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Final Report

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks.

Project code: Research date: November 2006

ISBN: 1-84405-254-0 Date:

Disclaimer: While steps have been taken to ensure the accuracy of this report, WRAP cannot accept responsibility or be held liable to any person for any loss or damage arising out of or in connection with this information being inaccurate, incomplete or misleading. Care should be taken in using any of the data provided as they are based upon numerous project-specific conditions. This report was prepared in 2006 and reflects the situation at that time and does not take into account any subsequent developments. The listing or featuring of a particular product or company does not constitute an endorsement by WRAP and WRAP cannot guarantee the performance of individual products or materials. For more detail, please refer to our Terms & Conditions on our website: www.wrap.org.uk.

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Executive summary
WRAP commissioned GHK, working in association with Recoup, to investigate the UK supply of plastics for recycling, global market demand, future trends and associated implications. The base date for the information and data collected in this report is 2005. This Executive Summary presents the objectives, methodology, main conclusions and recommendations of the study. Cross-references to the relevant sections of the main report are provided.

ES1

Objectives

The objectives of the study were: To provide projections for future UK growth of collection rates for plastics for recycling for 2008, 2010 and 2015. To provide projections for future UK growth of domestic end markets for plastics recyclate for 2008, 2010 and 2015. To identify and assess the current export market for UK recovered plastics. To provide projections for future demand for recovered plastic by each destination and material type for 2008, 2010 and 2015. To provide an assessment of the balance between collection and end markets to 2015. To identify and assess the uncertainties associated with the projections. To provide an assessment of the risks associated with any of the key end markets. To identify possible risk mitigation measures that could be taken.

ES2

Methodology

This study has been developed using an extensive range of interviews, contacts, primary research and references. Over 120 organisations have contributed information to the study between October 2005 and March 20061. In addition over 150 references have been drawn upon to provide the review and analysis presented2. The supply side and UK demand information is constructed based on discussions with over 40 relevant consultees and with reference to more than 80 published sources. The UK demand analysis is constructed from primary research involving some 65 plastics recyclers and UK-based traders of plastics waste. The review of international market demand and associated analysis has been carried out following interviews with 20 businesses, trade bodies and regulatory organisations in Europe, over 25 organisations in Hong Kong and China, 13 organisations in India and over 20 organisations in North America. Research included local visits in Hong Kong and China. The demand analysis is supported by a review of a wide range of published trade data from over 75 referenced sources. The initial findings of the research were presented both to the project steering team and to a study group made up of relevant UK stakeholders for review and comments prior to finalisation.

Annex L Annex M

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 1

ES3

Conclusions

ES3.1 UK collection rates of plastics for recycling & future trends


The quantities of plastics entering the market and being collected for recycling between 2005 and 2015 in each of the sectors studied, as concluded in the report, are set out in table ES.1. The ranges represent different growth scenarios or technical developments. These are detailed in the relevant sections of the main report.

Table ES.1

UK plastics waste arisings & supplies of plastics for recycling (ktonnes)


Projections Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled (minmax) 2005 2,0402,200 414 19-20% 60 <3 <5% 196 Low Low 219 Low Low 2,5152,675 c.425 16-17% 2008 2,2022,675 503 - 548 19-25% 60 10 17% 204 23-68 11-33% 242 68 28% 2,7083,110 604-695 19-27% 2010 2,323 2,934 580 - 692 20-30% 60 15 25% 234 47-117 20-50% 258 89 34% 2,8753,405 731-913 21-32% 2015 2,565 3,814 686 -1,028 19-40% 60 29 48% 252 101-177 40-70% 281 104 37% 3,1584,300 920-1338 21-42%

Sector Packaging3

Agriculture (excluding agricultural packaging)4

Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled Plastics waste arisings7 (kt/a) Collected for recycling (kt/a) % recycled Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled

ELV5

WEEE available for recycling6

Total

Other plastics waste (e.g. process scrap, plastics construction waste, etc.)

Not within scope of study. NOTE: some of these wastes will account for the current gap between export trade statistics and PERN returns.

Source: Various quoted sources & assessments by Recoup, detailed in this report. Supporting commentary for the data in the above table is provided below by sector.

For more detail see page 48, Table 2.14

Agricultural packaging arisings and recycling rates are included in packaging data in this table, but are identified separately on page 54, Table 2.15 For more detail see page 61, Table 2.17 For more detail see page 66, Table 2.19 Assumes 22% of WEEE is plastics (ICER 2000)

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 2

ES3.2 Packaging
Packaging arisings Packaging is the main application for plastics and the largest plastics waste stream arising in the UK. The study concluded that in 2005 approximately 2,474ktpa of plastics entered the production stream for UK packaging8. After accounting for process losses and deductions for reusable packaging it is estimated that 2,400ktpa of packaging plastics arose as post-use waste in the UK in 2005. Polyolefins (LDPE, HDPE, PP) represent 75% of consumption. PET is c. 15% of consumption. A full breakdown of consumption is provided in Annex A.

Packaging growth trends The UK is a net importer of plastic packaging both for domestic packing and in the form of packaging for imported goods. Based on reported packaging obligations the historic annual rate of growth of imported packaging and packaged goods (>15%) is significantly higher than the growth in domestic production (1.8%). It is important to consider this issue when projecting future trends. This study therefore considers overall annual growth in plastic packaging by weight ranging from c.2%-5%.

Packaging recycling DEFRA data for 2005, based on PRNs/PERNs issued, reports that 414kt of plastic packaging was recycled. The study was able to reconcile sources of approximately 75% of the currently reported packaging recycling activity based on other evidence from recyclers and waste generators. Post-use plastic films (165kt) and bottles and other household plastic packaging (67kt) make up at least 57% of plastic packaging recycled9. Approximately 100kt of the anticipated recycling reported were not able to be reconciled within the scope of this study. This issue is addressed in the report recommendations. An analysis of UK local authorities has shown a large increase in collection levels of both bottles and mixed plastics from households by local authorities. Strong growth in these supplies is expected in the next ten years. A new recovery infrastructure is likely to be created, with an increase in availability of new technologies for sorting both recyclables and mixed household waste, leading to better separation of domestic plastic streams for recycling. It is estimated that between 180ktpa and 522ktpa of post-domestic plastics will be recovered for recycling by 2015, of which up to 164kt will be mixed plastics10. This represents at least 113kt of additional bottle collections compared to 2005 levels. A market for at least 167kt of plastic bottles, including 80kt for mixed baled polymer bottles, will be required by 201511. Away from home initiatives to recycle more waste from offices, schools, cafes, leisure facilities and public buildings are growing. A 30kt growth in collections for recycling is assumed by 2015.

Table 2.1, page 30 Figure 2.1, page 41 Table 2.10, page 43 Table 2.11, page 43

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UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 3

Increased segregation of wastes by businesses and waste management contractors will lead to increases in plastic packaging extracted for recycling from commercial and industrial (C&I) waste. An increase of c.140kt in the supply of post use C&I packaging for recycling is estimated by 2015. This growth is predicted to come primarily from increased films recycling, and development of additional recycling of industrial drums, shelfready trays, crates and agricultural packaging plastics. The Directive on Packaging and Packaging Waste requires 22.5% of UK plastic packaging placed on the market to be recycled in 2008. There appears to be little desire within the EU to notably increase targets beyond 2008 when the second 5-year phase of Packaging and Packaging Waste Directive targets ends. Continuing growth in plastic packaging recycling is therefore expected to be primarily driven by improving waste management technology, social expectations and economics rather than by the Packaging and Packaging Waste Directive targets. The analysis shows that the development of extraction of plastics for recycling from mixed waste processes will be essential if growth rates of packaging are to reach the higher end of the projections12. The extraction technology will also be important if the targets ultimately set for packaging recycling post-2008 are higher than those assumed in this study. Based on current levels of reported obligation, the UK is likely to exceed statutory targets in 2008, 2010 and the anticipated 2015 targets. In relation to the above comments and the Directive targets, although providing an underpinning mechanism, PRN/PERN revenues look unlikely to be the major driver for increasing the supply of plastic packaging to the recycling industry. Improved recyclables-handling infrastructure, development of a recycling culture and the impact of other economic factors, such as landfill tax, are likely to be more influential on recycling levels achieved.

ES3.3 Agricultural plastics


Agricultural plastic waste arisings are approximately 93ktpa and represent c.12% of all agricultural waste. This comprises primarily of plastic sheet, wraps, bags and drums. The quantity of plastic materials on farms and agricultural holdings is not expected to rise significantly over the next 10 years. The implementation of The Waste Management (England and Wales) Regulations 2005 changes the classification of agricultural waste so it is no longer possible for farmers to bury or burn waste plastics on site without a licence exemption. Statutory producer responsibility for non-packaging agricultural plastics is also being introduced. Both these changes will drive up separate collections of agricultural plastics for recycling. It is projected that 17kt of waste plastic will be available for recycling in 2008, 26kt in 2010, and 49kt 2015. Of this quantity just over 40% is packaging plastics, the remainder is non-packaging including silage wraps and crop covers. Current expansions in recycling capacity for agricultural plastics suggest there will be sufficient capacity in the UK for all non-hazardous materials collected.

ES3.4 End of life vehicles


End of life vehicles (ELV) contain c.10% plastic by weight. Based on current arisings of ELVs this amounts to potentially c.200kt of plastics per annum in ELV waste. The main polymers used are PP and PVC, with ABS, HDPE, PA and PU also used in automotive components. Plastics consumption is expected to increase in this sector and plastics waste arisings from ELV will grow by over 50ktpa by 2015.

12

Table 2.14, page 48

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The ELV Directive (200/53/EC) requires a 95% recovery and 85% recycling rate of total ELV weight by 2015. These targets are not material specific, but will require increasing efforts to be concentrated on non-metal fraction recovery. The 2015 targets are currently under review. Technologies for recovery of single stream polymer fractions from automotive shredder are key to increasing recycling rates in this sector. The quantity of plastics that must be recycled to meet 2015 targets is estimated to be between 4% and 7% of the total vehicle weight, or c.100-175kt. It is likely that almost all this material will be generated by post shredder extraction of plastics, in particular through separation of the polyolefin rich stream. The economic conditions are not yet sufficiently attractive for shredder operators to make major investments in new separation technologies. The current debate about recovery targets for 2015 is not likely to give confidence to those considering investments in ELV plastics recycling based on fulfilling a producer responsibility need.

ES3.5 Waste electrical and electronic equipment (WEEE)


It is estimated that plastics account for 219 ktpa (22%) of all electrical and electronic equipment arising as waste (this excludes reused/exported equipment). Styrenics and polypropylene account for over 70% of plastics used in the manufacture of electrical and electronic equipment. WEEE arisings are predicted to grow at the rate of 3-5% per annum. Targets will require 70-80% recovery and 50-75% recycling for all collected WEEE. Quantification of current levels of WEEE recycling remains problematic. Projections suggest that the main bulk of plastics arising will remain in shredder residue from recycling of large appliances. Smaller amounts of plastics will be generated from the recycling/dismantling of small household appliances and CRT applications. Effective brominated flame retardant (BFR) removal and post shredder separation of plastics are important factors in maximising plastics recycling from these sources. Investment in sorting technologies will increase volumes of source separated materials. It is estimated that over 100kt of WEEE plastics will be available for recycling by 2015, although it is acknowledged that the figure could be significantly higher than this depending on how the WEEE Directive is implemented and on the separation technologies developed and implemented for plastics. A number of new WEEE processing plants are being established both in the UK and internationally integrating various separation technologies. The success of these in capturing plastic streams should be monitored. The supply assessments made here should be reviewed, as such information becomes available.

ES3.6 Other plastics wastes


Although not within the scope of this report it is noted that there are other plastics waste streams that provide supplies for the recycling industry and that provide end markets for recycled plastics. Supplies from process scrap represent a large flow of waste plastics for recycling. Plastics from construction applications (pipe, window frames, etc.) are also a growing source of material and many of these applications can be produced using recycled plastics.

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ES3.7 UK plastics reprocessing capacity, market demand & trends


A survey of 53 UK reprocessors and traders suggests at least 640kt of available capacity (for a combination of UK recycling and export) for collected recyclable plastics13. 90% of this capacity was reported by businesses operating recycling plants in the UK as a component of their business. It is believed the companies responding represent approximately 70% of tonnage handled by all UK reprocessors and traders. It is estimated that UK-based recycling businesses will offer over 700ktpa of recycling capacity (in a combination of domestic and export markets) by 2008. The bulk of this capacity is capable of handling packaging. It is unlikely that reprocessing capacity will be a barrier to achieving 2008 plastic packaging recycling targets, or indeed 2010 targets. If anything the UK, like Europe as a whole, suffers from over-capacity in some sectors of plastics recycling. Although there is evidence of investment in the UK reprocessing sector, there is also evidence of a decline in the quantities of plastics being reprocessed in the UK. Consultation with UK recyclers reveals they are undertaking an increasing volume of trading with export markets, rather than running collected material through their own reprocessing lines. Anecdotal evidence suggests that returns on investment are low for UK recyclers and that some businesses are mothballing capacity. It is unclear whether the UK plastics recycling industry will be able to remain competitive with markets in Asia and, potentially, Eastern Europe. These markets have the relative advantages of significantly lower labour costs, less costly regulatory controls and proximity to lower cost manufacturing centres. Arguably, the challenge for the UK recycling industry is to develop better recycling capacity, suited to specific long-term opportunities rather than simply to create more of the same capacity. The kind of interventions that will be important to maintain competitiveness of reprocessors relate to supporting technology innovations that will minimise the impact of the large labour cost differentials between the UK and Asia. For example, working to integrate supply chains to make opportunistic buying from traders less attractive and/or which provide a scale of supply that can justify investments that provide economies of scale. Market demand in the UK for recycled plastics looks set to remain strong, with growth in many areas, such as agriculture, horticulture and new applications for recyclate in food grade packaging and the construction sector emerging. Specific market challenges exist in the domestic market for handling plastics from ELV and WEEE streams; particularly those generated through post-shredder extraction. The study identified UK markets for some WEEE plastics and for ELV from dismantling operations. Recycling capacity for bulk shredded plastics from ELV and WEEE sources was not identified in the UK. The UK manufacturing industry could potentially use a large quantity of the plastics collected for recycling in the period 2008-2015 to manufacture new products. In most cases the barriers to domestic consumption relate to pricing, rather than technical limitations. Competitiveness factors tend to draw raw material to lower cost remanufacturing locations outside the UK. Some UK environmentally-directed policy instruments (e.g. Climate Change Levy) make recycling in the UK less competitive compared to export markets. This results in more plastics being recycled outside the UK in circumstances where environmental controls or emissions from energy sources can be less environmentally acceptable. This may represent a misaligning of policy aims and outcomes and these issues should be further considered. No recyclers, so far are known to have achieved exemption from the Climate Change Levy.

13

Table 3.4, page 74

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ES3.8 UK exports of plastics for recycling


UK trade data show that the UK exported around 324kt of waste plastic in 2005, slightly less than in 2004 (see Fig. ES.1). At least 75% of this went to China, mostly via traders in Hong Kong and some via consolidators in continental Europe. UK exports of plastics waste destined for China have increased by approximately 700% between 1998 and 2004.

Figure ES.1

UK exports of plastics for recycling


400,000 350,000 300,000 Tonnes 250,000 200,000 150,000 100,000 50,000 0 2001 2002 2003 Exports PERNs 2004 2005

Source: UK trade statistics website & Defra

Packaging, as reported by PERNs issued, represented 238kt (73%) of plastics waste exports in 2005 (see Figure ES.1). The remaining exported material (87kt) is thought to include production scrap, WEEE-derived plastics, packaging exported without PERNs, reprocessed flake and re-exports of material imported from third countries, though the exact origin and composition is unknown. There are notable differences between the consistency of total exports of plastics waste from UK trade data and the PERN data. For example, in 2002 PERNs issued exceeded the total volume of exports reported by trade statistics. These anomalies in data merit further consideration. This point is considered in the recommendations.

ES3.9 The global market in recovered plastic An overview of global trade in waste plastics
The following conclusions can be drawn from the review of the global market. Most of the demand for waste plastics now comes from emerging economies in Asia. The lower labour and energy costs (compared to the UK) provides a competitive advantage to reprocessors and manufacturers in an environment of increasingly globalised investment, sourcing and supply. The main trading blocks for plastics waste and the trade within, to and from these regions are illustrated in Figure ES.2 and described in more detail below.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 7

Figure ES.2

Main components of the global trade in recovered plastics

JAPAN JAPAN

Ban on direct trade lifted 09/05

Su pp ly Co Sid mp e eti tio n

EUROPE EUROPE Germany Germany UK UK Netherlands Netherlands Belgium Belgium Other EU Other EU
Intra -regional trade

HONG KONG

AMERICAS AMERICAS USA USA Canada Canada Mexico Mexico South America South America
Intra -regional trade

CHINA

OTHER OTHER India India SE & S Asia SE & S Asia Australasia Australasia Middle East Middle East

Exported waste plastic is a valuable commodity. The export trade is driven by a strong market demand for secondary material, not by an intent to dump waste. China absorbs the majority (over 70%) of globally traded recovered plastics (see section 10.3.3). Chinas declared imports of recovered plastic have increased at 500kt-1000kt per year over recent years and were just less than 5 million tonnes in 2005, as shown in Figure ES.3. Consultations in China and Hong Kong suggest that true imports are probably higher, possibly by up to 25%. The trade in recovered plastics is facilitated by the comparatively low cost of container freight to China, a consequence of the imbalance of trade on the routes between China and its major markets in Europe, North America and Japan. Freight costs to other potential markets, such as India, can be several times higher. The trade in waste plastics encompasses a range of different polymers, applications and material qualities from post-production scrap and unused inventory, through processed and semi-finished secondary plastics to unprocessed post-consumer material. Trade data will include all these items. Low labour costs in South East Asia enable mixed plastics waste to be sorted at very low cost prior to reprocessing. Some of these mixed or lower grade plastics (including post consumer packaging and plastics from shredder waste) would not normally be recycled in Europe. It is imperative that these mixed plastics are sufficiently pretreated to make their export from the UK legal. The increasing use of recovered plastic material has been largely driven by the growing capability of recycled plastics to achieve fitness for purpose at lower cost than virgin plastics. This has been enabled by the recent

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 8

high prime plastic prices. Even if prime prices fall significantly, the baseline demand for recovered plastics for lower grade and less quality sensitive applications in China is expected to remain.

Figure ES.3

Imports of recovered plastics to China (kt)

6000 5000 4000


kt

3000 2000 1000 0 1999 2000 2001 PE PS 2002 PVC 2003 Other 2004 2005

Source: China Customs Statistics (CCS) Information Center

Most of the supply to the global market comes from the wealthy nations of the world. Japan, Germany, the US, and the Netherlands all export larger quantities of recovered plastic to China than does the UK. Consultations and press reports show that Asian export demand is affecting prices and the availability of material in almost all the OECD markets examined. The strength of export demand is drawing out new sources of supply and increasing competitive pressure on local recyclers in the process. Regions where plastic consumption is increasing, such as South-East Asia and South America, are also becoming sources of recovered plastic for the export trade. For example, PET bottles collections in Asia (including Japan) reportedly exceed European levels14.

Profiles of major markets for recovered plastics


Table ES.2 summarises the main features of countries and regions with a significant role in the global market in recovered plastics. Detailed country/region profiles, including trade data and information by polymer type, are presented in the main report.

14

PCI Consulting, personal communication

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Table ES.2
Market
EU

Summary of global market in waste plastics by country/region


Features of current market for waste plastics
Many EU countries (e.g. Germany, Italy, Netherlands and France) have wellestablished plastics recycling industries. Some have developed plastics recycling infrastructure with support from green dot packaging fees through access to waste plastics packaging supplied at below global market rates and secure, longterm supply contracts given in return for guarantees of market availability and traceability of materials. The European plastics recycling industry is estimated to comprise over 700 businesses and 2,500ktpa recycling capacity15. 2,200kt- 3,100kt of plastics were collected in Europe for recycling in 2004. Of this at least 1,800kt of plastics packaging was collected for recycling, with approximately 80% recycled within the EU. There is significant intra-EU trade of recovered plastics with major imports from other EU countries to the Netherlands, Belgium, Italy and Germany. These countries are also the major exporters outside the EU. In 2004 EU export of plastics waste to Hong Kong and China were 1,245kt almost two thirds of total EU exports by volume. Exports to this region have more than tripled since 1999 (see Figs. 6.2 and 6.3).

Assessment of future market outlook


Supplies of plastics for recycling will continue to increase throughout Europe, as all member states must achieve higher recycling targets. European plastics recyclers report that it is increasingly challenging to remain competitive with Asian recyclers. The market data suggests that total available capacity in Europe is significantly under-utilised and this trend is likely to continue, with margins being squeezed. As more product manufacturing transfers to Asia, so local end markets for recycled flake and pellet products also become less available. Green dot packaging recycling schemes are using competition in the market to drive down costs. EU plastics recyclers are receiving less favourable arrangements than in the past and are being forced to compete fully in the international market. Recycling capacity in Eastern Europe and the new EU states is growing. This will compete with capacity in Western Europe for material and has the advantages of lower labour costs and, in some cases, better access to new markets in Russia. Changes to the EU food contact regulations will improve opportunities for closed loop packaging recycling for PET that will favour local markets. Supplies of plastics for recycling will increase with increasing regulatory interventions, although at a slower rate than Europe. North American plastics recyclers are concerned about ability to compete with Asian recyclers. Their concerns mirror those expressed by Western European plastics recyclers.

NAFTA

There is extensive trading of recovered plastics within the NAFTA region (the USA, Canada and Mexico), and also a net outflow of this material to East Asia. The US is one of the worlds largest importers and exporters of waste plastics. It imported 396kt and exported 745kt in 2004. Exports of, for example, PET bottle waste have increased by over 400% since 1998 whilst domestic recyclers consumption has declined slightly during the period. Six of the ten largest recovered plastic export markets for the US are in Asia, accounting for more than two-thirds of US recovered plastic exports (see Fig 8.4). The USs close neighbours, Canada and Mexico, receive most of the remainder. The US exports more plastics waste direct to China than to Hong Kong.

15

http://www.eupr.org/

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JAPAN

Japan has a range of laws covering recycling of different waste streams, including packaging and appliances. This requires high levels of plastics recycling (e.g. c. 850ktpa of plastic packaging recycling in 2005) Japan is the country with the largest recovered plastics exports to the China market. It exported 850kt of recovered plastic in 2004 (Fig 9.3). Japan has a strong reputation in China and Hong Kong for reliable supply of high quality plastic, both industrial scrap and post-consumer plastic waste. Many of the firms in Hong Kong focus exclusively on Japan-sourced material. After the introduction of a ban on direct import of plastics waste to China in May 2004 the proportion of Japans plastics that was routed through Hong Kong increased. The ban was lifted in September 2005, and a recovery of direct trade is now expected. China is the driving force behind the huge worldwide growth in the trade of waste plastics and the ultimate destination of most of the waste plastics that are exported from the European Union and NAFTA regions. C. 40,000ktpa of plastics are used in manufacturing in China and this demand is increasing at over 10% per annum. Demand for plastics in China has doubled in the last five years. Total imports of waste plastics to China were only 12.5% of production - 5,000kt in 2005. The UK waste plastics sales to China (including plastics routing via Hong Kong) are not significant when compared to Chinas overall consumption they represent less than 1% of total plastics demand and only 5% of waste plastics imports. The waste plastics are used in a wide variety of applications, from textiles to toys to kitchen utensils. The end-user manufacturers are seeking to reduce production costs by finding cheaper sources of plastic inputs, particularly when virgin prices are historically high. Demand for waste plastics remains strong. The combination of low cost labour, relatively low entry costs to establish recycling plants, more limited regulatory controls and low freight costs makes China highly competitive when compared to European and North American plastics recyclers. Hong Kong acts as a point of transhipment and temporary storage for plastics waste destined ultimately for China. It is a free port - a separate customs zone that is not subject to Chinas import duties and customs law. 2,730kt tonnes of plastics waste imported in 2004. Almost all these imports (2,500kt tonnes) were subsequently routed to mainland China. Most imported material is not processed in Hong Kong before onward shipment to China though small scale operations are beginning to sort, rinse and shred postconsumer bottles to comply with entry requirements of mainland China.

Japan is a wealthy economy and, like Europe, is likely to continue to act as a net supplier of waste plastics to lower cost economies for recycling.

CHINA

The demand for waste plastics from China looks strong for many years ahead. Consumption of plastic is expected to increase by at least 7% per annum over the next ten years as domestic consumption rises in line with income. There is robust growth in export manufacture of plastics products, which also drives growth in plastic packaging use. Even allowing for expected growth in virgin plastics manufacturing in China, imports of plastics are expected to form an important part of overall supply. At least 10,000ktpa of plastics imports (virgin & waste) will be required. Commercial drivers to source lower cost raw materials will continue to drive demand for scrap plastics. The development of domestic virgin plastics capacity is generally not expected to displace recycled material, unless virgin prices were to fall massively. Projections suggest that demand for waste plastics will rise to 6,500ktpa by 2010. Local collections of plastics waste are not expected to significantly reduce imported plastics demand within the period to 2010.

HONG KONG

Hong Kongs demand is a function of demand in China, which is expected to grow (see above). The role of Hong Kong as a trader and broker of deals with Chinese recycling businesses is likely to erode over time as increasing numbers of buyers gain the international business skills and connections to source material directly. Any decline in demand from Hong Kong will therefore be counterbalanced by increases in demand for direct shipments to mainland China. If Chinas enforcement of import controls is tightened Hong Kong could become a site

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for sorting and upgrading material prior to entry to China, although it would probably face competition in this role from countries such as Vietnam and Malaysia. INDIA India has a sizeable domestic plastics recycling industry consisting of an estimated 20,000 companies. It is estimated that 30-40% of all plastics in India is recycled. Import restrictions on waste plastics have limited Indias influence on the global waste plastics market. It imported 100kt of waste plastics in 2005, against a total demand for all polymers of 4,500kt. Import licenses for plastics waste are hard to obtain and in effect only waste equivalent to virgin plastics can be imported. The single exception to this rule is PET bottle waste, which can be freely imported. This study highlighted growth of recycling capacity in other parts of South East Asia, North Africa and South America. These regions are all characterised by a combination of low labour costs (compared to the UK) and increasing demand for plastics products, with relatively low market entry barriers for those wishing to establish plastics recycling operations. India is a sleeping giant with the potential to be a buyer of much larger quantities of waste plastics. Average per capita consumption is low (3.6kg/person cf. a global average of 21.5kg) Total plastics demand is predicted to rise at 12-15% per annum in coming years, increasing demand for plastics to 12,300kt by 2010. The commercial importance of securing plastics for this growing economy is expected to lead to relaxing of the restrictions to import of waste plastics. There is evidence that the Indian Government is considering some easing of import restrictions on a case by case basis for industrial scrap. It is unlikely this would extend to postconsumer material in the near future. Growth in plastics recycling capacity is expected to continue in developing countries, particularly those that are able to access international markets. This capacity will be used to supply raw material for growing domestic end-product consumption at lower cost than virgin plastics and to supply plastic products for the international market.

OTHER

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ES3.10 Anticipated trends in the global market in recovered plastic


The global consumption of plastics is over 200 million tonnes a year and growing. Based on the experience of several European countries with strong domestic recycling activity, it appears that from a technical perspective well over 20% of this global consumption could reasonably be met by recycled plastics or at least 40 million tonnes per annum. Demand for material from the export market will continue to exert strong competitive pressure on recyclers in the UK. All indications during research and consultations are that China is set to remain the focus of global export demand for recovered plastic for the next five years. During the next ten years additional demand is expected from India, North Africa and other regions where plastic consumption is increasing. There is a growing recycling industry in Eastern Europe that will be operating freely in the EU market (and therefore not influenced by uncertainties of regulators in Asia). These new recycling businesses are likely to offer further stiff competition to Western European plastics recyclers. Long term global demand for recycled plastics appears to be structurally strong for most materials considered whether it is from recyclers in the UK, Mainland Europe, China or emerging economies. The actual location of the recycling activity will therefore be determined by both price issues (including low labour costs) and the extent to which sellers wish to incorporate non-price factors into their selling decisions. For example, suppliers of waste plastics in the UK can if they choose - guarantee material is recycled in the UK but may in some cases have to accept a lower purchase price in return for this facility. The differences in prices paid for equivalent waste plastics by domestic and overseas buyers are not only determined by shipment and labour costs. In part, indirect factors such as business costs of environmental controls, environmental taxation (e.g. Climate Change Levy), health and safety and other social costs are components of the final pricing. In this regard, the UK plastics recycling industry is generally meeting higher operating standards (with associated costs) than some international buyers outside the EU. Higher minimum international standards for recycling could level the playing field in relation to these indirect cost factors. This could in turn impact on where recycling occurs.

ES4

Regulatory issues for the export & import of plastics waste

A concern raised by recyclers in Europe is the legality of waste trade with recyclers in Asia and the risks of changes in regulatory regimes suddenly blocking access to established routes to market in Asia. The Basel Convention, Transfrontier Shipment of Waste Regulations and the associated Green List declarations, etc. provide a common international framework on trade in waste for recycling that state which materials can be imported without prior notification. Beyond this there is variation in standards and practices that can restrict flows of certain grades of material and cause uncertainty. Most international trade in waste plastics is not controversial from a regulatory perspective. UK, EU and China regulators have particular concerns over some elements of the trade in post-consumer waste, such as mixed plastics waste. Such shipments have a potential to cause waste arisings and pollution if reprocessing facilities do not have adequate control measures. Mixed plastics shipments are currently a small part of total exports from the UK but could increase significantly as domestic collections expand. This growth will provide an increased regulatory challenge for the Environment Agency. China has laid down strict standards that require plastic waste to have been cleaned and processed before import. The application of these standards varies; research suggests that they are more rigorously applied to

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direct shipments to China than at the Hong Kong/Mainland border. Some other Asian countries have more limited controls and allow import of mixed recyclables for sorting for recycling purposes. Mixed plastics can be exported for recycling as green list waste provided that they are not mixed with other wastes and are prepared to specification in accordance with the relevant Transfrontier Shipment of Waste regulations. There is evidence that a proportion of the international trade in mixed plastics shipped for recycling does not fully comply with the requirements for green list shipment. It is believed that there is not full enforcement of this requirement by the appropriate regulatory agencies. Discrepancies in trade data and anecdotal evidence suggests that some plastics waste enters China illegally either to avoid complying with the requirements for separating and washing (which may be carried out at lower cost in China) or to avoid customs payments. In some cases bans may be introduced on certain grades of material, or on imports from countries where material contamination - particularly with hazardous or clinical waste - has been identified as a serious problem (e.g. Chinas ban on direct Japanese imports of plastics for recycling). Fuller enforcement of current waste regulations by the Chinese authorities would result in more sorting plants being established in Hong Kong and South East Asia. This would increase costs of recycling some plastics in Asia. It would not affect the underlying demand for plastics. It is not believed that the additional costs resulting from a fuller enforcement of import controls would fundamentally change the competitive advantage of recycling plastics in China. India currently has much tighter restrictions on import of plastics for recycling than China. New import controls or increased enforcement of current standards are unlikely to result in reduced market demand generally for waste plastics. A more literal enforcement of the Transfrontier Shipment of Waste Regulations could lead to restrictions on export of mixed plastics shipments to Asia. To manage the risks related to this issue and ensure compliance any material not meeting the green list criteria should either be further sorted to comply and/or be shipped under the amber list classification as appropriate. Both of these interventions would reduce the net value of such shipments but would not fundamentally change the underlying market demand for the material. There is lobbying from different interest groups on the issue of regulatory controls and standards for plastics waste trade as these have significant commercial outcomes. European recyclers have identified enforcement of higher quality standards as an opportunity to improve their competitive position and access greater volumes of materials and argue for tighter standards. Exporters and traders lobby for light regulation. If tighter export controls are applied to UK plastics waste then additional handling infrastructure and labour would be required to sort material to the revised higher standards, with associated costs.

ES5 Risks

Risks, Risk Management & Recommendations

The study considered risks that would limit the predicted growth in UK supply and global market availability/demand for used plastics during the period to 2015. The main risks have been identified, assessed and actions identified to mitigate these risks. These are summarised in table ES.3 and the risks presented graphically in section 14, figures 14.1 and 14.8. In table ES.3 recommended actions are considered primarily from the perspective of policy makers and delivery agencies seeking to achieve the identified national growth levels in plastics recycling. Risks are rated by probability and impact on a scale of 1-5, with 1 being a very low likelihood of impact and 5 representing a very high likelihood of impact.

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Many of the risks identified relate to regulatory objectives and controls. The growth in supplies of plastics for recycling has been accelerated by national and international government policy. The most significant risks to supply of plastics for recycling are believed to be associated with availability of sorting technology for mixed plastics, national recycling targets, other related environmental policies and their economic instruments. A significant drop in recycled polymer pricing is not considered a major risk to supplies of identified plastics streams as this should be counteracted by increased financing from producer responsibility programmes for all the main waste streams considered in this report. For example, if market prices for recycled materials decline (e.g. as a result of declining virgin pricing), PRN values should increase to compensate operators and to maintain economically viable supply chains to the target levels. Assuming current material pricing remains broadly at current levels or higher, the long-term trend is likely to be a decline in the value of PRNs to a level that covers administrative costs (this issue is discussed in detail on page 48.) Changes in waste processing infrastructure represent both an opportunity and a risk. For example, introduction of increased pre-sorting of waste could generate larger supplies of plastics suitable for recycling. However, some technologies will not generate a recyclable stream and instead will generate outputs of plastics more suitable for energy recovery. It is important to ensure that support for development work encourages the extraction of recyclable streams prior to generating lower grade plastics streams suitable for other recovery processes. There are no high probability, high impact risks identified for the export trade. Of the recovered plastic markets, the unprocessed and mixed post-consumer plastics trade is the most vulnerable to additional regulatory intervention. These shipments are a small subset of the overall trade but attract most of the regulators, NGO and press attention. Chinas most recent import standard effectively bars import of such material, but enforcement is still variable. More far-reaching regulatory change in China that would cut off demand for all recovered plastic imports is arguably increasingly less likely as Chinas industry becomes more dependent on recovered plastics as a source material.

Key Recommendations
The most important recommendations to address the major risks to a sustainable increase in plastics recycling in the UK, taken from table ES.3, are: Ensure current and proposed statutory recycling targets remain in place (e.g. for ELV). Encourage development of technology for effective separation of plastics for recycling from WEEE, ELV and mixed waste streams. Develop/ensure availability of UK handling capacity capable of upgrading plastics materials to European market standards to mitigate risks of tighter import controls in China and other markets. Lobby for implementation of REACH regulation in a manner that does not undermine competitiveness of European plastics recyclers. Review export market profile at least biannually to ensure ongoing awareness and management of risks in a rapidly changing global market. In addition, the following recommendations are also considered important to ensure that good quality information is available to accurately track performance and inform policy: Improve PRN reporting to include more information on the sources of plastics recycled to aid data reconciliation and auditing. Review data capture methods used by different agencies (e.g. Customs, Environment Agency, SEPA) with the aim of achieving improved data coherency. Clarify how the requirement for broadly equivalent standards of recycling will be implemented to comply with EC recycling targets.

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Review whether UK plastics recyclers compete on a level international playing field and revise policies accordingly (e.g. does Climate Change Levy on plastics recyclers achieve the desired environmental outcome?). Review the wider environmental, social and economic merits of recycling in the UK compared to recycling in Asia to inform BPEO. (This review would be useful to inform the interpretation of the broadly equivalent standards requirement of the revised Packaging Waste Directive.)

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Table ES.3
Risks

Summary of risks & recommendations to mitigate risk


Probability Impact Net risk Comments Recommendations to mitigate risk

(a)
(1 5)
Chinese waste imports substituted by domestic supplies of plastics waste 2

(b)
(1-5)
4.5

(a x b)
(1-25)
9 Increasing collection of plastics waste generated in China and other Asian countries could displace imports from Europe and North America. There is evidence of substantial collections of waste plastics in Asia undertaken on a commercial basis. The probability of these collections significantly displacing supplies from the UK is considered relatively low for two reasons: the projected growth of plastics demand in Asia remains large; the producer responsibility systems in the UK and mainland Europe would be able to finance discounting of the price of relevant plastics waste until it became competitively priced to the available market (i.e. UK material could be priced below local material, or below material from less regulated countries such as the USA). The 2015 EC targets of ELV recycling and recovery are under review. Producers are arguing for lower recycling rates or the removal of the recycling target and a focus on recovery only. A change in the current targets would undermine investment in separation technology for the recycling of plastics from ASR streams. The currently proposed implementation of the REACH regulation would introduce expensive, commercially unsustainable testing regimes for recyclers producing flake and pellets (but not those making finished products on the same site). The impact would be to further reduce competitiveness of European plastics recyclers and potentially limit EU capacity for collected materials. Ironically the implementation proposed would drive more plastics outside the EU for recycling, where the REACH requirements are not present. Monitor the trends in supply/demand balance in China and India on a biannual basis to review risks to market availability. Plan alternative market options as required.

Changes to current ELV targets reduce recycling requirements

Argue for retention of current targets. Ensure producer responsibility implementation provides financial underpinning required for investment in ASR separation technology.

Adverse implementation of REACH

Lobby for REACH implementation for recycled plastics based on generic data requirements, rather than batch testing. Encourage vertical integration of product manufacture and recycling to avoid the requirement for intermediate testing.

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Enforcement of stricter controls on imports of waste plastics materials to China

Consultation suggests that most of the waste plastics trade is uncontroversial. However, the Chinese authorities have been concerned about low quality materials (for example mixed plastics or plastics contaminated with organic matter). Tightening standards could disrupt the markets for lower quality waste plastics sales to China.

Develop links between the UK regulators (EA, etc.) and SEPA to ensure good communication on current and intended import controls and identify emerging risks to trade. Ensure availability of alternative markets. Develop UK based sorting capacity capable of upgrade all materials to anticipated international import standards. Review PET fibre market trends in Asia with major producers to identify extent of risk. Stimulate the growth of recycled PET use in other market sectors such as bottles and sheet packaging. Encourage development of technology for plastics separation for recycling within new waste technologies (e.g. through WIP New Technologies programme). Evaluate and promote effective technologies to local government and contractors. Review biannually the UKs ability to achieve long-term packaging recycling targets based on anticipated developments of this technology. Encourage investment and commercialisation of required technologies. Evaluate and promote effective separation technologies. Finalise long term statutory objectives, associated regulations and financial arrangements for WEEE and ELV. Improve PRN reporting to include further information on the sources of plastics. This will aid reconciliation of data. Review relevant data capture methods used by different agencies (e.g. customs and EA) with the aim of achieving improved coherency of

New manufacturing technologies for PET fibre in Asia result in substitution of recycled material with virgin polymer Inadequate technologies for separation of plastics from mixed waste

PET fibre accounts for over 75% of all markets for PET collected. Contradictory views were expressed on the potential for in line PET fibre production in Asia to shift to greater virgin use and displace demand for recycled PET.

Achievement of the high projections for supplies of plastics from the domestic waste stream will rely on effective separation of plastics from mixed waste, for example, as part of an MBT process. Some of the new technologies for mixed waste treatment appear capable of extracting plastics for recycling. Others are less effective or aim to use the plastics in energy recovery (e.g. RDF production). It is not yet clear which mixed waste treatment technologies will be implemented or how rapidly they will be introduced. Achievement of the targets for ELV and WEEE recycling will rely on effective separation of plastics from shredder residues. Suitable technologies are developing but not yet commercialised. Some uncertainty surrounding the implementation of the associated regulations is likely to be slowing investment.

Inadequate technologies for plastics separation from shredder residues

Incorrect PRN and trade statistics provide incorrect/unreliable data

It has not been possible to reconcile the sources of 100kt of plastic packaging PRNs from 2005 data. The trade statistics for UK plastics waste exports are not consistent with the associated PERN data. Reported exports of plastics from the UK to Hong Kong are significantly different from the same imports received from the UK by Hong Kong.

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UK trade data are thought to significantly over-state polyethylenes share of waste plastic exports. This is because of the way that export declarations are being completed and the fact that polyethylene happens to be the first on the available list of commodity codes. Some shipments to buyers in Europe (e.g. Rotterdam) are then routed to non-EU markets, so EU recycling is probably overstated by the available trade data. Tracking arrangements for recycling of agricultural, ELV and WEEE plastics under producer responsibility requirements are not clear. These points highlight that the reliability of baseline recycling data remains a concern. Plastics collection schemes develop at a slower rate than anticipated Declining competitiveness of UK plastics recycling industry limits local markets 2 3 6 The main reasons for failure to achieve collection levels predicted would be market collapses or other financing collapses (e.g. removal of funds for recycling). These are considered unlikely. There are some specific risks to achieving supplies of mixed plastics and post-shredder plastics and these are described separately. This study shows confidence in capacity being available for plastics collected. There is also evidence, however, of UK recyclers struggling to compete in the international market particularly against the low labour costs and regulatory controls of the Asian market. Sustained damage to the UK plastics recycling industry in combination with tighter controls on exports would present challenges in finding markets particularly for lower quality and/or mixed plastics waste. Currently export trade is driven almost exclusively by economic considerations within agreed regulatory frameworks. The relative environmental and social merits of recycling in Europe compared to in Asia play little part in current decision making. The EC requirements that recycling should count towards targets only if it is undertaken under broadly equivalent standards to Europe may lead to restrictions in access to some export markets. How this requirement will be implemented/enforced remains unclear. Some suppliers of plastics particularly from the public sector may determine end markets with greater emphasis on non-price issues. Greater consideration of non-price issues when selling plastics for

data. Procedures for completing plastics export paperwork should be examined for consistency with other trade data. Examine opportunities for consistent approach to measuring plastics recycled through various producer responsibility systems to maximise efficiency and minimise likelihood of misreporting. Consider cost/benefit of reporting polymer type as part of obligated business packaging obligation returns. Maintain current/planned recycling targets and levels of investment in recycling infrastructure and communications. Maintain landfill tax escalator. Ensure availability of local sorting capacity to upgrade low quality, mixed materials Review competitiveness of UK recyclers in the global market, consider whether the playing field is level and take further action as required

Negative environmental and/or social impacts

2.5

Review the relative environmental, social and economic merits of recycling in UK and Asia to identify BPEO. Clarify how the broadly equivalent standards requirement will be implemented in Europe. Review requirements to manage risk based on the outcomes of above two actions.

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recycling (either as a result of national or organisational policies) would influence flows of materials to export and into domestic markets. Prime price collapse 2 2.5 5 Although viewed as unlikely, large falls in virgin plastic pricing would depress pricing for recycled plastic materials. This could make collection less economically viable. Producer responsibility obligations and improving recovery technology provide an underpinning mechanism to mitigate the effects of such price changes. Tighter enforcement of TFS export controls could limit UK shipments of mixed plastics or contaminated single streams of plastics to export markets Ensure producer responsibility targets are matched to collection levels to ensure growth in collections can be maintained. Invest in development of lower cost recovery technologies. Maintain links with UK regulators to assess risks and ensure clarity of acceptable quality standards for export. Quantify materials potentially effected by tighter controls. Develop plan based on availability of local sorting capacity to handle any material identified as at risk. Continue development of LCAs and associated economic assessments to accurately identify the BPEOs for waste plastics. Lobby for appropriate national and international environmental management policies (e.g. recycling and recovery targets) based on BPEO.

Tighter enforcement of Transfrontier Shipment of Waste Regulations

Recovery technologies displace recycling activities

The adoption of waste to energy technologies at a larger scale than anticipated could displace material suitable for recycling. Changes to environmental regulations that place more emphasis on recovery and lower emphasis on recycling would impact on the relative economics of recycling (e.g. if the ELV Regulations were amended to reduce or remove recycling targets). Increasing availability of LCA evidence of the superior environmental benefits of many recycling technologies mean this risk is considered low. It is considered more likely that energy recovery technologies will displace landfill. Significant changes in the $///Yuan exchange rates will affect the relative value of UK scrap plastics on the global market. For example, a reduction in the value of the Chinese Yuan against the pound might reduce the -equivalent price paid by Chinese buyers for scrap plastics, however it would also make Chinese finished products more competitive and this would drive demand. Increased shipment costs to China would make this market relatively less attractive to European sellers. Chinas imbalance of physical trade is expected to continue and the balance of expert opinion is that freight rates will decline in the period to 2008.

Exchange rate movements

Monitor trends in currency exchange rates as required to manage risks. Enterprises concerned with this risk could buy options on future currency prices as required. No action proposed.

Chinese freight rate hikes

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Contents
ES1 ES2 ES3 Objectives ................................................................................................................................ 1 Methodology ............................................................................................................................ 1 Conclusions .............................................................................................................................. 2 ES3.1 UK collection rates of plastics for recycling & future trends.........................................................2 ES3.2 Packaging...........................................................................................................................3 ES3.3 Agricultural plastics .............................................................................................................4 ES3.4 End of life vehicles ..............................................................................................................4 ES3.5 Waste electrical and electronic equipment (WEEE) .................................................................5 ES3.6 Other plastics wastes...........................................................................................................5 ES3.7 UK plastics reprocessing capacity, market demand & trends....................................................6 ES3.8 UK exports of plastics for recycling .......................................................................................7 ES3.9 The global market in recovered plastic ..................................................................................7 ES3.10 Anticipated trends in the global market in recovered plastic ..................................................13 Regulatory issues for the export & import of plastics waste ................................................. 13 Risks, Risk Management & Recommendations ...................................................................... 14 Introduction ........................................................................................................................... 25 1.1 Objectives of the study ......................................................................................................25 1.2 Scope of study ..................................................................................................................25 1.3 Approach and method .......................................................................................................26 Domestic supply & collection of plastics ................................................................................ 28 2.1 Consumption of plastic packaging in the UK.........................................................................28 2.1.1 Introduction .........................................................................................................28 2.1.2 Estimates of current arisings by waste stream .........................................................30 2.1.3 Changes in the plastic packaging market 2008, 2010, 2015. .....................................31 2.2 Arisings of plastic packaging waste in the UK .......................................................................32 2.2.1 Processing scrap, filling/packing waste & rejected packed product.............................32 2.2.2 Future trends in process losses ..............................................................................33 2.3 Regulatory Drivers.............................................................................................................34 2.3.1 Plastics Packaging Waste .......................................................................................34 2.3.2 Projected minimum required collection levels...........................................................35 2.3.3 Recovery targets for plastic packaging ....................................................................36 2.3.4 Statutory targets for local authorities and waste generators......................................36 2.3.5 Transfrontier Shipment of Waste Regulations 1994 ..................................................38 2.3.6 REACH (Registration, Evaluation and Authorisation of CHemicals) Directive 67/548/EEC . ...........................................................................................................................39 2.4 Current supplies for recycling plastic packaging.................................................................39 2.4.1 Supplies by polymer type & application ...................................................................39 2.4.2 Sources of UK plastic packaging recycled in 2005.....................................................40 2.5 Future collections for recycling household sources.............................................................40 2.6 Future collections for recycling commercial, industrial & other sources ................................43 2.7 Future collections for recycling Away from home; offices, schools, public facilities, etc. .......44 2.8 Future collections for recycling agriculture, horticulture & construction ................................44 2.9 Summary of supplies of plastic packaging & performance versus targets ................................44 2.10 Agricultural plastics ...........................................................................................................49 2.10.1 Consumption and arisings of agricultural plastics in the UK waste stream...................49 2.10.2 Agricultural Plastics: Trends in future consumption ..................................................49 2.10.3 Agricultural Plastics: Regulatory drivers...................................................................49 2.10.4 Agricultural Plastics: Current levels of recycling and recovery ....................................50 2.10.5 Agricultural plastics: Technological and economic trends ..........................................51 2.10.6 Agricultural plastics: Forecast of future rates of collection for recycling and/or recovery . ...........................................................................................................................51 2.10.7 Agricultural Plastics: Further research .....................................................................52 2.11 Plastics from End of Life Vehicles (ELVs) .............................................................................53
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ES4 ES5 1.0

2.0

3.0

4.0

5.0

6.0

7.0

2.11.1 Arisings in UK ELV waste stream ............................................................................53 2.11.2 ELV plastics: Trends in future consumption .............................................................54 2.11.3 ELV plastics: Regulatory drivers..............................................................................55 2.11.4 ELV plastics: Current levels of recycling and recovery...............................................57 2.11.5 ELV plastics: Techno-economic trends & future developments in recycling & recovery technology........................................................................................................................57 2.11.6 ELV plastics: Forecast of future rates of collection for recycling and/or recovery .........58 2.12 Plastics from waste electrical and electronic equipment (WEEE) ............................................59 2.12.1 WEEE: Current plastics consumption and arisings in UK............................................59 2.12.2 WEEE: Trends in future consumption......................................................................60 2.12.3 WEEE: Regulatory drivers ......................................................................................61 2.12.4 WEEE plastics: Current & forecast levels of recycling and recovery ............................62 2.12.5 WEEE: Assessment of current practices of a sample of WEEE recyclers ......................64 2.12.6 WEEE: Techno-economic trends and future developments in recycling and recovery technology........................................................................................................................64 2.12.7 WEEE: Technology for separation of BFR from WEEE ...............................................65 2.13 Summary..........................................................................................................................66 UK demand for recovered plastics ......................................................................................... 71 3.1 Characterisation of UK plastics recycling industry .................................................................71 3.1.1 Available capacity .................................................................................................72 3.1.2 Product integration ...............................................................................................72 3.1.3 Reported plans for 2006-7 .....................................................................................73 3.2 Summary..........................................................................................................................73 UK market outlets for recovered plastics............................................................................... 74 4.1 Characterisation by sector..................................................................................................74 4.1.1 Packaging ............................................................................................................74 4.1.2 Agricultural plastics ...............................................................................................75 4.1.3 ELV .....................................................................................................................76 4.1.4 WEEE ..................................................................................................................76 4.1.5 Construction industry ............................................................................................77 4.2 Summary..........................................................................................................................77 The Export Market for Recovered Plastics ............................................................................. 78 5.1 Introduction......................................................................................................................78 5.2 Overview of the global trade in recovered plastics ................................................................78 5.3 Structure & drivers of the recovered plastics trade ...............................................................79 5.3.1 Summary .............................................................................................................79 5.3.2 EU .......................................................................................................................79 5.3.3 UK.......................................................................................................................83 5.3.4 NAFTA .................................................................................................................85 5.3.5 Japan ..................................................................................................................86 5.3.6 China...................................................................................................................86 5.3.7 Hong Kong ...........................................................................................................88 5.3.8 India....................................................................................................................88 5.4 Impacts............................................................................................................................89 EU ........................................................................................................................................... 91 6.1 Trade profile.....................................................................................................................91 6.1.1 Intra-EU Trade .....................................................................................................91 6.1.2 EU Trade with the Rest of the World.......................................................................91 6.2 Market Profile ...................................................................................................................94 6.2.1 Packaging waste ...................................................................................................95 6.2.2 PET .....................................................................................................................96 6.2.3 PET prices ............................................................................................................96 6.3 Outlook ............................................................................................................................96 6.4 Summary..........................................................................................................................97 UK........................................................................................................................................... 98 7.1 Trade profile.....................................................................................................................98 7.1.1 Imports................................................................................................................98 7.1.2 Exports ................................................................................................................99 7.2 Market Profile ................................................................................................................. 101 7.2.1 Plastic consumption and recycling ........................................................................ 101
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8.0

9.0

10.0

11.0

12.0

7.2.2 The UK plastics recycling industry......................................................................... 101 7.2.3 UK export market................................................................................................ 102 7.2.4 Plastic Prices ...................................................................................................... 102 7.3 Outlook .......................................................................................................................... 103 7.3.1 Current and future export markets ....................................................................... 103 7.3.2 Future risks to the export market ......................................................................... 104 7.4 Summary........................................................................................................................ 104 NAFTA................................................................................................................................... 106 8.1 Trade Profile................................................................................................................... 106 8.1.1 US ..................................................................................................................... 106 8.1.2 Canada .............................................................................................................. 109 8.2 Policy & regulatory situation and outlook ........................................................................... 112 8.3 Market Profile ................................................................................................................. 112 8.4 Outlook .......................................................................................................................... 116 8.5 Summary........................................................................................................................ 117 Japan .................................................................................................................................... 119 9.1 Trade Profile................................................................................................................... 119 9.2 Policy & regulatory situation and outlook ........................................................................... 121 9.3 Market Profile ................................................................................................................. 125 9.4 Outlook .......................................................................................................................... 126 9.5 Summary........................................................................................................................ 126 China .................................................................................................................................... 128 10.1 Introduction.................................................................................................................... 128 10.2 Demand ......................................................................................................................... 129 10.2.1 Introduction ....................................................................................................... 129 10.3 Supply............................................................................................................................ 130 10.3.1 Prime resin......................................................................................................... 130 10.3.2 Recovered Plastics - overview .............................................................................. 135 10.3.3 Recovered plastic imports .................................................................................... 137 10.3.4 Recovered plastic from the domestic market ......................................................... 143 10.3.5 Contribution of recovered plastic to overall plastic consumption .............................. 146 10.4 Policy & regulatory situation ............................................................................................. 146 10.4.1 Regulation of Trade in Waste ............................................................................... 146 10.4.2 Regulation of Reprocessors.................................................................................. 152 10.5 Future demand for plastics in China .................................................................................. 153 10.6 Outlook for recovered plastic imports ................................................................................ 156 10.6.1 Demand............................................................................................................. 157 10.6.2 Prime prices ....................................................................................................... 158 10.6.3 Domestic supply of prime plastics......................................................................... 158 10.6.4 Regulatory change .............................................................................................. 158 10.6.5 Domestic supply of waste plastic .......................................................................... 159 10.6.6 Technological change .......................................................................................... 159 10.6.7 Summary ........................................................................................................... 159 10.7 Summary........................................................................................................................ 161 Hong Kong............................................................................................................................ 162 11.1 Trade profile................................................................................................................... 162 11.2 Policy & regulatory situation and outlook ........................................................................... 165 11.3 Market Profile ................................................................................................................. 166 11.4 Outlook .......................................................................................................................... 167 11.5 Summary........................................................................................................................ 168 India..................................................................................................................................... 170 12.1 Introduction.................................................................................................................... 170 12.2 Overview of the plastics industry in India .......................................................................... 170 12.3 Plastic waste recycling in India ......................................................................................... 171 12.3.1 Introduction ....................................................................................................... 171 12.3.2 Trends in the import of plastic waste .................................................................... 172 12.3.3 Characteristics of waste importing firms ................................................................ 174 12.3.2 Regulations on import of plastic waste .................................................................. 175 12.3.3 Assessment of future trends in waste imports........................................................ 177 12.4 Summary........................................................................................................................ 178
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13.0

Future export demand ......................................................................................................... 180 13.1 Introduction.................................................................................................................... 180 13.2 Outlook .......................................................................................................................... 182 13.2.1 General pattern of trade ...................................................................................... 182 13.2.2 Location of demand ............................................................................................ 183 13.2.3 Demand drivers .................................................................................................. 184 13.3 Scenarios and Projections ................................................................................................ 184 13.3.1 Projections ......................................................................................................... 184 13.3.2 Implications for the supply side............................................................................ 188 13.4 Summary........................................................................................................................ 189 14.0 Risks & Risk Mitigation ........................................................................................................ 190 14.1 Introduction.................................................................................................................... 190 14.2 1Domestic market ........................................................................................................... 190 14.2.1 Supply side ........................................................................................................ 190 14.2.2 UK domestic demand risks ................................................................................... 193 14.3 International market risks ................................................................................................ 195 14.3.1 Market factors .................................................................................................... 195 14.3.2 Non-market factors ............................................................................................. 201 14.3.3 Summary of international market risks .................................................................. 202 14.4 Summary of key risks ...................................................................................................... 203 15.0 Conclusions .......................................................................................................................... 205 15.1 Domestic supply.............................................................................................................. 205 15.2 Domestic demand ........................................................................................................... 208 15.3 The export market .......................................................................................................... 210 15.4 Export outlook ................................................................................................................ 211 15.5 Balance between supply and demand................................................................................ 212 16.0 Recommendations................................................................................................................ 213 Annex A Packaging........................................................................................................................... 218 Annex B Agricultural Plastics ........................................................................................................... 229 Annex C End of Life Vehicles (ELV) .................................................................................................. 231 Annex D Waste Electric and Electronic Equipment (WEEE) ............................................................. 235 Annex E UK Market Demand........................................................................................................... 240 Annex F Summary of global market in waste plastics by country/region ....................................... 242 Annex G Chinese regulation of trade in waste ................................................................................. 245 Annex H Chinese Environmental Protection Standard for Imported Scrap Plastics ........................ 247 Annex I AQSIQ Registration Needed for Overseas Suppliers of Waste Material Imports ............... 254 Annex J UK-based firms on the AQSIQ list of accredited companies............................................... 257 Annex K OECD Member Countries .................................................................................................... 260 Annex L Consultees .......................................................................................................................... 261 Annex M Bibliography ...................................................................................................................... 265 M.1 Supply Side Analysis ............................................................................................................ 265 M.2 Demand Side Analysis .......................................................................................................... 269 M.3 Websites............................................................................................................................... 270 Annex N Currency Conversion Factors ............................................................................................. 272 Annex O Glossary of terms ............................................................................................................... 273

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1.0 1.1

Introduction Objectives of the study

The UKs collection of waste plastics is increasing rapidly as separated collection schemes spread and the measures adopted in pursuit of the Packaging Directive and other targets take hold. This material needs a market, something WRAP is heavily engaged in promoting. Historically a share of collected recovered plastic has been exported for processing abroad, mostly with our EU neighbours. However, in recent times there have been some marked changes in the pattern of exports, with ever-larger volumes being shipped outside the EU, and to Asia in particular. In 2004 three quarters of the UKs recovered plastic exports went direct to either Hong Kong or China, and further Asia-bound material was shipped via intermediaries in Belgium and Holland. Understanding the Asian export trade and whether it is likely to continue, expand, contract or expire is key to determining the likely balance in aggregate demand for waste plastics and hence the balance, prices and stability of the UK market. The objectives of the study were: To identify and assess the current export market for UK recovered plastics, to include a description of the types of market served (e.g. end products), the geographical destination, tonnes recycled, the types of plastics and the prices paid. Whilst focusing on China as the end market, export to India, Pakistan and Africa, and any other significant current or projected markets must also be considered and discussed, as should intermediate reprocessing in Vietnam, Korea, etc. To provide projections for future demand for recovered plastic by each destination and material type over the next 3, 5 and 10 years (years 2008, 2010 and 2015 respectively). In addition, a statement of assumptions, for example stability of economy, domestic collection, etc and an assessment of the validity of the assumptions should be provided. To provide projections for future UK growth of collection rates for plastics for recycling, over the next 3, 5 and 10 years (years 2008, 2010 and 2015 respectively) under a number of different economic scenarios, e.g. consumption, government policy, legislative targets, etc. In addition, a statement of assumptions, for example, stability of economy, domestic collection and an assessment of the validity of the assumptions should be provided. To provide projections for future UK growth of domestic end markets for plastics recyclate, over the next 3, 5, 10 years under a number of different economic scenarios e.g. consumption, government policy, legislative targets, etc. In addition, a statement of assumptions, for example, stability of economy, domestic collection and an assessment of the validity of the assumptions should be provided. To provide an assessment of the balance between collection and end markets for the next 3, 5 and 10 years. To identify and assess the uncertainties associated with the projections. To provide an assessment of the risks associated with any of the key end markets, for example impact of changes in indigenous processing capacity, future prices paid, etc. and the balance between supply and demand. To identify possible risk mitigation measures that could be taken.

1.2

Scope of study

The studys scope was the following plastic waste streams: Packaging Waste electronic and electrical equipment (WEEE) End of life vehicles (ELV) Agricultural plastics waste These waste streams have (or will shortly have) statutory recycling targets in the UK.
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 25

It is acknowledged that there are other streams of waste plastics that are beyond the scope of this study but that are relevant in consideration of the total UK plastics recycling sector. For example, recycling of plastics process waste from a range of manufacturing industries, waste from collections from the construction industry and from deconstruction / demolition projects. The report highlights the need for these streams to be similarly characterised to quantify and gain a full understanding of the UK plastics recycling market. This document reports the findings of the research and analysis undertaken. The project was delivered by a consultant team of GHK Consulting working in association with Recoup and was commissioned to provide WRAP with a better understanding of the dynamics and future prospects for the export trade in waste plastics.

1.3

Approach and method

This study is tasked with producing forecasts to 2015 for markets that have changed dramatically over the past five years, and which are continuing to evolve at a rapid rate, both in the UK and overseas. While the domestic market is relatively well mapped and understood, the export market has not been heavily researched or modelled in the past, either in the UK or overseas, and there are inevitably many unknowns. The primary objective was to develop an understanding of the market, how and why it is changing. This understanding forms the basis for construction of scenarios in the later stages of the project. The methodology is summarised below. This study has been developed using an extensive range of interviews, contacts, primary research and references. Over 120 organisations have contributed information to the study between October 2005 and March 200616. In addition over 150 references have been drawn upon to provide the review and analysis presented17. The UK supply and demand information is constructed based on discussions with over 40 relevant consultees and with reference to more than 80 published sources. The UK demand analysis is constructed from primary research involving some 65 plastics recyclers and UK-based traders of plastics waste. The review of international market demand and associated analysis has been carried out following interviews with 20 businesses, trade bodies and regulatory organisations in Europe, over 25 organisations in Hong Kong and China, 13 organisations in India and over 20 organisations in North America. Research included local visits in Hong Kong and China. The demand analysis is supported by a review of a wide range of published trade data from over 75 referenced sources. The initial findings of the research were presented both to a project steering team and to a study group made up of relevant UK stakeholders for review and comments prior to finalisation. The consultation programme was constructed with the aim of providing a cross-section of suppliers, intermediaries and end-users involved in the recovery and use of plastics in the UK, and for the export trade. The emphasis of the primary research on the demand side has been on exports to Asia, and China/Hong Kong in particular, as this is less well documented than the European market and represents the majority of trade volume. The report benefits from interviews conducted with companies, trade associations and official bodies in both Hong Kong and China. The study focuses on the main types of waste plastic traded today polyethylene (PE), polyethylene terephthalate (PET), polypropylene (PP), polyvinyl chloride (PVC) and polystyrene (PS). As well as established plastic waste streams it considers two emerging waste streams - the waste plastics arising from dismantling of waste electronic and electrical equipment and of end-of-life vehicles. The study workflow is shown in Figure 1.1. The work was divided into two main work streams: analysis of the present and future supply of recovered plastics in the UK, and future domestic demand for this material (led by Recoup); and

16

Annex L Annex M
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 26

17

examination of the present and future export market for recovered plastics, including investigation of its likely future development (led by GHK). These two strands are brought together in this Final Report which, as well as reporting the current state of the market, looks forward towards 2015. The building blocks from which the aggregated UK market and export market analysis have been constructed are provided in the Annexes.

Figure 1.1

Study workflow

Export Demand
Recovered plastics trade analysis

Net Supply
Baseline UK supply

Importer profiles Working Papers

Regulatory, technical & economic drivers

Exporter profiles

Waste stream Changes & outlook Study management group

Demand projections

UK end market analysis

Consolidation & market outlook

Final reporting

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 27

2.0 2.1

Domestic supply & collection of plastics Consumption of plastic packaging in the UK

2.1.1 Introduction
Packaging is the main application for plastics and is the largest plastics waste stream arising in the UK. The UK is a net importer of plastic packaging both for domestic packing and in the form of packaging for imported goods. UK waste arisings of plastic packaging are larger than UK production and polymer consumption figures. An assessment of packaging arisings and future trends has been developed with reference to a wide range of industry sources. Market data have been derived from information sourced from six trade associations, four market research organisations specialising in the plastics and packaging markets, and directly from a range of large businesses specialising in particular market areas. In addition, a review of trade media was undertaken to identify specific market data and trends. In the main, information has been sourced specifically showing UK consumption. In a limited number of instances only European consumption figures have been available and have therefore been assessed pro rata for the UK, primarily based on population. It has been possible in most cases to cross-reference various sources of information on both applications and polymer types to within 5-10% of each other. It is important to identify that the analysis of packaging presented in this section is provided at three distinct levels: Total plastics entering the packaging manufacturing chain this includes material that later is lost as process scrap and is not regulated as Packaging Waste. Finished plastics packaging supplied onto the UK market in a given year. This is the total amount described in the above bullet minus the assumed process scrap loss. Plastics waste arisings in a year. This is calculated as the finished plastics packaging amount above minus an allowance for increases in the renewable plastic packaging pool (i.e. the waste arising that is deferred to future years). The breakdown of the assessment of total current plastic packaging-related plastics consumption for 2005 (including process scrap) is shown in Table 2.1. A more detailed breakdown of the data is provided in Annex A. The tonnages shown represent the polymer input to the manufacturing process (except for net imports, which reflect finished packaging weight). The result of the analysis suggests that in 2005 some 2,474kt of plastic was used in the manufacture and supply of UK plastic packaging. Process scrap losses at different stages of the production and supply process may account for around 150kt of plastic. Therefore it is assessed that approximately 2,324kt/a of plastics are currently used to produce packaging that ultimately arises as waste in the UK. Most plastic packaging waste is assumed to arise in the same year of the packaging production. This is likely to be true for the significant majority of packaged items. Returnable Transit Packaging (RTP), intermediate bulk storage (IBS) and other reusable packaging may have several years of service life before becoming waste. Actual waste arisings in the year are therefore perhaps c.40kt lower than this total broadly 2,284kt/a. Different levels of data quality in the various sectors and polymer types could vary the overall total tonnage by up to c.10%. The weakest data areas are believed to be those for PP and PS sheet and trays; it is also suspected that the HDPE/PP use in returnable packaging systems may be understated. There is a notable difference between the assessment of polymer use discussed above and the figures used by Defra to quantify packaging for assessment of targets (2079kt in 200618). Several factors can help to explain the difference between this analysis and the plastic packaging quantities reported under the Producer Responsibility obligations (and assumed as present in UK waste by Defra). These are: the impact of production and packing losses within the supply chain (assuming these are not recycled and used in packaging); the use of data from the previous year to determine
18

Derived from Defra, 2005


UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 28

obligated tonnage; some producer under-reporting or an underestimate of quantities of plastic packaging falling under the de minimis; the inherent margin of variability of data.

Table 2.1

Polymer demand by application in production of packaging for consumption in the UK (2005), ktonnes
OPP PP UnPET specified Polyolefins (PO) 50 55 5 110 300 25 10 60 15 410 PS PVC Biopolymers Total

Application \ Polymer LDPE/ HDPE LLDPE

Bottles Closures EPS transit packaging Film Film - bags Injection moulded RTP19s, crates, etc Other HDPE packaging Pails, drums & industrial Semi-rigid sheet Strapping Thermoformed packs Injection moulded rigids Fibre for packaging Various applications Net packaging imports (estimated)21 Total
20

408 392 160 960

220 19 42 40 321

68 54 122

10 70 37 20 112 15 3 20 287

5 28 85 10 128

13 10 101 10 134

548 50 28 486 411 70 42 92 126 30 257 15 3 3 314

2,474

Source: Annex A, Table A.1 The view that the actual level of plastic packaging in the UK is currently nearer 2,356kt/a is reinforced by a review of the detailed obligated packaging data submitted to Defra. Actual reported raw material obligations for plastics in 2005 were 2,151kt 22 and imports of transit packaging on finished goods were 69kt (together 2,220kt). There are some additional adjustments to consider: some of the polymer sold will not end up in UK packaging; it would be reasonable to assume (based on analysis of the sales obligated data for plastics) that at least 10% of the imported packaging is not captured by obligations; some plastic packaging (such as franchise and lease packaging) was not captured in returns. For these reasons it appears that around 2,250kt would be a credible assessment of actual consumption although it is recognised that there will be a margin of error on this assessment that could be around 5%.

19

Returnable Transit Packaging (RTP)

20

There is evidence of recent rapid growth in PET thermoforming applications. It is possible that this may be counterbalanced by some slowing growth rates in the use of other polymers in thermoforming. However, it was not possible to verify this hypothesis within the study. As a result the thermoformed market may be overstated in total; this would be compounded in the long term projections.

21 Estimated for films net imports derived from PIFA data; allocation between LD/HD films and exports may have wider error but total tonnes remains consistent with PIFA market statistics; other net imports estimated based on comments from businesses to be reviewed against obligated tonnage returns 22

ACP, personal communication


UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 29

2.1.2 Estimates of current arisings by waste stream


To inform strategic planning, the points at which this packaging enters the waste stream have been assessed, as shown in Table 2.2. Due to the generally inconsistent data on the plastic composition of commercial and industrial (C&I) waste arisings23, the following should be treated as a fairly broad assessment. The waste generation figure is lower than the consumption figure for the year due to the growth in the returnable packaging pool (assumed at 40kt). An attempt has also been made, in very broad terms, to assess the kind of packaging that is likely to make up the C&I arisings. It should be emphasised that the limited data means that this is only a very rough assessment and would benefit from further investigation. However it does allow some general points on target waste streams to be highlighted. Table 2.2 Notional plastic packaging arisings by waste stream (est. 2005) Waste stream Domestic plastic packaging waste Domestic-like packaging arisings; e.g. in offices, leisure, schools, etc24 Agricultural packaging waste Plastic packaging in construction Post-use C&I arisings Production scrap Pack/fill waste & redundant stock TOTAL WASTE Source: Recoup based on various references kt (2005) 1,332 250 32 10 647 105 59 2,435

Table 2.3 Characterisation of C&I plastic packaging arisings, exc. domestic-like arisings (est. 2005)
Arisings Bottles & closures EPS transit packaging Fibre Film Film - bags Injection moulded rigids Injection moulded RTPs, crates, etc Other HDPE packaging Pails, drums & industrial Semi-rigid sheet Strapping Thermoformed packs Various applications Process loss/supply chain losses not accounted for already in above tonnages Grand Total
Source: Recoup based on various references
23

Total kt (2005) 42 14 3 318 127 2 38 42 52 48 27 20 30 91 854

For example different C&I waste analyses imply quite widely different amounts of plastics arisings. AEA et. al. (2003) found 1.5% of all C&I waste was plastic bottles this would equate to c. 274kt of bottles in C&I arisings alone and seems highly unlikely based on the quantities going into the market; waste analyses of C&I waste tend to consider plastics rather then detailed subdivisions so it is often difficult to extract the plastic packaging arisings from these figures.

24 This is described as away from home arisings, and refers to plastic packaging arisings that are in composition similar to the plastic packaging arising in the domestic waste stream for example, plastic bottles, tubs, bags, trays etc for food and drinks consumed in workplaces.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 30

2.1.3 Changes in the plastic packaging market 2008, 2010, 2015.


Factors affecting market growth
Growth in consumption is driven by a number of factors. Population growth in the UK accounts for about 0.3% p.a. of growth; increasing numbers of households, smaller household sizes, growth in GDP and associated consumer spending power and lifestyle choices also are increasing demand for certain kinds of goods packaging in plastics. Within the plastic packaging sector, individual materials and sectors are growing or contracting at different rates. Some of the possible trends in the marketplace have been considered, notably: Relatively high growth in convenience foods e.g. ready meals and fresh food, resulting in increased consumption of trays and pots Relative maturity of plastic bottle markets, although some substitution of glass and can markets is still possible, particularly in the beers, wines and spirits sector Reduction in pallet shrink film and hoods, increase in stretch film consumption Increase in RTP systems Increase in shelf ready packaging

Biodegradable polymers
The potential impact of biodegradable polymers (BDPs) must also be taken into consideration. At this stage no major shifts in the market share of polymers are anticipated, certainly in the period to 2010. Although biodegradables are showing double digit percentage growth, they start from a low tonnage. This low figure shows that the market is still in an early stage of development. Estimates of consumption of biodegradable/degradable plastics packaging in the UK in 2005 are between 1-3 kt25. Key considerations will be pricing against oil-based polymers and technical performance in major markets. Sustained high pricing of oil and oil based polymers is likely to accelerate adoption of biodegradable polymers. While EU Eco-labels and standards such as the EN 13432 standard for biodegradability/compostability have been developed to allow packaging and other materials made from BDPs to be easily recognised, any move to a greater reliance on BDPs will require actions from many sectors of society. European and national agencies will need to make more people and organisations aware of biodegradable products and help to establish supply chains. National policies such as introduction of market penetration programmes that improve consumer awareness would facilitate this. Industry has many incentives to use crop derived materials, that can be cost competitive and which may assist in regulatory compliance. Additional supportive political frameworks for funding and research may also encourage wider use. A working group on Renewable Raw Materials26 have predicted that in 2010, without national policies, biodegradable polymers will hold a 2% share of the total national UK polymer market. With the implementation of national policies, this share could account for around 7%. Other estimates show that this figure may easily reach 10% and in the long term the market share may be even higher. The impact of biodegradable polymers on recycling streams is not yet fully established. Some commentators suggest that biopolymers could contaminate existing recycling streams if arising in sufficient quantities. Suppliers of biopolymers respond arguing that the polymers can be separated from other polymers using common technology (e.g. near infra red spectroscopy) and can in some cases be mechanically recycled. For the purposes of this study it is assumed that biodegradable polymers will not be recycled in significant quantities and that measures will be put in place to ensure that the quality of existing plastics streams is not compromised (as arguably required under Annex II to Directive 94/62/EC).

