Oct 4, 2022
Energy Prices 2022 | What the Energy Price Crisis Means for Recycling In the UK and Europe
Energy Price Rise
It will come as news to no one that Europe is battling an extreme energy price rise. There are many contributing factors to this, such as the general economic slowdown caused by COVID-19 spending. Also, power generators that were shut down during the pandemic due to diminishing demand for energy could not be ramped up again in time to meet renewed demand.
The implications of Russia’s invasion of Ukraine cannot be overstated either, as the fall out from sanctions and rising tensions on the international stage has slowed the supply of Russian fossil fuels to Europe. Russian gas fuels many of Europe’s power stations and heats many of Europe’s households; as supply from Russia has reduced, there has not been a sufficient means of replacing it.
There are of course many other factors to consider in an issue as complex as this one, but they all lead to the same result: The energy prices 2022 is delivering are casting Europe into crisis.
Every household and every business in Europe will feel the effects of this, particularly businesses in the waste and recycling sectors.
Not only are recycling facilities across Europe having to deal with rising energy costs, with electricity now making up as much as 70% of their operating costs, but also with the decreasing value of recycled plastics.
As the barrel price of oil continues to fall, so too does the virgin plastic price; virgin polymers becoming considerably cheaper eliminates one of the main incentives for manufacturers to opt for recycled materials. The trade organisation Plastic Recyclers Europe (PRE) has predicted that the current downward pressure on the plastic price will continue. PRE warns the plummeting virgin plastic price combined with the energy price rise puts our transition to a circular economy entirely at risk.
Plastic Bottle Scrap Price
Mixed bottles are a perfect example of the price issues recyclers are facing. Only a few months ago, mixed bottles were trading at around £300 per tonne, whereas now producers of these materials are struggling to move them at £25 per tonne. Closures of major UK facilities that deal with these materials, combined with the falling virgin plastic price and rising energy costs, have slashed the plastic bottle scrap price and pulled the value out of the market.
This is representative of the problems being faced across all sectors of Europe’s recycling industry. PRE warns that unless there is swift and meaningful action by governments, many European recyclers will be at risk of having to close down. This would be a hit that could delay our transition to a circular economy by decades.
Unless something can be done to curtail the energy price boom in the near future, then things are looking bad for recycling. The devastation this would cause must not be underestimated. Losing recyclers would mean more plastic waste going into landfill; this would mean more plastic pollution going into the oceans where it will damage marine ecosystems and kill marine wildlife.
It would mean more plastic pollution contaminating our landscapes, leaking toxins into the soil. It would also mean a further increase in demand for virgin plastics, which would mean more fossil fuels being extracted, which would mean more carbon emissions being produced.
The recycling industry must be protected and supported if we are to prevent this all from happening and continue on our journey towards a circular economy. Things like the plastic packaging tax help to keep up demand for recycled materials, but energy prices are getting so high and virgin polymers so cheap that having to pay the tax is becoming negligible for many manufacturers.
There has been a great deal of investment into the recycling infrastructure in Europe in recent years, but the rising energy price means much of this work is being slowed or halted. According to PRE, this would have ‘disastrous implications for the European recycling industry’.
PRE emphasised that the recycling industry will play a central role in a low-carbon circular economy. Decisive action is needed without delay to ensure recycling remains an economically viable practice and that recycling facilities are not forced to close. It is not obvious at this stage what exactly can be done, but devising and implementing such a strategy must be made a priority.