling with a lack of clarity. The EU institutions are not clear on what will happen if players don't add at least 25pc recycled content to PET beverage bottles that they sell into the EU market [in line with the country-by-country targets laid out since 1 January in the EU Single Use Plastic (SUP) directive]. There does not appear to be any penalty for those who do not comply with the rules, so naturally the incentive to comply is not high.
As the cost of rPET is higher than vPET, we need to fight any potential greenwashing as hard as we can, to ensure brands that are paying the prices to comply are not at a cost disadvantage and thus losing market share, margin and profitability.
How much of an impact do you expect imports to have on the European rPET market in the coming years, taking into account expectations for how the push for stricter certification on imports will develop?
The current situation is clear — imported rPET is cheaper than European rPET. Stricter certification will certainly have an impact in the medium term, but it's not here yet. The current situation is that European rPET manufacturers face extra costs compared with imports, which cannot be compensated. Some brands could look to address the recycled content requirements set out by the SUP directive by seeking to buy lots of recyclates from outside Europe. In the future, with proper certification implemented, this could change the landscape significantly.
How much is the uncertainty and potential inconsistency in enforcement of the recycled content regulations in the SUP directive likely to affect its impact on rPET demand in 2025?
For the time being, uncertainty will affect the directive's impact a great deal. It is not clear what counts as recycled content and if depolymerisation is included. The EU Directorate-General for Health and Food Safety was requesting that recycled content should include only PET from European collections, but so far there is a lack of clarity on whether to interpret the definition of "placed on the market" as the EU market or the global market, which is adding to the confusion.*
The SUP directive, passed in 2019, is not clear enough and to confuse matters further, the Packaging and Packaging Waste Regulation (PPWR) passed in 2024 is not aligned with the SUP. The SUP is a directive, so it is for EU member states, and they must transpose it into their own laws by January 2025 and implement it. The PPWR is a regulation, aimed at companies that must reach specific targets by 2030.
However, with the current market situation of rPET being more costly than virgin PET, companies are understandably hesitant to increase the recycled content to or above 25pc as the target is a country average. It only really makes sense for the large brands that are driven by customer demand. Consumers are keen to see recycled content in packaging, but of course they do not expect to pay more for their products as a result. There is currently a clear disconnect between the wishes of the consumer and the realities of the industry.
Several European PET depolymerisation projects have faced challenges in recent months. How quickly do you expect to see commercial-scale depolymerisation making a meaningful contribution to PET recycling in Europe?
I don't see depolymerisation making a meaningful contribution until we get greater clarity over regulation. This is something that we will be taking up urgently with the European Commission, including with the commission speakers at our annual PETCORE Europe conference in Brussels on 4-5 February.
Clearly the technology needs to be proven and to be cost-effective. But even if this was the case, companies may have cancelled and postponed projects due to legislative uncertainty. They cannot be expected to move ahead with huge investments if it is not clear whether the definition of what is accountable in recycled content has been clarified. The endless discussion on the mass balance technology is a typical example of what we need to clarify.†
PETCORE Europe continues to push the commission to clarify all the cloudy points that are still pending, to allow correct implementation of the SUP directive. This is the thrust of the discussions that will be taking place at our conference.
The environment in which we operate is changing and Europe's PET industry has realised that it has lost its former global competitiveness. The challenge, and our role as the association representing the complete PET value chain in Europe, is to work to set in place conditions needed for the industry to regain its position and its competitive advantage by innovation and investments in new technologies.
*The most recent EU implementing decision relating to the SUP directive defines post-consumer plastic waste as generated from waste "placed on the market" without further clarification. A draft update in February 2024 expanded on the definition to "generated from plastic products that have been supplied for distribution, consumption or use on the market of a Member State or of a third country in the course of a commercial activity", but this was not adopted at the time.
†The as-yet-unadopted February 2024 implementing decision laid down a "fuel-use exempt" methodology for calculating chemically recycled content in respect of the SUP directive targets. This led to an objection from the European Parliament's environment committee, although this was rejected in a vote by the parliament. Discussions are ongoing with a new draft implementing decision due early this year.