25

Personal communication. ERRMA, 2002


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26

Growth projections
Two growth projections are provided based on a number of assumptions. Analysts of the manufacturing industry put growth in plastic packaging consumption in the UK at around 1.5-2% per annum27. Although units sold may be increasing at a faster rate than this, continued lightweighting is a counterbalancing influence and is slowing the growth in consumption of plastics. This overall level of growth (just under 2%) has been used to calculate future plastics waste streams (with different levels of growth assumed for different polymers and applications). A more rapid level of growth (at 5% pa.) has also been applied to provide what may be considered a high scenario. The rationale behind projecting this higher level of growth is that it reflects more closely the historic trends: obligated tonnage has grown at just over 5% pa. since 1998, and actually averaged 6.4% over the period 2003-2005. In part this may be due to better data collection, however strikingly much of this growth is driven by an apparently dramatic increase in the import of packaging for filling, and the import of packed finished goods. These have averaged growth of around 15.5% pa. each over the last 8 years; reported imports of packaging around finished goods grew by a striking 23% pa. in the last three years, from 210kt to 390kt28. These levels of growth in packaging imports and retail sales are perhaps less likely to be picked up by the UK manufacturing trade associations. For these reasons a second growth projection, based on 5% pa. increase29 is included. The likely quantities of plastic packaging (as defined by the Packaging Directive) on the market from 2008-2010 are shown below based on these assumptions. See Annex A.1 and A.2 for details of these calculations and for tables showing the polymer consumption assumptions at 2% growth.

Table 2.4

Plastics used in packaging - projections 2008-2015


Description kt 2008 2,490 2,675 kt 2010 2,586 2,934 kt 2015 2,853 3,814

Plastic packaging growth at c. 2% Plastic packaging growth at c. 5%


Source: Annex A, Tables A.1 and A.2

As noted previously it is suggested that there is probably c. 5% margin for error on these figures. On this basis the lowest assessment of growth is still a little higher than the figure used by Defra to assess setting of 2008 business targets. Although the analysis carried out in this report does not directly contradict the data used by Defra it does highlight a risk that the data are understated.

2.2

Arisings of plastic packaging waste in the UK

2.2.1 Processing scrap, filling/packing waste & rejected packed product


The characterisation of plastic packaging waste arisings in the UK, and their changing profile, is important when assessing potentially available supplies for recyclers and when considering compliance with packaging recycling targets. Arisings of waste from packaging production, filling and product rejection have been considered as well as waste arising from tertiary and secondary packaging during intended use, and finally the waste arisings from primary plastics packaging. Net production scrap arisings vary markedly depending on both the packaging type (e.g. film, bottles, thermoformed trays), the production method, run size and the efficiency of individual businesses. Having reviewed benchmarking data provided by Envirowise and consulted industry specialists, it is concluded that c.164kt of waste plastics packaging is likely
27 Various estimates range from c. 1% p.a. to growth in line with GDP; certainly growth has slowed considerably from that evidenced in the period to 2002. BPF and PIFA have suggested 1.5-2% growth. 2% growth is assumed by Defra in packaging target analysis 28

Personal communication from ACP, breakdown of DEFRA obligated tonnage returns 1998-2004

29

Another example of higher growth rates is the cook-chill market, which has grown by approximately 60% in the 6 years between 1999 and 2005
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 32

to be generated within the packaging supply chain as waste prior to fulfilling their intended purpose (i.e. delivering product effectively to the final customer). This is shown in more detail in Table 2.5 below. Of the in supply chain waste generated, it is estimated that approximately 40% (c.60kt) may be eligible for PRNs/PERNs if recycled. The remaining material is classed as production scrap and should not count towards packaging recycling targets. However, discussions with recyclers make clear that there is concern that some packaging production scrap particularly scrap generated in film printing/labelling processes may be wrongly counted towards PRNs or PERNs by some enterprises. Others have suggested that some non-packaging material (e.g. regrind from construction and automotive applications) may be wrongly being counted towards the packaging targets.

Table 2.5

Estimated net production and supply chain losses (kt/a) of plastic packaging (i.e. preconsumer)

Application

Net Printing & conversion labelling losses 11 19 5 4 39 6 55 2 3 66

Filling /packing 11 26 9 2 48

Redundant stock & returns 3 5 2 1 11

TOTAL (kt/a) 31 105 18 10 164

Bottles Films Sheet & thermoformed Injection moulded TOTAL

Source: Recoup based on personal communications with sector specialists

2.2.2 Future trends in process losses


A combination of business, technology and process improvements, as well as just in time systems where stock levels are kept low, has been reducing the quantities of process loss plastic packaging that are available to the existing recycling business. Consolidation of businesses has also led to larger packaging businesses that are able to introduce more sophisticated in house recycling systems. During the research, comments from both the film and rigids sector have been received highlighting this trend. More manufacturing businesses are using in-house granulators and extruders to recycle production scrap that then never reaches third party recyclers. The production scrap available to third party recyclers has declined, and availability of this material is likely to continue to decline. A combination of higher raw material prices, greater support for process improvement (e.g. PICME, Envirowise) and low technology costs will all lead to continued reductions in first pass production scrap levels and the evolution of in house recycling systems. The relative increase in quantities of imported finished or semi-finished packaging, and of packaged goods, also means that the amount of UK plastics scrap from packaging manufacture is likely to decline relative to overall levels of plastic packaging waste generated. As a result of the above factors it can be assumed that packaging waste generated in the production process and available for third party recyclers will not increase during the period 2006-201530.

30

It is acknowledged that trends for shorter run lengths, speed to market issues and shorter product life cycles could have a counter effect - increasing available levels of production scrap. However, for the purposes of this analysis we have assumed absolute levels of available production scrap will remain constant.
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 33

2.3

Regulatory Drivers

2.3.1 Plastics Packaging Waste


The statutory requirements for the recycling of plastic packaging waste stem primarily from the Producer Responsibility Obligations (Packaging Waste) Regulations 2005. These regulations are the implementation of EC Directive on Packaging and Packaging Waste 94/62/EC (as amended by the new Directive 2004/12/EC). This Directive, amongst other targets, requires 22.5% of plastic packaging placed on the market to be recycled by 2008. The UK implementation assigns these targets to businesses based on how they contribute to the quantities of packaging placed on the market. A calculation is made based on both the businesses role in the supply chain (polymer supplier, converter, filler, retailer) and the quantities of plastics used in packaging applications. Not all businesses are covered by the regulations only those with a turnover of more than 2m which handle over 50 tonnes of packaging are required to contribute to the overall Directive targets (and are termed obligated). The targets for individual businesses that do fall under the regulations are slightly higher than the EC target to compensate for the packaging that is used by small businesses that are not covered by the regulations. In November 2005, the UK targets for recycling of obligated plastic packaging waste up to 2010 were confirmed (see Table 2.6).

Table 2.6

Plastic packaging recycling targets for obligated businesses


2006 2007 24% 2008 24.5% (this is assumed to achieve the 22.5% EC target) 2009 25% 2010 25.5% 23%

Obligated plastics packaging recycling target

Source: Defra

The second 5-year phase of EC Packaging & Packaging Waste Directive targets ends in 2008. There has been an expectation that the targets would be reviewed during 2007 and new targets would be set for 2009 onwards. Research conducted during this study has suggested that at present there is no pressure within the Commission to notably increase targets post 200831. The tone of discussions suggests an emphasis on optimisation of current systems rather than implementation of further targets, particularly given that recent new EU members already have considerable work to do to achieve existing targets. The European Parliament is likely to be more keen to raise targets than the Commission, so it is possible that there will be more pressure to raise targets as 2009 approaches. The current Thematic Strategies relating to waste recycling and resource use may result in changes to the nature of target setting for packaging recycling in the longer term. However, the responses from stakeholders during the research suggested that in practical terms the impact of the Thematic Strategies was unlikely to be seen in relation to packaging targets certainly before 2010, and most likely after the next 5 year phase of targets (i.e. later than 2013). On the basis of the current information it has been assumed that the Packaging & Packaging Waste Directive target for plastic recycling will increase to 26% by 2013 and will be 27.5% by 2015. Any variation in these longer-term targets, once confirmed, will impact on how supplies of plastic packaging for recycling are underpinned by producers. However, it is unlikely at the currently anticipated target levels, that the Producer Responsibility Obligations will be the most significant driver for growth in supplies of recyclable plastics at these target levels. This is discussed in more detail in following sections of this chapter.

31 EU DG Environment and a range of Brussels-based stakeholder organisations representing both producer and environmental interests were consulted as part of the research. The views expressed suggested that a significant increase in recycling targets was unlikely. Some consultees expected no increase in plastic packaging recycling targets to 2012. Regardless of the Directive target revisions for 2008-2012, it was suggested by some UK stakeholders that UK recycling targets would continue to increase progressively. Our assessment of future targets has been based on the views expressed. The projections on targets could be updated once the actual EU 2008-2012 targets have been confirmed.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 34

2.3.2 Projected minimum required collection levels


The future required collection levels were assessed in two ways: Figure 2.7 is based on the current obligated packaging tonnage currently used by Defra and 2% growth projections to 2015. The actual and anticipated target recycling rates have then been applied. This quantifies a minimum likely required supply of plastic packaging for recycling. A second approach is based on the detailed assessment of total plastic packaging flows in the UK (summarised in table 2.6) and stated assumptions of future Packaging Directive targets. This assessment is likely to reflect a maximum amount required to meet future Directive targets, subject to any significant policy shift or intervention by the European Parliament. The outcomes of this approach for 2% and 5% pa. growth in packaging are shown in tables 2.8 and 2.9 respectively.

Table 2.7

Minimum likely supplies of UK plastic packaging for recycling to hit target based on reported obligated tonnage32
2008 2010 2,160 25.5% 551 2015 2,385 28.7% 685 2,078 24.5% 509

Obligated plastic packaging (kt) (a) UK business recycling target plastics (b) Total plastic packaging required (kt) (a x b)

Source: packaging obligation, Recoup derived from Defra (2005); targets from Defra

Table 2.8

Maximum likely required supplies of UK plastic packaging for recycling to hit target based on total market (based on 2% pa. market growth)
2008 2010 2,586 24% 621 2015 2,853 27.5% 784
33

Total plastic packaging forming basis for targets (kt) Total plastic packaging required (kt)

2,490 22.5% 560

EU recycling target (or assumed interim requirement)

Source: total packaging, see Annex A.1, targets; 2010-2015 estimates following consultation

Table 2.9

Maximum likely required supplies of UK plastic packaging for recycling to hit target based on total market (based on 5% pa. market growth)
2008 2010 2,934 24% 704 2015 3,814 27.5% 1,049
34

Total plastic packaging forming basis for targets (kt) Total plastic packaging required (kt)

2,675 22.5% 602

EU recycling target (or assumed interim requirement)

Source: total packaging, see Annex A.2, targets; 2010-2015 estimates following consultation *assumed for year based on pro rata 5 year targets

32

These figures are based on an obligation 43.2 kt/a higher than that reported in the Defra Packaging Regulations Consultation Paper August, 2005. This is the difference between the predicted 2005 obligation and the higher actual reported 2005 obligation, published in November 05 by Defra. Assumed growth rates are the same 2% per annum. This figure excludes net process waste that would not be eligible for PRNs/PERNs and would be deducted from reported obligations. This figure excludes process waste that would not be eligible for PRNs/PERNs and would be deducted from reported obligations
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 35

33

34

By 2010 the collections of plastic packaging for recycling will need to be 550-700kt; most probably 575kt (+/-5%). For the reasons stated earlier, the 2015 predictions are more uncertain some commentators would argue that this report overestimates the likely statutory 2012 targets. However, it appears unlikely that the supplies of plastic packaging required by 2015 for recycling targets would be significantly less than 704kt and could be in the range 750kt-1,000kt.

2.3.3 Recovery targets for plastic packaging


Only recycling is included in the scope of this review. However it is important to comment on the potential impact of recovery targets, as these may impact on future waste management decisions for plastics. The recovery target in the Directive requires at least 60% of all packaging to be recovered by 2008. The UK implementation requires 70% recovery of obligated packaging, of which 95% must be recovered by recycling. It is possible, given the thrust of the Thematic Strategies referred to earlier, that there may in the future be a specific requirement to recover a larger quantity of plastics packaging. This could be through energy recovery operations, use in cement kilns and feedstock processes such as diesel production. A regulatory requirement to recover a larger proportion of plastics would have implications for sourcing of plastics streams for recovery. The UK, which has a relatively low level of energy recovery capability compared almost all other European countries, would need to invest more significantly in methods of extracting plastics for recovery, and this could mean additional supplies of plastics packaging to those noted above would have to become available for mechanical recycling.

2.3.4 Statutory targets for local authorities and waste generators


Plastic packaging waste recycling levels will also be driven by more general requirements to reduce waste disposal to landfill and to promote recycling. In all parts of the UK it appears that domestic recycling targets for 2010 will be at least 40-45%, with higher targets for 2015 signalled for England and Scotland. A summary of the main current regulatory drivers for municipal waste recycling is provided below.

England
The England Waste Strategy Consultation35 sets out a vision of national household waste recycling and composting rates of 40% in 2010 and 45% in 2015. If this is reinforced in statute then it will prove important in driving forward plastics collections from domestic sources, as these higher recycling targets will require comprehensive recyclables collection services from households throughout England. Plastic bottles, and potentially other household plastics, will need to be targeted in many more instances.

The Government has also indicated the possibility of measures that would provide a financial incentive for individual households to participate in recycling programmes, through a combination of carrots and sticks. It is possible that some form of householder charging for waste generation could be introduced in the next 10 years. This would have a significant impact in increasing the quantities of material captured for recycling, as has been demonstrated in Ireland where direct charging is commonplace. The England Waste Strategy Consultation also strongly signals measures to increase recycling of commercial and industrial waste. The Government is considering a target of reducing this waste to landfill from 53% (2002) to 37% in 2010 and 36% in 2015. Although plastics packaging represents only a small amount of total C&I waste, a requirement to reduce waste to landfill would stimulate both in-house waste reduction measures and the further implementation of recycling-led waste management systems within businesses.

Wales
The National Waste Strategy for Wales replaces the Waste Strategy 2000 (England and Wales) and sets out targets for the next ten years. The programme will be led by the Assembly Government working in close partnership with local government and stakeholders.

35

Defra, 2006
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 36

There are 3 different targets set in the strategy: UK targets where Wales must meet targets set for the UK in EC Directives Primary Wales-specific targets where Assembly Government and local government have a direct influence: o o o Public bodies to reduce waste produced to at least 10% of 1998 arisings figure Minimum recycling and composting targets for each local authority to deliver 2006/2007 achieve at least 25% recycling/composting MSW with a minimum 10% composting and 10% recycling o 2009/2010 and beyond achieve at least 40% recycling/composting of MSW with a min. 15% composting and 15% recycling; composting must only be derived from source segregated materials Secondary Wales-specific targets where Assembly Government influence is less: o Stabilise and reduce household waste: by 2009/2010 and beyond waste arisings per household should be no greater than in 1997/1998; by 2020 waste arising per person should be less than 300kg/annum. The Assembly encourages businesses to join with the public sector and sets further targets for solid, hazardous and biodegradable industrial and commercial waste reduction, recycling and diversion (including construction and demolition waste).

Scotland
Scotlands National Waste Plan 2003 is the keystone to implementing the National Waste Strategy. This is to be continuously developed through a series of 11 local groupings known as Waste Strategy Areas (WSAs) which will each in turn develop an Area Waste Plan that forms part of the Strategy in line with national targets and objectives. Local authorities in these strategy areas will represent each group, as well as other interested stakeholders. Organisations and authorities may contribute to more than one group. Local solutions should be sought as far as possible for each waste stream. Overall the National Waste Plan sets out an increase in recovery of MSW by composting, recycling and conversion to energy from levels of 9% in 2003 to 30% in 2006, 45% in 2010, 69% 2020. Recovery by composting and recycling alone will be: 27% by 2006, 38% by 2010, 55% by 2020. Quantities of waste landfilled will reduce from 70% in 2006 to: 55% in 2010, 42% in 2012, 31% in 2020. The individual WSA plans will contribute varying targets to these overall outcomes, with each best practicable environmental option taking into consideration local circumstances and need. By 2010, 85% of all Scottish households will be offered a segregated kerbside collection scheme for dry recyclables. This will require householders to separate on average 20% by weight of household waste arisings. In 2020 this will rise to 90% of households that will be required to separate nearer 25% of household waste arisings. Progress reports will be produced by SEPA. If progress is not sufficient, statutory targets may be introduced.

Landfill tax escalator


In addition to specific recycling focussed policies, the acceleration of landfill tax to 35/tonne will act as a driver for diversion of waste from landfill to other routes.

Landfill Directive
The Landfill Directive (99/31/EC) bans disposal of tyres and other materials to landfill, stop co-disposal (landfilling of hazardous and non-hazardous wastes in the same site) and sets targets for diversion of biodegradable municipal wastes from landfill. As part of the development of the EU Thematic Strategy on the Prevention and recycling of Waste, the European Parliament in 2004 sought a ban on landfilling of all waste by 2025, notably bans on:
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 37

landfilling of untreated biodegradable waste by 2010 landfilling of recyclables by 2015 landfilling of recoverable waste by 2020 landfilling all residual waste by 2025 except where unavoidable or hazardous

This wider scope called for by the European Parliament is not statutory but does highlight the broader vision of the members of the European Parliament. Clearly introduction of landfill bans for recyclable plastics at a future point would have a major impact on the supplies of materials for recycling. Finance and technical support to enable local government to achieve these targets is being made available through central Government. For example, the Waste Implementation Programme (WIP) is directing funds to enable achievement of in particular targets associated with the Landfill Directive. A result of this is finance for new technologies such as MBT, which could result in increased plastics streams for recycling/recovery as described above. Other EU regulations drive the trade in recycled plastics in the EU. These are described below. The regulations relating to specific plastics waste sources such as agriculture, ELVs and WEEE are presented under the relevant sections.

2.3.5 Transfrontier Shipment of Waste Regulations 199436


Transboundary movements of wastes are controlled under this regulation. Transboundary movements are divided into those destined for disposal and those destined for recycling, and rules are established for controlling both types of movement. Solid plastics wastes are named on the Green List (non-hazardous wastes) which means that no notification is necessary for the transboundary movement of these wastes destined for recycling within the EU and in other non-EU OECD countries. For exports of Green List wastes destined for recycling in non-OECD countries, the Regulation requires that a copy of the list be shown to all applicable countries. It also requires written confirmation to be obtained to the effect that such waste is not subject to control in the country of destination and that the latter will accept categories of waste to be shipped without procedures that apply to hazardous wastes. If a country has not responded to the request for written confirmation, export of recycled plastics to this destination is prohibited. Answers have been received from some countries requesting prior notification and from others banning imports of certain substances. Thus China and Hong Kong have confirmed that waste plastics (separated polymer streams) will not be controlled, but India has requested that all waste plastics apart from PET and PP should be controlled. A change in Indias response to the Green List to request that all waste plastics should not be controlled would make India a strong competitor to China and Hong Kong as a destination of UK waste plastics. Some countries have not sent written confirmation so waste plastics from the EU can not therefore be exported to these destinations. Informal talks with exporters suggest that there is demand from some of these countries and that response to the regulation would open up further markets. Mixed plastics can be exported for recycling as green list waste provided that they are not mixed with other wastes and are prepared to specification in accordance with the relevant Transfrontier Shipment of Waste regulations. There is evidence that a proportion of the international trade in mixed plastics shipped for recycling does not fully comply with the requirements for green list shipment. It is believed that there is not full enforcement of this requirement by the appropriate regulatory agencies. To manage the risks related to this issue and ensure compliance any material not meeting the green list criteria should either be further sorted to comply and/or be shipped under the amber list classification as appropriate. Both of these interventions would reduce the net value of such shipments but would not fundamentally change the underlying market demand for the material.

36

http://www.legislation.hmso.gov.uk/si/si1994/Uksi_19941137_en_1.htm
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 38

2.3.6

REACH (Registration, Evaluation and Authorisation of CHemicals) Directive 67/548/EEC

REACH is an EU regulatory framework for chemicals (Registration, Evaluation and Authorisation of CHemicals). This new EU regulation will replace 40 existing legal acts and create a single system for all chemical substances. REACH will require manufacturers and importers to gather comprehensive information on properties of their substances produced or imported in volumes over 1 tonne per year and to submit the necessary information to demonstrate their safe use in a registration dossier to the European chemicals agency. Failure to register will mean the substance cannot be manufactured or imported to the EU market. In current form it could stop recyclates from being sold in Europe as a raw material in a manufacturing process as the composition of chemical in the waste plastics would be difficult to identify. It is unclear at this stage whether this would also affect the export to the EU of goods manufactured in China from plastics recyclates. The risks to the recovered plastics trade associated with REACH are discussed in further detail in Section 14.2.2.

2.4

Current supplies for recycling plastic packaging

Published Defra data for 2005 show that declared packaging recycling in 2005 was 414kt37.

2.4.1 Supplies by polymer type & application


The most comprehensive reconciliation of UK plastic packaging recycling activities was carried out by WRAP38 in 2003. This positively identified c.165kt of plastic packaging that was being collected and recycled in the UK from a total reported level of UK recycling of 225kt39. This survey captured 47% by number of identified plastics recyclers. It therefore appears reasonably plausible that the other 53% of business that did not respond may account for the balance of 60kt of plastic packaging recycling. The LDPE film recycling level is consistent with PIFA data on levels of purchased recycled PE for film extrusion for 2002 of 92kt. Initially reported 2002 plastics packaging recycling rates triggered accusations of PERN/PRN fraud and this has led to increased investigation and to revision of the initial official data downwards by 35kt (15% of the total). The declared levels of UK packaging recycled in 2003 were notably lower than 2002, and more in line with 2001 data (203kt and 207kt for UK packaging recycling in 2001 and 2003 respectively). This suggests that there may have been an over-declaration of plastics packaging recycling levels in 2002, even following the downgrading of reported data. The breakdown of plastic packaging recycling by material/application identified for 2002 is shown in Table A.6 (Annex A). The Defra data suggest that packaging recycling has increased from 360kt in 2002 to 414kt in 2005, an increase of c.54kt. Growth in domestic plastic bottle collections account for at least 30kt of the growth in plastic packaging collections during this period. Even allowing for possible overstatement of 2002 data, it is likely that domestic bottle collection accounts for around half the reported growth in plastic packaging recycling between 2002 and 2005. Current collection of post-use LDPE/LLDPE packaging films40 is estimated at c. 165kt. An assessment by PIRA for WRAP suggests that the recycling of films from the retail and manufacturing sectors could potentially generate c. 210kt of postuse LDPE/LLDPE for recycling.

37

http://www.defra.gov.uk/Environment/waste/topics/packaging/pdf/package-waste2005.pdf. Note the 414kt figure represents plastic packaging declared as accepted for recycling; only 407kt of PRNs & PERNS were issued in 2005. This may be due to issues such as load rejection or deductions made for contamination. WRAP, 2003c. The Environmental Agency revised the figure to 225kt from 260kt in 2002 due to identified PRN fraud. Classified as packaging waste under the Producer Responsibility Regulations.
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 39

38

39

40

2.4.2 Sources of UK plastic packaging recycled in 2005


Figure 2.1 shows the estimated volumes of plastic packaging recycled by application in 2005. Further details are provided in Table A.7 in Annex A. The information here is derived from a variety of sources. These primarily include the original WRAP 2003 study referenced above; DEFRA 2005 data on PRN and PERNs issued, the survey of 2005 household plastics recycling and from discussions with over 10 major plastics recyclers and traders to reality check this data based on their specialist knowledge of particular sectors. For example, several large films recycling business were interviewed to gain opinions on market size, as were specialists in PS recycling, crates, industrial packaging, etc.

Figure 2.1

Plastic packaging recycled by main applications (2005)


Filling line scrap redundant stock 7%

Unidentified PRNs & PERNs 24%

Other 1% PP pails 1% Drums & large containers 1% Plastic crates & pallets 6% Trays 2% EPS 1%

Films - post-use 41%

Bottles & other household 16%

Source: Annex A, Table A.6, A.7

Post-use plastic films and bottles make up at least 57% of plastic packaging recycled (based on PRNs and PERNs issued). The reported data raise questions about the composition of the unidentified flows of packaging recycling both in the UK and export markets. Even after reviewing available market data and circulating initial market assessments to a number of plastics recyclers for comment, it was not possible to reconcile the physical source of almost a quarter of all PRNs/PERNs issued. Although this does not mean that all these unaccounted PRNs and PERNs were issued inappropriately, it raises questions about what these PRNs and PERNs were actually issued on and certainly highlights a serious weakness in the current capture of data on packaging recycling achievements. In 2002 around 180kt (half the declared tonnage) was in unidentified flows. Qualitative information confirms that shipments of films account for a large proportion of the export market. This assessment of packaging film collections, at around 165kt/a, suggests that there is still a relatively large supply of unidentified material (around 100kt) being declared as recycled plastic packaging in the above figures which it would be helpful to reconcile. A relatively simple amendment to the PRN/PERN issuing arrangements, to broadly identify the type/source of material could facilitate such reconciliation. The introduction of electronic PRN/PERNs would further facilitate this arrangement.

2.5

Future collections for recycling household sources

An analysis of data from over 95% of UK local authorities supplied between December 2005 and February 2006 has shown a large increase in collection levels during 2005 and continued strong growth anticipated in 2006-7. It seems that

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 40

household plastics collections have reached a tipping point and significant growth could reasonably be anticipated over the next 10 years. Previous estimates of growth trends must be revised upwards significantly. Much of the growth comes from expansion of kerbside schemes and from improved householder participation/capture rates. It is expected that there will be continuing growth in capture rates, as a result of sustained communications work, improved convenient access to collection facilities and a culture shift towards recycling behaviour. Currently the majority of collections from households are based around bottles only. However, the number of councils offering collections of mixed rigid plastic packaging, and in some cases mixed plastics collections, has increased. It is anticipated that there will be continuing expansion of more mixed plastics collections from domestic sources from both kerbside and bring systems provided market availability is maintained for the non-bottle plastics. New technologies for separating recyclables and for processing mixed waste will also lead to increased separation of domestic plastics streams for recycling and recovery. The requirements of the Landfill Directive and the higher recovery targets proposed, for example in the England Waste Strategy, will result in new recovery infrastructure for mixed waste. Several of the new technologies (often grouped under the heading MBT) can provide a physical separation of a proportion of the plastics input from mixed waste in a format that is suitable, in whole or in part, for mechanical recycling. For example, the Sterecycle and Themesave autoclaving processes generate a separate stream of plastics with an output rate ranging from 3% (est.) to 11% of input mixed waste41. Some of these autoclaving processes for mixed waste, when combined with existing screening and Near Infra-Red (NIR) separation systems, are capable of generating large volumes of plastic containers in a form suitable for mechanical recycling. Other technologies will generate plastics rich streams that are more suited to energy recovery options, including gasification. These technology opportunities are discussed in more detail in Chapters 4 and 5. The rate of growth of mixed waste processing, and the selection of the processing technology will be significant variables in the likely availability of separated plastic packaging from the domestic waste stream, particularly in the 2010-2015 period. Three different scenarios for growth in supplies of domestic plastic packaging have been developed, as shown in Table 2.10. The breakdown of the supplies of material by source and scenario is shown in Table 2.11. The equivalent 2005 collection level is estimated at 67kt, of which almost all is from kerbside and bring collections of plastic bottles42. The format in which this material might appear on to the market can also be estimated. Currently most bottle sales are based on sale of mixed polymer bales. This assessment assumes that there will be an increase in sorting by polymer type as sorting technology costs reduce and economies of scale make polymer sorting attractive to higher throughput material recovery facilities (MRFs). It is also assumed that most other bottles mainly PP - will be sorted into HDPE bales where sorting occurs. The projections (detailed in Table A.8) suggest that mixed plastic bottles will be available and require a market of at least 80kt in any of the scenarios considered.

41

WIP Waste Technology Data Centre http://www.defra.gov.uk/environment/waste/wip/newtech/index.htm WRAP (2006)


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42

Table 2.10

Predicted supplies of plastics from domestic sources scenarios & outcomes


Dry recyclables infrastructure Mixed waste extraction No significant extraction from mixed waste Plastics collected43 2008 2010 2015 Extraction of plastics from mixed waste covering 1.5m households by 2015; extraction of mainly bottles Extraction from mixed waste covering 3m households by 2015; good extraction efficiency 2008 2010 2015 2008 2010 2015 114kt 138kt 180kt 137kt 183kt 282kt 159kt 250kt 522kt (47kt) (71kt) (113kt) (70kt) (116kt) (215kt) (92kt) (183kt) (455kt)

Scenario 1 - Low

Limited expansion from 2008 collection levels; 15m homes on kerbside collections including plastics by 2010; 16.5m by 2015; yields grow to 7.5kg/hh Continued expansion from 2008 collection levels: 17m homes on kerbside collections by 2010; 20m by 2015; growth in participation during period to 8.5kg/hh Continued expansion from 2008 collection levels: 18m homes on kerbside collections by 2010; 21m by 2015; growth in participation during period 11kg/hh, including some mixed plastics collections

Scenario 2 Medium

Scenario 3- High

Source: Recoup estimates, see Annex A, Table A.8

Table 2.11
Scenario Year

Separated domestic plastics streams available for recycling by scenario, source & year
Current 2005 Scenario 1 2008 2010 2015 Scenario 2 2008 2010 2015 2008 Scenario 3 2010 2015

kt/a Bottles from domestic kerbside Bottles from domestic bring Mixed plastics (excluding bottles) from kerbside Bottles from mixed waste extraction Mixed plastics (excluding bottles) from mixed waste extraction Total plastics (kt/a) 67 47 20 <1 (est)

kt/a 77 31 6

kt/a 92 38 8

kt/a 125 42 13

kt/a 95 33 8

kt/a 121 39 13

kt/a 173 44 20

kt/a 113 34 8

kt/a 164 41 15

kt/a 241 48 38

8 3

29 16

4 1

15 15

68 127

114

138

180

136

183

282

159

250

522

Source: Recoup estimates based on WRAP (2006), WRAP (2005j)

43

Number in brackets shows additional tonnage to 2005 collection level


UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 42

2.6

Future collections for recycling commercial, industrial & other sources

As the data on current commercial and industrial arisings and recycling rates are less robust than domestic waste data44, predictions about future collections from commercial and industrial sources are likely to be less reliable. Notwithstanding this point, the drivers are firmly pointing towards increased supply of post-use C&I packaging for recycling from these sources. A summary of main reasons is noted below: Increased cost of disposal (including landfill tax escalation) Increasing handling infrastructure for collection source-segregated recyclables & to extract recyclables from mixed commercial/industrial waste Increasing availability/scope of recycling offered by waste management contractors Improving economies of scale for contractors providing wider recyclables collections for C&I premises New national initiatives to encourage waste reduction and recycling in businesses (e.g. BREW) Possible national targets for C&I waste reduction Business emphasis on waste reduction, often as part of quality programmes such as ISO14001

It is expected that the availability of process packaging scrap for third party recyclers will decline slightly in relative terms, as process efficiencies continue to improve and as businesses extend measures to recycle process losses inhouse. Similarly, the relative availability of redundant stock should decline as a result of improving purchasing efficiency. Large retailers, especially supermarkets, have already established systems to capture retail and distribution films and other packaging. There is also increasing emphasis on RDCs and other reusable distribution systems. The growing importance of shelf-ready packaging could result in an increase in straight on trays; although it has also been suggested that there may be slower growth in the use of plastics in secondary collation packaging as cardboard shelfready cartons may gain a greater share of this market45. These factors will reduce the quantities of one-way tertiary and secondary plastic packaging in the supply chain relative to the weight of primary packaging. Growth of supplies of film in this sector is therefore expected to be relatively limited it is difficult to envisage more than a 20% increase on current levels to c.210kt by 2015. The largest and most defined sectors outside of packaging film are reusable trays, crates & RTPs, industrial drums and large containers, and straight on trays. The significant increase in the use of RTPs will increase the availability of HDPE and PP crates for recycling, although the increase of available material for recycling will probably grow more slowly than the pool itself. A growth in crate recycling by 10kt to 2015 has been assumed. The growth of shelf-ready packaging will lead to increased volumes being recycled. It is also likely that retailers will specify greater consistency of polymer use to enhance opportunities for recycling. A growth in recycling of shelf-ready and other trays by 10kt to 2015 has also been assumed. These trends in RTP and shelf ready packaging use, combined with the existing retail and RDC films recycling activities suggest that the multiple retailers are probably the owners of c.100kt of the plastic packaging waste that is being recycled. This quantity will increase for the reasons noted above. A large proportion of the current retailer plastics recycling obligation is, for some, broadly offset by their supplies of waste packaging plastics for recycling. The next most identifiable large plastics packaging market is the drums and industrial containers sector. Here there is potential to increase recycling as well as reuse: the markets are well known, there is a limited number of businesses supplying into these markets and the unit weights of the packaging are high. The hazardous contents of some of the containers may limit opportunities for recycling, however there will remain a relatively large amount of HDPE that could be recycled from these sources. Specialists in the sector have suggested that 20kt/a more material could reasonably be
44

see comments & footnotes in section 2.1.2 on page 31 re. data quality source: personal communications from packaging businesses
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 43

45

recycled from this sector. The IPA has also highlighted that current functioning of the packaging regulations does not adequately recognise the nature of the industrial packaging market. Reuse arrangements are discriminated against: they are not counted due to the manner in which third party drum reconditioning is handled under the regulations. Pack design innovations could also stimulate waste reduction. Some filling systems for industrial bulk containers (IBCs), drums, large tubs and other containers already use film liners. Changes in packaging design/filling practices to encourage use of liners for such containers could reduce container contamination from contents such as fatty foods, paints and chemicals that currently restrict reuse and recycling opportunities for these containers. Capture of specific packaging plastics from other commercial and industrial sectors is poorly documented. There is little consistent published research in this area and a lack of published information that reconciles PRNs and PERNs issued to other reports of recycling activity. There remains a strong concern within the UK plastics recycling industry again reported during interviews - that the information provided by PRNs and PERNs is not yet a reliable indicator of the actual packaging recycling activity undertaken. It can however reasonably be assumed that a combination of targeted sourcing activities by recyclers, specific waste-related initiatives (e.g. NISP, Envirowise, BREW, WRAP), increased segregation of waste by businesses and their waste management contractors will lead to increases in both rigid, foam and film packaging extracted for recycling generally in these sectors.

2.7

Future collections for recycling Away from home; offices, schools, public facilities, etc.

It is possible that there is a substantial quantity of plastic packaging in non-domestic waste that is not directly manufacturing or retail/distribution waste and which is similar in nature to domestic arisings. Examples are the plastic bottles, bags, pots, tubs and wrapping which enter the waste stream in offices, cafes, pubs and restaurants, leisure facilities, schools and public buildings. To illustrate, there are 29 million people in employment and a further 6.5 million students in secondary and tertiary education46. If each person uses one plastic packaging item, such as a 500ml plastic bottle or a yoghurt pot each working day, this would generate around 150kt of rigid plastic packaging47. Attempts to reconcile overall packaging flows suggest that there may be perhaps 250kt of plastic packaging in this category. It is recognised that there is probably a relatively wide error on this estimate but that the true figure is more likely to be larger than significantly smaller. There is a growing number of initiatives to recycle more waste from these kinds of locations. 30kt growth in plastic packaging flows from this sector can be assumed by 2015, although this is ultimately likely to prove a conservative estimate.

2.8

Future collections for recycling agriculture, horticulture & construction

Agricultural, horticultural and construction waste streams all contain plastic packaging waste. Initiatives for these waste streams are already developing; a farm plastics collection programme is underway, to be supported by statutory producer responsibility, and there are a variety of projects to recover materials from construction sites that can be expected to stimulate further expansion in this area. Collectively these sources could generate 25kt of new plastic packaging for recycling by 2015.

2.9

Summary of supplies of plastic packaging & performance versus targets

The above assumptions can be consolidated to create a projection of anticipated collection levels for plastic packaging and how these relate to the targets. The outcome, perhaps surprisingly, is that the producer packaging recycling targets are likely to generate relatively limited pull compared to the push of improved availability and economics of recyclables-led waste management practices.

46

http://www.statistics.gov.uk based on average item weight of 20g


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47

Table 2.12 shows the anticipated profile of plastics packaging collection for recycling based on the lowest scenario 1 assessment for household collection, and based on the lower targets consistent with current levels of reported business obligations. The background to the baseline 2005 figures is shown in Annex A6 and A7.

Table 2.12

Anticipated profile of plastics packaging collected for recycling 2005-2015 by application, based on scenario 1 (low) household collection projection & currently anticipated statutory recycling targets
kt 2005 15 6 10 165 <1 kt 2008 15 6 10 180 3 kt 2010 15 6 10 200 8 kt 2015 15 6 10 210 30

Application Films - packing rejects Packaging/filling rejects - bottles Other filling/packing/redundant stock rejects Films - post-use Away from home office & commercial collections additional Carrier bags FOS Bottles & other household EPS Cups Trays (e.g. Straight on) Plastic crates & pallets Drums & large containers PP pails (e.g. catering) PP bulk bags Agricultural & horticultural packaging Construction site packaging Other packaging unidentified TOTAL (kt) Packaging Target (kt) Surplus (shortfall) (kt)

2 67 6 <1 7 25 5 3 <1 <1 <1 100 414 409 5

3 114 8 1 12 30 8 4 1 7 0.5 100 503 509 (6)

4 138 10 1 15 35 18 6 1 11 2 100 580 550 30

4 180 11 1 20 40 25 8 1 20 5 100 686 685 1

Source: Recoup from various industry consultations, WRAP (2005j), WRAP (2006), WRAP (2004c), Valpak (2005), et al

The rationale for the different growth assessments is described at various points in this report. In summary, the following factors assumed to lead to the projected growth in collection of non-domestic waste: Continued implementation of more recycling-oriented waste management practices by waste contractors and business; partly driven by rising disposal costs and partly enabled by improved handling technologies and economies of scale. This will result in continued improvements in recycling rates, e.g. for post-use films48. Development of new and relatively extensive targeted collections from defined waste streams; notably away from home49, straight on trays50 and drums51. The recent growth in the returnable packaging pool will also lead to increased quantities of crate and tray recycling as these reach the end of their service life.
48

Levels of film recycling projected in the long term are broadly consistent with earlier research (e.g. PIRA for WRAP).
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 45

Producer responsibility for agricultural waste and changes to waste management legislation will lead to increases in collection facilities. These will capture packaging as well as non-packaging plastics.52 New initiatives in the construction sector will lead to a growth in the recycling of packaging plastics.53

A sensitivity analysis has been undertaken to explore the impact of increased performance from household collections, and to consider the impact of targets higher than the current reported packaging levels (shown earlier in this section as maximum targets). Depending on the household collection levels, the future collection tonnages are projected in Table 2.13. It is assumed that the main variable in future collections will be the extent of development of domestic packaging collections. This is because household plastic packaging is both a significantly larger waste stream and starts from a lower level of actual recycling than commercial and industrial plastic packaging recycling. The three total collection scenarios set out below (low, mid, high) are based on the levels of non-domestic recycling projected in Table 2.12 added to the projected domestic collection levels shown in the three scenarios in Table 2.10.

Table 2.13

Total projected collections of UK plastic packaging waste for recycling


kt 2008 kt 2010 580 625 692 kt 2015 686 788 1028

Collection low, scenario 1 Collection mid, scenario 2 Collection high, scenario 3


Source: derived from Table 2.10 and Table 2.12

503 525 548

Summary of predicted performance against future packaging targets


The shortfall/surplus on packaging targets is shown in Table 2.14. This analysis is significant because it suggests that based on the current level of reported obligation, the UK is likely to significantly exceed the 2010 targets and possible 2015 targets. It appears to be broadly on track for the 2008 targets assuming current momentum is maintained both in domestic and C&I collections. The analysis also suggests that large volume growth in collection of plastic streams from domestic waste in the period 2010-2015 is more likely to be sustained in the long term by: an emphasis on successful extraction from mixed waste and, to a lesser extent, mixed plastics collection from kerbside dry recyclables schemes. The current basis for calculating targets suggests that the incremental growth in kerbside and bring collections from households will be sufficient to achieve most of the increase required for target purposes. However, if packaging waste arisings grow faster than is currently being anticipated within the Defra assessments for packaging targets, then the projections show that extraction of plastics from mixed waste for recycling will become critically important to hitting higher targets. Perhaps more importantly, it is also an area that will offer increasingly attractive opportunities for landfill diversion of plastics.

49

There is already evidence of growing collection systems in this sector. There is also new support from BREW to accelerate take-up of these projects.

50

Reported efforts by retailers to specify trays made of single identified polymer type will improve opportunities for recycling this application. Growth in drums recycling based on personal communication with IPA representative citing previous research in this area. See more detailed discussed in section 2.10 Research on waste composition the Building Research Establishment (BRE) used to make an assessment of likely arisings
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 46

51

52

53

Table 2.14

Summary of projected plastic packaging consumption, targets and collection rates


kt 2008 kt 2010 2,323 2,586 2,934 551 621 704 580 625 692 29 4 (12) (124) 141 kt 2015 2,565 2,853 3,814 685 784 1,049 686 788 1028 1 4 (21) (363) 343

Total packaging - low (c. 2% growth p.a., based on current reported obligations) Total packaging - mid (c. 2% growth p.a.) Total packaging - high (c. 5% growth p.a.) Recycling target low Recycling target mid Recycling target high Total collection low, scenario 154 Total collection mid, scenario 2 Total collection high, scenario 3 Collection vs Target low Collection vs Target mid Collection vs Target high Max potential shortfall (high target, low collection) Max potential surplus (low target, high collection)
Source: derived from Table 2.7, 2.8, 2.9. 2.13

2,202 2,490 2,675 509 560 602 503 525 548 (6) (35) (54) (99) 39

The different potential collection levels and targets are summarised graphically in Figure 2.2.

Figure 2.2

Summary of projected plastic packaging collections and potential statutory targets


1200 1200

1000

1000

800

800

kt
600 600

kt

400

400

200

200

0 2008 2010 year 2015

Collection - low Targets - low

Collection - mid Targets - mid

Collection - high Target - high

Source: Table 2.14

54

Collection projections from table 2.13


UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 47

Assumptions in projections
The above projections are based on several important assumptions: Budgets for waste management activities by councils and businesses remain broadly comparable to recent levels in real terms during the period Communications programmes to promote recycling behaviour nationally and locally are sustained The planning application process for new recyclables handling infrastructure is not unduly restrictive There is an available market for mixed plastics sourced from mixed waste extraction processes Market prices for currently collected plastics remain broadly within historic trends and averages There is no significant over-declaration in the current level of PRNs/PERNs issued that may be identified at a later point and reduce the 2005 baseline

Discussion of implications for compliance costs


This analysis suggests that, in the most likely projection scenarios, packaging producer responsibility targets are likely to offer a safety net rather than act as a major economic driver in the development of plastic packaging recycling rates to 2010 and probably beyond. The value of plastic recycling PRNs and PERNs in Q1 2006 was approximately 25-30/tonne. During Q2, the price has fallen to around 15/t due to Q1 performance data published by Defra indicating likely oversupply in 2006. In the period 2006-2010 landfill tax is scheduled to increase by 15/tonne. During this period there will also undoubtedly be gains in operational efficiency in delivery of recyclables collection and handling, and process improvements to increase the value of collected plastic packaging waste. The increasing landfill avoidance benefits and efficiency gains in recycling processes will almost certainly exceed the value offered by PRNs and PERNs. It can be concluded given a broadly stable recyclable sales value that between 2008 and 2010, if not earlier, plastic PRN values could, based on current baseline collection performance, tend to a nominal level that will cover administrative costs of issuing and verifying that recycling has been achieved. Even if sales prices for recyclable materials decline and require support from the PRN mechanism, businesses obligated under packaging producer responsibility are unlikely to experience increased overall business costs. As an illustration of this point, a 60 fall in recyclable plastic prices would certainly require more than a 100 fall in comparable virgin plastic prices. With recycling targets at around 25%, an increase in PRN subsidy of 60/t that a producer might need to pay to compensate for a 60 fall in the price of a tonne of collected recyclable plastics would be counterbalanced by the producer saving more than 400 in virgin polymer costs.55 Packaging costs to the consumer should therefore decrease even though higher recycling subsidies are paid. Conversely, if virgin polymer prices increase then recycling becomes increasingly economically viable supplies will increase and the value of PRN subsidies will tend towards a level that covers administrative costs of the system only. One of the recognised sensitivities in the projections is that some of the growth of mixed plastics collection suggested may be directed to recovery processes, e.g. diesel production and gasification. Some of these technologies appear to be economically viable or close to market viability with sustained high oil prices, increasing disposal costs and more modern technology offering modular processes at smaller throughputs (e.g. 7 kt/a upwards). The impact on the above projections could be that the volumes sent to recycling decrease or slow in 2010-2015, particularly from sources of mixed or more contaminated plastics collections. Alternatively the commercialisation of these technologies could lead to increased collection levels during the period 2010-2015 but with a greater proportion used for these recovery processes, provided that they offer a sustainable alternative to landfill and traditional incineration technologies.

55

Example assumes that 25% target means that every 4t of polymer used for packaging requires 1t of plastic recycling, and that recycled material value drops at 60% of virgin pricing decrease: i.e. 60x4t/60%=400/tonne.
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2.10

Agricultural plastics

2.10.1 Consumption and arisings of agricultural plastics in the UK waste stream


Agricultural plastic waste arisings are approximately 93kt/a and represent c.12% of all agricultural waste56. The main polymer types and amounts used in agriculture are represented in Figure 2.3.57 A more detailed analysis of arisings is given in Annex B.

Figure 2.3

Plastic waste from farms by polymer type and use

Non-packaging other 33%

Plastic packaging 35%

Non-packaging films 32%

Source: see Annex B, Table B.1

2.10.2 Agricultural Plastics: Trends in future consumption


The quantity of plastics materials used on farms is probably close to its peak58 and is unlikely to rise significantly over the next 10 years. Reductions in farming and land-use for agriculture will also prevent growth in plastic. However only a very small quantity of farm plastic arising in the UK is currently being recycled so there remains plenty of material to source if the legislative and economic environment is in place to give incentive for collectors and recyclers to do so.

2.10.3 Agricultural Plastics: Regulatory drivers


Current Legislation
The purpose of The Waste Management (England and Wales) Regulations 2005 that mainly affect agricultural waste is to transpose the requirements of the Waste Framework Directive and the Landfill Directive to ensure that farm waste is disposed of in ways which protect the environment and human health. Separate regulations to fulfil the Hazardous Waste Directive have been issued in 2004. Burying waste on farms must be stopped with immediate effect while only burning of crop residue in the open will be permitted. Until early 2007, use of drum incinerators to burn rinsed polyethylene pesticide containers remains legal. The
56 It is suggested that the accuracy of waste estimates are low (Environment Agency, 2001). This has been a result of little or no monitoring of farm wastes, which up until 2005/6 have been excluded from a controlled waste regime. This shortage of data has led to the development of the Environment Agency commissioned report Improving Data on Agricultural Waste and Resources in which an Agricultural Waste And Resource System (AWARE) is proposed to compile a consistent and regularly updated data set. However, this remains a proposal and no time-scale has been set for its implementation.

57 58

Environment Agency 2001, 2005 BPI, 2006


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options open to farmers following the introduction of the 2005 regulations are summarised in Annex B.2. In essence, the impact of the regulations will be to require formalised waste management systems that are likely to enable collection of plastics for recycling. Significantly, the Government has announced that statutory producer responsibility is to be introduced for non-packaging farm plastics. Although details of the scheme were not available at the time of finalising the report, it is clear that it will cover items such as silage wrap and should provide further financial and organisational underpinning for growth in farm plastics recycling.

2.10.4 Agricultural Plastics: Current levels of recycling and recovery


Much non-packaging plastic waste is produced by dairy farming and horticultural holdings, where large volumes of polyethylene sheet or film are used for silage wrap bales and crop cover. Animal feed bags and fertiliser bags account for over 80% of the total packaging waste generated. In addition, a range of other wastes arise on all types and sizes of holdings. Respondents to the Environmental Agencys Agricultural Survey 2003 reported scrap metal, batteries, oils, tyres, agrochemical packs, syringes and general building waste. Hazardous wastes are also generated. In this same survey current waste management practices were also defined. 83% of farmers disposed of at least one waste stream by burning, either in the open or in a drum incinerator, with the waste stream most commonly burned being silage and packaging plastics. Alternative disposal routes for farm waste were by inclusion in household dustbin, by disposal using an unprepared farm dump or burial elsewhere, or by transporting waste to a civic amenity site. 98% of respondents reported that at least one waste stream was re-used (silage sheet can be used for more than one year) and 72% of holdings store at least one waste stream, especially those wastes that are not low-cost or convenient to dispose of in small quantities. Waste streams stored included metals, tyres, batteries and some hazardous waste materials - oil, agrochemical concentrate and similar. The introduction of new waste management controls to agricultural waste and non-mineral waste from mines and quarries will determine whether existing waste management practices are possible in future. This will determine material volumes likely to be directed for recycling.

Plastics recovery schemes


Encouraging the collection and recovery of agricultural plastics through recycling is important. Intensive use of plastics is reflected in high contamination levels, making them more difficult to manage and dispose of. It is thought that either a future national voluntary or statutory producer responsibility scheme in the UK will ensure that higher volumes of plastic non-packaging waste are collected59. A number of voluntary schemes have been set up by UK farmers to collect material from farms and transport it to a reprocessing facility. The main schemes in the UK are detailed below. It is thought that through these schemes 6kt of farm plastics were collected for reprocessing in 2005.

UK collection schemes for farm plastics & areas covered


Cumbria - Cumbria Farm Plastic Recycling Devon - Devon Farm Plastic Recycling Scotland - Solway Recycling North Lincolnshire, Yorkshire, Cleveland, Durham and Northumberland - Agriplass Northern Ireland - Emerald Isle Recycle Pembrokeshire - Haven Plastics Recycle Somerset - Somerset FWAG Wales and the border counties - Second Life Plastic
59

Packaging waste from farms (pesticide containers, feed/other sacks) is controlled as far as producers are concerned under the Producer Responsibility Packaging Waste Regulations 1997 the Packaging Regulations.
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Worcester, Gloucester and Shropshire - Farm Plastics Recycled Yorkshire - Recovered Agricultural Plastic Scheme (RAPS) Yorkshire, Nottinghamshire, Lincolnshire - Crop Cover Recycling

While some schemes accept most types of packaging and non-packaging plastics, some farmers do not have a collection scheme for non-packaging plastic waste available to them. This means that under the new options available to farmers it is likely that this waste will be disposed of away from farm premises at licensed sites, where the potential for landfill and incineration exists. As farm waste becomes classified as industrial waste, gate fees for landfill will apply. These vary by region: in the north-west for example the typical fee was 35/t in July 2004, rising by 3 per tonne per year in line with landfill tax increases60. Special hazardous wastes will be subject to higher additional charges of around 20 per tonne, excluding landfill tax. While there would be environmental benefits to maintaining voluntary schemes, the introduction of a national regulatory producer responsibility scheme for the collection and recycling of nonpackaging farm plastics waste would increase volumes of recovered farm plastics further. This scheme could either be introduced as a voluntary producer responsibility scheme in the UK, where manufacturers of farm plastics pay a levy to fund collection schemes61 or as a statutory scheme, where regulatory target levels for collection and recycling are established. Producers (manufacturers or importers or distributors of non packaging farm plastics) would be required to collect and recycle a certain proportion of non packaging farm plastics that might arise as waste annually62. In determining what the targets should be, available capacity for reprocessing waste farm plastics should be considered, although at present collection and transport systems are the main issues that challenge such a scheme63. While many local voluntary schemes are funded with grants and subsidies, real costs of these options cannot be compared. The recovery of farm plastics is dependant on the provision of a well organised, efficient collection service (either from the farms or at centralised collection points), a willingness from farmers to pay for the service, the use of efficient handling and transport options, and the availability of a suitable UK reprocessor. Without these elements farm plastic collection schemes will continue to be heavily subsidised and will not allow the UK to realise the full value of the plastic arisings from this sector. It remains clear, however, that when comparing costs to other recovery methods, the recycling and recovery of farm plastics will become increasingly competitive.

2.10.5 Agricultural plastics: Technological and economic trends


It is assumed that there will be no significant technological developments for the collection and handling of agricultural plastics waste but that existing models of farm collection will be rolled out more widely. These will benefit from increasing economies of scale and evolution of efficiency through a good practice network. Unit costs of reprocessing plastics waste from these sources are likely to decline over time with incremental improvements to process technology and with improved utilisation. The benefits of landfill avoidance will increase during the period. It is anticipated that farmers will increasingly opt for separate collection of plastics for recycling as the economics of this will be comparable to or better than alternative disposal options. The economics of this will be underpinned by forthcoming producer responsibility regulation.

2.10.6 Agricultural plastics: Forecast of future rates of collection for recycling and/or recovery
A model had been produced as part of the study to determine how waste farm plastic recovery, on either a voluntary or statutory basis, will modify existing agricultural waste streams. Using 1998 estimates of agricultural waste64 and
60

Environment Agency, 2005 Idea based on Farm Film Producers Group (FFPG) Scheme operated 1994-1997 but collapsed under influence of free-riders. Results of consultation document will indicate what decision is to be made. Defra, 2005a. Cost of collection per tonne is estimated at 48, this includes baling, handling and transport costs. Environment Agency, 2005.
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61

62

63

assumptions from previous models65 it is projected that 17kt of waste plastic will be available for recycling in 2008, 26kt in 2010, and 49kt 2015.

Table 2.15

Amount of farm plastics recycled


2006 2008 7.0 9.7 16.7 2010 11.1 15.3 26.4 2015 20.5 28.3 48.8 2.4 3.3 5.7

Packaging plastics collected (kt) Other plastics (kt) Total plastics (kt)

Source: Recoup following industry consultation, BPI et. al.

The assumptions are as follows: Contamination of 50%66 by weight is not included in projected figures of material recovered. Plastic waste streams that are deemed as hazardous have not been included in the estimates (agrochemical containers, oil containers, animal health packaging) as these in time may be dealt with through different schemes. Allowing for a 30% rejection rate of less recyclable material (tree guards, bale twine net wrap) it is assumed that 70% of total farm plastic waste collected is recycled, of which 43% is packaging. No major disruption to normal scheme operation (e.g. foot and mouth or other disease outbreak that would discourage movement of waste materials from and between farms). Effective enforcement of the legal framework by the relevant regulatory agencies (EA, SEPA, EHS). There is recycling capacity for this material67.

A separate assessment made in 2004 was that by 2010, 20kt of farm plastics could be recovered for recycling68. A 30% more optimistic forecast has been made, as there is more evidence of organised schemes, interest in services, and financial pump priming than perhaps was apparent in 2004. Due to the disparate nature of publications about agricultural waste arisings, of which many seem to be solely based on the 1998 estimates, it is not possible to observe and determine trends in agricultural waste production on which to base a model.

2.10.7 Agricultural Plastics: Further research


Based on the review of existing publications69 and production of the model, areas for research into agricultural farm plastics, and other waste arisings have been identified. These recommendations are based on a gap analysis between existing research papers and the requirements of the AWSF Vision and Strategy Objectives for Sustainable Agricultural Waste Management.
64

These estimates were calculated by deriving a unit waste estimate for each specific waste stream. This value links the quantity of a specific waste or by-product generated each year to a single agricultural unit (e.g. the quantity of agrochemical packaging per hectare, or the quantity of manure per livestock head). Environment Agency, 2003. Environment Agency, 2005. An economic model for a national network of collection schemes assumes that not all farms will be accessible and that not all waste will be collected economically. Percentage of waste arising to be collected is 80%. Environment Agency, 2001

65

66 67

New capacity for agricultural waste plastics is being provided by Evolution Polymers and BPI; other companies are also reporting investments in the UK. On the basis of current and proposed capacity growth there is capacity available for likely supplies until well beyond 2010.

68

Andrew Green (2004) British Polythene Industries, Dumfries. Presentation at 'Action Towards Nationwide Farm Waste Plastics Recovery' conference. Environment Agency, 2004
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69

The accuracy of waste estimates is low70. This is because there has been little or no monitoring of farm wastes that up until 2005/6 have been excluded from a controlled waste regime. This shortage of data has led to the Environment Agency report Improving Data on Agricultural Waste and Resources71 in which an Agricultural Waste And Resource System (AWARE) was proposed to compile a consistent and regularly updated data set. However, this remains a proposal and no time-scale has been set for its implementation. The impact of the Regulations and other measures to address agricultural waste will need to be measured and understood by the introduction of a whole farm approach and use of relevant performance indicators. Further research is needed to raise farmer awareness and produce best practice guidance documents. Only in 2003 were the amounts and quantities of stockpiled material on farms addressed72. Outlets for recovered material appear to be concentrated in Scotland and South Wales, with some potential reprocessors located in the north-west and other developments planned. Although current reprocessing capacity is not sufficient to meet the long term projected collections, there is sufficient capacity for likely growth for infrastructure and that additional reprocessing capacity for likely growth for several years. It is believed that recycling rates are constrained by limited collection infrastructure and that the additional reprocessing capacity will be developed as supplies of agricultural plastics increase. Translating EU best practice to the UK would involve the development of a single stream material recovery scheme utilising municipal waste collection facilities and civic amenity sites. Elsewhere in the EU a change in practice of farm waste management has only occurred where well communicated, convenient and cost effective waste transfer routes have been made available to farmers (EA 2002 P1-399/2). Development of single stream collections contrasts with opinions gathered from supply industries who felt that including film wastes with packaging waste in a single stream would be more practical. A new research project managed by CIWM on behalf of the AWSF aims to investigate, develop and promote a producer responsibility farm plastics collection and recovery programme in England. BREW programme funding will support this.

2.11

Plastics from End of Life Vehicles (ELVs)

2.11.1 Arisings in UK ELV waste stream


Some 2 million vehicles reach the end of their life each year in the UK and require correct treatment and disposal in accordance with specific environmental standards. Plastics accounts for an average 10% of total vehicle weight. Several different polymer types and many grades are used for automotive plastics, tailored to the requirements of individual parts. The most common are: polypropylene (PP) in bumpers and many other parts; acrylonitrile butadiene styrene (ABS) in seats, dashboards and parts casings; polyethylene (PE) for wash/liquid tanks; polyamide (PA); polyurethane (PU); and polyvinylchloride (PVC) for electrical casings, interior upholstery, and trim. Figure 2.3 shows the material composition of a standard delivery van as a percentage of the vehicle by weight, with the plastic fractions further broken down into polymer type where possible.

70

Environment Agency, 2001 P1-399/1.


Environment Agency, 2002.
72

71

Environment Agency Agricultural Waste Survey, 2003.

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Figure 2.4

Material composition by % of vehicle by weight (2002)


Fluids 2% Batteries 1% Glass 3% Tyres 3% Textiles 1% Rubber Other 2% 2%

Plastics 10% Non Ferrous Metal 8%

Ferrous Metal 68%

Source: Assurre, see Annex C, Table C.1

73

2.11.2 ELV plastics: Trends in future consumption


As vehicles have changed in shape and size and acquired more add-on features, their material composition has also changed. While there are many reasons for this, the main ones are lightweighting for emission reduction, technological developments in material performance and safety improvements. Research by Camanoe Associates74 provides estimates for key materials used in the automotive sector and forecasts of vehicle material composition. Estimates were based on literature, private communication and modelling/analytical work. The most important assumed trends in material use for cars and light duty vehicles are summarised by material type below.

Metals
It is assumed that higher specification performance materials such as aluminium (in castings and vehicle structure) and high strength steel will gradually replace ferrous metals, mild steels and cast iron. It is estimated that the substitution of high-strength steel for conventional steel accounts for about the same total amount of vehicle mass reduction as aluminium for ferrous metals. More electrical and electronic equipment in vehicles will increase use of copper, lead and nickel. Lead is classified as a hazardous substance and its use in the manufacture of new vehicles and automotive components must be limited.

Plastics
Plastics use in cars is increasing in absolute terms. Changes in the amount of polymers in vehicles will increase the amount of plastics available for recovery during the period 2008-2015. The increase in use of thermoplastics is attributable to the increased number of electrical components that require housings. One of the main trends in polymer consumption within the automotive industry is the growing use of PP. This is expected to increase rapidly over the next 10 15 years. There are opportunities for some of this consumption to be sourced from recycled PP compounds. The Plastics Reprocessing Validation Exercise (PRoVE) research carried out by the BPF Automotive Recycling Task Force and Consortium for Automotive Recycling (CARE) demonstrates that PP from ELV can be recycled back into automotive applications that meet high grade specifications.
73

http://www.assurre.org/downloads/archive/afeaf9c1-86cb-4232-a4cb-49fb477a05e5.xls Camanoe Associates, 2003


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74

Around 15% of the plastics used are thermosetting plastics. The Society of Motor Manufactures and Traders (SMMT) and BPF are supporting a research project at Exeter University, funded by the Department of Trade and Industry (DTI) and led by Sims Group UK Ltd, into the reusability of thermoset composites in the automotive industry. The primary aim of the research project, Recycling Thermoset Composites (RECCOMP) is to determine how composites should be ground to enable them to be recycled. Overall, consumption of all materials for vehicles is projected to increase, and while the polymer use of different plastics may vary, the overall percentage shows an increase. These findings are summarised in Table 2.16.

Table 2.16

Projected changes in vehicle material composition as a % of vehicle by weight EU 1990 to 2020

Material Ferrous Non-ferrous

1990 (%) 63.51 11.24

2000 (%) 62.91 11.33

2010 (%) 62.55 11.41

2020 (%) 62.42 11.54

PE PP PVC Other TP Total Thermoplastics


Thermosets Rubber Glass Other
Source: Assurre75

0.46 2.93 1.23 3.23 9.24


1.39 4.77 3.39 7.85

0.52 3.02 1.25 3.38 9.64


1.47 4.86 3.31 7.95

0.50 3.08 1.29 3.44 9.83


1.51 4.88 3.30 8.03

0.50 3.11 1.34 3.47 9.91


1.49 4.81 3.26 8.07

2.11.3 ELV plastics: Regulatory drivers


Current Legislation
The End of Life Vehicles (ELV) Directive (2000/53/EC) that entered into EU law in October 2000 requires Member States: to meet specific rising re-use and recycling targets o o o or shredders to provide collection systems for last owners to have their complete ELVs accepted free of charge (even if they have a negative or nil value) from January 2007 85% recovery 80% recycling for all ELVs by 1 January 2006, 95% recovery 85% recycling in 2015 There is an optional lower target of 75% recovery & 70% recycling for pre-1980 vehicles

to ensure that ELVs are treated and de-polluted prior to dismantling, recycling or disposal by authorised dismantlers

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http://www.assurre.org/downloads/archive/afeaf9c1-86cb-4232-a4cb-49fb477a05e5.xls
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Review of 2015 targets


The ELV targets are not material specific. Trials by the UK DTI have shown that a 75% metal recovery rate can be assumed in the UK, and that to meet 2015 targets attention must be concentrated on recovery of non-metal fractions. The DTI has proposed that the recovery/recycling rate for the metallic fraction can be assumed at an agreed level, and that enforcement will concentrate on non-metal fractions of ELV such as plastics. It appears that, aside from the bureaucracy of demonstrating compliance, the 2006 targets may not require plastics to be recycled in particularly large quantities. Depollution activities and tyre recycling could add 4%-5% to the existing 75% metals level, putting the recycling level at or close to 80% before any plastics are recycled. The European Automobile Manufacturers Association is quoted as claiming that the industry has already exceeded the 80% recycling rate76, although this is understood to include feedstock recycling as a recycling process. The definition of recycling is inconsistently applied and will be a key area of debate. There is a strong lobby for post-shredder blast furnace applications to be counted towards the recycling targets. There is a strong counter-argument that this is not the case, and that there should be consistency and this is likely to be reinforced as a result of revision of the EU Waste Framework Directive. Discussion with a UK shredder suggests that some quantity of ELV plastics will be required to meet the current targets, although this may be relatively limited and could potentially be achieved by export of a PO-rich stream of shredded plastics that has been through a relatively basic mechanical separation process. Consultations with recycling associations in Europe uncovered different views as to the potential increase in recycled plastics from end of life vehicles. Most suggested that the amount of plastic generated from the collection and sorting of ELVs would be very little compared to the amount of plastic from packaging waste. However other associations, including the Netherlands trade association for packaging waste, suggested that these materials would be a new source of recycled plastic and would encourage new recycling initiatives in Europe over the next ten years. On the basis of the current targets, at European level this implies a requirement to find markets (recycling and recovery) for a substantial proportion of the 600kt-800kt/annum of ASR plastics generated. A further review of proposed 2015 targets is suggested to be scheduled for 2010. Review of the targets is expected based on levels of recycling achieved in 2006. It is thought that producer obligation responsibilities for achieving the recovery and recycling targets could be implemented. These would be based on total weight of ELV scrapped in 2006, not weight of individual vehicles. In March 2007 (and each year after), producers or uncontracted material treatment facilities would be required to provide evidence of achieving required tonnage for the previous years targets. There appears to be extensive lobbying from some business representatives to simplify and/or reduce the 2015 targets. For example, the European Shredder Group view on the best option for revision of targets77 suggests that targets should be postponed or simplified to one target for both recovery and recycling, with each material to have specific targets. If a 95% recovery targets is specified, this will not be a driver for increased plastics recycling from ELV. It will reduce the likely investment in sorting technology advancements, as the specification of output plastics for recovery will not be as demanding as the specification necessary for mechanical recycling. Other options include banning materials with a high calorific value from landfill and that 2006 targets should be maintained for the future, although this would perhaps fail to recognise and restrict the possibility of technology improvements. The current pressure to reduce targets may fail due to evidence of 80% recycling rates already being achieved by several Member States. It is agreed that any amendments should be consistent with other EU directives, particularly the WEEE and Packaging and Packaging Waste Directives, that have introduced specific targets for both recovery and recycling.

76

Reinhart, A., 2005 http://www.assurre.org/downloads/archive/5d11a2fb-def8-4971-ae4f-1aa1384b820b.pdf


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77

The material composition of vehicles available for recycling beyond 2015 will be different to those available at the formulation of the Directive, with implications for 2015 target attainment.

2.11.4 ELV plastics: Current levels of recycling and recovery


Although vehicles are one of the most effectively recycled products in the UK only a small percentage of waste plastics is recycled. In 2000 less than 1% of ELV plastics waste was recovered for reuse and recovery78. While some plastics can be recovered at the dismantling stage (e.g. bumpers and battery casings), this process is labour-intensive and relatively expensive. When ELVs are recycled, they are first de-polluted to remove fluids, tyres and batteries, then the remaining hulk is dismantled and shredded. As noted earlier the composition of a car means that currently between 74-80% of the weight of a typical ELV is re-used or recycled simply by recovering the metal content. The ferrous metals can be passed to steel works and the non-ferrous metals to metal reprocessors. The remaining fraction of non-metal fractions is classed as automotive shredder residue (ASR). Figures from Assurre79 estimate national arisings of 400kt of ASR from ELV in the UK and it is thought that ASR contains from 5% to 20% recoverable polymer fraction80. This equates to 80kt per annum of available polymer. ASR contains a mix of many composite materials, as well as plastics, and up until now separation and or reuse has generally been uneconomic. Traditionally ASR has been landfilled, but it is now realised that the greatest potential for increasing recycling and recovery rates lies in developing single polymer streams and recovery from shredder residue. Sims UK81 have produced material specification sheets detailing content of approximately 26kt/a of available shredded plastics concentrate from recycling of cars and white goods at UK locations. The plastic is predominantly PP (48%) ABS (16%) HIPS (16%) and also some PE and PC blends, and a 9% other category. Markets for recovered plastics from ASR are currently limited and capacity to process shredder residue (where technologies exist) is lower than national arisings. There is opportunity for pellets to be sold to the plastics moulding and reprocessing industry as raw materials for new products in the automotive sector as well as many others.

2.11.5 ELV plastics: Techno-economic trends & future developments in recycling & recovery technology
There are many different technologies for the treatment and recovery of non-metals fractions of shredder residues in Europe that may be adopted by the UK in the future. Mechanical recycling of material based on both dismantling and post shredder treatment is the most common way to recover polymer fractions, although methods to separate polymers into single streams are varied.

Technology for separation and sorting of polymers from ASR


To facilitate the process of depollution and dismantling, car manufacturers have collaborated to develop an information database called IDIS (International Dismantling Information System). IDIS contains data on the material composition of vehicle components, on the draining of fluids and on the handling of components, etc., as well as information on any special tools needed. IDIS information is available on CD-ROM and online via the IDIS website82. The database is updated twice a year, ensuring that the information on end-of-life vehicle handling for the dismantlers and operators is always current.
78

TRL Ltd, 2002 Assurre, 2005

79

80

http://www/plastics-technology.com/articles/200410cu3.html, Work by Galloo has identified content of plastics in ASR as 10% (APME 2003, Plastics in End of life vehicles; Galloo shredder residues treatment line) and work by Brighton University estimates 4% plastics in ASR (Waste and energy research group, undated, Polymer processing; B Towards processing polymers from ASR) http://www.sims-group.com/uk/solutions/content/plastics/Shredder%20Plastic%20UK.pdf http://www.idis2.com
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81

82

Recycling of ELVs is based on manual dismantling, and separation of ferrous and non-ferrous metals using eddy currents and magnets. The most common way to recover polymer fractions is through further treatment of post shredder residue. Once separated, polymers can be moved to compounding extruders, or bagged and sold to reprocessors. Methods to further separate polymers into single streams vary and are discussed in Annex C. A review of the technology highlights that there are a range of commercial/near commercial technologies that generate streams of plastics from ASR. There is still some uncertainty regarding optimal technologies and economics. However it is believed reasonable to anticipate that continuing improvements in these technologies, increases in alternative disposal costs and potential financing from producers (subject to 2015 targets) will lead to viable economics for plastics separation at large scale shredder operations during the period considered. Figure C.2 in Annex C, produced by Assurre, shows both advanced mechanical sorting and thermal processing facilities, some in operation, some planned and shows the ability of Member States to process shredder residue. The data also show the estimated gate fees for Si-Con process at an estimated 80-100 Euros, or 52 - 66. Given the rising cost of landfill disposal, it is clear that cost-competitive recovery of polymers from shredder residue in the longer term can be achieved. Future post shredder separation technology may include further development of laser and x-ray technologies. Although a non-recoverable fraction will always remain, it can be assumed that as technology progresses this will be reduced. At present there remains a non-homogenous legal framework across the EU, potentially creating different timings, and favouring different technologies.

