Closing the Loop: How to Really Build a Circular Economy for Plastics in Packaging

Phin and Darby, dogs of NOVA Chemicals’ Director of Mechanical Recycling Alan Schrob, enjoy a moment with recyclable dog food packaging — a real-life example of how value chain collaboration is advancing a plastic circular economy. Image courtesy of. NOVA Chemicals.

How value chain collaboration is advancing a plastic circular economy.

By John Avolio, Value Chain Manager at NOVA Chemicals

Transitioning from a linear to a circular economy for plastics is one of the most complex challenges facing the packaging industry. The traditional “take-make-waste” model, where raw materials are extracted, converted into products, and discarded after use, is no longer sustainable in the face of plastic waste concerns, emerging recycling regulations, and shifting consumer preferences. In a circular plastics economy, materials are recirculated through the value chain at their highest possible utility and value. This shift is massive in scope, requiring a complete transformation of how plastic is viewed at the end of its initial use as well as coordination among governments, resin producers, converters, brand owners, retailers, and consumers. But what does a truly closed loop system for plastics look like today and how close are we to achieving it?

For plastic packaging, two strategic focus areas have emerged in legislation and corporate action: designing packaging for recyclability and incorporating post-consumer recycled (PCR) materials into new products. The industry has made measurable progress on both fronts. However, building fully circular systems, particularly those that return post-consumer recycled (PCR) plastics into high-value applications like food contact packaging, remains challenging due to current waste and recycling practices and logistical difficulties.

Designing for Recyclability

Designing packaging to be recyclable involves aligning material selection and packaging formats with existing recycling infrastructure. Rigid plastics made with high-density polyethylene (HDPE) and polyethylene terephthalate (PET) have the highest recycling rates in the U.S., benefitting from mature collection and processing systems.¹ In contrast, flexible packaging lags behind due to the lack of curbside collection programs and multi-material structures that are difficult or impossible to separate for reprocessing.

Technical innovation in resin technology is driving improvements for recyclable flexible films. New options for sealant and barrier layers are enabling multi-layer structures to transition to mono-material packages. For example, stand-up pouches that traditionally relied on PET/PE laminates can now be formulated as all-PE structures that can comply with store drop-off film recycling programs.

Despite these advancements, transitioning to mono-material packaging is not always straightforward for manufacturers. Some resins used in recyclable film constructions have different processing characteristics and run differently on packaging lines. From modified sealing temperatures to slower throughput on form-fill-seal equipment, implementing these structures can require new equipment or line modifications.

Brand owners can proactively be a part of the solution by partnering with recyclers and resin suppliers to reclaim their own post-use plastics. Image courtesy of NOVA Chemicals.

Incorporating PCR Plastics

To further support a circular economy, many packaging laws are introducing PCR content mandates. Incorporating PCR often starts with blending recycled resin with virgin material. This approach can make the transition more manageable from a processing standpoint while allowing companies to incrementally increase recycled content over time.

While data from the Ellen MacArthur Foundation’s Global Commitment shows that PCR usage has nearly tripled since 2018 among participating companies, the degree of progress varies significantly by sector. Cosmetics and personal care brands are leading the way, with over 30% PCR content in some product lines, but the food sector, constrained by regulatory requirements, are averaging only 10% PCR incorporation.²

The gap is largely due to the high strict standards for food-contact materials. The U.S. Food and Drug Administration (FDA) mandates that food-grade PCR meet the same safety and purity standards as virgin plastics. As a result, only materials with a fully traceable chain of custody and compliant reprocessing methods can qualify for these high-value applications.

Despite the lack of supply, demand for food-grade PCR continues to grow. Research from Smithers reports that the market for food-grade PCR plastic has grown over 9% annually since 2019.³

Barriers to Food-Grade PCR Production

The cornerstone of a circular economy is value retention, ensuring that recovered materials are returned to the highest possible use. The recycling industry faces challenges when it comes to producing PCR plastics that can be used in high value applications, particularly for food contact packaging. In order to produce mechanically recycled food contact PCR plastic, a strict chain of custody must be maintained from production through disposal. The recycling process itself must be reviewed by the FDA to ensure quality management and prevent cross contamination with other recycled materials.

The chain of custody requirements make it impossible for store drop-off or curbside recycling programs to meet the standards for mechanically recycled food-grade PCR. While advanced recycling technologies can remove the chain of custody barriers to food-grade recycled plastics, this technology is not yet as mature as mechanical recycling and has provided limited outputs to date. Advanced recycling processes also face different regulatory challenges.

