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The Economics of Recycling

Posted on February 17th, 2017 by in Chemical Manufacturing Excellence


Last time we briefly looked at the European Commission’s (EC) recently published roadmap for its Strategy on Plastics under the Circular Economy Initiative. One of the key problems the EC is looking to tackle is the low rate of recycling and reuse of plastics. As the roadmap identifies, in 2014 the EU generated around 25 million tonnes of post-consumer plastic waste. Of that, only 30% was recycled, with 31% going to landfill and another 39% being incinerated.

There are a variety of reasons why plastic recycling isn’t happening at the rate many would like. Here, I’d like to take a quick look at some of the economic factors involved.

The Price of Raw Materials

Perhaps the biggest economic barrier to recycling plastics is the relatively low cost of the raw materials required to make new materials. Feedstocks derived from natural gas and crude oil processing are relatively inexpensive, especially when compared with the fixed costs associated with recycling.

It’s likely that over the coming years this balance will begin to shift, both with likely rises in oil prices and lower cost approaches to recycling being developed.

Economies of Scale

A big challenge of recycling plastics can be that there are often only small quantities of certain types of plastic (per polymer type) available for recycling. This eliminates, or at least significantly reduces, the economic benefits arising from large-scale recycling. It therefore becomes a more involved, and expensive, process to recycle some of the less common polymers.

One potential method for overcoming this would be to centralize the processing of large volumes of plastic. While there is a clear logistical challenge here, with the right infrastructure the economies of scale could bring down the costs of recycling plastics.

This is something the EC have identified and as a starting point, they’re looking to gather improved data and understanding of the different plastic flows across Europe.

Quality and Loss

According to the EC roadmap, only about half of the plastic collected for recycling is actually recycled. This is largely down to either losses arising from the recycling process, or inefficiencies caused by contaminants or different requirements for different types of plastic.

It can be challenging to provide a reliable flow of recycled plastics, which would be required for the material to be easily integrated into a manufacturing supply chain.

The quality of the output material is one of the biggest barriers to being able to ensure a reliable supply. Additives to the plastic or the mixing of different types of polymer can significantly impact the quality and make-up of materials coming out of a recycling process. This makes recyclates a lot less appealing than brand new plastics in many applications.

While there are serious economic challenges to recycling now, this is something that should begin to slowly move towards a new equilibrium. Both consumption and raw material costs look set to increase and there’s a good chance that recycled materials will need to fill in the gaps.


All opinions shared in this post are the author’s own.

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