Environment & Energy Report

Plastic Looking More Green Friendly to Soft-Drink Bottlers

July 31, 2019, 8:01 AM

Soda drinkers probably won’t notice, but the plastic bottles for their favorite beverages could increasingly be made from recycled material in the next decade.

Companies like PepsiCo Inc. and the Coca-Cola Co. have pledged to use more recycled polyethylene terephthalate (PET) in their bottles.

Some companies are going even further. Swiss giant Nestle SA introduced its first 100% recycled bottle this month in Europe.

The world buys roughly 500 billion PET bottles each year. If big brands in the U.S. follow through on their public commitments to use recycled content in bottles, 43 new processing plants will be needed by 2030, said Pieterjan Van Uytvanck, a senior consultant with energy and chemicals specialists Wood Mackenzie in Singapore.

In Europe, 47 new plants will be needed. Each would be capable of producing 45,000 metric tons per year of recycled PET—or rPET—that meets food safety requirements.

Reduced Plastics Market

Such a shift to recycled PET could reduce the demand for petrochemicals used to make plastics. And although plastics create a huge global litter problem, recycled plastic bottles have less of a climate impact than metal or glass containers, recyclers say.

Plastic as packaging is “unbeatable” compared to glass and metal in terms of the greenhouse gases generated by its production, said Christian Crepet, director of Petcore Europe, which represents manufacturers and recyclers of plastic.

“You can recycle PET three, five, six, seven times,” without diminishing its strength and with only some discoloration, he said.

In theory, in an efficient system, 80% to 90% of the PET in bottles could be reused repeatedly for new bottles, Van Uytvanck said.

Even in the best system, however, not all PET collected for recycling could be reused.

Material that becomes too degraded, or is lost during PET reprocessing because of contamination, could be replaced with bio-based—plant-based polymer—PET, and that could put an end to the use of fossil fuels for making plastic bottles, he said.

“You need to have four bottles to produce three bottles,” Michel Mersch, Nestle CEO for Belgium and Luxembourg, said.

Going 100%

Big companies have already made pledges. Pepsi has said its plastic packaging will have 25% recycled content by 2025, while Coca-Cola aims for 50% by 2030.

More recently, companies have made a slew of announcements about switching to 100% recycled PET bottles.

So far, though, supply constraints mean this has only been possible for some smaller brands within big companies’ portfolios.

Nestle’s 100% recycled bottle was for 1.5-liter containers of its Belgian Valvert mineral water brand.

In the U.S., Nestle went 100% recycled PET in April for its premium water brand, Poland Spring ORIGIN, which is sold online and at some locations in Florida and Texas.

“It’s not an easy task to find the right quality of rPET and the quantity,” Mersch said.

Short Supply, Higher Cost

Van Uytvanck agreed that supplies of recycled PET are limited in the U.S. and Europe.

A metric ton of rPET is 30% to 40% more expensive than virgin PET, according to Nestle. The company says it is prepared to absorb the extra cost in the expectation prices will ultimately equalize.

Belgium doesn’t have a recycling facility capable of providing the rPET Valvert needs, and rPET granulate is being sourced from plants in France and the Netherlands, Mersch said. The granulate is turned into bottles at the Valvert plant in Etalle, Belgium.

Other smaller brands for which 100% rPET bottles are being introduced include PepsiCo’s LifeWTR and Coca-Cola’s Glaceau Smartwater. Coca-Cola will also introduce rPET bottles for Chaudfontaine, another Belgian mineral water.

Regulatory Push

Tightening regulation, along with desire for sustainability, is driving brands to push for 100% recycled bottles.

In the European Union, a law enacted in May, the Single Use Plastics Directive ((EU) 2019/904), requires 90% of PET bottles to be collected for recycling by 2029, and new bottles to have a minimum rPET content of 25% by 2025 and 30% by 2030.

Currently, average rPET content in drinks bottles in the EU is about 10%, said Ermis Panagiotopoulos, sustainability director of the European Federation of Bottled Waters.

Bottled water companies in the EU already pledged ahead of the Single Use Plastics Directive to hit 25% rPET by 2025, and the goal was “very realistic,” Panagiotopoulos said.

The 100% rPET Valvert bottle would be a “kickstart for Nestle in Europe,” and the company plans to incorporate more recycled content in its bottles, Mersch said.

Nestle plans for the plastic bottles for its Contrex, Hepar, Perrier, and Vittel brands to contain 50% rPET by 2025.

Collection Challenge

But to go further, collection systems for old bottles would have to be dramatically improved in many countries.

Collection rates for recycled plastic bottles in North America are about 39%, and in western Europe, 57%, Van Uytvanck said. In Asia, the rate is much higher, at about 78%, primarily because of the high prices bottles can fetch for litter pickers relative to wages.

Most recycling of the collected PET is actually downcycling, or turning the material into lower-grade products, such as plastic packaging straps or non-food packaging. But contamination of PET makes it hard to use much of the collected material for high quality clear plastic bottles that must comply with rules on food contact materials.

In Europe, collection rates and the quality of the collected material vary hugely, Panagiotopoulos said.

In Belgium and Germany, for example, the rules on household sorting of trash lead to collection rates of close to 90% of mostly good quality used PET, he said. In Greece and the U.K., however, “you put everything in one bin,” so though collection rates have risen, the quality remains poor, he said. Collection rates in most southern and eastern European countries are generally 30% to 40%, according to Petcore Europe data.

Deposit return schemes, in which a small sum is added to the purchase price of a beverage and given back to the consumer when the bottle is returned to a collection point, could be the answer for lagging EU countries that must now meet the Single-Use Plastics Directive’s 90% collection target, Crepet said.

European countries that already have deposit return schemes for PET bottles include Denmark, Estonia, Germany, and non-EU member Norway, where the collection for recycling rate tops 95%. The British government in early 2019 said it would also introduce a deposit return scheme for plastic bottles.

Investor Alert

The supply constraint for high quality rPET should make investors sit up, Van Uytvanck said.

Europe has more capacity than it needs for PET recycling, but that is in the context of current collection rates and the recycling of most PET into lower-grade applications, Crepet said. There has been little shift in Europe’s approach to PET recycling in the last quarter century, but because of brand sustainability commitments and new legal requirements, change is starting.

Through 2030, “there will be a real recycling project; everybody has to mobilize themselves,” Crepet said.

To contact the reporter on this story: Stephen Gardner in Brussels at correspondents@bloomberglaw.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Renee Schoof at rschoof@bloombergenvironment.com; Susan Bruninga at sbruninga@bloombergenvironment.com; Rob Tricchinelli at rtricchinelli@bloombergenvironment.com

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