Designing a Resilient Plastics Economy: Take-Aways from the MORSE Panel Debate

In the Netherlands, plastics recycling is facing significant challenges. In 2024 alone, 6 recyclers went bankrupt. For economists bankruptcy is often seen as healthy, but in these cases the bankruptcies were not caused by poor efficiency, but by something else: a poor allocation of responsibility for recyclate use and lower prices for virgin plastics. Every market is unique, but the market for plastic recycling is an unusual market in relying on Extended Producer Responsibility. Brand owners and importers who put plastic packaging made from virgin resources on the Dutch market are requested to pay for the collecting of waste, which is processed for recycling. They are expected to meet recycling objectives, which they do, but recyclers expected higher volumes of recycling which did not materialize, because of a price drop in virgin prices, causing a downward trend for recyclate prices. 

The challenges around plastic recycling were discussed during a panel discussion with three experts: Arjen Wittekoek (former CEO Umincorp, a plastic recycler), Nelleke van der Puil (Vice President Materials Engineering & Quality at Lego) and Laura Nieboer (Entrepreneur and plastic industry expert). 

The session was organised by René Kemp for MORSE. René introduced the speakers and the topic for discussion with the help of slides about the market for plastic recycling and the value chain, with special attention to the institutional arrangements that underpin economic transactions. Plastics are overwhelmingly made from fossil fuels and recycling is promoted via Extended Producer Responsibility. The Netherlands did relatively well, according to official figures: almost 50% of the plastic waste is recycled, the remainder is burned for energy recovery. Dutch recycling business grew until 2024 when it experienced a deep crisis. In that year alone 6 recyclers went bankrupt (including Umincorp), Verpact got in conflict with the municipalities over the lower payments and the Environment and Transport Inspectorate (ILT) is threatening to fine Verpact for failing to set up a functioning collection system for all plastic bottles. The system is in a state of crisis. The plastics recycling system worked as long as recyclate from mechanical recycling (which is of lower quality than virgin plastics) was cheaper than virgin plastics, but this changed when virgin prices fell in 2023 and 2024 (from more than 1500 $ per ton to less than 1000 $ a ton) due to a steep increase in petrochemical production in China and the US. 

An unhelpful factor was that Verpact (the producer responsibility organisation for packaging) is insufficiently equipped and tasked for promoting recycling, which is not a coincidence. It was set up to pay for waste activities of collection, sorting, pretreatment and recycling and not so much for encouraging the use of recylate by plastic converters who produce packaging for brand owners. The preference of brand owners and importers to pay as little as possible for the collection, separation and recycling of plastic packaging waste and to be fully free in their packaging choices worked against the use of recyclate.

Other factors working against the recycling of plastic packaging (PP) are that PP is hardly designed for recycling and that legislation on food contact materials creates (unintended) barriers to the use of recyclate. Attempts to produce recyclate at higher quality (by for example Umincorp) are not rewarded in the market, because no one wants to pay the price difference. As a result, plastic converters in Europe used virgin plastics from abroad that is less green than European plastics and even fake recyclate (virgin plastics sold with false certificates).

Policy action is needed but it is unclear what good policies are. For one, the regulations must be feasible, they must promote and not discourage innovation, they should not lead to a transfer of (environmental) problem and should not create competitive disadvantages for converters in frontrunner countries. 

The speakers accepted the invitation because it is clear to them that the system is not working and needs to be changed.

Those present at the meeting asked many questions to the speakers and reflected on the challenges and possible solutions. The speakers were very knowledgeable and spoke with clarity and passion. The meeting of minds was a great success. It is not very often that you get to nderstand markets and the crucial issue of governance of market dynamics for sustainability so well.  We talked about various measures, including a mandatory recycling content requirement with trade in certificates may be a promising option for this, combining effectiveness with efficiency. We also talked about EU trade policy, how this could be used to keep out dirty plastics and preserve the plastics industry in Europe.

The meeting revealed that the three themes of MORSE (resilience, sustainability and responsibility) are not separate issues but highly interrelated. The system of plastic recycling turned out to be not resilient (because this was never a design consideration), weakly oriented towards sustainability and deficient in terms of the responsibilities for taking action. The experiences show the need for a societal transition strategy (both national and European) with incentives and requirements for especially plastic users (especially brand owners of fast-moving consumer goods). 

In the current system, the arrangements of production and governance and governance are not well matched with societal wants. It is not economically attractive to engage in recycling, because of a lack of demand stimulus. The system of governance is mainly oriented at collection and not at reuse, as a structural failure. By giving away the responsibility to companies, who outsourced responsibility to Verpact, the government has put itself in a passive position. 

Societal coordination (through coherent packages of measures) for packaging recycling is needed to change. Ideas for Dual Track Governance measures for promoting plastics recycling in the Limburg border region are presently investigated in the Syschemic project by René Kemp, Henk Diepenmaat and Laura Nieboer. Info about the project and project outcomes can be found at https://www.syschemiq.eu/