Market conditions and drivers in Europe
At a time when the imperative is to make the EU a recycling society, there is a growing focus on the availability of capacity to process the collected materials back to product. Particular concern has been expressed in some countries (such as the UK) about a growing dependency on exports to the Far East.
This movement raises a number of issues including the opportunity cost of the lost recyclate, the environmental impact of long-distance transport and the lack of security associated with dependency on markets beyond the EU sphere. A similar concern has been expressed about loss of recyclate to recovery operations such as waste-to-energy.
These issues are being examined by the European Waste Management (EWM) project (see page 59). This article reports on the initial assessment of data sources undertaken by my company, Beyond Waste, as part of the project. It uses data for 2003-2004 as the baseline for comparative purposes as this is the most recent period for which data for separately collected materials across the countries of study and on compliance with the Packaging Waste Directive are available.Recycling performance in different countries
An analysis of Packaging Waste Directive compliance data for 2003 generated a league table of how certain EU states had performed in terms of self sufficiency across a range of materials. This league table (Table 1) was used to identify a sample of countries representing a range of performance for in depth studyClick here to enlarge image
The following countries were selected for closer scrutiny:Click here to enlarge image
Italy - an example of a country showing high degree of self sufficiency UK - an example of a country showing moderate degree of self sufficiency, but with growing dependency on exports in certain materials plus considerable focus on market development Netherlands - country showing a low degree of self sufficiency Poland - a country of study whose recycling system is evolving more rapidly as it moves to meet the requirements of a number of waste-related directives as a recent EU entrant. Click here to enlarge image
How much material is being collected?
Figure 1 shows the latest available comparable data on reported quantities of each material collected separately from the municipal solid waste (MSW) stream obtained from Eurostat 2003 and nationally reported data.
For the purposes of our analysis, it is also necessary to consider the recycling tonnages collected from the packaging waste stream.
In the UK, the Netherlands and Poland, packaging is collected primarily from non-MSW sources. Figure 2 shows the performance in 2004. Between 2003 and 2004 the countries of study accounted for a total of up to 12 million tonnes of paper and card, 1.5 million tonnes of plastic, 4.5 million tonnes of glass and 2.7 million tonnes of wood available to the market.
The case of Poland might be regarded as special as it has only been implementing collection systems for recyclables on a wider basis since it joined the EU in 2004. Collection of packaging-related material has evolved. While the total quantity of material collected for recycling has increased year-on-year, the reported quantity of plastic collected for recycling fell by over 40% between 2004 and 2005. This decline is apparently due to over-collection of material in 2004 following the introduction of Poland’s packaging compliance scheme, which resulted in a crash in subsidy paid for materials. This fall deterred collection in the following year.Reprocessing capacity
Using Packaging Waste Directive compliance data for 2004, it is possible to determine whether a country is self-sufficient in terms of packaging material reprocessing capacity. Here are a few highlights:Glass - All countries have a positive net balance. That is to say, a substantial flow of material to in-country reprocessing capacity. This indicates that either in-country collection capacity is under-developed or that reprocessing capacity exceeds in-country usage of material, or both. Plastic - Only Italy shows a positive net balance for plastic, with the other countries either being neutral or substantially dependant on other routes to manage in-country arisings. Paper - Despite varying degrees of reliance on other outlets, all countries display majority reliance on in-country recycling. Wood - This shows contrasting trends with Italy and UK showing near total self-reliance through material recycling, while the Netherlands and Poland appear to have near total reliance on other outlets (burning or export).
In summary, Table 2 gives an initial indication of the minimum level of in-country reprocessing capacity for the four packaging materials based on 2004 data. A more detailed analysis of these materials is given below.Glass
Relationship between production and recycling capacity
Figure 3 compares collected glass for recycling with production capacity in 2004 using data from FEVE (European Container Glass Federation) for Italy and the UK. Data for the Netherlands and Poland capacity were derived from the Packaging Waste Directive data.
