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Circular Economy: Everyone Wants rPET (But rPET is Still Missing For Everyone!)

PackTech Ventures - Newsletter #1 - November 2022

According to Bloomberg analysis, the recycled PET (rPET) market in 2021 reached USD 9.25 billion, with projection to reach USD 16.63 billion by 2030. This market growth was driven by the commitment made by the main Consumer Goods companies and the Textile sector, together with their shareholders, to reduce the use of virgin PET and increase the use of rPET by at least 50%, with the majority committing to reach this goal by 2025. In addition, social pressures and Regulations for more sustainable packaging are taking shape in the world's major economies. Products manufactured from rPET use an environmentally friendly process, since they require almost half of the energy used to produce items with virgin PET, and CO2 emissions are significantly lower - thus, those who use PET on a large scale, have sought to incorporation, even if partial, of rPET in its products.

However, this race for rPET – which is leading the material price to rise – is causing a crisis in Europe with small and medium-sized enterprises (SMEs), particularly in the Beverage sector, whose costs and restricted supply in volume can make these companies unable to meet increasing legislative demands for the amount of recycled material in packaging. As reported by the Packaging Europe portal, SMEs are manifesting their unsatisfaction through UNESDA Soft Drinks Europe with the European Commission dealing with this matter, demanding the introduction of a mechanism for priority access to these companies, or the priority to the right of exemption from compliance with the established rules in the next version of the Packaging and Packaging Waste Directive (PPWD).

On the supply chain side, post-consumer PET collection is critical – and this is where the bottleneck lies: “informal” collection is labor intensive, relying on society’s conscience and the network of recyclers, who then need to collect, select, aggregate and transport. A “formal” collection by municipalities and private companies requires high volumes to justify investment in infrastructure for material recovery and plastic recycling. The bottleneck is a global problem, which associated with the reduction of labor in developed countries and the banning of waste imports (which could even support the economic development of exporting countries, creating a new secondary market within the raw materials sector), are impacting the price increase. According to a survey by Packaging Collective, in Europe, this year alone, the price of rPET in flakes goes from €10 per 100 kg (€0.10/kg) to €1,600 per ton (€1.60/kg). In the US, food grade rPET pellets have increased by 52% in the last year. European SMEs are pushing the European Community to regulate the import of waste in order to increase the supply of rPET and reduce its cost.

Europe – which has the most regulatory pressure – is increasing its PET recycling capacity by 21%. The world's largest rPET producer – Indorama Ventures – is increasing its production capacity to 750,000 tonnes and investing USD 1.5 billion in additional capacity by 2025. As part of this effort, it has formed a joint venture with Coca-Cola in the Philippines called PETValue Phillipines, and has just opened a plant in Manila with the capacity to recycle 2 billion bottles a year, generating 200 direct jobs. Despite all the investments, the prognosis is that they will still not be enough to meet the demand. Therefore, changes in the volume and form of consumption of certain items, incentives for the disposal and selective collection of garbage, search for other materials (mainly from renewable sources), and social awareness, are keys to a sustainable future of life and business.

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