Neil Farmer assesses the crisis facing the plastic recycling sector and asks, is there hope for the future?
The global consumer goods packaging sector is a $600 billion market. I have worked in the industry for 47 years, as a business owner, manufacturer, and consultant, recently receiving a lifetime achievement award. It is an industry I am proud to be a part of but one which is increasingly becoming “a land of missed opportunities.” Nowhere is this more evident than in the environmental policy field, particularly in relation to the recycling of plastic packaging. Today, only nine percent of plastics finds its way back into the production cycle. A McKinsey survey earlier in the year said USA consumers prioritise packaging price and convenience over sustainability, a worrying fact, but not a surprising conclusion considering the current political and economic climate. I travel regularly to the US and it is clear sustainability is not high on the agenda of policy makers or indeed many consumers. But enough about America because here, I want to focus on the UK and Europe.
UK position
The UK is moving forward with its extended producer responsibility (EPR) scheme. The government`s taskforce is working to produce a circular economy strategy that was due later this year, but has since been delayed until 2026.
At £1.5 to £2.0 billion per year, EPR is an expensive programme. It is crucial the UK government demonstrates how the scheme will deliver value for money and build the circular economy that all, producers and consumers alike, are demanding.
However, my biggest concern relates to the plastic recycling industry which is on the brink of collapse. In July, Biffa announced the closure of its £27.5 million plastics recycling facility in Sunderland. The site had a reported processing capacity of 39,000 tonnes per year. This comes a year after Viridor closed its Avonmouth plant. When it opened in 2021, this £317 million operation was hailed as the UK`s largest multi-polymer recycling plant, capable of processing a wide range of plastics. In August 2025, Viridor also announced it would be closing and decommissioning its mechanical recycling centre in Rochester, Kent, due to challenging market conditions. Both companies are leading players in the waste management industry. The closures are significant blows to the future of the UK plastics recycling sector.
If this was not bad enough, in September 2025, UK-based recycler Vanden Recycling confirmed it would close its plastics recycling plant in Whittlesey, Cambridgeshire, by late October 2025. The facility processes post-industrial plastics, including PET, PP and HDPE.
Vanden said the site lacked the scale needed to support the company`s long-term strategy and was no longer viable in current market conditions.
You do not have to investigate too far to discover the reasons for the demise of these operations. Rising energy, transport and labour costs have squeezed margins. Lower virgin plastics prices have undercut demand for recycled polymers.
The UK packaging industry faces stark choices. Fewer domestic options now exist for processing plastics, with landfill or incineration the unattractive options. More waste will inevitably have to be exported, with spiralling economic and environmental costs an appalling consequence.
The bottom line is that all the above-mentioned companies invested in recycling infrastructure believing government promises of creating a circular economy. We are still waiting for this to materialise. The need for action is urgent because, as things stand, UK plastics recycling is not economically viable and faces termination.
UK flexible packaging recycling
In flexible plastics, similar issues exist. The problem will only be exacerbated when kerbside collection of flexible plastics becomes mandatory in 2027. The Flexible Plastic Fund (FPF) unveiled its FlexCollect report in September. This covered feedback from over three years of trials aimed at increasing the recycling of flexible plastic packaging.
The report, led by Ecosurety, an environmental consultancy, confirmed that once collections are scaled up nationally there will be a clear and substantial gap in recycling. The report predicted that more than 150,000 tonnes of flexible plastic packaging could be collected, once the government`s Simpler Recycling Initiative is implemented from 2027.
However, a lack of recycling capacity without substantial investment in the UK`s reprocessing sector will lead to the opportunity being lost. There is a desire amongst brands and retailers to ensure flexible packaging is collected and sorted. As the Ecosurety report makes clear, unless there is a commitment by government to make things happen, the mandatory collection of flexible plastics will go the way of so many other initiatives over recent years. One other significant point: the report clearly states that packaging extended producer responsibility payments provide the funding mechanism for councils to roll-out this service. The onus is on the government and councils to utilise the EPR fees for the purpose to which they were intended.
The position in Europe
Good progress has been made on environmental policy in the European Union. The Packaging and Packaging Waste Regulation (PPWR) represents an opportunity for the packaging industry and consumer brands to deliver packaging innovation and achieve sustainability commitments. PPWR aims to contribute to the EU`s transition to a circular economy and climate neutrality by 2050. The EU`s proposed circular economy act is expected in 2026.
However, it is a fact that the European plastic recycling sector is performing equally as badly as the UK`s. Locally produced recyclates are facing mounting pressures not only from cheaper virgin materials but also from unregulated and inferior imports, which are widely available. To illustrate the point, in July 2025 Veolia announced plans to close its MultiPet and Multiport GmbH plastics recycling facilities in Bernburg, Germany at the end of the year. The company said the decision was made because of “the continuing difficult market conditions in plastics recycling.” The Bernburg site had an annual capacity of around 70,000 tonnes and had been one of the largest plastics processing facilities in Europe. The closure is one of several announced this year in Europe. On a positive note, Veolia says it will continue to grow its PET recycling operations in Norway, Sweden, and Switzerland.
Hope for the future
In July 2025 Veolia announced the launch of a large UK plastics recycling project, a £70 million investment at a facility near Shrewsbury, Shropshire. This will include the UK`s first tray to tray closed-loop recycling facility. The operation will process 80,000 tonnes of plastic each year.
What is urgently needed in the UK is support for domestic recycling, primarily a reform of the Packaging Recovery Note (PRN) system on exporting waste and immediate increases in the recycled content requirement under the UK Plastic Packaging Tax. Most importantly, for EPR fees to be invested in infrastructure. There is hope for the future.
I will return to these issues in later editions of FMCG CEO.
Neil Farmer is the founder/owner of Neil Farmer Associates
