The nascent chemical recycling industry – in which plastics are broken down into oils or constituent monomers to be remade into new materials – is contracting across Europe and the US as recyclers call for policy stability to make the industry investable.
Recent closures, postponements or project cancellations ‘reflect the broader structural crisis facing the whole of Europe’s plastics recycling industry (both mechanical and chemical),’ says Maria Vera Duran, policy director at industry body Recycling Europe.
The result has been a slowdown in growth of plastic recycling overall, and a surge in exports of sorted plastic waste. Meanwhile, 70% of EU plastic waste goes to incineration or landfill, and almost 20% of recycled plastics being converted into products in the EU rely on imported feedstocks, according to a report from Plastics Europe. Chemically recycled materials made up just 0.2% of plastics European plastics production in 2024.
‘The underlying technology does actually work. It’s getting to the point where yields are making sense as well,’ says Lee Hodder, managing director for carbon capture and circular solutions at Viridor. He says that Viridor’s Quantafuel process achieved around 70–75% yield of pyrolysis oil by weight, from plastic going into its process. But last month Viridor closed its three Quantafuel chemical recycling plants across Scandinavia, saying the sector was not commercially viable.
You want certainty to be able to underpin investments, because you’re talking of hundreds of millions of dollars
Earlier this year, a UK chemical recycling pioneer, Plastic Energy, went into administration. It has two operational plants in Spain (that are not part of the insolvency process) as well as joint ventures to run plants located at petrochemical sites owned by Sabic in the Netherlands and TotalEnergies in France.
Joint administrator, Geoff Rowley, said that while the company had developed ‘market leading’ recycling processes, it had suffered from a European market downturn and had been unable to operate sustainably. He said the goal was to sell the group’s primary assets including its intellectual property, patents and shares in the joint ventures.
When Chemistry World spoke to Plastic Energy’s managing director Ian Temperton late last year, pyrolysis oil was expensive – trading at around twice the price of the equivalent fossil feedstock. The industry requires financial and regulatory support to scale to a point where it becomes competitive with fossil materials.
Analysis by the Fraunhofer Institute for Environmental, Safety, and Energy Technology suggests that – before Quantafuel’s closure – Europe’s chemical recycling capacity was 289,000 tonnes per year, with 65 projects in the pipeline. However, nine of those projects have already been cancelled.
While key policies such as the EU’s Packaging and Packing Waste regulation (PPWR), extended producer responsibility (EPR) and landfill bans are all coming down the track, Hodder says a lack of consistency in their application and an uncertain pace of implementation is challenging.
‘We invested ahead of regulation, but when you see uncertainty playing out in the market, it’s difficult to just continue to commit spending unless you know that there’s going to be a real firm inflection point. The timing is the biggest uncertainty.’
‘You want certainty to be able to underpin investments, because you’re talking of hundreds of millions of dollars for these types of investments, and then on the other side, you’ve got off-takers wanting more certainty from regulation before they commit to multi-year contracts.’
The EU has adopted new rules to allow chemically recycled content to be used in plastic bottles for drinks, accounted for using a mass balance approach that tracks total inputs and outputs of recycled material, rather than requiring a full chain-of-custody for recycled materials – something the industry has been asking for.
But Finnish chemical recycler, Neste, says the rules mean existing refineries can’t be used. A spokesperson said: ‘this approach must change to be fit-for-purpose for other plastics, where refinery upgrading steps are vital for handling contaminants which prevent the use of recycled feedstock at scale in steam crackers.’
You want great availability of plastic waste streams, but you also want cheap energy, and proximity to chemical processing markets
‘Policy is particularly important on the feedstock (the waste plastic) side, to be able to drive changes to do greater collection and sorting of waste. And I think that is lagging,’ says Steve Mahon, chief executive of Mura Technology. Indeed, in mid-July, the UK government announced a 3-year delay to mandatory collection of films and flexible packaging in England.
‘You want great availability of plastic waste streams, but you also want cheap energy, and proximity to chemical processing markets,’ he adds. So when Dow announced last year that it would close its steam cracker at Böhlen in Germany, ‘it made no sense’ to develop a planned chemical recycling plant on the site.
Mura’s first plant will come on stream in Wilton, UK later this year. The process uses supercritical water to break down post-consumer waste streams such as flexible films and multi-layered plastics (that would otherwise be incinerated), with a 98% conversion rate. Its output will be processed on the European continent.
Further expansion is planned in Singapore, where although energy process are similarly high ‘there is a lot of government motivation to drive higher recycling rates’ and a desire to grow a more ‘premium’ chemical industry to compete with China, notes Mahon.
Recycling Europe says the EU risks losing industrial capacity before the PPWR can deliver its full benefits. It’s calling for mandatory and harmonised ‘eco-modulation’ mechanisms, where EPR fees are adjusted according to criteria such as recyclability and use of EU-produced recycled materials.
Duran says France has recently implemented a system providing EPR bonuses for packaging containing recycled post-consumer plastics – provided they meet specific traceability, environmental performance and circularity requirements – and wants to see such bonus schemes scaled up at European level.
In the US, where recyclers face the same pressure from cheap fossil-based imports, the Department for Energy has cancelled grants for chemical recycling projects because the technologies were not judged to be ‘economically viable’, while two plants are reported to have closed over environmental concerns.
The EU aims to address pollution concerns by developing sustainability criteria for plastic recycling technologies.
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