The aim of the EU Packaging Regulation is clear: the Packaging and Packaging Waste Regulation (PPWR) is intended to lead to a significant reduction in packaging waste and more reuse - and to a significantly higher proportion of recycled material in plastic packaging. From 2030, this should contain a mandatory minimum proportion of recycled material, with increasing target values by 2040.
In practice, however, companies are faced with a problem: high-quality recyclate from PCR - Post Consumer Recycling is scarce, expensive and not available in all required qualities, especially when it comes to food and contact-sensitive packaging. There is therefore a clear gap between the legal requirements and the real possibilities of the market to provide sufficient recyclates.
Peter Désilets says: "The so-called GAP is estimated at around 3 million tonnes of recycled plastic, as various studies have calculated. The use of recyclate is one of the biggest hurdles of the PPWR, even though there are various solution options, all of which still need to be prepared. Those who have already looked into recycling and the use of recyclates also see this gap or read about it on social media."
But be careful, it's not necessarily about quantity, emphasises Désilets: "It's not just about pure availability, but also about the origin of the recyclates. Recycled plastic from PCR is required, but recyclates from PIR - Post Industrial Recycling - are already being used in many cases. These are two completely different qualities."
There is also another pressure factor, according to Désilets: "Other products also have to use recyclates in accordance with the EU Green Deal; these will also further reduce demand and are in a position to pay significantly higher prices."
Focus on the circular economy: What the Packaging Ordinance stipulates for the use of recyclates in packaging
For certain applications - in particular contact-sensitive plastic packaging and beverage packaging - specific percentage values have already been set. For example, contact-sensitive packaging made of PET must contain 30% recycled plastic from 2030, disposable plastic drinks bottles 30% and non-contact-sensitive packaging 35%.
The objectives of the PPWR can be summarised in three key points:
- More recyclate use in plastic packaging to reduce the use of fossil primary raw materials.
- Recyclability as the standard: According to the new regulation, all types of packaging should be recyclable by 2030.
- Clear framework conditions for companies, such as recyclability classes and verification requirements for recycled content.
This creates a high pressure to act for all companies that use polymers in packaging. Especially for sensitive applications such as food packaging or cosmetics packaging.
The implementation of the PPWR and the reality of the market: scarcity, price levels and quality issues
The requirements of the new PPWR packaging regulation are set against a market reality that is characterised by three central problems:
- Limited availability of high-quality recyclate
- Significantly higher prices compared to virgin material due to higher demand
- Qualitative restrictions compared to virgin plastic depending on the application
High-purity material is required for many applications, especially in food contact. Recycled materials must not only fulfil regulatory requirements (e.g. approvals for recycling processes by the European Food Safety Authority EFSA), but must also be visually and sensorially appealing. However, it is precisely these qualities that are currently highly competitive.
What is the current state of the recycling market? There are proven recycling processes and significant recyclate availability for established streams such as PET from beverage bottles. Nevertheless, the supply of high-quality grades remains limited because demand is rising sharply across many sectors.
For other polymers, such as polyolefins like LDPE, HDPE or PP, the development of new high-quality recyclate streams is still at an early stage. Numerous applications have been submitted to the EFSA for new recycling technologies to be classified as safe, especially for these materials. This creates prospects, but does not solve the short-term shortage and requires high investments in the long term.
Current developments in polystyrene (PS) are particularly interesting: processes are being developed to produce high-purity PS recyclate, which is already being tested and partially used in sensitive applications. This could represent a renaissance for yoghurt pots, for example, as PS pots have been replaced by other materials in recent years.
At the same time, however, the price of many high-quality recyclates is significantly higher than that of virgin material. Companies are therefore confronted with an area of conflict when it comes to recycling: On the one hand, minimum regulatory requirements are increasing, while on the other, scarce availability and high prices are increasing the cost risk across the entire supply chain. The current supply chain bottlenecks caused by the war in Iran are adding to this. On the one hand, virgin material is in short supply and is exploding in price, while at the same time energy costs are rising and both are reflected in higher recyclate prices. Supply and demand regulate the market here. The recyclate requirements of the PPWR will have the same effect on the market.
Technological options and practical implementation: what is already possible today and what remains a dream of the future
Various technological approaches are being pursued to close the gap between PPWR requirements and market reality. Some of these are already in use, while others are still being developed or evaluated.
