McKinsey has laid out three potential approaches to tackling rPET shortages on the US market and meeting increasing demand for recycled content in packaging – increasing supply, ensuring access, and designing for circularity.
Collection levels for high-quality recycled material have apparently stagnated, which is threatening industrial access to rPET – even as shifts in regulation, sustainability commitments, and consumer interest increase pressure on brand owners and packaging companies to drive up their recycled content. McKinsey calculates that, if every brand with public recycled content commitments met their own targets, demand for rPET in 2030 would be three times larger than the available supply.
In the United States, around 27% of PET bottles and 18% of all recyclable PET waste are currently thought to be collected. Some developments have been made in the reclamation and reprocessing sections of the value chain, but with no resultant decrease in process losses identified, an estimated 4.6 billion pounds of PET still end up in landfills every year.
Even so, rPET supply in North America has grown at approximately 1% per annum between 2012 and 2022, McKinsey claims, and it is not expected to increase any faster in the coming years. Meanwhile, consumption has undergone a parallel rise of around 4%, and demand is expected to keep rising by 15% every year if brands successfully meet their recycled content targets.
It is also becoming increasingly common for HDPE, PVC, and polystyrene packaging designs to be replaced with rPET due to its recyclability and, in the eyes of brand owners, its accessibility in comparison to other resins – another factor that is putting strain on rPET supply.
Imbalance in supply and demand is therefore widening, the report states, and a shortage could drive a significant rise in price premium between rPET and virgin PET. Therefore, McKinsey makes three suggestions to tackle the issue head-on – a checklist that could also be applied to other packaging substrates.
At present, over 80% of PET waste is thought to go unused. Opportunities to recover material across the value chain can be optimised, the report suggests.
Forming public-private partnerships is raised as a method of increasing collection rates where kerbside recycling is underfunded or nonexisting. For instance, The Recycling Partnership makes private investments in public recycling programmes in an effort to increase the supply of recycled plastics.
Investments in advanced sortation equipment at material recovery facilities are also encouraged, with McKinsey looking towards the Nordic region’s national and state-level policies – for instance, extended producer responsibility and deposit return schemes – as a means of driving rPET supply.
Depending on local policy, the location of their manufacturing plants, and their sources of rPET supply, brands may consider different strategic options to access recyclate and meet their recycled content targets.
For manufacturers in both plastic packaging and other materials, such as paper, vertical integration with a recycler, alongside long-term strategic partnerships or contracts with suppliers or competitors, are observed to have increased access to recycled content.
Other brands have sought to recover their own bottles directly from consumers. In McKinsey’s view, this method is currently uneconomic, but could become more useful if the value of recycled materials keeps increasing and accessibility worsens.
Designing for circularity
Ensuring that unrecycled plastic gets collected is anticipated to help close the loop on food-grade and non-food-grade PET, and by optimising their packaging designs, brands can meet their own targets for circularity and help ensure waste recovery. This could include the removal of coloured PET and the improvement of product and label design to boost consumer recycling rates.
Coca-Cola’s previous decision to phase green PET out of its Sprite bottles has apparently helped the company overcome the previous roadblock of the plastic being downcycled into carpeting, clothing, or other products that are not generally recyclable. Without the colour, it is possible to recycle the new bottles back into food-grade bottle applications.
Reportedly, it is possible to use the same methods of boosting supply, increasing accessibility, and designing for circularity in paper packaging. Although corrugated containers used in paperboard packaging can undergo a well-established recycling process, many mixed paper waste streams still end up in landfills; McKinsey argues that these resources could be better utilised to meet recycled content targets.
In the metal sector, only around 45% of aluminium is said to be recycled by consumers in the United States. This poses a threat to beverage packaging companies seeking access to used beverage cans and scrap metal. As a result, investments are being made in recycling infrastructure and sortation technology to recover more materials.
Similarly, high labour and sorting costs and the price of transportation are apparently limiting glass collection rates to 25%. Most cullet supply in the US is sourced from bottle-bill states, or states that have container deposit return laws in place for beverage packaging. To improve cullet use in the production of new glass, McKinsey suggests finding new means of reducing recycling costs and pursuing lightweighting initiatives.
Recycling rates are also low for flexible packaging, McKinsey explains, as not all recycling systems are equipped to collect and recycle it. By developing new materials like fully recycling films and redesigning packaging structures for easy separation, the company envisions improved circularity in the future.
Noting the imbalance between supply and demand for recycled materials, Resycure CEO Michel Weinketz recently spoke to Packaging Europe about its causes – including a lack of harmonised specifications for recyclers and brand owners, as well as a ‘long and complex’ qualification process – and potential solutions to the problem, like market disruption from start-ups and fast-moving companies.
In other recent reports, McKinsey examined variations in hygiene concerns, environmental priorities, and the definition of a ‘sustainable’ material across various countries, and teamed up with NielsenIQ to observe the relationship between ESG-related claims made on product packaging and consumer spending habits.
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