Reimagining Recycling: The Economic and Environmental Imperative for UK Plastics Recycling Infrastructure
The plastics recycling sector in the UK is facing challenging economic conditions, which have resulted in a loss of critical infrastructure. Approximately 22% of capacity has been lost between 2023 and 2025, creating a material risk to the UK Governments’ circular economy and Net Zero ambitions.
This report seeks to quantify the plastics recycling infrastructure needed to meet policy ambitions and quantify, at a high level, the economic and environmental impact of this infrastructure being delivered for UK Plc.
Viridor commissioned Ceres Waste, Renewables & Environment to undertake this independent assessment. The report considers the opportunity created by policy that will increase the quantity of plastics separated for recycling, and the infrastructure that would be needed to fill the capacity gap if all material could be processed in the UK.
It is hoped that the findings of the research will contribute to the growing evidence base for policy intervention and support for the plastics recycling sector in the UK. Without it, UK government and devolved administrations risk undermining the success of flagship policies such as Extended Producer Responsibility for packaging, deposit return schemes, Simpler Recycling, and emissions trading for Energy from Waste. At the same time, the reliance on export for recycling represents a loss of valuable resources and value to the UK economy.
Read the report below or download a copy here.
Reimagining Recycling: The Economic and Environmental Imperative for UK Plastics Recycling Infrastructure
Executive Summary
The Issue…
After years of policy development and investment, the ambitions of the UK government and devolved administrations for flagship waste, recycling and carbon policies may be at material risk - as plastics recycling infrastructure in the UK and Europe is in sharp decline.
Insecure pricing for recycled polymers, increased operational costs and growing quantities of fraudulently described ‘recycled polymers’ sold into the market have made commercial operations unviable for many businesses. As a result, infrastructure that is vitally important for a circular economy is rapidly being lost. By the end of 2025, the EU is expected to have lost almost 1 million tonnes (Mt) of plastics recycling capacity, while in the UK, 0.26 Mt of capacity (22%) has been lost between 2023 and 2025.
This comes at the time when key environmental polices of Extended Producer Responsibility for packaging (EPR), Simpler Recycling, deposit return scheme (DRS) and the Emissions Trading Scheme (ETS) for Energy from Waste (EfW) are being implemented. Together, they will increase both the scope and quantity of plastics collected for recycling by local authorities and businesses. These policies aim to address significant public concern about the environmental impact of managing post-consumer plastics and increase recycling rates to meet ambitious policy targets.
The proposed inclusion of EfW in the ETS from 2028 will also drive plastics out of residual waste, as they generate fossil carbon emissions and will cost significantly more to treat. Without the appropriate recycling infrastructure, the UK will have to rely on other countries for recycling where environmental standards can be lower, increasing transport costs and resulting in a loss of local resources, investment and jobs.
The Opportunity…
In 2060, an estimated 4.2 to 4.9 Mt of plastics will be separated for recycling in the UK. Yet, to recycle this domestically, the UK will need another 3.6 – 4.4 Mtpa of plastics recycling capacity to process it.
Policy requires and incentivises local authorities and businesses to increase the scope and tonnage of plastics diverted for recycling. This includes plastic films and non-packaging plastics, most of which, the UK’s existing recycling infrastructure is not designed to process, meaning new investment is required. As such, in addition to developing more domestic capacity for mechanical recycling, there is an opportunity to invest in chemical recycling to treat ‘hard to recycle’ plastics and generate a high quality, recycled feedstock for the plastics industry. Outputs from chemical recycling can provide the inputs needed to produce high-quality recycled polymers, particularly for content-sensitive packaging, to help meet recycled content targets in the UK and EU market. Assuming all plastics collected for recycling are treated in the UK, modelling suggests that the capacity gap for plastics recycling will increase significantly over the next 5 years to realise the opportunity created by EPR, Simper Recycling, DRs and ETS.
By 2030, the UK is estimated to need an additional 18 MRFs, 38 mechanical recycling plants and between 13-25 chemical recycling plants. By 2060, a further 88 plants would be required.
The Rewards…
Creating ‘investment ready’ conditions for plastics recycling could unlock £4.6 - 5.9 Bn of private investment.
If urgent action is taken, this infrastructure could generate an estimated £25 - 28 Bn of Gross Value Added (GVA) for the UK economy and create 6,900-7,700 jobs.