Peter Désilets on the options: "Various options are currently being considered: Chemical recycling, which can provide very good materials but has some other disadvantages - not least a very high price. Solvent-based recycling offers good qualities, but has not yet made it to industrial availability in around ten years, which could even come close to closing the gap."
Désilets also takes a differentiated view of enzymatic recycling: "Enzymatic recycling also produces monomers as a starting material, but the polymers are firstly limited to PE and PET and secondly are only available in small quantities. However, many of the disadvantages of chemical recycling are avoided."
In addition to recycling, other levers come into play, says Désilets: "One option in the PPWR remains bio-based raw materials as a substitute for recyclates. Although this means using virgin material, it has much better CO2 values as a renewable material, is technically equivalent to virgin plastics and currently commands a rather low price premium. However, the refineries would have to be expanded in order to divert the resources for bio-energy into packaging. Last but not least, mass balance certification is also being discussed, which could flexibly manage resources in a similar way to green electricity."
Désilets' recommendation to customers is clear: "We recommend assuming that the recyclate utilisation quotas will remain in place, even if there is currently talk of a recyclate gap and unrealistic quotas."
The basis for the future: mechanical recycling
Mechanical recycling continues to form the backbone of the recyclate supply. This approach is well established for PET bottles, with clear quality classes and largely familiar regulatory requirements. However, demand from many industrial sectors has increased significantly since 2019 and the price has roughly doubled since then.
The situation for polyolefins (LDPE, HDPE, PP) is much more heterogeneous: the collection and sorting structures are not yet at the necessary level in all EU member states. In addition, mechanically recycled polyolefins often exhibit fluctuations in quality, colour and odour, which limits their use in high-quality or sensitive applications. This also leads to differences in the utilisation of the recyclates.
New procedures submitted to the EFSA are aimed precisely at closing these quality gaps and opening up more applications with mechanically produced recyclates.
Opportunities and question marks: Chemical recycling
Chemical recycling is often positioned as a solution for plastic streams that are difficult to recycle. In theory, this approach makes it possible to recover high-quality raw materials from mixed or contaminated plastics. However, there are several critical points here:
- High costs: chemical recycling plants are capital-intensive; process costs are often significantly higher than those of mechanical recycling.
- CO2 balance: The processes are energy-intensive. In the public debate, the carbon footprint is sometimes relativised by using alternative waste incineration as a reference. Whether this reference scenario is realistic is the subject of controversial debate, as the required good qualities are generally also in high demand.
- Regulatory classification: The recognition of chemically produced recyclates within the framework of the PPWR, particularly with regard to the question of counting towards recyclate quotas and the use of mass balance approaches, is politically and technically controversial.
Chemical recycling should therefore currently be seen as a building block in specific material flows rather than a short-term solution for all recyclate quotas.
Niche instead of growth driver: solvent-based recycling
Solvent-based recycling processes promise particularly gentle cleaning of plastics by specifically separating out impurities. In practice, however, it has been shown that the economic operation of such systems is challenging.
High process costs, limited availability of suitable input streams and competing technological alternatives have already led to more plants being closed than new ones being built.
It is therefore unlikely that solvent-based processes will solve the volume problem in the recyclate market in the short term.
Functional alternative: bio-based plastics
Another option for reducing the pressure on scarce recyclates are bio-based raw materials such as bio-PE, bio-PET or bio-PP. These materials are chemically identical to their fossil-based counterparts and can fulfil the functions of conventional plastics.
In many cases, bio-based plastics can replace recyclates if the PPWR permits this from a regulatory perspective and corresponding verification and certification systems have been established. In terms of price, these variants are in some cases more predictable and in some cases cheaper than high-quality recyclates, especially where the recyclate market is very tight.
The required raw materials are available in principle: They are widely used for bio-energy today and could be partially diverted towards packaging applications. Subsequent energy utilisation is still possible. Their renewable sources offer low CO2 values, which is an objective of the EU Green Deal but not necessarily anchored in the PPWR.
This means that bio-based plastics not only open up new options for fulfilling PPWR targets, but also additional prospects for the market for bio-based materials as a whole. A significant increase in demand could also give new impetus to the entire market.
