First off, I’ve seen those eco-friendly packing peanuts out and about so they clearly are being mass-produced.
That said, these materials are often inferior to existing thermoplastics which are already recyclable. More expensive, weaker, dissolve in water, and so on. I mean, if your sandwich bag dissolved into your sandwich, it wouldn’t be a very good sandwich bag. In general, the more constraints you put on a material, the less optimal it will be for any given thing. If it has to be water-soluble, then odds are it will not be the best material in other ways.
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