Statement on the draft of the National Circular Economy Strategy (NKWS)

Digitization section (4.2.)

We expressly welcome the prominent role that digitalization plays in implementing the strategic goals of the NKWS.

The Federal Government should examine whether, in strategic harmony with the European Commission's strategy, it should introduce "twinning"¹, i.e. the mandatory interlinking of digital and green change in terms of content, as a mandatory assessment criterion for all legislative projects and measures or demand it from the author of the measure, comparable to the mandatory assessment of the fiscal impact of any measure².

The German government should also take into account the role of artificial intelligence in successfully closing the plastics cycle and consider R&D measures to determine the extent to which separate funding can be made available for this area. For an overview of the prospective field of application of AI, see Figure 1. A solid database is a mandatory prerequisite for its use. In this respect, all measures that increase the transparency and data collection of material flows in the plastics recycling industry are to be welcomed. Any interests in trade secrets that are in tension with the goal of increased transparency can, for example be covered by regulations for the Digital Product Passport to the effect that data is only passed on in accordance with a "need-to-know" principle in line with data protection law, i.e. market participants should only be given access to data that is actually relevant for achieving increased circularity in the handling of the material at the respective stage of the value chain (see also EN 18065:2024: "Classification of plastic recyclates according to data quality level for use and (digital) trade", section 7).

Figure 1: Possible fields of application of AI for the circular economy. Source: Cirplus GmbH.

Demand #2:

Anchoring "twinning" as a central leitmotif within the priority fields of action of the NKWS in line with the EU Commission's Strategic Foresight Report 2022.

Demand #3:

Stronger embedding & promotion of the development and application of artificial intelligence in the field of plastics circular economy, in particular also in the concrete measures of the material flows considered individually below.

Plastics section (4.10.)

Chapter 4.10.3 Vision, goals, indicators

We very much welcome the fact that the German government is calling on the plastics industry to fundamentally restructure its business model, away from being a producer of linear plastic products and towards becoming a circularity service provider for carbon. This requires a radical rethink on the part of shareholders and management in the plastics industry and will remain a pipe dream without an accompanying legal framework. The business case for the circular management of carbons needs to be established through control instruments such as a targeted plastics tax. Linear production and one-time use of plastic products must result in unprofitable business models; on the other hand, the German government must intervene in the market to steer the transformation process, at least at the beginning, and set a framework that more than compensates for the economic, technological and social disadvantages of reusable models and the production of recycled plastics (see the creation of an "unlevel playing field" for recycled plastics below).

In this framework, it is important that plastics producers as the most powerful player in the value chain as a whole develop an inherent economic interest in those circular technologies that cause the smallest carbon footprint or the least damage to people and the environment. In concrete terms, this means, among other things, that the petrochemical industry must develop an overriding economic interest in carbon cycle management with the lowest possible carbon footprint, i.e. divestment of exclusively linear refinery capacities and massive investments in capacity expansion and research in mechanical recycling (especially in comparison to chemical recycling technologies) as well as working with brand manufacturers to redesign the entire product range with the aim of "Design for Circularity". Investment announcements in just one single technology pathway with a proven high environmental footprint (here: chemical recycling), as already announced by the chemical industry in 2021³, ultimately runs counter to the goals of the NKWS and the mission statement of a comprehensively sustainable circularity service provider, undermining efforts at all stages of the value chain to close the carbon cycle with the least possible use of resources and pollution.

The Federal Government should explicitly include the absolute reduction of virgin plastic consumption in the vision for the circular plastics economy. In its current form, the draft only contains a reduction in plastic waste as a visionary goal and thus falls short of strategic goal 1 (reduction in the consumption of primary raw materials).

Only a cursory sentence at the end of the section has been included. Strategic objective number 1 of the NKWS should be expressed much more strongly here and logically included at the beginning of the section.

In addition to enforcing recycling quotas, the German government should therefore consistently examine the introduction of a tax on the consumption of primary plastics and abolish climate-damaging subsidies for virgin material production with the aim of creating an "unlevel playing field" in favor of secondary raw materials. Merely enforcing a "level playing field" between virgin and recycled materials, as has been demanded by the industry on various occasions, ignores the fact that there has been an "unlevel playing field" in favor of linear plastics production since the beginning of industrial plastics production in the 1950s. For precisely this reason, scaling up the circular plastics economy is difficult because the business case is not secure. If and to the extent that strategic objective 2 is to be fully realized, the reuse of secondary raw materials and recyclates must therefore be disproportionately promoted.

The specific form of a feed-in priority for recycled plastics or a feed-in tariff should be examined by the German government. When developing the plastic tax, it must be avoided that companies fall back on material alternatives that in turn result in poorer circularity and a higher carbon footprint than the use of plastic as a source material (here in particular the worrying trend towards non-recyclable composite packaging).

