The Packaging and Packaging Waste Regulation 2025/40 (PPWR) will begin rolling out from August 2026, introducing stricter requirements for packaging recyclability, recycled content, transparency, and producer responsibility across the EU. Chemical recycling is expected to play an important role in helping companies comply with these rules by enabling difficult-to-recycle materials, such as multilayer packaging and mixed plastic waste, to be processed into valuable recycled feedstocks. The regulation also establishes ambitious recycled-content targets through 2040, strengthening the case for mass balance accounting approaches that support chemically recycled materials. IDTechEx believes these regulatory changes are likely to be a major driver for the growth and adoption of chemical recycling technologies in the coming decade.
Beginning its phased rollout in August 2026, the Packaging and Packaging Waste Regulation 2025/40 (PPWR) will replace the Packaging and Packaging Waste Directive (PPWD) and reshape the European packaging landscape. Through a wide-ranging set of measures focused on circularity, transparency, and accountability, the regulation seeks to drive systemic change across the plastics value chain. The new IDTechEx report "Chemical Recycling and Dissolution of Plastics 2027-2037: Technologies, Players, Markets, Forecast" expects regulation to be a major driver in the adoption of chemically recycled plastics.
At the heart of these measures are three key objectives:
- Reduce plastic waste by 15% in the EU by 2040 (compared to 2018 levels)
- Improve recyclability of packaging by setting clear design requirements and binding recyclate quotas
- Standardize the internal market by replacing different national guidelines with common EU wide laws
From August 12, businesses will need to meet a number of important PPWR requirements. These include complying with PFAS and heavy metal restrictions, registering under Extended Producer Responsibility (EPR) schemes in all relevant member states, and operating reuse systems for existing reusable packaging. Companies will also be required to improve transparency on packaging by identifying the company responsible for placing the packaging on the EU market and maintaining an EU Declaration of Conformity to verify regulatory compliance.
EPR fees encourage sustainable packaging design. Source: IDTechEx
Additional requirements will be introduced in phases through to 2040, including minimum recycled content targets, mandatory Digital Product Passports accessible via QR codes, and stricter recyclability requirements for packaging.
Chemical Recycling Technologies Could Move the Goalpost for 'Recyclable' Packaging
Under the EU Packaging and Packaging Waste Regulation (PPWR), packaging placed on the market must be recyclable from 1 January 2030. Recyclability is assessed through performance grades, and packaging must achieve at least Grade C (equivalent to ≥70% recyclability). From 2038 Grade C packaging is no longer permitted and all packaging must be at least Grade B (≥80% recyclability). While these requirements may seem to necessitate significant packaging redesigns, potentially affecting product performance, market appeal, and costs, chemical recycling has the potential to ease this trade-off through changing what is considered recyclable.
The biggest recycling challenges are typically posed by multilayer packaging and mixed plastic waste streams. Materials that combine plastic, paper, metal, and adhesive layers are difficult to process using conventional mechanical recycling, while plastics from different applications often contain incompatible additives that limit their recyclability and value in secondary markets.
However, one of the greatest advantages of chemical recycling technologies is their ability to process multilayer waste and tolerate most common additives. Technologies such as depolymerization and dissolution simply extract the monomer and polymer respectively, effectively ignoring the presence of all other materials, while technologies such as pyrolysis, hydrothermal liquefaction (HTL), and gasification return most carbonaceous materials to liquid hydrocarbons or gaseous chemical building blocks, again subverting concerns around contamination.
IDTechEx's "Chemical Recycling and Dissolution of Plastics 2027-2037: Technologies, Players, Markets, Forecast" provides a deep dive into each of the aforementioned advanced recycling technologies, discussing the merits, challenges, and the players at the forefront of commercialization and scaling.
Mass balance approaches to recycled content reporting
The PPWR establishes minimum recycled content targets for all plastic packaging. These requirements apply to the plastic components of packaging and are evaluated on an annual, plant-wide average basis rather than for each individual package. The table below outlines the minimum recycled content thresholds set by the regulation.
Packaging type | 2030 minimum | 2040 minimum |
Contact-sensitive PET packaging (expect single-use plastic bottles) | 30% | 50% |
Contact-sensitive packaging (non-PET) | 10% | 25% |
Single-use plastic bottles (PET) | 30% | 65% |
Other plastic packaging | 35% | 65% |
Source: Regulation (EU) 2025/40 on Packaging and Packaging Waste (PPWR), EUR-Lex. Tabulated by IDTechEx
This plant-level approach strengthens the case for mass balance approaches, which allocate recycled content based on the mix of materials entering a facility rather than the physical composition of individual outputs. While this can be applied to mechanically recycled materials, it is particularly important for chemical recycling, where recycled feedstocks are often integrated into existing petrochemical value chains. ISCC certification schemes have further strengthened this pathway through fuel-exempt mass balance models for pyrolysis oil, ensuring that recycled-content credits are directed to plastics and chemical products rather than fuel outputs. As PPWR recycled content targets become increasingly ambitious, requiring recycled material to account for more than half of many packaging types by 2040, maintaining performance and appearance with conventional recycled plastics may become more challenging.
Chemical recycling offers a compelling solution, producing virgin-quality materials while enabling manufacturers to meet recycled content requirements without compromising product performance, quality, or functionality.
IDTechEx's "Chemical Recycling and Dissolution of Plastics 2027-2037: Technologies, Players, Markets, Forecast" provides a comprehensive overview of the global chemical recycling market, covering regulatory landscape and the full value chain from feedstock sourcing and collection through to recycling technologies, product outputs, and end-use applications.
For more information on this report, including downloadable sample pages, please visit www.IDTechEx.com/ChemicalRecycling, or for the full portfolio of research available from IDTechEx, see www.IDTechEx.com.