2.11.6 ELV plastics: Forecast of future rates of collection for recycling and/or recovery
A projection model has been built based on data provided by SMMT83 and industry sectors. The following assumptions were made: weight of the average car is 1000kg plastics content of car is 8% in 1984, increasing by 1 2 % in subsequent years low recovery rate of polymers required to hit 2006 target plastics recycling from ASR contributes at least 4 percentage points to targets by 2015

The maximum available quantity of plastics, based on 10% plastics by weight in a vehicle, is assumed to increase to c.250kt in 2015. As it is assumed that 75% of a car by weight is potentially recoverable simply by extracting the metals, a minimum of 10 additional percentage points are required to meet the target levels of 85% recycling in 2015. Through depollution and tyre recycling activities, approximately half of this requirements may be met. The remaining c. 5% could be acquired through recovery of plastics for recycling. On this basis the amounts of plastics that must be recycled to meet 2015 targets can be supposed to be between 4% and 7% of the total vehicle weight, depending on the effectiveness of non-plastic recycling (e.g. tyres, fluid, glass, etc.). The actual quantities recovered will be primarily dependent on the effectiveness of ASR separation technologies. The initial estimated projections are shown below:

83

SMMT, 2002
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Table 2.17
ELVs (kt)

Forecast of plastics volumes from ELV


2005 2,173 196 456 114 0% 0% 2008 2,272 204 477 119 1% 23 3% 68 2010 2,341 234 492 123 2% 47 5% 117 2015 2,522 252 530 132 4% 101 7% 177

Plastics available (kt) ASR (kt)@21% Est. plastics extractable (kt)@25% ASR

SCENARIO 1 - LOW
Percentage points required from plastics Est. plastics required/extracted (kt)

SCENARIO 2 - HIGH
Percentage points required from plastics Est. plastics required/extracted (kt)
Source : Recoup based on various industry sources

Consideration of technology available to recover plastics content from shredder residue suggests that it is possible to meet the levels of plastics separation for recycling in 2008 shown in Table 2.17. However, current technology does not appear able to achieve the high scenario requirement shown for 2010 and 2015, for example, VW Si-Con indicate that the capture rate from their process is 27%. Additional separation technology development may be necessary to achieve the high separation rates projected for 2010-2015. The plastics extracted will be a polyolefin (PO) rich stream mainly PP. There is a high variability on these projections. The determining factor will be investments by major shredder operators (primarily Sims, EMR, Jordans) in additional separation technology. A combination of improved process technology efficiency, increased landfill charges and some financial incentives resulting from producer responsibility will trigger investment from such businesses in separation of a plastics-rich stream, particularly in the period 2010-2015. Recovery of larger quantities will be strongly dependent on the outcome of ongoing review of targets and of measurement protocols. There are major problems of statistical certainty; a Lower Saxony commission in Germany has suggested that due to the cumulative sources of data errors in measuring and reporting, a spread of 77-94% recovery could be statistically compliant with a 5%+/- precision on the 85% target.

2.12

Plastics from waste electrical and electronic equipment (WEEE)

2.12.1 WEEE: Current plastics consumption and arisings in UK


Waste electrical and electronic equipment (WEEE) is growing three times faster than any other municipal waste category element in the waste stream,84 increasing at a rate of 3-5% per annum85. It is thought that between 12 and 20 kilograms of WEEE are generated per person per annum across Europe86. It has been suggested that an average of c.7kg/person of WEEE is already separately collected, although this is not all currently treated to the standards required in the Directive. Electrical items contain materials chosen for their functional performance. Innovation and product design have increased the use of plastics in this sector to 20% of all electrical and electronic equipment (EEE) by weight87.

84

Realise Network, 2003 European Commission, 2005b European Recycling Platform APME, 2001
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 59

85

86

http://www.erp-recycling.org

87

By weight different styrenics and polypropylene together account for over 70% of all plastics used in EEE. The most commonly used polymer types are polypropylene and polyurethane (large household appliances) and styrenics (HIPS, ABS,ASA-SAN) (computer housings, IT and telecommunications equipment). The use of many other small parts in these items produces a complex waste stream that has many implications for separation of parts for recovery and recycling. Figures 2.5 and 2.6 show plastics consumption in EEE by sector and polymer type. Household appliances, brown goods and IT equipment make up over 90% of WEEE.

Figure 2.5

Plastics consumption in EEE by sector

Small household appliances 10%

Automatic dispensers 1% E&E tools 1%

Medical equipment 1% Toys 1% IT and telecommunications 39%

Consumer equipment 15%

Large household appliances 32%

Source: PlasticsEurope (www.plasticseurope.com)

Additional projects reviewing contents of samples of WEEE have provided some more specific assessments of compositional data for plastics in particular applications (e.g. refrigeration, CRT products, etc).

2.12.2 WEEE: Trends in future consumption


It can be assumed, given the life span of products and trends in sector growth, that the largest area of plastics consumption (household appliances and IT telecommunications) will produce the most waste by number of items. Growth assumptions are in the range of 3-5% per annum of waste. Some changes in polymers in WEEE are likely to occur e.g. increased proportion of ABS in WEEE refrigeration arisings88. There are also ongoing changes in the type of WEEE collected for example the shift from CRT TVs and monitors to flat screens89.

88

Zolotor, A Composition, Properties & Economic Study of Recycled Refrigerators (APC) It has been suggested by some commentators that this trend will result in slower growth rates in WEEE arisings than those used here.
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 60

89

Figure 2.6
PE PBT PET POM PA UP PC PVC EP PU PP PS ABS-ASA-SAN

Plastics consumption in EEE by polymer type

10

15

20

25

30

35

Source: PlasticsEurope (www.plasticseurope.com)

2.12.3 WEEE: Regulatory drivers


The Waste Electrical and Electronic Equipment Regulations (the WEEE Regulations) implement provisions of the European Parliament and Council Directive on Waste Electrical and Electronic Equipment (2002/96/EC) (the WEEE Directive) and address waste that is currently untreated and sent to landfill or incineration. The Directive aims to reduce the quantity of waste from the electrical and electronic sector and increase its reuse, recovery and recycling. The main requirements of the WEEE Regulations90 are: Systems are set up to encourage separate collection of WEEE and which will allow the return of WEEE free of charge to the final holder. It is requested that co-disposal of WEEE and other waste is minimised and appropriate behaviour encouraged that facilitates WEEE treatment and recovery processes. There is no requirement for householders to separate all WEEE. Retailers are to ensure that WEEE is taken back when a new, equivalent type, product is supplied; alternative arrangements made by retailers91 with business users are acceptable e.g. compliance schemes. When there is no purchase made the business user is responsible for financing correct treatment and recovery of equipment purchased prior to summer 2005. To achieve, by 31 December 2006, a collection rate of at least 4 kilograms on average per head per year of waste electrical and electronic equipment from private households. Ensure that all WEEE collected from private households is transported to authorised treatment facilities.

90

http://www.defra.gov.uk/environment/waste/topics/electrical/index.htm

91 Retailers and producers providing take back must ensure that the WEEE they collect is delivered to a designated collection facility and sent for further treatment and recovery.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 61

Systems are set up by producers to provide for recovery and re-use of separately collected WEEE according to set recovery, re-use and recycling targets based on their market share. Targets are set as a proportion of collected WEEE from private households and producers are to provide guarantees for the financing of future waste. There are significant data reporting obligations for producers who must be registered.

Draft targets for recovery and recycling will require 70-80% recovery and 50-75% recycling for all collected WEEE. Effective management of endof-life electrical and electronic waste will be necessary to achieve these targets. The Directive was adopted by the EU in February 2003. It covers a broad range of electrical and electronic equipment. The full list of categories covered and targets for each sector are set out in Table 2.18.

Table 2.18

WEEE Directive recovery targets by category


Category Recovery % 80 70 75 75 70 70 70 TBC 70 80 Recycling % 75 50 65 65 50 50 50 TBC 50 75

Large household appliances Small household appliances IT & telecommunications equipment Consumer equipment Lighting equipment Electrical and electronic tools Toys, leisure and sports equipment Medical devices Monitoring and control instruments Automatic dispensers
Source: www.weeedirective.co.uk

There is uncertainty as to when main provision of the regulations will come into force in the UK. The producer responsibility and retailer take-back obligations are currently under review. Commentators are now expecting the regulations to be implemented by spring 2007. The Directives recovery and recycling targets are based on amounts of WEEE material collected and are expected to be reviewed in 2008. A report by the Industry Council for Electronic Equipment Recycling (ICER) is due to be released to coincide with the implementation of the WEEE Directive and will provide greater clarity of total WEEE arisings and amounts of WEEE recycled in 2004/5. Consultations with exporters suggest that there is currently demand for the ABS plastic found in computer frames, but these are difficult to reprocess due to the presence of fire retardants and lack of labelling of the variety of polymers making up the frames. This may change in the future due to the requirements not to use hazardous substances in the manufacture of electrical and electronic equipment.

2.12.4 WEEE plastics: Current & forecast levels of recycling and recovery
The uncertainties of the WEEE legislation implementation, of measurement of current flows and of future logisitics for recycling, mean that the position of development for recycling and recovery for WEEE in general, and for the plastics components in WEEE in particular, is complex and unclear. Plastics recycling schemes, such as those set up for mobile phones, are largely results of initiatives for WEEE metal recovery and while there is an increasing number of charities (Computers for schools, RENEW, Computer Aid, Remploy, etc.) collecting material for reuse, there is much evidence that large quantities (up to 50% of equipment) is exported for re-use or recycling instead of being recycled in the UK (ICER 2004).

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 62

To achieve the requirements set by WEEE Directive there will be an increase in facilities for consumer collections of all WEEE materials including plastics. Of this, it has been suggested that more than 50% of plastics waste will need to be recycled mechanically.92

In Switzerland, 11kgs of material per head have been collected, suggesting that successful collection of WEEE is possible. The Restriction of Hazardous Substances Directive, (2002/95/EC) will ban excess use of hazardous substances in new EEE (cadmium, mercury, hexavalent chromium, polybrominated biphenyl (PBB) and polybrominated diphenyl ether (PBDE) flame retardants) from 1 July 2006, making options for recycling less hazardous. Manufacturers will need to ensure that products and components comply with these restrictions. At the time of writing, the quantification of the current levels of WEEE recycling remains problematic due to many uncertainties; access to data has proved difficult. A model for future arisings has been pieced together using several different available information sources. Some of the collected WEEE is reused and effectively ceases to be WEEE. Information on export of WEEE for reuse and recycling is currently limited, affecting certainty of projections. Where reuse is occurring outside the UK then it is assumed that this is discounted from UK WEEE arisings. At the present time these projections are extremely uncertain, especially for items falling outside the large household appliance category. The framework presented is helpful and informative and allows for development. The outcomes are illustrative of the approach, rather than final estimates of projections. Tables D.1 D.4 in Annex D show in detail the projections made on arisings. The projection model is based on the following assumptions: Plastics content of WEEE remains broadly around 20% Growth in arisings per year is 3-4% Improvements in availability of collection infrastructure will result in growth in collections during the period Efficiency of plastics extraction from shredder residue will improve to 60-75% of input plastics The focus of small appliance plastics recycling will be around styrenic polymers Growth in collections of smaller household appliances will be most evident in the period 2010-2015

Note there will be other commercial and industrial WEEE that may not be currently accounted for in these data. The broad headline of the projections summarised in Table 2.19 is that it is likely that the available plastics component of the dismantled smaller household WEEE and CRT applications from households is likely to remain relatively small, even in the long term forecasts. The main bulk of available plastics will come from shredder residue. Effective postshredder separation of plastics would almost certainly ensure compliance with the recovery/recycling targets of the Directive for large household items. At this point it is unclear what quantities of plastics might need to be recycled to achieve the minimum 50% recycling target for the smaller household items, toys, etc.

92

ICER, personal communication


UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 63

Table 2.19

Summary of estimated and projected supplies of plastics from WEEE recycling


2003 2008 1100 545 60 605 10.08 50 68 2010 1174 653 121 774 12.9 72 89 2015 1275 783 228 1,011 16.9 209 104 937 445 25 480 8 37 72

Total WEEE arisings (kt) Large household appliances (kt) Small household appliances/other WEEE (kt) Total collected WEEE (kt) Equivalent kg/person Total exports for reuse (kt) Plastics available for recycling (kt)
Source: Recoup projections, Annex D

2.12.5 WEEE: Assessment of current practices of a sample of WEEE recyclers


A selection of WEEE recyclers listed on the ICER website were contacted and questioned regarding plastics recovery from WEEE. Generally both organisations processing fridges and those dismantling IT equipment, CRT equipment, etc. were positive about their ability to extract and sell plastics from WEEE sources. Most outlets appear to be outside the UK. Examples of comments from different WEEE recyclers are given below (each quote is a different company): We manually sort and granulate plastics. We send separate polymer types to different reprocessors. Plastics from WEEE are identified and separated at dismantling stage. Plastic is baled and sent to Integrated Polymers. Plastics are not difficult to separate from WEEE, but the process is time consuming. After mechanical disassembly, material is classified and cleaned before shredding. Plastics are segregated from metals and glass, etc. Typically 24% by weight of input fridges is plastic - PU foams and rigids that can be recycled. We dismantle and send our plastics to a local recycler. Some of the material is used in extruded profiles; some is granulated and sold on. We recycle over half the plastics. Manual dismantling of polymers that are baled and exported via an agent. 15t/week of mixed plastics are sold, and currently 220/tonne is paid for the material. More export is occurring to China and India due to the manufacture base also being in these areas. Our fridge reprocessing operation is based on dismantling and shredding. Plastics are then granulated to 8-10 cm size. This material is sold to a UK company who export it. We have the ability to recover 99% of plastics from WEEE, of which 90% is sourced from domestic arisings. Plastics from fridges are sold to Holland as granulated mixed polymer jazz. TV and IT monitor plastic is separate at dismantling stage and sold to UK brokers, who likely export for reprocessing. We are currently building a 10t/hour plant for WEEE. WEEE will be fragmented by machine and sent through a picking line where material can be separated. No specific markets for this material have been identified at present, but it can be assumed that same brokers will be used and material exported. Fridge PU and PS fractions are separated for sale, recovery rates are 75%.

2.12.6 WEEE: Techno-economic trends and future developments in recycling and recovery technology
There are several challenges in the recovery of different polymers from WEEE. It could be assumed that developments to sort plastic fractions from WEEE would be similar to those used to recover polymer from ASR. Modification would have to be made to account for differences in shredder composition.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 64

Magnetic, eddy current and air separation systems are the most common methods used to separate material obtained from large, household WEEE items; such as fridges and televisions, that have been dismantled, degassed and shredded into metal and non-metal fractions. In addition to these methods PU and PS foam can be separated after WEEE is shredded using powerful air jets. Plastics from WEEE shredder may potentially be sorted through a process of electro-static separation. Different plastics are known to have different electrostatic charges, and assume either a positive or negative charge. Hamos technology reportedly achieves single plastic streams from two component mixtures that are fed into high voltage separation units and passed through electrodes that will determine the charge and separate material according to polarity into single fractions. This approach is currently unproven.

2.12.7 WEEE: Technology for separation of BFR from WEEE


Techniques for detection of BFRs
Brominated flame retardants (BFR) allow plastics to be used safely in electrical and electronic equipment but when heated during the recycling process they can emit dioxins and furans. If non-permitted BFRs from WEEE are removed to comply with the WEEE Directive, plastics can be recycled into new products safely. Using the same process as ASR sorting, granulated WEEE plastics can be separated by polymer. Airstreams can separate foam and hydrocyclones/centrifugues can separate PP and PE fractions. Density separation can be used to separate denser flame retardant plastics. A recent major European research study has shown that it should be technically, economically and environmentally feasible to recycle plastics containing BFR in the UK at a process capacity of 10kt/a. It has also shown that it is possible to manually separate BFR containing plastic components from other plastic components using relatively low-cost detectors. 93 Examples of commercially available systems suitable for use on WEEE dismantling lines are: PolyAna Avatar using Fourier Transform Mid Infrared Spectroscopy (FT-IR) Sony Plastics ID system using MIR Spectroscopy 99% accuracy rate, 35 seconds sampling time SlideSpec-52 sliding spark spectrometer samples emissions from polymer surface vapour Iosys SSS3 Sliding spark detector Niton XRF portable X-ray fluorescence instrument Spectracode RP-1 laser lights produce a molecular barcode on contact with polymer molecules, 1 second analysis time, 100% accuracy Mid infra-red acousto-optic tunable filter (MIR AOTF) Laser induced plasma spectroscopy (LIPS)

Technologies are similar in price (25,000) and able to be transferred into purpose-built commercial instruments that can operate as part of integrated sorting lines. LIPS equipment is generally not free standing, and for the purpose of BFR detection on a WEEE recycling line, application is perhaps more limited. In independent trials conducted for WRAP the Niton and Iosys units have both been shown to be capable of BFR detection.

BFR treatment process options


Following identification of BFR in WEEE polymers these processes aim to obtain a high value, clean polymer, for direct recycling and also extract bromine compounds in concentrated form for recovery or disposal.

93

WRAP 2005,6L
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 65

The Creasolv process is one method of extracting bromine compounds. This process dissolves granulated feed plastic using a high boiling point solvent. A series of filtration, precipitation and particle formation extracts BFR from the polymers into the solvents which are recovered by crystallisation. The polymer is extruded to form a product with a bromine content of less than 0.1%. The WRAP project on BFR separation from polymers concludes that the Creasolv process should be able to compete with landfill disposal or incineration (35/te gate fee) as a treatment method for segregated polymer streams for BFR removal. The process will compete with export of the BFR-containing polymer outside the EU (current sales value of around 100/te) if the finished high grade compounded recyclate can be sold at about 80% of virgin compound price94. Other potential process methods of BFR extraction include: Matsushita kneader-based BFR debromination process Development of ionic liquids for a selective dissolution of BFRs or polymers Use of supercritical CO2 to aid extraction Use of high pressure sub or supercritical water for BFR extraction and debromination The research by WRAP has concluded that these are less suitable for commercialisation than the Creasolv process. As a comparison, alternative solutions exist which divert bromine-containing material from landfill, but which destroy polymers include: Haloclean feedstock recycling process Incineration The commercialisation of techniques to deal with BFRs in plastics is likely to be important in determining which WEEE plastics are recycled and can be use in remanufacture activities in Europe. WRAPs project to develop a process to separate brominated flame retardants from WEEE polymers exemplifies work in this area.

2.13

Summary

Packaging arisings
Packaging is the main application for plastics and the largest waste stream arising in the UK. In 2005 UK consumption of polymer for manufacture and supply of packaging related applications was 2,474kt. Of this most was used in the production of films and bottles. It is likely that some 2,200kt/a of packaging plastics arise as post-use waste in the UK. The waste figure is lower than the consumption figure due to pre-consumer process losses and the growth in the returnable packaging pool. The UK is a net importer of plastic packaging both for domestic pack filling and in the form of packaging around imported goods. Based on reported packaging obligations the historic annual rate of growth of imported packaging and packaged goods (>15%) is significantly higher than the growth in domestic production (1.8%). It is important to consider this issue when projecting future trends. Planning assuming an overall growth rate of packaging ranging from 2%-5% per year appears prudent. The total quantity of plastic packaging in the UK market is expected to increase to at least 2,490kt in 2008, 2,586kt in 2010 and 2,853kt in 2015 (based on 2% growth pa). These figures could rise to 2,675kt (2008), 2,934kt (2010) and 3,814kt (2015) if 5% growth pa is sustained. The Directive on Packaging and Packaging Waste requires 22.5% of UK plastic packaging placed on the market to be recycled in 2008. There appears to be no significant pressure to notably increase targets beyond 2008 when the second 5-year phase of EC Packaging and Packaging Waste Directive targets ends.

94

WRAP 2005,6L
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 66

Packaging recycling
It is estimated that 165kt/a of waste plastics packaging is likely to be generated in the packaging supply chain as waste, of which 40% may be eligible for PRNs/PERNs and the remainder classed as production scrap. In 2005, based on the relatively balanced market for PRNs/PERNs, it is estimated that 409kt of plastic packaging were reported to be recycled. Based on PRNs/PERNs issued, post-use plastic films (165kt) and bottles & other household plastic packaging (67kt) make up at least 57% of plastic packaging recycled. The study was able to reconcile sources of approximately 75% of the currently reported packaging recycling activity based on other evidence from recyclers and waste generators. Approximately 100kt of the recycling reported was not able to be reconciled within the scope of this study. This issue warrants further consideration. Additional reporting on the PRN/PERN about the nature of the plastics recycled could aid future reconciliation. This is discussed in the recommendations section. An analysis of UK local authorities has shown a large increase in collection levels of both bottles and mixed plastics from households by local authorities. Strong growth in these supplies is probable in the next ten years. A new recovery infrastructure is likely to be created, with an increase in availability of new technologies for sorting both recyclables and mixed household waste, leading to better separation of all mixed domestic plastic streams for recycling. It is estimated that between 180kt/a and 522kt/a of post-domestic plastics will be recovered for recycling by 2015, of which probably between 36kt and 164kt will be mixed plastics. The range is determined by stated assumptions on future performance improvements in capture rates (i.e. householder recycling behaviour) and infrastructure growth, particularly in mixed waste separation technology. A market for at least 165kt for plastic bottles, including 80kt for mixed baled polymer bottles, will be required by 2015. The analysis shows that the development of extraction of plastics for recycling from mixed waste processes will be essential if growth rates of packaging tend towards the higher end of the projections. The extraction technology will also be important if the targets ultimately set for packaging recycling post 2008 are higher than those assumed in this study. Potential future variable charging systems for household waste will have a significant impact in increasing the quantities of material captured for recycling towards the high end of this range. Away from home initiatives to recycle more waste from offices, schools, cafes, leisure facilities and public buildings are growing. A 30kt growth in collections for recycling is assumed by 2015. Data on commercial and industrial arisings and recycling rates are less robust than domestic waste and predictions about future collections from these sources may therefore be less reliable. Increased segregation of wastes by businesses and waste management contractors will lead to increases in both rigid, foam and film packaging extracted for recycling. An increase in supply of post-use C&I packaging for recycling of c.140kt is estimated by 2015. This growth is predicted to come primarily from increased films recycling, and development of additional recycling of industrial drums, shelf-ready trays, crates and agricultural packaging plastics. Landfill tax escalation to at least 35/tonne will act as an important driver to divert waste to recovery technologies and will increase collections for recycling from all sources.

Packaging recycling targets


It is estimated that between 550kt and 620kt of plastics packaging material will need to be collected in 2010. However, amounts required beyond this to provide continued underpinning are less certain. Based on current levels of reported obligation, the UK is likely to exceed statutory targets in 2008, 2010 and the anticipated 2015 targets. In relation to the above comments and the Directive targets, although providing an underpinning mechanism, PRN/PERN revenues look unlikely to be the major driver for increasing the supply of plastic packaging to the recycling industry. Improved recyclables-handling infrastructure, development of a recycling culture and the impact of other economic factors, such as landfill tax, are likely to be more influential on recycling levels achieved.
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 67

Agricultural plastics
Agricultural plastic waste arisings are approximately 93kt/a and represent c.12% of all agricultural waste. This is comprised primarily of plastic sheet, wraps, bags and drums. The quantity of plastic materials on farms and agricultural holdings is unlikely to rise significantly over the next 10 years. The implementation of The Waste Management (England and Wales) Regulations 2005 changes the classification of agricultural waste and it is no longer possible for farmers to bury of burn waste plastics on site, without a licence exemption. Statutory producer responsibility for non-packaging agricultural plastics is also being introduced. Both these changes will drive up separate collections of agricultural plastics for recycling. It is projected that 17kt of waste plastic will be available for recycling in 2008, 26kt in 2010, and 49kt 2015. Of this quantity just over 40% is packaging plastics, the remainder is non-packaging including silage wraps and crop covers. Current expansions in recycling capacity for agricultural plastics suggest there will be sufficient capacity in the UK for all non-hazardous materials collected.

End of life vehicles


End of life vehicles contain c.10% plastic by weight. Based on current arisings of ELVs this amounts to potentially c.200kt of plastics per annum in ELV waste, rising to an expected c.250kt per annum by 2015. The ELV Directive (200/53/EC) currently requires a 95% recovery 85% recycling rate of total ELV weight by 2015. These targets are not material specific, but will require increasing efforts to be concentrated on non-metal fraction recovery. Technologies for recovery of single stream polymer fractions from automotive shredder residue that may be adopted by the UK are key to increasing recycling rates in this sector. It appears that the economic conditions are not yet sufficiently attractive for shredder operators to take investment risks by major investment in new separation technologies. The current debate about recovery targets for 2015 is not likely to give confidence to those considering investments in ELV plastics recycling based on fulfilling a producer responsibility need. The amounts of plastics that must be recycled to meet 2015 targets can be supposed to be between 4% and 7% of the total vehicle weight, or c.100-175kt. It is likely that almost all this material will be generated by post shredder extraction of plastics, in particular through separation of the polyolefin rich stream.

Waste electrical and electronic equipment


It is estimated that plastics account for 20% of all WEEE waste. Styrenics and polypropylene account for over 70% of plastics used in the manufacture of electrical and electronic equipment. Growth of WEEE arisings is predicted at the rate of 3-5% per annum. Targets for recovery and recycling will require 70-80% and 50-75% recycling for all collected WEEE. Quantification of current levels of WEEE recycling remains problematic. Projections suggest that the main bulk of plastics arising will remain in shredder residue from recycling of large appliances. Small amounts of plastics will be generated from the recycling/dismantling of small household appliances and CRT applications. Effective BFR removal and post shredder separation of plastics are important factors in maximising plastics recycling from these sources. Investment in sorting technologies will increase volumes of source separated materials. It is estimated that over 100kt of WEEE plastics will be available for recycling by 2015, although it is acknowledged that the figure could be significantly higher than this depending on how the WEEE Directive is implemented and on the separation technologies developed and implemented for plastics. The report sets out a framework that could be used to more accurately assess flows of plastics, as more robust data becomes available. A number of new WEEE processing plants are being established both in the UK and internationally
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 68

integrating various separation technologies. The success of these in capturing plastic streams should be monitored. It would be worthwhile to revisit the supply assessments made here as such information become available.

Consolidated supply projection


On the basis of the supply projections, taking into consideration changing legislation and techno-economic factors, material volumes recovered for recycling will increase in all industry sectors. A summary of this is presented in table 2.20.

Table 2.20
Packaging95

UK supplies of plastics for recycling (ktonnes)


Sector Projections Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled (minmax) 2005 2,0402,200 414 19-20% 60 <3 <5% 196 Low Low 219 Low Low 2,5152,675 c.425 16-17% 2008 2,2022,675 503-548 19-25% 60 10 17% 204 23-68 11-33% 242 68 28% 2,7083,110 604-695 19-27% 2010 2,323 2,934 580-692 20-30% 60 15 25% 234 47-117 20-50% 258 89 34% 2,8753,405 731-913 21-32% 2015 2,565 3,814 686-1,028 19-40% 60 29 48% 252 101-177 40-70% 281 104 37% 3,1584,300 920-1338 21-42%

Agriculture (excluding agricultural packaging)96

Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled

ELV97

WEEE available for recycling98

Plastics waste arisings99 (kt/a) Collected for recycling (kt/a) % recycled Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled

Total

Other plastics waste (e.g. process scrap, plastics construction waste, etc.)

Not within scope of study. NOTE: some of these wastes will account for the current gap between export trade statistics and PERN returns.

Source: Various published data and Recoup analysis, as detailed in this section

95

For more detail see page 48, Table 2.14

96

Agricultural packaging arisings and recycling rates are included in packaging data in this table, but are identified separately on page 54, Table 2.15 For more detail see page 61, Table 2.17 For more detail see page 66, Table 2.19 Asumes 22% of WEEE is plastics (ICER 2000)
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 69

97

98

99

All the above plastics waste streams will be covered by producer responsibility obligations. This will necessitate certification mechanisms to prove plastics have been recycled/recovered. Such mechanisms already exist for packaging in the form of PRNs and PERNs. One of the current considerations at an EU level is whether ultimately to move to material recycling targets (i.e. for plastics). It appears highly desirable that the process of certification of recycling for these different waste streams is as consistent as possible particularly if at a later point there is the possibility that they will be of equivalent value in achieving future targets. A common approach would also simplify regulation and inspection/audit controls.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 70

3.0 3.1

UK demand for recovered plastics Characterisation of UK plastics recycling industry

Detailed information provided for Recoup in 2005 by 65 UK recyclers and traders was analysed in the construction of a profile of the industry. Of these, 55 (c. 85%) had a reprocessing operation based in the UK. 48 (c.75%) of the businesses were traders in recyclable plastics, either entirely (n=10) or as part of a wider business activity including reprocessing (n=38). Responses from recyclers and traders were reviewed and, where appropriate, further information to clarify data was sought. However, it is not possible to independently verify information provided about quantities handled or reprocessing capacities. The information is analysed in good faith and should be taken as a guide to likely market sizes, rather than a full and definitive assessment. The analysis below includes, unless otherwise identified, only those companies that have provided a positive response to the survey. The sample incorporates probably 50% by number of the regular UK-based buyers of recyclable plastics and may account broadly for 70% by tonnage handled.

Table 3.1

Reprocessing capabilities of UK reprocessors


What quantity of plastics does your site typically reprocess in a year? (tonnes per annum)

Do you reprocess plastics on-site, or are you a trader? Reprocessor and trader Reprocessor only Trader only Grand Total

(a) < 400 1 1 2

(b) 4012,500 9 6 3 18

(c) 25015000 4 1 1 6

(d) 5001-10,000 9 5 14

(e) 10,00115,000 5 1 1 7

(f) >15,000 8 1 1 10

(g) not supplied 2 2 4 8

Grand Total 38 17 10 65

The above information was extrapolated to generate the following profile of demand by the UK recyclers and traders participating in the survey.

Table 3.2

Profile of estimated handling rates of UK recyclers and traders in 2005


(c) 25015000 3750 6 15000 3750 3750 22500 (d) 500110,000 7500 14 67500 37500 0 105000 (e) (f) 10,001- >15,000 15,000 12500 7 62500 12500 12500 87500 17500 10 140000 17500 17500 175000 Total 57 298700 80450 38250 417400

Quantity of plastics typically (a) <400 (b) 401handled per annum 2,500 Estimated average quantity handled per site (tpa) Number of companies in category Reprocessor and trader (est. tpa) Reprocessor only (est. tpa) Trader only (est. tpa) Total plastics handled (est tpa) 200 2 200 200 0 400 1500 18 13500 9000 4500 27000

This suggests that the 57 companies which provided data on quantities handled account for some 420kt of plastic recycling activities. Of these approximately 380kt (90%) is represented by businesses who operate reprocessing activities in the UK.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 71

3.1.1 Available capacity


Responses provided by companies about their current maximum capacity to handle recyclable plastics were reviewed. 53 companies identified their capacity within the given parameters, offering at least 640kt of available capacity (both UK and export) for collected recyclable plastics mainly from packaging sources. Even a pessimistic assessment, based on the minimum capacity in each of the capacity bands, implies almost 500kt of capacity. The results are shown below. It is worth highlighting that 90% of this declared capacity was by UK based reprocessors (including those with trading activities), rather than by those with only a trading activity.

Table 3.3

Capacity by type & numbers of businesses


4012,500 7 1 1 9 2,5015,000 1 4 0 5 5,00110,000 7 5 2 14 10,001- 15,001- >20,000 UnGrand 15,000 20,000 specified Total 5 0 0 5 4 4 0 8 10 0 2 12 4 3 5 12 38 17 10 65

Maximum capacity (tpa) Reprocessor and traders Reprocessor only Trader only Grand Total

Table 3.4

Estimated total recycling capacity (tpa) by type of businesses


4012,500 10500 1500 1500 13500 2,5015,000 3750 15000 0 18750 5,00110,000 52500 37500 15000 105000 10,001- 15,001- >20,000 15,000 20,000 62500 0 0 62500 70000 70000 0 140000 250000 0 50000 300000 Grand Total 449250 124000 66500 639750

Maximum capacity (tpa) Reprocessor and trader (tpa) Reprocessor only (tpa) Trader only (tpa) Total estimated capacity (tpa) N=53

Most of the available capacity is for material with little or no contamination. Processing of post-user bottles, film and other materials will typically require washing plant. Ten companies said that they operated washing plants. Collectively these have a capacity of more than 120kt/a.

Table 3.5
Maximum capacity range (tpa) Companies identifying washplant availability N=10

Number of washplants for plastics


4012,500 1 2,5015,000 1 5,00110,000 2 10,00115,000 1 15,00120,000 1 >20,000

3.1.2 Product integration


The research showed that 19 of the 65 recycling businesses responding had some degree of integration into a product manufacturing process. For these businesses the recycling activity was primarily a source of raw material for their products. Examples of product led businesses include those manufacturing injection moulded pots and tubs, drainage pipe, packaging bags and films, damp proof membranes, decking, signage, pallets and street furniture. Responses from these businesses suggest that at least 120kt per annum of plastics are used in integrated manufacturing processes.

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Table 3.6

Number of business with integrated end product manufacturing by tonnes handled/year


(a) <400 (b) 401- (c) 2501- (d) 5001(e) 2,500 5000 10,000 10,00115,000 (f) >15,000 8 2 10 (g) not supplied 8 0 8 Grand Total 46 19 65

Sell intermediate raw materials Sales include end products Grand Total

1 1 2

11 7 18

5 1 6

9 5 14

4 3 7

3.1.3 Reported plans for 2006-7


A number of respondents made comments about their plans for development in 2006-7. Thirteen of the 65 companies responding made specific statements about planned expansions. Mainly these involved reprocessing capacity expansion, but also included plans for investment in sorting and baling equipment. A selection of comments is provided below: Major expansion of capacity in 2006 planned Installing sorting plant Installing materials reclamation facility 0.5m investment programme underway New washplant and increased compounding capacity Hoping to add 5-10kt of capacity in next 12-18 months New 1 tonne/hour extruder planned Increasing capacity for bumper recycling Additional extruder planned From January 06 capacity will increase by over 5,000 tonnes (this has now occurred) New washplant and move to a larger site Relocating site to increase capacity In addition to these responses are at least two additional significant plans for investment in new PET bottle recycling capacity in London and the North West. Two other developments for films recycling, not captured in the above survey will add at least 25kt of film washing capacity. Arguably the current developments are in response to new regulatory requirements for several waste streams containing plastics (e.g. WEEE, agriculture, packaging, etc). It should be noted that there is currently a particularly high level of regulatory activity driving these changes. As well as expansions in capacity there may be businesses leaving the sector or scrapping existing equipment which have not been picked up by this survey. The net increases in UK capacity may therefore not be as high as the above assessment.

3.2

Summary

Despite the challenging trading conditions reported by UK recyclers, a number of businesses are planning investments that will collectively add well in excess of 100kt of new reprocessing capacity during 2006-7. On this basis, the recycling businesses responding to the survey should offer well over 700kt/a of capacity (domestic and export) before 2008. There are other UK recyclers that did not respond to the survey which should add well over 75kt/a of capacity. Even recognising that this capacity covers recycling of not only packaging but other applications, the bulk of the capacity is capable of handling packaging. On this basis it can be concluded that there is unlikely to be a reprocessing capacity barrier to achieving 2008 packaging targets, or indeed 2010 targets. If anything the UK, like Europe as a whole, suffers from overcapacity in some sectors of plastics recycling.
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 73

4.0 4.1

UK market outlets for recovered plastics Characterisation by sector

This section considers the potential ability of UK markets to make use of the quantities of recovered plastics generated by the various sectors at the previously identified collection levels. An assessment of future UK market opportunities has been made based on current/forecast plastics consumption information and potential market applications in key areas from plastics sources such as rigid packaging applications, food and non-food, mixed plastic processes, pipes, profiles, WEEE and post shredder residue plastics. Recyclate is used as a substitution for virgin plastics, concrete, wood or natural fibres in a wide range of products. Use of recyclate in manufacturing, and its introduction into the market place, is driven primarily by economic considerations. In some cases the performance or features of the finished product can be enhanced by replacement with recycled plastics (e.g. light-weight construction products). Post-use plastics generally are lower priced than virgin polymers and the end product can sometimes be marketed against competitors to those buyers that recognise environmental considerations in procurement. Pressure from the government for public sector departments, local authorities and industry to buy products with a recycled content is expected to increase. Previous studies100 have consistently reported potential growth in a number of UK industry sectors using post-use recycled plastics. Annex E.1101 gives an indication of existing market sizes by application, an estimate of the potential for market growth and the extent to which that growth that could occur. Improvements in process technologies for recycled materials are expected to continue for the period to 2015. This will enable better quality recyclate to be supplied more reliably at lower processing costs relative to virgin polymer. As a result recycled materials should become increasingly competitive with virgin plastics particularly oil based polymers - in many bulk polymer markets. In particular it is reasonable to believe that use of recycled plastics for food grade plastics applications is likely to accelerate. Many of the technical and consumer acceptance issues have been resolved and process costs are decreasing. For these reasons it is anticipated that penetration of recycled material into packaging markets will grow faster than the overall growth of the total volume of the identified markets.

4.1.1 Packaging
The projections show that the UK has the potential to be substantially self-sufficient in the use of recovered plastics expected to be generated from packaging by 2015. However, this assessment assumes that material is not purchased by international buyers for non-UK markets at more competitive prices. Technically, recycled plastics can be used in many applications. It may therefore be expected that if demand from international markets declined, the sales price of recovered plastics would be discounted until they reached a sufficient level compared to virgin prices to enter current production processes. The assessment also assumes that external finance from producer responsibility schemes would meet any resulting financial shortfalls and investment needs up to the recycling rates required by statutory targets identified in earlier sections. Market studies have already demonstrated the potential for the use of recycled PET and recycled HDPE in new packaging applications. These include food grade packaging (certainly for PET and potentially for HDPE within the period under consideration). Based on the ability to substitute 30%102 by weight of bottles with recycled content, the potential domestic markets for 2015 in containers would be approximately 100kt in PET for bottles103.
100

Enviros (2003), Closed Loop London (2004), IVV (2005) From Enviros (2003)

101

102

WRAP (2005), The Development of a Food Grade PET recycling Process states that multi-layer PET bottles can be manufactured with 40-60% recycled PET. Lower percentage level of recycled PET may currently be used by other technologies.
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Use of recycled PET in sheet and strapping applications would add a further 30kt of potential domestic markets for PET (assuming imported recycled PET was displaced from these applications). Together these applications could potentially provide sufficient market outlets for practically all the PET anticipated to be collected (equivalent to around 140kt of PET polymer, after recycling process losses). HDPE bottle collections would similarly generate around 140kt of HDPE polymer. Demand from new bottle manufacture could provide outlets for at least 110kt of this material potentially more. Competitively priced recycled HDPE would also be in demand for construction applications, for example land drainage pipe, inspection chambers, kerb systems. The pipe market alone could potentially absorb the remaining 30kt of recycled HDPE. Other markets including profiles, decking, some film products and products such as bins, boxes, etc would provide outlets for suitably priced recycled HDPE. The main growth areas for packaging collections from non-domestic streams104 are PP from crates and trays (c.10kt), HDPE from drums (c.20kt) and an increase of c.50kt in film collections. The potential UK domestic market for HDPE is not considered a significant limiting factor at the quantities identified. The increase of 10kt of good quality PP from crates should find ready markets. The 50kt from film collections should also be absorbed into film markets and markets for decking, timber substitutes if pricing is competitive: 50kt growth represents an increase of c.30% on current levels. The market demand for film products is assumed to grow at around 20% during this period and so organic growth in market share is likely to incorporate the extra reclaimed material. In the above scenarios the limiting factors would be price and investment in the necessary sorting, reprocessing and bottle manufacturing technology/infrastructure, rather than the inherent viability of the technologies. A key assumption in the market assessment is that regulatory arrangements would not limit the use of recycled materials in these markets in the future. In the high collection scenario there is a large quantity of mixed domestic plastics (127kt) available for recycling. It is less clear where this material would find large volume markets for mechanical recycling in the UK. There is demand for post-use films, pots and tubs from some markets in the UK but this is mainly based on material being pre-sorted by polymer type. In the low packaging growth (c.2%) scenario the impact of the mixed plastics collections appears not to be significant in meeting the statutory recycling targets and it is possible that this material could find markets in recovery processes such as the production of diesel fuel, in gasification or other recovery processes. Suppliers of plastics to diesel technology already assess the potential UK market for such plants at significantly more than 150kt/a and mixed domestic plastics waste is believed to be suitable for these processes. In the period 2010 to 2015, a combination of process improvements, long term increased oil pricing, financial benefits from Renewable Obligation Certificates (ROCs) and higher disposal costs are likely to make these recovery processes attractive. The possibility of technology also emerging to mechanically recycle this mixed stream into products for a greater environmental gain could be considered a bonus at this stage. In the high packaging growth (c. 5%) scenario the impact of mixed plastics collection would be a significant factor in achieving statutory recycling targets. In this case the current lack of volume markets for non-bottle domestic plastics combined with greater future regulatory uncertainties associated with exporting this material would present a major long-term challenge to secure compliance with possible targets.

4.1.2 Agricultural plastics


Non packaging agricultural plastics collections could represent a further c.30kt of plastics collected for recycling by 2015. This material would potentially be suitable for various applications including film manufacture and extruded profile applications. It is expected that this would find a market without major problems. For example, displacement of current imports of price-discounted farm plastics from Ireland could occur which it is estimated currently accounts for approximately 8kt of polymer. The key issue is relative pricing of UK supplies, not availability of markets for the material.
103 104

Based on the consumption data in section 2. Excluding the away from home collections of primarily plastics bottles which are considered in the bottle market assessment.
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As non-packaging agricultural plastics are not covered by any specific recycling targets, they could equally form a feedstock for recovery processes such as diesel or syngas production and be processed in local plants.

4.1.3 ELV
Quality of recycled plastics will be critical to the scope for both recycling within the automotive industry and into other applications. Trials on development of standards for use of recycled PP in the automotive industry (PROVE) have concluded that engineering grade polymers can be developed from PP sourced from ELVs. The use of recycled PP in the automotive sector is becoming more common, with some ELV recyclers producing pellets from polymers recovered from shredder residue, although not in the UK. Recycled content of automotive components currently manufactured in the UK ranges from 5-60%, although the ProVE project suggests that in some cases 75% recyclate can be used. The RECCOMP programme is also making progress on the recycling of thermoset composites. The process developed by Argonne Laboratories claims to generate high quality grades of various polymers from ASR although the commercial viability is uncertain. The market for PP in the UK is large over 800kt per annum so there appears to be some potential for good quality recycled plastics to be used within a market of this size; perhaps in applications such as plastic crates or other injection moulded products. However, many of the PP applications that make up this tonnage (e.g. food contact packaging, OPP films, trays) are highly unlikely to be suitable for the recyclate generated from ASR extracted plastics. At this stage there is insufficient evidence to conclude whether the UK could be self-sufficient in providing a market for ELV plastics waste it generates to achieve mechanical recycling targets. Currently it appears unlikely at the high target projection and more probable at the low target projections. The commercial development of high quality ASR plastics separation technologies will be a critical success factor. The current review of long term targets for recycling of ELVs is a fundamental uncertainty that undermines investment confidence in research and development of solutions. The UK could be self-sufficient in a variety of recovery processes for this type of material, through plastics to diesel and other feedstock technologies already outlined.

4.1.4 WEEE
The opportunities for self-sufficiency in WEEE plastics remanufacture is less clear. The tonnages that will arise from the implementation of the WEEE Directive are, as previously stated, uncertain, especially for the items outside the large household appliance category. The UK has a relatively small indigenous electrical and electronics manufacturing industry. As a result there is a lack of a sizeable UK manufacturing base that would be the best fit with the arisings generated from WEEE plastics. For example, combined ABS & SAN consumption for manufacturing in the UK is 60-70kt. There is, however, evidence of some UK demand. For example, Brother and Axion Recycling have produced a trial internal fax machine component using plastic from waste electrical and electronic equipment (WEEE), another UK reprocessor has indicated sales of 300 tonnes of ABS regrind from WEEE into the UK market. Although these represent anecdotal snapshots of developments they highlight that r-ABS is capable of being used in markets in the electronics industry in the UK and it could be anticipated that this level would increase. The RoHS Directive restricts the recycling of plastics containing certain brominated flame retardents (BFRs), lead and cadmium into electric and electronic products within the European market105. Separation technologies are potentially available but not currently commercialised. It is therefore likely that Asia will remain the main outlet for WEEE plastics containing BFRs unless regulations intervene.

The restrictions apply only to certain BFRs: e.g. penta and octa-brominated bisphenol esters are not permitted, deca-brominated bisphenol esters is permitted for future use. However many OEMs are going beyond the RoHS Directive and requiring bromine-free compounds.
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105

4.1.5 Construction industry


The Governments Sustainable Buildings Task Force recommends that at least 10% of a construction projects material should consist of reused/recycled material. This sector could use recycled material from all the above sectors. It is also likely to form a growing source of supplies of plastics for recycling (e.g. increasing collection of PVC through the Recovinyl programme). Market growth for recyclate in the construction sector is thought to be somewhat difficult due to the risk-averse nature of the industry where products are required to meet high specifications and be tested to stringent standards. Opportunities for products currently manufactured in the UK include development of recycled PVC for use in sustainable urban drainage systems (SUDS) and PE in turf reinforcements and ground stabilisation. This is in addition to established markets for plastic lumber, piping and construction film. The construction sector is the strongest growing area of plastics consumption in the UK as well as being a key growth sector in many developing economies. It is expected that the construction sector will increase use of post-use plastic in applications such as pipes, cladding and interior decoration, road construction, for roof and flooring and as a wood polymer composite.

4.2

Summary

The UK industry could potentially use a large quantity of the plastics collected for recycling in the period under evaluation. In most cases the barriers to domestic self-sufficiency relate to pricing, rather than technical limitations. The shift in plastics manufacturing out of the UK to lower cost manufacturing bases, in Asia, in Eastern Europe and elsewhere will erode the opportunity for domestic use of recycled materials. This is most evident when considering the shift of the electronics and electrical industry but is also potentially a longer term factor in the packaging sector, where an increasing proportion of UK consumption is met by imported packaging. High volume, lightweight items such as bottles (i.e. those which it is most costly to ship long distances) are potentially better long-term opportunities than markets for products which can be shipped more efficiency (sheet, stacking trays, bags, etc), all other factors being equal.

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5.0 5.1

The Export Market for Recovered Plastics Introduction

This chapter presents an overview of the global trade in recovered plastics, assessing the drivers and structure of the market. The impacts of the trade and its significance for the UK and at a global level are examined. The details and dynamics of the export market in the UK and the major trading blocs are discussed in outline in sections 5.3.2 to 5.3.8. This information is developed in more detail in the trade profiles in Chapter 6 to 12. Annex F provides a tabular summary of the main market features of the regions and anticipated trends described in the following chapters.

5.2

Overview of the global trade in recovered plastics

A simple representation of the main trading blocs and global trading patterns in the recovered plastics trade is shown in Figure 5.1. There is trade of recovered plastics within Europe (with the EU and between the EU and its neighbouring countries) and within the Americas (especially among the USA, Canada and Mexico). These regions are also net exporters of recovered plastic to Asia. Within Asia, the largest single source of demand (by a considerable margin) is China. Recovered plastic reaches China either direct, or via Hong Kong which functions as a transhipment, trading and temporary storage hub for the trade. The largest single supplier to China is also in Asia Japan. There are other sources of supply to the international market (e.g. Australia) and other importers (e.g. India, Middle Eastern countries), but these are of a lesser scale. The trade within and to these regions (including the UK) is described in more detail in section 5.2 and in the following chapters.

Figure 5.1

Main components of the global trade in recovered plastics

JAPAN JAPAN

Ban on direct trade lifted 09/05

Su pp ly Co S id mp e eti tio n

EUROPE EUROPE Germany Germany UK UK Netherlands Netherlands Belgium Belgium Other EU Other EU
Intra -regional trade

HONG KONG

AMERICAS AMERICAS USA USA Canada Canada Mexico Mexico South America South America
Intra -regional trade

CHINA

OTHER OTHER India India SE & S Asia SE & S Asia Australasia Australasia Middle East Middle East

Source: GHK

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5.3

Structure & drivers of the recovered plastics trade

5.3.1 Summary
Demand for material to feed the large increases in output of the Chinese manufacturing sector has, within the past five years, helped to create a dynamic international market in recovered plastics. This is now challenging the economics and operations of traditional recycling markets within the EU, North America and Japan. Although markets for recovered plastic are increasing in Eastern Europe, South America and elsewhere, it is demand from China that dominates. Indias consumption and production of plastic is smaller than that of China, and at present India has much more restrictive controls on import of recovered plastics. A map of the global trade is provided in Figure 5.2. The main recovered plastic flows are from Japan, North America and the EU to China the larger share of this transiting via Hong Kong rather than being shipped direct. Hong Kongs hub role in the recovered plastic trade is a result of a combination of geographical, economic and regulatory factors. It has a strong trading sector with access to excellent trade and logistical services, and good links to the source markets. It is well integrated with the reprocessing and manufacturing sectors in Guangdong that buy and consume the secondary plastic material. Vendors can sell to Hong Kong firms without having to obtain accreditation or customs pre-clearance from the Chinese authorities. Customs procedures for cargoes routed from Hong Kong are less demanding than on direct shipment and Hong Kong traders are familiar with Mainland customs procedures. Since 2003 the baseline increase in demand for recovered plastic material caused by the rapid expansion of Chinese industrial output and consumption of plastics has coincided with a period of comparatively high prime plastic prices. This has given an added incentive to manufacturers to cut costs by incorporating secondary plastics into their production processes where possible, especially in factories serving the domestic Chinese market, segments of which will accept lower quality and performance standards than export buyers. Chinas imbalance in physical trade with the EU, NAFTA and Japan has also meant that the cost of shipping containers back to China is comparatively low further facilitating a trade in recovered products of which plastics forms only one part. For the UK export trade, large upward shifts in east-bound freight rates seem unlikely as the trade in goods between Europe and China continues to grow, and large increases in the available capacity of the container shipping fleet in the years ahead raise the prospect of over-supply in the market.

5.3.2 EU
Plastics consumption in Western Europe is one of the highest in the world. Around 42,000kt of plastics (including both virgin plastics and around 2,000kt of recycled plastics) were consumed in 2003, an increase of 5.6% since 2001106. The plastics recycling industry in Europe has grown over the last decade, mainly stimulated by packaging waste recycling. In 2003, 14.8% of all recovered plastic was recycled, a 24% increase since 2001107. Figures for 2004 suggest that almost 3,000kt of recovered plastic were recycled in Europe. Most of this is packaging waste, from both municipal household waste and industry sources such as production scrap. Packaging waste makes up the majority of plastic recycled in the EU. Packaging waste collection and recycling systems are one of the main drivers for recycling plastics in the EU, as packaging is the most important source of plastics. Progress in meeting the targets of the Packaging Waste Directive in those countries lagging behind will mean a greater volume of recovered plastics being collected and potentially traded within and outside the EU. There is a significant intra-EU trade of recovered plastics with major imports from other EU countries to the Netherlands, Belgium, Italy and Germany. These countries are also the major exporters outside the EU, reflecting the movement of recovered plastics within the EU which is then transhipped to other non-EU destinations, including Hong Kong and China. It is believed that much of France and Germanys recovered

106

PlasticsEurope, 2004 Ibid UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 79

107

plastics are being transhipped through the Netherlands and Belgium for export to Asia, in addition to direct export from these countries. These days the EU is of much less significance to the UK market than has been in the case in the past in 2004 for every one tonne of recovered plastic shipped to an EU country, another five tonnes were exported to the Far East. Trade flows within the EU are shown in Figure 5.3. The volume of exports from the EU has increased by 129% between 1999 and 2004 from just over 1,000kt/a to 2,360kt/a, from a value of 171 million to 439 million108. In 2004 Hong Kong and China made up almost two thirds of total EU exports by volume and exports to this region have more than tripled since 1999. Polythene is the largest declared plastic material exported from the EU.

108

EU Eurostat online
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Figure 5.2

Global trade flows in recovered plastics

Canad

Other Asia

Europe US China Japan

Africa & Middl E t

Hong Kong

Central & S 2004 TRADE FLOWS 1050200500+ th A i Australasia

Source: Eurostat

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81

There is consensus that the export market to China is set to continue for at least the next 5 years due to high demand and expected high prices. It is difficult to predict what might happen beyond then. If regulations change, there may be an increase in exports to countries such as India and Pakistan, with potential demand from countries in South America or North Africa emerging.

Figure 5.3

Main intra-EU trade flows in recovered plastic

Outside EU

2004 TRADE FLOWS 10 20 50 100+


i l d

Swede

Outside
Denmark

EU

Poland N th l d

Belgium b

Germany

A Switzerland

t i

Ital S i

Source: Eurostat

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5.3.3 UK
Approximately 4,700kt of plastic were consumed in the UK in 2002, an increase of 250kt since 2000. This trend is set to continue and the 5,000kt/a mark is expected to be reached in the next few years.109 UK imports of waste plastics have been increasing rapidly over time, and have grown by 130% from 11kt in 1999 to 44.7kt in 2005. Plastic waste imports in 2005 were valued at 11.8 million. The UK is a large net exporter of recovered plastics. Exports far outweigh imports each year. UK exports of recovered plastics have increased six-fold since 1999. UK trade data record recovered plastic exports of 344kt in 2004, up from 48.3kt in 1999. Figures for 2005 show a slight decrease on 2004, with exports of 324kt110. These figures do not cover all plastic recyclate exports. For example a study on the recycling of PVC waste in Europe111 shows that PVC is leaving the UK in other forms, such as plastic casing around metal cables, the export of which is driven by the scrap metal trade. Such trades are not captured in the waste plastic trade data. The share of UK exports going to Hong Kong and China has increased from 43% in 1999 to 74% in 2004. When transhipment via Hong Kong and Netherlands is included, exports to China are estimated to account for at least 75% (more than 254kt of the UKs recovered plastic exports). This compares with a total of 47 kt exported from the UK to all European Union countries. Although China is of great importance to the UKs recovered plastic market, the UK is estimated to account for just 5% of Chinas imports of recovered plastic, which were between 4,750kt and 5,000kt in 2004. The UK is a price-taker in a large global market. The strong growth in total UK exports of recovered plastics is being driven by the growth of exports to Hong Kong and China. All the exporters consulted in the study exported all or a majority of their recovered plastics to Hong Kong. Most plastic collected for recycling sent to China via Hong Kong is mixed scrap and PET. Prices obtained for these were quoted to be at least 20-30 higher than in the UK. The UK is also not alone in Europe in sending recovered plastic to China. The UK is estimated to account for 20% of the EUs exports, compared with 28% for Germany, 17% for Belgium and 16% for the Netherlands. As of July 2005, 43 UK companies were Environment Agency accredited exporters of plastic waste. The majority of these (over 75%) export over 0.4kt of material per year. There are also 83 UK-based companies which are on the General Administration of Quality Supervision, Inspection and Quarantine of China (AQSIQ) list of companies accredited by the Chinese authorities to export recycled goods (not just plastic) directly to China. Only 18 companies appear on both lists. UK companies that export to China via intermediaries in Hong Kong do not require accreditation to the Chinese system. Consultations in the UK, and in Hong Kong and China have confirmed that industrial scrap forms a major part of the international market, and that such materials are being exported from the UK to the Far East. There is also anecdotal evidence of some plastic packaging being exported by non-accredited businesses without PERNs being claimed. The relative contribution of different industries to these scrap exports is not easily determined. The trade in industrial scrap is purely market-driven. In contrast, the legislation and policy are driving investment in collection of packaging waste. Figure 5.4 shows the exported plastic packaging recorded by PERNs and total exports of recovered plastics from 2001 to 2004. While the recovered plastic market is often thought of in terms of packaging waste, a much wider range of recovered plastic products are in fact being traded. In 2005 PERNs were issued for 238kt of recovered plastic but total UK recovered plastic exports for the year stood at 324kt. Figure 5.4 also highlights inconsistencies between the PERN and

109

British Plastics Federation UK Trade statistics website AJI-Europe, 2006 UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 83

110

111

trade data sources for example, in 2002 PERNs issued exceeded reported exports, in 2004 and 2005 there are large differences in the export quantities not covered by PERNs.

Figure 5.4

PERNs exports as a proportion of total recovered plastics export, 2001-2005

400,000 350,000 300,000 Tonnes 250,000 200,000 150,000 100,000 50,000 0 2001 2002 2003 Exports
Source: UK trade statistics website & Defra

2004 PERNs

2005

Basic information on the material composition of exports should be provided by trade data, drawing on customs declarations, but a comparison of declarations to UK customs authorities for Hong Kong-bound exports and those (for imports from the UK) to the Hong Kong authorities show significant differences. This is shown in Figure 5.5.

Figure 5.5

Comparison of UK exports to Hong Kong and Hong Kong imports from the UK, by commodity code
Total: 191,000t
Other 9%
Other 35%

PP 4% PVC 2% PS 0%

Total: 160,000t

PE 35%

PE 85%

PP 15%

PVC 9%

PS 6%

UK exports to Hong Kong, 2004

Hong Kong imports from the UK, 2004

Source: Consultants analysis of data from www.uktradeinfo.com and Hong Kong Census & Statistics Department. UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 84

Research for this study suggests that UK trade statistics do not provide a reliable guide to the material content of exported recovered plastics. The high proportion of PE in the UK recovered plastic trade statistics appears to be an artefact of the completion and coding process for export declarations. Shipping companies are responsible for completion of the forms for which an 8 digit HS code describing the shipment is required. Consultation suggests that suppliers rarely provide a description of the shipment that is more detailed than scrap plastic. In the absence of further information, this is being coded in the system into the HS code 39151000, which is supposed to only apply to polymers of ethylene. The information system for PERNs can confirm only the total volume of recovery notes issued in a given year and does not record the origin or type of the plastics involved, or the destination of PERN-related exports. India and Pakistan are also growing markets for UK recovered plastic exports and are becoming increasingly significant, particularly the Indian market. Barriers to increasing exports to other countries include stricter regulations and prices lower than China and Hong Kong buyers are prepared to pay. Many exporters also trade with other European countries, where there is demand for high quality recovered plastic and recycled plastic granulates.

5.3.4 NAFTA
There is extensive trading of recovered plastics within the NAFTA region (the USA, Canada and Mexico), and also a net outflow of this material to East Asia. Whilst information is available about the recovery and recycling of PET bottles from the municipal stream, data on trends within the wider recovered plastic market are not readily available. The US is one of the worlds largest importers and exporters of recovered plastics. It imported 396kt and exported 745kt in 2004. Imports increased by 27% between 1999 and 2004 in terms of volume but by only 7% in value terms112. Imports from Mexico almost doubled during this period and Mexico is now the largest source of US recovered plastic imports. Canada is the second largest source. The vast majority (86%) of US recovered plastic imports are declared as other waste plastics rather than polyethylene, polystyrene or PVC. Over the past 5 years US exports of recovered plastics have increased much more quickly than imports, growing by 112% and 133% in terms of volume and value respectively. This growth has been driven by a rise in exports to Hong Kong and China. Exports to Canada (more than 90% of total Canadian imports arrive from the US) and India have also increased substantially. Six of the ten largest recovered plastic export markets for the US are in Asia. These account for more than two-thirds of US recovered plastic exports. The USs close neighbours, Canada and Mexico, receive most of the remainder. Whereas the UK exports far more recovered plastic to Hong Kong than it does direct to China, the US exports more direct to China than to Hong Kong. Values per tonne of recovered plastic from the US to Hong Kong and China are higher than for the UK and Germany (another significant exporter to China). The reason for this is unknown. Consultations reported strong demand from buyers for the China market. There is also strong demand from within the NAFTA region itself, typically for high quality, sorted scrap plastic. Export markets are reportedly more forgiving on quality. The US has not ratified the Basel Convention and there is no US equivalent to the Trans Frontier Shipment regulations. The quality of shipments is thus influenced by end-market requirements (such as AQSIQ accreditation and CCIC inspections for China). Research has not identified any federal policy initiatives on the horizon that would significantly transform either the supply of recovered plastic into the market, or the controls on trade in this material. Neither the US, Canada nor Mexico has a federal law on packaging recycling equivalent to the EUs Packaging Directive or Japans Container and Packaging Recycling Law.
112

UN Trade statistics

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Beyond the market-driven recycling of scrap by industry, which is significant, the impetus for plastic recycling from the municipal waste stream appears to come from state and municipal initiatives. State laws are also mandating the use of recycled plastic, which is increasing demand for products such as recycled PET. Indeed, the significance of the role of large corporations (particularly soft drink manufacturers) in driving the market for recycled materials is a common theme in this segment of the market.

5.3.5 Japan
Japan is the largest single source country for recovered plastics exports to the China market. It exported 850kt of recovered plastic in 2004113, about 250% more than the UK, but significantly less than the total recovered plastic exports of the EU as a whole. After the introduction of a ban on direct import in May 2004 the proportion of this material that was routed through Hong Kong has increased. The ban was lifted in September 2005, and a recovery of direct trade is now expected. Japans resource and recycling laws set recovery targets and specify the treatment that is required before material can be exported. Post-consumer waste is supposed to be sorted and washed before it is permitted to be exported. Although some of the Japanese literature suggests that there may be some circumvention of these requirements, Japan has a strong reputation in China and Hong Kong for reliable supply of high quality plastic, both industrial scrap and postconsumer plastic recyclates. Many of the firms in Hong Kong focus exclusively on Japan-sourced material.

5.3.6 China
China is the driving force behind the huge worldwide growth in the trade of recovered plastics and the ultimate destination of most of the recovered plastics that are exported from the European Union and NAFTA regions. Chinese official statistics show imports of 4,096kt of recovered plastics in 2004, approximately three times the volume of imported waste plastics in 1999114. This figure is equal to the combined exports of the US, Canada, the EU and Japan. The growth in value terms is even larger; import values have increased more than five-fold between 1999 and 2004. Recently published official figures for 2005 show an increase of almost 1,000kt on 2004 data, with 4,957kt of recovered plastics imported by China. Figure 5.6 shows the growth in Chinas imports of recovered plastics from 1999 to 2005.

Figure 5.6
6000 5000 4000 3000 2000 1000 0

Imports of recovered plastics to China (kt)

1999

2000

2001 PE PS

2002 PVC

2003 Other

2004

2005

113

UN Trade Statistics
China Customs Statistics (CCS) Information Center UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 86

114

Source: China Customs Statistics (CCS) Information Center.

There is a substantial variance between Hong Kong records of the waste plastic exports to China, and the imports to China from Hong Kong of the same materials as recorded in Chinese official statistics, with the Hong Kong figures consistently showing a larger number. The difference was some 744kt in 2004 equivalent to more than twice the UKs total exports of waste plastics, or 18% of total declared Chinese imports. Figure 5.7 compares the two sets of figures from 1999 to 2004. Consultations in China and Hong Kong suggest that the Hong Kong data provide the more reliable estimate of the scale of the trade. Chinese data on waste trades have improved but do not provide a full picture of activity. Adjustment on the basis of this Hong Kong-China point-to-point trade alone therefore moves the estimate of Chinas import of waste plastic to 4,700kt rather than the 4,000kt shown in official statistics. Consultations with industry in the region suggest that Chinas actual imports in 2004 were in the range of 4,700kt 5,000kt. The recovered plastics are absorbed, via the Chinese plastics reprocessing sector, into a wide variety of secondary uses, from textiles to toys to kitchen utensils. The end-user manufacturers are seeking to shave production costs by finding cheaper sources of plastic inputs. The extent to which they are able and willing to do so varies according to the production process involved and the specification of the markets that they are serving. Various end markets in China itself are more forgiving on quality than export buyers. At the same time, the waste plastic label covers everything from the cleanest production scrap to post-consumer waste.

Figure 5.7

Comparison between Hong Kong waste plastic exports to China and Chinas waste plastic imports from Hong Kong

3000 Trade in waste plastics (kt) 2500 2000 1500 1000 500 0 1999 2000 2001 2002 2003 2004

Hong Kong exports to Mainland China


Source: Hong Kong & China trade statistics, 1999-2004.

China imports from Hong Kong

The Chinese government has introduced a series of measures over the last ten years in an effort to control the undesirable elements of the waste trade, including that in recovered plastics, while (for the time being at least) preserving the plastic product industrys access to lower cost inputs. It has retained a comparatively broad Green List schedule for plastics, in contrast to India where imports are much more restricted. These efforts have had some success but evidence suggests that unauthorised imports and variation in the enforcement of the regulations continue. The extension of central laws into local jurisdictions is a challenge on many fronts in China and is captured in the old Chinese phrase, The mountains are high and the emperor is far away.
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5.3.7 Hong Kong


Hong Kong is a point of transhipment and temporary storage for recovered plastics that are ultimately destined for the China market. It remains a free port and, under the One Country, Two Systems formula, a separate customs zone that is not subject to Chinas import duties and customs law. Hong Kong is the largest single destination for UK recovered plastic exports, receiving 191kt of the 344kt exported direct in 2004 (and an additional, unknown, quantity indirectly via Holland and other countries). Although the UK was the fourth largest single source of recovered plastic imported to Hong Kong in 2004, it accounted for only 6%-7% of Hong Kongs 2,730kt of recovered plastic imports for the year. Almost all Hong Kongs recovered plastic imports are subsequently re-exported to China. Hong Kong trade data estimate exports to China at 2,500kt in 2004. Comparative analysis of China and Hong Kong trade data indicate that official Chinese trade statistics understate imports from Hong Kong and consultations on both sides of the boundary suggest that significant quantities of recovered plastic imports do not appear in the customs data. Hong Kong companies link vendors worldwide with buyers in China, principally in the adjoining Guangdong province. Firms vary in the extent to which they specialise in particular types of recovered plastic, and/or particular source markets. Some are pure trading operations. They exploit their networks of contacts in Europe, North America, Japan and elsewhere to source material, and then resell it through other networks in China both trading companies and reprocessors. Most of the trading firms involved are small and their sourcing is based on the business network of the owner. Other Hong Kong-based buying operations are integrated with plastic reprocessing factories in China. Often the overseas vendors ship plastic to the Hong Kong quayside and the China buyers arrange the forwarding of freight into the Mainland. Recovered plastic often travels into China by barge up the Pearl River to one of the many river ports, which is a cheaper and preferred option for low-value cargoes not prone to damage in transit. The remainder is trucked over the Hong Kong-Mainland boundary. Anecdotal evidence suggests that mixed waste plastics are sometimes illegally imported to China. The nature of these goods (the import into China of which is not legal) is not always truthfully declared, usually under the direction of the Chinese importer. It should be noted that mixed waste plastics leaving Hong Kong jurisdiction are within Hong Kong law. Hong Kongs hub status in the global recovered plastic trade is a function of its traditional role as a conduit in the worlds trade with China and the associated traffic in containerised cargo and its proximity to the plastic-consumer manufacturing base of the Pearl River Delta. Also, the regulatory risk when moving waste over the Hong Kong-China boundary is lower than for direct shipment to China from the source country, especially for lower quality waste. Preclearance customs inspections in Hong Kong are supposed to involve the opening of the doors of each container, but there is no requirement for three photographs of the container being loaded as for shipments from the UK. The role of the Hong Kong-based trader as broker and deal-maker, bridging the gap between buyers (mainly) in Guangdong and vendors in source countries such as the UK, is set to erode over time as increasing numbers of buyers begin to acquire the international business skills and connections to source direct. Should Mainland import regulations be tightened, such as enforcing more strictly the requirements for cleaning and preprocessing of post-consumer waste, then it can be expected that some intermediate processing will emerge in Hong Kong. One firm has already invested in sorting and shredding facilities near the Hong Kong-Mainland boundary in anticipation of such a change. There is no indication that Hong Kong will itself introduce similar requirements for preprocessing, which would push the sorting/washing/grinding activity further back towards source countries and/or countries such as Malaysia.

5.3.8 India
India is not a significant player in the recovered plastics trade. This would change if current import restrictions are eased. Indias plastics industry is five decades old and historically has grown significantly faster than GDP. Demand for

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polymers grew from less than 100kt in 1970 to an estimated 4,500kt in 2005. In the last decade India moved from being a net importer of polymers to having a substantial export surplus, and this trend is set to continue. The industry grew at nearly 20% in 2004. Industry sources have predicted trend annual growth rates of around 12% - 15% in coming years. India continues to import plastics despite its growing capacity for virgin plastic production. These imports include some virgin plastic raw material, speciality polymers not produced by Indian manufacturers, and a certain amount of plastic waste. Tariff barriers have been systematically reduced in recent years, with the present customs duty being 15% for most polymers. Industry sources expect that tariffs to fall to 5-6% within next few years. Imports have grown at a compound annual growth rate of 7.6% over the last six years. Official trade statistics show that 99.4kt of recycled plastic were imported in 2004. The USA, Holland and Germany were the largest exporters to India, accounting for 54% of its recovered plastic imports. Unfortunately, while it is clear that a certain volume of illegal plastic recyclate continues to enter India, it is very difficult to assess either the scale of the trade due to its (semi) clandestine nature, or its potential rate of future growth. There is also a smaller, though growing trade in export of recovered plastic from India. 15.1kt of recovered plastic was exported from India in 2004, an increase of 14.9kt since 1999. The main export destination for recovered plastic is China and Hong Kong. The Indian government are considering easing scrap import restrictions, but only on a case by case basis. Imports of scrap (e.g. industrial trimmings might be allowed). The current thinking is that any exceptions to rules should be carefully specified, e.g. with scrap imports specifically allowed for recycling for a particular product. Overall, consultations suggested that the overall policy presumption against import of recovered plastics will stay in place. However, an existing exemption for PET recycling, previously obtained after industry lobbying, and the discussion of making exceptions in some other cases suggest that a moderate additional amount of scrap imports will be allowed in the future.

5.4

Impacts

The main regulations on packaging recycling in the EU and Japan were designed before this export market emerged. The transition has required adjustment in various areas, a process that is not yet complete as the debates over standards of traded recovered plastics in both exporting and importing countries illustrate. The increase in demand for material from the Far East, and the favourable prices offered for export, have put pressure on domestic firms in the source markets. In the US, Japan and Europe there are reports of scarcity of material and a domestic sector with over-capacity. Anecdotal reports suggest some reprocessors, unable to compete, are switching their focus to the export trade. Labour costs in China are a small fraction of what they are in OECD115 countries and there is a large and varied demand for material that centres on the provinces of Guangdong and Zhejiang. In a globalised economy where so much manufacturing has migrated to these regions it should not be a surprise that recycling markets, and especially the more labour-intensive processes, are subject to the same competitive pressures. Figure 5.9 illustrates how these new globalised recycling loops are structured using PET bottles as an example.

115

Note: Please see Annex K for full list of OECD member countries

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Figure 5.9

Roles in a globalised recycling market: the example of PET bottles

Factory

Household

Source Country

Collecting Company (Broker, Trading Company etc)

Collecting Company

Export
Collecting Companies Dismantling Plant PET Flakes Domestic Recycle Remanufacturing Plant Polyester Fibre Domestic Market Moulded Plastic Products Pellets

China

Source: Adapted from Kojima et al, 2005

While the export trade has clearly had an impact on domestic recycling operations within the source countries, and created new headaches for trade regulators. It also represents a strong pull factor that supports recycling and probably reduces the cost of attaining recycling targets. In 2004 China consumed 1,250kt of recovered plastic material from the EU which otherwise would have had to find markets elsewhere, or be disposed of. A common feature of trade between Europe and China is regulators concern about standards. This is an area where there is scope for greater communication and, possibly, collaboration between national regulatory agencies, to reduce the regulatory uncertainty faced by the firms involved in both the supply and demand sides of the trade. This would also raise public confidence that environmental and health risks are being properly controlled.

