For much of the past decade, “plastic-free” and "compostable" were the holy grail of consumer packaged goods (CPGs). These sustainable packaging materials promised a future where convenience no longer came at an environmental cost. However, in practice, no polymer fully free of plastic has met the performance demands of consumer goods that rely on long shelf life and durability.
Bioplastics fail to deliver on sustainability and scale
Most bioplastics, even those made from renewable feedstocks, behave like conventional plastics once discarded and only degrade under specific industrial conditions.
Some “plastic-free” coatings and additives for paper show promise for short shelf life or limited-use applications, but they account for a tiny fraction of global packaging. Roughly 40 percent of all plastics produced worldwide go into packaging, the majority of which must remain stable for years in storage and transit.
Current plastic alternatives address only the edges of this challenge. Compostable plastics such as PLA (polylactic acid, a bioplastic made from renewable sources like corn starch and sugar cane) and PHA (polyhydroxyalkanoates, a biodegradable bioplastic produced by microorganisms) were marketed as eco-friendly solutions, materials that could keep the benefits of conventional plastic without harming the environment.
That story is now falling apart.
A sea change for compostables
As governments tighten packaging regulations and waste operators enforce stricter standards, the compostable experiment is losing ground. PepsiCo and Bacardi’s PHA bottle projects, both announced in 2020, have not progressed publicly. Nestlé has quietly replaced compostable sachets with recyclable paper.
Tesco, the third-largest retailer in the world, has gone further, banning all compostable and biodegradable plastics, including PLA and PHA, for both branded and private-label products. The company’s packaging guidance cites poor recyclability and limited end-of-life options as the reason for the decision.
The retreat from compostables comes as several PHA manufacturers face financial distress, exposing the fragility of the sector. Although marketed as a natural alternative to plastic, PHA is legally defined as a plastic under all major regulatory frameworks, including the EU’s Single-Use Plastics Directive and comparable U.S. and UK legislation, as the polymer is created using industrial processes rather than occurring naturally.
This means PHA must comply with the same restrictions, labelling requirements, and recycling targets as conventional, synthetic plastics despite being home compostable and biodegradable—unlike PLA, which is only industrially compostable. Commercially, PHA remains in the early stages of adoption, with production volumes still limited and most announced projects stalled or cancelled without any viable end of life option at scale.
The infrastructure gap
The core problem is that compostables depend on an infrastructure that barely exists.
Across the EU, compostable packaging relies on an industrial composting infrastructure that remains largely underdeveloped and optimized for food waste, not packaging. According to Eunomia’s 2024 Cost-Benefit Analysis of Compostable Plastics, existing UK infrastructure ‘does not, at large, currently accept’ compostable packaging, with most compostables ending up in residual waste rather than composting streams due to limited processing capacity and collection systems.
Composting certification schemes such as EN 13432 and ASTM D6400 ignore operational realities and only add to the confusion. These standards are lab-based, not infrastructure-based, and do not guarantee acceptance—resulting in the majority of rigid packaging labelled “compostable” ultimately ending up in landfills.
Even where industrial composting facilities exist, packaging that fails to disintegrate within required timeframes is typically screened out and sent to landfills, where it decomposes anaerobically, emitting methane, a greenhouse gas with a global warming potential of ~28 times that of CO2 over 100 years, and about 80 times over 20 years.
At the household level, there is very little reliable data on penetration of home composting and virtually none on packaging acceptance, but available studies identify low uptake and frequent concerns over contamination or incomplete breakdown.
Crackdown on greenwashing claims
Regulators have begun closing the gap between claims and reality.
In 2021, the European Commission’s Green Claims Sweep found that 42 percent of environmental claims on consumer products were false or misleading. The forthcoming Green Claims Directive will allow fines of up to four percent of annual revenue for companies that use unverified terms such as “biodegradable” or “plastic-free.”
In the United States, California’s SB 343 already bans packaging from carrying compostable or recyclable labels unless it is recovered at scale. Similar scrutiny is spreading across other markets.
What once earned brands praise for innovation now exposes them to legal and reputational risk.
Regulatory incentives favour true recyclables
Economic incentives are also shifting as a result of the new policy. Extended Producer Responsibility (EPR) programs across the UK and EU will be fully enforced starting in the 2026/2027 reporting year, introducing higher, modulated fees for packaging that cannot be recycled through curbside systems, incentivizing businesses to use more sustainable materials.
The UK’s Plastic Packaging Tax, in effect since 2022 and set to rise to about £223 per ton in 2025, adds another cost for materials with less than 30 percent recycled content.
Compostables are among the hardest hit because they cannot be counted as recycled or recyclable.
The return of paper and pulp
The collapse of compostables has shifted attention toward materials that fit existing recycling systems rather than trying to create new ones. Paper and molded fiber have been the main beneficiaries.
Paper remains the most recycled packaging material globally, with European recovery rates near 75 percent, and strong consumer trust. A 2025 Two Sides survey found that most Europeans view paper and cardboard as the most sustainable option, ahead of glass, plastic, and metal.
Fiber’s growth has been driven by this perception and new investment aimed at scaling production and improving barriers, but challenges remain. Capital costs are high, and most manufacturers are only now moving from pilot to commercial runs.
With EPR fees, plastic taxes, and retailer policies converging, fiber-based packaging is attracting serious investment and could reach broader market deployment by 2026.
What’s next for sustainable packaging
The search for sustainable packaging does not end with fiber. Aluminum is regaining attention for its recyclability and closed-loop systems, while bio-based polymers such as PEF are emerging as lower-carbon alternatives to petroleum-based PET. Reuse systems are also returning in pilot programs as companies and cities move toward a circular economy and away from single-use packaging.
While each approach has its limitations, all reflect a common lesson from compostables: success depends on working within real-world collection and recycling infrastructure, not theoretical ones, and achieving viable economics and performance at scale.
Alexis Phillips is a cleantech writer and editor with a master's in Renewable Energy Engineering and nearly a decade of experience covering the energy transition. She has worked with more than 100 clean energy companies—including Sungrow, Fluence, Aurora Solar, EVLO, and Clean Energy Associates—and her ghostwriting has appeared in pv magazine, PV Tech, and Solar Power World.