The Economics of Plastics
The Economics of Plastic Recycling
Why only some plastics are profitable to recycle, how oil prices affect recycled plastic demand, and why India recycles PET bottles at high rates.
Not all plastic is worth recycling.
Valuable plastics
- PET bottles: widely collected and recycled.
- HDPE containers.
Low-value plastics
- Thin films, multilayer packets and mixed plastics are costly to recycle.
India’s PET success
India recycles a high share of PET bottles, often estimated at around 80 to 90 percent, largely thanks to informal waste pickers and scrap dealers.
Oil price effect
- When oil prices fall, new (virgin) plastic becomes cheaper than recycled plastic.
- Recycled plastic demand then falls.
Mandated recycled content
India’s rules require packaging to include rising shares of recycled plastic, creating demand.
Recycled PET uses
Polyester fibre for clothes and carpets, and food-grade bottles (approved by FSSAI in recent years).
Economic view
Recycling works when the value of material exceeds collection and processing costs.
A waste picker collects PET bottles, sells them to a scrap dealer, who sends them to a factory that turns them into polyester fibre for T-shirts.
Only some types have enough value.
- PET and HDPE are valuable to recycle.
- Films and multilayer plastics are hard to recycle.
- India recycles a high share of PET bottles.
- Low oil prices make recycling less competitive.
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