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6.0 6.1

EU Trade profile

6.1.1 Intra-EU Trade


Intra EU trade in waste plastics totalled approximately 850kt in 2004 and was worth almost 179 million. The major EU importers of waste plastics from other EU countries in 2004 were the Netherlands (164kt), Belgium (149kt), Italy (133kt) and Germany (120kt). The combined total imports of these four countries accounted for approximately two-thirds of all intra EU imports in 2004. This reflects the reprocessing capacity found in the Netherlands, as well as the use of both Belgium and the Netherlands as transit ports for recycled plastics exported to non-EU destinations such as Hong Kong and China. The largest exporters of waste plastics to other countries in the EU are Germany (225kt), France (201kt), the Netherlands (129kt) and Belgium (73kt). These four countries account for almost three-quarters of all intra EU exports. The most significant trade flows of waste plastics within the EU in 2004 were from Germany to the Netherlands (77kt), from France to Italy (65kt) and from the Netherlands to Belgium (58kt).

6.1.2 EU Trade with the Rest of the World


Imports
Intra-EU imports of waste plastics accounted for five times the quantity of imports from outside the EU in 2004, reflecting the trend over at least the last 5 years. EU total waste plastic imports have grown by 43% between 1999 and 2004. The highest non-EU provider of EU waste plastic imports is the US.

Table 6.1 EU imports of waste plastics

1999 Rank Order Exporting Country TOTAL 1 2 3 4 5 6 7 8 9 10 Germany France Netherlands Belgium UK Switzerland Italy Austria Spain Sweden Others Trade Value () Net Weight (kt) 695.9 208.3 137.4 119.8 51.4 35.7 25.6 13.2 17.6 5.3 17.1 64.4

2004 Exporting Country TOTAL Germany France Netherlands Belgium UK Switzerland Italy Sweden Austria Spain Others Trade Value () Net Weight (kt) 993.3 225 201.7 128.9 72.8 36.3 71.5 28.4 29.1 20.9 13.5 165.3

120,475,898 28,252,865 24,732,570 24,581,278 9,354,773 7,259,602 4,115,356 3,671,811 2,393,588 1,854,261 1,605,880 12,653,912

195,554,062 44,558,142 42,337,911 31,657,559 12,824,150 10,338,267 8,190,449 7,381,755 4,786,160 4,319,948 3,899,451 25,260,271

Source: EU Eurostat online, http://epp.eurostat.cec.eu.int

PE used to be the largest single plastic type to be imported into the EU. However other waste plastics has been the fastest growing material group between 1999 and 2004 and has overtaken PE to become the largest import group. Figure 6.1 below shows the import in waste plastic by material for 2004. This may to some degree reflect inconsistencies in completion of records; i.e. some component of Eurostats other waste plastics category may include PE and other specified polymers.
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Figure 6.1 EU imports of waste plastic by material 2004

Other Waste Plastics 39%

PE 37%

PP 12%

PVC 8%

PS 4%

Source: EU Eurostat online, http://epp.eurostat.cec.eu.int

Exports
Total EU waste plastic exports are significantly larger than EU imports and have been growing more rapidly. The volume of EU exports (both intra and outside the EU) has increased by 129% between 1999 and 2004 from just over 1,000kt to 2,360kt, from a value of 171million to 439million. Trade data show that the majority of EU countries export more waste plastics to other EU countries than to countries outside the EU. For example, the vast majority of French waste plastics trade takes place within the EU. However most of the larger players in waste plastics trade tend to have much larger exports to countries outside of the EU. This is true of Germany, Belgium, the Netherlands and Italy. These figures mask what is actually happening to waste plastics generated and collected in the EU. As mentioned above, Germany, Belgium, the Netherlands and Italy are also the greatest importers of waste from the rest of the EU. Waste plastics are collected in other countries in the EU and exported to these countries as a transhipment destination before being finally exported to other non-EU countries such as Hong Kong and China. It is believed that much of France and Germanys exported waste plastics are being transhipped through the Netherlands and Belgium for export to Asia, in addition to direct export from these countries. The destination of EU exports has also experienced great change between 1999 and 2004. The major change has been the increase in direct EU exports to China. China was not included in the top ten destinations of EU waste plastic exports in 1999, yet in 2004 China was ranked a clear second behind only Hong Kong. Figure 6.2 shows the change in volume of exports to Hong Kong and China compared to other destinations from 1999 to 2004.

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Figure 6.2
2500 2000 1500 kt 1000 500 0

Change in EU exports from 1999-2004

1999

2000

2001 HK & China

2002 Other

2003

2004

Source: EU Eurostat online, http://epp.eurostat.cec.eu.int

EU exports of waste plastics to India have also increased over this period. The US has fallen down the rankings: EU waste plastic exports to the US were of a similar level in 2004 to 1999 and have since been overtaken by China and some growing European markets. The figure below shows the destinations of EU exports in 2004. Hong Kong and China make up almost two thirds of total EU exports by volume.

Figure 6.3

Destination of total EU exports in 2004 (ktonnes)


O thers, 37 India, 89 Ireland, 57 Belgium 79 , Spain, 51 US, 70 Hong Kong, 720

Germ 159 any, Netherlands, 187 Italy, 154


Source: EU Eurostat online, http://epp.eurostat.cec.eu.int PE is the largest declared export from the EU. Polystyrene exports from the EU have declined between 1999 and 2004 but all other materials have increased. The total EU waste plastic exports of 2,400kt in 2004 was split between polythene (58.4%), polypropylene (5.6%), PVC (5.3%), polystyrene (1.6%) and other waste plastics (29.1%).

China, 526

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Figure 6.4

EU export of waste plastics by material 2004

Other Waste Plastics 29%

PP 6% PVC PS 5% 2%

PE 58%

Source: EU Eurostat online, http://epp.eurostat.cec.eu.int

6.2

Market Profile

Plastics consumption in Western Europe is a one of the highest in the world. Around 4,200kt of plastics (including both virgin plastics and around 2,000kt of recycled plastics) were consumed in 2003, an increase of 5.6% since 2001116. Unsurprisingly the average per capita consumption (98.1kg in 2003) is significantly higher than the world average of 21.5kg. The plastics recycling industry in Europe has grown over the last decade117, mainly stimulated by packaging waste recycling as countries adopted waste management systems to implement the Packaging Waste Directive. In 2003, 14.8% of all recovered plastic was recycled, a 24% increase since 2001. According to figures from Plastics Europe,118 around 3,100kt of European waste was mechanically recycled in 2003. This reflects a 10.5% increase in European recycling since 2002119. Plastic packaging is recovered from municipal household waste and industry sources such as production scrap. The breakdown in composition of the total plastic packaging recycling in Europe is shown in Figure 6.5 below:

116

PlasticsEurope, Plastics in Europe An analysis of plastics consumption and recovery in Europe, 2004

117

ibid ibid

118

119 There is some debate over this data. Plastics Europe quote 3,100kt tonnes recycled, whereas EuPR suggest the figure is 2,200kt in 2004. EPRO have identified at least 1,800kt of packaging recycled in 2004.

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Figure 6.5

EU domestic recycling of waste plastics by material, 2005


PP, EPS & PVC 20%

PET 22%

LD/LDPE 38%

HDPE 20%

Source: EuPR

6.2.1 Packaging waste


Many EU countries including France, Belgium, Germany, and Luxembourg are part of a Green Dot Scheme which was established to organise the collection, sorting and recycling of used sales packaging (this system was in place before the Packaging Waste Directive came into force). In these countries, packaging recycling targets are met principally through the collection and recycling of post-consumer plastic bottles (PET and some HDPE). This is one of the reasons why there is more information on PET collection and recycling in Europe than other plastic waste materials. The Netherlands and Italy are not part of the scheme, and targets are met through recycling of PET bottles and other plastic waste such as LDPE film and plastic crates. In Belgium, industrial film is also collected and recycled to meet the packaging directive objectives. Plastic waste collections from packaging waste in Western Europe continue to increase as the coverage of the collections (percentage of the population targeted) and the amount of waste produced increases. However, over the last few years the proportion of plastic that makes up packaging has decreased. It is possible that the rate of increase in collection of plastic packaging may also decrease in the future. The fate of plastic packaging in the EU varies from country to country. For example, France and Italy have been committed to supplying their domestic recycling market: Frances declared export of packaging waste (bottles) in 2004 was 5%, and Belgium 10%. In the same year in both Italy and Spain, all collected plastic packaging (both from household and industrial waste) was recycled domestically120. These figures are very different to the export figures shown in Section 6.1, which take into account all types of plastic waste. The reason why some of other European countries have supplied higher levels of material to domestic recyclers primarily stems from the implementation of the Packaging Directive in these countries. Most mainland European countries had and/or retain one main compliance organisation, creating more quasi-monopolistic management arrangements than exist in the UK. As a result the strong central control, organisations in, for example, France, Germany and Italy were able to place a stronger emphasis on long term compliance plans and associated risk management measures (at increased financial cost). This enabled them to commit to long-term contractual arrangements with suppliers of waste plastics and with recyclers121. Historic concerns about security of markets, accountability of recycling practices and practicability of managing long-term partnerships led these organisations to contract with local recycling businesses, which could be readily audited, and often contracts lasted several years. Contracts guaranteed supplies at fixed or formulaic prices and often at below global market rates. These organisations also in effect funded market development work in their countries as part of the contractual/financial arrangements implemented. This kind of arrangement has become less
120

EPRO

For example, in France Valorplast has until recently controlled the sales contracts for almost all plastic bottles collected in France (i.e. >100ktpa). In Gemany DKR controlled the sales arrangements for all plastics collected by DSD (over 350ktpa).

121

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common for two main reasons: concerns raised by competition authorities are being addressed; also the customers of these compliance organisations wish to reduce their costs by embracing the international market more fully. As a result European recyclers are now being guaranteed less material from these sources and often only at prices that are, from the local recyclers perspective, at historically high levels prices but which are more representative of Asian market pricing.

6.2.2 PET
In 2004, 665kt of plastic PET were collected in Europe, an increase of almost 48% since 2002122. Most PET bottles are recycled domestically or within the EU. Most of the PET imports can be attributed to deposit bottles from Germany123. The Netherlands is the main destination for the EU recycling of PET bottles, with 3 PET reprocessing plants currently operating. Most of the PET bottle recycled here come from other EU countries. Despite the presence of reprocessing capacity in the country, most PET bottles collected in the Netherlands are exported within the EU and to the Far East. This is because none of the three reprocessors in the Netherlands were successful in winning a tender put out by a multi-national soft-drinks company for the reprocessing of PET bottles consumed in the Netherlands. This situation may change in the future.

6.2.3 PET prices


Recovered PET can be sub-divided into 4 categories of descending quality; Clear, Blue mixed, Green and Mixed colour. There is great demand in Europe for high quality PET, and correspondingly higher prices. China and Hong Kong importers are not willing to pay a premium for the high quality material, however these countries will offer a higher price for mixed PET than European reprocessors. There is demand for this lower quality material in China as labour costs are lower and the infrastructure for sorting mixed PET has been set up. Recycled PET prices have increased over the last two years. These high prices and the low barriers to entry in this market have led to many reprocessors recently entering the market, creating overcapacity for PET reprocessing in the EU. In 2003 there were 50 to 60 PET reprocessing companies across Europe. This has increased to around 90. The export of PET to the Far East has further exacerbated the lack of raw material for reprocessing. This creates pressure for the industry in Europe, which is directly in competition with reprocessors in the Far East.

6.3

Outlook

The trade data show that EU exports to China and Hong Kong have been increasing year on year since 1999. The China/Hong Kong export is driven by the higher prices for mixed and scrap plastic. Although there is some demand in the EU, reprocessors are unable to compete with the prices for scrap and unsorted waste plastics obtained from Hong Kong and China. The trade associations consulted in the study agreed that the export market to China is set to continue for at least the next 5 years due to high demand and expected high prices. They found it difficult to predict what might happen beyond then. Although demand from China is unlikely to drop, it is possible that lower prices for recycled plastic in the future will mean that reprocessors in the EU or in other countries in North Africa or South America can compete for waste plastics. It was reported that there are recycling plants in Egypt, Tunisia and Morocco, and some exports from Italy are being sorted in Tunisia. India is also a strong export market and any relaxing of the regulations allowing the import of waste plastics other than PET and PP would increase the market share for destination of European waste plastics.

122

ibid ibid UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 96

123

Several consultees also stated that harmonisation across EU member states allowing recycled PET to be used for food packaging would reinvigorate the European market. This would in turn reduce export to China of PET bottles from Europe. There are reports that reprocessors are setting up plants in Eastern European states where the cost of labour is lower than in the rest of Europe (e.g. German companies are shipping their waste to Bulgaria for sorting124). These countries are also ideally placed for trade between Western Europe and Russia. In conclusion, EU exports both within the EU and to non-EU destinations such as Hong Kong and China are set to continue over the next 5 years. There may be increasing exports to countries such as India and Pakistan, with potential demand from countries in South America or North Africa emerging.

6.4

Summary

Plastics consumption in Western Europe is a one of the highest in the world. Around 42,000kt of plastics (including both virgin plastics and around 2,000kt of recycled plastics) were consumed in 2003. The plastics recycling industry in Europe has grown over the last decade, mainly stimulated by packaging waste recycling as countries adopted best waste management systems. In 2003, 14.8% of all recovered plastic was recycled, a 24% increase since 2001. Figures for 2004 suggest that almost 3,000kt of plastic packaging waste were recycled in Europe. There is a significant intra-EU trade of waste plastics with major imports from other EU countries to the Netherlands, Belgium, Italy and Germany. These countries are also the major exporters outside the EU, reflecting the movement of waste plastics within the EU that is then transhipped to other non-EU destinations, including Hong Kong and China. The volume of exports from the EU has increased by 129% between 1999 and 2004 from just over 1,000kt to 2,360kt, from a value of 171 million to 439 million. In 2004 Hong Kong and China took almost two thirds of total EU exports by volume. Exports to this region have more than tripled since 1999. Polythene is the largest declared plastic material exported from the EU. Packaging waste makes up the majority of waste recycled in the EU. Packaging waste collection and recycling systems are one of the main drivers for recycling plastics in the EU as packaging is the most important source of plastics. Progress in meeting the targets of the Packaging Waste Directive in those countries currently lagging behind will mean a greater volume of waste plastics being collected and traded within and outside the EU. There is consensus that the export market to China is set to continue for at least the next 5 years due to high demand and expected high prices. It is difficult to predict what might happen beyond then.

124

Wellman, personal communication UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 97

7.0 7.1

UK Trade profile

7.1.1 Imports
UK imports of waste plastics have been increasing rapidly over time, and have grown by 130% from 11kt in 1999 to 44.7kt in 2005. Plastic waste imports in 2005 were valued at 11.8 million. Table 7.1 gives a summary of the top 10 providers of waste plastic into the UK. The vast majority of UK waste plastic imports (more than 92% in 2004) are imported from other EU Member States. The bulk of it comes from the UKs closest neighbours. Ireland accounts for more than a quarter of UK waste plastic imports (7.1kt), while the other major countries include Belgium (4.9kt), Germany (4.4kt), the Netherlands (4.3kt) and France (2.7kt). Despite ranking only fifth in terms of import volume, the waste plastic imports from France actually have the highest trade value of 1.5m.

Table 7.1

UK imports by source country


1999 2004
Net Weight (kt) 11.7 2.8 1.8 1.0 1.1 1.2 1.0 1.5 0.1 0.2 0.5 0.5 Exporting Country TOTAL France Germany Netherlands Belgium Irish Republic Italy USA Denmark Hong Kong Dubai Others Trade Value () 6,738,073 1,476,161 1,111,147 913,378 891,697 834,849 397,315 391,042 261,288 94,809 81,775 284,612 Net Weight (kt) 26.9 2.7 4.4 4.3 4.9 7.1 0.5 0.4 0.8 0.2 0.1 1.5 Exporting Country TOTAL Irish Republic Germany Netherlands Belgium France USA Denmark Italy Hong Kong Switzerland Others

2005
Trade Value () 11,754,543 2,824,950 1,986,681 1,979,588 1,220,620 942,091 725,676 420,676 402,967 367,038 131,988 752,268 Net Weight (kt) 44.7 16.1 7.6 6.8 4.5 3.0 0.7 0.5 1.0 0.9 2.1 1.5

Rank Order

Exporting Country TOTAL

Trade Value () 4,704,661 1,737,932 548,972 445,147 400,639 339,501 300,703 214,434 206,573 114,448 111,986 284,326

1 2 3 4 5 6 7 8 9 10

Netherlands Belgium USA Germany Italy Austria Irish Republic Russia Norway Denmark Others

Source: UK trade statistics website, http://www.uktradeinfo.com

Imports of all different materials have grown between 1999 and 2004 but PE imports have really been driving this growth. The share of UK waste plastic imports accounted for by PE has increased from 44.6% in 1999 to 50.8% in 2005. PVC imports are the next largest single material import into the UK, representing 7.7% of waste plastic imports in 2004, followed by PS (4.3%) and PP (2.4%). Other waste plastics contributed 37.2% of the total figure in 2004, increasing markedly since 1999, and showing further growth in the latest 2005 data (Table 7.2).

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 98

Table 7.2

UK imports by waste plastic type


1999 2004
Net Weight (kt) 11.7 5.2 0.02 1.5 0.2 4.7 Waste Plastic Type 4,704,661 1,390,373 8,348 405,953 74,069 2,825,918 TOTAL PE PS PVC PP Other Waste Plastics 6,738,073 2,232,096 464 468,497 108,721 3,465,031 26.9 13.6 1.2 2.0 0.7 9.3 Trade Value () Net Weight (kt) Waste Plastic Type TOTAL PE PS PVC PP Other Waste Plastics 11,754,543 4,013,249 1,112,342 1,780,831 1,331,291 3,516,830 44.7 16.1 1.9 10.7 7.3 8.7

2005
Trade Value () Net Weight (kt)

Waste Plastic Type TOTAL PE PS PVC PP Other Waste Plastics

Trade Value ()

Source: UK trade statistics website, http://www.uktradeinfo.com

7.1.2

Exports

The UK is a large net exporter of waste plastics. Exports far outweigh imports each year. Over the last five years exports have grown even more rapidly than imports.

Figure 7.1 UK exports of waste plastic, 1999 2005

400,000 350,000 300,000 Tonnes 250,000 200,000 150,000 100,000 50,000 0 1999 2000 2001 2002 2003 2004 2005 81,293 48,227 86,919 109,543 195,889 344,000 324,234

Source: UK trade statistics website, http://www.uktradeinfo.com UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 99

Figure 7.1 shows that UK exports of waste plastics have increased six-fold since 1999. UK trade data records waste plastic exports of 344kt in 2004, up from 48.3kt in 1999. Exports in 2005 were 324.2kt. Export values have also been growing rapidly (four-fold over the same five year period), albeit at a slightly slower rate than the quantity, so the average value of waste plastic exports has fallen slightly over time. The total of 344kt in 2004 is significantly higher than the volume of waste plastic packaging exports recorded via the PERN system. PERN data for 2001 to 2004 are shown in Table 7.3. In 2004 these accounted for 173.9kt of the 344kt tonnes of waste plastic exported.

Table 7.3

PERN export data for plastic packaging waste

2001

2002

2003

2004

2005

Exported waste plastic (kt)


Source: Defra

66.8

135.2

114.4

173.9

237.8

Consultations with UK exporters help to explain the origin of the remaining 87kt exported in 2005. These volumes are partly made up of packaging waste that is not recorded (through unaccredited exporters) and exported. However consultations with exporters show that a large proportion of export plastics are post-production scrap (injection moulding) collected directly from the manufacturers of plastic bottles, car components and other products. Many of the exporters consulted stated that a large proportion, in some cases all, of their exported plastic waste was industrial scrap. Some of the plastics exported under the waste category will include semi-finished reprocessed material, for example granulated plastics scrap and washed flake PET. The destination of these recovered plastics is shown in Figure 7.2. The share of exports going to Hong Kong and China has increased from 43% (20.8kt) in 1999 to 74% (254.2kt) in 2004. The strong growth in UK exports of waste plastics is being driven by the growth of exports to this region. India is a growing, but much smaller market for UK waste plastic exports. The share of UK exports going to EU countries has declined.

Figure 7.2

UK waste plastic exports by destination (2004)

North America 1% India 4% Other 6%

Europe other 1%

EU 14%

HK & China 74%

Source: UK trade statistics website, http://www.uktradeinfo.com


UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 100

The composition of UK recovered plastic exports by commodity code is shown in Figure 7.3. The largest single component is PE followed by Other and PP. PE is the main driver of the growth in UK exports, having increased from a 20.3% share of all plastic waste types in 1999 to 72.6% in 2004.

Figure 7.3

UK exports by waste plastic type (2004)


Other 15%

PVC 7%

PP 5%

PS 1% PE 72%

Source: UK trade statistics website, http://www.uktradeinfo.com The extent to which these data (drawn from exporters declarations to the UK authorities) can be used as a reliable guide to the contents of the containers in question is uncertain. As shown in Chapter 5, there are significant differences in the declarations made to UK and Hong Kong customs authorities about the type of plastic being shipped between the two destinations. Hong Kong data record 26.1kt of waste plastic arriving from the UK than the UK exports to Hong Kong, and a significantly different polymer composition. Year-end effects may account for some of the quantitative difference (e.g. a shipment that leaves in the UK in December 03 but arrives in Hong Kong in January 04), but the material differential is less easily explained. The consultations have not revealed a specific reason for this material difference. The same comparisons for other exporting countries do not reveal such startling discrepancies. This suggests that the difference is not necessarily due to Hong Kong reporting practices.

7.2

Market Profile

7.2.1 Plastic consumption and recycling


Approximately 4,700kt of plastic were consumed in the UK in 2002, an increase of 250kt since 2000. This trend is set to continue and the 5,000kt mark is expected to be reached in the next few years.125 Packaging represents the single largest sector of plastics use in the UK economy. An estimated 2,200kt of plastics were used in packaging applications in 2005. Plastic packaging tonnage is growing at 2-5% pa. A full profile of the UKs consumption of plastics and supplies for recycling is provided in section 2.

7.2.2 The UK plastics recycling industry


The UK plastics recycling industry is made up of several business types, outlined below. Around 200 UK companies dealt in the processing of packaging waste in 2003126.

125

British Plastics Federation WRAP, 2003c

126

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 101

Reprocessors: reprocess waste plastics into secondary raw materials for use by the plastics industry.

Reprocessors may depend on waste management companies and suppliers to sort out and clean materials prior to reprocessing. Many companies involved in reprocessing plastics are small businesses with less than 50 employees.
Manufacturers: use recyclate in the production of e.g. pipe, film sheet, etc. Reprocessors/manufacturers: Many companies are both reprocessors and manufacturers. The advantage of this

is to guarantee the supply of recyclate or to ensure a market for products made from recycled materials. Such companies tend to be equally split between small businesses and companies that are part of larger groups.
Distributors either offering a range of products made from recycled plastics, or importers of a niche product

manufactured abroad.

Since the introduction of the Producer Responsibility Obligations (Packaging Waste) Regulations in 1997 the reprocessing industry can be divided into those companies that are accredited reprocessors of packaging waste and those that are not. Reprocessors and exporters of packaging waste undergo voluntary accreditation (carried out by the Environment Agency or SEPA) that allows them to generate and sell packaging recovery notes (PRNs UK reprocessors) and packaging export recovery notes (PERNs for exported material). It is not clear what proportion of the UK companies recycling waste plastics are Environment Agency accredited reprocessors of packaging waste. 70% of the companies surveyed in the Enviros 2003 report were accredited. A certain amount of plastic packaging waste recycled (either in the UK or exported) will therefore not be accounted for in official PRN/PERN data (this is also true for waste produced by non-obligated producers). A profile of the UK plastics reprocessing industry is provided in Section 3.

7.2.3 UK export market


As the trade figures show, the UK export market in waste plastics is healthy and has been growing over the past 5 years (despite a small drop in 2005). As of July 2005, 43 UK companies were Environment Agency accredited exporters of plastic waste. The majority of these (over 75%) export over 400 tonnes of material per year. There are also 83 UKbased companies that are on the AQSIQ list of companies accredited to export recycled (not just plastic) goods directly to China. Only 18 companies appear on both lists. UK companies can export to China via Hong Kong and dont require accreditation to the Chinese system.

7.2.4 Plastic Prices


The export market is driven by the price paid for waste plastic. The following chart shows the trend in average UK prices since 2002 for unprocessed waste plastics from LDPE and HDPE film, as well as PET, HDPE bottles and mixed plastic waste from bottles. Prices for LDPE and HDPE film are generally higher than for bottles. Single colour plastics also fetch a higher price than coloured or mixed in both types of material. As expected, the price for mixed plastic bottle waste remains much lower than for unmixed plastics. For all plastic types, prices in 2002 were stable followed by a slight downturn in 2003-2004 then a sharp increase in 2005. The exception was the price for bottle mixed plastic waste which rose in mid-2003 to mid-2004 then softened, before rising again in 2005. All the exporters consulted suggested an increase of around 20-30 per tonne on these prices could be obtained for export.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 102

Figure 7.4
300 250 Price per tonne () 200 150 100 50 0

Price per tonne for different recovered packaging plastics 2002-2005

Nov-02

Nov-03

Nov-04

May-02

May-03

May-04

May-05

Mar-02

Mar-03

Mar-04

Mar-05

Sep-02

Sep-03

Month HDPE mixed colour film Clear and light blue PET Mixed HDPE single colour film Coloured PET LDPE mixed colour film HDPE single colour bottle

Source: Letsrecycle.com http://www.letsrecycle.com/

7.3

Outlook

7.3.1 Current and future export markets


The current trend in export of waste plastics to China and Hong Kong is growing and expected to continue. All the exporters consulted exported all or a majority of their waste plastics to Hong Kong. Only one of these exported exclusively to China direct. This was because he had contacts in China and dealt with clean post-industrial waste. This exporter also stated that prices obtained for the PP and PVC exported to China were only 80% of what could be obtained in the UK. However he believed that the UK market was not big enough and business conditions were better in China. There are several reasons for going through Hong Kong rather than China directly given by the exporters: China regulations are stricter (no mixed waste and PET bottles allowed) Traders in Hong Kong are able to sort and organise transhipment of waste to China Traditional good and trusted business links with Hong Kong traders

Current demand from other countries was also mentioned such as the Middle East and South American countries. Barriers to increasing exports to these countries included stricter regulations and lower prices than China and Hong Kong were prepared to pay.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 103

Sep-04

Sep-05

Nov-05

Jul-02

Jul-03

Jul-04

Jan-02

Jan-03

Jan-04

Jan-05

Jul-05

India was identified as an important destination for some UK exports. Many exporters expressed the wish that India would open up regulations to accept all Green List waste (not just PET and PP). Although other countries in Europe and the US were competitors for export, the exporters consulted did not consider this to be a serious concern. Many exporters also traded with other European countries, where there is demand for high quality waste plastic and recycled plastic granulates. All exporters were confident that demand and high prices from China would continue in the foreseeable future, and certainly the next 5 years. It is more difficult to predict what might happen after that in terms of prices and competition from other countries. Most exporters agreed that demand from China was likely to remain high even in the longer-term.

7.3.2 Future risks to the export market


A major risk identified through the consultation was that regulations in China might be tightened so that plastics waste currently exported will no longer be accepted. Two exporters said that they were installing sorting facilities on site so that they would be able to export higher quality waste. One future risk to the export market in the UK identified was a future lack of supply due to the efficiency of the packaging and manufacturing industry, as well as the use of lighter packaging leading to less plastic wastes. One exporter reported that it was becoming more difficult to find suppliers. Another reason for this was reported to be that some Chinese importers were coming to the UK to buy waste directly from the supplier, thus leaving out the intermediate UK traders. Volatility in plastic waste prices was mentioned as a risk to business. There was a sharp decrease at the end of 2005 after a year of high prices. Prices are expected to stabilise in 2006, which may change the volumes of waste being exported. Exporters were nevertheless confident that prices for recycled plastic would rise over the longer term, in parallel with oil and virgin plastic prices.

7.4

Summary

Approximately 4,700kt of plastic were consumed in the UK in 2002, an increase of 250kt since 2000. This trend is set to continue and the 5 million tonne mark is expected to be reached in the next few years. UK imports of waste plastics have increased from 11kt in 1999 to 44.7kt in 2005. In 2004 more than 92% of imports came from other EU Member States. The UK is a large net exporter of waste plastics. Exports far outweigh imports each year. UK exports of waste plastics have increased six-fold since 1999. UK trade data record waste plastic exports of 344kt in 2004, up from 48.2kt in 1999. Figures for 2005 show a slight decrease on the 2004 figure, having achieved exports of 324.2kt tonnes. The 2004 export total is significantly higher than the volume of waste plastic packaging exports recorded via the PERN system. In 2004 PERNs for packaging waste accounted for 173.9kt of the 344kt of waste plastic exported. In 2005 PERN for packaging waste accounted for 238kt of the 324kt exported. This difference can be partly accounted for by the export of non-packaging plastic waste (post industrial waste) and some packaging waste exported outside the PERN system, although there are clearly other anomalies in the data over the period 2002-2005. As of July 2005, 43 UK companies were Environment Agency accredited exporters of plastic waste. The majority of these export over 0.4kt of material per year. There are also 83 UK-based companies on the AQSIQ list of companies accredited to export recycled (not just plastic) goods directly to China. Only 18 companies appear on both lists. UK companies can export to China via Hong Kong and dont require accreditation to the Chinese system. The share of UK exports going to Hong Kong and China has increased from 43% in 1999 to 74% in 2004. The strong growth in UK exports of waste plastics is being driven by the growth of exports to this region. All the exporters consulted in the study exported all or a majority of their waste plastics to Hong Kong. Most plastic waste

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 104

sent to China via Hong Kong is mixed scrap and PET. Prices obtained for these were quoted to be at least 20-30 per tonne higher than in the UK. The Indian market is becoming increasingly significant. Many exporters expressed the wish that India would open up regulations to accept all Green List waste (not just PET and PP). Barriers to increasing exports to other countries include stricter regulations and prices lower than those available from China and Hong Kong. Many exporters also trade with other European countries, where there is demand for high quality waste plastic and recycled plastic granulates. All exporters were confident that demand and high prices from China would continue in the foreseeable future, and certainly the next 5 years. It is more difficult to predict what might happen after that in terms of prices and competition from other countries. Most exporters agreed that demand from China was likely to remain high even in the longer term.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 105

8.0 8.1

NAFTA Trade Profile

8.1.1

US

The US is one of the worlds largest importers and exporters of waste plastics. It imported 396kt and exported 745kt of recovered plastic in 2004, worth 107m and 200m respectively.

Imports
US import data for waste plastic are presented in Figure 8.1. These show that imports increased by 27% between 1999 and 2004 in terms of volume, but by only 7% in value terms. Imports from Mexico almost doubled during this period. Mexico is now the largest source of US waste plastic imports. Canada is the second largest. The US imported 40kt of waste plastics from China in 2004. All other significant sources of scrap plastic imports are European Germany, Italy, Spain, Belgium, France, the Netherlands and the UK (Figure 8.2).

Figure 8.1
450 400 350 kt 300 250 200 150

US imports of waste plastic, 1999-2004

1999

2000

2001 Canada Mexico

2002 Other

2003

2004

Source: UN Trade Statistics, http://un.org/unsd/comtrade SITC 579: Waste, Parings and Scrap of Plastics

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 106

Figure 8.2

US waste plastic imports by country of origin, 2004

Other 29%

Mexico 28%

China 10%

Germany 11%

Canada 22%

Source: UN Trade Statistics, http://un.org/unsd/comtrade. SITC 579: Waste, Parings and Scrap of Plastics

The vast majority (86%) of US waste plastic imports are declared as other waste plastics rather than polyethylene, polystyrene or PVC. The material composition of the trade (based on customs declarations) is shown in Figure 8.3.

Figure 8.3

Composition of US waste plastic imports, 2004

PE 36%

Other 53% PVC 8% PS 3%

Source: UN Trade Statistics, http://un.org/unsd/comtrade. SITC 579: Waste, Parings and Scrap of Plastics

Exports
Over the past five years US exports of waste plastics have increased much more quickly than imports, growing by 112% and 133% in terms of volume and value respectively (see Figure 8.4).

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 107

Figure 8.4

US Exports of Waste Plastic, 1999-2004

900 800 700 600


kt

500 400 300 200 100 0 1999 2000 HK 2001 China 2002 Canada 2003 Others 2004

Source: UN Trade Statistics, http://un.org/unsd/comtrade. SITC 579: Waste, Parings and Scrap of Plastics This growth has been driven by a rise in exports to Hong Kong and China. Exports to Canada and India have also increased substantially. Six of the ten largest waste plastic export markets for the US are in Asia. These account for more than two-thirds of US waste plastic exports. Canada and Mexico receive most of the remainder. Whereas the UK exports far more waste plastic to Hong Kong than it does direct to China, the US actually exports more direct to China than to Hong Kong. Based on the market and risk analysis covered elsewhere in this report, we expect the direct trade to be concentrated in post production scrap rather than post-consumer waste plastics (where the risk of shipments being rejected is higher). More than half of US waste plastic exports are declared as other waste plastics (53% by tonnage, 59% by value). In 2004, polyethylene accounted for 36% of export volume and 32% of the value. Direct exports to China have a slightly higher share of PVC and lower share of other than do exports to Hong Kong (which are shown in Figure 8.5). Exports to Canada, on the other hand, have a larger PVC and other share than exports to Hong Kong.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 108

Figure 8.5

Composition of US Exports to Hong Kong of Different Waste Plastic Materials, 2004

PE 40%

Other 55% PVC 3% PS 2%

Source: UN trade statistics, http//unstats.un.org/unsd/comtrade

8.1.2

Canada

Imports
Canada is a net importer of waste plastics, importing 207kt and exporting 159kt in 2004, with values of 47m and 37m respectively. Imports increased by 46% between 1999 and 2004 in tonnage terms and 65% by value. More than 90% of Canadian imports (by both volume and value) arrive from the US (see Figure 8.6). Most of the remainder is sourced from Europe. The material composition of imports and exports is similar to the US, which is unsurprising given the major role that the US plays in the Canadian waste plastics trade (Figure 8.7).

Figure 8.6

Canada Imports of Waste Plastic, 1999-2004

250 200 150


kt

100 50 0 1999 2000 2001 US 2002 Other 2003 2004

Source: UN trade statistics, http//unstats.un.org/unsd/comtrade. SITC 579: Waste, Parings and Scrap of Plastics

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 109

Figure 8.7

Canada Imports of Different Waste Plastic Materials, 2004

PE 30%

Other 55% PVC 10%

PS 5%

Source: UN trade statistics, http//unstats.un.org/unsd/comtrade

Exports
Canadian waste plastic exports have increased more slowly than imports (see Figure 8.8). Exports have risen 27% by volume over the same period, but have changed significantly in shape. Hong Kong and China now account for more than 40% of exports, compared to 21% in 1999. The US share has fallen from 76% to 54%. Exports to India have also increased significantly but continue to lag a long way behind exports to the US, Hong Kong and China. Small volumes are also exported to Europe and some other Asian countries including Vietnam and Korea.

Figure 8.8

Canadian exports of waste plastic, 1999-2004

180 160 140 120


kt

100 80 60 40 20 0 1999 2000 HK 2001 China 2002 US Other 2003 2004

Source: UN trade statistics, http//unstats.un.org/unsd/comtrade

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 110

Figure 8.9

Destination of Canadian Exports of Waste Plastic, 2004

China 11%

Other 3%

Hong Kong 32%

USA 54%

Source: UN trade statistics, http//unstats.un.org/unsd/comtrade. SITC 579: Waste, Parings and Scrap of Plastics.

Most of the material shipped to Hong Kong and China is described as other waste plastics. This includes PET bottles, one of the waste streams known to be imported to Hong Kong from Canada. The composition of exports to Hong Kong is shown in Figure 8.10.

Figure 8.10

Composition of Canadas waste plastic exports to Hong Kong, 2004

PE 11%

PS 2% PVC 2%

Other 85% PE PS PVC Other

Source: UN trade statistics, http//unstats.un.org/unsd/comtrade

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8.2 USA

Policy & regulatory situation and outlook

In the US the key federal policies governing recycling come from Executive Orders issued by the President. An example is Executive Order 13101 - Greening the Government Through Waste Prevention, Recycling and Federal Acquisition.127 These orders go little further than establishing the principle that local agencies must set goals for recycling, and measure and report progress towards such goals. None of the interviewees expected to see more detailed federal regulation in the foreseeable future. However, legislation at state level has the potential to both increase the supply of plastic bottles and the demand for waste plastics. Recycling initiatives have so far been concentrated in California and on the north-eastern seaboard of the US. However, other states are now contemplating legislation on recycled content, including Bottle Bills (laws requiring minimum refundable deposits for bottles) and bans on landfill of plastic bottles. For instance, North Carolina is introducing a complete ban on the landfill of plastic bottles by mid-2009. However it was suggested that the ban could only be expected to have a 10% impact on the recycling rate in its first year, largely due to the publicity that would surround it. California and Wisconsin have both introduced Rigid Plastic Packaging Container (RPPC) laws, which specify that all nonfood rigid plastic packaging, must contain a certain percentage of post consumer plastic. The impact of California enforcing this has been a trebling in the use of recycled PET in non-food containers in 2004128. The extension of similar policies to other states could have substantial effects on the US demand for recycled plastics.

Canada
In Canada there is little in the way of national regulation of waste plastics. Provincial regulations in terms of recycling in the municipal waste stream vary. Most provinces focus on voluntary regulations such as beverage container deposit systems. There are comprehensive kerbside collection schemes for recyclables in major cities and municipal bottle collection schemes are known to be feeding export markets. Meanwhile, Canadian industries are integrated into the complex North American market for industrial scrap plastics.

Mexico
In Mexico the attention of the regulators has been focused on PET bottle collection from waste disposal sites. Widely fluctuating prices for PET have made it undesirable to collect, but a new law introduced in 2004 provides a minimum price for every PET bottle collected. The hope is that this minimum price, along with the establishment of a processing organisation (ECOCE) will encourage enough collection to ensure a stable supply of PET plastics. It is then hoped that this stability will help to create a stable PET recycling industry in Mexico.129 It is assumed, though it has not been corroborated, that waste plastic from industrial sources is also being collected and recycled.

8.3

Market Profile

There is little information or literature available about the US plastics recycling market in the public domain. The last official study appears to be a 1997 report by the Environmental Protection Agency. There is more information on the recovery of PET bottles from the municipal waste stream (where intervention by municipal governments is involved and there is a dedicated association), than on the much larger commercial markets for scrap plastic. It is estimated that 80% of plastics in the waste stream come from industrial and commercial entities.130 The market is growing. However, since industrial waste plastics are not generally subject to government targets or reporting
127

http://www.ofee.gov/eo/13101.htm
128

NAPCOR 2004 report page 8


http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2004/02/17/BUGRI51VNU1.DTL&type=printable Denton Plastics, quoted in the Portland Business Journal.

129

130

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 112

requirements, very little collated information or data is available about the market. Additionally the heterogeneous nature of post-industrial waste plastics supply makes the market far more ad hoc than the markets for post-consumer waste plastics. There are a very large number of suppliers offering highly differentiated waste plastics and an equally large number of organisations looking to purchase them - recyclers, brokers and exporters. The agricultural sector is a major source of waste plastics and has features that are common to the market as a whole. Large quantities of different types of waste plastics are generated - bailing twine, HDPE pots, styrene trays, pesticide bags and the film covers from greenhouses. Due to the dispersed nature of this supply, a specialist broker typically collects the material. For instance Agri-Plas, based in Oregon, specialises in collecting, cleaning and sorting agricultural waste plastics. In 2004 it processed 8kt of waste plastics from the agricultural industry in Oregon alone. The firm sells this on to a combination of brokers, recyclers and end users that either process the material themselves or sell it on to brokers and recyclers, either locally or around the world. The presence of closed-loop recyclers complicates the picture further. These are manufacturers that produce waste plastic, but recycle it themselves and return it to a state where it can again be used as a raw material. Across North America there are many organisations that work with manufacturers to achieve closed-loop recycling. Interviews with such companies have shown this to be a particularly strong market. Rises in the price of virgin resins have had the effect of forcing many companies to look to their scrap plastic arisings. Consultees admitted however that this type of recycling is only suitable for large organisations, and certain types of plastics. For instance, large factories processing vinyl are ideally placed to use their scraps since this polymer can easily be recycled. Contacts in the post-industrial plastics market agreed that there was demand for all types of waste plastics and recycled resins from Asia, in particular China, Hong Kong, and India. Though no official figures exist it was estimated that between a quarter and a third of all material collected is exported. Published data and consultations confirm a clear trend of rising prices in both the US and Canada over recent years. The price rise was generally attributed to an increase in the prices of oil affecting virgin resin prices, and the prices of virgin resins in turn affecting the prices of waste plastic.

PET
The quantity of post-consumer PET bottles collected in the US increased from 352kt in 1995 to 455kt in 2004131. The quantity of recovered bottles reprocessed within the US, however, has barely changed over a decade. Over the same period exports have increased 118% (see Table 8.1). The National Association for PET Container Resource (NAPCOR), the trade body, estimates US and Canadian PET processing capacity at 425kt by the end of 2004. However these facilities operated well below capacity in 2004. At the same time, market prices are at their highest levels since 1996 (Figure 8.11). Although the volume collected has risen, the overall recycling rates for these bottles have fallen because over the same period the quantity of bottles placed on the market has increased from 885kt in 1995 to 2,100kt in 2004. The US and Mexico have the worlds highest per capita consumption of carbonated soft drinks, and increasingly buy drinks packaged in small individual servings132.

131

NAPCOR. 2004 report. Quoted from Reuters at htpp://www.planetark.com/dailynewsstory.cfm/newsid/31660/story.htm

132

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Table 8.1

Post-Consumer PET Bottle Recycling in the US, 1995 2004

Post Consumer Bottles Gross Weight Purchases (kt) 1995 1996 1997 1998 2000 2001 2002 2003 2004

Purchased by US Reclaimers and Others Purchased by exporters Total US Material Recycled Post Consumer Bottle Imports Total Post Consumer Bottles used by US Reclaimers

274 77 352 21

249 67 316 39

263 50 313 30

298 40 338 46

272 77 349 31

272 106 378 32

237 125 362 26

236 146 381 28

286 169 455 48

295

288

293

343

303

304

263

264

334

Source: NAPCOR, annual report 2004

Figure 8.11
500 450 400 350 300 250 200 150 100 50 0

PET bottles, clear post-consumer flake, clean regrind or flake

/ Kg

Source: PlasticNews

The US market for recycled PET has become increasingly strong. It grew 61kt in 2004 to reach 398kt. This was 64kt more than the total weight of post consumer bottles handled by US reprocessors in 2004133. It is estimated that Mexico recycled only 30kt of the 460kt of PET it consumes annually134. Historically, widely fluctuating prices for PET have made it undesirable to collect, but new regulations are set to change this.
133

-8 M 9 ay -9 M 0 ay -9 M 1 ay -9 M 2 ay M 93 ay -9 M 4 ay -9 M 5 ay -9 M 6 ay -9 M 7 ay -9 M 8 ay -9 M 9 ay -0 M 0 ay -0 M 1 ay M 02 ay -0 M 3 ay -0 M 4 ay -0 5

M ay

/tonne

NAPCOR 2004 report, page 6.

134

Mexican Officials, as quoted in the San Fransisco Chronical 17th February 2004 http://www.sfgate.com/cgibin/article.cgi?f=/c/a/2004/02/17/BUGRI51VNU1.DTL

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Figure 8.12

Reprocessing of post-consumer PET bottles in the USA, 1995-2004

500 450 400 350 300 250 200 150 100 50 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
kt

purchased by us firms

purchased by exporters

Source: NAPCOR, 2004.

PE
The American Plastics Council reported North American HDPE bottle collection rates at 25.9%. Utilisation of the HDPE capacity in 30 companies equipped to process it in the US and Canada was 70% in 2004. Eighty percent of this was processed by the eight largest companies. Of this, only 16% of the total HDPE recovered was exported for recycling in other countries. Firms in this industry appear to face far less competition from China than PET processors. According to one HDPE processor, the Chinese market is absorbing 33% of US PET and only 10% of US HDPE. HDPE and LDPE prices have nonetheless climbed to historic highs on the back of high prime plastic prices (Figures 8.13, 8.14)

Figure 8.13

Prices of HDPE, Mixed Colours Post-Consumer Flake, clean regrind or flake.

400 350 300 250 /t 200 150 100 50 0


Ju n8 Ju 9 n9 Ju 0 n9 Ju 1 n9 Ju 2 n9 Ju 3 n9 Ju 4 n9 Ju 5 n9 Ju 6 n9 Ju 7 n9 Ju 8 n9 Ju 9 n0 Ju 0 n0 Ju 1 n0 Ju 2 n0 Ju 3 n0 Ju 4 n05
Source: PlasticNews UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 115

Figure 8.14
250 200 150 /t 100 50 0

LDPE Film coloured post-consumer flake, clean regrind or flake.

Source: PlasticNews

Table 8.2

-9 2 Au g93 Au g94 Au g95 Au g96 Au g97 Au g98 Au g99 Au g00 Au g01 Au g02 Au g03 Au g04 Au g05

Au g

US market prices of various recovered industrial plastics, Jan 2006 (/t)

ABS ABS PC PC HDPE HDPE LLDPE PET bottles PP PVC

Mixed Colours Industrial Flake, Clean regrind or flake Mixed Colours Industrial Pellets Clear Industrial Flake Mixed Colours Industrial Flake Natural, Post-consumer flake Natural, Post-consumer pellets Stretch film pellets Clear Post-Consumer flake Industrial pellets Clear Industrial Flake

Low 240 360 650 300 490 550 390 470 410 350

High 270 410 750 350 540 600 450 560 510 450

Average 255 385 700 325 515 575 420 515 460 400

Source: PlasticNews

8.4

Outlook

Consultations highlighted the impact of competition for waste plastics from Asia. There is strong demand for all forms of waste plastics, particularly from China. Every single recycler contacted for this study identified this as a key issue in the industry and it is evident that many US firms feel unable to compete. There are reports of an exodus135 of North American plastics processing companies to China. The CEO of one such company, which has recently set up a plant in China, explained that in addition to cheap labour not only is much of their market for recycled plastics now in China, but there is also a supply of post-consumer plastics from Asia (Japan, Taiwan, Korea, and now China). Most recyclers feel that China will soon dramatically increase its capacity to produce virgin resin, but respondents were split on the impact that this would have on the export market. Some respondents felt that this extra supply would curtail Chinas demand for waste plastics. For instance, the recent approval of an 800kt/a expansion in the ethylene capacity of Guangzhou Petrochemical alone (eight times the current weight of ethylene pairings exported to China) is likely to have
135

Ben Benvenuti, CEO of Commercial Plastics Recycling Inc., quoted in Plastics News, 22nd Nov

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an impact on demand. However, most saw the Chinese market growing at such a rate that the demand for plastic resins, both virgin and reclaimed, would continue to grow faster than the supply. One recycler went so far as to voice the opinion that trade would continue to tighten as prime resins face shortages of their own feed stocks to manufacture resin. This creates higher prices and thus more demand on recycled plastics. Consultations suggest that it is generally accepted by the industry that incremental changes in regulation will continue to increase the supply of waste plastics. Some measures (such as the Oregon example in section 8.3 above) will also increase demand. In discussion, the impact of domestic regulation on the recycling of plastic was seen as coming a distant second to changes in the attitudes of key corporations. It was generally felt that there was now a new corporate conscience in place, and that corporations were moving towards more environmentally sound modes of production. As one recycler put it: There seems to be a renewed corporate commitment to product stewardship and environmental responsibility, which includes recycled packaging. For example, the large drinks manufacturers are using more waste plastics in the fabrication of their bottles. In fact, the demand from the large drinks manufacturers is reportedly so strong that research suggests it is almost impossible to obtain post-consumer waste bottles, unless the organisation concerned is tied to one of these key companies. In Mexico Coca-Cola have recently opened the first bottle-to-bottle recycling plant in Latin America. It has the capacity to process 23kt of waste PET per year and the potential to double the amount of PET currently being recycled in Mexico136. Such a plant will inevitably have a significant impact, both on the market for waste PET within Mexico, and on the supply of plastics to the US from Mexico. Some consultees saw international regulations as a potential risk that changes in custom and environmental regulations in China could curtail the export demand for waste plastics. This was usually in the context of making a case for government support to the local plastics recycling industry. The development of the plastic and plastic-composite lumber market was seen as important for future use of plastic recyclate. The key feature of this industry (currently a 1 million tonne market in North America137) is that it can consume a wide range of post-commercial and post-industrial waste plastic types. The historically strong demand for lumber decking (a US$4 billion market in the USA alone138) and the development of new ways in which plastic lumber can replace traditional pressure treated lumber, such as railway sleepers (train track ties), is making the production of plastic lumber an increasingly important market for waste plastics. Market dynamics in the packaging sector are also relevant, particularly trends in packaging and virgin plastic use which make recycling more difficult. Use of PET is no longer restricted to (mainly) clear and un-pigmented one and two litre drinks bottles. PET is now used to package a wide variety of products, demanding different sizes, pigments, label materials, barrier coatings, layers, fillers and blends. All of these changes make the plastics more complex and less costeffective to recycle.

8.5

Summary

There is extensive trading of waste plastics within the NAFTA region (the USA, Canada and Mexico), and also a net outflow of this material to East Asia. Whilst information is available about the recovery and recycling of PET bottles from the municipal stream, data on trends within the wider waste plastics market are not readily available. Consultees reported strong demand from buyers for the Chinese market. There is also strong demand from within the NAFTA region itself, typically for high quality, sorted scrap plastic. Export markets are reportedly more forgiving on quality.

136

http://www.cokefacts.org/news/news_aw_articles_recycling.pdf http://www.plasticsnews.com/subscriber/fyi.html?id=1110567485 http://www.plasticsresource.com/s_plasticsresource/sec.asp?TRACKID=&CID=128&DID=230

137

138

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The US has not ratified the Basel Convention and there is no equivalent to the Trans-Frontier Shipment regulations. The quality of shipments is thus influenced by end-market requirements (such as AQSIQ accreditations and CCIC inspections for China). Research has not identified any federal policy initiatives on the horizon that would significantly transform either the supply of waste plastic into the market, or the controls on trade in this material. The US, Canada and Mexico do not have federal laws on packaging recycling equivalent to the EUs Packaging Directive or Japans Container and Packaging Recycling Law. Beyond the market-driven recycling of scrap by industry, which is significant, the impetus for plastic recycling from the municipal waste stream appears to come from state and municipal initiatives. State laws are also mandating the use of recycled plastic, which is increasing demand for products such as recycled PET. Indeed, the significance of the role of large corporations (particularly soft drink manufacturers) in driving the market for recycled materials was a common theme in this segment of the market.

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9.0 9.1

Japan Trade Profile

Exports
In 2004, Japan exported 10.9kt of waste materials, 8% of which was waste plastic139. There is also an export trade in used equipment, such as domestic appliances, which will contain recyclable plastics.
Figure 9.1 Japans exports of waste materials, 2004, (kt).

Waste plastic, 850 Waste paper / paperboard, 2840

Aluminium scrap, 81 Copper scrap, 329

Scrap iron, 6810

Source: UN Trade Statistics, http://un.org/unsd/comtrade

Waste plastic exports have increased significantly since 1999, moving from 191kt per year to 849kt (Figure 9.2). 90% of Japans exports of waste plastic went to either Hong Kong or China in 2004 (see Figure 9.3). Hong Kongs share of Japans waste plastic export trade increased in 2004. This followed the introduction by the Chinese authorities of a ban on direct imports of waste plastic from Japan in May of that year because of an incident involving a falsely labelled consignment of waste plastics that was found to contain large volumes of unrecoverable wastes140.

139

Ministry of Finance trade statistics, quoted in Terazono, 2005. The ban was lifted in September 2005, see www.ccc-us.com/aqsiq.htm

140

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Figure 9.2
900.0 800.0 700.0 600.0 kt 500.0 400.0 300.0 200.0 100.0 0.0

Japans exports of waste plastic by destination, 1999-2004 (kt)

1999

2000

2001 HK China

2002 Other

2003

2004

Source: UN Trade Statistics, http://un.org/unsd/comtrade

Figure 9.3

Japans exports of waste plastic by destination, 2004


Malaysia 1% Others Rep. of Korea 1% 9%

China 19%

Hong Kong 70%

Source: UN Trade Statistics, http://un.org/unsd/comtrade

There is a reasonable level of consistency between the Japanese and Hong Kong data in terms of the material composition of waste plastic trade between them (Figure 9.4). 20%-25% appears to be polyethylene, around 20% polystyrene, PVC accounts for 1%-5%, polypropylene around 12% and the remainder (40%-45%) is classified as other (this would include PET).

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Figure 9.4

Comparison of Japanese & Hong Kong Trade Statistics Description of Composition of their Plastic Waste Trade

Japans exports to Hong Kong


PE 25%

Hong Kongs imports from Japan


PE 20% Other 45%

Other 52% PVC 1% PS 22%

PS 18% PP 12% PVC 5%

Source: Source: UN Trade Statistics, http://un.org/unsd/comtrade

Source: Hong Kong Census & Statistics Department

Imports
Japanese imports of waste plastic are minimal less than 4kt per year for the last few years. The largest source of imports (recognising that quantities are very small) is Korea.

9.2

Policy & regulatory situation and outlook

Landfill costs in Japan are extremely high, in large part due to the geology which makes construction of landfill sites difficult. This has created the incentive for a high percentage of waste to be diverted from landfill, and is reflected in the high tonnage of recycled waste. Japan has a comprehensive set of laws governing recycling and waste management. The rules on what should happen to different materials in different circumstances are not entirely straightforward. This section attempts a summary based on Japanese (English language) articles from recent publications. The Fundamental Law for Establishing a Sound Material-Cycle Society of Japan defines wastes, etc. according to the structure shown in Figure 9.5. Materials are classified as valuable or valueless. Legislation is used to transform the status of wastes from class to class within this hierarchy. As an example, the Packaging Recycling Law requires waste PET bottles to be converted into PET flakes or pellets, thereby changing their status from valueless to valuables. In cases of trans-boundary movement of wastes for recycling the criteria for valuable and valueless resources differ considerably, depending on whether the buyer is domestic or foreign141. The Law defines recyclable resources as those wastes that are useful i.e. those that can be used cyclically, or with the potential to be used cyclically.

Resources & Recycling


There is a series of specific laws governing recycling of particular products, analogous in some ways to the various EU Directives on packaging, WEEE, ELVs, etc. These include: Law for the Promotion of Sorted Collection and Recycling of Containers and Packaging (the Container and Packaging Recycling Law) Law for Recycling of Specified Kinds of Home Appliances (the Home Appliances Recycling Law) Law for the Promotion of the Effective Utilisation of Resources Law for the Recycling of End-of-Life Vehicles
141

Terazono, 2005

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Table 9.1 provides a summary of the origins and requirements of these laws, drawn from Terazono (2005).

Figure 9.5
Valuables

Definitions of waste
Articles that will be Cyclically used (recycled)

Nonvaluables (Waste, under the Waste Management Law Articles that will be disposed of

Byproducts

Discarded articles (including end-ofLife products)

Source: Research Group on Sound Material Cycle Society Legislation, 2000, quoted in Terazono (2005).

Container and Packaging Recycling Law


This law was introduced in 1995 to promote recycling of container and packaging waste with the intention of reducing the volume of municipal waste subject to final disposal and uses a form of producer responsibility model. The context for the law was pressure on landfill capacity and the fact that containers and packaging accounted for approximately 60% of all municipal solid waste by volume. In the law recycling is defined as the transformation of used containers and packaging into products and raw materials that are traded for value142. The law does not specify whether these transactions should occur in Japan or overseas. It was drafted before the emergence of the China export trade, and worked on the assumption that recycling would be undertaken domestically. Permissible methods of recycling are defined. By example, PET bottles should be recycled into flakes, pellets or polyester raw materials. The law does not say whether this should happen in Japan or overseas. There is no legal specification on the qualifications or limitations defining the businesses that use the products generated by recycling and thus the handling of waste after recycling. However, as a means of establishing requirements for recycled material users, the Containers and Packaging Recycling Association143 (effectively a compliance scheme that was established after the introduction of the packaging law) defined a system that precluded easy export144. The requirements differ for each resource (see final column of Table 9.1). Thus, according to the Association, contracted users of recycled PET flakes are limited to manufacturers that process flake inside Japan. Export of recycled PET pellets is, however, allowed. Export of flakes is not allowed because the impurities in the flake could then lead to it being considered as exports of waste. This regulation is not legally binding but contracted recyclers are required to give prior notification upon registration, and contracts are cancelled in the event of a violation.

142

Yoshida, 2005 See http://www.jcpra.or.jp/eng/ Ibid

143

144

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Waste export
When the Basel Convention came into force Japan amended its Waste Management and Public Cleansing Law so as to incorporate a domestic disposal principle. Under the law export and import of waste is controlled. Those exporting general or industrial waste (excluding economically valuable material) are required to obtain a certificate from the Ministry of Environment stating that The wastes to be exported are deemed difficult to treat properly in Japan by available treatment techniques. The waste to be exported will be recycled in the country to which they are exported. In August 2002 the Ministry issued technical standards relating to the confirmation of exports of general and industrial waste which provided some relaxation of the domestic disposal principle. The revised standards allow ministerial confirmation for export of wastes where it is certain that such will be utilised in the destination country, even where appropriate disposal within Japan is not difficult. These provisions do not apply in the same way to non-hazardous economically valuable material, such as waste plastic, which is exported in large volumes.

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Table 9.1

Summary of Japanese laws related to resources and recycling


Background Articles covered Four types: glass bottle, PET bottles, plastic containers and packaging, and paper containers and packaging Definition of Recycling To utilize raw materials or assigning them, with or without charge, to those who will utilize them. Or to use as products or assigning them, with or without charge, to those who will use them Recycling Methods Criteria or Targets for Recycling Export Regulations None (The Containers and Packaging Recycling Associations only permits exports of PET pellets. Export of plastic containers and packaging are prohibited. The Association recognises that no other recycled material are substantially exported)

Pressure on landfill The Law for the capacity; large ratio Promotion of Sorted Collection and Recycling of container and packaging of Containers and waste to municipal solid Packaging waste (Container and Packaging Recycling Law, est. 1995: enacted 1999)

(Concrete procedures for recycling) Glass None bottles: cullet processing PET bottles: recycling into flakes, pellets, or polyester raw materials. Plastic containers and packaging: recycling into products, pellets, flakes, EPS granules, ingots, fluff, etc. oil, gasification, coke-oven chemical raw materials, use as blast furnace reducing agents. Paper containers and packaging: recycling as solid fuel, paperboard and other products, paper raw materials.

The Law for Recycling Specific Kinds of Home Appliances (Home Appliances Recycling Law,est. 1998; enacted 2001

Pressure on landfill capacity; difficulty of disposal at municipal services; existing valuable resources contained (in home appliances

TV sets, refrigerators, washing machines, air-conditioners

To utilize parts or raw materials, or assigning them, with or without charge, to those who will utilize them. (Excl. heat recovery. Termed recycling, etc. (recycling in the broad sense), where included.)

Not stipulated

Sets the following recycling rate targets: Air-conditioners: 60%+ TV sets:55%+ Refrigerators: 50%+ Washing machines: 50%+

None (Home appliance recycling facility operating companies seem to have established export policies)

Pressure on landfill Law for the Promotion of capacity; potential for Effective Utilization of resource depletion Resources (est. 2000; enacted for office computers in 2001; enacted for home computers in 2003) Law for the Recycling of End-of-Life Vehicles (est. 2002, enacted 2005) Pressure on landfill capacity (controlled landfill site); need for proper disposal; to prevent illegal dumping

As specified resourcerecycled products: personal computers (home and office), compact rechargeable batteries

To utilize as recycled parts and/or Not stipulate materials

Sets the following recycling rate targets: personal computers: Desktop PCs: 50% Notebook PCs: 20% CRT displays: 55% LCDs: 55%

None

All vehicles except two-wheeled and special motor vehicles (as specified products for recycling: shredder residues illegal dumping

To use as parts or raw materials for new products, or to utilize as heat (recycling that includes destruction of CFCs is termed "recycling. (recycling in the broad sense))

Sets the following CFCs: destruction recycling target rates for Airbags: recovery / actuation, etc. Shredder residues: material recycling or heat shredder dust and airbags: Shredder dust: 30%+ recovery (from FY05), 50% +(from In addition to the above, pressed and sheared ELV can be cast into electric furnace or steel FY10), 70%+ (from FY15) converters (whole recycling) or exported as Airbags: 85% scrap metal

With the exclusion of the following sets no controls on exports Recycling charge is refundable to the owners in the case of exports of second-hand vehicles, that is exempted from the Law (Article 78) Exports as scrap metal are considered to represent entire use (Article 16, Enforcement Regulation 10)

Source: Kojima et al, 2005


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9.3

Market Profile

The trading relationship between Japan and China in East Asias secondary material markets has been researched in several recent studies published by Japanese researchers. A report for the Japan External Trade Organisation provides the best available overview on the dynamics in these markets145. Waste PET bottles are collected and baled/compacted by municipalities. The Containers and Packaging Recycling Law obliges recycling companies to process them into PET flakes or pellets for further use. If the Regulations laid down by the JCPRA are followed, post-consumer bottle waste should be processed before leaving Japan. However, reports146 in the Japanese literature suggest that in some cases waste PET bottles are not converted to flake or pellet before export. To avoid the costs of processing in Japan (including domestic transportation costs) some recyclers buy up PET bottles for export, and some municipalities export directly. JCRPA data on packaging recycling are provided in Tables 9.2 to 9.5. As is typical for the markets around the world, there are not the same detailed data on recycling of industrial waste, including scrap plastics.

Table 9.2

Volume of requested recycling by JCPRA under the Container & Packaging Recycling Law (kt/a)
2000 96.6 151.5 2001 196.3 256.4 2002 230.7 311.8 2003 236.2 441.6 2004 253.4 546.6 2005 252.1 594.7

PET bottles Plastics

Source: Japan Containers and Packaging Recycling Association

Table 9.3

Volume of take-back from municipalities by JCPRA under the Container and Packaging Recycling Law (kt/a)
2000 96.7 67.1 2001 131 168.7 2002 153.9 259.7 2003 173.9 368 2004 191.7 446.9 2005 117.3 576.5

PET bottles Plastics

Source: Japan Containers and Packaging Recycling Association

Table 9.4

Number of recyclers
2000 42 41 2001 51 65 2002 56 86 2003 58 79 2004 59 74 2005 48 84

PET bottles Plastics

Source: Japan Containers and Packaging Recycling Association

145

Kojima et al. 2005. International Trade of Recyclable Resources in Asia. ID Spot Survey No. 29. Japan External Trade Organisation. Available online at http://www.ide.go.jp/Japanese/Publish/Spot/29.html Ibid

146

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Table 9.5

Use of Recycled Packaging Products through JCPRA (kt/a)


2000 2001 2002 2003 2004

PET bottles Textiles Plastic sheet Bottles Molded products Others Plastics Plastics Molding materials Synthetic oil Reducing agent in blast furnaces Chemical raw materials for the coke oven Synthetic gas Tray Molding materials Synthetic oil

68.6 38.3 23.4 0.326 3.8 2.7 43.9 43.3 4.9 3.3 24.7 9.8 0.638 0.533 0.520 0.013

94.9 48.7 37.5 0.381 5.3 3 118.5 117.6 9.2 7.9 42.3 50.6 7.5 0.872 0.777 0.095

112.5 58.9 45.6 0.606 5.3 2 180.2 179.2 23.2 6.8 46.6 91.2 11.2 0.924 0.921 0.003

124.3 57.4 50 11.3 3.9 1.6 256.2 255.1 41.6 5.8 58.8 120.8 28.1 1 1 0

147.7 63.6 54.6 23.4 4.2 2 309.5 308.5 56 6.4 55.9 138 52.2 1 1 0

Source: Japan Containers and Packaging Recycling Association

9.4

Outlook

The outlook for waste plastic exports from Japan appears similar to that for the EU, albeit with some different requirements for domestic processing. Recycling and resource recovery laws are helping to drive collection rates from the municipal waste stream, and the industrial sector is well equipped to maximise the value of production scrap. Japans waste plastic export trade survived a ban in May 2004 on direct trade (see page 119) with China (its largest export market) by routing material through Hong Kong. Now that import restrictions have been relaxed a resumption of direct trade can be expected. Japans own waste laws set requirements on the pre-processing of post-consumer waste. Japan has a good reputation for quality and this, plus its geographical proximity to the China market, seems likely to support its strong position in the secondary plastic market. The concerns raised by EU and US recyclers regarding difficulty in competing for supplies are mirrored in Japan. The Japan Times recently reported that one-third of Japanese firms using recycled plastic are reported to be in danger of failing in 2006, due to the shortage of bottles147. An industry group of 41 recycling companies (out of the 59 licensed recyclers) projects their average factory utilisation rate will fall to 36 percent in fiscal 2006 from 55 percent in fiscal 2005, with the likelihood that this will trigger a contraction of the domestic Japanese plastic recycling industry.

9.5

Summary

Japan is the largest single source country for waste plastics exports to the China market. It exported 850kt of waste plastic in 2004, about 250% more than the UK, but significantly less than the total 2004 waste plastic exports of the EU as a whole.

147

http://www.resourcesnotwaste.org quoting The Japan Times

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After the introduction of a ban on direct import in May 2004 the proportion of this material that was routed through Hong Kong increased. The ban was lifted in September 2005, and a recovery of direct trade is now expected. Japan has a set of resource and recycling laws that have set recovery targets and specify the treatment that is required before material can be exported. As an example, post-consumer waste is supposed to be sorted and washed before it is permitted to be exported. Although some of the Japanese literature suggests that there may be some circumvention of these requirements, Japan has a strong reputation in China and Hong Kong for reliable supply of high quality plastic, both industrial scrap and post-consumer plastic waste. Many of the firms in Hong Kong focus exclusively on Japan-sourced material.

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10.0 China 10.1 Introduction

Chinas consumption of plastics has increased rapidly over the last ten years. The demand for input material into the Chinese plastics processing industry has been met by a mix of domestic plastic production imports of synthetic resin waste plastic collection in China import of waste plastic from overseas. Imports of waste plastic are therefore only one part of the wider picture. The following sections explain the status and development of the Chinese plastics market, covering both prime resin and recovered plastics. They are based on a consultation exercise carried out in Guangdong and Hong Kong in early 2006 a review of the international literature and trade press interrogation of Chinese official publications relevant to the sector additional unpublished data obtained in Beijing. They cover: the source of demand for waste plastic the sources of material supply to meet that demand the main market dynamics, broken down by plastic type as far as possible expected future development of the market.

A generalised representation of material flows in the waste plastic market is shown in Figure 10.1. It provides a framework for the analysis that follows.

Figure 10.1

Material flows for new and waste plastics


Applications Input materials Exemplar influencing factors,

Demand, tech change Demand, tech change Demand, tech change

Film (packaging etc)

China resin manufacture New resin Imported resins

Investment, oil prices Import duties Prices Waste policy Transport costs Waste trade Policy, supply

Fibre (to textiles, toys, etc.)

Casting for electronic & electrical appliances Wood fibre plastic composite product e.g. pallets & playground accessories

Waste plastics

China waste plastics Imported waste plastic

Demand, tech change

Source: GHK

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10.2

Demand

10.2.1 Introduction
Chinas consumption of plastic, whether prime or secondary, is driven by the requirements of the principal various manufacturing sectors involved. These include textiles, electronics, packaging and toys. Over the last five years output across all these sectors has increased dramatically. The industry expects continued strong growth across a range of plastics markets including agricultural plastics, packaging material and construction applications. The application to which prime plastics are put is changing as the market develops. By example:

Polyethylene (PE): According to official data most of the LDPE used in China is made into films (76.4%), or
injection moulding products (9.5%). Applications of HDPE include blow moulding (19.3%), films (18.5%), monofibre (18.8%), and injection moulding (17.0%). The proportion of PE that goes into films for agricultural use is expected to decline in the future, while new film applications such as food wrap are expected to increase. Consumption of HDPE is increasing. The main HDPE applications are blow moulding, film product and injection moulding. In 2004, these accounted for 19%, 18% and 19% of HDPE consumption respectively.

Polypropylene (PP): In 2004, 7,650kt of PP were consumed in China. 3,430kt/a of PP (44.7% of total
consumption) were used as raw material for textile manufacture. 1,150kt/a were used to produce BOPP film. Injection moulding consumed about 1,320kt/a of PP in 2004. The documents reviewed suggest that the structure of demand is not expected to change significantly, but that there may be some change in the percentage of PP used in film and injection moulding.

Acrylonitrile-Butadiene-Styrene (ABS): China is the worlds largest consumer and importer of ABS. Official data
estimate that in 2004 consumption was 2,940kt (52% of the world total), of which 1,963kt were imported. The electronics and electrical sector in Shenzhen and Guangdong is a large user. In 2004, more than 900kt/a of ABS were used for producing electrical appliances for domestic use, which accounted for 31% of total ABS consumption. 512kt/a of ABS were used for producing electrical appliances for commercial use, some 17% of total consumption.

Polyethylene terephthalate (PET): The total consumption of PET in 2004 was 12,540kt of which 10,450kt
(88.1%) was used for production of fibre. 1,100kt/a (9.3%) were used to produce bottles. 200kt/a of PET (1.7% of consumption) went to film applications while 120kt/a (1%) were used as plastics for engineering purposes. Official data on plastics production provide only a guide to activity. Smaller companies are not covered and coverage of the state-owned sector may be better than that of private enterprises. These data show that in 2003 there were 8,237 companies producing plastic products in China. Output of plastic products is estimated at 18,500kt in 2004 (Table 10.1). The plastics sector is concentrated in Guangdong and Zhejiang (Figure 10.2).

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Figure 10.2

Location of plastic products production, 2004

Zhejiang 20%

Guangdong 25%

Jiangsu 11% Shandong 7% Other 33%

Fujian 4%

Source: China Chemical Industry Information Centre

Table 10.1

Production of plastic products, 2004

Category
Films

Quantity (kt)
3,658.9 728.7 1,688.1 1970 2,023.9 659.9 345.5 859.5 845.5 2,247.8 4,157.1 18,456.2

of which agricultural films


Boards Pipes Fibre Artificial leather Synthetic leather Foam Packaging Household products Other Total
Source: CPPIA

10.3

Supply

Demand from the end-users is met by a combination of prime and recovered plastics, both imported and domestic.

10.3.1 Prime resin


Chinas petrochemical sector is receiving around US$30 billion of new investment each year, around half of that being foreign capital148. The sector has seen substantial year-on-year increases in output (Figure 10.3). Production of plastics in China from outside the state-owned sector increased at 20% per annum between 2000 and 2003.

148

KPMG, 2004.

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Figure 10.3
18,000 16,000 14,000 Production, kt 12,000 10,000 8,000 6,000 4,000 2,000 0

Chinas domestic production of plastics, 1997-2004

1997

1998

1999

2000 PE PP

2001 PS PVC

2002

2003

2004

Source: China Chemical Industry Information Centre

However, consumption of prime resins is increasing even more rapidly. Imports therefore continue to account for a large share of plastic consumption. Trends vary for specific polymers, but the double-digit annual increases in demand mean that imports are expected to form a major part of the story for some years to come. Supply options available to consumers of resin have increased. The accession of China to the WTO brought reduction of import duties and abolition of quantitative restrictions on imports. Resin consumers are now better connected to the global market, and global prices, than was the case previously. Further increases in domestic capacity will enhance competition.

Table 10.2

Apparent consumption of five major synthetic resins (prime), 2003 (kt)


Domestic output Import 4690 2734 2292 1564 1790 13070 Export 26 12 45 54 21 158 Apparent consumption 8794 6991 6241 2520 2255 26801 Import share (%) 53.3 39.1 36.7 62.1 79.8 48.8

PE PP PVC PS ABS Total

4130 4269 3994 1010 486 13889

Note: official figures rounded to nearest kt. Source: Liao, 2004

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Figure 10.4
10,000 9,000 8,000 Consumption (kt) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

Production and net import of five major synthetic resins (PE, PS, PVC, ABS, PP), 2004

PE

PP

PVC

PS
Net Imports

ABS

Domestic Production

Source: Liao, 2004

Details of the current production and import situation for the major plastics are provided in the following paragraphs.

