Press Release

Future of plastics recycling in Europe: New study by Pareto Securities highlights opportunities and challenges

• Significant capacity expansion needed to meet EU plastics recycling targets
• Germany is leading the way in the EU with systems such as the Dual System and the deposit return system for PET bottles
• Mechanical recycling still dominates in Europe, but chemical recycling is becoming increasingly important
• Pareto sees combination of both techniques as key to effectively addressing recycling challenges of the future
• Circular Economy & Recycling Summit on September 28, 2023 at Industrial Park Höchst (for more information on the conference click here).

Frankfurt, September 14, 2023 - Pareto Securities AS, international investment bank and long-standing partner of SMEs, today published an in-depth study "Plastic recycling: From waste to gold!". Since World War II, plastic has revolutionized the industrial landscape, thanks to its practical properties and cost-efficient production. From 1950 to today, production increased from two to an impressive 391 million tons. With such production, however, the question of sustainability as well as disposal of this widely used material - and how the industry can solve the challenges that come with it - arises today more than ever.

Plastic packaging - short life cycle, large quantities of waste, immense challenges

Globally, approximately 240 million tons of plastic waste are collected annually, of which 30 million tons come from the EU-27 alone. Worryingly, plastic packaging in particular accounts for more than 60% of plastic waste in the EU, despite its short lifecycle. Not only is the improper disposal of this plastic waste a serious problem, but so are lifecycle CO2 emissions, which account for about 4% of total global emissions.

In the light of this enormous burden on the environment, the EU has issued a large number of directives and regulations in recent years to promote the recycling of plastics. The EU's goal is to achieve a recycling rate of at least 50% of plastic packaging waste by 2025 and 55% by 2030. However, to meet the EU targets, recycling capacity must grow by at least 5% per year over the next 10 years, according to Pareto's calculations. Germany, as one of the largest producers of plastic waste in the EU, has introduced additional measures and laws that often go beyond EU targets. With schemes such as the Dual System and the deposit return system for PET bottles, the country has created exemplary initiatives that promote high recycling rates and better quality recyclates.

The need for more recycling is obvious. But what sounds simple in theory poses immense hurdles in practice. Unlike other materials such as steel, aluminum, glass, or paper, which have recycling rates of over 80%, plastics present unique challenges. These include the diversity of plastic types, the complexity of their compositions, and the economics of recycling. As a result, only 10 million tons of the 30 million tons of post-consumer plastic waste generated in the EU are currently recycled.

Technological approaches and the future of recycling

But which technology will deliver the desired results? Although mechanical recycling dominates in Europe - with leading companies such as Remondis, Veolia and Suez - chemical recycling is rapidly gaining momentum. Many players recognize the potential: in addition to newcomers, heavyweights such as BASF, Shell and OMV are already active in the sector.

Dr. Knud Hinkel, Partner and Research Analyst at Pareto and author of the study, summarizes: "Our conclusion from a comparison of the different recycling approaches is that none of the processes represents a universal solution. Rather, we think mechanical and chemical recycling techniques can complement each other. It is necessary to select the most effective process or combination of processes for different input streams."

Looking at future developments in plastics recycling, Pareto expects that the proportion of recyclates in packaging will increasingly become a marketing tool for consumer goods companies, the price of plastic recyclates could become even more decoupled from the price of virgin plastic, improved sorting is the key to higher recycling rates and better quality recyclates, chemical recycling technologies will continue to gain momentum, and more deposit return systems will be established in Europe.

Further information on the subject of plastics recycling, and the complete study can be obtained by mail. An extensive event on the topic will also be held under the auspices of Pareto Securities on September 28, 2023 at the Industrial Park Höchst. Interested parties can view the agenda here "View Agenda" and register for the Circular Economy & Recycling Conference via the following email address events.de@paretosec.com.

About Pareto Securities
Founded in 1986, Pareto Securities is headquartered in Norway and has offices in Denmark, Finland, Sweden, Germany, the UK, Switzerland, the US, Singapore, and Australia. Pareto Securities has a leading position in the Nordic financial markets and a strong international presence. Pareto Securities offers a wide range of financial services, including equity and fixed income brokerage, equity, debt and project finance, and advisory services related to mergers and acquisitions and restructuring.