The conflicting goals that a reduction in plastic consumption can be in tension with the strategic goal of closing plastic cycles should be explicitly pointed out (e.g. where the use of highly recyclable monomaterial increases the recyclability of the material, but can lead to a higher use of primary material in the first step). This is one of the decisive engineering achievements that the plastics industry will have to make in the coming decades. The full life cycle must already be included at the product design level and two separate scoring systems (use phase vs. end-of-life phase) should be developed that can map the trade-off between optimizing the use phase vs. the end-of-life phase for product development in a simple, transparent and legally compliant manner. In particular, the above-mentioned commentary on anchoring the reduction of the carbon footprint or greenhouse gas emissions must be referred to separately as a decisive criterion.

Chapter 4.10.4 Concrete measures and instruments

No circularity at any price

In the subsection Optimized recycling of plastics, the NKWS should not focus solely on the duality between mechanical and chemical recycling and thus be less open to technology from the outset. In addition to other recycling processes (e.g. physical or bioenzymatic), further development of the incineration of plastics with CCU/CCS technology should also be given greater consideration. In the future, chemical recycling will have to assert itself against such technologically high-quality incineration, because: The aim of NKWS should not be "circularity at any price", but rather a life cycle assessment of carbon that makes sense (see demand #1 on anchoring the reduction of GHG or the carbon footprint as a key strategic objective). It is therefore crucial that the carbon footprint or a comprehensive life cycle assessment is used in the technology assessment. In the public debate, the potentially toxic by-products of the respective production processes, particularly in chemical recycling, have so far been insufficiently taken into account⁴.

Establish chemical recycling as a subsidiary technology

Due to the existing path dependencies, the NKWS should not classify chemical recycling as a "complementary/supplementary" technology, but as a "subsidiary" technology. The difference between complementary and subsidiary technologies is that in the former there will be a (presumed) balance between the two technologies discussed in the text, e.g. 70% mechanical recycling and 30% chemical recycling. However, a technology mix comprising 90% chemical recyclates and 10% mechanical recyclates would also be "complementary" in exactly the same way. This balance should be achieved where the former technology is not able to recycle waste. In essence, such complementarity postulates an equivalence in the efforts to promote research and expand technology: the existing mechanical recyclers should focus on expanding mechanical recycling, while the petrochemical industry should focus on expanding chemical recycling.

However, such an approach runs the risk of massive misdirection. This is because the postulated technological limit of mechanical recycling is a fluid one, which has not yet been exhausted in mechanical recycling precisely because the business case and thus investments in research, development and capacity building have not been made here in the past. The petrochemical industry has so far neither supported such a priority expansion of mechanical recycling technologies nor promoted it itself with the corresponding resources. In this respect, the reference to chemical recycling as a "supplement" to mechanical recycling is a (poorly disguised) protective claim as to why the petrochemical industry is disproportionately involved in chemical recycling, ironically in complete contradiction to the "openness to technology" that it repeatedly calls for.

The circular economy and climate protection potential of advanced mechanical recycling is 10 times greater than that of chemical recycling, as the 2020 study by the German Academy of Science and Engineering highlighted⁵ . This was published by Dr. Martin Brudermüller, the former CEO of BASF, among others.

Figure 2: Technology pathways and climate protection potential in plastics recycling.⁶

In contrast, subsidiary technology pathways are those that only receive funding if and to the extent that all resources on the priority technology pathway have been exhausted by all value chain participants (!). To this end, the entire value chain must develop an overriding economic interest in closing the carbon cycle with the lowest possible carbon footprint. This is the only way to ensure that the individual market players do not operate in "their" silos and only promote technologies on their own initiative that are as close as possible to the existing business model. The latter scenario will almost certainly result in a technology mix that makes insufficient use of the circular and climate protection potential of plastic waste recycling, in line with the motto: "If you only have a hammer, you can see a nail in every problem"⁷.

In a plastics recycling economy based on the use of quotas, which will also be geared towards sustainable growth in 2030 and 2045, the individual market players will try to grow in "their" technology path. It is already foreseeable today that in a "complementary" technology scenario without further legislative intervention, a situation will arise in which mechanical recyclers will not be able to achieve the quotas to be met due to a lack of resources for R&D and capacity expansion in the period 2024-2030⁸. The petrochemical industry will then be prepared to increase the recyclate input quotas (see 10% for contact-sensitive packaging in the European Packaging Ordinance), which are actually only limited for them; the political players could be put under so much pressure by the possible failure to achieve the prescribed input quotas that they will ultimately give in to the chemical industry's demand for increased quotas for chemical recycling.

