Changing business models for plastic recycling could lead to more profitable businesses, higher grade material on the market and make investment in recycling infrastructure more viable.

A shift away from the ‘traditional’ recycling business model could also potentially open up market opportunities for ‘lower quality’ recyclate, such as that from flexible plastics, according to Richard McKinlay, Axion’s Head of Circular Economy.

“Business models for recycling are changing, and in a beneficial way,” he observes. The sector is shifting away from the ‘old style’ recycling model of ‘buy waste, process it, sell flake/commodity compound’.”

Richard has identified shifts towards two distinct operational models. Some companies are controlling the waste, using it as infeed and producing recyclate from that; along the lines of Axion Polymers’ extraction and processing of plastics from end-of-life vehicles at its SWAPP facility. Others are becoming an ‘end user’ that buys in waste before converting that into a secondary raw material used in their own products.

Fluctuations in infeed or output prices cause difficulties for recyclers. In an ideal world, Richard argues that companies would collect plastic waste directly from households, process it and use the recyclate in new products.

Welcoming the current trend towards investment in or takeovers of recycling businesses by large petrochemical firms, he continues: “This is positive news as they bring stable financial backing and access to an existing customer base, alongside valuable polymer science knowledge and R&D capabilities. All this can aid growth and further development in recycling capability.”

Targeting higher-value markets is another trend that is benefiting the recycling sector. Rather than selling HDPE for piping, for example, firms are improving the quality and selling it for more demanding applications, such as packaging. Richard reckons this gap in supply of lower-grade recyclate could be filled by flexible packaging recycling.

He says: “With a proposed tax on packaging with less than 30% recycled content, there will be a significant increase in demand for high quality material, potentially giving recycled compounds a higher market price than virgin. This should shift recyclate from packaging up the quality ladder, moving it away from applications such as pipes and transport and logistic packaging.

“This movement of recyclate could then open a gap in the market from “lower grade” recycled polymers, such as that produced from flexible packaging. With competition from higher grade HDPE and PP removed, compounds from flexibles could be supplied into these markets, improving the economic argument for recycling flexibles.”

This trend is likely to be stimulated by brand managers needing to incorporate more recycled content for marketing purposes.

Concluding, Richard believes that an ‘interesting’ shift in the nature of recycling business models could herald a new era in the applications of recyclable materials as well as one in which successful companies can thrive.

Brexit could offer fresh opportunities for the UK and its manufacturers to secure their raw material supplies, such as recycled plastics, from a stable domestic market and stimulate a circular flow of materials.

Potential difficulties in transporting material across borders after March 29 2019 could become a driver for growth in the domestic market as purchasers seek to reduce inward material supply chain risk.

Axion Director Roger Morton asserts that freedom from regulatory controls and external policies, coupled with the ability to set our own rules, could encourage greater investment and enable the UK to ‘get ahead of the rest of Europe’ in material recovery and resource security, provided there is strong Government leadership.

Mark Keenan, Axion Polymers Business Development Manager comments: “With 31.5 million cars currently on UK roads, our future end-of-life vehicle feedstock for our recycled polymers is assured. And that can only be good news for UK companies seeking to use locally-sourced plastic raw materials that can go back into a range of products, from new cars and electrical equipment to construction products,” adds Mark.

Roger says: “Brexit is inevitable now. Although complications could arise, we are taking a positive approach. British companies should focus on the opportunity that leaving the EU offers and how we can make the most of our resource sustainable position.”

A good example here, he points out, is steel. With annual consumption (12 Mt) versus annual arisings (11.5 Mt), this market could be much more ‘circular’ than the existing export of scrap/import of finished products model. Similarly, demand creation for the use of recycled polymers in new automotive, electrical and building products could encourage further investment in more processing plants like Axion’s.

While material quality controls, such as REACH regulations and other standards, should remain ‘mirrored with Europe’, Roger suggests there could be an opportunity to ‘take the lead by designing and implementing a set of regulatory measures that drive the transition to a circular economy here’.

Such measures could involve heavily-modulated producer responsibility obligations for brands that make the most effort to change to fully recyclable designs and/or utilise high levels of recycled content. “This would require vision and a brave government with strong leadership” observes Roger, “but in an uncertain world; what’s certain is that material would be available in the UK for use in the UK!”

One of the long-term benefits of Brexit, he says, should be that we can stop mass exports of waste plastic packaging and WEEE, and start investing in recycling infrastructure in the UK as an ‘environmental goal’. While 63% of collected UK plastic packaging resources is currently exported, the country is short of around 10 to 15 large-scale recycling plants to handle that volume.

Plus, we don’t have enough energy-from-waste capacity to handle the low-grade reject plastic stream produced by those plants – around 50% of their waste infeed tonnage. So strategic government thinking and stable long-term policy measures and clear goals for the five to ten years’ will be needed to drive this change.

Roger suggests that there is an opportunity for the UK Government to drive the development of recycling demonstration and pilot ‘pathfinder’ plants once we are free of ’state aid’ regulations that prevent preferential treatment by governments.

He adds: “UK businesses need to wake up to these future possibilities and start talking to suppliers like us that can offer a secure supply of material. It’s competitive on price, performs to the same standard as virgin material – and it’s low carbon!”

“We’ve seen an increase an enquiries in recent months and there’s a lot of interest from UK manufacturers in what we can offer. Despite current uncertainty around Brexit, we remain upbeat about the opportunities to trigger more material moving within the circular economy in the UK!”