A new report by Bain & Company has highlighted a significant growth opportunity for the chemical recycling industry in Europe, projecting that it could reach cost parity with virgin plastics production within the next two to three decades.
This comes as the industry has a current valuation of over €400bn ($455.5bn) in cumulative capital expenditures.
The report emphasises that despite the currently high costs of recycling polyolefins in Europe – more than double the production costs of virgin polyolefins – there is a potential window for plastics companies to become early movers in the market.
Policy interventions could be instrumental in bridging the supply-demand gap, similar to mandates for sustainable diesel and aviation fuels. The report suggests that the incremental blending of mandates could significantly increase chemical recycling market penetration, potentially achieving over 15% of the plastics market share by 2040.
Bain & Company’s report outlines three key strategies for plastics producers to lead in chemical recycling. Firstly, companies should proactively collaborate with value chain partners to create offtake opportunities, securing premium waste streams and high-value customers. These early positions could be difficult for competitors to replicate.
Secondly, industry leaders are encouraged to engage with regulators to influence policies that support their business objectives and reshape public dialogue around plastics, emphasising their sustainable potential when managed responsibly.
Lastly, the report advises producers to be adaptable, suggesting they experiment with new business models, sourcing strategies, and partnerships such as ten-year offtake agreements with dynamic pricing, to lay the foundation for future success.
As the industry matures, advancements in technology and operational experience are expected to drive cost efficiencies.
Achieving cost equivalence with Europe’s marginal producers would necessitate global capital investments of at least €400bn in a base scenario, with an additional cost premium of around €270bn. This premium encompasses the aggregate of price surcharges paid by consumers, regulatory frameworks, and investment in margins by the value chain.
Bain & Company global chemicals practice head Mark Porter said: “Our analysis shows that chemical recycling could become competitive with virgin production once cumulative global volume reaches 650 million metric tons [tonne] of polyolefins recycled through pyrolysis, assuming a virgin price of €1,250 per metric ton and depending on gate fees and broader market conditions.”