Where production outstrips collection, this indicates surplus capacity for recyclate. However, the situation is more complex as these data conceal the fact that three distinct types of glass are used, i.e. clear (flint), amber (brown) and green. This explains why Figure 3 suggests there was surplus capacity in the UK although some glass was exported.Click here to enlarge image
Data on EU trades over the same period reveal a slightly different profile with the Netherlands exporting substantially greater tonnages of glass cullet than the UK.Assessing the economic cost of exports
Although the export of material is generally regarded as a negative action both strategically (in the context of in-country reprocessing capacity supply) and environmentally (additional impacts from transport), exports are generally seen as a good thing from an economic point of view. The economic cost/benefit to the economy can be assessed by comparison of values attached to the movements for glass cullet shown in Figure 4.Assessing the wider cost of exports
A number of life-cycle assessment (LCA) studies have sought to determine the wider costs of exports. For example, a Danish study assessed the additional benefit of improving collection of glass. Under the existing Danish system, wine bottles are collected and remelted along with cullet at glass works in Denmark and other European countries. The study concluded that reliance on export is not a secure option for the long term as outlets might be subject to the vagaries of changes in receiving countries.
Figure 3. Relationship between glass container production and recycling, 2004 Click here to enlarge image
In contrast, a UK study looked at the comparative carbon dioxide (CO2) emissions associated with use of cullet for remelting against alternative uses. It concluded that, even where glass is exported to other European container manufacturers, recycling through remelt delivers the greatest reduction in CO2 emissions, so is preferable to in-country alternative uses. This is attributed to the relatively low energy intensity of bulk transport by sea.
Figure 4. Trade by value for glass cullet, 2004 Click here to enlarge image
Conclusion and prospects
In the case of glass where substantial investment is required in new furnaces, the market will probably mature in response to increasing collection. However, provision of capacity is less likely to be driven by availability of recyclate because recycled content is unlikely to be specified by purchasers of the final product.
The prime benefit to container manufacturers of using recyclate is lower energy and raw material costs. There may be greater scope for existing furnaces to substitute second-life materials for virgin materials if supplies of the required colour cullet of sufficient purity can be secured.
Alternative applications are being developed to address the growing tonnages of glass collected which can create cullet surplus to in-country capacity needs. These will provide in-country outlets on an incremental basis and can be expected to compete with exports as outlets.Plastic
Italy and Germany account for around 40% of all European capacity for plastics conversion to products. All countries experienced growth in plastics demand in 2004 compared with 2003 but the increasing trend for plastics processors to relocate to central Europe is seeing a shift in raw material demand.
For example, Poland’s plastics conversion capacity of about 1.6 million tonnes is growing at 7%-8% per year (see Box 2).Recycling capacity
PlasticEurope reports that the overall material recycling rate of post-consumer plastics in 2004 in Europe was around 18%, with mechanical recycling at 16% and feedstock recycling at 2%. Italy is among the leaders with a mechanical recycling rate of over 25%, with the Netherlands and UK at 20%-25% and Poland at 15-20%. The rate is defined by the ratio (local waste recycled + waste exported for recycling/plastic packaging waste).Plastic packaging
The European Association of Plastics Recycling and Recovery Organizations (EPRO) reports that plastic packaging waste is mainly recycled within the EU. However, only Italy (and Spain) achieved national self sufficiency in recycling of plastic packaging waste. This is illustrated in Figure 5.Market outlets
The five high volume families of plastics [polyethylene (including LDPE, LLDPE and HDPE), polypropylene (PP), polyvinylchloride (PVC), polystyrene (solid and expanded) and PET] account for around 74% of all plastics demand in Europe. Their different performance characteristics mean that distinct routes for recycling have developed. Reprocessing capacity is not interchangeable across plastic materials, although pre-processors may deal with a range of materials.
