Page 145 - CW E-Magazine (10-6-2025)

News from Abroad

AIMING FOR CIRCULARITY

Chemical recycling in Europe could take 20-30

years to achieve cost parity with virgin plastics

production: Report

Despite impending mandates and from a subsidy-reliant push to a
ambitious corporate targets, chemical demand-driven pull. That inflection
recycling in Europe remains nascent point could fundamentally shift the
mostly due to unattractive economics. economics, turning chemical recycling
A new report published by global con- into a competitive, market-driven
sultancy firm, Bain & Company, has solution,” said Mr. Porter.
revealed that the industry is worth over
€400-bn in cumulative capex and cost The report outlines three strategies
parity with virgin plastics production for plastics producers to become
could be achieved in 20-30 years. Plas- chemical recycling leaders:
tics companies now have a window of technologies across the recycling pro- * First, companies need to proactively
opportunity to be early movers and reap cess, from waste sorting to pre-treat- co-create offtake opportunities
material benefits. ment of waste. in close collaboration with value
chain partners while setting them-
Recycled polyolefins in Europe “Our analysis shows that chemical selves up for long-term advantage.
costs more than twice as much as virgin recycling could become competitive Early movers can lock in premium
polyolefins. Market forces alone are in- with virgin production once cumu- waste streams and serve high-value
sufficient to drive change as customer lative global volume reaches 650-mt customers, creating a virtuous cycle
demand is price sensitive and volumes of polyolefins recycled through pyro- of scale and performance. These
are too limited to generate substantial lysis, assuming a virgin price of €1,250 positions are hard to replicate once
cost benefits. per tonne and depending on gate fees established.
and broader market conditions,” said * Second, leading companies should
According to the report, policy Mark Porter, head of Bain & Company’s actively engage with regulators on
could play a significant role to close the global Chemicals practice. “This policy levers critical to their busi-
supply-demand gap. Like the sustaina- would take at least 20 to 30 years and nesses and help to materialise them.
ble diesel and aviation fuel mandates, by then recycled plastic would account Reframing public dialogue and percep-
European plastic companies could start for approximately 20-30% of total tion around the role of plastics is
small and gradually increase recycled plastic demand.” equally important, highlighting
material blending requirements. For both the performance benefits
instance, country-level or regional blend- Getting to cost parity with marginal and the sustainability potential of
ing mandates that increase chemical producers in Europe would require plastics when managed responsibly.
recycling market penetration by 1-2% cumulative global capital expenditures * Lastly, producers must be will-
annually could unlock over 15% share of minimum €400-bn in a base case, at a ing to be flexible and rewrite their
of the plastics market by 2040. This cumulative cost premium of ~€270-bn. playbooks. Leaders will experi-
pathway can deliver a smooth ramp-up That premium includes the sum of ment with new business models,
with manageable capital requirements, price premiums that would be paid by novel sourcing strategies, and un-
healthy returns, and minimal margin customers, regulatory mechanisms, and conventional partnerships. That
erosion or unintended substrate switch- margin investment by the value chain. could mean forming 10-year offtake
ing. Longer term, maturing techno- agreements with dynamic pricing
logies and accumulated operational “Moving the needle will require mechanisms – the kind of creative
experience will unlock cost efficiencies, a systems approach with regulatory moves that may be invisible from
eventually closing the gap with virgin support. Once scale reaches critical the outside but lay the groundwork
plastics. The industry is developing mass, chemical recycling can transition for future advantage.

Chemical Weekly June 10, 2025 145

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