The use of plastics in products and packaging is growing. At the same time, the lifespan of packaging is short and consequently plastic waste volumes are growing in Finland and globally. Although separate collection and recycling of plastic packaging waste exists in Finland, it needs to be strengthened to reach the European Union’s targets. The separately collected plastic waste is mechanically recycled, but the recycling capacity is small, as is the process’s yield of secondary polymers. Hence, a large share of plastic packaging waste remains being recovered for energy. In our study, we first apply material flow analysis (MFA) to identify different routes of plastic packaging waste in Finland, and then we apply life cycle assessment (LCA) to quantify greenhouse gas (GHG) emissions of the current system and of alternative scenarios based on improvement measures. Domestic GHG emissions of the studied system were estimated to be 178 kt CO2e. Net GHG emissions including exports and credits from avoided production were estimated to be 155 kt CO2e. The results of the scenario assessment indicate that combining more measures offer significantly greater potential to reduce the system’s climate impacts, compared to individual measures. The results are complemented by a sensitivity analysis, helping with the interpretation of the results, understanding modelling challenges, and supporting robust decision-making. The study contributes to academic literature in two ways; it presents a robust, yet flexible way to integrate scenario-based, future-oriented modelling techniques into decision-making, and it assesses the various possibilities to improve the plastic recycling system to identify the quantitative improvement potential.