Figure 5. Plastic packaging recycling, 2004 Click here to enlarge image
Unlike paper and glass, material recycling changes the mechanical properties of plastics to some extent, so it is not always possible to recycle large quantities of a particular type straight back into the same production process (i.e. a closed loop). (NB: a true closed loop might be achieved through feedstock recycling where polymers are cracked into their constituent parts - but this technology is not mature.) This supports the need for a diverse base of outlets. Hence to understand true capacity we need to examine each polymer stream. For the purpose of this article we will look at polypropylene.Exports of polypropylene
Within Europe, there are considerable cross-border movements of plastics for recycling. PlasticEurope reports that, in 2004, there was a fall in exports of plastics waste leaving Europe to be recycled in the Far East after five years of increases in such exports.
Italy was a bulk importer of polypropylene in 2004, which cost the Italian economy nearly €25 million. Trade data indicate that Italy has substantial reprocessing capacity for polypropylene, with the capability to process at least 57,000 tonnes per year. Italy exports substantial quantities of polypropylene-containing products and hence must source its raw material beyond its borders (see Box 3). It is not clear if it suffers from undersupply from its in-country collection infrastructure.
In contrast flows for Netherlands and Poland appear to be in reasonable balance, while the UK is a substantial exporter. This finding is consistent with the reports of the strength of the Italian injection moulding sector, a prime user of polypropylene, and the contraction of the UK sector.
The flow of imports and exports in the Netherlands and Poland begs the question as to why material is being exported if domestic demand exists. Examination of the trade statistics reveals that, while the average transaction rate per tonne is comparable for exports and imports in Italy and UK, the price of imports to Poland and Netherlands is significantly cheaper. Hence, trade in second-life polypropylene actually results in economic gain in those countries.
The differential in transaction price for imports and exports leads to the questions of why, and with which countries, the transactions are arising.
France is the only country with which Italy had a reciprocal trading relationship for waste-derived polypropylene polymer in 2004. In contrast, the Netherlands has a reciprocal relationship with Belgium and Germany. Profit from sales of polypropylene to Belgium, Hong Kong and Italy more than offset the cost of purchase of material from Germany, Greece and UK. This suggests that there is an oversupply of polypropylene in those source countries.Prospects for recycling plastics
Emerging economy demand (e.g. China) for industrial raw materials has fundamentally changed the global balance of supply and demand. In particular in-country recyclers are now facing intense price competition for second-life plastics with export demand.
The value of recycled plastics is linked to oil prices - if oil prices remain high then prices of oil-based virgin polymer will remain high. This should, in theory, enable recyclates to maintain a competitive advantage. But the many different types of plastics in use make closed-loop recycling of post-consumer plastic difficult. Markets for mixed plastic recyclate are limited and fail to exploit the potential of the individual polymers. To gain greater value more separation and processing is needed with an associated rise in costs. This may be encouraged by restrictions on exports of mixed plastic as a result of tighter regulation of transboundary movement, which in turn may encourage retention of material to serve in-country outlets. In addition, emerging non oil-based polymers entering the waste stream are problematic as they can lead to contamination of second-life polymer streams and require specific management.Paper
In the case of paper, where substantial investment is required in reprocessing plant, the market is likely to mature in response to increasing collection. That is to say in-country capacity will expand once collection reaches a certain threshold but then remain static until a ‘tipping point’ in collection is reached. At this point, further investment can be supported. In the meantime the market may be stabilized by exports to accommodate growing collection levels. If production conditions are favourable (e.g. energy prices or demand for recycled content product), the market may be stabilized by imports to feed in-country capacity.
Figure 6 shows the differences between paper production and consumption in each country. Where a country consumes substantially more paper than it produces (as in UK), a negative trade balance is shown. One can deduce from this that, after in-country capacity for recovered paper has been met, export will be the only outlet if recycling is to be preferred over in-country energy recovery.
Figure 6. Paper production versus consumption. SOURCE:CEPI Click here to enlarge image
Comparing in-country production capacity and recovered paper utilization, the UK and Netherlands have achieved a high recovered paper utilization rate. This confirms that export of recovered paper is more or less inevitable. All countries covered by this study actually exported newsprint regardless of the state of their in-country production capacity. Apart from UK capacity, utilization of recovered paper has increased across Europe since 2000.Exports of recovered paper
The expansion in capacity has led to a reported surplus across Europe of over one million tonnes. Just over 300,000 tonnes was sourced from the EU to feed in-country capacity (with little non-EU input), while over 400,000 tonnes was exported to other EU countries. However, this was dwarfed by exports of over one million tonnes to the Far East.