Exporting plastics for recycling represents a loss of valuable resources, along with the loss of GVA that recycling businesses could contribute to the economy. The GVA generated by building more infrastructure to close the plastics recycling capacity gap is largely driven by the significant number of permanent jobs it would create.
Strengthening the business case for investment in plastics recycling infrastructure will ensure that local authorities and businesses investing in separating plastics for recycling have domestic recycling options that avoid the potential reputational risk associated with exports.
Filling the capacity gap will create an estimated 100 Mt of recycled polymer for circular use by 2060 and avoid over 143 MtCO2e of fossil carbon emissions over the same period.
These outcomes are well aligned to wider public concerns about the negative environmental impact of how post-consumer plastics are managed in the UK, and concerns about environmental standards when plastics are exported for recycling overseas.
With the quantity and scope of plastics collected for recycling set to increase significantly, as new legislation is implemented, new infrastructure must be delivered quickly. Given that new facilities can take at least 2 years to get to operation, the imperative for urgent action is clear.
Saving tax payers money…
Recycling more of the plastics we collect and separate for recycling in the UK will contribute to reducing the financial burden of supporting carbon capture and storage for the EfW sector by 52%.
Plastics in residual waste are the source of almost all the fossil CO2e emitted by EfW facilities, the type of emissions that contribute to climate change. The UK government is funding the development of carbon transport and storage networks in two areas of the UK to capture emissions from heavy industry, with the potential for more networks to be added in the future. EfW operators that can install carbon capture and connect to these networks could receive funding from the government to cover the cost of building and operating carbon capture technology and the cost of transport and storage for captured CO2.
Removing plastics from EfW feedstock will reduce the proportion of fossil carbon in residual waste and means that a great proportion of the CO2e emissions captured through CCS will be biogenic in origin – capturing this carbon will have a net positive impact on the climate or it can be used to ‘offset’ fossil carbon emissions from hard to abate sectors and heavy industry.
The government is likely to allow operators to monetise credits for biogenic CO2e captured by selling them to other CO2e emitters in the ETS or on the voluntary carbon markets.
This revenue, combined with the fact that CCS could be avoided on the most expensive to abate EfW facilities as recycling rates increase, could mean that the cost of implementing CCS on all EfW without action, could be reduced by 52% to 2060.
Although investors can accept different levels of risk, the availability of funding and the cost of capital is lowest when feedstock, operations and offtake markets are predictable.
Infrastructure investors typically look to invest in large capital projects with predictable, long-term returns and high barriers of entry for potential competitors. There are three key areas of risk for plastics recycling infrastructure that are material to investment decisions – feedstock, operations and offtake markets.
Government policy is strengthening confidence around the ability to secure feedstock for recycling and both the quantity and quality of packaging plastics collected for recycling is likely to increase. However, the volatility and uncertainty of the global offtake market for recycled polymer continues to undermine the business case for investment. Whilst prices for recycled polymers are expected to fluctuate in response to demand, the market is reportedly being undermined by imports from regions lacking clear chains of custody, with some material potentially fraudulently described as recycled.
Sometimes virgin polymer is described as recycled and reprocessed pre-consumer plastics, which can be produced at a much lower cost than post-consumer recycled polymers in Europe. This undermines consumer confidence and undercuts the products of legitimate recyclers, adding to the commercial pressures that are already facing higher operational costs and falling demand.
Barriers to investment…
The ask…
Retaining existing plastics recycling capacity in the UK and expanding it to treat the growing quantity of plastics that will be separated for recycling driven by flagship environmental policies, must be a priority for the UK governments. This is essential if their objectives are to be realised and economic benefits achieved.
Support circular demand. Drive demand for recycled polymers and disincentivise ‘downcycling’ by setting recycled content targets for non-packaging plastics, including ‘circular’ plastics/
Reduce volatility in the offtake market. Increasing revenue certainty to reduce investor risks, protects recycling businesses and will help to retain and grow domestic recycling capacity.
Set financial penalties at a level that incentivises the adoption of recycled polymers. Must be combined with actions to ensure traceability and avoid incentivising fraudulent activity.
Address fraud. Set standards for recycled polymers, implement and enforce traceability to ‘lock-out’ mis-represented ‘recycled’ polymers from the market.
De-risk the commercialisation of chemical and advanced recycling technology. Potential for support to commercialise these technologies in line with other emerging technologies, including a national approach to ‘end of waste’ for pyrolysis oil.