Where nature provides the technology: Enzymatic recycling
Enzymatic recycling has been promoted for several years now. Enzymes break down polymers and form monomers as a starting material for plastics. One of the leading companies is the French company Carbios, which is supported by global players and is also listed on the French stock exchange. However, scaling up is proving more difficult than hoped and has been dragging on for years. It therefore remains questionable whether the necessary volumes can be expected from this technology.
Models in limbo: mass balance approaches and certificates
Another building block in the discussion is mass balance certificates. Here, recycled raw materials are fed into existing production streams and "credited" to certain products in the balance sheet.
For companies, this can mean flexible access to recycled content via certificates without having to rely exclusively on physically separate recycled material streams and changing material qualities. In addition, there is the possibility of valuing and "selling" recyclate quantities that are used in excess of the company's own regulatory requirements on the market.
Whether such models are accepted depends on two aspects: on how clearly and transparently the certification systems are designed and whether multiple marketing takes place, and on the extent to which regulatory authorities recognise mass balance solutions as equivalent to the physical use of recyclates. In Germany, this procedure has probably received backing, but it remains to be seen whether it will also be accepted at European level.
Packaging and Packaging Waste Regulation: strategic consequences for companies
Companies affected by the PPWR requirements are therefore faced with a key decision: how can a resilient recyclate and raw material strategy be developed, even though the market is in a state of flux?
From today's perspective, there are several basic principles for meeting the legal requirements:
- Do not speculate on easing the requirements: The political signals from Brussels are clearly pointing in the direction of binding and increasing recyclate quotas. Betting on a later weakening or postponement of the quotas is therefore risky.
- Consider several technological paths in parallel: Companies should assume that the required quantities of recyclate can only be achieved through a combination of different options, such as the consistent use of mechanical recyclates:
- Consistent use of mechanical recyclates where the quality fits.
- Gradual entry into new, EFSA-assessed recycling technologies.
- Integration of bio-based plastics as a functional supplement.
- Utilisation of mass balance models where these are viable from a regulatory and reputational perspective.
- Targeted use of chemical recycling in selected streams.
- Adapt packaging design and material selection at an early stage: Design-for-recycling is a key element of the PPWR. Packaging that currently relies heavily on composite materials, carbon black-based dark colours or components that are difficult to separate will find it difficult to tap into sufficiently high-quality recyclate streams in the future. Sensible steps include
- Reducing the variety of materials within a packaging family.
- Avoiding problematic additives and colours.
- Switching to mono-material solutions where this is technically possible.
- Consideration of future recyclate qualities in new developments.
- Switch to material alternatives such as paperisation or reusable packaging.
- Early and long-term procurement strategies: Anyone looking for recyclates shortly before individual PPWR specifications come into force will probably find themselves in a highly competitive market. Long-term supply contracts, cooperation along the value chain and joint investments in recycling capacities can help to achieve security of supply and predictable prices.
- Transparent communication along the supply chain: PPWR-compliant use of recycled materials requires reliable data and evidence. Companies should clarify at an early stage
- what evidence is required from suppliers,
- how internal systems are set up to document recycled content in an audit-proof manner,
- and how to communicate with customers about differences in quality, colour variations or price mark-ups.
Taking the regulation's quotas seriously
The targets set for the use of recyclate in plastic packaging as part of the PPWR 2026 are as ambitious as they are binding. At the same time, the market for high-quality recyclate is not yet in a position to cover all future demand. Scarcity, high prices and quality restrictions are a reality.
Nevertheless, there is no way around adapting to the new framework conditions at an early stage. Companies must not regard the minimum quotas as negotiable wish values, but as a basis for planning. The assumption that recyclate specifications will be reduced or suspended again harbours considerable regulatory and economic risks.
Peter Désilets warns against waiting too long: "The development of new recyclate alternatives can take years. The new technologies also need to build up capacity first. They have five years to do this if they are recognised as a new technology. If they fail to do so, this path will quickly end in a dead end."
Désilets concludes by describing where Pacoon comes in: "We at Pacoon have been observing the recycling and recyclate market for several years and helping companies to orientate themselves. Or to consider alternative materials that could circumvent the recyclate requirements. At the end of the day, we never just look at the material, but at the packaging concept as a whole."
You can also read about this in our blog Recycling plastic: these technologies make it possible to recycle plastic