In the UK, export prices are reportedly higher than prices paid by domestic mills owing to the additional risk associated with exporting compared with domestic contracts. For example, there are few long-term export contracts and, if a load is rejected owing to poor quality, repatriation is at the exporter’s expense.
In Italy, however, the rate offered for import is higher than that gained for export while, in the Netherlands, there is no apparent difference. Poland almost exclusively exported in 2004, but at an order of magnitude less than the other countries in the study.Paper-based board
There are four primary categories of paper packaging materials - containerboard, cartonboard, other paperboard, and packaging/industrial papers. Board represents the bulk of paper-based packaging covered by the Packaging Waste Directive.
Cardboard production capacity between 2000 and 2004 increased in all the study countries except the UK, with Poland nearly doubling capacity with manufacturing sector relocation from western Europe and growth in demand for consumer products.
It is reported that over 70% of the fibreboard produced each year is made from recycled fibres.3 The percentage recycled input to the process has remained more or less constant in the UK and the Netherlands since 2000, but in Italy has risen progressively; the Confederation of Paper Industries (CPI) reports that the recycled fibre content of UK corrugated board is now around 53%. Poland saw a sharp rise and then decline in utilization rate. The drivers behind these changes may be increased supply of recovered paper, price relative to virgin material, or other factors such as technical advances or new capacity.Market conditions
Although most types of paper fibre can be used for cardboard production, the converse is not true, i.e. cardboard fibre cannot be used for paper production. This limitation means that use of paper fibre in cardboard production may be regarded as the lower order ‘closed-loop’ recycling option. Use in toilet tissue manufacture may be regarded as the option of last resort as fibre cannot be recovered for recycling once used.
Prices paid for corrugated cardboard found in cartons and boxes fluctuate considerably over time. When prices paid by reprocessors are low, merchants may charge to take the cardboard waste away as the value gained may not cover handling and transport costs.
There is also a need to top up fibre with higher quality grades, while board producers find themselves competing with newsprint producers for news grade fibre.Exports of recovered board
Domestic capacity is also competing with the burgeoning export market. The trade balance for movements of corrugated board (Figure 7) shows there is appetite in the countries of study approaching 400,000 tonnes imports but approaching 2 million tonnes are being exported.Prospects
The growth of exports is likely to continue to feed the demand for packaging for goods manufactured for import to the EU from the Far East and Indian sub-continent.
Figure 7. Trade balance for cardboard, 2004 Click here to enlarge image
Increasing quantities of cardboard are being diverted from the MSW stream to a range of outlets including composting. The merits of using cardboard for composting over closed-loop recycling are still to be fully explored.Wood
Wood differs from the other packaging materials in that it cannot generally follow a closed loop for recycling. The principal routes used for virgin material substitution are in particleboard/MDF production and use as a fuel, where it must compete with other materials.
Germany, France, Italy, Spain and the UK together account, in decreasing order of importance, for 65% of total particleboard production output; in 2004, this was at a record level of 34.3 million m3.
An increasing amount of post-consumer wood is recycled into wood-based panels and, on average, recycled wood represented nearly 23% of input to such products. The particle board industry claims to have further capacity for waste wood, but is specifying stricter quality standards that exclude treated wood waste.
Figure 8 presents data on wood recycling submitted by Member States as part of their reporting obligations under the Packaging Waste Directive. This shows that Italy and UK are relatively self sufficient, while the Netherlands and Poland appear to have little in-country reprocessing capacity, instead relying on use of the collected wood as a fuel or for export.
