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Good news for the struggling European plastics recycling industry

The Struggle of European Plastic Recyclers

European plastic recycling companies are finding it increasingly hard to compete in the global market. High energy prices, plummeting recycled resin prices, and higher labour costs have already led to some plant closures, for example Veolia’s PET recycling facility in Rostock, Germany.

Plastics Recycling Europe has called for ‘urgent measures’ to avoid a shutdown of recycling plants across Europe. In Germany, the chemical industry has been lobbying for a ‘bridge electricity price’ to aid industry with high energy costs. The country, which relies heavily on imports of Russian gas, has been particularly affected by the energy crisis that followed the war in Ukraine.

Turning Point at the Chemical Summit

Those lobbying efforts failed at the ‘chemical summit’ in Berlin in September 2023, but now there is good news for a section of the industry: plastic recyclers.

Member states of the European Union can only grant energy aid to companies that belong to the economic sectors listed in the European Guidelines for State Climate, Environmental Protection and Energy Aid 2022. To be compatible with EU’s state aid rules, the aid must encourage economic activity; incentivise an activity that brings environmental benefits in line with Green Deal objectives; and not harm competition and trade. The manufacture of plastics in primary forms is included in the 2022 guidelines, under code 2016, classified as an energy-intensive user.

A Victory for the German Plastics Recycling Association

The German Plastics Recycling Association (bvse) has now announced that ‘after years of intensive lobbying’ it has ‘achieved partial success’ in negotiations with the Federal Ministry for Economic Affair and Climate Protection and Brussels. The association succeeded in redefining the economic sector under which activities in the plastic recycling industry fall, thereby affecting their eligibility for energy subsidies.

Eligible Activities from 2025

In particular, the following activities will fall under economic sector manufacture of plastics in primary forms (2016), making them eligible for aid from Jan. 1, 2025:

• Production of artificial powders, granules, or flakes by compounding or converting plastic resins from recovered plastic waste;
• Production of recycled plastic in flakes or plastic granules based on pre-treated plastic waste through material recycling processes.
• Production of cellulose and its chemical derivative – which will benefit the bioplastics industry.

The activities were previously classified under economic sector 3831, recovery of sorted materials, which is not eligible for energy aids.

Impact on the Industry’s Competitiveness

“The plastics recycling industry must maintain its competitiveness in order to survive in a global market,” said bvse vice president Herbert Snell. “This is crucial to ensure a continuous and sustainable supply of recyclates to the processing industry. As energy-intensive companies, plastics recyclers now have the opportunity to reduce the extremely high energy costs which have a negative impact on their competitiveness.”

The European guidelines allow Germany to grant the aid in the form of a reduction in levies, as a fixed annual compensation amount (refund), or as a combination of the two.

Germany’s Recycling Achievements

Germany set a record for plastic recycling in 2022. The country mechanically recycled 67.5% of its plastic waste, a 2% increase from the previous year.

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