This must be prevented by anchoring subsidiarity in technology promotion and quota recognition, which will inevitably lead to a restructuring of business models in the plastics industry. Market players would have to prove in the form of significant turnover, R&D and CapEx expenditure at the respective upstream technology level that they are fully committed as circularity service providers.

Example: petrochemical company A is almost exclusively involved in chemical recycling in 2030 = no funding and quota recognition; petrochemical company B is significantly involved along the LCA-optimized technology path in addition to chemical recycling, e.g. 30% of CapEx and R&D in mechanical recycling = company eligible for funding or recognition of the end products for achieving quota targets.

The Federal Government should therefore examine how such anchoring of chemical recycling (or other downstream recycling technologies) as a subsidiary technology can be implemented in a legally compliant manner in German and European legislation.

Mass balance procedure - "proportional allocation" or "polymer-only" instead of "fuel exempt"

The German government should work at European and national level to ensure that only "proportional allocation" or "polymer-only" are recognized as permissible forms of mass balancing. Not only does such an anchoring serve to prevent greenwashing and the reporting of recycled content that is only theoretically contained in the product; it is also a logical part of a subsidiary anchoring of downstream technology paths, in that the most ecologically sensible technology paths receive the strongest support.

Figure 3: Comparison of the different mass balancing methods. Source: CE Delft 2020.⁹

Although the chemical industry may see the recognition of fuel-exempt mass balancing as a prerequisite for investment in chemical recycling, such a statement puts the cart before the horse. The primary driver for the plastics industry in choosing "its" technology path should not be the establishment of chemical recycling, but rather the most environmentally friendly form of carbon recycling (in line with the guiding principle of the "circularity service provider for carbons"). If the German government wants to push ahead with this restructuring of the plastics industry, it should preferably focus on "proportional allocation" or "polymer only".

Demand #4:

Place absolute reduction of virgin plastic consumption as an independent goal at the beginning of the section, in line with Strategic Goal 1.

The German government should work at European and national level to ensure that only "proportional allocation" or "polymer-only" are recognized as permissible forms of mass balancing. Not only does such an anchoring serve to prevent greenwashing and the reporting of recycled content that is only theoretically contained in the product; it is also a logical part of a subsidiary anchoring of downstream technology paths, in that the most ecologically sensible technology paths receive the strongest support.

Demand #5:

Establish an "unlevel playing field" in favor of plastic recyclates.

Demand #6:

Examine a feed-in priority for mechanical recyclates (in the sense of subsidiarity-oriented technology promotion).

Demand #7:

Replace the concept of "complementarity" between mechanical and chemical recycling with the concept of "subsidiarity".

Demand #8:

Establish subsidiarity as a prerequisite for quota recognition and technology promotion.

Demand #9:

If and insofar as mass balancing is to be used at all for the calculation of recyclate content, then only recognition of "proportional allocation" or "polymers-only", not "fuel-exempt".

Demand #10:

Hold out the prospect of massive funding for Design 4 Circularity and the expansion of advanced mechanical recycling, given the superior environmental footprint of this circular economy technology.

Sources:

1) EU Commission 2022, Strategic Foresight Report “Twinning the green and digital transitions in the new geopolitical context”, accessible via this link (last accessed on 09.07.2024.)

2) see EurActiv 2022, “Green and digital, Europe’s twin transitions”, accessible via this link (last accessed on 09.07.2024.)

3) BKV 2021, “Milliardeninvestitionen ins chemische Recycling”, accessible via this link

4) see Beyond Plastics 2023 “Chemical Recycling - a Dangerous Deception”, accessible via this link (last accessed on 09.07.2024.)

5) Martin Brudermüller, Reiner Hoffmann, Henning Kagermann et al. Hrsg.; 2020, “Innovationen für einen europäischen Green Deal”, accessible via this link (last accessed on 09.07.2024.)

6) Ebd., S. 98.

7) see CE Delft 2023, Impact of allocation rules on chemical recycling, S.25 “A larger share of long-loop [= chemical]recycling technologies result in lower environmental benefits and reduced maximum recycling rates.“ accessible via this link (last accessed on 09.07.2024.)

8) IK Kunststoffverpackungen 2023, “EUVerpackungsverordnung: Lieferketten schützen - Rezyklateinsatz sinnvoll gestalten”, accessible via this link (zuletzt abgerufen am 09.07.2024; TecPart 2023, “Autos sind keine Verpackung”, accessible via this link (last accessed on 09.07.2024.)

9) CE Delft 2023, Impact of allocation rules on chemical recycling, S.4, accessible via this link (last accessed on 09.07.2024.)

This statement was written in German and translated with deepL.com.