Figure 8. Wood packaging management routes, 2004 Click here to enlarge image
Trade data reinforce the picture portrayed by the Packaging Waste Directive compliance data showing Italy to be a major importer of waste wood and UK having a small positive trade balance, which presumably feeds in-country board production capacity. The Netherlands exports and imports with a net positive balance suggesting an in-country capacity of nearly 300,000 tonnes, and this contrasts with the Packaging Waste Directive, while Poland exports almost exclusively.Prospects
The Packaging Waste Directive’s 15% recycling target is exceeded by all the study countries, where efforts concentrate on chipping untreated wood to produce high-grade woodchip to feed chipboard capacity and some organic recycling. Development of higher value markets (e.g. graded for equestrian uses and animal bedding) results in some exports further afield such as the Middle East.
Although use of existing combustion capacity largely eliminates the capital costs associated with developing new dedicated reprocessing capacity, plant taking waste wood may source fuel from a range of sources (waste and non-waste) and can switch waste-related capacity on and off. It is not uncommon for operators of plant accepting wood waste to charge a gate fee. Incentives to encourage the use of renewable energy sources may redress this balance, placing a premium on biogenic fuel. However, the plants must also comply with the requirements of the Waste Incineration Directive if they are to accept anything other than clean untreated wood. Material substitution limits in particleboard manufacture may also limit input to untreated wood.Conclusion
Europe has a long-established capacity to reprocess paper, card and glass. This is because manufacturers can substitute second-life material for virgin materials with relative ease in new products. It may also be due to the historic focus on collection of these materials at the municipal level.
This brings us to the question of why mainstream reprocessing capacity arises. Is it because it is ‘pushed’ by availability of material through recycling collections or ‘pulled’ by the possible benefits of utilizing second-life materials? Examples include reduced energy consumption when using glass cullet compared with silica (sand) or reduced purchase cost over virgin materials.
Many of the outlets for second-life materials exhibit a dependency on fossil fuel prices - whether the price of gas supply to major users or oil supply as a source of virgin material or, as in the case of wood, simply as a competing fuel. Carbon footprinting and LCA are seen as the key to establishing priorities for action. The EWM project continues to research such aspects and will report in autumn 2007.
Alan Potter is Managing Director of Beyond Waste, a consultancy based in East Sussex, UK.
The EU-funded Interreg lllC European Waste Management (EWM) project involves 12 partners from eight regions across Europe. The lead partner is the Province of Fryslân in the Netherlands. Two UK-based partners - the South East England Regional Assembly (SEERA) and the Environment Agency - commissioned Beyond Waste to examine market conditions in a number of EU countries. Visit www.waste3c.org for more details of the EWM project.REFERENCES Economic Periscope, 25 January 2006 (www.warsawvoice.pl/view/10350/) Waste Strategy for England, Department for Environment, Food and Rural Affairs (Defra), May 2007 (www.defra.gov.uk/environment/waste/strategy/) Confederation of Paper Industries (CPI) website (www.paper.org.uk/info/corrugated/fragile.htm Box 1. Mixed (co-mingled) collection
In Italy, the Netherlands and the UK some of the materials collected for recycling are collected in a mixed form. In the UK this represents a growing proportion (local authorities see it as a route to reduce collection costs), accounting for 20%-30% of the total materials classed as separately collected. The data presented for the UK in Figure 1 have been adjusted to include material collected through these systems.
Mixed (co-mingled) materials require further sorting in a materials recovery facility (MRF) before onward processing. This has two consequences. First, up to 25% (average 10%-15%) of what is collected ends up as rejects at the MRF. These are process losses and incur disposal costs. Secondly, the materials collected may be contaminated, which impacts on the reprocessing plant - particularly paper production where glass shards and food residues can be problematic. The increase in mixed collections means that the quality of paper collected for reprocessing in the UK has generally declined.
Mixed collection of glass results in the loss of colour separation, with ‘all glass’ being suited only to green glass production or use in secondary applications that are not colour sensitive unless it is subject to further processing through an optical separation process.
