Currently, recycling polyolefins - a prevalent category of thermoplastics - costs over twice as much as producing virgin materials in Europe. Market dynamics alone are not enough to drive significant change, as consumer demand is highly sensitive to pricing, and the volumes are too limited to yield substantial cost advantages.

Source: Recycling-Magazine

Policy could play a crucial role in addressing this imbalance. Similar to the mandates for sustainable diesel and aviation fuel, European plastic manufacturers could start with modest requirements for blending recycled materials and gradually increase them. For example, implementing country-level or regional blending mandates that boost chemical recycling market penetration by 1–2% annually could potentially capture over 15% of the plastics market by 2040. This approach allows for a smooth ramp-up with manageable capital investment, healthy returns, and minimal margin erosion or unintended substrate switching.

In the long run, the maturation of technologies and accumulated operational experience will lead to cost efficiencies, ultimately bridging the gap with virgin plastics. The industry is advancing technologies throughout the recycling process, from waste sorting to pre-treatment methods.

Achieving cost parity with marginal producers in Europe would necessitate cumulative global capital expenditures of at least €400 billion in a base case scenario, with a cumulative cost premium of about €270 billion. This premium encompasses the total price premiums that customers would pay, regulatory mechanisms, and margin investments along the value chain.

The report identifies three key strategies for plastics producers aiming to become leaders in chemical recycling:

Proactive Co-Creation of Offtake Opportunities: Companies should work closely with value chain partners to create collaborative offtake opportunities that position them for long-term success. Early movers can secure premium waste streams and cater to high-value customers, fostering a virtuous cycle of scale and performance that is difficult to replicate.

Engagement with Regulators: Leading companies must actively engage with regulators regarding policy levers that are vital to their operations and assist in bringing them to fruition. It's equally important to reshape public dialogue and perceptions around the role of plastics, emphasizing both their performance benefits and sustainability potential when managed responsibly.

Flexibility and Innovation: Producers must demonstrate a willingness to adapt and revise their strategies. Leaders should explore new business models, innovative sourcing strategies, and unconventional partnerships. This could involve establishing 10-year offtake agreements with dynamic pricing mechanisms—creative moves that may not be immediately visible but lay the foundation for future competitive advantages.