Responding to the Crisis in the Recycling Industry Amid the Surge of Low-Priced Plastics
The European Union (EU) announced on December 23 (local time) that it will expand support for companies in energy-intensive industries, such as steel and chemicals, which have a high proportion of electricity use in their production processes, in order to prevent these industries from relocating overseas.
The European Commission has decided to provide additional state subsidies to companies in sectors such as steel and chemicals that are already receiving support, and to include other industries such as batteries and glass as eligible for assistance. Specifically, the government will subsidize the carbon emission costs included in electricity bills, thereby indirectly reducing the cost of carbon emission allowances that companies must pay. For companies already eligible for support, the subsidy for indirect electricity costs will be increased from a maximum of 75% to 80%.
The EU is concerned that the price of carbon emission allowances-a tool for putting a price on greenhouse gases to encourage carbon reduction-has risen in recent years, increasing the risk that energy-intensive industries may relocate to countries outside the EU where emission regulations are less strict. The Commission stated, "This guideline aims to reduce the risk of 'carbon leakage,' in which companies move production facilities to countries with weaker regulations or replace EU products with more carbon-intensive imports."
Additionally, the EU has decided to strengthen controls on imports of low-priced plastics from third countries such as China, in order to revive the domestic recycling industry, which is struggling due to an influx of cheap plastic. As demand for recycled plastics has recently declined and cheap imports have surged, recycling plants within the EU have been shutting down one after another. Last month, six countries-including France, the Netherlands, and Spain-sent a joint letter to the EU, urging measures such as expanding incentives for the use of recycled materials and responding to low-priced imported plastics.
The EU also plans to standardize waste recycling regulations across its 27 member states to stimulate recycling trade, and to increase investment in technologies that recycle plastics by heating them at high temperatures. Jessica Roswall, the European Commissioner for Environment, stated that the domestic recycling industry is in a serious crisis, saying, "It is important to make changes now. There is too much plastic coming in from third countries."
Commissioner Roswall pointed out that over the past year and a half, 10 recycling plants have closed in the Netherlands. Across the EU as a whole during the same period, about 1 million tons of recycling facility capacity has been shut down, which is equivalent to France's annual recycling production.
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