Levels of contamination influence the price reprocessing plants will pay for glass and paper.Box 2. Support for Polish plastic reprocessing
IMP Comfort is to build a €24 million production-and-warehousing facility which will manufacture polyester fibresfrom polyethylene terephthalate (PET) flakes obtained from recycled plastic bottles. The project will be carried out using the company’s own funds as well as loans and subsidies from Eko-Fundusz, a fund which subsidizes environmental protection projects as part of a programme for the ‘eco-conversion’ of Poland’s foreign debt. Typically Eko-Fundusz provides grants for between 10-30% of investment costs.1Box 3. Italian plastic market
The Italian National Packaging Consortium (CONAI) is a private consortium of companies working towards the recovery and recycling targets of the Packaging Waste Directive. CONAI works through six material-specific consortia that enter into purchasing contracts with municipalities for the take-back of packaging from separate collection. The system has also established a network for the take-back of secondary and tertiary packaging from industrial and commercial activities not covered by the public service.
The plastic packaging consortium, Corepla, conducts auctions for materials collected. These auctions are subject to regulations that specify that only companies with operations in EU countries may participate. Bidding companies must comply with licensing requirements laid down in their respective national regulations regarding the recycling of plastic packaging waste and own a recycling plant suitable for converting the selected products into secondary raw material according to applicable EU and national regulations.Box 4. Plastic recovery in the Netherlands
The Netherlands recovers energy from around 80% of plastics packaging waste collected. It is also believed to be the largest European user of plastics waste as alternative fuel in other industrial installations such as power generation and used96,000 tonnes in 2004. It also produced substantial amounts of refuse-derived fuel (RDF) containing a significant proportion ofplastic waste, which was exported to German energy-from-waste plants prior to 2006. Following the introduction of restrictions on landfilling in Germany to meet EU Landfill Directive diversion targets, the capacity was claimed back by German incinerator operators. The vulnerability of this dependence has now resulted in Dutch operators looking to develop in-country capacity to utilize the RDF.Box 5. Supporting paper capacity in UK
Long-established reprocessing capacity in the UK2 has contracted in the face of rising energy prices and competition from exports. This has meant that, although the utilization rate has increased by almost 10 percentage points (from 59% to 68% in 2005), consumption of recovered fibre has not kept up with collection rates.
In the face of the contraction of in-country reprocessingcapacity, the Waste & Resources Action Programme (WRAP)has developed a paper support programme. This has injectedfunds into the development of de-inking capacity to convertexisting capacity to take recovered paper. It has alsosupported a number of projects investigating the viability ofnon-closed loop recycling (i.e. paper going into non-paperapplications). Examples include moulded pulp (egg boxes,etc.), fibrous insulation and animal bedding.
However, non-paper applications currently account foronly 0.4% of the market for recovered paper and thus they arenot seen as a solution for the UK’s reliance on export. To putthis into context, the UK currently consumes around 50,000tonnes of moulded pulp per year and collection of recovered paper is increasing by almost the same amount per month.
WRAP is also promoting the growth in use of fibre products in insulation applications and other building materials. At the same time a number of companies are positioning to expand newspaper reprocessing capacity once again.
For more information visit WRAP’s website(www.wrap.org.uk).Box 6. Supporting development of wood recycling capacity in the UK
Regional Development Agencies (government-funded bodies responsible for economic and social development in the English regions) have channelled significant funds into developing local outlets for wood waste. For example, the South East England Development Agency (SEEDA) has set up a programme to invest in recycling and reprocessing enterprises in south-east England. It has awarded a share of £500,000 to invest in a waste wood shredder and screening equipment to increase recycling capacity.
WRAP’s Regional Market Development Fund has funded a company in north-west England to install a plant to produce woodchip that can be used by the chipboard industry, as well as for other purposes such as animal bedding, equestrian riding surfaces and garden mulching. A further £106,000 was donated to another company to help build a second production line and a decontamination plant for wood fibre products. The aim was for the two plants together to be recycling around 235,000 tonnes of wood waste by the end of 2006.
For more information visit WRAP’s website (www.wrap.org.uk).