Polyethylene/PE
Consumption of prime PE resin in 2004 was approximately 8,800kt. About 45-50% of demand was met by local production, with the rest serviced by imports.

Table 10.3

Polyethylene production, imports, exports and apparent consumption, 1999-2003, kt/a


NameplatePr oduction capacity 2,610.5 2,647 3,104 3,651 3,881 Import % 51 50 57 56 54

PE 1999 2000 2001 2002 2003

Production 2,714 3,000 3,083 3,552 4,129.6

Import 2,599 2,967.1 4,112.5 4,559.4 4,690.1

Export 11.4 9.3 7 10.7 14.5

Consumption 5,301.6 5,957.8 7,188.5 8,100.7 8,805.2

Source: 2005 Petrochemical Market Annual Report by the China Petrochemical Consulting Corporation

Production has grown at an average of 14.3% p.a. over the period 1995 to 2004. Chinas PE production capacity reached 4,000kt in 2004. The structure of capacity and output is shown in Table 10.4.

Table 10.4

Capacity and Output of PE in China, 2004 (kt)


Sets Nameplate capacity Output

High pressure LDPE HDPE Linear LDPE

8 11 12

883 1,333 1,795

995 1,486 1,843

Source: 2005 Petrochemical Market Annual Report by the China Petrochemical Consulting Corporation

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In 2004, China imported 4,800kt of PE. Imports grew at an average annual growth rate of 13.0% from 1999 to 2004. Chinas PE imports are sourced mainly from Korea (19.5% of the total), Singapore, Saudi Arabia, Taiwan, Japan, and India (see Figure 10.5).

Figure 10.5

Source of PE imports to China

Thailand 3.6%

Others 23.2%

Korea 19.5%

U.S. 5.0% Japan 5.1% Taiwan 7.2%

Saudi Arabia 14.2% Singapore 9.9%

India 5.2%

Malaysia 6.9%

Source: 2005 Petrochemical Market Annual Report. China Petrochemical Consulting Corporation.

Polypropylene/PP
China produced 4,750kt, imported 2,900kt and consumed 7,600kt of polypropylene in 2004. More than 70 plants are equipped to produce PP, with a cumulative production capacity of 4,820kt, but 10 firms account for the more than half the industrys output. 1,600kt of capacity has been added since 1999 but demand continues to exceed domestic supply.

Table 10.5

Polypropylene production, imports, exports and apparent consumption (kt/a)

PP 1999 2000 2001 2002 2003

NameplatePr oduction capacity 3,056 3,157.5 3,371 3,960 4,260

Production 2,687.7 3,239.5 3,339.5 3,741.7 4,268.2

Import 1,472.7 1,640.3 2,086.5 2,442.3 2,734.3

Export 8.7 10.2 9.3 12.5 11.9

Consumption 4,151.7 4,869.6 5,416.7 6,171.5 6,990.6

Import % 35 34 39 40 39

Source: 2005 Petrochemical Market Annual Report by the China Petrochemical Consulting Corporation

2004 imports were equivalent to 39% of consumption. Imports grew at an average annual rate of almost 15% between 1999 and 2004. The sources of imported PP are shown in Figure 10.6, the largest single supplier being Korea.

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Figure 10.6

Source of PP imports to China

India 5.31% Japan 7.13%

Others 12.80%

Korea 30.74%

Thailand 8.72% U.S. 9.55% Singapore 10.10% Taiwan 15.64%

Source: 2005 Petrochemical Market Annual Report. China Petrochemical Consulting Corporation.

Polyethylene terephthalate/PET
PET production capacity reached 16,500kt/a in 2004, of which 10,360kt (63%) was produced by the top 20 companies. In 2004, domestic PET production reached 11,800kt, 66% of this from the same top 20 enterprises. The average annual growth rate in production capacity from 1999 to 2004 was 33.1%. On average 2,000kt/a in capacity has been added each year since 1999, with almost 4,000kt/a added in 2004. Consumption in 2004 was estimated at 11,860kt. Output increased by almost 25% per annum between 1999 and 2004 but as a result of over-investment in PET production plants, only 71.5% of production capacity was utilised in 2004, compared to 99.5% in 1999. The high cost of raw materials in 2004 also contributed to the lower utilisation rate. The fact that trading in recycled PET has grown and remained relatively strong in China and has not been displaced by availability of locally produced virgin PET reinforces the view that the demand for recycled plastics has little to do with virgin supply. It is much more closely linked to the price difference between virgin and recycled grades. This point is developed further in this reports conclusions. Trade in PET is much smaller, pro rata, than that in PE. Prime PET imports in 2004 were 172kt (see Table 10.6). Taiwan is by far the largest source of PET. Together the imports from Taiwan, Korea and Japan account for 85% of total PET imports (see Figure 10.7).

Table 10.6
PET

Chinas PET imports, 2003 & 2004 (kt)


2003 2004

100 68 N/A N/A

43 115 14 172

PET for further processing High viscosity PET Total

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Figure 10.7

Source of Chinas PET imports


Indonesia U.S. 1% 7% Others 7%

Taiwan 58% Japan 4%

Korea 23%

Source: 2005 Petrochemical Market Annual Report, China Petrochemical Consulting Corporation. 116kt of PET were exported in 2004, about 40% down on 2003 (a change attributed to EU anti-dumping duties). Exports of high viscosity PET were down 35% on 2003, at 79.8kt. Exports to Western Europe have declined significantly (to 34.5kt) as a result of the EUs anti-dumping taxes. Central and Eastern Europe became the largest importer of Chinas PET taking some 37kt of PET in 2004 (32% of total). The third largest destination was the Middle-East (13% / 15kt). Jiangsu Province was the major PET exporting province accounting for 62% of PET exports.

Acrylonitrile-Butadiene-Styrene/ABS
Nine firms were producing ABS in China in 2004, with collective annual output capacity of 1,170kt per annum. In 2004 they manufactured 992kt of ABS. Domestic production of ABS has increased significantly year-on-year but China remains reliant on imports to meet demand. 1,963kt were imported in 2004, up almost 10% on 2003. Net imports have grown at an average rate of over 9.6%p.a. over the period 1997-2003. Taiwan and Korea were the major sources (Figure 10.8).

Figure 10.8

Source of ABS imports to China


U.S. 0.9%

Thailand 4.5% Japan 7.6%

Malaysia 6.8%

Others 2.7% Korea 33.2%

Taiwan 44.3%

Source: 2005 Petrochemical Market Annual Report. China Petrochemical Consulting Corporation.

10.3.2 Recovered Plastics - overview


Consumption of prime resin (whether imported or produced in China) is complemented by use of recovered plastic. Recovered plastic comes from both domestic sources (municipal and industrial) and from imports. A plastic reprocessing
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industry has emerged to supply the demand for this material. It has attracted foreign investment as well as domestic companies, including firms from Japan and the USA. Official data provide a guide to the size of the sector, but not the complete picture because only firms with sales in excess of RMB 5 million (around 370,000) are included. In Shenzhen, for example, around thirty firms are involved in plastic recycling, excluding trading companies149. This sector has its origins in the 1960s and 1970s. Formal recovery systems were organised to collect material from (what were then exclusively) state-owned factories for re-use. The formal sector was complemented by an informal system of collectors, often unemployed rural labourers, who would scavenge material from the post-consumer waste stream. In the last twenty years the erosion of the state-owned sector and changes to urban waste collection systems have undermined the ability of both of these systems to play their former roles. The result is that the overall collection rate has fallen150. The recovered plastic import trade originally emerged in response to the lack of domestic virgin plastic production and limited collection capacity of the domestic recovery systems. Today reprocessors dealing in recovered plastic imports source material via their own (or independent) trading operations in China and Hong Kong. Some also source direct - plastics factories can be found advertising for material on the internet. Consultations in China and the UK suggest that in the export market there is a gradual trend towards more direct sourcing as reprocessors become more familiar with the markets and more confident in dealing with suppliers overseas. They sell their products to plastic consuming companies in the local economy. There are very many of these, serving a very wide range of markets from high-end export manufacturers to factories producing low grade products for the less discriminating end of the domestic market.

There is specialisation in the market, with firms concentrating on particular sub-sectors. Much of the waste plastic imported is industrial production scrap (it is assumed that domestic production scrap is also widely used, though data on this are scarce). The best recovered material is equivalent to prime plastic in performance and trades at a discount of just 10% to the prime polymer. Discounts on poorer quality material are much higher. While some waste markets are in decline, a commonly cited example being the styrenes used in audio and video cassettes, others are in strong demand (e.g. polycarbonate). As online waste exchanges illustrate (Box 10.1), CDs and DVDs are being imported via Hong Kong for the recovery of the polycarbonate (for which prices are reportedly in the order of 600/t in Hong Kong). There is also a market for mixed waste plastic with a high percentage of recyclable material. This trades at around USD100/t (58/t) and is used in applications such as plastic wood.

Box 10.1

Online wanted advert for scrap CDs

We are the end user of PC CD Scrap or Regrind in Hong Kong. We are looking for: 1. PC CD Runner (Sprue) [uncrush] 2. PC CD Clear Disk [uncrush] 3. PC CD/DVD with metalized (Regrind or Whole disc form) 4. PC CD Lump We need these above materials for long term basis (at least buy them for 3 years). So we hope to find a reliable supplier for our long term business. Please feel free to contact me if you have the above materials. We can accept as many quantity as you offer. Looking forward to receiving your offers. HINKI Source: online waste exchange, 2005. It was apparent from consultations in Shenzhen and Guangdong that sourcing imported material is a major issue and factories are very interested in getting information on new suppliers. While some of the heat had come out of the
149

pers comm., Shenzhen Plastics & Rubber Association. See the various papers by van Beukering et al referenced in the bibliography for a more detailed history and analysis.

150

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market after the high prices (and speculation) of 2004, there remains a strong underlying demand and many firms are looking for new, reliable sources of good quality material. Quality of material was a common theme in consultations. The market rewards quality with a price premium; a severalfold difference in price for the same plastic is possible depending on its condition. There are more outlets for high quality material, and the risk of rejection by customs on import is lower. Lack of control over quality and unreliability of supply was cited by one consultee as reasons why imported PET was preferred to domestic supplies. Japan has a strong reputation in China and Hong Kong as a source for waste plastics. This reputation appears to be based on consistent high quality of supply, both for production and post-consumer waste (Japans recycling laws and market are described in Chapter 9). Buyers consulted for this study generally saw the UK as having a much weaker reputation for quality, especially on postconsumer waste, although this is not to say that no reliable, quality supplies were available. The UKs lower levels of sorting of post-consumer waste is widely recognised. The presence of a price premium for higher quality material is not inconsistent with there being a demand for lower quality wastes, such as mixed bottles, and UK reports that buyers would take material whatever the quality. It appears that in the face of very strong demand, some firms in the Chinese reprocessing industry found that they could make money by importing lower grade material accepting the import risk (or paying a premium to circumvent the risk) processing it in China accepting the lower yields and/or lower prices of saleable material that would result. In terms of research, little has been published on this trade in recent years until the release of a series of papers by Japanese researchers over the last couple of years. They have looked at Chinas waste plastic sector as part of a broader examination of waste markets in the region151 (Japan is a major supplier of waste materials to China). These studies are available online and provide a useful briefing on the general situation. A report by the Japan External Trade Organisation released in 2005 and available online, provides the best available overview of the regulation and operation of Chinas trade in waste material152.

10.3.3 Recovered plastic imports


China is the driving force behind the huge worldwide growth in the trade of waste plastics. Official statistics show imports of 4,096kt of waste plastics in 2004, approximately three times the volume of imported waste plastics in 1999. This figure is equal to the combined exports of the US, Canada, the EU and Japan. The growth in value terms is even larger; import values have increased more than five-fold between 1999 and 2004. The composition and growth trend of these imports is shown in Figure 10.9. Other waste plastics account for 42% of import by volume and 44% by value. These are thought to comprise mainly PET and polypropylene153. The next largest waste plastics material is polyethylene, accounting for 35% by volume (33% by value), followed by PVC (15% of volume and value) and polystyrene (8% of volume and value).

151

See Terazono, 2004, Terazono et al, 2004 and Yoshida et al, 2005 Kojima et al, 2005. See for instance: Terazon A et al, 2004

152

153

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Figure 10.9
6000 5000
kt

China Imports of Waste Plastic Materials, 1999-2004 (kt)

4000 3000 2000 1000 0 1999 2000 2001 PE PS 2002 PVC 2003 Other 2004 2005

Source: China Customs Statistics (CCS) Information Center

Hong Kong is the largest source of waste plastic imports, accounting for almost 40% of Mainland Chinese imports by volume and value in 2004 (Figure 10.10). Imports are also sourced from a wide variety of other countries and regions, including North America, Europe, Asia, and to a lesser extent Australasia and Central and South American countries.

Figure 10.10

Origin of Chinas waste plastic imports

Others 33%

HK 42%

United States 8% Canada 6% Taiwan 11%

Source: China Customs Statistics (CCS) Information Center There is a substantial variance between Hong Kong records of the waste plastic exports to China, and the imports to China from Hong Kong of the same materials as recorded in Chinese official statistics. The Hong Kong figures consistently show a large number (see Figure 10.11). The difference was some 744kt in 2004 equivalent to more than twice the UKs total exports of waste plastics, or 18% of total declared Chinese imports. Consultations in China and Hong Kong suggest that the Hong Kong data are likely to provide the more reliable estimate of the scale of the trade. Chinese data on waste trades have improved, but are unlikely to provide a full picture of activity. Adjustment on the basis of this Hong Kong-China point-to-point trade alone therefore moves the estimate of Chinas import of waste plastic to 4,700kt rather than the 4,000kt shown in official statistics. Consultations with industry in the region suggest that actual imports in 2004 were likely to be in the range of 4,700kt 5,000kt.

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Reasons for this differential are discussed in more depth below but consultations conducted in the region suggest that the discrepancy can be attributed to circumvention of import duty and Chinese customs controls, an issue not unique to the waste plastic trade.

Figure 10.11

Comparison between Hong Kong waste plastic exports to China and Chinas waste plastic imports from Hong Kong

3000 Trade in waste plastics (kt) 2500 2000 1500 1000 500 0 1999 2000 2001 2002 2003 2004

Hong Kong exports to Mainland China

China imports from Hong Kong

Source: Hong Kong & China trade statistics, 1999-2004.

Chinese data show direct imports from the UK of around 20kt in 2004 (see Figure 10.12). These compare with declared UK exports to China of 63,000t in the same year. Most of the difference is in what is declared to UK customs as polyethylene, though there is uncertainty about the reliability of those figures. It takes the total difference between UK declared exports and the quantities declared at import in Hong Kong and China to about 75kt for 2004 (see Hong Kong chapter for discussion of UK-Hong Kong trade).

Table 10.7

Comparison of UK and China trade statistics on waste plastic, 2004 (kt) UK (declared exports) 53.9 0 1.6 7.5 China (declared imports) 12.7 0.05 1.6 6.4

PE PS PVC Other

Source: China Customs Statistics (CCS) Information Center, and uktradeinfo.com

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Figure 10.12 China imports of waste plastic from the UK by commodity code, 1999-2004

25 20 kt 15 10 5 0 1999 2000 2001 PE PS PVC 2002 Other 2003 2004

Source: China Customs Statistics (CCS) Information Center

The southern province of Guangdong accounts for more than 60% of waste plastic imports to China as a whole (Figure 10.13). Official statistics record imports to Guangdong of 2,560kt in 2004, though for reasons stated elsewhere in this report, the actual total is likely to have been significantly higher. Guangdongs share of imports varies somewhat by plastic type; the eastern province of Zhejiang (south of Shanghai) is a centre for prime plastics production and staple fibre manufacture and attracts PET imports. A breakdown of waste plastic imports by commodity code and province is given in Table 10.8.

Table 10.8
Guangdong Zhejiang Shandong Tianjin Shanghai Fujian Others Source: Based on

Waste plastic imports by type & location of importer, 2004 (kt)


PE PS PVC Other 801.6 285.2 515.2 957.4 40.2 19.9 39.9 267.7 196.0 1.0 9.0 61.8 115.2 0.15 5.1 48.7 31.0 3.6 3.0 111.6 109.1 0.54 3.0 24.0 138.1 28.1 49.1 231.6 data provided by the Customs General Administration of P. R. China in Total 2,559.3 367.6 267.8 169.0 149.1 136.6 446.9 Beijing.

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Figure 10.13

Waste plastic imports, 2004, by location of importer (tonnes)

Zhejiang, 367.62 Shandong, 267.8 Tianjin, 169.0 Guangdong, 2,559.3 Shanghai, 149.1 Fujian, 136.65 Others, 446.9

Source: Based on data provided by the Customs General Administration of P. R. China in Beijing.

Figure 10.14

Port of custom clearance, 2003


Xiamen 3% Qingdao 11% Gunagzhou 13% Shenzhen 68%

Other 5%

Source: China Chemical Industry Information Centre

Table 10.9 presents some data on who is importing this material.

Table 10.9

Polystyrene imports by type of importer, 2003


Import USD US$k 32,218.5 15,130.3 3,093.7 11,259.10 Import quantity kt 123.9 58 11.8 37.90

State-owned enterprises Private Collective owned Unspecified

Source: Based on data provided by the Customs General Administration of P. R. China in Beijing.

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Exports
Declared Chinese exports of waste plastics are small: 40kt, worth 4.1m, in 2004. However these figures also represent a large increase since 1999 with export volumes increasing five-fold, and export values increasing three-fold. Figure 10.15 shows that almost all of the Chinese exports fall into the other waste plastics category, which accounts for 96% of export volume and 93% of export value. There are again discrepancies in the data Hong Kong data record about 96kt of imports from China, compared to about 12kt in the Chinese data on exports to Hong Kong. This level of import to Hong Kong is in itself counter-intuitive given that the demand for the material is in China, not Hong Kong. Consultations with the Hong Kong Government suggest that there is a level of cross-boundary churn, the logic of which is not known.

Figure 10.15

China Exports of Different Waste Plastic Materials, 1999-2004

25 20 kt 15 10 5 0 1999 2000 2001 PE PS PVC 2002 Other 2003 2004

Source: China Customs Statistics (CCS) Information Center

The majority of Chinese exports go to other Asian countries although a small proportion are imported by the US, and European and Middle Eastern countries. The breakdown of Chinese exports is presented in Figure 10.16 below.

Figure 10.16

China Waste Plastic Exports by Destination, 2004


Hong Kong 30%

Others 66%

Japan 2%

Korea 2%

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10.3.4 Recovered plastic from the domestic market


The quantity of recovered plastic supplied from domestic sources is less easily determined than imports - there appear to be few data in official Chinese publications covering this activity. This may reflect the fact that, at least in respect of the municipal waste stream: abstraction of waste materials has been a largely informal activity collection through the old formal state-owned systems has not kept pace with market changes. Waste pickers and scavengers are known to scour domestic waste for plastic materials, such as PET bottles, and waste material markets have been established in some major cities, but there appears to be little information on the volume of recovered material in circulation. This is likely to change as new policy initiatives to encourage recycling and to address Chinas large municipal waste management problem come into effect. Demonstration projects on recycling in major cities, such as Beijing, are the exception rather than the rule for the time being. From 1950 to 1978 recovery was dominated by the formal sector, and recovery rates of over 20% were achieved. Since the economic reforms of 1978, the formal sector (based around the command economy and state-owned industries) has weakened and the recovery rate fallen154. The formal sector mostly collects waste from industrial sources. The informal sector (akin to waste pickers in India) are self-employed and focus on post-consumer wastes. A 1997 study estimated that 80% of the 1,300kt of plastic waste recovered was collected by the informal sector. Consultations with, for instance, PET recyclers suggests that the informal sector is still the main source of plastic. In the 1990s, plastic recycling was the domain of collective and township factories, rather than the large state-owned firms that dominate the primary plastic sector. The operations were highly labour intensive. The same (1997) study estimated employment in plastic recycling in the mid 1990s at 200,000-270,000. Plastic waste arisings in China are increasing as consumer consumption and industrial output increases. As highlighted in a recent World Bank study155, China recently surpassed the US as the worlds largest municipal solid waste (MSW) generator. In 2004, urban areas generated about 190,000kt of MSW and by 2030 this is projected to reach at least 480,000kt. No country has ever experienced as large or as rapid an increase in waste generation. The total of 484,000kt is projected to include about 68,000kt of plastic waste. Assuming that formal and effective separated collection of plastics from municipal waste is established across the country over the medium to long term, the supply of domestic waste plastic material will increase. It will be recovering only a fraction of what will be a very large level of consumption. Official policy is to encourage plastic recycling within China, as part of a wider resource efficiency drive and in the interests of reducing imports of synthetic resins. Provisions for the support of waste plastic recycling in China have been incorporated into the latest Five Year Plan. These provisions are for both recycling by industry and collection from the municipal waste stream. Some firms consulted for this study used waste plastic that had been recovered in China but looked to imports for greater stability of supply and quality. Chinas per capita consumption of plastics is increasing but is still low by OECD standards, and formalised collection infrastructure for post-consumer plastics is not well developed. Transport costs within the country can be comparatively high.

154

van Beukering et al, 1997. World Bank, 2005.

155

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Applications for recovered plastic


Manufacturers use recycled plastics to cut production costs. Waste plastic trades at a 10% discount to the prime (for best quality production scrap) to a more than 50% discount (for lower quality material). Generally, the ability and willingness to use waste plastic sources is affected by the quality and product performance requirements of the product. These vary widely from product to product, and from market to market. As such there is no single norm. Consultees in south China suggested that recovered plastic, once processed, is used more extensively by domestic companies than it is by foreign firms. This fits with feedback from Hong Kong-owned export manufacturers. They explained that in many instances the quality and performance standards applied to export products prohibit use of recovered plastic in these markets. This is in addition to the export manufacturers nervousness about how recovered plastic may affect quality leading to batches being rejected or contracts cancelled. Quality standards for the domestic market tend to be lower and reportedly some small firms in Guangdong may use up to 100% waste plastic. Garbage bag manufacturers reportedly use 30%-40% recycled content. Applications for recovered plastic include; For PET - polyester fibre used stuffing for toys and furniture, textiles. For PVC - construction applications. For ABS - electronics and electrical equipment and household appliances. For PE - packaging and agricultural plastics. For PC - DVDs. The most recent official data on applications of recovered plastic date back to 1994 and are shown below.

Table 10.10

Secondary plastic consumption, 1994


Recovered plastic consumption (kt) Share of total recovered plastic consumption (%) 38 54 8 100

Industrial plastics Household plastics Agricultural plastics Total

500 700 100 1300

Source: Information Centre of the Ministry of Chemical Engineering (1995) reported in van Beukering et al 1997

The results of consultations in Hong Kong and China are reported below, by plastic type.

Polyethylene/PE
Consultation with the China Plastics Processing Industry Association suggests annual LPDE imports are now around 1,500kt, with a further 1,000kt of HDPE. PE is imported as film, production scrap, HDPE bottles, etc. Whereas there was a consensus on the main outlets for recovered PET and ABS, it has proved more difficult to determine the application of secondary PE, despite the large volumes involved. This may just reflect the large number of factories and diverse applications of this plastic. Processed waste PE is extruded and turned into pellets. It then goes into injection moulding and blow moulding processes for multiple possible uses. At least some HDPE is understood to go into packaging. Construction applications are also likely end-uses. Indicative prices for baled, unprocessed PE film were USD100/t (60/t). Sorted industrial scrap (e.g. HDPE and PP) is bought in at USD300-500 per tonne (175-300/t). Prices vary depending on the quality of the input material.

ABS
Good quality scrap ABS is in heavy demand, especially in Guangdong. Applications for processed secondary ABS include electronic/electrical products and toys. ABS from post-consumer sources is being sourced as well as production scrap. Samples of shredded computer casings from Japan and Korea were seen during consultations. The variation in the
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specification of plastic blend (including flame retardants) used in computer casings was cited as an issue by a couple of consultees. The extent to which consultees were concerned about the consistency and quality of material varied. Indicative prices for ABS of different grades are given in Table 10.11. Guangdong is home to one of Chinas largest WEEE dismantling industries, centred on the township of Guiyu. The dismantling complex has been the subject of a number of reports by international environmental groups and international press coverage156. The extent to which plastic is recovered here and supplies the regional waste plastic industry is unknown, but it seems likely that it would contribute to it.

Table 10.11

Indicative ABS prices, Shenzhen

Quality Virgin Best quality production scrap Poor quality post-consumer waste
Source: Consultations, Shenzhen.

Local price, Reminbi/t RMB14,500 RMB13,500 RMB7,000

Sterling equivalent, /t 1035 964 500

PET
Consultation with the reprocessing specialists at the China Plastics Processing Industry Association suggests PET imports are in the 1,200kt 1,400kt range. PET imports come mainly in bottle form (separated or mixed) but also other packaging, e.g. blister packs. Production scrap and surplus inventory stock are traded as well as post-consumer bottles. Consultees had a particular interest in knowing about potential UK sources of PET. The bulk of secondary PET collected is converted to polyester fibre. Much of Chinas fibre production is centred around Shanghai. PET is therefore imported to Zhejiang for processing as well as to Guangdong. The major application for the fibre is in textile manufacture. Chinas output of clothing and textiles for export has increased dramatically in recent years as the Multi-Fibre Agreement international quota system was finally abolished, as well as there being growth in the domestic market. Other factors influencing demand include the Chinese cotton crop, with which demand for fibre has an inverse relationship (all else being equal). Consultees reported that some PET is available from the domestic recycling systems, but that supply and quality are unstable and so there is a preference for overseas sources. The reported demand for PET has been so strong that buyers have preferred to sacrifice quality in order to obtain material. They will invest in additional cleaning and processing locally to render the material useable. One tonne of mixed bottles typically yields 800-850kg of useable material. The import of whole bottles directly to China is prohibited yet still occurs. The uncertainty about the future regulation of this trade is a significant factor, especially given the concerns of the Chinese authorities about the pollution and infection potential of post-consumer waste. When the pre-processing requirement was enforced in 2003, a bottle mountain rapidly developed in Hong Kong, and a price differential between Hong Kong and the Mainland emerged.

156

Exporting harm, the High-Tech Trashing of Asia. http://www.crra.com/ewaste/ttrash2/ttrash2/

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Table 10.12

Indicative waste purchase PET prices, Shenzhen

Quality Clear, post-consumer Clear, ground Virgin


Source: Consultations, Shenzhen.

Traded Price, USD/t USD300 USD600 / RMB6,000 RMB10,000

Sterling equivalent, /t 175 350 - 430 720

10.3.5 Contribution of recovered plastic to overall plastic consumption


The lack of robust data on use of recovered plastic from domestic sources means that the overall use of recovered plastic, and thus its contribution to overall plastic consumption in China, is not readily determined with any accuracy. On the basis that 2004 imports of PE, PVC and PS were approximately 2,500kt (assuming understatement of imports broadly equates to processing losses), and that consumption of the major five resins was around 30Mt in the same year, then imported recovered plastic consumption is equivalent to approximately 8% of prime resin demand. On the assumption that domestic recovery probably contributes a further 1,000kt/a - 2,000kt/a, the overall utilisation rate for the five major resins could be between 12% and 15%. This excludes PET (which flow mainly into fibre applications), and ABS and other engineering plastics.

10.4

Policy & regulatory situation

The Chinese government has taken a number of measures over recent years to tighten up the imports of waste into the country. When customs inspections have found loads to contain mixed municipal waste, it has on occasion led to complete bans on waste imports from particular countries. This happened with Japanese exports of waste plastic in May 2004 (lifted in September 2005), and with all waste plastic imports in 1996 (rescinded in 1997). The regulatory environment is set by: Rules governing what types of waste can legally be imported A twin-track system to police the quality of waste materials shipped to the country: an accreditation system for foreign suppliers of waste materials and a more rigorous customs inspection regime.

o o

These are complemented by regulation of reprocessors within China. This section provides an over-view of the regulatory environment. It draws on interviews conducted in China and Hong Kong, online research and a review of the contemporary literature (which is primarily Japanese).

10.4.1 Regulation of Trade in Waste


Laws & Standards
Dumping, storing or disposing of foreign wastes in China is forbidden under the Law of the Peoples Republic of China on the Prevention and Control of Solid Wastes Pollution to the Environment157. Only solid waste that can be used as raw materials can be imported, based on a restricted list. Customs officials and the State Environmental Protection Administration (SEPA) are entitled to act against unlicensed imports, imports of solid wastes labelled as recyclable wastes and imports of waste for final disposal. Customs officials can order the country concerned to ship back cargos, and can impose fines. Unlicensed imports of waste materials are liable to be fined anywhere in the region of 100,000-1 million yuan (7,000 - 70,000).
157

Terazono et al, 2004


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Orders regulating foreign waste flows were issued in 1991 and 1994. In 1996 an Interim Regulation on the Administration of Environmental Protection in the Import of Waste Materials was issued158 under this law. It identified ten categories of waste that could be imported as raw materials, including specified plastic wastes. In 2002 a series of further lists of prohibited items have been issued from 2002 onwards, covering second-hand machinery, municipal wastes, used batteries, waste electronic and electrical appliances, etc. This was sanctioned by the Ministry of Foreign Trade & Economic Cooperation, the State Environmental Protection Agency and the Customs General. An amendment to the Solid Waste Law in April 2005 introduced the Polluter Pays Principle. This adds a provision which means that where the importer of a rejected waste load cannot be identified, the shipper shall be responsible for shipping back or disposal of the solid waste cargo. It also requires imported materials to meet SEPA environmental quality standards159 and pass AQSIQ pre-shipment inspections160. Standards for various waste materials were set. The standard for waste plastic requires: Plastics to have been crushed, to be colourless and odourless, and to have been washed to remove any obvious contaminants. The mix of agricultural and chemical waste and their containers, liquid wastes, kitchen and toilet garbage, sealed containers and used plastic (uncrushed) should not exceed 0.01% of total plastic waste volume. The mix of impurities, including wood chips, waste metal, mud and sand, should not exceed 0.1% of total volume.161 The new standard provides a demanding reference against which the authorities are to assess imported waste. On the basis of consultations with the China Inspection Co. in Hong Kong it is understood that for import: Plastic should be recyclable, melt at high temperature and have minimal contamination Mixing of new plastics with waste plastic is prohibited Post-consumer waste is required to be processed before entering China i.e. cleaned, dry and ground The Chinese authorities have used the laws in place to stop trade in waste plastics. The complete ban in 1996 was the most draconian. More recently, in May 2004 a 4,000t load from Japan to Tsingdao in China was stopped for violating Chinese standards; allegedly a small amount of high quality material was concealing a larger volume of contaminated waste. In the aftermath of this incident, the China government introduced a temporary ban on all waste plastic imports from Japan162. It was the first time China had banned the import of recyclable waste from a single named country163. Ship-back of rejected waste loads has also been used. Between 1993 and 1994 China invoked the ship-back regulation on many consignments of imported waste164. It is understood that this practice continues. The literature references shipments that were legal under Japanese law being returned to Japan, before the ban, for failure to comply with Chinese standards165.

158

Terazono et al, 2004 National Environmental Protection Control Standards for Imported Scrap Materials

159

160

From Kojima et al. 2005. International Trade of Recyclable Resources in Asia. ID Spot Survey No. 29. Japan External Trade Organisation Koijima et al, 2005

161

162

General Administration for Quality, Supervision, Inspection and Quarantine Notice No.47. Kojima et al. 2005. Koijima et al, 2005 Koijima et al, 200

163

164

165

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Although the new standard is demanding, Chinas position vis--vis the Green List and the types of plastic that can be imported under the international controls on trade is relatively liberal. Whereas India has heavily restricted the scope of waste plastic imports, China allows import of post-production and post-consumer waste across a wide range of plastic types. The only specific prohibition mentioned in consultation was that expanded polystyrene is not permitted because of the risk of explosion during transportation. Despite the ban on direct shipment of Japanese waste, the implementation of the regulations issued by the central authorities (especially on pre-processing of post-consumer waste) has been highly variable. Consultations suggest that the risk of a load being intercepted and rejected at the border is higher if the waste is dirtier, but import of unwashed and uncrushed bottles remains the norm, at least as of early 2006. Unauthorised channels are reportedly used to get mixed or more contaminated loads into the country- generally material that has transited Hong Kong- in exchange for a premium on the normal freight forwarding fee. Consultations in the UK and Hong Kong/China suggest that most of this material is routed via Hong Kong. The pre-clearance requirements for Mainland China and the potential costs of having a direct shipment rejected mean that shipments direct to China are more likely to be cleaner, less contentious material (e.g. production scrap and pre-processed waste). Consultations in Hong Kong suggest that before the new standard come into force the regulation on post-consumer waste was enforced for a period during 2003. This quickly resulted in large stockpiles of bottles accumulating in Hong Kong and material shortages on the Mainland side of the boundary. Since then, the situation has reverted to normal. The uncertainty relating to enforcement of this regulation has had impacts on businesses in the region: One reprocessor that was consulted in the Mainland had invested in a facility in Malaysia with the intent of processing bottles from Europe and elsewhere before importing the flaked material to China. This venture failed when the enforcement of the regulation was relaxed resulting in it being cheaper to import direct to China and process the waste in Guangdong; One company in Hong Kong has invested in bottle processing sites close to the Mainland boundary in anticipation of a future tightening of implementation of the preprocessing requirement. It is currently carrying out primary processing (sorting, washing and grinding to a size sufficient to comply with import regulations), and secondary processing (flaking) in Donguan in Guangdong province; Several trading and import companies in the region cited uncertainty about the enforcement of rules governing import post-consumer waste as a factor in their avoiding trade in that material. Reprocessors within the Mainland cite regulatory uncertainty as one of the key operational issues they face.

AQSIQ Accreditation
A new accreditation scheme for companies exporting waste to China was brought in during 2004. It requires foreign waste material suppliers to register with the General Administration of Quality Supervision, Inspection and Quarantine of China (AQSIQ). Companies wishing to export waste to China must apply to AQSIQ giving various details of their business, systems, environmental quality standards, suppliers, etc. as summarised in Box 10.2 (full details in Annex I). Site inspections of the companies can be carried out. Under the Solid Wastes Law, AQSIQ is free to revoke the import licences of exporters that have had cargoes shipped back on environmental grounds twice within any 12 month period166. AQSIQ screens the applications and periodically releases a list of approved overseas suppliers and the materials that they are licensed to supply. As of 1 January 2005, only companies with an AQSIQ registration are able to export waste to China. Examination of the most recent available (December 2004) list of AQSIQ-approved overseas suppliers of waste materials (available online167 from the US office of the CCIC) shows that 83 UK companies have been accredited on the first and

166

Kojima et al, 2005. http://www.ccc-us.com/aqsiq.htm

167

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second lists. These are listed at Annex C2. A new AQSIQ list is expected during 2006. The distribution of AQSIQregistered firms is shown in Table 8.2. Companies in the UK exporting waste to Hong Kong do not need AQSIQ accreditation. Providing the company exporting waste from Hong Kong into the Mainland is registered with AQSIQ the import will be allowed. The Hong Kong routing, therefore, allows UK firms to avoid the cost, delay and uncertainty of registration.

Table 10.13
USA Hong Kong Japan South Korea Taiwan Canada Germany UK Netherlands Australia France Russia

AQSIQ registered exporters of waste by country (all wastes)


1st List 335 448 316 147 95 70 64 48 40 31 40 27 2nd List 261 56 129 71 57 58 42 35 27 31 16 27 Total 596 504 445 218 152 128 106 83 67 62 56 54

Source: AQSIQ, quoted in Kojima et al, 2005.

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Box 10.2

Summary of AQSIQ requirements

Implementation Details of the Registration Scheme Concerning Overseas Suppliers of Waste Material Imports, recently promulgated and implemented by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), make it mandatory for foreign enterprises, including those in Hong Kong, Macau and Taiwan, which export waste material to the Mainland to apply for registration with AQSIQ. Those which fail to obtain registration will not be allowed to export waste material to China, nor will their requests for inspection and quarantine be entertained by the departments concerned. This new rule is believed to ensure that imported wastes will comply with the environmental protection standards as well as other mandatory requirements and technical regulations of the state. The following are the prerequisites for overseas companies wishing to apply for registration according to the implementation details: The company is in legal operation in the country or region where it is located; The company has a permanent office or processing workplace and its business is of a considerable scale; The company should be familiar with the laws and regulations concerning environmental protection technology in China, and the associated environmental protection standards; it must also be equipped with the necessary facilities and inspection capabilities; The company should implement quality assurance or environmental quality administration systems, such as ISO14000 certification, or provide corresponding accreditation certification; The company must have a relatively stable supply source over which it exercises environmental protection quality control measures; No major safety, sanitation and environmental protection quality problems have been found in the company in the past three years. Within 30 days from the receipt of the registration application documents, AQSIQ will decide whether or not to entertain the application. After examination and investigation, applicants found to comply with the requirements will receive a notification signed by AQSIQ informing them that their applications are being processed. AQSIQ will then form a jury to assess the applicants. Successful applicants will be issued a registration certificate valid for three years.
Source: Hong Kong Trade Development Council. http://www.tdctrade.com/alert/cba-e0407a-5.htm or http://www.aqsiq.gov.cn/cms/template/index.html for the original Chinese version

Customs Pre-Clearance
Waste materials imported into China are required to undergo customs pre-clearance inspection. Pre-inspection services are offered by offices of China Certification & Inspection Group, a company that has authorisation for the purpose from Chinas State Council, and accreditation from AQSIQ and the Certification & Accreditation Administration. In the UK, exporters can have a pre-shipment inspection conducted by CCICs UK office in London168. This inspection is conducted according to an Environmental Protection Control Standard169 at the supplier or a container yard. Contacts in the industry suggest that, in the light of the large volumes being processed, inspections will sometimes consider the state of the depot, its quality systems, etc. rather than involve a physical inspection of the container. Before customs clearance can be issued, CCIC in the UK requires three photographs taken at various stages of the loading of the container as evidence that the exporter has not filled only the final segment of the container with paper or plastic of the proper grade. Should these photographs be missing, the freight forwarder can experience significant difficulties in getting clearance. Exporters can alternatively have shipment inspection carried out at the Chinese port, but in so doing run a greater risk of having to pay the (much more expensive) freight charges for the return of a rejected cargo, plus the failure to deliver to

168

CCIC London CO., Ltd. Address: Central House ,1, Ballards Lane, Finchley London N3 1LQ. 020 83498186. GB164871996. http://www.aqsiq.gov.cn

169

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contract and the administrative overhead. Consultations with CCIC in London suggest a significant growth in requests for pre-shipment inspection and certification for waste products, including plastics. Equivalent customs inspection services in Hong Kong are provided by the China Inspection Co. Ltd. According to the nominated representative for this company, inspections of waste plastic shipments are conducted in specified yards and quayside locations around Hong Kong. The inspection protocol requires that the container doors are opened, but does not require photographs of the loading process. There is less likelihood of customs issues when a container of waste plastics is routed via Hong Kong channels than in direct shipment from Europe to one of the main Chinese container ports due to the sheer volume of cargo being moved over road boundaries and at river ports. Containers are not unloaded at inspection and so there is the possibility for better quality scrap near the container doors to screen contaminated material inside.

Import Duties
Both prime plastic and waste plastic imports to China are subject to import duty. The rate of duty is declining year-onyear in accordance with a programme set out in the agreement by which China joined the World Trade Organisation (see Table 10.14). At the 2006 duty rate, PET declared at USD700/t would be liable for import duty of USD60/t. Falling import tariff rates should reduce the incentive to evade normal import processes. It should also marginally improve the competitiveness of Chinese importers in the global market.

Table 10.14
3915

Import duty payable on waste plastic imports to China under WTO accession agreements, 2002-2008
Bound rate at date of accession 13.9 13.9 13.9 13.9 2002 2003 2004 2005 2006 2007 2008

39151000 39152000 39153000 39159000

Waste, parings and scrap of plastics: Polyethylenes Polystyrenes Poly vinyl choride Other plastics

12.8 12.8 12.8 12.8

11.8 11.8 11.8 11.8

10.7 10.7 10.7 10.7

9.7 9.7 9.7 9.7

8.6 8.6 8.6 8.6

7.6 7.6 7.6 7.6

6.5 6.5 6.5 6.5

Source: Market Access and Compliance. http://www.mac.doc.gov/China/Docs/searchableothertariffs.pdf

In the past much of the waste plastic was reportedly imported under the special, duty-free, terms available to foreignowned export manufacturers who could bring raw materials for export manufacturing processes into China, duty and VAT free, if they were able to demonstrate that compensating quantities of finished products had been exported. Current data supports the decline in this activity170. Today almost all waste plastic is brought in under ordinary terms of trade (see Table 10.15 for data on some of the main provinces).

170

Yoshida et al, 2005.

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Table 10.15

Waste plastic imports by trade type, selected provinces, 2004 (kt)


Entrepot trade by bonded area Ordinary Trade Process & Assembling Process with Imported Material Grand Total

Fujian Guangdong Shanghai Zhejiang Grand Total

0.059 0.059

136.1 2,420.40 146.3 330.7 3,033.5

0.054 103.1 0.275 103.4

0.431 35.8 2.8 36.7 75.7

136.6 2,559.4 149.1 367.7 3,212.7

Source: Based on data provided by the Customs General Administration of P. R. China in Beijing.

As described in the Hong Kong chapter and above, there is evidence to suggest that considerably more waste plastic is imported into China than is shown by the official statistics, which are based on customs data. The apparent reason for this is though to be evasion of import duty. The impact of duty on import costs is illustrated by data obtained from a Hong Kong-based trader specialising in engineering plastics, shown in Table 10.16.

Table 10.16

Import costs across the Hong Kong-Mainland boundary


Material sale price RMB/t 1100 5300 Freight forwarding (Hong Kong Dongguan, truck) & Mainland import duty RMB/t /t 1900 64 900 136

ABS natural colour pellets ABS mixed colour regrind

Source: industry consultations, Hong Kong

10.4.2 Regulation of Reprocessors


In China enterprises are required to obtain a licence to operate from the appropriate government authority. The licence sets out the permitted scope of the enterprises operation what it is allowed to do (governing operations, outputs, and access to inputs). It may also define the permitted scale or capacity of the enterprise, and the level of investment to be made. Obtaining licences, permits and land on which to operate can be an involved process. Reprocessors are subject to these requirements as well as being subject to various operating and import controls and periodic inspection by the State Environmental Protection Agency (SEPA). SEPA issues import licences, which are plastic-specific. A limit is set on the amount of waste that a reprocessor can import, based on its capacity - an estimated quantity of waste plastic that could be processed annually. For government-owned companies it is believed that a system of import quotas are cascaded down through the stateowned sector from the major petrochemical companies via local import/export corporations. Foreign-owned enterprises are not affected. The fit between this and the permitted import of reprocessors, based on their capacity, is not known. The authorised import level in previous years has been well above the quantity actually imported, as illustrated in Table 10.17.

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Table 10.17

Approved import & actual of waste plastics, kt

Approved quantity

Actual import

2000 2001 2002 2003

3,238 4,580 3,870 5,434

2,007 2,228 2,458 3,024

Import increased over same period in previous year 44.6% 11.0% 10.3% 23%

Source: Presentation by Liao Zhengpin, President of China Plastics Processing Industry Association to ChinaPlas. 2004, China Plastics Industry: Facing the World.

Consultations in Guangdong suggest that some trading companies linked to large enterprises also get involved in the import of waste plastic, even though they are outside the normal licence requirements and not engaged in reprocessing. This may be connected in part to the reports of speculation in the scrap plastic market that affected prices and supply in Guangdong in 2004/5. In addition to the site and import controls, there are regulations governing issues such as the use of waste plastic. For example, waste plastic is not supposed to be used for production of new food and beverage containers.

10.5

Future demand for plastics in China

Movements in the primary plastic markets shape the demand for recovered plastics. Expected trends are reviewed and the implications for the recovered plastic sector then considered. The following sections report expected changes in demand and supply of the main plastics. The forecasts are drawn from the 2005 Petrochemical Market Annual Report by the China Petrochemical Consulting Corporation or the China Chemical Industry Information Centre, and from forecasts by industry analysts that have been placed in the public domain. There is a large number of research reports available in the market, provided by specialised vendors on a fee or subscription basis and advertised online.

General outlook
The general outlook for the Chinese plastic sector is characterised by: Sustained year-on-year growth in demand for all plastics to 2015, e.g.: Polymer demand increasing at 7% p.a. or more in the next 10 years, compared to 11.7% in the past five171 Consumption of ethylene equivalents growing by 50% (equivalent to 9,000kt/a) between 2005 and 2010172 Large increases in domestic production capacity in key products (e.g. polyethylene, polypropylene) An expectation that there will continue to be a need for substantial imports of the major 5 resins, and other plastics Concern in the international market that Chinas investment in additional ethylene and other capacity, when put together with that taking place in the Middle East, will put margins under pressure towards the end of the decade Analysis by Qu (2006) estimates that demand for the main five polymers will increase from about 30,000kt/a in 2004 to 50,000kt/a in 2010 and above 60,000kt/a by 2015. Growth of ethylene consumption in China of 10.8% p.a. between 2004 and 2014, contrasts with a corresponding projected growth rate of 1.7% p.a. in the USA. The investments underway in domestic capacity means that imports of the major 5 resins are expected to continue at or above 10,000kt/a over the period to 2010 but do not track the demand curve.

171

Qu, 2006 Ibid

172

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Figure 10.17

Projected demand, import and production for the major five polymers in China, kt

Source: Qu/SRI Consulting (2005).

Figure 10.18

Projected imports of the five major polymers, kt

Source: Qu, 2005.

The demand for individual plastics is illustrated by the following:

Polyethylene/PE
Demand for polyethylene is projected to increase by 6MT between 2005 and 2010. With domestic production capacity expected to grow by a similar amount over the same period, imports seem likely to remain at around 6,000kt/a173.

173

ibid.

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The 2005 Petrochemical Market Annual Report forecasts for HDPE and LDPE production capacity, output and overall market demand are given in Table 10.18. Chinas production capacity for PE is expected to reach 14,000kt-18,000kt by 2010. The report estimates that by 2020, on the assumption of 6% GDP growth rate in China, total consumption of PE will reach 22,000kt/a. The proportion of packaging film in LDPE consumption is expected to continue to increase to 2010. The share of agricultural films is expected to decline and the share of construction applications increase. Blow moulding, film product and injection moulding will continue to be the major applications of HDPE. The implied requirement for imports is calculated here as the difference between demand and domestic output. Market reports from the petrochemical industry do not discuss the use of scrap plastic as a substitute for prime product. However it is assumed that the demand estimates show prime plastic requirements that are in addition to the demand met by waste plastic inputs.

Table 10.18

Forecast annual capacity, output demand and imports for PE, kt/a
2010 2015
5,010 6,240 8,600 2,360 9,790 8,560 10,700 2,140

HDPE
Production capacity Output Demand Implied import requirement 3,560 4,620 6,540 1,920 7,940 6,880 8,300 1,420

LDPE
Production capacity Output Demand Implied import requirement

Source: 2005 Petrochemical Market Annual Report. China Petrochemical Consulting Corporation.

Table 10.19
Year
$ billion % growth kt % growth

Forecast Chinese output of packaging plastics


2001
3.62 5,940 -

2002
4.07 12.4 6,660 12.1

2003
4.57 12.3 7,480 12.3

2004
5.14 12.4 8,420 12.5

2005
5.78 12.6 9,490 12.7

2006
6.41 10.9 10,710 12.9

2007
7.12 11.1 12,100 13.1

2008
7.90 11.0 13,730 13.3

Source: China Packaging Technology Association/EP Media. Updated forecast is being researched.

Polypropylene
Official forecasts suggest that PP production capacity will more than double between 2004 and 2010, from 4,810kt/a to 10,520kt/a, and rise again to 14,030kt/a by 2015. However this dramatic increase in capacity will not, on the same projections, remove the need for imports as demand is projected to increase from 7,650kt/a in 2004 to 12,600kt/a in 2010 and 17,400kt/a in 2015. The proportion of PP demand going to textiles and BOPP films is expected to decrease, and the share accounted for by injection moulding and CPP films rise.

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Kinder (2006) projects a similar increase in demand of 4,000kt per year between 2005 and 2010, with increases in domestic capacity roughly equal to the incremental consumption and so little change to imports. Qu (2005) suggests a similar polypropylene demand increase from around 7,000kt/a in 2004 to a little over 10,000kt/a in 2009, and then 14,000kt/a in 2014. He projects a slight decline in imports from near 6,000kt/a to a little over 4,000kt/a between 2004 and 2011, before imports increase again.

PET
It is estimated that the consumption of PET will continue to increase from 12,540kt per year in 2004 to 19,500kt per year in 2010, and further increase to 23,000kt per year in 2015, i.e. at an average annual growth rate of 7.6% between 2004 and 2010. Fibre will remain the major application, the consumption of which will reach 16,800kt per year in 2010, accounting for 86.2% for total PET consumption in China, which is slightly lower from than the percentage in 2004. Total demand for PET to produce beverage bottles is also forecast to increase. It is estimated that the production capacity will increase from the present 16,500kt per year to 25,000kt per year in 2010. PET is therefore in production surplus in China. Utilisation of capacity is expected to suffer as a result. Zhejiang Province and Jiangsu Province will remain the major exporting provinces of Chinas PET. For Zhejiang Province, the production capacity will increase from 6,400kt per year in 2004 to 9,400kt per year in 2010. For Jiangsu Province, the production capacity will increase from 5,000kt per year in 2004 to 7,000kt per year in 2010. The production capacity of other provinces will increase from 5,100kt per year in 2004 to 8,600kt per year in 2010.

ABS
Official forecasts suggest that domestic ABS production capacity will increase from 1,170kt/a in 2004 to 2,060kt/a in 2010, and will remain at about the same level to 2015. Demand for ABS in China was 2,930kt in 2004, and is forecast to increase to 3,860kt in 2010, with a further increase to 4,400kt in 2015. This suggests that a significant part of domestic demand will continue to be met by imports. Demand for ABS is expected to be driven by manufacturing of electrical and electronic appliances for home and commercial use, and light industrial products. Official projections suggest growth of electrical and electronic appliances overall, and a proportional shift towards office and small electrical appliances.

10.6

Outlook for recovered plastic imports

Given the terms of the reference for this study, the key issues going forward are: Will there continue to be a demand for recovered plastic from manufacturing industry in China? Will the share of imported waste plastic meeting that demand change?

The outlook for waste plastic demand from China can be considered as the composite outcome of a number of different dynamics: Changes in overall demand for synthetic resins, a function of output in the plastic-consuming industries (construction, packaging, textiles, electronics, packaging, toys, etc.) Prime plastic prices and hence the incentive on manufacturers to use waste plastic in lieu of prime. This increasingly means international rather than China prime plastic prices import tariffs are lower than they were and the China economy is more open. Chinas domestic supply of plastics (while the oil price will largely determine prime prices, China has experienced over-supply and below-cost pricing in other markets) Regulatory change including the possibility that import of specific types of plastic waste currently legal will be prohibited, or that regulation of reprocessing within China will change Displacement by domestic recovered plastic supply Technological change in the plastic-consuming industries that could mediate against use of plastics from secondary sources
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The only economic model of the Chinese recovered plastic market that we are aware of was developed in the mid-1990s by a team from the International Institute for Environment and Development in London and researchers from Chinese ministry research centres174. This research explained how the waste trade emerged to meet the gap between demand in China for plastics and the availability of supply from the local plastics industry, and developed a model that linked demand for recovered plastic with price and policy factors. However, the IIED work was not developed further and more recent research on the market has not attempted projections of its future development175.

10.6.1 Demand
The general outlook for plastic demand is very strong. China is, and seems set to remain, the centre of a number of major export-manufacturing sectors that consume large volumes of plastic. Domestic use of plastic for packaging, construction, agriculture, etc. is set to continue its rapid increase. The projections below from some of Chinas industry associations illustrate expectations. The consultations and market analysis conducted for this study suggest that the present demand for recovered plastic will continue and grow, at least for the next five years and probably longer. The consultations further suggest that this demand is driven, in large part, by price factors. The feedback was that the main source of demand is manufacturers seeking to reduce production costs while factoring in the quality standards imposed by the market on the products that they make. This is in contrast to the situation in the early days of the plastics industry, where it was a quantity problem (lack of access to prime plastics due to the import restrictions and other trade barriers) which provided the primary stimulus to plastic recovery. Whilst there may still be differences in firms access to foreign exchange and ability to trade, China is now much more open to the world plastics market than was previously the case. Import tariffs on prime resin are reducing and quantitative restrictions on imports have been removed. If this analysis is correct it has significant implications for the projections of developments to 2015. It means that, for instance, demand for recovered plastic is less related to prime resin imports (i.e. a domestic production deficit) than it is to prime resin prices (i.e. incentives on manufacturers to shave production costs). Imports of the main 5 resins are not expected to change significantly in the next five years (Figure 10.18) so the strength of this theory will become clear over the next few years. If prime resin imports move relatively little but recovered plastic imports continue to grow, there will be further evidence of the price-drive substitution effect that appears to be taking place. Consultations and some of the literature suggest that products with waste plastic content often go into the Chinese domestic market. Over time quality benchmarks in the domestic market are likely to improve, which may depress demand (and/or drive up quality requirements for recyclate). At the same time, several consultees in the reprocessing sector were confident that new applications and technologies for use of waste plastic would be found, expanding the scope of waste plastic markets. There was a consensus that on a 5-year horizon at least, demand for waste plastics would remain robust. The plastic products market in China is evolving rapidly and it can be expected that the recovered plastic market will change with it, and probably exhibit further instances of the volatility seen in 2004. Beyond 2010 the outlook is, as a result, increasingly uncertain. It is expected that sustained high prime resin prices will further encourage innovation in the use of recovered plastic by manufacturers in China, expanding its potential range of applications. On the basis of a simple extrapolation of the trend in declared exports from 1999 to 2003, official recovered plastic imports were on track to hit 5,000kt by 2008 and 5,500kt by 2010. However, the added impetus of the higher prime prices from 2004 onwards pushed the trendline towards 5,500kt by 2008 and 6,500kt by 2010, even allowing for no increment in 2005.

174

IIED 1997, 1999. See Kojima et al, 2005 and other Japanese research.

175

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As discussed above, past figures have probably under-stated actual imports by 20%-25% so the true demand in the market is corresponding higher. These sorts of increases are equivalent to average annual growth rates of 10%-12%, i.e. well within the range of the annual increases in consumption of many plastics in China over the past few years and those projected for the coming 5 years or more. Consultees in China did not expect 2006 to see the intensity of buying activity that characterised 2004 and reverberated through international waste plastic markets, but instead a more normal, steady growth in volumes over the next few years.

10.6.2 Prime prices


If prime plastic prices fell substantially, waste plastic prices would eventually follow. Lower prices reduce the incentive on final product producers to substitute scrap for prime. Demand for waste plastic would then soften. However, none of the businesses or associations consulted expected oil prices to fall back to US$30/barrel or indeed to go much below todays levels. Consultees suggested that a 10% increase in prime prices typically leads to a 3%-5% increase in waste plastic prices. Some of the current applications for recovered plastic have quality parameters that do not require prime resin to be used. If prime prices fall significantly, the baseline demand for recovered plastics for such lower grade and less qualitysensitive applications is expected to remain, although prices would be lower. On top of this baseload demand, the comparatively high prime prices of the past couple of years have helped to drive an additional move from prime resin to recovered plastic by other manufacturers. Intense competition and fixed contract terms mean that manufacturers have had only limited scope to pass higher input costs to buyers, so have had to look hard at production costs.

10.6.3 Domestic supply of prime plastics


Chinas domestic production of plastics is increasing and keeping pace with, if not catching up on, demand. Again, the 5 year projections suggest that there will be demand for imports and waste plastic inputs. One of the related issues is the terms under which the plastic industry operates there are examples in other markets in China of intense competition leading firms to sell at minimal margins, or even below cost price for sustained periods. Such activity in the plastics sector, if it lowered resin prices, would reduce demand for scrap material.

10.6.4 Regulatory change


The waste plastic trade is heavily conditioned by the regulatory framework: In the countries of origin (e.g. EU member states regulation of waste exports) In countries of transit (Hong Kong) At the Chinese border (permitted imports, enforcement of regulations) Within China (licencing of reprocessors etc.)

Reprocessors within China, and traders outside it, regard regulatory uncertainty and change as the largest threat to the trade. The reprocessors are also looking to technological innovation to help identify reprocessing systems that reduce pollution output, and hence reduce the concern of regulators. An example quoted was low-water technologies for bottle sorting and cleaning to reduce the water pollution from washing operations. Changes in Chinese import regulations are a particular issue. These could in theory terminate segments of the trade almost overnight. Changes in the enforcement practice on the ground are also potentially powerful in shaping how the market operates. The most obvious example is the firm application of the pre-processing requirement to post-consumer bottles. This would push pre-processing out of China into the source countries, or intermediate locations that permitted it and cause significant disruption to the relevant markets while alternative arrangements were put in place. In this context, a key issue is communication between China and the exporting countries on matters of trade standards, enforcement and protocols.

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For the next few years at least, Hong Kong is set to remain a favoured import routing, despite the additional cost of transhipment, due mainly to the reduced regulatory risks at import compared to direct shipment.

10.6.5 Domestic supply of waste plastic


Domestic supply of waste plastic will increase if China invests in the kind of waste management infrastructure that is being advised to help with the rapid increases in municipal solid waste, and if measures to encourage resource efficiency in industry prove effective. Over the 5 year horizon, consultees did not expect domestic supply to displace waste plastic imports. There is the potential for demand increases to accommodate increases from both sources.

10.6.6 Technological change


In consultations in Hong Kong and south China, technological change in plastic product manufacturers was not seen as posing a threat to demand for waste plastics. It was recognised that in some cases investment in new facilities would reduce operators use of waste plastic. One example was plastic bag manufacturers who are investing in facilities where extrusion, printing and cutting operate as a continuous process and reliability of input materials is key. During the consultation conflicting reports were received on whether technology changes would impact on PET demand. Some analysts claimed that fibre demand was peaking and fibre plant technology using recycled PET was limited in life span; others (including buyers and some Chinese fibre companies) were not identifying such concerns. Due to the conflicting evidence these specific issues should be considered in more detail. However, waste plastic covers a very wide range and quality of materials, the risks of which vary. The general consensus was that the sheer scale and variety of production of plastic products in the Pearl River Delta (and similarly for the Yangtze River Delta), buffered the risk of technological change, at least for the next 5 years or so.

10.6.7 Summary
The consensus among those consulted in China and Hong Kong for this study was that over the next five years there will be continued strong demand for waste plastic. Beyond the five year horizon the outlook is less certain. The total demand for recovered plastic imports is the sum of demand from a series of separate plastic material markets. These individual plastic markets have some common features and drivers (e.g. economic and investment climate, feedstock prices) but many differences. As an example, Chinese demand for PET bottles is driven by the markets for, and economics of, polyester fibre for toys, furniture, etc. This has very little to do with demand for recovered ABS used in electronic and electrical manufacturing. As with the supply side, the analysis is therefore best done on a bottom up basis, looking at individual plastics, and researching: How demand is expected to change for the specific products where recovered material is used (e.g. future demand for stuffing for soft toys). What influences the use of recovered as opposed to prime plastic (qualify, price, supply availability) and how those factors are likely to change in the future. How domestic recovered material competes with imported and whether relative shares are likely to change. This is a data-intensive process that is achievable to a degree in UK markets, but more challenging in China where the firms are more numerous and supply chains more opaque. These application analyses could be combined with macro-economic and wider market scenarios, as outlined below.

Looking at the overall market, a Base case export demand scenario would be associated with the following general market conditions:
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Continued growth in the Chinese domestic economy on the recent trend line (i.e. annual growth in GDP of 7%-9%). Sustained export demand for Asian consumer goods from European and North American markets. Feedstock prices in the range observed in 2004-2006. No changes to the regulations governing trade in recovered plastic, either in Europe or China, such that material of an adequate standard can reach end-markets. A Low export demand scenario would be associated with: A sustained fall-off in US/EU demand for Chinese exports and a slow-down in the Chinese domestic economy. A significant fall in international prime plastic prices. Systematic over-supply of resins in the Chinese market leading to heavily depressed domestic prices. New regulations and enforcement that imposed significant restrictions on the type of recovered plastic legally importable to China (either in terms of type of polymer or the nature of previous use). A High export demand scenario would be associated with: Feedstock prices moving higher than recent levels. Strong economic growth in the world translating into strong consumer demand for Asian exports in key sectors such as textiles, toys, electronics and plastic products. Strong growth in Chinese domestic economy and, in particular, above-trend income increases among the rural population and sustained growth in the construction sector. Chinese import controls largely unchanged and the gradual opening up of new markets (e.g. liberalisation of Indian import regime for recovered plastic). Any measures that substantively reduced Japanese or US supply into the export market (e.g. additional export controls from Japan or an extension of the mandated recycled content measures in the US that caused US domestic buyers to out-compete exporters). For the present, rough-and-ready projections are probably more appropriate given the availability of support data: On the basis of a simple extrapolation of the trend in declared imports from 1999 to 2003, official recovered plastic imports were on track to hit 5,000kt by 2008 and 5,500kt by 2010. However, the added impetus of the higher prime prices from 2004 onwards pushed the trendline towards 5,500kt by 2008 and 6,500kt by 2010, even allowing for no increment in 2005. As discussed above, past figures have probably under-stated actual imports by 20%-25% so the true demand in the market is correspondingly higher. These sorts of increases are equivalent to average annual growth rates of 10%-12%, i.e. well within the range of the annual increases in consumption of many plastics in China over the past few years and those projected for the coming 5 years or more. Chinas consumption of the five major resins in 2004 has been estimated at a little over 30,000kt. Declared recovered plastic imports, excluding the other category (which is thought to include a large share of PET and other plastics as well as ABS), in 2004 were 2,300kt and approximately 2,500kt if ABS is included. This is about 7.5% of prime demand for the same plastics. If these imported recovered materials did no more than maintain their existing market share, official imports in 2008 would be 3,000kt and 3,800kt in 2010. Moving away from the official data, current recovered PE imports are estimated by the CPPIA at 2,500kt. Allowing for 20% process losses, this suggests that they may contribute 2,000kt/a to manufacturing, i.e. 23% of prime resin consumption. Inputs from domestic collection (e.g. from agriculture) are unknown. If they grew on a pro-rata basis (i.e. as a share of PE production), PE imports would reach 4,000kt/a in 2010 and 5,000kt/a in 2015. On the assumption that domestic collection systems improve, this may be an upper limit on the size of the market. Without data on current consumption of PE from domestic sources, or better data on its applications, it is difficult to make firm projections. Basing projections on official customs data produces lower estimates.

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These rough and ready approaches suggest potential additional demand of around 500kt each year, spread across all recovered plastics. However, the headline import figure hides significant movement from year-to-year in the apparent imports of individual polymers. Even if trade data are discounted as unreliable, anecdotal evidence suggests that submarkets have their own dynamics (as is the case in the UK) as dictated by trends in and out of electronics, intensity of construction investment, etc. US and EU controls on imports from China (e.g. of textiles) feed back into reduced demand for the associated plastics. As discussed above, it would be preferable, in time, to build up material specific projections mapped more closely on to the demand drivers for individual plastics.

10.7

Summary

China is the driving force behind the huge worldwide growth in the trade of waste plastics and the ultimate destination of most of the waste plastics that are exported from the European Union and NAFTA regions. When transhipment via Hong Kong and Netherlands is included, it is estimated to currently account for at least 75% (more than 254kt) of the UKs waste plastic exports. This compares with a total of 47kt exported from the UK to all twenty-five European Union countries. The waste plastics are absorbed, via the Chinese plastics reprocessing sector, into a wide variety of secondary uses, from textiles to toys to kitchen utensils. The end-user manufacturers are seeking to shave production costs by finding cheaper sources of plastic inputs. The extent to which they are able and willing to do so varies according to the production process involved and the specification of the markets that they are serving. Various domestic end markets in China are more forgiving on quality than the buyers of finished plastic goods manufactured in China for export to, for example, Europe. At the same time, the waste plastic label covers everything from the cleanest production scrap to post-consumer waste. The former can be used on a near like-forlike basis with the virgin material, and trades at a modest 10% discount to new synthetic resin. The latter frequently does not, and is discounted accordingly. The Chinese government has introduced a series of measures over the last ten years in an effort to control the undesirable elements of the waste trade, including that in waste plastics, while (for the time being at least) preserving the plastic product industrys access to lower cost inputs. It has retained a comparatively broad Green List schedule for plastics, in contrast to India, where imports are much more restricted. These efforts have had some success but evidence suggests that unauthorised imports and variation in the enforcement of the regulations continue. The extension of central laws into local jurisdictions is a challenge on many fronts in China, nothing new, and captured in the old Chinese phrase, The mountains are high and the emperor is far away. The demand for waste plastics looks strong for many years ahead. Large increases in consumption of plastic are expected as domestic consumption rises in line with income, added to which is robust growth in export manufacture. Both these factors drive growth in packaging use and in consumption of plastics for the products themselves. The extent to which domestic plastic resin manufacturing capacity is able to meet demand varies from plastic to plastic but as a general case, imports of synthetic resin are expected to form an important part of overall supply. The industry foresees a combination of comparatively high oil prices and strong price-based competition among plastic consumers, which are likely to encourage manufacturers to use some fraction of waste plastic where they can. If the regulatory environment remains broadly unchanged, demand for overseas sources of waste plastic can therefore be expected.

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11.0 Hong Kong 11.1 Trade profile

Trade data for Hong Kong have been purchased from the Hong Kong SAR Government. This forms the basis of the analysis reported below.

Imports
Hong Kong imported 2,733kt of waste plastics in 2004. 2005 imports, to the end of October, stood at 2,840kt. The main sources of waste plastics are Japan and the USA (see Table 11.1). Most of the remainder comes from the EU and other Asian countries. Canada is a major source of PVC.

Table 11.1: Hong Kong Imports HS 3915: Waste, Parings and Scrap of Plastics, 2004 (kt)
PE
Japan USA Netherlands 156.1 97.6 89

PS
135.3 25.2 15.3

PVC
39.2 55 21.8

PP
88.3 118.3 15.2

Other
348.5 251.7 83.1

Total
767.4 547.8 224.5

%Share
28% 20% 8% 6% 6% 5% 4% 23%

United Kingdom
Germany Belgium China Others

58.2
61.2 51.8 21.2 133

10.6
12.8 12.7 6.4 76.7

14.8
13.9 11.6 7 46.9

24
9.4 13.9 6.3 56.9

57.5
64.2 42.8 55.4 324.5

165.1
161.4 132.8 96.3 638

Total 668.2 294.8 210.2 332.2 Source: Census & Statistics Department, Hong Kong SAR Government.

1,227.8

2,733.2

In direct trade, the UK was the fourth largest source of waste plastic imports, with 165kt recorded in 2004. This compares with UK data showing exports to China of 191kt for the same year. The source of the difference is not known. In 2005, the imports from the UK to the end of October stood at 183kt.

Figure 11.1 Hong Kong Imports of Different Waste Plastic Materials, 2004
3,000 2,500 2,000 1,500 1,000 500 0 1999 2000 PE 2001 PS PVC 2002 PP Other 2003 2004 kt

Source: Hong Kong Census and Statistics Department


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In the customs forms, 45% of the plastic waste imported from around the world is declared as other waste plastics, and it is this category that has grown most rapidly in recent years (see Figure 11.1). PE imports (24% in 2004) have increased significantly while PS (11%), PVC (8%) and PP (12%) imports have grown much more conservatively. There is a significant difference in the declarations made to UK and Hong Kong customs authorities about the type of plastic being shipped (see Chapter 7). The cause of the difference is unknown possible explanations include anomalies of the classification systems, different traditions/understanding of the codes, or strategic choices by exporters/importers hoping to reduce the probability of customs inspections.

Exports
Hong Kong is the largest exporter of waste plastics in the world and China is effectively the sole destination, accounting for 99.6% of Hong Kong volume exports and 99.7% of export value. A tiny fraction of Hong Kong exports are sent to other Asian countries and North America but these flows are negligible. Hong Kong exports of waste plastic increased by 84% between 1999 and 2004 by volume (and 83% by value), as illustrated by Figure 11.2. Available 2005 data suggest that this strong growth is continuing and by the end of October 2005 exports had already exceeded the 2004 totals. Hong Kong statistics show exports to China of just under 2,500kt of waste plastic in 2004, up from around 1,750kt in the previous year. Exports in 2004 were therefore 200,kt lower than imports, which may reflect end of year effects, inventory changes, export smuggling or other factors. Hong Kong waste plastic exports are split relatively evenly between PE (25%), PP (29%) and other waste plastics (30%), with a residual 8% of PVC and 8% PS. There is a substantial variance between Hong Kong records of the waste plastic exports to China, and the imports to China from Hong Kong of the same materials as recorded in Chinese official statistics, with the Hong Kong figures consistently showing a large number (see Figure 11.3). The difference was some 744kt in 2004 equivalent to more than twice the UKs total exports of waste plastics, or 18% of total declared Chinese imports. Consultations in China and Hong Kong suggest that the Hong Kong data are likely to provide the more reliable estimate of the scale of the trade. Adjustment on this basis of this point-to-point trade alone therefore moves the estimate of Chinas import of waste plastic to 4,700kt rather than the 4,000kt shown in official statistics. Consultations with industry in the region suggest that actual imports were likely to be in the range of 4,700kt - 5,000kt. Reasons for this differential are discussed in more depth in Chapter 8, but consultations conducted in the region suggest that the discrepancy can be attributed to circumvention of import duty and Chinese customs controls. This issue is not unique to the waste plastic trade.

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Figure 11.2
3,000 2,500 2,000 1,500 1,000 500 0 kt

Hong Kong Exports of Different Waste Plastic Materials, 2004

1999

2000 PE

2001 PS PVC

2002 PP Other

2003

2004

Source: Hong Kong Census and Statistics Department

Figure 11.3

Comparison between Hong Kong waste plastic exports to China and Chinas waste plastic imports from Hong Kong

3.0 Trade in waste plastics (million tonnes) 2.5 2.0 1.5 1.0 0.5 0.0 1999 2000 2001 2002 2003 2004

Hong Kong exports to mainland China


Source: Hong Kong & China trade statistics, 1999-2004.

China imports from Hong Kong

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11.2

Policy & regulatory situation and outlook

Trade in Waste
Hong Kong is a signatory to the Basel Convention, originally via the UK, but now through China. It implements the Convention separately from the Mainland. Hong Kongs own Waste Disposal Ordinance (WDO) provides for the control on import and export of waste in Hong Kong. Under the Ordinance, a permit is required before any waste can be imported into, or exported from Hong Kong, unless the waste is uncontaminated, as specified in the Sixth Schedule of WDO, and is for the purpose of reprocessing, recycling, recovery or reuse. Waste plastic is included on that Sixth Schedule and thus excluded from the permitting requirements. Hong Kongs Environmental Protection Department has participated in the IMPEL-TFS programme, the network of representatives from EU enforcement authorities. In the last couple of years, enforcement action in Hong Kong in the waste trade has tended to focus on waste electronic and electrical equipment, significant quantities of which have been imported to China via Hong Kong, despite an import ban on the Mainland side. Although Hong Kong has been part of China since 1997, a feature of the One Country, Two Systems formula and its separate jurisdiction over trade regulation etc. is that Hong Kong companies are treated as overseas operations for the purposes of Mainland regulations. Hong Kong-based firms therefore need to register as exporters to China with AQSIQ in the same way that UK firms do (see Chapter 8 for more on this system). Customs pre-clearance on China-bound cargoes is carried out in Hong Kong by the China Inspection Co. Ltd (equivalent to the CCIC service in the UK). In general, Hong Kong provides an open and low-risk environment for the waste plastic trade. There are no domestic standards by which the uncontaminated state of imported plastic waste is determined, and there is no requirement in the Hong Kong legislation for pre-processing of post-consumer waste. Consultations suggest the potential for shipment rejection associated with bringing, for example, mixed post-consumer bottles into Hong Kong is lower than the risk of direct shipment of such material from Europe to Mainland China. Hong Kongs status as a global hub for the waste trade has attracted attention from environmental NGOs and some press coverage. At present there is no indication of domestic policy changes that might affect the trade. Consultations with the Environmental Protection Department have not identified any new policy initiatives or controls that would impact on its operation. Storage and processing of bottles etc. on sites near the China border poses some issues in terms of planning control, but these are small compared to larger scale uses such as container storage and vehicle repair.

