Plastic Waste : Europe’s plastic recycling paradox: High performance, low demand

According to a recently published report by the European Court of Auditors (ECA) on the state of the European circular economy, Austria ranks among the EU’s top performers in municipal waste recycling, alongside Slovenia and Germany. More than 60 percent of waste from households, businesses and public institutions is recycled, placing Austria among Europe’s recycling leaders.

Yet this success story masks a growing structural problem. Both Austrian and European plastic recycling plants are increasingly threatened by closure. The reason lies in the systematic disadvantage faced by recycled plastics compared to primary raw materials, which has significantly weakened the competitiveness of the sector. In 2025 alone, Europe’s plastic recycling capacity shrank by around one million tonnes.

High operating and energy costs, weak demand for recycled products and intense price pressure from low-quality plastic imports from non-EU countries are eroding the economic viability of recycling companies. According to the ECA, this development puts the EU’s environmental and climate objectives at serious risk.

Austria’s strength lies in its highly specialised facilities, innovative sorting and processing technologies, and a robust waste management infrastructure, making it a key driver of the European circular economy. However, performance alone is no longer enough.

“We are excellent at recycling. However, demand for recycled raw materials is low, which makes a genuine circular flow of materials nearly impossible,” says Gabriele Jüly, President of the Austrian Association of Waste Management Companies (VOEB).

For years, the industry has been calling for legal equality between virgin and recycled materials, as well as mandatory minimum shares of recycled content in products.

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To unlock the economic potential of the circular economy, the European Court of Auditors recommends making recycling more profitable across the EU. One key proposal from the Austrian waste management sector is the creation of a “Schengen area for recyclates.”

“The waste and resource management industry produces high-quality secondary raw materials. But bureaucratic barriers mean that there is no genuine internal market for them,” Jüly explains. “Waste must finally be classified as a valuable resource within the EU and, with few exceptions, be subject to the free movement of goods. Only then can fair competition exist.”

Fragmented national regulations currently prevent recycled materials from flowing freely across borders, undermining economies of scale and discouraging investment in advanced recycling technologies.

Helga Berger, Austria’s Member of the European Court of Auditors, underlines the economic imbalance at the heart of the crisis: “As long as recycled materials are more expensive than new products, the circular economy has little chance of becoming profitable. The lack of demand for recovered materials poses major economic challenges for recycling companies.”

The ECA report paints a stark picture of the broader European plastics recycling landscape. Fragmented markets, high energy prices, volatile virgin plastic prices and unfair competition from third countries led to the sharpest downturn in Europe’s plastic recycling industry since records began. In 2025, the sector recorded a net loss of around one million tonnes of recycling capacity.

From the industry’s perspective, the measures currently planned by the European Commission fall short. According to VOEB, binding procurement rules and mandatory recycled content requirements are essential to ensure fair competition and stabilise demand for recycled plastics.

The report also highlights significant disparities among EU Member States. While Austria exceeded the EU’s 2025 municipal waste recycling targets as early as 2022, many countries remain far behind. In terms of landfilling, several Member States still exceed the EU target of a maximum 10 per cent landfill rate. Greece and Romania rank among the lowest performers, with Romania currently failing to recover around 85 per cent of its municipal waste.

The European Court of Auditors recommends that the European Commission make stronger use of monitoring and enforcement tools, including infringement procedures, to ensure compliance with EU waste legislation.

Austria’s success is partly attributed to its landfill ban on untreated municipal waste and the strategic use of waste-to-energy incineration as an efficient form of energy recovery.

“Austria’s waste management sector proves that a high-performing circular economy is possible,” Jüly concludes. “But we cannot remain competitive through national efforts alone. Europe now needs a common strategy to secure the future of the waste and recycling industry.”