“Impact would be most felt in the PE- resin market, with less of an effect on the upstream purified terephthalic acid (PTA) and paraxylene (PX) markets - although the influence would still be significant. Hitting brands’ sustainability goals would require significantly less virgin PET resin, resulting in less PTA and PX needed to make virgin PET (VPET). Older and less efficient PET resin, PTA and PX plants would need to be closed in order to maintain balanced markets and operating rates. Monitoring industry progress towards these goals will be crucial for all US polyester chain players, too," says Dr. Michael Bermish, Wood Mackenzie Chemicals Principal Analyst.
Recycled PET bottles required to meet brand recycling targets
Scenario #1 - RPET required to hit CSD and water PET bottles targets only
Wood Mackenzie's analysis estimates the amount of PET bottles required to meet the 25% recycled PET (RPET) content goal for carbonated soft drink (CSD) and PET water bottles is equivalent to 1.5 Mt in 2025 and 2.2 Mt in 2030. This would require an additional 0.4 Mt of PET bottles collected by 2025 and an additional 0.9 Mt of PET bottles collected by 2030. This is a 38% increase in PET bottle collections by 2025 and a 78% increase in PET bottle collection by 2030, as compared to our current base-line forecast. The country’s recycling rate would need to sit at 45% by 2025 and 60% by 2030.
Scenario #2 - RPET required to meet target for all beverage PET bottles
The amount of PET bottles needed to meet the 25% recycled content goal for all beverage PET bottles is 1.7 Mt in 2025 and 2.9 Mt in 2030. In this scenario, current sustainability goals would require an additional 0.6 Mt of PET bottles collected and a 53% recycling rate by 2025. An additional 1.6Mt of PET bottles would need to be collected, with a 78% recycling rate, by 2030. This is a 137% increase in PET bottle collections by 2025 and a 209% increase in PET bottle collection by 2030, as compared to our current base-line forecast.
What if recycled content goals are achieved?
"Both scenarios suggest the current amount of PET bottles collected - on a tonnage basis - will fall far short of what is needed to meet the ambitious recycling goals set by many brands. Clearly, a large gap exists between existing corporate sustainability goals and the current state of the US RPET market. Our previous analysis, undertaken earlier this year, found that up to $3 billion in additional capital investment would be required to achieve current US recycle- plastics content goals by 2030. Nevertheless, major brand owners are committed to fulfilling these commitments in the face of consumer backlash," adds Dr. Bermish.
Impact on US VPET market
By meeting PET recycled sustainability goals, we expect the greatest impact to be on the US VPET market. Based on our analysis, lost US VPET production would be substantial by 2030.
In scenario #1, where RPET content goals are only met for CSD and PET water bottles, US VPET production would decline by 0.4 Mt by 2025 and 0.9 Mt by 2030. With these assumptions in our base-line analysis, lost virgin PET resin production to RPET usage would equal 8% of total capacity in 2025 and rise to 19% by 2030. The loss of nearly 0.9 Mt of virgin PET resin production by the end of the next decade would be equivalent to nearly one Corpus Christi-sized plant, or two or more older legacy PET resin plants.
In scenario #2, where content goals are met for all beverage bottles packaged in PET, US VPET production would decline by 0.6 Mt by 2025 and 1.6 Mt by 2030. Lost PET-resin production to RPET use would equal 13% of total capacity in 2025 and rise to 33% in 2030. The loss of nearly 1.6 Mt of virgin PET resin production by the end of the next decade would be equivalent to one Corpus Christi-sized plant, plus one to two legacy PET resin plants. In this scenario, approximately a third of total US PET resin capacity would be replaced by RPET, resulting in a drastic change in the composition of the VPET resin industry.
All VPET producers would also need to be major PET recyclers to survive this transition. We’ve seen some activity in this space already, with Indorama's acquisition of Custom Polymers, DAK Americas' acquisition of Perpetual Solutions and FENC's acquisition of Phoenix Technologies. In addition, chemical recycling is also a route that virgin PET resin producers are taking by introducing clean flake at the front-end of the polymerisation process. This, in fact, may offset the decline in asset utilization rates due to greater use of RPET by downstream converters.