The fact remains that demand for PCR is growing rapidly due to expanding extended producer responsibility (EPR) regulations and corporate sustainability goals. Even if all flexible films from consumer products were able to be collected for recycling, the mandate for chain of custody documentation would prevent mechanically recycled films from being reused in food-grade applications.

Unlocking Untapped Potential

A promising but underutilized source of clean, traceable flexible films exists in the operational waste streams of retailers and distribution centers. Back-of-house plastics such as pallet stretch wrap, shrink film, and protective overwraps are typically made from high-quality PE and are used in tightly controlled environments. These materials are not only consistent and traceable, but they also avoid many of the contamination risks associated with post-consumer waste.

The collection of these films is where difficulties arise. Many companies already sell their plastic film waste to third-party recyclers or waste haulers for a profit. Facilities may have waste management contracts that bundle film disposal with other services. In such cases, separating these materials for food-grade PCR recovery requires both operational changes and strategic alignment. Transporting collected films to facilities capable of producing food-grade PCR resin would also require the development of new logistics networks.

But the resources to successfully recycle these films into high value applications do exist. The key to unlocking the full potential of back-of-house films is brand owners who take the initiative to research recycling partners and strategically select partners that prioritize reusing plastics to their highest possible value.

In order to produce mechanically recycled food contact PCR plastic, a strict chain of custody must be maintained from production through disposal, and the FDA must review the recycling process. Image courtesy of NOVA Chemicals.

Moving From Aspirations to Action

The foundation for circularity in plastic packaging is already under construction. Numerous studies, partnerships, and projects have shown that a closed loop mode is not only technically feasible, but also economically viable with a proactive and coordinated approach.

Brand owners must first learn to revalue their internal plastic materials. Too often, high-quality films are downcycled into lower value products such as construction materials or disposed of in landfills. The films used in shipping and operations can and should be recycled for more valuable end markets like food packaging.

Rather than waiting for the market to supply high quality PCR to help make more sustainable packaging, brand owners can proactively be a part of the solution by partnering with recyclers and resin suppliers to reclaim their own post-use plastics. It is not enough to only divert waste from landfills. By signing responsible contracts that ensure these important plastic resources are reused at their highest value, brands and retailers can directly contribute to the creation of reliable, high quality PCR feedstocks that are suitable for reuse in their own brand products.

Developing reverse logistics infrastructure is another essential piece of the puzzle. Brands must work with reclaimers, recyclers, and transportation providers to establish systems for film collection, tracking, and delivery to recycling facilities. This includes building data protocols that ensure traceability, establishing reliable transportation networks, and integrating circular principles into supply chain planning.

Above all, leadership must drive alignment across various departments and functions and provide the resources to operationalize circularity. Beyond packaging and sustainability teams, facilities and warehousing staff must be able to adapt operations to allow for film segregation and procurement may have to revisit existing waste management and recycling contracts.

The circular economy for plastics is not a theoretical model. It is a rapidly developing framework with the power to reshape the packaging landscape. Designing packaging for recyclability and incorporating PCR content are interconnected strategies that require a holistic understanding of materials, manufacturing, and supply chain dynamics.

The greatest opportunities for progress can be found in the areas where technical and regulatory barriers remain the highest. Flexible films and food-contact PCR materials are two of the most challenging aspects of building a plastics circular economy, yet they also offer the most transformative potential. Creating closed-loop systems in these sectors will require unprecedented collaboration, capital investment, and regulatory alignment. But as pilot programs evolve into permanent supply chains and innovations in material science continue to accelerate, the vision of circular plastic packaging is moving from aspiration to achievable reality.

About the Author

John Avolio is the polyethylene value chain manager at NOVA Chemicals. He has more than 20 years of experience in the packaging, plastics and chemicals industry. He is passionate about helping customers, partners and brand owners design sustainable packaging. He earned his B.S. in Plastics Engineering from The Pennsylvania State University (Behrend campus). Visit: https://www.novachem.com

References:

1 EPA Statistics: https://www.epa.gov/system/files/documents/2024-12/financial_assessment_of_us_recycling_system_infrastructure.pdf

2 Ellen MacArthur Foundation Report: https://content.ellenmacarthurfoundation.org/m/528a7cd095787dec/original/The-Global-Commitment-2024-Progress-Report.pdf

3 Smithers Research: https://www.smithers.com/resources/2025/march/food-grade-pcr-to-reach-1-6-million-tonnes