Domestic recycling
Hong Kong has historically had a market-driven recycling sector for plastic recyclables. There has been no formalised system for separate collection of post-consumer recyclables, though consultations suggest that newspapers and some other recyclables have been recovered through informal networks of waste collectors. The Environmental Protection Department issues licences for waste collection and waste disposal. The Governments Policy Framework for the Management of Municipal Solid Waste (2005-2014) 176 has set a target of increasing the recovery rate and reducing the proportion of waste that is landfilled. A system of separate collection of recyclables is now being rolled out, with the aim of serving 80% of the population by 2010, and the supply of plastic bottles, etc. from Hong Kong itself is therefore expected to increase. With a local population of fewer than 7 million people, this will have only a limited impact on the volumes of traded material. However, it is likely to prompt the establishment of sorting, washing and grinding capacity within Hong Kong itself so that the products of local official recycling schemes can be exported to China in compliance with Mainland regulations.

176

http://www.epd.gov.hk/epd/msw/htm_en/content.htm

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11.3

Market Profile

Trade in goods and services is the foundation of the Hong Kong economy. Hong Kong supports one of the worlds busiest container ports and has had a key strategic role in the economic development of southern China, especially Guangdong, the neighbouring Mainland province. The tens of thousands of Hong Kong-owned factories in Shenzhen and the Pearl River Delta employ millions of workers and form a significant part of what is now becoming known as the worlds factory: the export manufacturing power house that is increasingly dominating the production of textiles, toys, household goods and numerous other products. These firms, and a large number of Hong Kong-based trading companies, handle import of raw materials and export of finished goods. Domestic manufacturing (and exports) are greatly out-weighed by re-export of goods and materials passing to and from China. Hong Kongs function in the global waste plastic trade mirrors this generalised role in the economic development and trade flows of south China. Waste plastic is imported from around the world and re-exported, almost exclusively, to China, and most of that goes to Guangdong. At present, little actual processing of the waste takes place in Hong Kong. Hong Kongs hub status in the global waste plastic trade is a function of its traditional role as a conduit for the worlds trade with China and the associated traffic in containerised cargo, and its proximity to the plastic-consumer manufacturing base of the Pearl River Delta. Hong Kong has very good support facilities for international trade, such as credit facilities and foreign exchange settlement. It also has a large population of freight forwarders and traders with a very good working knowledge of Chinese customs requirements and practices. The number of outward-bound loaded containers has long exceeded the number of loaded inbound containers. The deficit of inbound cargo means that shipping lines must reposition large numbers of empty containers back to Hong Kong. Freight rates to Hong Kong and south China from Europe and the US are much lower than those for the outward journey. The waste plastic trade piggy-backs on this container repositioning. Hong Kongs own collection of plastic recyclables makes only a modest contribution to the flows of material passing through the city: the bulk of the citys manufacturing sector has now relocated into China and formal systems for the separate collection of recyclables from the domestic waste stream for the population of around 7 million people are only now being established. Hong Kong companies link vendors worldwide with buyers in China, principally in the adjoining Guangdong province. The Hong Kong firms exploit their networks of contacts in Europe, North America, Japan and elsewhere to source material, and then resell it through to other networks in China. Some are pure trading operations with overseas vendors shipping plastic to the Hong Kong quayside and the China buyers arranging the forwarding of freight into the Mainland, the broker need only manage the Hong Kong import procedures. Some source for their own plastic factories in China. Firms are more or less specialised in particular types of waste plastic, and/or particular source markets. Consultations were held with, for example, a firm specialising in the import of mixed bottles from Europe and the US, another importing only film from Japan, one firm specialising in styrenics and engineering plastics and another importing a range of post-production scrap from Europe, Australia and elsewhere in Asia. Most firms involved are small and their sourcing is derived by the business network of the owner. Sourcing over the internet is regarded to be much less reliable than the use of trusted personal contacts. Waste plastic is typically sourced via a broker/consolidator in the source market. Reliable suppliers able to deliver material of consistent quality are able to command premium prices. For production scrap, the Hong Kong buyer will typically obtain a sample and test for material, colour, form, melting point and how clean it is. If accepted, the waste is normally imported on CIF Hong Kong terms. A schedule of indicative Hong Kong market prices is shown in Table 11.2. Prime plastic traders exploit day-to-day moves in prices to maximise margins. Waste plastic prices are less volatile. Exposure to price shifts is nonetheless a factor in the waste plastic trading environment. One Hong Kong trader cited the

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longer delivery time (and thus the greater potential to be caught by an unfavourable move in prices) as one of the risks of dealing in scrap from Europe as opposed to East Asian sources, for which shipping times are shorter.

Table 11.2

Indicative sales prices, Hong Kong, early 2006

Price range, per tonne ABS USD500 600 WEEE shredded (ABS base) USD300 400 PE USD200 - 300 PE (90/100 clear/mixed) USD350 450 PC (best quality) >USD1000 PET (clean) USD700 PET (dirty) USD300 400 Source: Industry consultations, Hong Kong

Sterling equivalent, /t 295 - 350 175 - 235 115 - 175 205 - 265 590 410 175 - 235

The buyers, the importers in Mainland China, may be trading companies or reprocessors (see Chapter 8). When material makes the onward journey into China, the freight forwarder will typically provide customs clearance for the importer as well as transportation. Waste plastic often travels into China by barge up the Pearl River to one of the many river ports (such as Nanhai), which is a cheaper and preferred option for low-value cargos not prone to damage in transit. The remainder will be trucked over the Hong Kong-Mainland boundary. A number of the Hong Kong-based companies on the AQSIQ register are trucking operations the transport company must be registered with AQSIQ to carry imported waste over the Hong Kong-China boundary. There is at the present time very little processing of waste plastic in Hong Kong the reprocessing sector is now located in China and Hong Kongs role is limited to transhipment. This could change if enforcement of Mainland import controls is stepped up, specifically in relation to post-consumer waste (see Chapter 8 for further discussion). Some companies are investing in sorting, washing and grinding facilities in Hong Kong, partly in expectation that this tightening up will occur. Exhibit 11.1 shows an example of one firms sorting lines in Hong Kong. The firms consulted in Hong Kong were trading a very wide range of plastics. More were focused on production scrap than on post-consumer waste. This was, at least in part, because of the risk and hassle associated with the postconsumer market. Firms were found to be handling packaging material in various guises (mainly production scrap and inventory clearance), WEEE shredders residue from east Asian sources (in the form of ABS from computer casings), lump, fibre and other production scrap. Consultation with the Hong Kong Plastics Recycling Association, the main local trade body, suggests its members concentrate primarily on the import of film from Japan and are not involved in the European or post-consumer trade.

11.4

Outlook

The outlook for Hong Kongs waste plastics trade is tied very closely to demand and regulatory change in the Mainland. High demand from industries in Guangdong and Zhejiang boosts waste plastic throughput. When the Mainland introduced a ban on waste imports from specific countries, much of the material was routed via Hong Kong instead (as happened with Japanese waste plastics in 2004). Relaxation of the ban on imports should now see more material again routed direct from Japan to China. The large increase in container liner calls at Mainland China ports in recent years (such as the Shenzhen ports and Shanghai) has provided new and cost-effective cargo routing options. Use of these ports for waste plastic imports has been increasing, but restrained by Hong Kong companies hold on much of the trade and by the greater risk (and hence risk of a large cost) of rejection of direct shipments. The gradual internationalisation of the Mainlands reprocessing sector, improvement in trade support services in China, and the potential for better margins, seems likely to reinforce
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recent trends towards more direct shipment. This trend is likely to be more marked for production scrap and preprocessed material than for post-consumer waste. In the event of greater controls on the import of post-consumer waste to China, establishment of more processing facilities in Hong Kong seems likely. Although labour costs in Hong Kong are very much higher than in the Mainland, they are lower than in Western Europe or North America for low-skilled manual labour. A new government scheme making it easier for Hong Kong employers to obtain employment permits for Mainland workers may also help. However, facilities in Hong Kong are likely to find themselves competing with processing plants in Malaysia and other locations well connected to international container shipping routes.

Exhibit 11.1

The exception to the rule: sorting of post-consumer bottles in Hong Kong

Photograph with the permission of Global Plastics Recycle Processing Centre (HK) Ltd.

11.5

Summary

Hong Kong is a point of transhipment and temporary storage for waste plastics that are ultimately destined for the China market. It remains a free port and, under the One Country, Two Systems formula, a separate customs zone that is not subject to Chinas import duties and customs law. Hong Kong is the largest single destination for UK waste plastic exports. It received 191,000t of the 344,000t exported direct in 2004 (and an additional, unknown, quantity indirectly via Holland and other countries). Although the UK was the fourth largest single source of waste plastic imported in 2004, it accounted for only 6%-7% of Hong Kongs 2,730kt of waste plastic imports for the year. Almost all of Hong Kongs waste plastic imports are subsequently re-exported to China. Hong Kong trade data estimate exports to China at 2,500kt in 2004. Comparative analysis of China and Hong Kong trade data indicate that official Chinese trade statistics understate imports from Hong Kong. Consultations on both sides of the boundary suggest that significant quantities of waste plastic imports do not appear in the customs data.
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Hong Kong companies link vendors worldwide with buyers in China, principally in the adjoining Guangdong province. Firms tend to specialise in particular types of waste plastic, and/or particular source markets. Some are pure trading operations. They exploit their networks of contacts in Europe, North America, Japan and elsewhere to source material, and then resell it through other networks in China both trading companies and reprocessors. Most of the trading firms involved are small and their sourcing is based on the business network of the owner. Other Hong Kong-based buying operations are integrated with plastic reprocessing factories in China. Often the overseas vendors ship plastic to the Hong Kong quayside and the China buyers arrange the forwarding of freight into the Mainland. Waste plastic often travels into China by barge up the Pearl River to one of the many river ports, which is a cheaper and preferred option for low-value cargoes not prone to damage in transit. The remainder will be trucked over the Hong Kong-Mainland boundary. Hong Kongs hub status in the global waste plastic trade is a function of its traditional role as a conduit for the worlds trade with China and the associated traffic in containerised cargo. It is close to the plastic-consumer manufacturing base of the Pearl River Delta. There is also less risk involved in moving waste over the Hong KongChina boundary than via direct shipment to China from the source country, especially for lower quality waste. Preclearance customs inspections in Hong Kong are supposed to involve the opening of the doors of each container, but there is no requirement for three photographs of the container being loaded, which is a requirement for shipments from the UK. The role of the Hong Kong-based trader as broker and deal-maker, bridging the gap between buyers in China and vendors in source countries such as the UK, is likely to erode over time as increasing numbers of buyers acquire the international business skills and connections to source direct. If Mainland import regulations are tightened then it can be expected that some intermediate processing will emerge in Hong Kong. A possible change is more strict enforcement of the requirements for cleaning and pre-processing of waste. Some companies have already invested in sorting and shredding facilities near the Hong Kong-Mainland boundary in anticipation of such a change. There is no indication that Hong Kong will itself introduce similar requirements for pre-processing, a move which would push the sorting/washing/grinding activity further back towards source countries and/or countries such as Malaysia.

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12.0 India 12.1 Introduction

This section reviews trends in the recycling of plastic waste in India, including a description of domestic waste and imported product. The information has been compiled from primary and secondary research. Eleven interviews were carried out with government officials, waste importing companies, industry associations and an environmental NGO. Secondary data were obtained through internet searches and from sources suggested by various interviewees. The only source of hard data on import of plastic waste in India is government statistics. These almost certainly underestimate the scale of the trade. Information provided on general industry trends is more readily available, and comments by interviewees have made it possible to draw some conclusions. However, there are severe limitations on the information available and as a result only part of the picture can be provided. The conclusions are therefore tentative in nature and need to be read as such.

12.2

Overview of the plastics industry in India

Indias plastics industry is five decades old. Demand for polymers grew from less than 100kt in 1970 to an estimated 4,500kt in 2005. In the last decade, India has moved from being a net importer of polymers to having a substantial export surplus, and this trend is set to continue. The industry grew at nearly 20% in 2004, and various industry sources have predicted trend annual growth rates of around 12% - 15% in coming years. Average per capita consumption of plastics remains low by international standards at 3.6 kg per person in 2003, compared to a global average of 21.5 kg and 10-15 kg in China. However, this picture is expected to change substantially in the next few years, driven by an economy expanding at 6% 7% per year and rising consumer incomes. High growth in segments such as retail packaging and building construction as well as in pipes, bulk packaging and agricultural use are expected to increase polymer demand to around 12,300kt by 2010. This will make India the third largest polymer consumer in the world after the USA and China, compared to its current eighth position. Supply and demand figures for leading polymer categories in 2004 are illustrated in Table 12.1.

Table 12.1

Demand for leading polymers in India, 2004 (kt)

Plastic Type Local Production Export Import Demand LDPE 195 0 15 210 EVA 5 0 35 40 LLDPE 550 150 75 475 HDPE 1000 100 70 970 PP 1450 300 100 1250 PVC 800 10 160 950 PS 300 100 10 210 TOTAL 4300 660 465 4105 Source: AIPMA / PlastIndia Foundation / Industry Estimates. Note - not inclusive of all plastics types The main centres of plastics production are in western India (e.g. in the states of Gujarat and Maharashtra), corresponding broadly with major petrochemicals industry sectors. Plastics processing is more evenly spread across the country, being closer to industries using plastics inputs and to consumer markets, rather than being close to raw material sources. The industry is fragmented across more than 20,000 processors, with around 100 large processors constituting about 35% of plastics processing output. India continues to import plastics despite its growing manufacturing capacity. These imports include some virgin plastic raw material, speciality polymers not produced by Indian manufacturers, and a certain amount of plastic waste. Tariff barriers have been systematically reduced in recent years. The customs duty is now 15 % for most polymers. Industry sources expect tariffs to come down to about 5-6% within next few years.

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12.3

Plastic waste recycling in India

12.3.1 Introduction
Collection and recycling of plastic and other waste in India involves an estimated 20,000 companies. Recent press reports valued the industry at approximately 1.3 billion177, although this seems high. No source was provided for this claim and no study to obtain this figure could be identified through secondary research. A very large proportion, and perhaps a majority, of recycling companies in India are operating at a small scale in the informal sector, and their output is unlikely to be accurately recorded in official statistics. It has been difficult to obtain authoritative figures on the volume of plastics that are recycled. According to the views of industry trade associations, as reported in the press, (i.e. the All India Plastics Manufacturers Association) around 40% of total plastics manufactured are recycled. One company gave an apparently accurate figure for total plastics production in India and followed this up with an estimate of the volume of recycled plastics which was equivalent to 30% of total production. Whatever the precise figure, the industry is clearly large in terms of volumes of waste dealt with and number of people involved. Some waste plastic types (e.g. nylon) are sourced directly from factories by dealers, with scrap and cast-off material being re-ground and re-used. However, a large proportion of plastics recycling derives from post-consumer or packaging waste and takes place in a complex chain involving waste-pickers, wholesalers, re-processors and end-users. This is described in the following paragraphs, in order to provide the context for understanding the recycling of plastics in India. In particular, this description highlights the linkages at the top of the recycling pyramid where large domestic waste dealers may also import plastic waste if they can see profitable opportunities in doing so. This account relies heavily on an interview and information in a report by Toxics Link, an environmental NGO based in Delhi178 . It is estimated that there are around 100,000 people involved in collecting waste in Delhi alone, and perhaps 1 million or more nationwide. For purposes of reference, Delhis population is around 14 million people, so around 0.7% of the population are involved in waste collection and recycling (not exclusively of plastics). The industry can be understood as a pyramid, with waste pickers supplying small, medium or large waste dealers, who in turn supply recycling units that sell recycled plastic back to the processing industry. In this sense the industry combines both organised segments (i.e. at the top of the pyramid) and a large informally organised workforce. The bottom of the pyramid and main section of the workforce consists of waste pickers, who collect plastics as well as other valuable recyclable commodities, such as paper or metal.

Figure 12.1

Schematic view of waste plastic collection/recycling industry structure

Recycling Units Large Waste Dealers Medium Waste Dealers Small Waste Dealers Waste Pickers
Source: GHK
177

Hindu Business Line: Plastics recycling units form organisation March 13 2005

178 Shristi / Toxics Link (2002) Recycling Responsibility: Traditional Systems and New Challenges of Urban Solid Waste in India, New Delhi

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The industry is highly complex, and it is not uncommon for plastics to be exchanged in as many as twenty transactions before being recycled. Waste pickers provide recycled products to small, medium or large waste dealers, so defined according to their storage and holding capacities. Large waste dealers sell either directly to factories or through agents, and it is not uncommon to find medium size waste dealers doing the same. Small waste dealers sell their waste scraps to medium or large dealers, depending on their capacity and turnover. The value of waste increases by more than 80% by the time it reaches the large waste dealers. A wide range of plastic types are collected and all sections of the workforce have well developed abilities in identifying different types of plastic waste. One article by an environmentalist suggests that PVC accounts for around 45% of recycled plastic, LDPE for 25%, HDPE for 20%, PP for 8% and PS for 2%, though the source of this information is unclear179 . This chain of collection, sorting and recycling is illustrated in Figure 12.2.

Figure 12.2

The plastic collection and recycling chain

Source: Priya Shah, (2001) In Delhi, a typical large city, recycling is carried out in the organised and unorganised (i.e. informal) sectors. The scale of units ranges from small unregistered units to medium-size labour intensive small scale industry, and in the case of PET recycling, to large automated factories with up-to-date technology. Capacity of firms ranges from 500 kg per day in the case of smaller units, to 25 tonnes in bigger units in the organised sector. Recycled product is used in a wide variety of applications including bags, household products, sandal soles, fibres, etc.

12.3.2 Trends in the import of plastic waste


Official data on import of plastic waste and scrap are provided in Table 9.2. According to the UN Statistics Division, 99.4kt was imported in 2004, worth just under 17 million. The USA, Netherlands and Germany were the largest exporters, accounting for 54% of all plastic waste imports to India. Imports in 1999 were 64.1kt.

179

Priya Shah, (2001) The Plastic Devil : Ecological Menace EcoIndia, Mumbai

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Table 12.2

Imports of Plastic Waste and Scrap to India, 2004

Exporting Country USA Netherlands Germany China France Belgium Japan Italy Mexico Australia Others

Trade Value () 3,519,406 2,862,855 1,476,314 1,453,560 938,670 870,859 660,622 651,682 604,194 541,648 3,328,927

Net Weight (ktonnes) 25.6 14.9 13.6 5.8 4.4 4.4 2.4 5.0 2.3 1.8 19.0

TOTAL

16,908,735

99.4

Source: UN Statistical Division Commodity Statistics Trade Database Interviews with the industry suggest that there are both supply and demand factors driving this growth. As mentioned, plastic scrap is considerably cheaper than virgin product. Although several importers pointed to the problem of unpredictable quality in imported waste, price is clearly a very significant factor in growing import levels. On the supply side, it has also been suggested that improved waste collection and segregation procedures in Europe and North America are also increasing the potential supply of waste, allowing large quantities of waste plastics to be sold to Indian companies for recycling. Although in value terms waste is a small proportion of plastic imports, in volume terms, the proportion is much larger. Volume figures on imports from the same (UN) source are not available. However, data on imports provided by the All India Plastics Manufacturers Association (AIPMA) suggests that waste imports could account for around a fifth of all plastic imports, as illustrated in Table 12.3.

Table 12.3

Import of waste by product and as % of total imports (kt/a)


Import of plastic waste Total imports Total Imported Imported domestic waste as waste as demand % of % of domestic imports demand
1,655 210 950 1,290 4,105 0.2% 0.0% 0.2% 7.3% 2.4% 2.5% 0.5% 1.0% 69.4% 21.4%

Plastic type

PE PS PVC Other Total

3.99 0.05 1.67 93.7 99.41

160 10 160 135 465

Source: UN trade statistics; All India Plastics Manufacturers Association According to the AIPMA, imported plastic scrap is nearly three times cheaper than virgin product. This explains the attraction of importing waste.

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There is also a smaller, growing trade in export of plastic waste from India. 15.1kt of plastic waste were exported from India in 2004 according to UN statistics. The data suggest that export of plastic waste from India is a new phenomenon, as the comparable figure for 1999 was just over 0.2kt. The main export destination for waste is China and Hong Kong, accounting for just over 25% of exports. The official UN statistics (provided by the Indian authorities) understate the actual quantity of plastic waste imported into India, due to the mis-labelling and illegal import of plastic waste, which will not register in the official data. This is discussed in more detail below.

12.3.3 Characteristics of waste importing firms


Seven companies were interviewed for this research, identified from e-trading websites and selected on the basis that they had offices in Delhi or Mumbai, and were willing to give interviews. While not providing a representative sample of waste trading companies, the information they provided is useful, giving an alternative indication of industry trends to statistical data. The companies usually deal in a variety of different types of waste, including HDPE, LDPE, PP, PS, ABS, PET, Nylon, etc. They import the waste and recycle it, and then sell this on the domestic market, or re-export the plastic in pellet format or finished products to the Middle East, Far East and Europe. The volume of waste plastic processed by these companies amounts to several thousand tonnes per year. All seven companies were primarily sourcing waste and scrap plastic from domestic sources in India, but were also looking for additional imported waste. One company had an import licence for waste and one had a factory in a Special Economic Zone (into which plastic waste can be imported without a licence). Others either said they obtained waste indirectly from recycling companies based in Special Economic Zones, or were vague as to how they obtained imported waste. Most of the companies had in fact been established for a number of years, with the newest one set up three years ago. The comments of all the companies suggest that demand for recycled plastic is buoyant, and all are looking to increase their turnover of product. However, information provided on the price of imported plastic waste compared to waste sourced from domestic sources gives a slightly confused picture of the market. As can be seen from Table 12.4 below, in some cases imported waste is held to be cheaper than domestic waste, and in other cases more expensive.

Table 12.4
Plastic type HDPE, LDPE, PP HDPE, LDPE, PP

Indicative prices for different waste plastics


Category Virgin scrap Virgin scrap Domestic/im ported Domestic Imported Domestic Domestic Price per tonne, 380-450 380-450 90 190 Note

LDPE Used bags PET Used bottles Source: industry interviews

Price includes cost of customs duty, clearing charge, damage charge Sourced from waste pickers Sourced from waste pickers

In addition to the data provided in the table, our interviewee at the industry funded Centre for Plastics in the Environment said that plastic scrap can be imported at 2 Rupees per kilo (25/tonne), and that this is cheaper than domestic scrap. It is difficult to establish a definite picture of the economics of imported versus domestic trade from a small number of interviews. However, all companies were actively seeking additional waste plastic from abroad through advertising, and most of their comments suggested that supply was limited from domestic sources. It may be the case that recycling companies have capacity to process imported waste and sell it on at a profit, even if imported waste is not particularly competitive from a price point of view compared to domestic waste.

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Box 12.1

Profile of a large waste trader / recycling / waste importing company

Amber Waste Recycling, based in Rajouri Garden, West Delhi is a family run enterprise that has grown rapidly since starting business three years ago. Their main source of raw material is smaller waste dealers based in various slum areas in Delhi, from whom they obtain HDPE, LDPE, PET. They also deal in Nylon, though this is sourced only from textile factories. The company has a plastic recycling (agglomeration) facility near Delhi in Rajasthan, and exports most of its recycled pellets to Germany where prices for imported plastic are higher than in India. The company advertised internationally (on www.alibaba.com , a general e-trading website) to import nylon and other plastic waste.

12.3.2 Regulations on import of plastic waste


India currently has strict regulations in place controlling the import of plastic waste. The relevant regulatory authorities are: Ministry of Environment & Forests (MOEF); Directorate General of Foreign Trade (DGFT), part of the Ministry of Commerce & Industry. MOEFs Hazardous Substances Management Division frames regulations relating to waste plastic (e.g. including restrictions on manufacture of plastic bags etc.). The Divisions formal mandate is to promote safe management and use of hazardous substances including hazardous chemicals and hazardous wastes, in order to avoid damage to health and environment. DGFT is responsible for ensuring import regulations correspond to the broader environmental policies established by MOEF. The relevant regulation for plastic waste is Public Notice 392 (PN)/92-97 dated 1.1.97 according to which import of plastic waste or scrap is forbidden, except under licence. The single exception to this rule is PET bottle waste/scrap which can be freely imported without a licence. Import licences for plastic waste are very hard to obtain and are only allowed for enterprises established after 16 June 1998. According to Public Notice 392 and its supporting notes, various criteria need to be met. In effect, only waste equivalent to virgin plastic can be imported (e.g. unused cuttings that are an offshoot of the production process). The appropriate State Pollution Control Board must approve the licence, and only on presentation of detailed documentation from the importing company, including information on the recycling process and equipment used. Consignments of plastic waste are also opened at Customs to ensure that only virgin-grade plastic is in fact imported, with samples subjected to laboratory tests before consignments are released. In addition, import licences are not open-ended, but need to be periodically renewed. Several companies we spoke to confirmed this picture. For instance, one company that had obtained such a licence noted that the officials dealing with his case had been strict and had taken considerable persuasion before agreeing to grant a licence. The company in question had advertised internationally to import HDPE and LDPE scrap, and had capacity to process up to 3kt per year. However, the quantity it could import was restricted to much less than this. According to DGFT officials only 10 12 companies have such import licences in India currently. DGFT documentation on requests for import licences for restricted items in the last four months of 2005 show rejection of one application for a licence by a Tamil Nadu-based company to import used PVC flakes. Views of relevant officials on possible change in regulations We spoke to both DGFT and MOEF officials regarding any possible change in the regulations. According to DGFT officials, the number of licences granted for plastic waste may increase slightly in future. However, the general position is that the Indian Government does not want the country to become a dumping ground for plastic waste. While the DGFT official interviewed did not expect the regulations to change, whether they do or not depends on MOEF policy.

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A MOEF official told us that the general presumption is that the existing policy on import of plastic waste as set out in Public Notice 392 will remain the same in future. It is worth noting the representation to the Indian government by the All India Plastics Manufacturers Association . This asks for relaxation of controls to allow the industry to import scrap (post factory waste, rather than post consumer waste), in order to compete with Chinese products internationally. Some concession is made to environmental concerns in the same submission, as illustrated below:

Chapter 39.15 Present Status: Except PET scrap, import of other thermo plastic scrap is banned. Our Suggestion: Since scrap imports are banned, India imports almost 7 to 8 percent of its virgin polymer requirement from the international market which, is almost three times more expensive than plastic scrap in the international market. The only way to compete in this existing scenario where we face competition from countries like China, is on the strength of pricing. This will not only help reduce quantum imports of virgin polymers, but also, will help us save valuable foreign exchange and be competitive in the international markets. The scrap can be used for certain domestic applications as well. Provision should be made for the Industry to import Scrap (Post Factory Waste) to compete with the Chinese products internationally. Scrap has been an issue of concern for long and to keep a vigilance on its use, we suggest that special Scrap Processing Zones be created for Plastics Industry in every State. This will help maintain a strict check since, the imports would directly be brought to this zone alone, to be processed into products for further supplies internationally.180
MOEF stated that they are now considering easing scrap import restrictions, but only on a case by case basis. Scrap (e.g. industrial trimmings), not post-consumer waste, might be allowed in particular instances and officials are currently studying this to see how it might be allowed. The current thinking is that any exceptions to the rule should be carefully specified, e.g. with scrap imports specifically allowed for recycling for a particular product. The example given was that industrial trimmings from PVC floorings might be allowed, but only on condition that their recycling conforms to Bureau of Indian Standards regulations. Overall, comments from the two ministries suggested that the overall policy presumption against importing waste will stay in place. However, the existing exemption for PET recycling, previously obtained after industry lobbying, and the discussion of making exceptions in some cases suggest that a moderate additional amount of scrap imports will be allowed in the future. If the compound rate of growth for plastic waste as recorded in the UN statistics between 1999 and 2004 was 7.6%, then the comments of officials suggest this growth rate might increase somewhat in the next few years.

Alternative and illegal import routes


Despite the very strict regulations on importing plastic waste, our research suggests that a large amount of waste is in fact entering India through a number of alternative routes including legal loopholes and illegal activities. An example of such illegal imports made the headlines in India in 2002 when it was found that a 0.4kt consignment of waste acrylic polymers from Denmark was found to have entered India181. These routes include: taking advantage of loopholes in regulations relating to Special Economic Zones (SEZs) and Export Processing Zones (EPZs) straightforward corruption i.e. bribing officials to allow prohibited cargoes to pass into the country mislabelling of waste to disguise it These can be described briefly as follows.

Import through SEZs and EPZs

180

AIPMA 58th Annual Report (2004) Proposals for Union Budget 2004-2005 New Indian Express, 12 February 2002 Denmark minister apologises for illegal plastic waste imports

181

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A wide variety of plastic wastes, that would otherwise be forbidden, are allowed to be imported into Special Economic Zones and Export Processing Zones, with the proviso that 100% of the reprocessed product is exported. The relevant regulatory instrument allowing this is Notification No. 37 (Re-98)/97-02, dated 23rd December, 1998. As a result, a large number of importers and recycling units are located within these zones, and reprocess waste plastic for export. However, according to industry sources, the plastic waste can be taken out of the zone and legitimately imported into India proper. This is achieved through a loophole in the law under which imports into India are restricted as described above, but transfer of product from an EPZ or SEZ is allowed as long as duty is paid. According to one company, thousands of tonnes of plastic waste is imported into India in this way each year. This tallies with the reports of at least two other companies interviewed, who explained that they did not import waste themselves but bought it instead from companies located in an SEZ. According to one interviewee, this practice is well-known in the industry and also to the authorities, but a blind eye is turned to it. The officials we spoke to in Delhi acknowledged that this might have been a problem in the past, but claimed this had been resolved.

Illegal imports
In addition to legitimate transfers of waste via SEZ / EPZ routes our interviews suggest that a certain amount of illegal importing takes place. One interviewee involved in recycling noted that his company sourced domestic waste only, as it was cheaper than imported waste. According to this source, domestic waste could be obtained for 15 16 Rupees per kilo (0.18/kg). Similar grade waste could also be imported for the same price. However, 4 Rupees per kilo (0.05/kg) had to be paid in bribes to Customs officials and a 1 Rupee per kilo (0.01/kg) payment made to Pollution Control Board officials. The implication that there is a fixed price per kilo for facilitating import suggests however that the practice is likely to be well established and that it may be significant in terms of volume.

Mislabelling of plastic waste


According to research by environmental campaigners, substantial amounts of electronic, or e-waste, (defined to include used computers, TVs, mobile phones, refrigerators, etc.) is illegally imported into India every year from developed countries182 . This is recycled predominantly in the so-called un-organised sector of small enterprises, and is often focused on reclaiming recyclable metals (e.g. copper, gold, etc.) and some of the plastic from the original product. Much of this scrap is imported under the category of Mixed Metal Scrap or Mixed Cable Scrap, hiding the fact that it may also contain substantial amounts of plastic waste. In addition, those consignments of waste that are barred by Customs are often auctioned off to the highest bidder, (rather than being returned to the country of export), thereby creating an alternative method for plastic waste to enter.

12.3.3 Assessment of future trends in waste imports


From the discussion above it can be seen that the pattern of future imports of plastic waste will be influenced by growth patterns in both legitimate and illegal imports. In this concluding section, a broad assessment of the potential trends in plastic volumes is made. As will be seen from the following discussion this remains a highly conjectural exercise and is for the purposes of scenario planning, rather than a rigorous forecast.

Legitimate waste imports


As noted above 99.4kt of plastic scrap and waste was imported in 2004 according to official data. This represents a 7.6% compound annual growth rate compared to the volume of imports in 1999. In assessing what future growth rates might look like the following broad factors need to be taken into account: A key driver of plastics consumption in general in India is economic growth, which drives not only increases in consumer packaging waste but also investment items such as plastic construction materials or pipes for agricultural use. GDP growth in India is estimated by the World Bank to be in the range of 6% 7% over the next five years.

182

Toxics Link (2004) E-Waste in Chennai: time is running out New Delhi

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The plastics industry has typically grown faster than GDP in recent years, giving credence to forecasts of consumption tripling to more than 12,000kt in the next five years. Although it is likely that a large part of this demand will continue to be met by domestic production, falling customs duties and possible lack of capacity in the industry mean that imports are likely to continue in some categories for some time. Although virgin and waste plastic are not exact substitutes due to quality issues, these factors would suggest continuing demand for imported waste. It is also worth noting again that lack of capacity is already cited by the industry (e.g. in the AIPMA submission cited above) as a reason for relaxing waste import regulations in order to meet demand. However, discussions with government officials suggest that the regulatory framework on import of plastic waste will remain in force and more or less retain their current shape, with only limited exceptions allowed. This would suggest that the trend rate of growth for legitimate waste imports can perhaps be expected to increase slightly.

Illegal waste imports


Unfortunately, while it is clear that a certain volume of illegal plastic waste continues to enter India, due to its (semi-) clandestine nature it is very difficult to assess either the scale of the trade, or its potential rate of future growth. In terms of volume, the only indications provided by the interviews carried out for this survey were from sources who were not directly involved in the trade, but knew other companies and individuals that were. According to these thousands of tonnes of illegal plastic are currently being imported. However, given the scale of interest in illegal waste among environmental groups, and the existence of a free and inquisitive press in India, (the current journey of the contaminated French aircraft carrier Clemenceau has attracted front page headlines for instance) it seems likely that if the illegal trade were greater than the current level of licensed imports, it would have attracted exposure and censure. Taken together, this would suggest that the level of illegal plastic waste imports is perhaps in the range 1% - 100% of legitimate imports.

12.4

Summary

India is not a significant player in the recovered plastics trade. This could change if current import restrictions are eased. Indias plastics industry is five decades old and historically has grown significantly faster than GDP. Demand for polymers grew from less than 100kt in 1970 to an estimated 4,500kt in 2005, with large capacity additions by major producers taking place particularly in the second half of the 1990s. In the last decade, India moved from being a net importer of polymers to having a substantial export surplus, and this trend is set to continue. The industry grew by nearly 20% in 2004, and various industry sources have predicted trend annual growth rates of around 12% - 15% in coming years. India continues to import plastics despite its growing capacity. This includes some virgin plastic raw material, speciality polymers not produced by Indian manufacturers, and a certain amount of plastic waste. Tariff barriers have been systematically reduced in recent years, with the present customs duty being 15 % for most polymers. According to industry sources, it is expected that tariffs may come down to about 5-6% within the next few years. This may lead to an increase in imports (which constituted just 11% of plastics consumption in 2004), although our industry interviews suggest that large plastics producers operate cartel-like mechanisms to try and keep imported products out of the market. Imports have grown rapidly in the last six years, with a compound annual growth rate of 7.6% during this period. Official trade statistics show that 99.4kt of recycled plastic were imported in 2004, worth just under 17 million. The USA, Holland and Germany were the largest exporters, accounting for 54% of all recovered plastic imports to India. Unfortunately, while it is clear that a certain volume of illegal plastic recyclates continues to enter India, it is very difficult to assess either the scale of the trade due to its (semi-) clandestine nature, or its potential rate of future growth.

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There is also a smaller, growing trade in export of recovered plastic from India. 15kt of recovered plastic were exported from India in 2004, an increase of 14.9kt since 1999. The main export destination for recovered plastic is China and Hong Kong, accounting for just over 25% of exports. The Indian government are now considering easing scrap import restrictions, but only on a case by case basis. Scrap (e.g. industrial trimmings), not post-consumer waste, might be allowed in particular instances and officials are currently studying this to see how it might be allowed. The current thinking is that any exceptions to the rule should be carefully specified, e.g. with scrap imports specifically allowed for recycling for a particular product. Overall, consultations suggested that the overall policy presumption against importing recovered plastics will stay in place. However, the existing exemption for PET recycling, previously obtained after industry lobbying, and the discussion of making exceptions in some cases suggest that a moderate additional amount of scrap imports will be allowed in the future.

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13.0 Future export demand 13.1 Introduction

This chapter considers the future outlook for the recovered plastic export market, with a focus on markets outside the EU. The analysis is built on the exporter and importer profiles provided in the previous chapters which cover the EU, USA, Japan, Hong Kong, China and India. The quantity of recovered plastic exported is influenced by, among others: The volume and type of UK supply Whether the export or domestic markets are prepared to pay a higher price for plastic of a given type and specification, net of shipping and other transaction costs Non-price factors such as risk and security Whether public policy at national and local level is neutral, positive or negative towards export

Supply
UK supply side issues have been discussed in chapters 2 to 4. The preceding analysis shows that the quantity of packaging waste recycled and reported under the Producer Responsibility Obligations (Packaging Waste) Regulations is expected to increase from 414kt in 2005, to over 685kt in 2015. The 86kt of recovered plastics exported in 2004 that were additional to the declared PERN volume are thought to include: post-production scrap, re-exports of material from Ireland and other countries, shredded plastic from ELV/WEEE processing, off spec virgin material and international sales of semi-processed flake. The destination and volume of recovered plastic exports are understood better than the origin or type of material being shipped. There are fewer data on ELV and WEEE derived waste plastic arisings but the quantities of these materials placed on the market are expected to increase. At present the bulk of the separated plastic from WEEE & ELV sources is relatively low and is thought to be finding outlets in the export market, rather than the UK.

Price
Recovered plastic is a commodity good. As with other traded commodities (coal, steel, paper pulp, scrap metal, etc.) materials find a market that matches specification, availability and price. There is nothing in the nature of the product that differentiates UK recovered plastic of a given specification from that exported by Holland, Germany, Japan, the USA or any other country183. The UK has a small share of the overall global market and does not have sufficient market share to significantly influence the market price offered: it is a price-taker, not a price-setter. The UK has, for example, around 5% of the Chinese market for recovered plastic imports. Prices in the domestic market are heavily influenced by the export market. As recent experience has shown, the presence of a price premium in the export market can draw collected material overseas in large quantities.

Non-price factors
The size of the export trade is also determined by the willingness of UK vendors to sell the material they have at the price offered by the global market. This choice is influenced by non-price factors such as perceived risk (both financial and relating to reputation), market knowledge, terms of contract and payment, local authority policy and the quantities involved. While there is a market for individual spot trades, consultations show that much of the business is built on long-term relationships and contracts that cover multiple deliveries.

Public policy
Public policy matters to the export market. For example: Local governments (waste disposal authorities) can specify that their recyclables should not be exported National government policy can set rules or incentives that affect access to, and the cost of, export (e.g. the terms of issue for PERNs/PRNs in the UK, or policies in countries such as France that have favoured domestic recycling, and standards on export and import of materials in source and destination markets)
183 It is noted that some common types of available waste plastic may vary between international markets: e.g. different levels of PET barrier bottles, use of heavier returnable PET bottles, different colour mixes etc. However material value should be comparable where the specification is equivalent.

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Table 13.1

UK supply side outlook a summary (kt)


Sector Projections
Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled (minmax)

2005
2,0402,200 414 19-20% 60 <3 <5% 196 Low Low 219 Low Low 2,5152,675 c.425 16-17%

2008
2,2022,675 503-548 19-25% 60 10 17% 204 23-68 11-33% 242 68 28% 2,7083,110 604-695 19-27%

2010
2,323 2,934 580-692 20-30% 60 15 25% 234 47-117 20-50% 258 89 34% 2,8753,405 731-913 21-32%

2015
2,565 3,814 686-1,028 19-40% 60 29 48% 252 101-177 40-70% 281 104 37% 3,1584,300 920-1338 21-42%

Packaging

Agriculture (excluding agricultural packaging)184

Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled Plastics waste arisings185 (kt/a) Collected for recycling (kt/a) % recycled Plastics waste arisings (kt/a) Collected for recycling (kt/a) % recycled

ELV

WEEE available for recycling

Total

Other plastics waste (e.g. process scrap, plastics construction waste, etc.)

Not within scope of study. NOTE: some of these wastes will account for the current gap between export trade statistics and PERN returns.

Source: various references, see Chapter 2 Public policy can mandate use of recovered plastic in products sold in the domestic market, creating an enhanced local demand for recovered material beyond that which would exist in normal market conditions (as is the case in some parts of the USA)

Outputs & Focus


In producing export projections accurate information on trends up to and including the chosen base year and an understanding of how the market will evolve in the future are required. In the case of recovered plastic these conditions are only partially met as, as shown in Chapters 2 and 5. The origin of c.25% of existing (2005) UK exports is undetermined and there are gaps in the data covering the remaining c.75% UK trade data do not provide a reliable guide to the type of materials being exported186
184

Agricultural packaging arisings and recycling rates are included in packaging data in this table, but are identified separately in chapter 2. assumes 22% of WEEE is plastics (ICER 2000) See discussion in Chapter 5.

185

186

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While at a general level the drivers of export demand are clear, there are significant gaps in the data on endmarket applications The terms of reference for this study require projections for 2008, 2010, 2015. As of 2006, the extensive global trade in recovered plastic is no more than ten years old, and in its current shape and form dates back only five years. Like many secondary markets it is volatile and so difficult to predict. Furthermore, a direct mapping from source to application for the UK, even in the base year, is not possible with present data. In looking forward there has therefore been an effort to focus on what matters: To determine the strategic direction of export market development: Will demand continue? Where will it be? What is the outlook for individual materials? To explore the outcomes from alternative scenarios To identify and understand risks and key influencing factors To provide as much detail as possible, but not to extrapolate further than the underlying data will support

13.2

Outlook

13.2.1 General pattern of trade


Current situation
As Chapter 5 describes, the global recovered plastic market is characterised by: Extensive trading within the EU and NAFTA bloc Net exports from both these regions, and from Japan, Australia and other wealthier nations to developing countries Trade between the EU, NAFTA and Japan is much smaller that their exports to the developing world. This is fairly typical of secondary products markets. There is also increasing evidence that demand from China is drawing material out of other emerging economies in Asia and South America. As plastic consumption (and hence waste arisings) in these countries is increasing, they are also being recruited as sources of recovered plastic for Chinese industry.

Future developments
This general pattern of trade is expected to continue into the long term. Plastic industries in lower income countries tend to have a higher utilisation rate (e.g. 20%) for recovered plastics compared to those in wealthier economies (e.g. 6%), in part because they are used in applications that have a different set of price/quality trade-offs. In an increasingly efficient global marketplace where the barriers to trade are falling, the demand for lower cost inputs can be met by imported secondary material. The only circumstances under which a reversal of present trends is expected is if new regulations: Placed hard barriers to exports of recovered material from the EU Forced domestic markets to use locally recovered material, e.g. through mandating a percentage of (EU) recycled content

Neither of these is a prospect at present, but could not be ruled out in the period to 2015.

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13.2.2 Location of demand


Current situation
It is estimated that more than 70% of all imports of internationally traded waste plastic end up in China (Figure 6.1), which accounts for most of the exports from OECD markets to the developing world. China also imports material from emerging and recently industrialised economies such as Malaysia, Korea and Taiwan. By comparison other importers are small.

Figure 13.1

Estimated share of demand for internationally traded recovered plastic

India 1% NAFTA 11%

EU 14%

Others 3%

China 71%

Source: GHK from international trade data for 2004. Country of import is here assumed to reflect location of final demand. Chart assumes China imports 4,700kt/a rather than 4,000kt/a declared, i.e. adjusted to fit Hong Kong data (see text). Hong Kong not shown: it is a transhipment port only and provides no final demand.

Future developments
Over the next ten years, the OECD markets share of world plastic consumption is expected to fall. Growth rates in other markets the major Asian economies but also South America, the Middle East, South-East Asia are higher than those expected for the EU, North America and Japan. Consultees for this study noted the emergence of markets for recovered plastic in Eastern Europe and Russia and the Middle East over recent years. The increase in plastic consumption in non-OECD markets also creates new sources of supply of recovered plastic material. With current plastic consumption of 4-5kg/capita/yr in India and 10-15kg/capita/yr in China (compared to an EU average of 98kg/capita/yr), a population of around two and a half billion people in these two countries alone and a tendency for plastic consumption to grow faster than GDP, the demand for plastics, both new and recovered, will clearly be substantial. The issue is whether, for each material, the imports of recovered plastic will retain their current share of the larger market. China is the more open than India to recovered plastic imports due to its more liberal Green List schedule and the low freight rates from Europe and North America. Our research suggests that China will continue to be the focus of the recovered plastic trade for at least the next five years, and probably longer. Growth in Chinese waste plastic imports should be expected to fluctuate in line with domestic demand, manufacturing output, prime prices, domestic recycling trends, etc . Only punitive regulatory change in China (Green List changes and import controls) would cause it to lose the central role it has in the market. The path and timing of regulatory change in China cannot be predicted but the past ten years has seen a focus on eliminating imports of contaminated and low-grade material that carries a threat of pollution. This is being achieved directly, through standards, and indirectly, by accreditation of suppliers, rather than any fundamental restriction of imports. Chinas accession to the WTO has also reduced recovered plastic import tariffs and liberalised other aspects of the trade. India has a more restricted Green List schedule than China and a very small share of global imports of recovered plastic. If more types of plastic were legally importable to India, its overall market share would increase. However, container freight costs from the UK to India are much higher than those to China (around 2200 per

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forty foot container compared to 500 or so to Hong Kong/China) so the prices offered would need to be higher to divert large quantities of material from the UK-China trade. Only if India was able to create the same manufactured trade surplus as China, and hence the imbalance in inward/outward freight rates, would the Chinese advantage be eroded. For the present at least, this seems unlikely.

Role of Hong Kong


Hong Kong has a strategic function in the international trade with China. It is a well-connected transhipment hub that lies outside Chinas customs and environmental controls. The movement of material into China via Hong Kong appears to carry a lower risk of customs intervention than direct shipment, and is favoured by some importers for that reason. Although the size of trade has increased, Hong Kongs share of Chinas external trade has been in decline for some years as new and efficient ports have been built in the Mainland. Factors reducing Hong Kongs significance as a hub for the recovered plastic trade include: The internationalisation of the Mainland reprocessing sector, i.e. more Chinese buyers being equipped to buy direct from sources markets (in terms of language, familiarity, finance facilities, etc.) Mainland ports increasing share of China-EU and China-US container freight movements The normalisation of customs and import procedures in China, support by exporter accreditation and customs clearance, so that direct shipment poses limited additional risk for exporters Only 25% of UK exports were shipped direct to China in 2004, in comparison to 50% of both German and US exports, 75% went first to Hong Kong. It is not clear whether this reflects a greater proportion of lower grade material in the UK exports, or simply the strength of historical business ties between the UK and Hong Kong. German and US exports in 2004 had a higher value per tonne than those from the UK, but it may not be sensible to put too much weight on the declared value statistics in this trade.

13.2.3 Demand drivers


The overall demand for recovered plastic imports is made up of the demand from a series of separate plastic material markets. These individual markets have some common features and drivers (e.g. economic and investment climate, feedstock prices) but many differences. For instance, demand for PET bottles in China is driven by the markets for, and economics of, polyester fibre for toys, furniture, etc. This has very little to do with demand for recovered ABS used in electronic and electrical manufacturing. As with the supply side, the analysis is therefore best done on a bottom up basis, looking at individual plastics, and researching: How demand is expected to change for the specific products where recovered material is used (e.g. future demand for stuffing for soft toys) What influences the use of recovered as opposed to prime plastic (qualify, price, supply availability) and how those factors are likely to change in the future How domestic recovered material competes with imported and whether relative shares are likely to change

This is a data-intensive process that is achievable to a degree in UK markets, but more challenging in China where the firms are more numerous and supply chains more opaque.

13.3

Scenarios and Projections

13.3.1 Projections
For the next 5 years, unless there is liberalisation of Green List controls by India, Chinas demand for recovered plastic is going to determine the size of the international trade in recovered plastics beyond the EU and NAFTA. Other markets are emerging, but they are likely to remain dwarfed by the Chinese market for the time being.

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Summarising the analysis of market and regulatory conditions provided in Section 10, it is concluded that Chinese demand for recovered plastic is set to be sustained and to grow, at least to 2010 and probably well beyond. Chinas consumption of synthetic resin has increased at double-digit annual rates over the last 10 years (see Figure 6.2). Steady growth is expected to continue (Table 6.1). Large investments are being made by international firms and domestic companies to expand capacity, but import of many millions of tonnes of prime resin continues to be required to sustain the growth in output of domestic and export manufacturing businesses. In circumstances of strong competitive pressure and varied markets, recovered plastic has acquired a share of this growing market for material. However, the demand for recovered plastic is not determined simply by deficits in domestic supply of prime resin and so need not decline if and when domestic production capacity does catch up with demand. Nor is it solely a matter of high prime prices, though these did contribute to the surge in demand seen in 2004. This is illustrated by the continuing high demand for PET bottles despite excess virgin PET production capacity in China. Demand is driven by manufacturers seeking plastic inputs at a price lower than that of the prime resin in order to gain competitive advantage. Quality requirements for a wide and growing range of plastic applications can be met by recycled plastics at a discount to virgin. Even if prime prices fall significantly, the baseline demand for recovered plastics, particularly for less quality-sensitive applications is expected to remain. On top of this baseload demand, the comparatively high prime prices of the past couple of years have help to drive an additional move from prime resin to recovered plastic by other manufacturers that have the scope to do so. Intense competition and fixed contract terms mean that manufacturers have had only limited scope to pass higher input costs to buyers, and so have had to look hard at production costs. The percentage of recovered plastic used in individual applications varies from 5% to 100% depending on quality and performance standard. A wide spectrum of recovered plastics is being imported into China from mixed post-consumer plastics to production scrap. The scope to substitute recovered plastic for prime resin is higher with production scrap, and the latter trades at only a 10% discount to the prime as a consequence. As a general case, the applications are either: For the low-end domestic Chinese market For the general export and domestic market in applications where the appearance and performance parameters are compatible with use of recovered plastics At a material level, this translates into demand for: PET, for use in staple fibre applications (e.g. stuffing for soft toys, furniture, textiles) ABS, for use in the manufacture of toys, electronic and electrical equipment, etc. PE, for applications including household products, packaging, construction and agricultural plastics PP, for applications including packaging PVC, for applications including construction plastics

The plastic products market in China is evolving rapidly and it can be expected that the recovered plastic market will change in line with it, and probably exhibit further instances of the volatility seen in 2004. Beyond 2010 the outlook is, as a result, increasingly uncertain. It is expected that sustained high prime resin prices will further encourage innovation in the use of recovered plastic by manufacturers in China. This will expand the potential range of applications for recycled plastics. Waste plastic collected from domestic sources in China is unlikely to displace imported material in the next five years and quite possibly longer (see Section 10). Data on domestic collection of plastic wastes appear scarce. It seems plausible, however, that a reliable and large-scale supply of recovered plastics depends on the establishment of formal waste management systems that include separation of recyclables. This is a general case, specific markets and requirements may be impacted more significantly. On the basis of a simple linear extrapolation of the trend in declared imports from 1999 to 2003, official recovered plastic imports were on track to hit 5,000kt/a by 2008 and 5,500kt/a by 2010. However, the added impetus of the higher prime prices from 2004 onwards has pushed the linear trendline towards 5,500kt/a by 2008

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and 6,500kt/a by 2010 (Figure 13.2). With 2005 declared imports standing at 5,000kt, there is a very good fit polynomial trendline that would put 2010 imports nearer 12,000kt (Figure 13.3). There is no basis for knowing whether the near-1,000kt increase shown in Chinas 2005 import data reflects better measurement of the trade, or a true increase in underlying demand. As discussed above, past figures have probably under-stated actual imports by 20%-25% so that the true demand in the market has been correspondingly higher than shown in the charts 13.2 and 13.3 below. Given reasonable assumptions about utilisation of recovered plastic compared to prime resin, the increases seen from 1999 to 2004 are compatible with annual increases in consumption of many plastics in China over the past few years and with those projected for the coming 5 years or more, particularly if high prime prices are sustained. Chinas consumption of the five major resins in 2004 has been estimated at a little over 30,000kt. Declared recovered plastic imports, excluding the other category (which is thought to include a large share of PET and other plastics as well as ABS), in 2004 were 2,300kt, (2,500kt if ABS is included). This is about 7.5% of prime demand for the same plastics. If these imported recovered materials did no more than maintain their existing market share, official imports (excluding PET) in 2008 would be 3,000kt and 3,800kt in 2010. These rough and ready approaches suggest potential additional demand of 500kt/a-1,000kt/a each year, spread across all recovered plastics. However, as Figure 13.4 illustrates, the headline import figure hides significant movement from year-to-year in the apparent imports of individual polymers. Even if trade data are discounted as unreliable, anecdotal evidence suggests that sub-markets have their own dynamics (as is the case in the UK). The dynamics are shaped by, for example, trends in electronics, intensity of construction investment, etc. US and EU limits on Chinas growth in exports of products (e.g. textiles) feed back into reduced demand for the associated plastics. It would be preferable, in time, to build up material specific projections mapped more closely on to the demand drivers for individual plastics. Most of all, the cumulative analysis conducted in this study suggests that much more needs to be known about the capacity and growth rates of recovered plastic applications in China for more reliable forecasts of demand to be feasible. This could be put together with macro-economic parameters in order to build more solid projections than are possible at the present.

Figure 13.2
8000 7000 Annual imports (kt) 6000 5000 4000 3000 2000 1000 0

Linear extrapolation of imports 1999-2005, to 2010

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2010

Figure 13.3
14000 Annual imports (kt) 12000 10000 8000 6000 4000 2000 0

Polynominal trendline on imports 1999-2005, to 2010

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Source: GHK Looking at the overall market, a Base case export demand scenario would be associated with the following general market conditions: Continued growth in the Chinese domestic economy on the recent trend line (i.e. annual growth in GDP of 7%-9%) Sustained export demand for Asian consumer goods from European and North American markets Feedstock prices in the range observed in 2004-2006 No changes to the regulations governing trade in recovered plastic, either in Europe or China, such that material of an adequate standard can reach end-markets

A Low export demand scenario would be associated with: A sustained fall-off in US/EU demand for Chinese exports and a slow-down in the Chinese domestic economy A significant fall in international prime plastic prices Systematic over-supply of resins in the Chinese market leading to heavily depressed domestic prices New regulations and enforcement that imposed significant restrictions on the type of recovered plastic legally importable to China (either in terms of type of polymer or the nature of previous use)

A High export demand scenario would be associated with: Feedstock prices moving higher than recent levels Strong global economic growth translating into strong consumer demand for Asian exports in key sectors such as textiles, toys, electronics and plastic products Strong growth in Chinese domestic economy and, in particular, above-trend income increases among the rural population and sustained growth in the construction sector Chinese import controls largely unchanged and the gradual opening up of new markets (e.g. liberalisation of Indian import regime for recovered plastic) Any measures that substantively reduced Japanese or US supply into the export market (e.g. additional export controls from Japan or extension of the mandated recycled content measures in the US that were sufficiently demanding to cause domestic buyers to be able to out-compete export markets on price)

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2010

Chinas imports of recovered plastic in 2005 stood at 5,000kt and at a value of 1.1 billion. On the evidence collected, the recovered plastics trade has not really been on the radar screen of the plastics industry, but as it grows, that seems likely to change, particularly as recovered plastics replace prime polymer in a larger set of applications.

Figure 13.4

Chinas declared imports of recovered plastic (kt)

6000 5000 4000


kt

3000 2000 1000 0 1999 2000 2001 PE PS 2002 PVC 2003 Other 2004 2005

Source: China Customs Information Centre

13.3.2 Implications for the supply side


If demand is increasing at 500-1,000kt per annum is the global market capable of supplying it? So far the evidence is that it will. Larger demand and higher prices appear to be stimulating new and additional supply on a global basis, with material being sourced from Asia and South America as well as OECD markets. Export demand is drawing out material that might otherwise be processed in their domestic economies. It is also playing a large part in absorbing the additional supply coming from policies such as the Packaging Directive. PlasticsEurope data from recent years, for instance, suggest increases in collection for mechanical recycling in Europe in the order of 300kt per year. A large fraction of this additional material is being exported. The continued existence of a buoyant international market does not, in itself, dictate the volume of UK exports. As described in chapters above, domestic factors have a large role, such as the presence/absence of a manufacturing industry, with potential demand for the material (electronics/ABS being an example) and the financing of recovery.

As present, the UK accounts for a 4% to 5% share of overall supply into the recovered plastics market as a whole and this seems unlikely to change dramatically. The quantum of supply into the market from Europe and elsewhere is expected to increase, but given that demand is also projected to rise, problems of over-supply generally seem unlikely. However, the supply/demand balance for specific polymers and applications will be dynamic; specific over-supply challenges may require addressing (e.g. PET for fibre, ASR plastics). The general conclusion is rather that export demand will put continued pressure on recyclers in OECD markets to find niches where they can be competitive. The proportion of supply to the international market seems set to shift gradually towards post-consumer material as: The EU Packaging Directive and equivalent Japanese legislation increase recovery from the municipal waste stream; Improvements in manufacturing efficiency are expected to reduce waste arisings per tonne of output from industry.
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If the export policies of other EU member states became more restrictive (e.g. due to popular back-lash against exports), supply would tighten and, at the margin, favour increases in UK market share.

13.4

Summary

Demand for material from the export market will continue to exert competitive pressure on recyclers in the UK and elsewhere. The lower labour cost of emerging economies in Asia and elsewhere provides a competitive advantage to reprocessors and manufacturers in an environment of increasingly globalised investment, sourcing and supply. As with the prime resin, the prices and dynamics of individual secondary plastic markets vary and valid generalisations are difficult. However, all indications are that China is set to remain the focus of global export demand for recovered plastic for the next five years. It is expected that future demand for recovered material will be influenced by prime plastic prices and by income growth and the strength of consumer spending in the Chinese domestic economy anecdotal evidence suggests that recovered plastic is used more in products sold into the domestic market than in exports. Evidence to date is that the global market is capable of delivering this supply, albeit at the expense of exposing domestic reprocessors to competitive pressures that they may not have faced previously. Looking beyond China and into the longer term, additional demand is expected from India and other regions where plastic consumption is increasing. The global consumption of plastics is over 200,000kt a year. Based on the experience of several European countries with strong domestic recycling activity, it appears that from a technical perspective well over 20% of this global consumption could reasonably be met by recycled plastics. Long term demand for recycled plastics appears to be structurally strong for most materials considered whether it be from recyclers in the UK, Mainland Europe, China or emerging economies. The actual flows of material will therefore be determined by both price and the extent to which sellers wish to incorporate nonprice factors into their selling decisions. For example, suppliers of waste plastics in the UK can, if they choose, guarantee material is recycled in the UK but may in some cases have to accept a lower purchase price in return for this facility. The differences in prices paid for equivalent waste plastics by domestic and overseas buyers are not only determined by shipment and labour costs. In part, indirect factors such as business costs of environmental controls, environmental taxation (e.g. Climate Change Levy), health and safety and other social costs are components of the final pricing. In this regard, the UK plastics recycling industry is generally competing based on working to higher operating standards (with associated costs) than some international buyers outside the EU. Higher minimum international standards for recycling could level the playing field in relation to these indirect cost factors. This could in turn impact on where recycling occurs. The prevailing regulatory framework can influence supply/demand balance very strongly. This is particularly obvious in the ELV waste stream where verification protocols on the amount of other materials accepted as recycled, and the revision of the long term targets can have fundamental impacts on the investment of businesses in the extraction of plastics for recycling, and the supplies of materials arising.

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14.0 Risks & Risk Mitigation 14.1 Introduction

The preceding chapters show how the demand and supply of recovered plastic in the UK and internationally are matched in profit driven markets that are shaped by regulations that govern the supply, trade and processing of the material. These chapters suggest that the most probable position is that markets for UK waste plastics in the period to at least 2010 and probably beyond will generally be limited by available supplies, not by limits on demand. This chapter explores how market and non-market (regulatory) factors could impact on the domestic and international recovered plastic sector. It provides an assessment of the risks associated with key end markets, such as changes in indigenous processing capacity, prices and the balance between supply and demand. It also describes possible risk mitigation measures that could be taken. The study has considered risks that would limit the growth in recycling of UK plastics waste to target levels shown in this report. Recommended actions are considered primarily from the perspective of policy makers and delivery agencies seeking to achieve the identified national growth levels in plastics recycling. It should be emphasised that the management of many of the risks described here should be considered as processes, not one off events. The analysis in this report highlights that the global market is dynamic and that there are also many factors that will influence supply. It will be important for the UK to introduce and/or improve ongoing monitoring and feedback systems to manage risks and deliver continuous improvement. The issues relating to risk are described in more detail in this following section and a summary of the main risks is provided at the end of the section. A full tabular summary of the key risks, their relative impacts and the associated recommended mitigating actions is provided in table 16.1, in the Recommendations section.

14.2

1Domestic market

14.2.1 Supply side


The risks to the supply of UK collected plastics for domestic recycling fall into four broad categories: Changes to regulatory frameworks & economic instruments Deterioration of market economics of recycling Changes in societys priorities and changes in householder behaviour Innovations in products, materials and waste processing technology Collapse of export demand187

Regulatory framework & economic instruments


Most of the economic instruments used to minimise waste and influence supplies of recyclable materials are common to many waste streams and not specific to plastics. Regulatory interventions and the associated use of market instruments to achieve desired outcomes have had a transformatory impact on plastics recycling. The presence of recycling targets has underpinned the ability of the market to offer solutions, by encouraging investment in systems to fulfil the future need of greater recycling. The risks to supplies of plastics for recycling from changes to the regulatory framework, appear generally low. The EUs long term vision as set out in the Thematic Strategy on the prevention and recycling of waste188 is
Although not directly a supply risk, the UKs heavy reliance on export markets means that although unlikely even a shortterm market collapse would undoubtedly damage investment confidence in future collection infrastructure. It would also probably result in materials not readily handled in the UK (particularly mixed plastics) being diverted to recovery or landfill, rather than being recycled.
188 187

Commission of the European Communities, 2005

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stated, in part, as a continuing move to a recycling society. European policy also aims to encourage activity on the basis of beneficial environmental impact using more life-cycle consideration. On both these points plastics recycling can make a contribution: end of life plastic products represent a large waste stream from which a substantial proportion of the waste could potentially be recycled. Studies consistently show savings in CO2 emissions as a result of plastics recycling. It is very difficult to envisage regulatory backtracking on current targets for plastics recycling in most areas with ELV plastics perhaps being the exception. It is also difficult to envisage weakening of mechanisms such as the UKs landfill tax, given the ongoing commitment to increase this tax. The risk that regulations would deliberately be conceived to act as the brake on the growth of plastics recycling is considered highly unlikely. There are, though, some areas where regulatory decisions may indirectly result in the market conditions for supply changing (e.g. increasing the statutory priority of other waste streams, such as biodegradables).

Deterioration of market economics of recycling


Significant negative shifts in supply-side economics would put supplies at risk. It can be argued that the supplies of plastics for recycling are relatively price inelastic in the short term for example, it is unlikely that large retail film collections or domestic collections would stop if prices slumped within historic trends. Equally, once plastics separation equipment is in place (for example at a shredder site) is it unlikely that this significant capital investment would not be employed unless sales prices descended to historically abnormal levels. Most of the technology and regulatory drivers point to improving the overall economics of generating plastics in a form suitable for recycling. There are some indirect risks though for example if the price of paper collapsed then this would have a much more significant impact on available waste management budgets as there is no financial support from producers for non-packaging paper. A price collapse in paper which, as a heavy and biodegradable material is more target friendly, might disrupt the collection of municipal plastics for recycling in the short to medium term. Producer responsibility mechanisms provide, at a strategic level, a method of limiting this market risk. The PRN system, for example, should compensate for adverse market economics by increasing subsidies to achieve a sustainable flow of material to target levels. It is important that the supply and the targets are growing together. If supplies significantly exceed underpinning targets then there is a greater risk of instability in the supply trends. Reduction in current municipal budgets for waste management, or back-tracking on current Producer Responsibility policy framework would have negative impacts on supply. Neither of these is likely in the short term.

Changes in societys priorities and behaviour


Although a risk, it is considered unlikely that society will elect to return to waste management with high levels of landfill. The drivers point to a much greater level of landfill reduction, with increases in recycling and recovery. A more pertinent risk for recyclers of plastics is a greater social acceptance of energy recovery techniques as being of equivalent value. This could lead, for example, to material potentially available for recycling being recovered for energy instead. Recovery of energy from plastics is undoubtedly preferable to landfill as a waste management solution but in many cases it generates lower environmental gains than material recycling. Better policy integration, for example of CO2 tradeable permits and the impacts of waste management, would help to highlight the added value of mechanical recycling in many instances. This would be necessary to better align environmental economic instruments to achieve the desired environmental outcomes. There is a hypothetical risk that householders become disenchanted with recycling for example through sustained and seriously adverse publicity about recycling, e.g. dumping of recyclables stories - and therefore participate less in schemes. Again, there appears to be a very low likelihood of occurrence of this kind of negative behaviour change.

Innovations in products, materials and waste processing technology


During the next 10 years there is the potential for new plastics materials and products to be developed that are currently not being considered. Change in packaging technology could also occur, that could potentially create large shifts. Ten years ago there was no mass market for 500ml PET bottles but the market has grown massively.

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An example for the future, could be a much larger than anticipated growth in the use of biodegradable polymers, or the widespread growth in intelligent packaging with more complex material combinations (e.g. RFID labels).

These kinds of changes have the potential to change the nature of arisings from collection schemes. There are risks that in some cases new packaging and materials could contaminate existing recycling streams. The risk here is considered relatively low as there is some regulatory protection against this in Annex II of Directive 94/62/EC commonly referred to as setting out the Essential Requirements of packaging. However, it is acknowledged that the impact of biopolymers and complex packs on recycling is currently uncertain and the extent of enforcement of this aspect of the Directive in the UK is currently low. The mitigating activity here is to undertake periodic horizon scanning projects to ensure that long term planning of infrastructure will not be rendered inappropriate, due to unanticipated shifts in the nature of arisings being targeted. Large scale changes in waste processing infrastructure not currently foreseen could result in changes in the format of plastics materials available for recycling, and in the balance between recycling and broader recovery technologies employed. However, provided that the policy framework and definitions of recycling are maintained this should not present a major risk to the supply projections provided.

Summary of supply risks


The growth in supplies of plastics for recycling has been accelerated by national and international government policy. The most significant risks to the supply of plastics for recycling are believed to be associated with national waste and other environmental policies, their economic instruments and their associated interaction. Deterioration of market economics is not generally considered a major risk, as this should be counteracted by increased financing from Producer Responsibility programmes for all the main waste streams considered in this report. For example, if market prices decline, PRN values should increase to compensate operators and to maintain economically viable supply chains to the target levels. However, particular polymer types or applications may exhibit weak market capacity and/or price periodically. In such cases there is currently no specific support mechanism. Changes in waste processing infrastructure represent both an opportunity and a risk. For example, introduction of increased pre-sorting of waste, could generate larger supplies of plastics suitable for recycling. However, some technologies will not generate a recyclable stream and instead will generate outputs of plastics more suitable for energy recovery. It is important to ensure that support for development work encourages the extraction of recyclable streams prior to generating lower grade plastics streams suitable for other recovery processes. A summary of the main risks to supply and their relative potential impacts is illustrated in figure 14.1.

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Figure 14.1 Summary of risks to expected UK supply of waste plastics

14.2.2 UK domestic demand risks


The UK has the potential to utilise higher quantities of recycled plastics in products. The domestic demand risks need to be considered at three levels domestic demand by reprocessors for unprocessed waste plastics, domestic demand for recyclate for domestic remanufacture and domestic demand for products made using recycled material but not manufactured in the UK. In the first two cases the key risk is likely to be a result of competition from lower cost enterprises in locations such as Asia and Eastern Europe. UK consumption of plastics products is growing in a range of sectors where there is development of recyclate use in new applications. This suggests that there will be a growing market in the UK for products with increasing levels of recycled content. There is uncertainty about the degree to which domestic enterprises will fulfil this product demand. Domestic remanufacture risks are closely related to the health of the UK plastics processing industry generally. There is a shift of plastic product manufacturing from the UK to businesses in Asia and Eastern Europe with a lower cost base. Despite this, the UK plastics conversion industry is growing (although at more modest rates than in other parts of the world). It is expected that the economics of UK remanufacture and reprocessing will be the biggest determinant of UK demand for recyclate. It is anticipated that products that are less readily imported for either bulkiness or speed to market reasons will be the most promising long-term opportunities for domestic remanufacture of recyclate. Whilst there remains such a large difference between the cost base of UK and Asian reprocessors and remanufacturers of plastics products, there will be significant economic challenges for UK operators. Activities that could reduce the risk of loss of domestic reprocessing and remanufacturing capacity include work to develop increasingly competitive processing technologies, development of recycling processes that feed particularly sustainable local market needs (e.g. remanufacture of bottles) and better integration of supply chains (e.g. waste collectors, recyclers and end product manufacturers). The use of lower cost recycled material should be encouraged as part of the competitiveness strategy of UK firms.

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Government policy impacts could and should be considered in a more integrated manner to recognise the different external costs and benefits of UK recycling and, for example, recycling in China. As an illustration of this point, UK recyclers of plastics pay Climate Change Levy (CCL) costs on energy; this disadvantages them against Asian recyclers who do not pay such taxes. The CCL is designed to encourage more energy-efficient practices, with the aim of reducing greenhouse gas emissions. Plastics recycling makes a significant positive contribution to reducing greenhouse gas emissions, and yet recyclers are penalised without receiving any balancing credit for the CO2 savings generated by recycling and use of recycled materials. Instead the CCL measure disadvantages the UK recycler and creates an economic position which makes it more likely that plastics will be shipped to China where, in many cases, the sources of energy used in the recycling process will be less sustainable and lead to greater greenhouse gas emissions than those used in the UK189. The 2006 Budget Statement suggests the Chancellor will require some convincing of this argument. Equally, certain businesses that are working to reduce their carbon footprint could do so by using recycled plastics, but the current tradable CO2 certificates system does not recognise such benefits financially. These are examples of misalignment of UK environmental economic instruments and outcomes detailed consideration is beyond the scope of this report but clearly these issues warrant more work to ensure that decisions on implementing environmental improvement objectives are made based on best practicable environmental option (BPEO) rather than simply the least expensive approach. Currently the UK tends towards the latter position with respect to plastics recycling. A further potential risk to the recycling activity in the UK (and Europe) is the implementation of the Registration, Evaluation, Authorisation and restriction of CHemicals (REACH) regulation. This is intended to bring about better control of the chemicals that are used to make products. Subject to certain exemptions, chemical substances will have to be registered with a new European Chemicals Agency. This will require submission of information on the risk to health and the environment for the entire life-cycle of the substance. This information will be used to create a safety data sheet (SDS) identifying relevant information needed by the user of the substance. Although both polymers and waste are either exempted or outside the scope of REACH, the generation of recycled raw materials (e.g. recycled plastic pellet) from waste leads to problems within the currently conceived REACH regulation, that appear unique to the plastics recycling industry. The plastic recycler supplying pellet must be able to provide a safety data sheet to customers. The problem for the recycler is how to do this: without SDS information about the material input to the recycling process (which, as waste is outside the scope of REACH) the recycler would be required to test the output recycled material, probably on a batch basis and at molecular level, in order to compile the necessary chemical safety assessment to provide SDS. The cost of the exercise for recyclers working on different batches of material and at relatively low tonnages would be excessive. Using the Commissions own assessment, the cost of doing this would be much higher than the value of the recycled material itself. As a result, this could significantly commercially undermine plastics businesses selling pellet. Oddly, due to the way REACH is conceived, the problem of high costs of product testing do not apply to those businesses that convert waste into a finished end product (rather than intermediate pellets). Although the REACH regulation is unlikely in the long term to undermine the demand for recycled plastics, the unintended consequences could make it significantly less attractive to recycle plastics in Europe. The regulation, if applied as currently being conceived, would significantly disrupt many current recyclers businesses and would undermine current and future investment in European recycling infrastructure. That an initiative designed to improve our environment and health (REACH) could badly - and inadvertently - undermine the ability of enterprises in Europe to deliver another measure to improve the environment (plastics recycling) is an example of the risks of poorly integrated policies and regulations. Several consultees identified concerns that any significant reduction in the sales value of virgin polymer, would result in a further increased competitive disadvantage for UK and European recyclers, compared to Asian recyclers. A lower sales price for recycled flakes or pellets would probably reduce absolute profits; European businesses with greater overhead costs for site and equipment would become relatively less competitive than Asian buyers who, it is suggested, will be able to better adapt to a price decrease. There would be some counterbalancing factors that would result from a lower level of demand from Asia, for example, less intense procurement efforts from traders. Nonetheless a decrease in virgin prices does present a risk to the sustainability of competitiveness of UK recyclers.

