The plastic recycling industry is in a critical state, and urgent measures are required to maintain competitiveness—according to the latest report from the Wuppertal Institute, commissioned by the German Federal Environmental Foundation (DBU). To stabilize the sector and foster a circular economy, experts have developed a six-point proposal that includes the introduction of a global plastic levy and a significant reduction in material variety.
A Sector in a Dramatic Situation
The latest position paper from the Wuppertal Institute—presented at the IFAT environmental technology trade fair in Munich—highlights the alarming state of the German plastic recycling industry. According to Alexander Bonde, Secretary General of the DBU, the sector must be supported through innovation, otherwise, there is a risk of “losing both industry and ideas.” Bonde emphasized that this sector is crucial for climate and resource protection, as well as for achieving independence from fossil raw material imports.
Currently, the plastic value chain is primarily organized linearly, following the so-called “take-make-waste” model. Production is overwhelmingly based on fossil crude oil and generates enormous amounts of waste. To achieve sustainable economic activity, a shift is necessary toward a true Circular Economy, spanning from product design and waste prevention to reuse and recycling.
Alarmingly Low Demand for Secondary Raw Materials
Plastic is omnipresent in modern life. According to data from the association Plastics Europe, approximately 431 million tons of plastic are produced annually worldwide. More than one-third of this is manufactured in China, 55 million tons in Europe, and 13 million tons in Germany. The report’s author, Prof. Dr. Henning Wilts, Head of the Circular Economy Division at the Wuppertal Institute, notes that approximately 16 million tons of plastic waste are generated annually in Europe, with about 6 million tons in Germany alone. While nearly half of this is recycled in Germany, the European average is significantly lower.
One of the most severe problems facing the recycling industry is the extremely weak demand for secondary raw materials (recycled plastics, or recyclates). Surprisingly, this trend persists even amidst rising oil prices, which theoretically should give a competitive advantage to cheaper recycled products as fossil-based alternatives become more expensive. Due to a lack of investment security, an increasing number of plastic recycling plants are being forced to close, leading to a significant loss of specialized know-how. Locally, the share of recyclates remains below 20 percent, even though innovative technologies would allow for a much higher proportion.
Strict EU Regulations on the Horizon: The Impact of the PPWR
The situation is further complicated by upcoming European Union legislation. The EU’s Packaging and Packaging Waste Regulation (PPWR), which entered into force on February 11, 2025, will bring a radical transformation to the industry starting August 12, 2026.
The regulation mandates minimum quotas for the use of recyclates:
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From January 1, 2030: Contact-sensitive packaging with PET as the main component must contain 30 percent recyclate, increasing to 50 percent by 2040.
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Single-use plastic beverage bottles: Must contain 30 percent recyclate by 2030 and 65 percent by 2040.
While the PPWR aims to boost demand, reduce greenhouse gas emissions, and increase circularity, Wilts warns that current capacity reductions pose a serious risk of a “recyclate gap.” This could force companies to rely on foreign imports to meet the mandatory quotas.
The Six-Point Proposal: Global Levies and Material Simplification
The Wuppertal Institute’s position paper outlines six specific solutions to save the sector:
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Reduction of Material Diversity: One of plastic’s greatest advantages—the tens of thousands of variations in shape, color, and density—is, in practice, a barrier to effective recycling. The report suggests a drastic reduction in the excessive variety of materials without compromising functionality.
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Public Procurement as a Lever: State and public sector procurement can act as a central lever to increase demand for secondary raw materials.
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Global Plastic Levy: Implementing a globally coordinated plastic levy would integrate the environmental costs of crude oil extraction and processing (while ensuring it does not lead to the use of ecologically harmful alternative materials).
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Plastic-as-a-Service: Revenue should be generated from the circular, repeated use of plastics rather than just one-time sales.
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Promotion of Circular Business Models.
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Targeted Stabilization and Incentivization of the Recyclate Market.
Although AI-based sorting now allows for highly specialized processing, the lack of reliable demand means these innovations rarely move beyond university laboratories. According to the Wuppertal Institute, this must change immediately for the sake of climate protection and economic stability.
References and Official Sources:
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Original Article and DBU Official Press Release: DBU: Mehr Kunststoff-Recycling sichert Klimaschutz und Wirtschaftsstandort