Stuart Foster FCIWM, CEO of RECOUP and CIWM East Anglian Region Co-Chair, breaks down the problems the UK plastic packaging sector is experiencing and analyses the potential solutions.
Described as a perfect storm, at breaking point, in turmoil and on the brink of collapse in recent months by various industry commentators, experts and trade bodies, the UK and European plastic packaging recycling infrastructure really is under threat.
The viability of plastic packaging reprocessing in the UK and Europe
Worsening UK and European operating conditions have taken their toll on the plastics reprocessing industry.
This is due to a range of factors, including high energy and labour costs, cheap fossil-based plastic imports, weakening recycled plastic demand, delays in approvals for food-grade production, and lack of effective policy support and policing, particularly around recycled content and Plastic Recovery Notes (PRNs).
A point that really hit home for me was the confirmation from Wellman International, which is based in Ireland, that they were going into examinership last month, quoting that they had seen losses in the double-digit millions across 2023 and 2024. This was due to increased energy prices following geopolitical conflicts and fierce competition from low-priced plastic imports from China, Africa and the Middle East.
Why that particular example that hit home? Wellman was one of the key end markets that worked with RECOUP in the 1990’s to develop UK plastic bottle recycling opportunities and allow early take back and kerbside schemes to become established.
Importantly, this collaboration helped build market confidence by showing that collection, handling, and end markets were feasible. As a result, household plastic collection levels and kerbside schemes grew significantly between 2000 and 2005, paving the way for major UK plastic packaging recycling investments.
Not so long ago this was an industry showing significant promise, supported by investment, emerging technologies and innovative processes, but is now facing serious commercial challenges and instability at a time when circular economy ambitions are higher than ever.
Moreover, the promise of chemical recycling as a key supporting technology to mechanical plastic recycling has also not yet delivered with many plans and developments either stopped or moved outside of Europe.
It must be recognised that there are still new reprocessing infrastructure and investments being planned and publicised, and these need protecting and encouraging alongside those that are still operating.
I am in no doubt that a strong domestic reprocessing infrastructure is a key building block for plastic packaging circularity over the next decade, alongside the expected more transformative shift towards re-use and use of alternatives.
Anyone undermining recycling credentials and celebrating recycling failures in pursuit of plastic reduction and re-use is wrong and very misguided.
Furthermore, it is naïve to think that reduction of UK and European plastic production capacity is good, with that capacity not just taken up but extended by producers elsewhere. Global plastic production is still growing, reported by Plastics Europe as 413.8mt in 2023.
But this growth is increasingly outside of UK and European legislation and control, and very much focussed on producing cheap fossil-based virgin material. Let’s see how commitments come together now part two of the plastic pollution treaty discussions in Geneva have been completed.
The PRN system: Inconsistent support in a volatile market
The first area of ongoing concern is the Packaging Recovery Note (PRN) mechanism. I have been a big supporter of the PRN system over many years, but while Extended Producer Responsibility (EPR) regulations are designed to recover the ‘full net cost’ of packaging waste, PRNs remain the primary commercial mechanism supporting UK-based plastic reprocessors and exporters.
This support is proving to be increasingly volatile and insufficient to help the domestic plastic reprocessing markets and is not fit for purpose as it stands.
Attempts to rectify this in the past have been met with little interest and no action, but viable solutions do exist, including reducing price volatility, differentiating between domestic and export PRN values, separate values based on format and recyclability (accepting RAM will work towards this), and clamping down on illegal activities connected to PRNs.
In 2023, 51% of the UK’s declared recycled plastic packaging was exported, 685,000 of 1.18 million tonnes collected, with Turkey being the largest recipient. With UK infrastructure eroding and no binding obligation to use UK recyclate, export is likely to rise further this year.
There is a real reprocessing capacity gap if we want the capability to recycle more of our own plastic packaging. Many recycling facilities are operating below capacity, importing materials from outside of the UK for price and quality reasons, and others have been forced to cease operations entirely.
There is still some merit in considering whether the PRN system could be integrated into the broader packaging EPR scheme to create a single, unified compliance framework to reduce administrative complexity while offering more consistent support for domestic recyclers.
The Plastic Packaging Tax: Good intentions undermined by poor enforcement
A second major issue is the ineffective enforcement of the UK’s Plastic Packaging Tax. This environmental tax was introduced with the objective of encouraging the use of recycled content in packaging.
It applies to plastic packaging that does not contain at least 30% recycled content, theoretically incentivising manufacturers and importers to adopt more sustainable materials.
However, the implementation has been riddled with loopholes and a lack of oversight. Approximately half of the plastic packaging placed on the UK market is imported, and many of these imports make claims of meeting the 30% recycled content threshold.
Alarmingly, these claims are often unverifiable, with some utilising ambiguous terms such as ‘pre-consumer’ recycled content. In some cases, the technical feasibility of the recycled content being claimed is highly questionable.
Connected to this is the lack of consistent certification and third-party auditing mechanisms means that false claims can go unchallenged. This undermines both the integrity of the tax and the competitive position of UK recyclers.
While some argue that the £223.69 per tonne tax does not go far enough to incentivise behavioural change, increasing the rate without addressing the enforcement gap would likely exacerbate the issue and encourage even more fraudulent claims and further disadvantaging domestic recyclers.
It stands to reason that the failure to enforce the tax equitably results in lost revenue for HMRC that could otherwise be invested into improving the UK’s recycling infrastructure. Using a portion of the Plastic Packaging Tax revenue to fund a national verification framework for recycled content makes complete sense.
A major opportunity has also been missed to integrate recycled content into the EPR framework, where it could be tied more directly to environmental impact and support for domestic processing facilities.
Plastics Recyclers Europe has previously proposed that imported materials should meet equivalent EU sustainability and safety standards. While the idea of levies or tariffs on imported polymers and products has also been discussed, such measures are politically sensitive and may be difficult to implement.
A way forward?
Now is the time for coordinated, decisive action. To build a robust circular economy for plastic packaging reprocessors in the UK, we must:
- Strengthen enforcement of recycled content claims and import standards.
- Stabilise and maintain consistent PRN values to support domestic reprocessing.
- Invest some tax revenues into UK recycling infrastructure.
- Rebalance incentives to favour local recycling over exports.
- Reduce exports of plastic waste where domestic solutions exist.
- Accelerate approval and better support for UK food-grade recycling.
If these challenges can be addressed, they present a powerful opportunity to create a truly circular economy which supports UK companies in retaining valuable resources, producing sustainable products, reducing export risks, creating skilled jobs, and enhancing national environmental outcomes.
With meaningful intervention, the UK can still reclaim its leadership in sustainable plastic recycling, and perhaps, by 2035, have a recycling system that is truly worth celebrating. The cost of doing nothing is disastrous for our plastic circular economy ambitions and will set us back at least 10 years.