Why Recycling Plants are Closing and What Needs to Change

Stuart McCaig

Sales Manager UK & European Product Manager - Oceanworks

Ultrapolymers Ltd

Passionate about sustainability, Stuart's work at Ultrapolymers has been focused on cultivating circularity. His goal being to take action in protecting the environment for his children and the generations that follow. From supporting suppliers in setting up recycling facilities. To helping brand owners and converters switch from traditional, fossil-based polymers to recycled solutions. Stuart's 12+ years in plastics have given him extensive experience in supporting customers from design to manufacture. And with his strong network in the industry, if he can't help you, he's bound to know someone who will.

In this article, Stuart delves into the current state of play of recycling in Europe. Highlighting the reasons for the decline in recycling and the shutdown of plants. And pointing out the solutions that will recover our recycling network.

Polymer recycling is often presented as a straightforward solution to the plastic waste problem, but in reality, the economics and infrastructure behind it are complex. In Europe, mechanical recycling plants are closing at an alarming rate, with twice the recycling capacity shutting down in 2024 compared to 2023. And 2025 is showing an even faster pace of closures.

"1 million tonnes of capacity has been lost since 2023, with 2025 forecasted to deliver zero net growth..." _{Recycling Magazine}

The reasons for this are clear and interconnected: high energy costs, volatile resin prices, pressure from imports, and inconsistent enforcement of sustainability policy.

Why isn't recycling profitable? Energy Costs

Recycling is energy-intensive. Sorting, washing, grinding, and extruding equipment consume large amounts of electricity. With the rise of energy prices, this pushes up the cost of recycled resin and makes it harder to compete with cheaper virgin material.

Comparison of Industrial Electricity Prices (2024) 

• EU: €0.199 per kWh
• China: €0.082 per kWh
• U.S.: €0.075 per kWh

These cost pressures have already forced the cancellation of several high-profile investments, such as the scrapped plans by Dow for a chemical recycling plant in Böhlen in Germany.

When energy prices spike, plants often reduce production or shut down lines to avoid losses. This directly reduces the supply of recycled resin, which keeps prices high and discourages buyers from making the switch from virgin plastics.

Virgin vs Recycled Price Gap

Virgin plastics are often cheaper than recycled resin and are more available. In 2022, the world produced around 362 million tonnes of virgin plastic and only 38 million tonnes of mechanically recycled polymer. Virgin plastic made up around 90% of the total production, keeping its price low in comparison to recycled polymers.

Numerous reports demonstrate that leading players like Borealis, Dow and Neste have even cancelled or paused major recycling projects, citing the lack of competitiveness against virgin resin.

Oil price fluctuations and global oversupply can make virgin plastic even cheaper. Without the strict enforcement of taxes like the UK Plastic Packaging Tax, many buyers continue to choose virgin over recycled material simply on cost. The price gap is one of the biggest obstacles to growing demand for recycled content.

Imports Adding More Pressure

Another major factor is the surge in imports of both virgin and recycled plastics into Europe.

"Imports of both recycled and virgin polymers account for over 20% of EU polymer consumption" _{Plastics Recyclers Europe}

These imports are attractive for their low prices, distorting the market and forcing companies into closure, jeopardising the local market's resilience and self-sufficiency for recycled polymers.

Limited Feedstock & Sorting Challenges

Recyclers also face shortages of high-quality feedstock. Contamination levels in mixed recycling streams are high. Materials like films, black plastics, and multi-layer packaging are difficult to sort and process. Without consistent input quality, plants cannot operate at full capacity.

Sustainability Policy Gaps & Enforcement Issues

Regulations such as the Packaging and Packaging Waste Regulation (PPWR) are designed to create a market for recycled content. However, consistency and enforcement of such policies across Europe have been weak. Loopholes allow material to be exported and counted as recycled without proof of proper processing.

Global policy is no clearer. With the UN plastics treaty talks being stalled, countries are divided on whether to cap virgin production or prioritise recycling. Without clear and enforced rules, responsible recyclers are undercut by those who avoid compliance costs. This undermines investment in better infrastructure.

The Role of Chemical Recycling

Chemical recycling could help by processing materials that are unsuitable for mechanical recycling. It can break plastics back into their building blocks, creating feedstocks for new polymers. Yet the technology is still scaling, energy use is high, and costs remain significant. Mechanical and chemical recycling will need to work together to meet future recycled content targets.

What Needs to Change?

To reverse the closure trend and grow European recycling capacity, three key changes are needed:

1. Energy cost relief for recyclers - subsidies or reduced tariffs for recycling plants to offset high operating costs.
2. Stronger enforcement of recycled content policies - closing loopholes and requiring proof of actual recycling.
3. Investment in sorting and processing infrastructure - ensuring high-quality feedstock to improve plant efficiency.

Without these changes, European recycling will remain trapped in a cycle of high costs, low demand, and underinvestment.

Recycling is not a failed experiment. It is a mis-priced system. If the economic incentives shift, UK recyclers can scale up and become a vital part of the circular economy.

Read More...