Advanced recycling technologies still thriving despite mounting criticism, Rabobank finds

25 Oct 2021 --- Advanced recycling continues to flourish in 2021, despite criticism from NGOs and media reports challenging the cost-effectiveness and environmental performance of these technologies. The increasing market activity has been documented in Rabobank’s latest report on advanced recycling. 

Many see advanced recycling as crucial to establishing a circular plastics economy. Advanced recycling technologies split polymer chains, converting hard-to-recycle plastics into crude oil, naphtha or fuels.

The Dutch financial services company has monitored “plenty of activity” in 2021, including traceability solution trials, new plant announcements, partnerships, acquisitions and equity stakes. There are also new players entering the industry, especially in Asia.

PackagingInsights explores the proliferation of advanced recycling activity with Susan Hansen, global strategist for food packaging and logistics at Rabobank.

In March, Rabobank predicted advanced recycling plants will double to around 140 plants globally by 2025, with a combined capacity of 3-4 million metric tons. Since these estimations were made, the speed of activity has increased even further.

“The [new plant] announcements since March are mind-boggling,” notes Hansen. “There’s been 75-80 additional announcements against what we saw in March, adding to the 140 we have already tracked.”Susan Hansen, global strategist for food packaging and logistics at Rabobank.

Notably, the new plant announcements include PureCycle Technologies’ intention to build 50 additional polypropylene (PP) recycling facilities worldwide.

Asia accelerates activity
Rabobank has monitored accelerated activity in Japan and South Korea. Companies like Mitsui (Japan), SK Geo Centric (South Korea) and Kumho Petrochemical (South Korea) have formed partnerships with technology companies to set up advanced recycling plants, primarily in their home countries.

“South Korea and Japan are very concerned with [environmental] sustainability, especially energy transition and resource scarcity,” explains Hansen. “It is the philosophy in these countries [driving advanced recycling].”

SK Geo Centric is Asia’s “most ambitious investor” in advanced recycling technologies, securing a broad range of investments and partnerships during 2021. The company recently announced its ambition to become “the world’s largest urban oil field company using plastic waste.”

Formerly SK Global Chemical, SK Geo Centric is “betting on many horses” in the advanced recycling industry, adds Hansen. The company’s “green company” goals would require it to recycle 100% of its product by 2027, equivalent to around 2.5 million metric tons of plastic waste.

Taking on the critics
Rabobank highlights there are many opponents to advanced recycling. Criticisms range from the technologies being too expensive and still unproven to “worse-than-advertised” environmental impacts and delayed investments.

In the US, greenwashing concerns are common, with opponents suggesting advanced recycling serves as an expensive circumvention for waste-to-energy treatment.Recycling systems explained (Infographic credit: Rabobank).

Major players have faced reputational damage and share price falls as a result of public criticisms. For example, Loop Industries was “seriously dented” after Hindenburg Research published a damning report, leading the company to hire advisors to counter the report’s allegations.

Similarly, the research investment firm also challenged PureCycle Technologies, “questioning the management’s integrity and accusing the company of inflating projection about its doubtful technology,” Rabobank recalls. PureCycle Technologies’ share price dropped by almost 40% the day the report was published (Nasdaq).

“Advanced recycling companies also hire their own experts to prove their technology is working and the greenhouse gas performant is superior [to existing solutions], with high yields,” Hansen tells PackagingInsights.

“They're also very successful in forging partnerships, teaming up with many different kinds of companies. Collaboration also adds credibility to these projects – you can see some very respected companies believe in these technologies.”

Despite the criticisms, both Loop Industries and PureCycle Technologies are increasing their advanced recycling investments. Loop Industries made what Rabobank refers to as a “remarkable comeback” after last year’s controversy, announcing plans to build another PET waste plant in Canada.

Meanwhile, PureCycle Technologies plans to invest US$440 million in a new “cluster location” in the US.

Turning up transparency
In response to traceability concerns, advanced recycling companies are increasing their focus on creating more transparent supply chains, notes Rabobank.

The bank highlights the example of the Trackcycle solution, a partnership between Circulor, Total Energies and Recycling Technologies to develop a blockchain-enabled traceability solution for hard-to-recycle plastics.The philosophy of improved environmental sustainability is driving advanced recycling technologies in countries like Japan, Hansen says.

The technology tracks plastic waste from its origin to the end product leaving the advanced recycling plant. The system will “confirm compliance with predefined manufacturing parameters, such as elapsed time, mass balance calculations, responsible outsourcing standards or energy use,” the partners say.

Rabobank’s conclusions
Despite the criticisms, Rabobank believes advanced recycling will remain “highly attractive for leading companies in the plastics value chain.” The bank notes packaging converters are also increasing their activity in this space, including Sealed Air, Berry Global, Greiner Packaging and Scholle IPN.

However, market players “need to prepare to balance a growing level of criticism, including from the investor community,” stresses Rabobank.

“A reliable image will be crucial to continue to attract banks and investors that can provide the billions needed to finance and scale-up advanced recycling on its way to becoming a mature and commercially-viable industry,” the bank adds.

For Rabobank, PureCycle Technologies’ ability to overcome its class-action lawsuit and faltering share price could inform the direction of the whole industry. Meanwhile, PureCycle Technologies continues to attract high-profile partners.

By Joshua Poole