The Business with Recyclate Certificates
9/26/2023 Retail Brands Industry Look into Europe Article

The Business with Recyclate Certificates

The EU is aiming for demanding quotas for the use of recycled plastics in FMCG packaging. The company CRC brokers "virtual partnerships" between companies in the plastics value chain. For food manufacturers, this could open up new spaces.

Ansgar Schonlau, Managing Director of CRC, presents Fabian Meiberg, Head of Business Development and Marketing at Kuchenmeister GmbH, with the certificate for the first 5 tons of recycled material to be reused in durable products. Ansgar Schonlau, Managing Director of CRC, presents Fabian Meiberg, Head of Business Development and Marketing at Kuchenmeister GmbH, with the certificate for the first 5 tons of recycled material to be reused in durable products.

According to EU plans, from 2030, contact-sensitive PET packaging for food, pet food, and cosmetics, as well as disposable beverage bottles, should contain at least 30 percent recycled material from “post-consumer” (PCR) waste. A 10 percent quota is proposed for contact-sensitive packaging made from other plastics, and one of 35 percent for non-contact-sensitive packaging.

The IK Industrievereinigung Kunststoffverpackungen (Industry Association Plastics Packaging) estimates that there is currently a shortfall of more than 700,000 metric tons of recyclates to meet the planned quotas. The industry association warns of future supply bottlenecks, especially in the food packaging segment, where – apart from r-PET – no other recyclates are currently permitted.

“Due to current safety and hygiene requirements, the quotas for food packaging are not feasible, at least not with quantities and qualities from current mechanical recycling,” Ansgar Schonlau told Lebensmittelzeitung. Nevertheless, the managing partner of Maag, a company specializing in highly recyclable, flexible plastic packaging, has set out to advance the use of recyclates in the FMCG industry as well as the recyclability of packaging.

To this end, Schonlau founded CRC (Certified Recycled Content) in 2022 with Dirk Textor, chairman of the Plastics Recycling Association in the German Association for Secondary Raw Materials and Waste Disposal (bvse). The service provider with broker function mediates, “virtual partnerships” between companies in the plastics value chain, who, in each case, have stakes in  the same type of material.

Involved in such a deal can be, for example, on the one hand, brand manufacturers who cannot yet use recyclates, and, on the other hand, manufacturers of plastic articles with a recyclate content that already exceeds the minimum percentages advised by the EU. CRC’s business purpose is the purchase and sale of recyclate certificates, so-called “credits”, which certify the reuse of precisely measured quantities of packaging material in high-quality applications.

The first deal brokered by CRC involved Kuchenmeister, a baked goods manufacturer, and Otto Graf, a manufacturer of rainwater barrels. CRC first acquired a certificate from Graf. It shows that the garden products specialist has used five tons of re-granulated polypropylene in its own products, which was previously recovered from the yellow bag by an audited recycler. Graf waives any crediting or communication of this recyclate quantity as of sale. In return, as a “credit donor”, the company generates revenue  that reduces its expenditures for recyclates and encourages it to demand even more of them.

Broker CRC sold the certificate to Kuchenmeister at a premium. The buyer can now take credit for the fact that 5 tons of the cake wrappers it placed on the market, which were also made of polypropylene – and were also collected close to households in an audited manner – were recycled for high-quality materials. “The flow of material from the yellow bag through sorting, recycling, and conversion to high-quality application is precisely verified via the Dual Systems’ volume flow record and certified auditors,” Schonlau says.

According to him, the trade is subject to other clear rules. For example, he says, the market is limited to the five easily recyclable plastic types, PP, PS, PO, LDPE, HDPE, and PET, as well as transactions involving equal buying and selling quantities of the same polymer type. Resale is excluded. Purchased certificates may only be credited to product packaging placed on the market in the validated quantity. On top of that, a buyer such as Kuchenmeister would have to prove that at least 90 percent of its packaging can be recycled.

The idea behind CRC is to encourage brand owners to use materials in packaging that can be readily reused instead of non-recyclable mixed composites. “The flow of recyclables is thus aligned in such a way that what is produced up front finds a customer market downstream,” explains plastics expert Schonlau.

Another concrete goal of CRC is the inclusion of the business model in the EU Packaging Regulation (PPWR): “We have broad support from the Industrievereinigung Kunststoffverpackungen, the Gesamtverband Kunststoffverarbeitende Industrie, the Bundesverband der Deutschen Süßwarenindustrie, the Verband Deutscher Maschinen- und Anlagenbau, the Wuppertal Institute and dm-Drogeriemarkt, but we need more lobbying vis-à-vis politicians,” says Schonlau.