It is acknowledged that there is a counter-argument that the recycled material from the UK displaces virgin production in China and this has greater environmental benefits than equivalent displacements of virgin plastics produced in Europe. Such uncertainty highlights the complexities that exist and the need for better understanding of BPEO in this context.

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14.3

International market risks

This sub-section reviews risks in the international market for recovered plastics, considering market and nonmarket factors separately.

14.3.1 Market factors


Technological change
If major downstream consumers switch over to technologies (typically integrated, continuous systems) in which recovered plastics would not be risked, aggregate demand in the market for recovered plastics would decline. Given the number of plastics involved in the trade, the variety of destination markets and the fact that the material flows are not always well documented, there are hazards in making generalised statements about the impact of technological change on the recovered plastic export market. However, the consistent view of consultees in the trading, reprocessing and manufacturing sectors in Hong Kong and south China was that they did not see this as a threat to the market at the present time. Indeed, it was a new theory for most of them. It could be argued that traders and reprocessors are too far removed, and that the lack of specific information about end-users in various areas means that there is undetected change underway, but this is the situation as reported. This is not to say that there are not specific markets where investments will reduce the scope for individual factories to use recovered plastic (integrated plastic bag production, cutting and printing lines was an example mentioned in one meeting). However, with the wide spread of factory standards, products being manufactured and markets being serviced in the Pearl River and Yangtze River Deltas, there is little evidence that technological change poses a short to medium term threat to demand. In the specific case of PET, some analysts have reported fibre applications that use recycled PET are reaching a ceiling in China, and some factories will convert to new technologies using monomer and in-situ polymerisation rather than PET flake to produce polyester190. Follow-up calls on this issue have been made to several factories in Zhejiang which convert PET bottles to polyester fibre, and none said that technology changes were expected to reduce their markets. If a dialogue with Chinese authorities is established (see below) this issue would warrant further research as part of a more general investigation on the applications to which individual plastic waste streams are being put, and how these are changing. This would require more extensive research on-the-ground in China than was possible in this study, and probably the support of the Chinese official research centres.

Prime prices
The outlook for the prime resin prices is relevant to projections for the recovered plastic market. A significant decline in the prime prices would be expected to soften demand for recovered material, reducing the incentive on consumers to look to alternatives. Post production scrap plastics, which can be used on a near like-for-like basis, track the prime rates more closely than do lower value, post-consumer loads. However, as prime prices rise, manufacturers are more likely to look at use of recovered plastic. Not all can do so: consultees in Hong Kong suggested that a 10% uplift in prime resin prices will in time lead to a 5% upward movement in recovered plastic prices. The prices of individual resins are driven by supply and demand dynamics that are often specific to individual plastics. Specialist market research companies provide world and regional plastic-specific analysis and forecasts which describe these markets in more detail than is possible or appropriate here191. External effects can also intervene in the smooth operation of regional markets, an example being the loss of production in the US after Hurricanes Katrina and Rita, which pushed up prime prices and prompted strong demand for recycled material192.
190

Personal communications with European sector specialists See for instance www.cmai.com ; www.bccresearch.com Plastic Technology, 2005.

191

192

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 195

Figure 14.2
88 86 Million barrels/day 84 82 80 78 76 74 72 1Q

Global oil consumption

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

2003
Source: IEA, 2005

2004

2005

A common underlying market driver is the world oil price. Driven by growth in demand from non-OECD countries (see Figure 14.2 and Table 14.1), tight supply and political uncertainty, oil prices doubled from their 2002/03 levels.

Table 14.1

Global Oil Demand by Region, 2004-6, million barrels/day


Demand 2005 2004 Annual Charge 2005 2006
0.44 0.05 0.08 0.38 0.20 0.67 0.13 0.30 0.08 0.11 1.78 3.3 1.3 -1.9 15.4 6.3 5.4 4.7 6.5 3.2 4.1 3.8

Annual Change (%) 2004 2005


0.5 -0.2 1.2 2.5 2.1 1.9 1.3 5.1 3.2 2.5 1.3

2006
1.7 0.3 1.0 5.8 2.3 2.8 3.3 5.0 2.9 2.3 2.1

0.81 0.11 North America 25.45 0.22 -0.04 Europe 16.29 -0.16 0.10 OECD Pacific 8.63 0.86 0.16 China 6.60 0.51 0.18 Other Asia 8.73 1.20 0.44 Subtotal Asia 23.96 0.17 0.05 FSU 3.81 0.34 0.29 Middle East 5.91 0.09 0.09 Africa 2.90 0.19 0.12 Latin America 4.98 3.02 1.06 World 83.30 Source: International Energy Agency, Oil Market Report

Oil futures markets and a scan of long term energy forecasts show that oil prices are not expected to decline, but rather to gradually increase over time. Figure 14.3 shows the long term forecast from the latest energy outlook report produced by the US Governments Energy Information. This illustrates an expected sustained increase in oil prices over the next 25 years. Current pricing is already higher than shown in the graph, but this analysis serves to show that official projections do not expect prices to fall. Although it is acknowledged that increasing quantities of plastics are being derived from gas and, to a lesser extent, renewable sources such as crops, oil pricing will undoubtedly be a factor in future energy/fuel pricing generally. It is therefore concluded, that the risk of a down-turn in the recovered plastic market, due to a fall in oil prices, is low. Although this implies that international prime resin prices for oil-derived plastics are unlikely to collapse, it need not necessarily imply that prices in the main end market for recovered plastics, China, will follow suit. One of the characteristics of the Chinese manufacturing sector in the last ten years has been a tendency towards over-

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investment, leading to surplus capacity and then heavy competition on price, sometimes resulting in firms selling at below cost-price for sustained periods. Other markets, including energy and resources, were a central part of the planned economy. These remain dominated by state-owned companies and do not operate entirely on market principles, characterised by subsidies, soft loans and controls on prices. It is unsurprising to find that the upstream part of Chinas petrochemical sector is either state-owned, or involves partnerships between state-owned and foreign firms. Chinas forecast need for imports of major resins on an ongoing basis (as reported in Chapter 10), the foreign participation in new production, and increasing openness to the global market (e.g. through lower tariffs and WTO obligations) suggest that the risk of serious over-supply of prime resin, and hence artificially depressed prices, is low. It seems more likely that Chinas demand for imported recovered plastics will be affected by competition from domestic recovered material or regulatory change, than by over-supply in the prime market.

Figure 14.3

World oil price long term projection (2004 dollar/barrel)

Source: Annual Energy Outlook 2006193

Freight rates
Substantial upward movement in in-bound freight rates would have an impact on the economics of recovered plastic trade, especially on lower-margin products. Freight charges are generally paid by the exporter. One reason why it is cost-effective for China to meet demand for recovered plastic from sources overseas is the comparatively low cost of inward transportation. Prices for container shipments to China are much cheaper than for the outward journey from China to Europe and North America. This reflects the imbalance in physical trade between Asia (and especially China) and the major developed markets. Shipping lines sell China-bound container space on these routes at a discount, defraying the costs of repositioning containers back to China, that would in any event take place. The differential between the inward and outward traffic is illustrated by the data in Figure 14.4, which shows averaged freight rate changes over the last few years. Return-leg rates have not changed even as outward-leg prices have risen.

193

Report #:DOE/EIA-0383(2006), http://www.eia.doe.gov/oiaf/aeo/index.html

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Figure 14.4 2003-2005

Freight rates (market averages) on Trans-Pacific and Europe-Asia liner routes,


2500

2000

Rate, US$/TEU

1500

1000

500

0 03/Q1 Asia - US 03/Q2 03/Q3 US - Asia 03/Q4 04/Q1 04/Q2 04/Q3 04/Q4

Europe-Asia

Asia-Europe

Notes: Information from six of the trades major liner companies. All rates are all-in, including the inland intermodal portion, if relevant. All rates are average rates of all commodities carried out by major carriers. Rates to and from the United States refer to the average for all three coasts. Rates to and from Europe refer to the average for northern and Mediterranean Europe. Rates to and from Asia refer to the whole of South-East Asia, East Asia and Japan/Republic of Korea
TEU: Twenty foot-equivalent units

Source: Adapted from UNCTAD, Review of Maritime Transport 2005 Typical freight rates for a 40 foot container (2 TEU) in and out of Hong Kong (one of the cheaper routings) are shown in Table 14.2. Consultations in the UK suggest that a 40 foot loaded container can be shipped to Hong Kong for around US$800, including the UK inland trucking move. This is cheap by comparison with other worldwide destinations, or even point-to-point cargo moves within the UK.

Table 14.2

Exemplar freight rates, 40 container


From Hong Kong US$1800 US$2100 US$550 To Hong Kong US$800 US$950 US$350

UK USA Japan Source: Industry sources.

There has been upward pressure on freight rates over the period 2003-2005 driven by, in particular, large increases in the price of bunker oil (Figure 14.5)194. The effects of energy costs were compounded by heavy outward traffic from Asia, with ship operators adding vessels, diversified routes and improved load planning to increase cargo delivery to US ports195. However, despite these factors, industry analysts expect freight rates to fall in 2006 and the outlook for 2007 is similar. The reason is the large increase in supply of container vessels coming into service.

194

IFO380 is currently trading at US$290-$320/t depending on location. Source: www.bunkerworld.com . Fuel costs can account for 15% of vessel operating costs. Neptune Orient Lines Ltd. spokesperson on www.floridashipper.com

195

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The large number of orders placed when the market was tightening a few years ago are now entering service, and more are scheduled for 2007. In terms of container capacity (TEU), the global container fleet is expected to increase 16.6% in 2006, after a 12.8% increase in 2005. A 14.7% increase is expected in 2007196. Some industry experts are predicting significant falls in prices.

Figure 14.5

Year on year freight rate changes, 2000-2006


20 15 Annual percent change 10 5 0 2000 -5 -6.1 -10 -10.7 -15 -9 2001 2002 2003 2004 2005 2006 2.6 7.5 3.6

17

Source: Drewry Market Forecast, Oct 2005. East-West trade route composite rate. The imbalance in container trade on European and North American routes seems set to continue. Chinas containerised trade has been on a sustained upward path (Figure 14.6). Imports used to manufacture the finished goods sent to the EU and North America tend to come from other Asian countries.

Figure 14.6

Growth of containerised trade at Hong Kong and China ports and Chinas share of world container movements
20

120

18 16 China as % Of World 14

100

million TEU

80

12 10

60 8 40 6 4 20 2 0 1995 1996 1997 1998 1999 Total HK 2000 2001 2002 2003 2004 0

Total China

Total China as % of World

Source: GHK, from published sources. Overall, it is concluded that there is a low probability of freight rate increases choking off the recovered plastic export trade, at least in the coming few years.

196

All estimates BRS-Alphaliner Cellular Fleet Forecast. www.alphaliner.com

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Substitution (by domestic supply)


The increase in Chinas consumption of plastics also implies an increase in the quantity of recoverable plastic material that could be fed back into the manufacturing sector. If the proportion of plastic recovered increases, and the price and regulatory environment is favourable, it is possible to see domestic material displacing imported waste plastics. There is therefore a risk that the Chinese demand for imported plastics (which currently dominates world demand) will reduce, because the material need is being met by domestic supply. This risk is the hardest to evaluate, simply because very few recent data have been located about plastic recovery in China. The following is known: Consultations show that domestic supply exists and is being used, but is insufficient to meet current demand. Domestic supply is subject to reliability and quality issues. The most recent studies that have been located on this market (from 1999197) reported that

The collection rate had fallen from 20% in 1980 to 9% in 1994 (although this probably is a reflection of consumption increasing faster than collection). A further 20-30% of waste plastic was landfilled or incinerated and the remainder assumed to have been dumped or left uncollected

Formal collection systems servicing industries were more effective (and handled larger volumes) than the informal sector, which mainly collected post-consumer wastes. Domestic recycling has suffered from lack of supply of waste plastics.

Very different consumption and income patterns exist within the country crudely summarised as an 800 million rural population on very low incomes and an expanding urban population (of the order of 400 million people), mainly in the coastal provinces, where incomes are rising and (in the wealthiest areas) where consumption patterns are rapidly evolving towards those seen in OECD markets. There are plastics product producers within China serving both these markets, which have different price/quality attributes. Driven primarily by the urban population and export demand, plastic consumption as a whole is growing rapidly, and corresponding increases in collection from the domestic commercial and household waste streams will be needed for the domestic market to maintain its market share. China will need to invest large sums of money in modern waste management infrastructure and services if it is to cope with the projected waste arisings and make progress towards the circular economy objectives set out in government policy (e.g. separation of recyclables, controlled landfills, incinerators). Extension of formal waste management systems should increase the supply of recovered plastics from urban areas. China is a very large country in which distances can be very large and internal transport costs significant, especially on road transport (inter-provincial trucking services are not yet fully liberalised, often necessitating a change of firm/vehicle). Todays demand for imported recovered plastic is concentrated in a few coastal provinces well connected to international shipping routes and overseas markets.

Collection of higher value post-consumer plastics (e.g. PET bottles) is known to be well established. The extent to which this might displace imported bottles depends on the relative growth rates of PET bottle consumption in the domestic market and consumption of recovered PET, principally for polyester fibre. Chinas national consumption of PET for packaging has been estimated at 1,000kt for 2004 and is increasing, but 88% of prime PET goes to fibre applications. The recovery rate on the packaging not exported is unknown. Imports of recovered PET bottles (pre and post consumer) have been estimated by industry sources at 1,600kt. If output of textiles, toys, carpets, etc. continue to grow at recent rates, and recovered fibre is to retain its share of overall fibre consumption, growth from both the domestic and imported PET markets will be required to meet demand. It can be argued that in the case of UK PET supplies, the Packaging Producer Responsibility programmes will also have a role in ensuring this material finds a market. PET collection is important to meet future statutory recycling targets and the financial underpinning that the PRN system provides should support this. It is possible that PET baled prices could be discounted to prices that would enable them to be attractive to the Chinese market in spite of large levels of national collection of PET. Put simply, if the market did contract the UK could still supply baled
197

Van Beukering, 1997, 1999a, 1999b.

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PET to China at prices tending to 0 (with the corresponding loss in revenue compensated for by increased PRN prices) to meet the UK recycling target. This material will be purchased preferentially to supplies from purely market economies such as China and North America where, at low market prices, collection will not be commercially justifiable and supplies would contract. In reality, this is believed to represent a relatively extreme and unlikely scenario. In conclusion, there is insufficient evidence that domestic collection will displace imported material in the short to medium term. There are, however, few contemporary data on the domestic plastic recycling market in China and how it is changing and this is an area that warrants further research so that the dimension of the risk can be better quantified.

14.3.2 Non-market factors


Regulatory change
The primary non-market risk to the export market is regulatory change (figure 14.7) which affects the cost of, or scope for: Export of material from the UK/EU (e.g. export standards, Green List status at destination) Import of material at the destination country (e.g. import duties, importer/exporter accreditation, import standards, customs procedures, Green List status) Access to imported material, and operation of re-processing facilities in the destination country

Figure 14.7

Regulatory influences on traded plastic waste

Source

Road

Ocean freight

Road

End-User

Regulations governing collection & processing

Export regulations (e.g. TFS)

Import Regulations (e.g. AQSIQ)

Regulations on import licensing, reprocessing & re-use

At the UK or EU border regulatory factors include whether: The plastics are on the Green List for export to the destination in question. Not all the countries that could be potential markets for recovered plastic have made Green List submissions to the European Commission. Of those that have, the type of plastics that can be imported varies Indias list is more restrictive than Chinas for example. The shipment is deemed to meet the EU standards for export (i.e. export of mixed waste is prohibited, export of plastics is allowed). In practice, mixed plastics are shipped which may not meet all the green list requirements and should be more appropriately classed as amber waste. The shipments are to recycling operations deemed to meet the broadly equivalent standards requirements necessary to count towards EU recycling targets. The practical implementation of this requirement is currently unclear. Defra is expected to issue further guidance. The shipment is destined for recovery or disposal (export for disposal is prohibited) and how/whether proof of the recovery is required. By example, on the application for accreditation as a packaging exporter, firms are

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asked to give details of where exported material is going to be sent and for what purpose, but this is not necessarily subsequently verified.

Export demand is also affected by border and internal regulations in the destination market. Changes can sometimes come rapidly, as with Chinas temporary ban on direct import of plastics waste from Japan in 2004 and introduce unfamiliar procedures, as with Chinas introduction of an accreditation system for scrap exporters. A scan of the regulatory risks facing the plastic export trade has been carried out. It is concluded that the risks to the trade production scrap and pre-consumer waste are limited this is the least contentious of the material traded. By contrast, it can be expected that export markets for lower quality, unprocessed post-consumer waste will be more heavily regulated over time and may become unavailable. By example, the current Chinese environmental protection standard in effect prohibits import of unprocessed material. As of early 2006, some importers are bringing whole, unprocessed PET and HDPE bottles into China in violation of the standard. Some fraction of these bottles is being sourced in the UK. The UK original exporters, providing they are compliant with UK regulations, are breaking no law because the shipments are sold to third parties in Hong Kong where that standard does not apply, and then resold. If or when that standard is systematically enforced at the border then sorting, washing and shredding operations for this type of waste will be pushed back along the supply chain. This seems likely to have more impact on those countries (such as the UK and USA) that have less sorting-atsource than green dot countries. However, while the direction of change seems clear, the timing and degree of change is uncertain. While international convention has established rules that allow countries to notify potential exporters of the types of material they are prepared to see imported, the detailed quality standards governing these shipments have been developed independently around the world. The literature notes the consequences, an example being shipment of material that is legal for export from Japan which is then rejected on arrival for not meeting the (different) standard of the importing country. More active dialogue between regulators in exporters (such as the EU and Japan) and the major destination countries (such as China, Hong Kong and India) is recommended. This could include the issue of mutual recognition of accreditations for exporters/importers and harmonisation of standards198. More communication among regulators will improve regulatory management of the trade and reduce regulatory risk.

Environmental risks
This study has explicitly not addressed the comparative environmental impacts of recycling overseas and in the UK and associated risks. Independent research on this topic is necessary to properly inform the debate about the wider environmental (and social) implications of the trade, a debate that has tended to be shaped more by conjecture than hard analysis. Without this information the development of environmentally-directed national policies on plastics recycling may result in environmentally negative outcomes.

14.3.3 Summary of international market risks


Figure 14.8 illustrates the international market demand risks and relative impacts described in this section.

198 The continuing development and adoption of common international standards for specifying plastics for recycling will assist international trade. This requires both the ability to accurately describe material, for example, through the Publicly Available Specification (PAS) 103 and also a common agreement as to minimum standards for acceptance of shipments in relation to the composition of material.

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Figure 14.8

Summary of risks to expected market demand for UK waste plastics

Notes: The dimensions of each oval reflects the degree of uncertainty of impact or probability of occurrence. Source: GHK in association with Recoup.

14.4

Summary of key risks

The study has considered risks that would limit the growth in recycling of UK plastics waste to target levels shown in this report. Many of the risks identified relate to regulatory objectives and controls. The growth in supplies of plastics for recycling has been accelerated by national and international government policy. The most significant risks to supply of plastics for recycling are believed to be associated with availability of sorting technology for mixed plastics from domestic sources and shredder residues, national recycling targets, other related environmental policies and their economic instruments. A significant drop in recycled polymer pricing is not considered a major risk to supplies of identified plastics streams, as this should be counteracted by increased financing from producer responsibility programmes for all the main waste streams considered in this report. For example, if market prices for recycled material decline (e.g. as a result of declining virgin pricing), PRN values should increase to compensate operators and to maintain economically viable supply chains to the target levels. Assuming current material pricing remains broadly at current levels or higher, the long-term trend is likely to be a decline in the value of PRNs to a level that covers administrative costs (this issue is discussed in detail on page 48) Changes in waste processing infrastructure represent both an opportunity and a risk. For example, introduction of increased pre-sorting of waste could generate larger supplies of plastics suitable for recycling. However, some technologies will not generate a recyclable stream and instead will generate outputs of plastics more suitable for energy recovery. It is important to ensure that support for development work
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encourages the extraction of recyclable streams prior to generating lower grade plastics streams suitable for other recovery processes. There are no general high probability, high impact risks identified for the export trade. Of the recovered plastic markets, the unprocessed and mixed post-consumer plastics trade is the most vulnerable to additional regulatory intervention. These shipments are a small subset of the overall trade but attract most of the regulators, NGO and press attention. Chinas most recent import standard effectively bars import of such material, but enforcement is still variable. More far-reaching regulatory change in China that would cut off demand for all recovered plastic imports is arguably increasingly less likely as Chinas industry becomes more dependent on recovered plastics as a source material. This study has explicitly not addressed the comparative environmental impacts of recycling overseas and in the UK and associated risks. Independent research on this topic is necessary to properly inform the debate about the wider environmental (and social) implications of the trade. Without this information the development of environmentally-directed national policies on plastics recycling may result in environmentally negative outcomes. The management of many of the risks described here should be considered as processes, not one off events. The analysis in this report highlights that the global market is dynamic and that there are also many factors that will influence supply. It will be important for the UK to introduce and/or improve ongoing monitoring and feedback systems to manage risks and deliver continuous improvement.

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15.0 Conclusions
This report provides the results of a study into the UKs current and future supply and demand for recovered plastics, and the present operation and future prospects for the export market in this material. Although the UK recovered plastics market, particularly the packaging component, is comparatively well documented, this is the first time that the domestic and export markets have been considered in tandem. In addition, there is little in the way of independent research in the public domain on the Asian export market. The report contains a large amount of data. The objective of this chapter is to draw out the key points from this mass of information and help to provide a focus on what matters. As well as answering old questions, the findings of the study raises new questions and helps to quantify known data problems. Such issues include questions about activity in the UK market that is, in theory, the better understood part of the sector. Examples include the gap between the plastic packaging flows used by Defra and those identified in this report, the gap c.100kt between the PRNs and PERNS reported as issued and the arisings of plastics that generate these, and the nature and source of the material exported that is not PERNed packaging waste. Information gaps on newer plastic waste streams, such as those arising from WEEE and ELV, can be expected to be addressed over time. Collectively these have an impact on the extent to which a complete picture of arisings and applications (domestic or export) can be projected, and hence the balance between domestic supply and demand. For strategic and decision-making purposes this does not necessarily matter, since the market fundamentals by which recovered material finds a secondary use are relatively well understood.

15.1

Domestic supply

The quantities of plastics arising in UK waste and available for recycling will undoubtedly increase during the period to 2015. The recycling of material will increase as a result of improvements in waste management practices. These include better kerbside collection, commercial waste management systems, greater extraction of plastics from mixed waste, implementation of new technologies to sort plastics from shredder residues, increases in disposal costs and the underpinning of targets set by producer responsibility regulations.

Packaging
Plastic packaging as reported under producer responsibility regulations is projected to grow at between 2% and 5% per annum, with a figure closer to the lower end of this range believed to be most likely over the long term. This would imply c. 3,000kt of plastics will be used in UK packaging applications by 2015. On this basis packaging will be easily the largest single source of post-use plastics for recycling (potentially generating supplies of c. 675kt-1,015kt for recycling by 2015). The analysis highlights that it is important to ensure that the targets set by Producer Responsibility programmes remain challenging, achievable and affordable. For packaging it appears possible that the supplies of packaging for recycling will begin to significantly exceed targets. Given the broad aim of moving to a more resource efficient recycling society, it appears important that future targets are set at a level which keeps the targets in line with growth particularly when the costs to business of doing this are low. Defra, the ACP and other interested stakeholders should closely monitor the trends highlighted in this study when considering new target levels. The alternative to revising targets in line with anticipated growth is that a growing proportion of packaging recycled falls outside the PRN system. This would probably be an undesirable outcome for several reasons: for example, reduced influence over standards of trade, restricted access to accurate performance information to inform national strategy and limited underwriting of sustainable growth in recycling levels by producer responsibility. The most significant unknown factor in future supplies of packaging for recycling is the extent to which extraction of plastics in a form suitable for recycling from mixed waste processing plants, will occur. It is clear that more investment in such plants will occur in the UK to enable compliance with Landfill Directive requirements. It is less clear which technologies will be favoured and to what extent plastics will be separated in a form suitable for recycling (rather than in a form suitable only for energy recovery). For example, large-scale technologies for extracting plastic bottles from mixed waste are already in use internationally. The analysis highlights that it is critically important for the issues of new waste technologies (e.g. Mechanical Biological Treatment) in relation to plastics waste management, to be considered with much more focus.

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Currently the thrust of government interest in new waste technologies primarily relates to the biodegradable fraction. It is important that the wider opportunities of these new technologies as they relate to recycling and recovery of non-biodegradable materials, such as most plastics, are factored into assessment of BPEO. As the analysis shows, it is likely that the development and use of plastic extraction technologies for recycling from mixed waste processes will be essential if growth rates of packaging tend towards the higher end of the projections. The extraction technology will also be important if the targets ultimately set for packaging recycling post 2008 are higher than those assumed in this study. The analysis highlights several other areas where there are opportunities for focussed activity to increase supplies of packaging. Away from home collections of bottles and other packaging are currently under-developed. Targeted collection of larger streams of material for example industrial packaging such as drums199 could generate worthwhile quantities of material.

The packaging gap


The study highlights two data issues that are not new and still remain unresolved, although are now better documented: The review of quantities of plastic packaging collected for recycling again highlights a gap between the amounts of PRNs and PERNs issued and the quantities of material believed to have been collected. Although not an objective of this study, it appears an unacceptable position that it has not proved possible to reconcile almost a quarter of the reported plastic packaging recycling tonnage. Arguably this large unknown represents one of the highest risks to non-compliance with EU recycling targets if at a later point some part of this is found not to be from Packaging as defined by the regulations. It is recommended that additional summary information should be provided on the source of PRNs/PERNs (e.g. bottles, retail film, redundant stock, etc or by polymer type). This would assist reconciliation of this data and would support the inspection agencies audit activities. It is believed that such information could be integrated relatively easily into the current new electronic data system being developed. Concerns were again raised by recyclers surveyed that this data gap was the result of production scrap and other plastics, not defined as packaging, having PRNs/PERNs incorrectly issued on them. Further investigation of the treatment of production scrap should prove of value, both in reconciling the current data gaps and in helping inform the work of regulatory agencies. Second, the study reinforces the question of whether the total market for plastic packaging is being understated in consideration of recycling targets. Although the difference between the assessment in this report and the information used by Defra is not large, it is worth consideration. The growth in imported packaged goods is a potentially significant factor that should be watched closely as this sector appears to have a higher proportion of tonnage that falls outside the obligation. Obligated tonnage has grown at over 6.5% per annum in the last 3 years. If this growth rate continues, and there is a large capture of the new obligation from leased packaging, there is a risk that the reported obligation tonnage exceeds the tonnage on which the businesses targets were set, which would be undesirable. One suggestion made during the study is that businesses obligated under the Packaging Regulations should provide a polymer breakdown as part of their returns. This would provide information on packaging market trends and highlight shifts that may be relevant for recycling. Some businesses already have information in a polymer-specific format, however others may not be able to provide this information without major changes to their data capture systems. The cost/benefit of providing this kind of reporting as within business returns merits further consideration.

Agricultural plastics
It is clear that supplies of plastics from agricultural sources will grow, driven by changes to waste management regulations. The confidence of significant growth of recycling in this sector has been given increased impetus by
It is noted that one of the anomalies of the current producer responsibility system is that third party reconditioning arrangements for industrial packaging do not count as reuse for the purposes of calculation of producer obligations and therefore some of the associated financial incentives are misaligned.
199

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the Government announcement that producer responsibility will be introduced for non-packaging elements of this sector (primarily plastics used in crop cover, silage wrap, etc). Although the regulatory mechanics are not yet certain, the experience of operators of established farm plastics recycling programmes in the UK and internationally highlights the potential for strong growth in supplies for recyclers rising to some 50kt of plastics over the period to 2015. The rate of growth of collections may vary from that shown in this report depending on the details of the recently announced move to a producer responsibility system for non-packaging agricultural waste.

End of Life Vehicles


The quantity and quality of plastics arising from ELV streams are closely linked both to details of the implementation of the ELV Directive and to the - partly related - introduction of Automotive Shredder Residue plastics separation technology in the UK. There is sufficient international evidence from different implementations of post-shredder plastics separation technology to demonstrate that the limiting factor to generating relatively large supplies of separated PO (polyolefins) rich plastics (i.e. >100kt pa) from these sources is an economic and developmental one, rather than a fundamental technological barrier. It appears that the economic conditions are not yet sufficiently attractive for shredder operators to take major investment risks by investing in new separation technologies. The current debate about recovery targets for 2015 is not likely to give confidence to those considering investments in ELV plastics recycling based on fulfilling a producer responsibility need. Improved clarity on the quantities of plastic necessary to comply with the ELV Directive, both now and in 2015, is one requirement needed to stimulate increased supplies of discrete ELV plastic streams. Support in mitigating or underwriting technology investment risks could also accelerate progress in generating supplies. In the long term it would appear likely that a combination of improved separation technologies and increased costs of landfill disposal would tend to favour extraction of plastics for recovery. The uncertainty, given the above issues, is to what extent recovery will be achieved specifically by materials recycling.

WEEE
The quantities of plastics for recycling from WEEE sources will increase during the period studied potentially to around 100kt per annum. This assessment has proved the most difficult to quantify due to both uncertainties surrounding the pending implementation of the WEEE regulations and the impact of export and reuse of this equipment. Within the scope and resources available for this study it has proved difficult to access reliable data to make assessments. The report sets out a framework that could be used more accurately to assess flows of plastics, as more robust data becomes available. It is also noted that a number of new WEEE processing plants are being established both in the UK and internationally which integrate various separation technologies. The success of these in capturing plastic streams should be monitored. It would be worthwhile to revisit the supply assessments made here as such information become available. WEEE plastic streams have some parallels with ELV plastics streams in both the likely quantities and in the method of recovery. It appears that although some plastics will arise for recycling through manual dismantling activities, the bulk of plastics will probably be available as a result of separation of plastics from the shredder residue of large appliances.

Export declaration Forms


Research for this study suggests that UK trade statistics do not provide a reliable guide to the material content of exported recovered plastics. The high proportion of PE in the UK recovered plastic trade statistics appears to be an anomaly of the completion and coding process for export declarations. Shipping companies are responsible for completion of the forms for which an 8 digit HS code describing the shipment is required. Consultation suggests that suppliers rarely provide a description of the shipment that is more detailed than scrap plastic. In the absence of further information, this is being coded in the system into the HS code 39151000 which is supposed to only apply to polymers of ethylene. Engagement with the industry and Customs & Excise on this issue to address such coding issues and produce more reliable data is recommended. This would also contribute to an understanding of the nature of the material exported that is not covered by PERNs. It is also recognised that some shipments to buyers in Europe (e.g. Rotterdam) are then routed to non-EU markets, so EU recycling is probably overstated by the available trade data.

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Consistency of data capture


All the above plastics waste streams will be covered by producer responsibility obligations. This will necessitate certification mechanisms to prove materials such as plastics have been recycled/recovered. Such mechanisms already exist for packaging in the form of PRNs and PERNs. One of the current considerations at an EU level is whether ultimately to move to material-specific recycling targets (i.e. for plastics). It appears highly desirable that the process of certification of recycling for these different waste streams is as consistent as possible particularly if at a later point there is the possibility that they will be of equivalent value in achieving future targets. A common approach would also simplify regulation and inspection/audit controls. The quality of market data is vital for the market and the producer responsibility schemes to function effectively, efficiently and with credibility. The main stakeholders should agree systems of data management. The effective validation of the data by regulators to the satisfaction of stakeholders is and will remain a key requirement.

15.2

Domestic demand

The UK has sufficient consumption of plastics products to offer potential markets for large quantities of recycled plastics. Whether material collected in the UK will be reprocessed in the UK, remanufactured in the UK, or be used in products purchased by UK consumers will depend on a range of factors.

Reprocessing capacity
The analysis of information provided by UK recyclers suggests that in general the capacity to recycle plastics is significantly ahead of the available supply. This is reinforced by anecdotal comments from UK recyclers generally who comment on the difficulty of sourcing sufficient inputs of raw materials. Comments from recyclers also suggest that investment in new UK capacity to handle incoming plastics remains ongoing, although to what extent this is being offset by removal of old capacity through mothballing, sale or closure is not clear. The analysis suggests that the strategic consideration for the UK is not whether there is a need for more capacity arguably there is not - but what represents the right kind of capacity for sustainable businesses. The nature of the competitive challenge from Asia is such that UK recyclers need to be clear what long-term added value they provide that will ensure they can remain competitive in the global market. This could be a combination of business integration with either material supply and/or product manufacture; use of innovative technology; providing niche solutions for traditionally hard to recycle materials or working at a scale that brings sufficient economies to ensure competitiveness. Without some kind of competitive advantage in one of more of these areas, it is difficult to see how a business will compete effectively. Capacity to handle current qualities of plastics from mixed domestic, ELV and WEEE streams appear relatively limited in the UK (especially for post shredder material). Uncertainties regarding the likely levels and quality of future arisings are market obstacles to enterprises developing solutions. It can be argued that work to develop solutions for both mixed plastics separation and recycling should be a given higher priority and incentive. The kind of interventions that will be important to maintain competitiveness of reprocessors relate to addressing the above issues. For example, supporting technological innovations that will minimise the impact of the large labour cost differentials between the UK and Asia; working to integrate supply chains to make opportunistic buying from traders less attractive and/or providing a scale of supply that can justify investments that provide economies of scale; and in some cases better regulatory underpinning to provide certainty of supplies. The above potential interventions relate to business models. The study highlights a case for considering wider regulatory or fiscal interventions: for example, some of the competitive imbalance between UK businesses and those in Asia relates to energy tax (Climate Change Levy). It seems at best counter-productive that a measure designed to reduce greenhouse gas emissions is helping to drive material to more distant markets where energy sources used in the recycling process are likely to have higher environmental impacts: it may be better for the environment to recycle the plastics in Europe with perhaps lower environmental impacts and trade reprocessed materials. However, a BPEO analysis is not available to draw conclusions on this point. The flows of recyclables are primarily driven by economics and weight-based targets, rather than by environmental economics. Better integration of environmental policy threads could better align the economic and environmental outcomes. This

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report has already noted that there is need to assess BPEO with regard to whether recycling plastics in developing Asian economies is environmentally better, worse, or the same as recycling in the UK. Another example relates to CO2 allowance trading: renewable obligation certificates (ROCs) currently trade at 32.40 per MW/h200. Assessments of PET bottle recycling show savings of over 50MJ/kg201 mechanically recycled when used in place of virgin polymer at 1:1 substitution. On this basis, recycling a tonne of PET bottles would conserve energy equivalent to 1.4MW/h worth 45 in ROCs value - substantially more than currently traded PRN values. Would large businesses be more likely to use recycled plastics if this allowed them to highlight reduction in greenhouse gas emissions or energy use, rather than simply comply with landfill diversion targets particularly if the fiscal instruments were better aligned to the environmental outcomes sought? The REACH regulation casts a potentially unwelcome shadow over recyclers in Europe who produce recycled raw materials (flake or pellet). If implemented as currently drafted it will introduce highly costly testing requirements that are not required by businesses that recycle in house into a final product. This is an example of a potentially serious and presumably unintended impact of a much wider regulatory intervention. It is important that the REACH regulation as currently conceived is amended so that it does not adversely impact the plastics recycling industry in the manner outlined.

End product capacity


The UK could potentially remanufacture using a large quantity of the plastics collected for recycling. In most cases the fundamental barriers to domestic self-sufficiency relate to pricing (both raw material and transitional investment costs), rather than technical limitations. This view is reinforced by the fact that there is demand for a range of plastics from ELV, WEEE and mixed sources from Asia again suggesting that a main barrier to use in the UK is cost of upgrading the material. Another example comes from Japan, where the pattern of recycled PET use is very different from the UK: almost 60% of PET bottles collected in Japan are used to remanufacture PET bottles for the Japanese domestic market, a further 20% is used in packaging sheet applications202. It should be noted that the high landfill costs in Japan provide an economic incentive for higher recycling rates. Finding applications for plastics from mixed plastics, WEEE and ELV streams are undoubtedly more challenging than for most of the currently sourced packaging material. This is due to quality issues and in some cases the use of additives in the original plastic products. However, there is a growing body of evidence of successful market trials and commercially successful initiatives in the WEEE and ELV sectors. The development of markets that use mixed plastics (or the development of effective separation systems) represents an important development area and one that will be critical to achieving higher levels of justifiable mechanical recycling (and other high value recovery processes) from domestic waste. Shifts in UK manufacturing industry continue to occur with a net flow of manufacturing activity to Eastern Europe and to Asia. This could have implications for some markets if high collection levels are achieved, but the UK manufacturing capacity for the material is relatively low (e.g. electronics). The construction industry, although not considered in detail in this report as a source of supply, certainly represents an important potential market opportunity for large quantities of recycled plastic material. For example, products such as drainage pipes, land stabilisation systems, and damp-proof membranes can all be manufactured with high levels of recycled content. The growth of plastic consumption in the UK is also currently higher in the construction sector. The most important opportunities to encourage domestic use of recycled materials arguably lie in two directions. One is to make environmental issues a greater feature of public procurement. The other is in programmes that mitigate transitional investment cost risks in product lines with long term, high volume prospects.

200

http://www.smartestenergy.com Wastewatch & Recoup (2003) Japan Containers & Packaging Recycling Association

201

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15.3

The export market

Many types of recovered plastic are bought and sold in the UK for domestic consumption and, increasingly, for export. While this export trade in waste may be synonymous in the media with exports of mixed plastics or unsorted bottles from domestic sources, in reality such material accounts for only a small fraction of the overall market. The bulk of the business involves shipments of production scrap and other less-contentious material, a large fraction of which falls outside the scope of the Packaging Regulations. In 2004 exports of this unseen material, and re-exports of recovered plastic from elsewhere, were at a similar volume to the packaging waste covered by Packaging Export Recovery Notes. This study explains why plastic is being exported. It ought to put to rest the claims that recovered plastic is exported only to be dumped. As a general principle, export demand, by increasing overall demand for recovered plastics, helps to support prices and reduces the overall cost to the UK of recovering plastics. In the absence of an export market, domestic prices for recovered plastic would be lower but PRN prices would be higher (in the obligated sector) and recovery less economically attractive (in the unregulated scrap sectors). The export market is providing outlets for some recovered plastics, such as ABS from waste electronic and electrical equipment, for which demand in the UK is likely to remain modest - simply because few products that use it are manufactured in the UK. China produces large quantities of electronics and electrical goods and machinery, manufactures most of the worlds toys, and is the worlds largest consumer of ABS. It is unsurprising to find that there is an export demand for recovered ABS. The recovered plastics market is a composite of a series of individual trades shaped by the supply and demand, as well as regulations governing, individual types of plastic. Generalisations are, as a consequence, difficult. Nonetheless, there tends to be an inverse correlation between market value and regulatory risk of waste plastic exports. For plastic users, clean production scrap can be close to prime resin in performance and trades at a modest discount to it. For environmental regulators, it is a commodity that presents few issues of risk, although licensing and other conditions still apply. Unsorted, post-consumer plastics are low in value and the focus of regulators attention, both here and in destination markets. It is this lower-value material that is most vulnerable to regulatory intervention. The real debate, at both ends of the trade, is therefore about standards and how they are applied to postconsumer material. Sorting and processing of mixed, post-consumer plastics will tend to take place in the lowest cost location allowed by the prevailing regulations, subject to transport costs and location of demand. In the case of bottles this operation produces 15%-20% waste203 and has the potential to create water pollution if adequate treatment facilities are not in place. There is an order of magnitude difference in the sorting cost per tonne between the UK and China. Firms in China (for example) have found margins in treating unprocessed, or partially processed, material from overseas. The latest Chinese standard on imports is sufficiently strict in its terms that for post-consumer wastes it would, if followed to the letter, preclude direct imports of anything but sorted, washed and shredded material204. If consistent enforcement was applied at the Chinese border, export demand for unsorted material would suffer, but processing activities would in time move to the next most favourable location as dictated by labour, capital and shipping costs and regulatory climate. If Europe wished to allow only processed material to be exported then the additional costs of sorting domestically would follow. Regulatory risks in export markets would be lower, but at the expense of higher cost recycling at home. At the present time China dominates the UK export market for recovered plastic. For every one tonne that was exported to another EU country in 2004, 5 tonnes were exported to China, either direct or via Hong Kong. Chinas 75% market share in UK direct trade probably understates its total contribution to demand, as some fraction of the UKs exports to continental Europe also ultimately end up in China, mainly via consolidators in Belgium and Holland. Although China drives UK recovered plastic exports, the UK is of much less significance to China. The UKs share of Chinas recovered plastic imports in 2004 was no more than 5%. The UK exported less than Germany,

203

from waste labels, residual contents of the packs, some closures and miscellaneous contamination Hong Kong is excluded from this standard

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Holland, the US or Japan. Chinese imports of recovered plastic from all regions have increased rapidly since 2000, as consumption of plastic for the domestic economy, and for exports, has grown. Other export markets are modest by comparison, but have the potential to grow in the future.

15.4

Export outlook

Much of the effort of this study went into documenting and researching the export trade. We expect continued export demand for recovered plastic across most sectors. However, this is a dynamic trade and it would be entirely possible for the international recovered plastics market to change as much in the next five years as it has in the past five. In the short to medium term the case for demand for recovered plastic from China looks robust, even if aggregate demand will not necessarily increase at the rate experienced between 2001 and 2004. In the longer term other markets can be expected to expand. Indias consumption of plastics lags behind China but is increasing. On one Indian estimate, 70% of plastic production in the country uses recovered plastic. Imports of recovered material are constrained by regulation, but there is some pressure from within the country for regulations to be relaxed. Other markets, such as the Middle East, are also emerging. The distribution of global plastic consumption in 2015 will be different from today and in the lower income markets, in particular, demand for recovered material can be expected. Manufacturers in China are using recovered plastic at a price lower than prime resin to gain competitive advantage. Some of the plastic applications are natural recovered plastic markets where quality parameters do not require prime resin to be used. A consistent message on the drivers of demand for this material was received from many different sources and it stands up to scrutiny. However, the exact identity of these manufacturers and the precise applications into which the plastic is put remain, in the case of several markets, obscure. While consultations provide comfort that demand is unlikely to decline in the next few years (and is more likely to increase), the extent to which manufacturers sourcing strategies are likely to change, as end market requirements evolve, domestic collection increase and prime resin supplies is increased, is still uncertain. In this study the trail was followed as far as the material reprocessors. A more intensive research effort in China, probably in collaboration with Chinese ministry research centres, would be required to shed light on these dynamics. Overlaid upon these uncertainties, are external market factors such the oil price and trends in liner shipping which will do much to influence the recovered plastic market. By common consensus, a substantial fall in oil prices (and hence many prime resin prices) would prompt a softening in the recovered plastic market. The same consensus regards such a fall as unlikely over the short to medium term. Despite energy prices, freight rates seem set to fall as the increases in container slot capacity of the worlds shipping fleet, out-strip growth in containerised trade over the next few years. Changing prices may influence demand, but regulatory changes have the power to open or close markets, sometimes at very short notice. Changes in the way in which imports to China are regulated and enforced could have important effects on the shape of the international recovered plastic trade. The Chinese Government is accrediting scrap exporters in the UK (and elsewhere) on the basis of an evaluation similar to that applied by our own Environment Agency for packaging waste exporters. China has standards for imported scrap plastic material which if enforced - are stricter than European export standards. Similar issues will apply in time to other export markets as they emerge. Research suggests that plastic wastes from the municipal waste stream in the UK and other countries are commonly imported to China in a form that does not meet Chinas own environmental protection standard for this material. Other exporters (such as Japan), have already faced trade issues relating to mismatch in national standards. Sustained strict enforcement of this standard would deliver a short term shock to the market sectors involved, and prompt a shift in sorting/processing operations, probably to other intermediate locations. This would probably manifest itself in some short-term disruption to shipments and price corrections as a result of re-routing to other outlets, rather than any structural loss of demand for the raw materials. There would be benefits in an international dialogue on how standards are applied and enforced at each end of the trade. This would reduce the regulatory risk to businesses, and help deal with the environmental risks stemming from aspects of trade where there are concerns. There is a common interest in making the legitimate trade work smoothly and acting in concert against the small fraction of the shipments that risk bringing the trade as a whole into disrepute

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Regulatory change in the EU, that required more detailed verification of the reprocessing location, or standard for exported waste, would also have a negative impact on exports, at least in the short term. Material can change ownership several times in the destination country before being processed, and en route in transhipment locations such as Hong Kong. The final dimension is competition. The UK has a small percentage share of the global export market for recovered plastics. If the export market becomes more competitive (i.e. buyers become more selective because supply and demand are better balanced than was the case in 2004) better quality material is more likely to find an outlet (or command the target price). For the large markets in post production scrap, and for suppliers able to guarantee a reliable flow of material of consistent quality, this is less likely to be a problem than for those touting lower quality loads closer to the margins of acceptability.

15.5

Balance between supply and demand

Most recovered plastic of a given type and quality will find a market within the global economy on the basis of price. The analysis indicates that for most collected packaging applications, and many agricultural plastics, supply is the practical limiting factor. Underlying market demand remains strong. From a UK perspective, the UK market has both capacity and is a consumer of many end products that could potentially accept the medium term growth in collection. The reason the UK market is currently under-utilised is due to pricing factors rather than fundamental technical limitations to the market. Providing UK recyclers can remain competitive, it is anticipated that further recycling capacity will grow in the UK although perhaps not at the same pace as export activity. From a global perspective there is a consumption of over 200m tonnes of plastics a year; based on the experience of several European countries with strong domestic recycling activity, it appears that from a technical perspective well over 20% of this global consumption could reasonably be met by recycled plastics. Given that long term demand appears to be structurally strong for most materials considered whether it be from recyclers in the UK, Mainland Europe, China or emerging economies the actual flows of material will be determined by both price and the extent to which sellers wish to incorporate non-price factors into their selling decisions. For example, suppliers of waste plastics in the UK can if they choose - guarantee material is recycled in the UK, but may in some cases have to accept a lower purchase price in return for this facility. In countries such as China, some external costs (such as the pricing of environmental impacts and health and safety standards comparable to the UK) are not fully reflected in the cost of recycling. This gives recyclers in these countries a competitive advantage, and has an effect on waste plastic prices. If these costs are included into the price mechanism as a result of further regulation, then this could impact on the actual location where recycling occurs. The area with the greatest risk of disruption relates to markets for unsorted or more contaminated plastics material. Changes in regulatory controls for recipient countries could result in rapid reduction of routes to markets and/or in changing acceptance specifications. It is recognised that the prevailing regulatory framework will influence supply-demand balance very strongly. This is particularly obvious in the ELV waste stream where verification protocols on the amount of other materials accepted as recycled, and the revision of the long term targets, can have fundamental impacts on the investment of businesses in the extraction of plastics for recycling and the supplies of materials arising. This study has shown that the recovered plastic market is not static and is subject to the currents of the global economy (consumption in the US, output in China, oil prices, etc.) as much as any other commodity market. Medium and long term projections are subject to significant uncertainty. It is recommended that the export market should be periodically reviewed, either via published reports or commissioned research, within the context of likely waste plastics availability and quality.

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16.0 Recommendations
The most important recommendations from the study are summarised below. The full listing of recommendations, along with associated risks and explanatory commentary is provided in table 16.1. The most important recommendations to address the major risks to a sustainable increase in plastics recycling in the UK, are: Ensure current and proposed statutory recycling targets remain in place (e.g. for ELV). Encourage development of technology for effective separation of plastics for recycling from WEEE, ELV and mixed waste streams. Develop/ensure availability of UK handling capacity capable of upgrading plastics materials to European market standards, to mitigate risks of tighter import controls in China and other markets. Lobby for implementation of REACH regulation in a manner that does not undermine competitiveness of European plastics recyclers. Review export market profile at least biannually to ensure ongoing awareness and management of risks in a rapidly changing global market.

In addition, the following recommendations are also considered important to ensure that good quality information is available to accurately track performance and inform policy: Improve PRN reporting to include more information on the sources of plastics recycled to aid data reconciliation and auditing. Review data capture methods used by different agencies (e.g. Customs and Environment Agency/SEPA) with the aim of achieving improved data coherency. Clarify how the requirement for broadly equivalent standards of recycling will be implemented to comply with EC recycling targets. Review whether UK plastics recyclers compete on a level international playing field and revise policies accordingly (e.g. does Climate Change Levy on plastics recyclers achieve the desired environmental outcome?) Review the wider environmental, social and economic merits of recycling in the UK compared to recycling in Asia to inform BPEO. (This review would be useful to inform the interpretation of the broadly equivalent standards requirement of the revised Packaging Waste Directive.)

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Table 16.1

Summary of risks & recommendations to mitigate risk

Risks

Probability (a) (1 5)

Impact (b) (1-5) 4.5

Net risk (a x b) (1-25) 9

Comments

Recommendations to mitigate risk

Chinese waste imports substituted by domestic supplies of plastics waste

Increasing collection of plastics waste generated in China and other Asian countries could displace imports from Europe and North America. There is evidence of substantial collections of waste plastics in Asia undertaken on a commercial basis. The probability of these collections significantly displacing supplies from the UK is considered relatively low for two reasons: the projected growth of plastics demand in Asia remains large; the producer responsibility systems in the UK and mainland Europe would be able to finance discounting of the price of relevant plastics waste until it became competitively priced to the available market (i.e. UK material could be priced below local material, or below material from less regulated countries such as the USA). The 2015 EC targets of ELV recycling and recovery are under review. Producers are arguing for lower recycling rates or the removal of the recycling target and a focus on recovery only. A change in the current targets would undermine investment in separation technology for the recycling of plastics from ASR streams. The currently proposed implementation of the REACH regulation would introduce expensive, commercially unsustainable testing regimes for recyclers producing flake and pellets (but not those making finished products). The impact would be to further reduce competitiveness of European plastics recyclers and potentially limit EU capacity for collected materials. Ironically the implementation proposed would drive more plastics outside the EU for recycling, where the REACH requirements are not present. Consultation suggests that most of the waste plastics trade is uncontroversial. However, the Chinese Authorities have been concerned about low quality materials (for example mixed plastics or plastics contaminated with organic matter) and these require pre-treatment before

Monitor the trends in supply/demand balance in China and India on a biannual basis to review risks to market availability. Plan alternative market options as required.

Changes to current ELV targets reduce recycling requirements

Argue for retention of current targets. Ensure producer responsibility implementation provides financial underpinning required for investment in ASR separation technology. Lobby for REACH implementation for recycled plastics based on generic data requirements, rather than batch testing. Encourage vertical integration of product manufacture and recycling to avoid the requirement for intermediate testing.

Adverse implementation of REACH

Enforcement of stricter controls on imports of waste plastics materials to China

Develop links between the UK regulators (EA, etc) and SEPA to ensure good communication on current and intended import controls and identify emerging risks to trade.

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entering mainland China. Tightening standards could disrupt the markets for lower quality waste plastics sales to China.

Ensure availability of alternative markets. Develop UK based sorting capacity capable of upgrade all materials to anticipated international import standards. Review PET fibre market trends in Asia with major producers to identify extent of risk. Stimulate the growth of recycled PET use in other market sectors such as bottles and sheet packaging. Encourage development of technology for plastics separation for recycling within new waste technologies (e.g. through WIP New Technologies programme). Evaluate and promote effective technologies to local government and contractors. Review biannually the UKs ability to achieve long-term packaging recycling targets based on anticipated developments of this technology. Encourage investment and commercialisation of required technologies. Evaluate and promote effective separation technologies. Finalise long term statutory objectives, associated regulations and financial arrangements for WEEE and ELV. Improve PRN reporting to include further information on the sources of plastics. This will aid reconciliation of data. Review relevant data capture methods used by different agencies (e.g. customs and EA) with the aim of achieving improved coherency of data. Procedures for completing plastics export paperwork should be examined for consistency with other trade data. Examine opportunities for consistent approach to measuring plastics recycled through various producer responsibility systems to maximise efficiency and minimise likelihood of misreporting. Consider cost/benefit of reporting polymer type as part of obligated business packaging

New manufacturing technologies for PET fibre in Asia result in substitution of recycled material with virgin polymer Inadequate technologies for separation of plastics from mixed waste

PET fibre accounts for over 75% of all markets for PET collected. Contradictory views were expressed on the potential for in line PET fibre production in Asia to shift to greater virgin use and displace demand for recycled PET.

Achievement of the high projections for supplies of plastics from the domestic waste stream will rely on effective separation of plastics from mixed waste, for example as part of an MBT process. Some of the new technologies for mixed waste treatment appear capable of extracting plastics for recycling. Others are less effective or aim to use the plastics in energy recovery (e.g. RDF production). It is not yet clear which mixed waste treatment technologies will be implemented or how rapidly they will be introduced. Achievement of the targets for ELV and WEEE recycling will rely on effective separation of plastics from shredder residues. Suitable technologies are developing but not yet commercialised. Some uncertainty surrounding the implementation of the associated regulations is likely to be slowing investment.

Inadequate technologies for plastics separation from shredder residues

Incorrect PRN and trade statistics provide incorrect/unreliable data

It has not been possible to reconcile the sources of 100kt of plastic packaging PRNs from 2005 data. The trade statistics for UK plastics waste exports are not consistent with the associated PERN data. Reported exports of plastics from the UK to Hong Kong are significantly different from the same imports received from the UK by Hong Kong. UK trade data are thought to significantly over-state polyethylenes share of waste plastic exports. This is because of the way that export declarations are being completed, and the fact that polyethylene happens to be the first on the available list of commodity codes. Some shipments to buyers in Europe (e.g. Rotterdam) are then routed to non-EU markets, so EU recycling is probably overstated by the available trade data. Tracking arrangements for recycling of agricultural, ELV and WEEE plastics under producer responsibility requirements are not clear. These points highlight that the reliability of baseline recycling data remains a concern.

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obligation returns. Plastics collection schemes develop at a slower rate than anticipated Declining competitiveness of UK plastics recycling industry limits local markets 2 3 6 The main reasons for failure to achieve collection levels predicted would be market collapses or other financing collapses (e.g. removal of funds for recycling). These are considered unlikely. There are some specific risks to achieving supplies of mixed plastics and post-shredder plastics and these are described separately. This study shows confidence in capacity being available for plastics collected. There is also evidence, however, of UK recyclers struggling to compete in the international market particularly against the low labour costs and regulatory controls of the Asian market. Sustained damage to the UK plastics recycling industry in combination with tighter controls on exports would present challenges in finding markets particularly for lower quality and/or mixed plastics waste. Currently export trade is driven almost exclusively by economic considerations within agreed regulatory frameworks. The relative environmental and social merits of recycling in Europe compared to in Asia play little part in current decision making. The EC requirements that recycling should count towards targets only if it is undertaken under broadly equivalent standards to Europe may lead to restrictions in access to some export markets. How this requirement will be implemented/enforced remains unclear. Some suppliers of plastics particularly from the public sector may determine end markets with greater emphasis on non-price issues. Greater consideration of non-price issues when selling plastics for recycling (either as a result of national or organisational policies) would influence flows of materials to export and into domestic markets. Although viewed as unlikely, large falls in virgin plastic pricing would depress pricing for recycled plastic materials. This could make collection less economically viable. Producer responsibility obligations and improving recovery technology provide an underpinning mechanism to mitigate the effects of such price changes. Tighter enforcement of TFS export controls could limit UK shipments of mixed plastics or contaminated single streams of plastics to export markets. Maintain current/planned recycling targets and levels of investment in recycling infrastructure and communications. Maintain landfill tax escalator. Ensure availability of local sorting capacity to upgrade low quality, mixed materials. Review competitiveness of UK recyclers in the global market, consider whether the playing field is level and take further action as required. Review the relative environmental, social and economic merits of recycling in UK and Asia to identify BPEO. Clarify how the broadly equivalent standards requirement will be implemented in Europe. Review requirements to manage risk based on the outcomes of above two actions.

Negative environmental and/or social impacts

2.5

Prime price collapse

2.5

Ensure producer responsibility targets are matched to collection levels to ensure growth in collections can be maintained. Invest in development of lower cost recovery technologies. Maintain links with UK regulators to assess risks and ensure clarity of acceptable quality standards for export. Quantify materials potentially effected by tighter controls. Develop plan based on availability of local sorting capacity to handle any material identified as at risk. Continue development of LCAs and associated

Tighter enforcement of Transfrontier Shipment of Waste Regulations

Recovery technologies

The adoption of waste to energy technologies at a larger scale than

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displace recycling activities

anticipated could displace material suitable for recycling. Changes to environmental regulations that place more emphasis on recovery and lower emphasis on recycling would impact on the relative economics of recycling (e.g. if the ELV Regulations were amended to reduce or remove recycling targets). Increasing availability of LCA evidence of the superior environmental benefits of many recycling technologies mean this risk is considered low. It is considered more likely that energy recovery technologies will displace landfill. 2 1 2 Significant changes in the $///Yuan exchange rates will affect the relative value of UK scrap plastics on the global market. For example, a reduction in the value of the Chinese Yuan against the pound might reduce the -equivalent price paid by Chinese buyers for scrap plastics, however it would also make Chinese finished products more competitive and this would drive demand. Increased shipment costs to China would make this market relatively less attractive to European sellers. Chinas imbalance of physical trade is expected to continue and the balance of expert opinion is that freight rates will decline in the period to 2008.

economic assessments to accurately identify the BPEOs for waste plastics. Lobby for appropriate national and international environmental management policies (e.g. recycling and recovery targets) based on BPEO.

Exchange rate movements

Monitor trends in currency exchange rates as required to manage risks. Enterprises concerned with this risk could buy options on future currency prices as required.

Chinese freight rate hikes

No action proposed.

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Annex A Packaging
Consumption of polymer for packaging applications
Details of consumption of polymers 2005-2015, used to form an analysis of the quantity of packaging in the UK market are shown in tables A.1 and A.2. The baseline (2005) assessments in these tables have been derived in the following manner: An assessment of packaging arisings and future trends has been developed with reference to a wide range of industry sources. This assessment has been derived from information sourced from six trade associations, four market research organisations specialising in the plastics and packaging markets, and directly from a range of large businesses specialising in particular market areas. In addition, a review of trade media was undertaken to identify specific market data and trends. In the main, information has been sourced showing specifically UK consumption. In a limited number of instances only European consumption figures have been available and have therefore been assessed pro rata for the UK, primarily based on population. It has been possible in most cases to cross-reference various sources of information on both applications and polymer types to within 5-10% of each other. In some cases the market data from particular sources provided information on UK production rather than domestic consumption of finished products in other cases information on import/export data was available. In order to reconcile available data on total net imports of packaging with other data sources to provide a consolidated assessment of the plastics applications used and arising as waste in the UK, some adjustments have been made to reference data (notably to assess the net imports/exports of films based on PIFA statistics published in 2003 and 2004). This allows as full an allocation of the net imports of packaging to be identified and broken down to applications and polymers as the available data will allow. The balancing assumptions made in this report relating to the available PIFA statistics are shown. Assessments have been made for the annual growth/decline of the individual packaging applications and polymers listed in the tables A.1 and A.2. Where assessments of specific likely future growth levels were available from sources, these have been used. Where this has been unavailable, historic trends have been extrapolated where it is considered that there is good reason for trends being maintained (e.g. displacement by imports). Where this information was unavailable cross-referencing between different data sources was used to assess and consolidate the remaining data based on the authors knowledge of the industry to produce what is judged to be a reasonable overall assessment. As a result of the combined trends in different polymers and applications, the resulting overall growth rates of total plastic packaging are approximately 2% and 5% per annum which are levels consistent with industry estimates and available obligated packaging data trends.

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Table A.1

Consumption of polymer 2005-2015 by major packaging applications (kt) c. 2% overall packaging growth pa.205

Description
PET bottles HDPE bottles - natural/food HDPE bottles - non food, retail HDPE bottles - oil & car care, retail PVC bottles PP bottles PS bottles PS thermoformed & XPS packaging PP thermoformed packaging PET thermoformed packaging206 PP injection moulded packaging PP Injection moulded pots PP Bulk bags PO other closures PS expanded packaging- - transit PO other drums & IBCs207 PP pails PET strapping PP strapping OPP film OPP Deduction: assumed imports in PIFA OPP data PET sheet PVC film/sheet (sandwich packs, etc) PVC other technical/performance film/sheet PVC cling film HDPE Other HDPE packaging PE Collation shrink PE Pallet shrink PE Pallet stretch PE Frozen Food FFS PE Lamination film PE Bubble Film PE Dry cleaning/laundry PE Cereal Co-ex PE Other PE reels for packaging PE Deduction: assumed imports in PIFA PE film data PE Heavy duty sacks PE industrial liners PE Carrier bags PE Retail bags HDPE Bags PE Adjustment to PIFA data for HDPE films PE Bread bags
205

kt 2005 kt 2008 kt 2010 kt 2015


300 130 70 10 13 10 5 85 112 60 70 15 3 50 28 55 37 10 20 122 (54) 25 96 5 10 52 59 27 132 24 29 16 12 8 148 (40) 35 25 159 87 19 (19) 12 309 136 72 10 13 12 5 93 124 66 80 16 3 52 29 58 39 11 22 126 (54) 28 99 5 10 54 58 24 140 26 29 18 12 8 152 (40) 33 25 167 91 20 (19) 11 315 140 74 11 13 13 5 98 133 70 87 17 3 54 30 59 40 12 23 128 (54) 30 101 5 11 56 56 22 146 28 29 19 12 8 155 (40) 32 25 172 94 20 (19) 11 331 151 77 11 14 16 6 114 158 81 109 20 3 58 32 64 43 13 27 135 (54) 37 106 6 12 60 54 18 161 32 29 23 12 8 163 (40) 29 25 185 101 22 (19) 9

c. 2% refers to the aggregate annual increase in all plastic packaging. Individual applications and polymers may exhibit different estimated rates of growth/decline.

There is evidence of recent rapid growth in PET thermoforming applications. It is possible that this may be counterbalanced by some slowing growth rates in the use of other polymers in thermoforming. However, it was not possible to verify this hypothesis within the study. As a result the thermoformed market may be overstated in total; this would be compounded in the long term projections.
207

206

Intermediate Bulk Containers (IBCs)

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Description
PE Freezer bags PE Other bags PE Deduction: assumed imports of bags in PIFA data Biopolymers Various applications PET net imports various applications PO other net imports various applications PVC net imports various applications OPP net imports various applications PS net imports various applications HDPE net imports various applications PP net imports various applications PE net imports various applications Sub total - polymer use Of which supply chain process losses Of which other filling and stock losses Of which net imports Net weight of polymer supply to final UK user/customer

kt 2005 kt 2008 kt 2010 kt 2015


6 197 (120) 3 15 5 10 54 10 40 20 160 2,474 118 47 314 2,310 6 209 (120) 5 16 5 11 57 11 42 21 170 2,608 118 47 333 2,444 6 217 (120) 7 17 6 11 60 11 44 22 177 2,704 118 47 347 2,540 6 240 (120) 19 18 6 12 66 12 49 24 195 2,971 118 47 383 2,807

Plastic packaging forming basis for targets (kt)

2,356

2,490

2,586

2,853

Source: Recoup, from industry consultations & published market research AMA (2003), AMI (2005), APME (2003, 2004), BPF (2004), DEFRA (2005), ACP, Envirowise (2003), EPRO (2005), PIRA (2003, 2005), PRW, PIE, REXAM (2005), RPC (2005), PIFA (2004, 2005), The Packaging Federation (2005), Valpak (2005), WRAP (2003b, 2004d), Wastewatch & Recoup (2004)

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Table A.2

Consumption of polymer 2005-2015 by major applications (kt) c. 5% growth pa.208

Description
PET bottles HDPE bottles - natural/food HDPE bottles - non food, retail HDPE bottles - oil & car care, retail PVC bottles PP bottles PS bottles PS thermoformed & XPS packaging PP thermoformed packaging PET thermoformed packaging PP injection moulded packaging PP Injection moulded pots PP Bulk bags PO unspecified closures PS expanded packaging- - transit PO unspecified drums & IBCs PP pails PET strapping PP strapping OPP film OPP Deduction: assumed imports in PIFA OPP data PET sheet PVC film/sheet (sandwich packs, etc) PVC other technical/performance film/sheet PVC cling film HDPE Other HDPE packaging PE Collation shrink PE Pallet shrink PE Pallet stretch PE Frozen Food FFS PE Lamination film PE Bubble Film PE Dry cleaning/laundry PE Cereal Co-ex PE Other PE reels for packaging PE Deduction: assumed imports in PIFA PE film data PE Heavy duty sacks PE industrial liners PE Carrier bags

kt 2005
300 130 70 10 13 10 5 85 112 60 70 15 3 50 28 55 37 10 20 122 -54 25 96 5 10 52 59 27 132 24 29 16 12 8 148 -40 35 25 159

kt 2008
323 140 75 11 14 12 5 98 130 71 81 17 3 53 30 58 39 12 23 129 -54 28 102 5 11 55 58 24 140 26 29 18 14 9 157 -40 33 25 169

kt 2010
339 147 79 11 15 13 6 108 143 80 89 18 3 55 31 61 41 13 26 135 -54 30 106 6 11 57 56 22 146 28 29 19 14 9 163 -40 32 25 176

kt 2015
384 166 90 13 17 16 6 138 182 107 114 22 3 61 34 67 45 16 33 149 -54 37 117 6 12 63 54 18 161 32 29 23 17 10 180 -40 29 25 194

208 c. 5% refers to the aggregate annual increase in all plastic packaging. Individual applications and polymers may exhibit different estimated rates of growth/decline.

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Description
PE Retail bags HDPE Bags PE Adjustment to PIFA data for HDPE films PE Bread bags PE Freezer bags PE Other bags PE Deduction: assumed imports of bags in PIFA data Biopolymers Various applications PET net imports various applications PO other net imports various applications PVC net imports various applications OPP net imports various applications PS net imports various applications HDPE net imports various applications PP net imports various applications PE net imports various applications

kt 2005
87 19 -19 12 6 197 -120 3 15 5 10 54 10 40 20 160

kt 2008
93 20 -19 11 6 209 -120 7 22 7 14 78 14 58 29 231

kt 2010
97 21 -19 11 6 217 -120 11 28 9 18 99 18 74 37 295

kt 2015
107 23 -19 9 6 240 -120 41 51 17 34 183 34 136 68 543

Sub total - polymer use


Of which supply chain process losses Of which other filling and stock losses Of which net imports Net weight of polymer supply to final UK user/customer

2,474
118 47 314 2,310

2,793
118 47 453 2,629

3,051
118 47 579 2,887

3,932
118 47 1,066 3,768

Tonnage forming basis for targets

2,356

2,675

2,934

3,814

Source: Recoup, from industry consultations & published market research, (from table A.1)

The projections shown in table A1 are summarised by polymer type and application for the years 2008, 2010 and 2015 in the three figures A.3 A.5.

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Table A.3

Polymer demand by application in production of packaging for consumption in the UK (2008) (2% growth)

Format

PE

HDPE

OPP

PP

PO other

PET

PS

PVC

BioGrand polymers Total 2008 (kt)


5 557 52 29 3 510 424 16 80 54 96 132 33 283 5 333

Bottles Closures EPS transit packaging Fibre Film Film bags Injection moulded rigids Injection moulded RTPs, crates, etc Other HDPE Pails, drums & industrial Semi-rigid sheet Strapping Thermoformed packs Various applications Net imports

428 404 170

218 20 54 42

72 57

12 3 16 80 39 22 124 21

52 58 5

309 28 11 66 16

5 29 93 11

13 10 104 11

Grand Total

1,001

335

129

316

115

430

138

138

2,608

Source: Recoup, from industry consultations & published market research (from table A.1)

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Table A.4

Polymer demand by application in production of packaging for consumption in the UK (2010) (2% growth)

Format

PE

HDPE

OPP

PP

PO other

PET

PS

PVC

Biopolymers

Grand Total 2010 (kt)


571 54 30 3 521 438 17 87 56 99 137 35 301 7 347

Bottles Closures EPS transit packaging Fibre Film Film bags Injection moulded rigids Injection moulded RTPs, crates, etc Other HDPE Pails, drums & industrial Semi-rigid sheet Strapping Thermoformed packs Various applications Net imports

437 418 177

224 20 56 44

74 60

13 3 17 87 40 23 133 22

54 59 6

315 30 12 70 17

5 30 98 11

13 11 106 11

7 -

Grand Total

1,031

345

134

338

119

444

145

141

2,704

Source: Recoup, from industry consultations & published market research (from table A.1)

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Table A.5

Polymer demand by application in production of packaging for consumption in the UK (2015) (2% growth)

Format

PE

HDPE

OPP

PP

PO other

PET

PS

PVC

Biopolymers

Grand Total 2015 (kt)


606 58 32 3 554 479 20 109 60 107 149 40 353 19 383

Bottles Closures EPS transit packaging Fibre Film Film - bags Injection moulded rigids Injection moulded RTPs, crates, etc Other HDPE Pails, drums & industrial Semi-rigid sheet Strapping Thermoformed packs Various applications Net imports

461 457 195

239 22 60 49

81 66

16 3 20 109 43 27 158 24

58 64 6

331 37 13 81 18

6 32 114 12

14 12 112 12

19 -

Grand Total

1,113

370

147

400

128

481

164

149

19

2,971

Source: Recoup, from industry consultations & published market research (from table A.1)

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Plastic packaging recycling by application


Table A.6 provides a breakdown of estimated plastic packaging recycling by material/application identified for 2002, and also shows UK plastic packaging activity in the same year reported by Defra based on PERN and PRN returns.

