A groundbreaking study from the University of Greenwich and international collaborators proposes an optimal policy roadmap for revolutionising the EU’s plastic recycling capacity, using cutting-edge system dynamics modelling to mitigate environmental and supply chain risks.
Amid rising global concern over climate change and material scarcity, the European Union faces a stark challenge: while it generates over 89 million tonnes of packaging waste annually, its domestic recycling capacity lags drastically behind, capable of processing just over 10 million tonnes.
Decades of reliance on exporting waste to countries like China, Malaysia, and Vietnam collapsed in 2018 with the imposition of global waste import bans. This disruption exposed a critical vulnerability: the EU’s recycling infrastructure was not built for circularity—it was built for outsourcing.
In a timely response, researchers from the University of Greenwich, in collaboration with Greenovation Solutions (UK) and Westcon-Comstor (US), have developed a dynamic model to forecast how different policy strategies can affect the EU’s capacity to recycle packaging waste.
Published in the Annals of Operations Research, their study employs system dynamics simulation to rigorously test innovation-driven, subsidy-based, and market-oriented policy scenarios.
Innovation-focused policies lead to long-term gains
Among the three policy types assessed, innovation-focused policies (e.g., R&D grants, tax relief for green tech development) emerged as the most impactful over time.
These policies increase recycling productivity by driving technological breakthroughs in material separation, sorting, and remanufacturing. The model demonstrates that such innovations lead to cost reductions, improve profitability, and stimulate capacity growth, outpacing all other policy types by 2040.
“Supporting innovation isn’t just about future-proofing; it’s about creating scalable, domestic systems that eliminate the need to ship our problems overseas,” explained co-author Dr Li Zhou of the University of Greenwich.
Subsidies provide immediate support but fade
Subsidy-focused policies—like tax incentives for recyclers or public funding for collection systems—show short-term benefits, but the research finds they quickly plateau. Without concurrent demand-side stimulation or innovation, such subsidies risk becoming economically inefficient and unsustainable over time.
“Subsidies are necessary for early-stage ecosystem support,” the authors argued. “But they must evolve in tandem with innovation and market maturity.”
Market-based mechanisms kickstart momentum
Interestingly, market-based policies—such as minimum recycled content mandates, Extended Producer Responsibility (EPR) rules, and public awareness campaigns—proved most effective immediately after a shock, like the 2018 China Waste Ban. These policies rapidly stimulate demand for recycled materials, prompting manufacturers to ramp up recycling input usage.
The study recommends an optimal policy mix allocating 84% of resources to innovation-focused policies and 16% to market-based policies, completely phasing out pure subsidies.
A blueprint for circular resilience
This research marks the first time such a broad combination of EU recycling policies has been assessed in a dynamic, long-term simulation model. Using data from 28 EU nations, the model provides actionable recommendations tailored to both developed and developing recycling economies. It accounts for real-world economic signals—like inflation, profitability, and cost structures—while simulating disruptions such as global bans and price shocks.
For policymakers and funding agencies, the implications are clear:
- Investing in green innovation ecosystems is paramount to achieving the EU’s 2030 target of recycling 70% of packaging waste.
- Short-term market shocks must be mitigated through responsive market-based policies, not temporary fixes.
- Tailored policy mixes based on local cost structures, waste volumes, and profitability indicators will yield the best results.
Driving the circular transition
With increasing scrutiny on environmental accountability, this study offers a science-backed policy guide to build resilient, circular recycling systems in the EU. It resonates with the broader ambitions of the European Green Deal and Circular Economy Action Plan, setting the stage for smarter regulatory frameworks and strategic innovation investment.
As the EU faces mounting pressure to close the loop on packaging waste, this research provides not just a diagnosis, but a dynamic prescription—grounded in systems thinking, economic realism, and technological foresight.