Table A.6

Sources of UK plastic packaging recycled in 2002


Application 2002 (kt)
4.8 19 0.5 4 9.5 0.5 2.5 0 101 7.4 15 60.8

PE crates PP crates HDPE film PP film EPS PS cups PET bottles LLDPE LDPE films HDPE bottles & drums Other packaging (positively identified) UK recycled packaging not captured in survey (reconciliation based on PRNs issued)

Sub-total UK packaging recycled (based on PRNS issued)


Export - Straight on trays (PVC/PET/PS) Export - Bottles Export Other, assumed to be mainly LLDPE/LDPE films; (reconciled quantity based on PERNs issued)

225
6.5 5.6 122.9

Sub-total export Total packaging recycling


Source: Defra & WRAP (2003c)

135 360

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Table A.7 provides an updated assessment of UK probable breakdown of plastics packaging recycling activity in 2005. This has been developed from table A.6 by Recoup in conjunction with input from 10 UK recyclers or exporters and using 2005 Defra data on PRNs and PERNS issued. Table A.7 Estimated UK plastic packaging recycling in 2005 by application, (kt)

Application
Films - packing rejects Packaging/filling rejects - bottles Other filling/packing/redundant stock rejects Films - post-use Office & commercial collections - additional Carrier bags - FOS Bottles & other household EPS Cups Trays (e.g. "Straight on") Plastic crates & pallets Drums & large containers PP pails (e.g. catering) PP bulk bags Agricultural & horticultural packaging Construction site packaging Other packaging - unidentified

kt 2005
15 6 10 165 <1 2 67 6 <1 7 25 5 3 <1 <1 <1 100

TOTAL (kt)

414

Source: Recoup, from industry consultations, WRAP (2003c), WRAP (2004d), Defra (2006b)

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Projected collections of plastics packaging for recycling


Table A.8 Projection to show separated domestic plastics streams available for recycling by scenario & polymer type

Scenario Year
Total bottles Total mixed plastics

Scenario 1 2008 kt/a


108 6

Scenario 2 2015 kt/a


167 13

Scenario 3 2015 kt/a


246 36

2010 kt/a
130 8

2008 kt/a
128 8

2010 kt/a
168 15

2008 kt/a
150 9

2010 kt/a
220 30

2015 kt/a
357 164

Total plastics
Of which PET bottles HDPE bottles Other bottles Mixed plastics (PO, PET, PVC, PS) % of bottles sold polymer sorted % of bottles sold unsorted baled mixed polymer bottles baled PET bottles (clear & blue) baled PET bottles (coloured) baled HDPE bottles

114

138

180

136

183

282

159

250

522

49 54 5 6

60 62 8 8

79 77 12 13

58 64 6 8

77 81 10 15

116 113 17 36

68 75 8 9

101 105 13 30

168 164 25 164

25% 75% 81 9 3 15

30% 70% 91 13 4 21

40% 60% 100 24 8 35

25% 75% 96 11 4 18

35% 65% 109 20 7 32

50% 50% 123 43 14 65

30% 70% 105 15 5 25

40% 60% 132 30 10 47

60% 40% 143 76 25 114

Source: Recoup based on industry consultations, WRAP (2005j), WRAP (2006), WIP

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Annex B Agricultural Plastics


Table B.1 shows detailed arisings of agricultural plastics waste (1998) by polymer type and application.

Table B.1

Plastic waste from agricultural holdings by polymer type and use

Application
PACKAGING Agrochemical packaging Fertiliser bags Seed bags Animal feed bags Animal health packaging Oil containers Miscellaneous packaging Total plastic packaging NON-PACKAGING PLASTICS Films Silage plastics Silage plastic + contamination Greenhouse and tunnel film Mulch film and crop cover Mulch film and crop cover + contamination Total films Total films + contamination OTHER NON-PACKAGING PLASTICS Silage wrap cones Other horticultural plastics Bale twine and net wrap Tree guards Total non-packaging plastics Total non-packaging plastics with contamination Total all plastics - non contaminated Source: Environment Agency (2001, 2005)

Polymer type

Amount (ktonnes)
2.4 12.2 1.0 11.4 0.7 0.7 3.8 32.2

HDPE PP/LDPE PP PE PP EPS,PP

LDPE LDPE LDPE LDPE 25.0 50.0 0.5 4.5 22.5 30.0 73.0 1.5 LDPE PP 6.0 11.1 11.9 60.5 103.5 92.7

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B.2

Summary of agricultural waste management options.

On the introduction of the 2005 Regulations farm waste will be classed as industrial waste leaving five basic waste management options available to farmers209 of which a combination may be used. Option 1

Store waste, pending collection, on the site where it is produced for up to 12 months in suitable containers where
necessary to that it cannot escape control e.g. become windblown. Storing waste properly can reduce costs, and avoid contamination also allowing for waste to be easily separated. Option 2

Take the waste for recovery or disposal off-farm at an appropriately licensed site detailed in the Waste Recycling
Directory210. A gate fee may be charged and paperwork such as a Duty of Care transfer note may be requested. Option 3

Transfer waste to someone else for recovery or disposal off-farm at an appropriately licensed site. Duty of Care
documents will be requested. Option 4

Register a licence exemption with the Environment Agency to recover or dispose of waste on-farm free of charge.
Option 5 Apply to the Environment Agency for a Waste Management Licence (WML) or a landfill Pollution Prevention and Control (PPC) Permit to recover or dispose of waste on-farm. Ideal for diversification of farm to transfer station, waste recycling business, waste treatment facility. Obtaining licences and permits is subject to charges and meeting statutory requirements. Within these available options, there is no specified or separate provision for the recovery and recycling of large quantities of valuable waste plastics.

209

DEFRA, 2005a http://www.wasterecycling.org.uk

210

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Annex C End of Life Vehicles (ELV)


Table C.1 Composition and projected changes in vehicle material composition as a % of vehicle by weight EU 1990 to 2020

Material
Galv steel sheet Cold rolled coil Hot rolled coil Plate steel Alloy steel Wire rod Cast iron Cast Aluminum Wrought aluminum Cu PE PP PVC Other TP Thermosets Synthetic rubber Glass Other materials

1990
17.94 15.09 10.70 0.23 17.01 0.69 1.85 7.93 2.77 0.54 0.46 2.93 1.23 3.23 1.39 4.77 3.39 7.85

2000
17.73 14.94 10.67 0.22 16.85 0.66 1.84 7.95 2.80 0.59 0.52 3.02 1.25 3.38 1.47 4.86 3.31 7.95

2010
17.65 14.85 10.55 0.22 16.79 0.72 1.79 7.96 2.80 0.65 0.50 3.08 1.29 3.44 1.51 4.88 3.30 8.03

2020
17.55 14.79 10.54 0.28 16.70 0.71 1.84 8.00 2.83 0.71 0.50 3.11 1.34 3.47 1.49 4.81 3.26 8.07

Total plastics

9.24

9.64

9.83

9.91

Source: Assurre, http://www.assurre.org/downloads/archive/afeaf9c1-86cb-4232-a4cb49fb477a05e5.xls

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Figure C.1

Post shredder technologies for treating shredder residue (Assurre, 2005)

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Examples of ASR plastics separation technologies Engineering Separation and Recycling - Dense medium separation (wet)
Materials that either float or sink are separated using different densities of water. The water density is changed by means of suspending fine particles that will separate out polymers. In the past there have been problems of heavier materials (sinks) burying lighter materials (floats), that cannot find their way to the surface of the density medium drum. Material is injected with the medium over a 3-D plane into a shallow bath inside the drum. The length of the drum is called the separation zone. The bi-directional motion of the drum combined with scrolls underneath the drum moves the sinks in one direction (where they drop outside the separation zone and are screwed up out of the drum) and the floats in the opposite direction. Different suspension densities, created using materials such as sand, ultra-fine metals and glass in different drums can separate out different polymer types (organics from inorganics, PVC from ABS and nylon).

MBA Polymers - Dense medium separation - hydrocyclone


At MBA Polymers, polymers are removed in stages. Lighter materials, such as foam, film, and paper are removed by air jets, and hydrocyclones separate plastics further using water as a medium to separate sinks or floats.

Argonne Laboratories, Recovery Plastics - Froth/Skin flotation


Once bulk separation has taken place, polymers are separated by froth flotation. The process (shown in Figure C.2) modifies the effective density of polymers. In solution, gas bubbles attach to the material surface enabling the material to float above denser plastics to the surface.

Figure C.2

Separation of mixed plastics concentrates

Source: Argonne Laboratories

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VW Si-con
This process of shredder residue separation produces a PVC fraction for PVC production, and shredder granulate to be used as reducing agent in blast furnaces. Figure C.3 shows the process in more detail.

Figure C.3 Source: VW

ELV treatment chain

Figure C.4

Main process steps of VW Si-Con recycling technique

Source: VW

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Annex D Waste Electric and Electronic Equipment (WEEE)


Tables D.1 D.4 used for the basis of the projections are colour coded: Green cells = data based on recent ICER statistics, or credible other references Grey cells = data where the reference highlights a relatively large uncertainty, or assumptions based on informed estimates based on disparate data sources Blue cells = an estimate to drive the model, with little corroborative evidence to support The projection model is based on the following assumptions: Plastics content of WEEE remains broadly around 20% Growth in arisings per year is 3-4% Improvements in availability of collection infrastructure will result in growth in collections during the period Efficiency of plastics extraction from shredder residue will improve to 60-75% of input plastics The focus of small appliance plastics recycling will be around styrenic polymers Growth in collections of smaller household appliances will be most evident in the period 2010-2015

Note there will be other commercial and industrial WEEE that may not be currently accounted for in the data.

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Table D.1

Estimated supplies of plastics from WEEE recycling, 2003

Household WEEE
Refrigeration equipment (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) Other large household appliances (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) Equipment containing CRTs (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) All other WEEE (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt)

2003
143 77% 110 7% 8 102 22% 69% 15.5 478 70% 335 3% 9 325 30% 56% 54.7 96 25% 24 45% 11 13 21% 48% 1.3 220 5% 11 10% 1 10 20% 47% 0.9

Styrenic

PU Foam

PP

PMMA

PA

PC

Other

59% 80% 10.6

36% 60% 4.9 -

5% 0% -

80% 70% 54.7 95%

5% 0% -

5% -

10% 0% 5%

95% 50% 1.3 -

5% 0% -

65% 50% 0.6 -

17% 40% 0.1

7% 40% 0.1

3% 40% 0.0

4% 40% 0.0

4% 40% 0.0

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Table D.2

Projected supplies of plastics from WEEE recycling 2008


2008
162 80% 129 7% 9 120 22% 72% 19.0 554 75% 416 3% 11 404 20% 56% 45.3 117 35% 41 45% 18 22 21% 48% 2.2 268 7% 19 10% 2 17 20% 33% 1.1 65% 40% 0.9 17% 20% 0.1 7% 20% 0.0 3% 20% 0.0 4% 20% 0.0 4% 20% 0.0 95% 50% 2.2 5% 0% 80% 70% 45.3 95% 5% 0% 5% 5% 10% 0% 59% 85% 13.3 36% 60% 5.7 5% 0% -

Household WEEE
Refrigeration equipment (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) Other large household appliances (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) Equipment containing CRTs (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) All other WEEE (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt)

Styrenic

PU Foam

PP

PMMA

PA

PC

Other

Source: Recoup from ICER (2004, 2005), APME (2003), AMI (2005), industry consultations

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Table D.3

Projected supplies of plastics from WEEE recycling 2010

Household WEEE
Refrigeration equipment (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) Other large household appliances (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) Equipment containing CRTs (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt)

2010
170 90% 153 7% 142 22% 75% 23.4 588 85% 500 3% 486 20% 60% 58.3 126 50%

Styrenic

PU Foam

PP

PMMA

PA

PC

Other

59% 90% 16.6

36% 60% 6.8 -

5% 0% -

80% 75% 58.3 95%

5% 0% -

5% -

10% 0% 5%

40%

21% 57% 4.5

95% 60% 4.5

5% 0% -

All other WEEE (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt)

290 20%

20%

20% 33% 3.1

65% 40% 2.4

17 20 0.3

7% 20% 0.1

3% 20% 0.1

4% 20% 0.1

4% 20% 0.1

Source: Recoup from ICER (2004, 2005), APME (2003), AMI (2005), industry consultations

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Table D.4

Projected supplies of plastics from WEEE recycling 2015


2015
181 95% 172 15% 26 146 22% 75% 24.1 643 95% 611 15% 92 519 20% 60% 62.3 137 75% 103 40% 41 62 21% 76% 9.8 314 40% 125 20% 25 100 20% 38% 7.7 65% 40% 5.2 17% 40% 1.4 7% 30% 0.4 3% 30% 0.2 4% 30% 0.2 4% 30% 0.2 95% 80% 9.8 5% 0% 80% 75% 62.3 95% 5% 0% 5% 5% 10% 0% 59% 90% 17.1 36% 60% 7.0 5% 0% -

Household WEEE
Refrigeration equipment (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) Other large household appliances (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) Equipment containing CRTs (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt) All other WEEE (kt) Of which collected for reuse/recycling/recovery (%) ktonnes WEEE collected Of which exported for reuse (%) ktonnes net exports for reuse Of which available for recycling (kt) Of which plastics (%) Of which extracted for recycling (%) Tonnes of plastics available (kt)

Styrenic

PU Foam

PP

PMMA

PA

PC

Other

Source: Recoup from ICER (2004, 2005), APME (2003), AMI (2005), industry consultations

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Annex E UK Market Demand


Table E.1 An indication of existing market sizes by application, an estimate of the potential for market growth and the extent to which that growth that could occur. (reproduced from Enviros, 2003)
Note this is not an exclusive listing and other potential applications (e.g. bottles) are also available.

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Annex F Summary of global market in waste plastics by country/region


Market EU Features of current market for waste plastics Many EU countries (e.g. Germany, Italy, Netherlands and France) have wellestablished plastics recycling industries. Some have developed plastics recycling infrastructure with support from green dot packaging fees through access to waste plastics packaging supplied at below global market rates and secure, longterm supply contracts given in return for guarantees of market availability and traceability of materials. The European plastics recycling industry is estimated to comprise over 700 businesses and 2,500ktpa recycling capacity211. 2,200kt-3,100kt of plastics were collected in Europe for recycling in 2004. Of this at least 1,800kt of plastics packaging was collected for recycling, with approximately 80% recycled within the EU. There is significant intra-EU trade of recovered plastics with major imports from other EU countries to the Netherlands, Belgium, Italy and Germany. These countries are also the major exporters outside the EU. In 2004 EU export of plastics waste to Hong Kong and China were 1,245kt almost two thirds of total EU exports by volume. Exports to this region have more than tripled since 1999 (see Figs. 6.2 and 6.3). There is extensive trading of recovered plastics within the NAFTA region (the USA, Canada and Mexico), and also a net outflow of this material to East Asia. The US is one of the worlds largest importers and exporters of waste plastics. It imported 396kt and exported 745kt in 2004. Exports of, for example, PET bottle waste have increased by over 400% since 1998 whilst domestic recyclers consumption has declined slightly during the period. Six of the ten largest recovered plastic export markets for the US are in Asia, accounting for more than two-thirds of US recovered plastic exports (see Fig 8.4). The USs close neighbours, Canada and Mexico, receive most of the remainder. Assessment of future market outlook Supplies of plastics for recycling will continue to increase throughout Europe, as all member states must achieve higher recycling targets. European plastics recyclers report that it is increasingly challenging to remain competitive with Asian recyclers. The market data suggests that total available capacity in Europe is significantly under-utilised and this trend is likely to continue, with margins being squeezed. As more product manufacturing transfers to Asia, so local end markets for recycled flake and pellet products also become less available. Green dot packaging recycling schemes are using competition in the market to drive down costs. EU plastics recyclers are receiving less favourable arrangements than in the past and are being forced to compete fully in the international market. Recycling capacity in Eastern Europe and the new EU states is growing. This will compete with capacity in Western Europe for material and has the advantages of lower labour costs and, in some cases, better access to new markets in Russia. Changes to the EU food contact regulations will improve opportunities for closed loop packaging recycling for PET that will favour local markets. Supplies of plastics for recycling will increase with increasing regulatory interventions, although at a slower rate than Europe. North American plastics recyclers are concerned about ability to compete with Asian recyclers. Their concerns mirror those expressed by Western European plastics recyclers.

NAFTA

211

http://www.eupr.org/

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JAPAN

The US exports more plastics waste direct to China than to Hong Kong. Japan has a range of laws covering recycling of different waste streams, including packaging and appliances. This requires high levels of plastics recycling (e.g. c. 850ktpa of plastic packaging recycling in 2005) Japan is the country with the largest recovered plastics exports to the China market. It exported 850kt of recovered plastic in 2004 (Fig 9.3). Japan has a strong reputation in China and Hong Kong for reliable supply of high quality plastic, both industrial scrap and post-consumer plastic waste. Many of the firms in Hong Kong focus exclusively on Japan-sourced material. After the introduction of a ban on direct import of plastics waste to China in May 2004 the proportion of Japans plastics that was routed through Hong Kong increased. The ban was lifted in September 2005, and a recovery of direct trade is now expected. China is the driving force behind the huge worldwide growth in the trade of waste plastics and the ultimate destination of most of the waste plastics that are exported from the European Union and NAFTA regions. C. 40,000ktpa of plastics are used in manufacturing in China and this demand is increasing at over 10% per annum. Demand for plastics in China has doubled in the last five years. Total imports of waste plastics to China were only 12.5% of production - 5,000kt in 2005. The UK waste plastics sales to China (including plastics routing via Hong Kong) are not significant when compared to Chinas overall consumption they represent less than 1% of total plastics demand and only 5% of waste plastics imports. The waste plastics are used in a wide variety of applications, from textiles to toys to kitchen utensils. The end-user manufacturers are seeking to reduce production costs by finding cheaper sources of plastic inputs, particularly when virgin prices are historically high. Demand for waste plastics remains strong. The combination of low cost labour, relatively low entry costs to establish recycling plants, more limited regulatory controls and low freight costs makes China highly competitive when compared to European and North American plastics recyclers. Hong Kong acts as a point of transhipment and temporary storage for plastics waste destined ultimately for China. It is a free port with separate customs zones that are not subject to Chinas import duties and customs law. Hong Kongs demand is a function of demand in China, which is expected to grow (see above). The role of Hong Kong as a trader and broker of deals with Chinese recycling Japan is a wealthy economy and, like Europe, is likely to continue to act as a net supplier of waste plastics to lower cost economies for recycling.

CHINA

The demand for waste plastics from China looks strong for many years ahead. Consumption of plastic is expected to increase by at least 7% per annum over the next ten years as domestic consumption rises in line with income. There is robust growth in export manufacture of plastics products, which also drives growth in plastic packaging use. Even allowing for expected growth in virgin plastics manufacturing in China, imports of plastics are expected to form an important part of overall supply. At least 10,000ktpa of plastics imports (virgin & waste) will be required. Commercial drivers to source lower cost raw materials will continue to drive demand for scrap plastics. The development of domestic virgin plastics capacity is generally not expected to displace recycled material, unless virgin prices were to fall massively. Projections suggest that demand for waste plastics will rise to 6,500ktpa by 2010. Local collections of plastics waste are not expected to significantly reduce imported plastics demand within the period to 2010.

HONG KONG

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2,730kt tonnes of plastics waste imported in 2004. Almost all these imports (2,500kt tonnes) were subsequently routed to mainland China. Due to import controls on mixed plastics and whole bottles, there are a growing number of enterprises in Hong Kong that sort, rinse and shred post-consumer bottles to comply with entry requirements of mainland China.

businesses is likely to erode over time as increasing numbers of buyers gain the international business skills and connections to source material directly. Any decline in demand from Hong Kong will therefore be counterbalanced by increases in demand for direct shipments to mainland China. Hong Kong is likely to continue to act as a site for sorting and upgrading material prior to entry to China, although it will probably face growing competition in this role from other nearby countries such as Vietnam and Malaysia. India is a sleeping giant with the potential to be a buyer of much larger quantities of waste plastics. Average per capita consumption is low (3.6 kg/person cf. a global average of 21.5kg) Total plastics demand is predicted to rise at 12-15% per annum in coming years, increasing demand for plastics to 12,300kt by 2010. The commercial importance of securing plastics for this growing economy is expected to lead to relaxing of the restrictions to import of waste plastics. There is evidence that the Indian Government is considering some easing of import restrictions on a case by case basis for industrial scrap. It is unlikely this would extend to postconsumer material in the near future. Growth in plastics recycling capacity is expected to continue in developing countries, particularly those that are able to access international markets. This capacity will be used to supply raw material for growing domestic end-product consumption at lower cost than virgin plastics and to supply plastic products for the international market.

INDIA

India has a sizeable domestic plastics recycling industry consisting of an estimated 20,000 companies. It is estimated that 30-40% of all plastics in India is recycled. Import restrictions on waste plastics have limited Indias influence on the global waste plastics market. It imported 100kt of waste plastics in 2005, against a total demand for all polymers of 4,500kt. Import licenses for plastics waste are hard to obtain and in effect only waste equivalent to virgin plastics can be imported. The single exception to this rule is PET bottle waste, which can be freely imported. This study highlighted growth of recycling capacity in other parts of South-East Asia, North Africa and South America. These regions are all characterised by a combination of low labour costs (compared to the UK) and increasing demand for plastics products, with relatively low market entry barriers for those wishing to establish plastics recycling operations.

OTHER

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Annex G Chinese regulation of trade in waste


Inventory of changes in the regulations on imported waste, from Yoshida (2005), Chapter 3, in Kojima et al (2005).

Table Changes in the Regulations on Imported Wastes (19892004) March 1989 Basel Convention established March 1991 Notice of tough restrictions on transboundary movements of foreign hazardous wastes bound for China: State Environmental Protection Administration, General Administration of Customs Sept. Standing Committee of the National Peoples Congress ratifies the Basel Convention Nov. 1994 Interim regulations concerning the strict control of waste imports from the European Community (EC) State Environmental Protection Administration (total ban on imports of yellow and red wastes) Oct. 1995 Law of the Peoples Republic of China on the Prevention and Control of Environmental Pollution by Solid Waste established (enacted on April 1, 1996) Nov. Urgent Circular on the Strict Control on Transference of Foreign Waste to China (the General Office of the State Council) Mar. 1996 Interim Provision on the Administration of Environmental Protection in the Importation of Waste Materials (State Environmental Protection Administration, General Administration of Customs, Ministry of Foreign Trade and Economic Cooperation, State Ministry of Commerce, General Administration of Import and Export Commodity Inspection) July Supplementary Interim Provision on the Administration of Environmental Protection in the Importation of Waste Materials (as above) July Supreme Peoples Court explanation regarding minor problems in applying the law to criminal hearings on illegal imports of wastes Sept. Management rules for pre-shipment inspections of imported wastes (General Administration of Import and Export Commodity Inspection) established Oct. Category 5 and Category 10 (waste plastics) added in a Supplementary notice relating to those wastes used in raw materials and restricted in import (State Environmental Protection Administration, Ministry of Foreign Trade and Economic Cooperation, General Administration of Customs, State Ministry of Commerce, General Administration of Import and Export Commodity Inspection) Feb. 1997 Urgent notification by the State Council of a tough ban on imports of waste metals and plastics that have been radioactively contaminated (State Council) Nov. 1999 Methods of Managing Pre-shipment Inspection Agency Licenses for the Importation of Wastes (General Administration for Quality Supervision, Inspection and Quarantine) Feb. 2000 Notice of even tougher controls on the importation of waste (State Environmental Protection Administration) Jan. 2000 Notice of problems relating to the importation of Category 7 wastes (Ministry of Foreign Trade and Economic Cooperation, General Administration of Customs, State Environmental Protection Administration) bans imports of used household appliances, etc. from February 1, 2000 onwards Jan. 2001 Notice of adjustment of problems relating to the importation of waste and environmental protection administration (State Environmental Protection Administration, General Administration of Customs, State Administration for Quality Supervision, Inspection and Quarantine, Release [20002] No. 7) automatic import licenses May 2001 Notice of problems relating to the management of mixed metal waste imports (Ministry of Foreign Trade and Economic Cooperation) Nov. 2001 Notice of adjustments to the screening and accreditation procedures for authorized Category 7 waste treatment companies (State Environmental Protection Administration, Release [2001] No. 186)

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Dec.

2001

Mar.

2002

July

2002

Dec.

2002

Apr. July July July July Aug. Aug.

2003

Dec.

May

2004

Oct.

Nov. ~ China

Measures on the Administration of Automatic Import Licenses for Goods (Ministry of Foreign Trade and Economic Cooperation, 2001, No.20) enforceable from January 1, 2002 Notice relating to the importation of wastes and environmental protection issues (SEPA [2002] No. 7) Imports of 11 types of waste, including waste plastics, scrap vehicles, scrap ships, etc., covered by import quotas are, in principle, permitted. Imports of used paper, iron and steel scrap, copper scrap, aluminum scrap (excluding used mixed metal electrical equipment, electric wires I cables, motors) permitted via the administration of an automatic registration system. Ban on imports of components (State Environmental Protection Administration, Ministry of Foreign Trade and Economic Cooperation, General Administration of Customs) enforceable from August 15, 2002 onwards Bill of amendments to Criminal Law passed by the National Peoples Council Stipulating that contraband traffic in imported wastes (solid, liquid, gaseous) is a punishable offence Regulations on the administration of quality inspections, supervision and quarantine for importation of secondhand electrical equipment (State Administration for Quality Supervision, Inspection and Quarantine Ordinance No. 37) enforceable from May 1, 2003. Strengthening of inspections of secondhand electrical equipment; mandating of pre-shipment inspections for certain products. Notice of Administration of Environmental Management of Waste Materials Restricted in Importation (SEPA [2003] No. 69) Notice of Problems in the Administration of Licenses for Waste Materials Restricted in Importation (SEPA [2003] No.61) Notice of Standards for the Rigid Enforcement of Environmental Protection from Imported Waste Plastics (SEPA [2003] No. 66) Notice relating to the further strengthening of quarantine controls on imported waste materials (AQSIQ [2003] No. 217) Notice relating to the further strengthening of quarantine controls on imported waste materials (AQSIQ [2003] No. 217) Notice relating to the strengthening of the environmental management of used electronic and electrical equipment (SEPA [2003] No. 143) Regulations relating to quality supervision, inspection and quarantine procedures for imported secondhand electrical equipment (State Administration for Quality Supervision, Inspection and Quarantine Ordinance No. 53), enforceable from October 10, 2003 onwards Notice relating to the temporary registration of foreign suppliers of waste materials (State Administration of Quality Supervision, Inspection and Quarantine [2003] Ordinance No. 115), enforceable from January 1, 2004 onwards Announcement concerning problems relating to the importation of secondhand electrical products (2003, No. 124) (State Administration of Quality Supervision, Inspection and Quarantine Notice No. 47) Temporary ban on Japanese exports of waste plastics to China Detailed regulations on the registration of overseas suppliers of imported waste (State Administration of Quality Supervision, Inspection and Quarantine Notice No. 48 [2004]) enforced Notice concerning problems relating to the licensing of companies designated to undertake the treatment of mixed metals, used electrical wires / cables and motors imported in 2005 (SEPA [2004] No. 344)List of processing trade bans I products (Ministry of Commerce, General Administration of Customs, State Environmental Protection Administration Announcement [2004] No. 55) enforceable from November 1, 2004 onwards Notice concerning problems relating to the administrative strengthening of checks on import-restricted wastes (SEPA [2004] No. 100) refers to recyclable wastes as importable wastes and waste materials.

Compiled from the State Environmental Protection Administration web site and various materials. Source: Yoshida, 2005.
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Annex H Chinese Environmental Protection Standard for Imported Scrap Plastics


This is an unofficial translation of the new Chinese environmental protection control standard for imports of scrap plastic212. Published in draft in 2005, it came into force in February 2006. This text relates to the draft version. The Chinese original of the final version (which is substantially unchanged) follows.

Environmental Protection and Control Standards for Imported Materials Scrap Plastic
1 Scope These standards hereby set forth the control requirements for items brought in by imported scrap plastic and radioactive pollution that impacts the environment. These standards shall be applicable to the import of the following scrap plastic. Customs commodity number Name of waste material 3915.0000 Waste and scrap ethylene polymers and remnants 3915.2000 Waste and scrap vinyl benzene polymers and remnants 3915.3000 Waste and scrap cholroethylene polymers and remnants 3915.9000 Other waste and scrap plastic and remnants 2 Standards cited GB 5085.3 1996 Standards for Identification of Hazardous Waste Materials Identification of Poisons SN 0570 1996 Best Inspection Practices for Radioactive Pollution By Imported Scrap Metals (Proposed) GB / T 15555.1 ~ 15555.12 1995 Methods for Measuring Poisons Extracted from Solid Wastes SN 0625.1 ~ 0625.2 1997 Best Inspection Practices for Imported Scrap Plastic Usable As A Raw Material 3 Definitions These standards shall use the following definitions: 3.1 Scrap plastic This shall refer to the remnant bits, leftover bits, defective and substandard products and single wanfen [sic; unintelligible] thermoplastics that has been processed and washed (in chips, blocks, or particulate or powdery). 3.2 Waste materials brought in This shall refer to waste substances mixed in imported scrap plastic during the collection, packing and transportation processes (exclusive of the packing materials for the imported scrap plastic). 4 Standards and requirements for control 4.1 The import of thermoplastic products and used scrap plastic products that have not been processed and washed shall be prohibited. 4.2 It is prohibited to mix imported scrap plastic with clinical wastes, medical wastes and explosive waste materials. 4.3 Imported scrap plastic with waste materials brought in that are mixed with harmful substances in their extract liquid with a level that exceeds the standard value for identification in GB 5085.3 1996 shall be prohibited. 4.4 Waste materials brought in that are mixed with imported scrap plastic and that have a pH value in its extract liquid equalling or exceeding 12.5 or less than 2 shall be prohibited. 4.5 Imported scrap plastic shall be prohibited from bringing in radioactive wastes. 4.6 The external penetrating radiation of imported scrap plastic shall not exceed the local natural and background radiation by three times, the value of the surface pollution level inspection shall not exceed 0.04 Bq / cm2, and the value of the surface pollution level inspection shall not exceed 0.4 Bq / cm2. 4.7 The total weight of the following waste materials brought in by imported scrap plastic shall not exceed 0.01% of the weight of imported scrap plastic: Waste insecticides, other waste chemicals and their contents
212

The assistance of BIR in providing this translation is gratefully acknowledged.

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Various liquid wastes Kitchen waste and bathroom waste Sealed containers and used complete plastic containers, etc. 4.8 In addition to the waste materials listed above, other waste materials (such as scrap wood, scrap metals, scrap textiles, scrap glass, thermoplastics, composite plastic, scrap rubber, soil and sand, etc.) shall not exceed 0.1% of the total weight of the imported scrap plastic. 5 Inspections 5.1 Inspections under Article 4.3 and Article 4.3 of these standards shall be performed in accordance with the provisions of GB / T 15555.1 ~ 15555.12 1995: 5.2 Inspections under Article 4.5 and Article 4.6 of these standards shall be performed in accordance with the provisions of SN 0570 1996. 5.3 Inspections under Article 4.1, Article 4.2, Article 4.7 and Article 4.8 of these standards shall be performed in accordance with the provisions of SN 0625.1 ~ 0625.2 1997.

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Annex I AQSIQ Registration Needed for Overseas Suppliers of Waste Material Imports
Implementation Details of the Registration Scheme Concerning Overseas Suppliers of Waste Material Imports, promulgated and implemented by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), make it mandatory for foreign enterprises, including those in Hong Kong, Macau and Taiwan, which export waste material to the Mainland to apply for registration with AQSIQ. Those which fail to obtain registration will not be allowed to export waste material to China, nor will their requests for inspection and quarantine be accepted by the departments concerned. This new rule is believed to ensure that imported wastes will comply with the environmental protection standards as well as other mandatory requirements and technical regulations of the state. The following are the prerequisites for overseas companies wishing to apply for registration according to the implementation details: The company is in legal operation in the country or region where it is located; The company has a permanent office or processing workplace and its business is of a considerable scale; The company should be familiar with the laws and regulations concerning environmental protection technology in China, and the associated environmental protection standards; it must also be equipped with the necessary facilities and inspection capabilities; The company should implement quality assurance or environmental quality administration systems, such as ISO14000 certification, or provide corresponding accreditation certification; The company must have a relatively stable supply source over which it exercises environmental protection quality control measures; No major safety, hygienic and environmental protection quality problems have been found in the company in the past three years. Within 30 days from the receipt of the registration application documents, AQSIQ will decide whether or not to accept the application. After examination and investigation, applicants found to comply with the requirements will receive a notification signed by AQSIQ informing them that their applications are being processed. AQSIQ will then form a jury to assess the applicants. Overseas suppliers need to submit the following paper documents besides application forms: Organization structure, department and employee task responsibility. Promise to obey the technical regulations on environmental protection, associated environmental protection and control standards and relative regulations in China. Document about the supplier's permanent office and manufacturing site, like floor plans. Relative proof about category, quantity and environmental quality of the materials supplied. Quality control management system and relative technology employees, including hazardous wastes, carried/contaminated wastes control and disposition of discarded wastes. Raw materials inspection and acceptance system Measurement and equipment calibration system Rules of rejects control Employee training plans Promise for the cargos' environmental quality control, including the promise of the environmental quality control on supplying source and supplier. Promise to pay any associated costs for the treatment of unqualified cargos in environmental protection.

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All documents must be in Chinese or in English/Chinese bilingual version. We provide professional translations, contact us for further details. If any one of following situations happened, the registration application will be denied: 1). The submitted materials do not comply with aforementioned requirements; 2). The submitted materials are false or falsified; 3). The waste materials imported into China within recent three years by the supplier did not conform to the environmental protection control standards, and the supplier is responsible after investigation; 4). The imported waste materials are falsified to include with hazardous or forbidden cargos, or are found out as fraud and the supplier is responsible after investigation; 5). The imported waste materials are required to be returned due to disqualify the environmental inspection, and the supplier causes severe impacts because of indolent return; 6). The supplier causes severe impacts because of abandoning unqualified cargos; 7). The supplier changes the harbor to import again those returned unqualified cargos; 8). The inspection certificate prior to shipment is faked; 9). The import scale is too small to guarantee the quality of cargos; 10). Other situations do not conform with requirements announced by AQSIQ.

Registration Evaluation and Approval:


Within 30 days after receiving the registration application materials in paper format, AQSIQ will make the decision whether or not to accept the application: 1). If qualifies all requirements after investigation, AQSIQ will issue and send out the "Receipt Notice of Oversea Suppliers of Waste Materials Import Registration Application"; 2). If disqualifies after investigation, the applicant will be noticed to revise within 30 days. If no revision made after due day, the application will be cancelled; 3). If disqualifies the No. 115 Announcement from AQSIQ and the requirements of evaluation, the application will be denied and the applicant will be noticed. After AQSIQ issues the "Receipt Notice of Overseas Suppliers of Waste Materials Import Registration Application", auditors will be organized to evaluate the oversea supplier. The evaluation will consist of two parts: document evaluation and on-site evaluation, to certify the integrity and authenticity of the application materials. The validity of the supplier's inner management and quality control measurements will be investigated and verified; the capability of guaranteeing the imported materials conforming to Chinese environmental protection control standards and regulations will be measured and evaluated as well.

Follow-up Administration:
1. The registration certificate will be valid for three years. The applicant could apply to AQSIQ for renewal at least three months before its expiration date. If the oversea supplier has any change in its registration information, like owner or address change, the supplier must notify AQSIQ within three months. 2. If any one of following situations happened to the registered oversea supplier, AQSIQ may suspend the supplier's import declaration, or even cancel the supplier's registration. If the supplier's registration is cancelled by AQSIQ, AQSIQ will not accept its application within three years: 1). Any violation of Chinese laws, rules and regulations associated to waste materials import; 2). Any violation of the aforementioned 10 regulations about registration application denial; 3). One disqualification happened during the safety, hygienic or environment inspection conducted by the custom inspection and quarantine authorities, and causes severe consequence, and the oversea supplier is responsible after investigation; 4). Any document has been altered or fabricated; or any other frauds; 5). Supplier didn't report to AQSIQ in time if any important change on supplier's registration information; 6). Registration certificate or registration number was transferred to other companies for use; 7). Any violation of other regulations.

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3. AQSIQ or its authorized organizations should take care of the regular supervision management after the oversea suppliers receive the registration certificate. The authorized organizations should report the supervision management situations to AQSIQ. The content of regular supervision management includes: 1). Scheduled or non-scheduled random inspection to the imported cargos by the registered suppliers; 2). Inspection to the registered suppliers to check if any violations of the regulations; 3). Send the inspection feedback on the imported cargos by the custom inspection and quarantine authorities to the registered suppliers in time; 4). If registered supplier violates the aforementioned regulations after investigation, should put forward the opinion to suspend or cancel the supplier's registration to AQSIQ; 5). Supervise the registered suppliers to return the unqualified cargos.

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Annex J UK-based firms on the AQSIQ list of accredited companies


A826042760 A826042761 A826042762 A826042763 A826042764 A826042765 A826042766 A826042767 A826042768 A826042769 A826042770 A826042771 A826042772 A826042773 A826042774 A826042775 A826042776 A826042777 A826042778 A826042779 A826042780 A826042781 A826042782 A826042783 A826042784 A826042785 A826042786 A826042787 A826042788 PREMIER TRADING ASIA GLOBAL TRADE LTD. HARMON INTERNATIONAL LTD CHOICE TRADING INTERNATIONAL LTD. FLEXDART LTD TRADING AS BEAVER METALS PAPER TRADE LIMITED ANGLO OVERSEAS COMMERCE LIMITED INTERNATIONAL FOREST PRODUCTS UK LTD METALS COMMODITY TRADING LTD VOSS INTERNATIONAL LTD. DOWGATE TRADING (UK) LTD E.KLEIN&CO. BLAKEPORT MARKETING LIMITED TANGENT TRADING LTD OMG INTERNATIONAL LTD OMG RJH TRADING LTD. AZUSA LIMITED MINMETALS (U.K) LTD. ALAN M WYE&CO., MH PLASTICS LTD. PAPER DRAGON LIMITED C SOAR AND SONS A.K.HIRANI LTD BERNHARD RECYCLING LIMITED ROBINSON INTERNATIONAL TRADING LTD THE REMET COMPANY LIMITED METAL INTERESTS LTD STEMCOR UK LIMITED WESTPORT VENTURES LIMITED WINDMILL BUSINESS CENTRE,302-310 COMMONSIDE EAST,MITCHAM, SURREY, U.K SUITE 37,6 PORCHESTER TERRACE, LONDON, UK 4TH FLOOR,TUBS HILL HOUSE,SEVENOAKS,KENT,UK 10 PARK PARADE GUNNERSBURY AVE LONDON MARSH LANE, WATER ORTON, BIRMINGHAM, UK 25 PRETORIA ROAD NORTH EDMONTON, LONDON WOOD HOUSE,WARWICK BRIDGE CARLISLE CUMBRIA,CA4 8RJ UK WINCHCOMBE HOUSE, 123-126 BARTHOLOMEW STREET, NEWBURY BERKS UNIT1 B,HOOD LANE FARN NUREATA,ENGLAND SOVERIGN HOUSE,GRAHAM ROAD,WEALDSTONE,HARROW,MIDDLESEX HA3 5RF BRIDGE HOUSE,CHURCH LANE,RAVENFIELD,ROTHERHAM 122-126 WEST FERRY ROAD LONDON E14 3SG 106 DORCHESTER WAY, KENTON, MIDDLESEX, HA39RB U. K. 1 DOLLIS MEWS, LONDON UK SUITE F10 SHAKESPEARE BUSINESS CENTER 245A COLDHARBOUR LANE LONDON 10/11 DACRE STREET LONDON,UK C214 89 BICKERSTETH RD. LONDON, UK 5A PRAED STREET,LONDON WZ 1NJ, U.K 23 PRIORY CRES.CHEAM.SURREY SANDY WAY AMINGTON IND.ESTATE TAMWORTH,STAFFS 78-82 CHURCH STREET,ECCLES,MANCHESTER,UK TANK ROW, GRANGE LANE STAIRFOOT, BARNSLEY 98CHELMER CRESCENT,BARKING,ESSEX IG11 0QA,ENGLAND ATHENE HOUSE THE BROADWAY MILL HILL, LONDON SUITE 7, DERWENT MANOR ALLENSFOM, NORTHUMBERLAND 9A CODY BUSINESS CENTRE, CODY ROAD LONDON E16 4SR UK CAWLEY PRIORY, SOUTH PALLANT,CHICHESTER, WEST SUSSEX ,U.K. LEVEL 27 CITYPOINT,ROPEMAKER STREET LONDON SUITE 202, 24-28 ST.LEONARD'S ROAD WINDSOR BERKSHIRE

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A826042789 A826042790 A826042791 A826042792 A826042793 A826042794 A826041659

METRO POLYMERS LTD. BBY CONSULTING LTD. HARMONY CONSULTING LTD. UNIMETALS COMPANY LIMITED SUNRY IMPORT AND EXPORT CO., LTD CENTURY GENESIS LIMITED PLASTICS RECOVERY LTD

19-21 BULL PLAIN HERTFORD HERTFORDSHIRE,U.K. 126 BROOM LANE, ROTHERHAM, SOUTH YORKSHIRE, UK STUDIO, ST NICHOLAS CLOSE, ELSTREE HERTS.UK UNIT 11,SHAFTESBURY CENTRE,85 BARLBY ROAD,LONDON 76,ST.HELENS GARDENS LONDON, UK 56 WOLFA STREET DERBY, UK UNIT 121 CLYDESDALE PLACE, MOSS SIDE, 1 INDUSTRIAL ESNA LEYLAND PRESTON, LANCASHIRE, ENGLAND STAINLAND BOARD-MI LLS, HOLYWELL GREEN HALIFAX WEST YORKSHIRE ARMER STREET ROTHERHAM S60 1AF SOUTH YORKSHIRE, UK 33 GOODWOOD KILL INGWORTH NEWCASTLE UPON TYNE 59 COMPTON ROAD,LONDON NI 2YT ENG LAND , U K STRATFORD BUSINESS PARK,BANBURY ROAD, STRATFORD-UPON-AVON, UNITED KINGDOM 7 EARLS COURT SOUARE,LONDON 8 EARLS COURT SQUARE,LONDON 34 ST GEORGES CRESCENT,WHITLEY BAY TYNE&WEAR UNITED KINGDOM 136 CHAMBERLAIN STREET,ST.HELENS SIRIUS HOUSE DELTA CRESCENT,WESTBROOK WARRINGTON,WAS 7NS BROOK HOUSE, HAMBLETON ROAD,EGLETON,NR.OAKHAM,RUTLAND,UNITED KINGDOM GREYFRIARS FLOUSE,18-2O PRINCE OF WALES RD, NORWICH UK ALBERT WORKS 65-7 WASHINGTON ST. GLASGOW G3 8BB SCOTLAND RAILWAY SIDINGS BIGGLESWADE BEDFORDSHIRE 826041674 126 ALDERSGATE STREET, LONDON UNITED KINGDOM TEMPLEBOROUGH WORKS SHEFFIELD ROAD SHEFFIELD SOUTH YORKSHIRE UNITED KINGDOM NORTH EAST ENGLAND, ABBOTSFORD ROAD, FELLING, GATESHEAD, TYNEWEAR, NE10 OHJ RABONE LANE SMETHWICK R66 2LF U.K. 11A CAMBRIDGE PARK, WANSTEAD, LONDON 543 NEW HYTHE LANE AYLESFORD,KENT,UK 27 BURNSIDE TROON,AYRSHIRE,SCOTLAND UNITL,TANFIELDLEA INDUSTRIAL PARK,TANFIELD IEA,STANLEY COUNTY DURHAM LOWMILLS, RAVENSTHORPE, DEWSBURY,UK

A826041660 A826041661 A826041662 A826041663 A826041664 A826041665 A826041666 A826041667 A826041668 A826041669 A826041670

SONOCO RECYCLING EUROPE C.F.BOOTH LIMITED PLASTIC RECYCLED UK LIMITED LONDON METALS LIMITED VALIENT RECYCLING LTD COMMUNITY WASTE LTD APG ATLANTIC PAPER LTD ALTERNATIVE WASTE SOLUTIONS LTD. SINOWAY INTERNATIONAL LTD. EUROPEAN METAL RECYCLING LTD (AND SUBSIDIARY) J & A YOUNG(LEICESTER)LTD.

A826041671 A826041672 A826041673 A826041674 A826041675 A826041676 A26041678 A826041679 A826041680 A826041681 A826041682

INTERNATIONAL RECYCLING LIMITED R.M.EASDALE & CO.LTD MOUNTSTAR METAL CORPORATION LTD WALLIS AND PARTNERS LTD. ELG HANIEL METALS LTD IK ECO LTD DUNN BROS (1995) LTD. J&H SALES INTERNATIONAL LTD. SCA RECYCLINQ UK LTD FIBRE BROKERS INTERNATIONAL GORDELL PLASTIC RECYCLING LTD.

A826041683

M & B HAULAGE & WASTE PAPER CO.LTD.

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 258

A826041684 A826041685 A826041684 A826041685 A826041686 A826041687 A826041688 A826041689 A826041690 A826041691 A826041 692 A826041693 A826041694 A826041695 A826041696 A826041697 A826041698 A826041699 A826041700 A826041701 A826041702 A826041703 A826041704 A826041705 A826041706

MONOWORLD LIMITED HAWKESWOOD METAL RECYCLING MONOWORLD LIMITED HAWKESWOOD METAL RECYCLING DELLEVE PLASTICS LIMITED SUNBERG LIMITED EURTOPE INTERNATIONAL HOLDONGS GROUP LIMITED GROSVENOR WASTE MANAGEMENT LTD. UNITED MOLASSES IRISH POLYMERS UNIBOND TRADING LYD. POLYMERS TRADING INT L INC. PEARSONGS (THETFORD) LTD. PRESTON RECYCLING LTD. F.J.CHURCH & SONS LTD GROVE ENVIRONMENTAL LTD B.D.METALS MAXTON TRADING LTD ROSEFIELD SALVAGE LTD MATERIALS RECOVERY LTD AMPTHILL,METAL COMPANY LIMITED CLEARWAY DISPOSALS LTD. XPAP RECYCLING LIMITED CONCORD IMPEX LTD. THORNDALE ENVIRONMENTAL RECYCLING LIMITED

WOMERSLEY MIII,DONCASTER ROAD WHITLEY,NR,GOOLE RIVERSIDE WORKS TREVOR STREET NECHELLS BIRMINGHAM B7 SRG WOMERSLEY MIII,DONCASTER ROAD WHITLEY,NR,GOOLE RIVERSIDE WORKS TREVOR STREET NECHELLS BIRMINGHAM B7 SRG BAY 5,BOLD INDUSTRIAL PARK,NEILS ROAD,ST HELENS MERSEYSIDE U.K. CHURCHILL HOUSE,137 BRENT ST.LONDON UK SACHSENWEG 37-C CENTURY WHARF,CRAYFORD CREAK CRAYFORD,KENT DA1 40G THAMES REFINERY FACTORY ROAD LONDON UK UNIT ELL ,ENKALON IND ESTATE, RANDALSTOWN ROAD CO ANTRIM 29A SWAKELEYS ROAD, ICKENHAM,MIDDLESEX,UK 29 A SOUTH STREET ELGIN MORAY IV3O 1JZ, SCOTLAND UK HOWLETTWAY,THETFORD NORFOLK D2 RED,SCAR INDUSTRIAL ESTATE, LONGRI DGE ROAD, RIBBLETON, PRESTON,LANCASHIRE, ENGLAND CENTENARY WORKS,MANOR WAY,NEW ROAD, RAINHAM,ESSEX,RM13 8RH WHITLEA GROVE INDUS ESTATE MEXBOROUGH SOUTH YORESHIRE,U.K. 14 ELM CRESCENT HIXON,STAFFORDSHIRE UNITED KINGDOM 37 STATION RD MARCH CAMBS IRON GRAY ROAD, LOCUSIDE INDEST,DUMFRIES DG2 OHS BICESTER ROAD KINGSWOOD AYLESBURY BUCKS HP18 ORA STATION RD. IND.EST.AMPTHILL BEDFORDSHIRE,U.K. EAST TWIN RD, BELFAST HARBOUR BELFAST N.LRELAND UK BLDG,3.CHISWICK PARK 566 CHISWICK HIGH ROAD,LONDON UK 16 ABERY STREETLONDON SE181DD U.K. 77 CLOONEY RD, CAMPDALE, LONDONDERRY BT47 3PA

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 259

Annex K OECD Member Countries


Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 260

Annex L Consultees
Europe
Interviewee Cormac Quigley Bill Duncan Ian Barnes Philip Law, Mercia Gick Andrew Green Organisation Agricultural Waste Stakeholders Forum ASSURRE Boots BPF BPI Bruce Metals BTR (UK) CARE CCE Chase Plastics Choice Trading CKS Recycled Technology Compass IT Cynar DTI EEB EMR Environmental Storage Solutions Ltd EPRO EPS Group EU DG Environment EUPR EUROPEN EVC Hydro Polymers IBAW ICER Ineos Integrated Polymers Klassic Computer Services Linpac LME M Baker Recycling Ltd MDB Market Research Company NEWS PCI Petcore PIFA Rade (UK) Ltd RAPRA Recovered Plastics Sainsburys plc

Tony Weatherhead Paul Smith Jessica Baker, Stephen Chase Raj Iqbal, Mark Mellor

Michael Murray Peter Cottrell Melissa Shinn Graham Carus Peter Sundt Damian Packer Karolina Fras Bernard Mercx Julian Carrol Roger Mottram Jason Leadbitter Harald Kaeb Claire Snow Graham Rice Mick Young Les Fergusson

Tracy Wallbank Steve Jenkins Andrew Noone Frank Koelwijn David Tyson P Charlesworth Paul Farquson James McKechnie

UK
CCIC London BPF Recycling Council

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 261

Exporters
Raj Iqbal, Peter Marsh Choice Waste Management Mark Sharples CK Polymers Mike Scollick - Materials Recovery Ltd MIT Plastics Ltd Mr Ruparelia - Monoworld Ltd Mr Modha - Premier Trading Simon Jones - YSB Recycling Peter Bennett MA Logistics (shipping company) HM Revenue and Customs, tariff classification service

EU
PlasticsEurope Bernard Mercx - European Plastics Recyclers (EuPR) Peter Sundt European Association of Plastics Recycling and Recovery Associations (EPRO) Peter Daardler - Bureau of International Recycling (BIR) Jim Armstrong Wellman

Germany
Matthias Kuegelgen Gruene Punkt DSD

Belgium
An Vossen - FostPlus Mr Huysman Valipac

Netherlands
Mr Schutjes Vereniging Milieubeheer Kunstofverpakkingen (VMK)

Luxembourg
Mr Boever - Valorlux

Asia China
Huang Xiao Wei Guangdong Plastics Industry Association Tan Rong Ying Zhaoqing Xinchuang Plastics Co. Ltd Huang Tongyu Eco-material (Hong Kong Corporation) Yang Bo ZhuHai BBD Plastic Raw Material Co. Ltd Daniel Ho Kar Wong United Overseas Industries Co. Ltd Tan Xin Feng Zhaoqing Xinchuang Plastics Co. Ltd Xun Yue Jian Yixing People Government Stop Wen Li Hua Shenzhen Plastics & Rubber Association Tan Rong Ying Guang Dong Hong Ling Group Co. Ltd Jiang Shou Bing Dadu Co. Ltd China Plastics Processing Industry Association Office of the China Chemical Industry Yearbook Shenzhen Risu Plastic Products Co. Ltd

Hong Kong
Chuk Kwong Yi Wai Yee Lam China Inspection Co. Ltd Wing Shun Chemical Limited

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 262

Billy Leung Barry Lee Toland Lam Enphy Cheung Chu Fuk Cheung Dr William Chan Cheung Chi Ming

Fook Woo Group Benchmarking China Development Ltd T & T Hong Kong Ltd The Hong Kong Packaging Institute HongKong Enviro Plastics & Metal Recycling Co. Ltd Federation of Hong Kong Industries Global Plastic Recycle Processing Centre (HK) Ltd

Hong Kong Environmental Protection Department Hong Kong Plastic Manufacturers Association Hong Kong Plastics Recycling Association Virginia Glory

India
Interviewee Dr. Indrani Chandrasekar Dr. Pratima Dixit Dr. Naoji Mr. R. C. Palhan Mr. G. Jindal Mr. N. Anand Nitin Mehta Ritesh V Vakil Vinod Poadar Ravi Agarwal Mr. T.K. Bandopadhyay Organisation Hazardous Waste Management Division, Ministry of Environment & Forests, Delhi Directorate General of Foreign Trade, Ministry of Commerce & Industry, Delhi Avishek International, Delhi Elastometric Molding Lines, Delhi Prime Sales, Delhi Amber Waste Recycling Company, Delhi Kunal Exports, Mumbai Pet Plastics Limited & T.S.V. Corporation, Mumbai Shakti Plastic Industries, Mumbai Toxics Link, Delhi Indian Centre for Plastics in the Environment, Mumbai

Further documentary information was also obtained from Association of Plastics Manufacturers of India and the Plastic India Foundation.

NAFTA Institutions / Associations / Journalists


Alberta Plastics Recycling Association Pete Dinger American Plastics Council Association of Post Consumer Plastics Recyclers Atlantic Dairy Council, Nova Skotia Jason Marshall Californian State Government, Integrated Waste Management Board and Department of Conservation Atul Sharma CIPA, Canada Donna Dempsy Film and Bag Federation NAPCOR Robert Sinclair Natural Resources, Canada James Hickman North Carolina State Government, Division Of Pollution Prevention and Environmental Assistance Steve Toloken Plastics News

Companies
Dari Jongsma Marc Fleischmanm Tamsin Ettefagh Agri-Plastics, Oregon B. Schoenberg & Co. Inc. New York Envision Plastics, North Carolina
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 263

Dave ___ Mike Biddle Bruce Buchan Tribu Persaud Jean Bina Steve ___ Gerry Fishbeck

Go Polymers, Global MBA Polymers, Global Midpoint International, Canada Norwich Plastics, Ontario Phoenix Technologies L.P. Ohio also known as Plastic Technologies International, Global Recycle America Alliance, USA United Resource Recovery Corporation, South Carolina

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 264

Annex M Bibliography
M.1 Supply Side Analysis
AMA Research (2003) The UK Plastics Recycling Industry Applied Market Information Ltd. (AMI) (2005) European Plastics Industry Report Assocation of Plastics Manufactures in Europe (APME) (2000) UK Packaging Data Associates in Industrial Ecology (2002) Delivering the Landfill Objective: The role of new and emerging technologies Association of Plastics Manufactures in Europe (APME) (2001) Plastics Insight into consumption and recovery in Western Europe 2000 Association of Plastics Manufactures in Europe (APME) (2003) Plastics in End of Life Vehicles : Galloo Shredder Residues Treatment Line Association of Plastics Manufactures in Europe (APME) (2003) Annual Report Statistics Association of Plastics Manufactures in Europe (APME) (2004) An analysis of plastics consumption and recovery in Europe Association of Plastics Manufactures in Europe (APME) (2005) 5th Identiplast 2005, the Biennial Conference of the Recycling and Recovery of Plastics - Identifying the Opportunities for Plastics Recovery Conference Proceedings Biffaward (2004) UK Food and Drink Processing Mass Balance British Plastics Federation (2004) Annual Review Camanoe Associates (2003) World Business Council for Sustainable Development (WBCSD) Materials Projection Analysis Defra (2005a) The Waste Management (England and Wales) Regulations Defra (2006) A Review of England's Waste Strategy - A Consultation Document Defra (2003) e-Digest of Environmental Statistics, Categorisation of Commercial and Industrial waste Defra (2005) Municipal Waste Management Survey: Mean weight of municipal waste arisings in 1996/97 to 2003/04 by region and authority type Defra (2005b) Packaging recycling data 1998-2004 Defra (2004) e-Digest of Environmental Statistics, Recycling of plastics 1984-2001 Defra (2006b) Packaging & Packaging Waste Data relating to 2005 (as at 10 April 2006) Environment Agency (2001) Towards Sustainable Agricultural Waste Management Environment Agency (2005) Changing Attitudes to Waste - Recycling Agricultural Plastics Waste Environment Agency (2003) Agricultural Waste Survey Environment Agency (2004) Review of Agricultural Waste Research and Development Projects

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 265

Environment Agency (2002) Improving Data on Agricultural Waste and Resources

Environment Agency (undated) Transfrontier Shipment of Waste - A guide to the international shipment of waste Envirowise (1999) Reducing Waste for Profit in the Dairy Industry Envirowise (2000) Packing Line Savings in the Food and Drink Industry Envirowise (2001) Finding and Reducing Waste in Plastics Processing Envirowise (2003) Are you focused on waste? Envirowise (2000) How to improve packing line efficiency in the food and drink industry Envirowise (2003) Benchmarking report on waste in plastics processing European Association of Plastics Recycling and Recovery (EPRO) (2005) Best Practice Working Group, Plastic Packaging Statistics 2005 European Commission (2005a) Taking sustainable use of resources forward: A Thematic Strategy on the prevention and recycling of waste European Commission (2005b) Science for Environmental Policy, DG Environment News Alert Service Ecological Advantages of WEEE Recycling European Environmental Bureau (2005) Strategies on Resources, Energy and Waste: the EEB Perspective. Recoup AGM 2005 European Renewable Resources and Materials Association (ERRMA) (2002) Current Situation and Future Prospects of EU Industry using Renewable Raw Materials GHK/EPEC (2004) Support in the Drafting of an ExIA on the Thematic Strategy on the Prevention and Recycling of Waste (TSPRW) HM Revenue and Customs (undated). Statistics and Analysis of Trade Unit (SATU) Overview of EU & Non-EU Totals - Annual - Imports & Exports 1996-2004, Imports and Exports of Top 30 Products. Imports and Exports of UK Trade by Industry, Annual. Imports and Exports of UK Trade by Industry, Quarterly UK Trade Statistics Industry Council for Electronic Equipment Recycling (ICER) (2005) Status Report on WEEE - Interim report Industry Council for Electronic Equipment Recycling (ICER) (2004) WEEE- Green List Waste Study Industry Council for Packaging and the Environment INCPEN (undated) Environmental Impact of Packaging in the UK Food Supply System Institute of Civil Engineers (2006) The case for a resource management strategy Perchards (2005) Transposition of the WEEE and RoHS Directives in Other EU Member States PIRA (2001) Packaging in the 3rd Millennium PIRA (2005) Developments in the Plastics Packaging Sector' presentation given at 'Plastics The Industry of Tomorrow' BPF Conference, December 05 PIRA (2001) Mass Flow Analysis of Packaging in the UK, Phase 1 Report: Data Review and Methodology Development Plastics and Rubber World (2005-2006) Various articles

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 266

Plastics Information Europe (PIE) (2003-2006) Various articles Realise Network (2003) IT Recyclers Research Report A survey of views on the impact of the WEEE Directive among UK IT recyclers - Full report Recycling and Waste World (2006) Article: small scale gasification within an IWMS RECycling Of Used Plastic (RECOUP) (2005) Online Reprocessor Database Reinhardt, W.A., (2005) Drive Towards Compliance IN Waste Management World, Nov/Dec 2005 REXAM (2005) future innovation today - Consumer Packaging Report Society of Motor Manufactures and Traders (SMMT) (2002) UK Motor Industry Facts Strategy Unit (2005) Waste not, Want not Strategy Unit Report Recommendations Final Update The Association for the Sustainable Use and Recovery of Resources in Europe (ASSURRE) (2005) Stakeholder consultation on the review of the 2015 targets on reuse, recovery and recycling of end of life vehicles produced for the European Commission The Chartered Institute of Waste Management (CIWM) (2005) Delivering Key Waste Management Infrastructure: Lessons learned from Europe The Packaging and Industrial Films Association (PIFA) (2004 & 2005) Annual Review The Packaging Federation (2005) Packaging - a very productive resource The Recycling Coalition (2005) The need for a recycling definition in the Waste framework Directive Recycling Coalitions reaction to the Commission draft proposed package for the Thematic Strategy on the prevention and recycling of Waste The Stationery Office (2005) The Producer Responsibility Obligations (Packaging Waste) Regulation 2005 TRL Ltd (2002) Data required to monitor complance with the EU Directive. Part 2 Report Demonstrating Compliance Project Report PRSE/518/02 Valpak (2005) PackFlow 2008 'UK compliance with the 2008 targets of the European Packaging and Packaging Waste Directive' Summary Report and Recommendations Waste and Energy Research Group (WERG) (undated) Polymer Processing B: Towards Processing Polymers from ASR Waste Management and Technology (WAMTECH) (2004) Green List Waste Exports Wastewatch & Recoup (2004) Plastics in the UK Economy Welsh Assembly Government (2005) Annual Report Expert Panel on Resources Management (EPRM) Welsh Assembly Government (2002) Wise About Waste: The National Waste Strategy for Wales Part One WRAP (2002a) Investigation of Technical and Economic Viability of Recycling 25 Litre Plastic Drums to Process Chemistry to Metal Finishing Industries WRAP (2003b) A study into Waste Polythene Film Recovery WRAP (2003c) Survey of Applications, Markets and Growth Opportunities for Recycled Plastics in the UK WRAP (2004d) Development of Options for Enhancing Commercial and Industrial Film Collection

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 267

WRAP (2004e) Establish Tonnages and Cost Effectiveness of Collection of Construction Site Packaging Waste WRAP (2004f) Materials and Products from UK sourced PVC rich waste WRAP (2005-6l) Develop a process to separate BFR from WEEE polymers - Interim reports 1,2 & 3 WRAP (2005g) Development of a Food Grade PET Recycling Process. Literature Review and Feasibility Study WRAP (2005h) Develop a food grade HDPE recycling process WRAP (2005i) Stockport Household Plastic Collection and Sorting Trials Summary Report WRAP (2005j) UK Plastic bottle recycling survey 2005 WRAP (2005k) Plastics Forum Presentations Chelsea Village, London WRAP (2006) UK Plastic bottle recycling survey 2006 Zolotor, A., (undated) Composition, Properties & Economic Study of Recycled Refrigerators

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 268

M.2

Demand Side Analysis

AJI-Europe, 2006. The recycling of PVC waste in Europe. Final Report. AJI-Europe for Vinyl 2010 American Plastics Council 2004, National Post-Consumer Plastics Recycling Report, http://www.plasticsresource.com/s_plasticsresource/sec.asp?TRACKID=&CID=174&DID=293 Basel Action Network (BAN), Silicon Valley Toxics Coalition (SVTC). 2002. Exporting Harm - The high-tech trashing of Asia. http://www.crra.com/ewaste/ttrash2/ttrash2/ China National Chemical Information Centre. 2004. China Chemical Industry Yearbook 2004. ISSN 1005-3344. China Petrochemical Consulting Corporation. 2005 . Petrochemical Market Annual Report. CSR 2006, The Price Sheet, http://www.csr.org/ Duraiappah A, Xin Z, van Beukering P. 1999. The Plastics Sector in China: Issues in Production, Recycling and International Trade. IIED. Working Paper No. 27. Available online from www.iied.org EIA, 2006. Annual Energy Outlook 2006. Report #:DOE/EIA-0383(2006), http://www.eia.doe.gov/oiaf/aeo/index.html Environment and Plastics Industry Council (EPIC) 2004, An Overview of Plastic Bottle Recycling in Canada, http://www.cpia.ca/files/files/files_plastic_bottle_recovery.pdf Environmental Protection Department. 1996. Control on Import and Export of Waste. Hong Kong SAR Government. EPA 1997, Office of Compliance Sector Notebook Project: Profile of the Plastic Resin and Manmade Fiber Industries, http://www.epa.gov/compliance/resources/publications/assistance/sectors/notebooks/ EPA 2001, Municipal Solid Waste in The United States: 2001 Facts and Figures, http://www.epa.gov/epaoswer/non-hw/muncpl/msw99.htm EPA 2003, Municipal Solid Waste Generation, Recycling, and Disposal in the United States: Facts and Figures, http://www.epa.gov/epaoswer/non-hw/muncpl/msw99.htm Kahlenborn, W. & Kemp, R. (eds) 2002. A Directive made to fit The Packaging and Packaging Waste Directive in Germany, France and Finland, International & European Environmental Policy Studies, Ecologic, Berlin. Kinder, S. 2006. China cracker developments: a growing influence on global petrochemical dynamics. Presentation by Stephen Kinder, Nanhai Venture Project Manager, Shell Chemicals, to 1st ICIS Asian Olefins Conference, Shanghai, 23 Feb 2006. Kojima et al. 2005. International Trade of Recyclable Resources in Asia. ID Spot Survey No. 29. Japan External Trade Organisation. Available online at http://www.ide.go.jp/Japanese/Publish/Spot/29.html KPMG. 2005. Petrochemical and Plastics Industry Outlook for China. Market Access and Compliance. Undated. Searchable schedule of tariffs on Chinas WTO Accession. http://www.mac.doc.gov/China/Docs/searchableothertariffs.pdf NAPCOR 2003, Report on Post Consumer Pet Container Recycling Activity, www.napcor.com/2003_Report.pdf NAPCOR 2004, Report on Post Consumer Pet Container Recycling Activity, www.napcor.com/2004_Report.pdf

NAPCOR YEAR, Best Practices and Industry Standards in PET Plastic Recycling, www.napcor.com/

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 269

PlasticsEurope 2004. Plastics in Europe An analysis of plastics consumption and recovery in Europe 2002 & 2003, Brussels Plastic Technology, 2005. Recycle Pricing December 2005: 2006 may bring more stable prices for recycled resins. www.plasticstechnology.com Qu, G. 2005. Petrochemical industry in Chian growing demand and supply in the future. SRI Consulting. Romero-Hernndez, Dr Omar, Romero-Hernndez, Dr Sergio, Munoz, David. Sustainability engineering supplied

into the PET plastic supply chain. A policy tool for industry and government.
Terazono A. 2004. Japanese recycling laws and international trade in recyclable resources, in Kojima et al, 2005. Terazono A, Yoshida A, Yang J, Moriguchi Y, Sakai S. 2004. Material cycles in Asia: especially the recycling loop between Japan and China. Journal of Material Cycles and Waste Management (2004) 6:82-96. DOI 10.1007/s10163-004-0115-0 UNCTAD, 2005a. Review of Maritime Transport, 2005. UNCTAD. Van Beukering P, Li Y, Zhao U, Zhou X. 1997. Trends and issues in the plastics cycle in China with special emphasis on trade and recycling. CREED Working Paper Series No. 16. December 1997. IVM, Vrije Universiteit, Amstedam and IIED, London. Available online from www.iied.org Van Beukering, P. 1999a. Plastics Recycling in China an international life cycle approach. Institute for Environmental Studies. Yoshida A, Terazono A, Aramaki T, Hanaki K. 2005. Secondary materials transfer from Japan to China: destination analysis. Journal of Material Cycles Waste Management (2005) 7:8-15. DOI 10.1007/s10163-0040120-3. World Bank. 2005. Waste Management in China: Issues and Recommendations. Urban Development Working Papers. East Asia Infrastructure Department. Working Paper No.9.

M.3 UK

Websites

http://www.wasteonline.org.uk/ http://www.letsrecycle.com/

China related
http://www.export.gov/china/exporting_to_china/scrap.asp

NAFTA related
Alberta Recycling Management Authority, http://www.trma.com/ American Metals Market, http://www.amm.com/recman/ American Plastics Council, http://www.plasticsresource.com/ and http://www.americanplasticscouncil.org/ Association of Post-Consumer Plastics Recyclers, http://www.plasticsrecycling.org/members-index.asp Bottle Bill Resource Guide, http://www.bottlebill.org/about_bb/bottlebill-whatis4.htm Californian Government Home, http://www.ciwmb.ca.gov/ Canadian Plastics Industry Association, http://www.cpia.ca/ Canadian Plastics Industry Association, http://www.plastics.ca/ Canadian Plastics Sector Council, http://www.cpsc-ccsp.ca/index.php?lang=e&view=search Canadian Polystyrene Recycling Association, http://www.cpra-canada.com/ Capital Press, http://www.capitalpress.com/specpages/agriplus.htm Coca-Cola, http://www.cokefacts.org/news/news_aw_articles_recycling.pdf and http://www2.coca-

cola.com/presscenter/nr_20050713_americas_pet_recycling.html
DMOZ Open Directory Project, http://dmoz.org/Business/Energy_and_Environment/Waste_Management/Recycling/Polymers/
UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 270

Environment and Industry Plastics Industry Council, http://www.plastics.ca/epic/ Environmental Packaging International, http://www.enviro-pac.com/home.htm Federal Environmental Executive, http://www.ofee.gov/eo/13101.htm Global Recycling Network, http://www.grn.com/ HDPE Recycling Exchange, http://www.recycle.net/Plastic/hdpe/xf100200.html Hong Kong Trade Development Council, http://forum.tdctrade.com/forum/Forum8/HTML/000068-2.html Industry Canada, http://strategis.ic.gc.ca/ Midpoint International Recycling Links, http://www.midpoint-int.com/links.mv?m= NAPCOR, www.napcor.com National Recycling Coalition, http://www.nrc-recycle.org/default.htm National Recycling Coalition, www.nrc-recycle.org Natural Resources Canada, http://www.recycle.nrcan.gc.ca/ North East Recycling Council, http://www.nerc.org/ Pacific Recycling Marketplace, http://pacific.recycle.net Planet Ark, http://www.planetark.com/dailynewsstory.cfm/newsid/31660/story.htm Plastics News, http://www.plasticsnews.com/ Plastics News, http://www.plasticsnews.com/ Platts Petrochemical Information, http://www.platts.com/Petrochemicals/News/8293083.xml?p=Petrochemicals/News&S=n Portland Business Journal, Denton Plastics, Recycle Exchange, http://www.recyclexchange.com/a/1000.html Recycled Plastics Market, http://www.caplasticsmarkets.com/index.php Recycling Council of British Columbia, http://www.rcbc.bc.ca/ Recycling Today, http://www.recyclingtoday.com/ San Francisco Chronical 17th February 2004 http://www.sfgate.com/cgibin/article.cgi?f=/c/a/2004/02/17/BUGRI51VNU1.DTL USA Environmental Protection Agency, http://www.epa.gov/ Waste Recycling Directory, http://www.wasterecycling.org.uk/stem.net/(2aq3ux55lpuiyibz2of5yybm)/index.aspx www.ccc-us.com/wastesupplier.htm AQSIQ Registration of Overseas Supplier of Imported Scrap www.sepa.gov.cn/english State Environmental Protection Administration of China http://importer.alibaba.com/buyeroffers/Waste_Plastic.html

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Annex N Currency Conversion Factors


Costs and prices in foreign currency have been converted at the following schedule of rates to the pound sterling: USA Euro zone Canada Japan India China Pakistan US$1.73 1.48 C$2.01 209.76 80.11 INR 14.01 RMB 103.79PAR

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 272

Annex O Glossary of terms


ABS Acrylonitrile Butadiene Styrene AQSIQ General Administration of Quality Supervision, Inspection and Quarantine of China BFR Bromine Flame Retardants BPEO Best Practicable Environmental Option BPPs Biodegradeable Polymers BREW Business Resource Efficiency Waste Programme CCIC China Certification and Inspection Group CIF Cost Insurance & Freight (Sellers must pay costs and freight to bring goods to the named port of destination and procure insurance against buyers risk of loss or damage of the goods). CRT Cathode Ray Tube EEE Electrical and Electronic Equipment ELV - End of Life Vehicle FOB Free on Board (Buyer has to bear costs and risks of loss or damage to goods from the named port of shipment. Seller must clear goods for export). HDPE High Density Polyethylene HIPS High Impact Polystyrene IBS Intermediate Bulk Storage ICER Industry Council for Electronic Equipment Recycling JCPRA Japan Containers and Packaging Recycling Association LDPE Low Density Polyethylene MBT Mechanical Biological Treatment NAFTA North American Free Trade Agreement NAPCOR National Association for PET Container Resources OPP Oriented Polypropylene PE Polyethylene PERNs Packaging Export Recovery Notes PIFA Packaging & Industrial Films Association (UK) PO Polyolefins PP - Polypropylene PRNs - Packaging Recovery Notes PS - Polystyrene PVC -Polyvinylchloride RDF Refuse Derived Fuel REACH Registration Evaluation & Authorisation of Chemicals RoHS Restriction of Use of Certain Hazardous Substances in Electrical and Electronic Equipment Regulations SAN Styrene Acrylonitrile SEPA State Environmental Protection Administration (China) SEPA Scottish Environmental Protection Agency (UK) TEU Twenty Foot Equivalent Units WEEE Waste Electrical and Electronic Equipment WIP Waste Implementation Programme

UK Plastics Waste A review of supplies for recycling, global market demand, future trends and associated risks. 273

Written by: GHK in association with Recoup

Published by Waste & Resources Action Programme

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