Rabobank strategist: Advanced recycling is proliferating but not the circular economy silver bullet

04 May 2021 --- Rabobank is predicting advanced recycling plants to double to around 140 plants globally by 2025 as regulatory and public demand for recycled plastics packaging drives “huge” investment. 

The Dutch multinational bank sees advanced or chemical recycling as a “promising solution to drastically increase recycling rates of plastic packaging waste” in light of mechanical recycling’s limitations.

Likewise, the EU Plastics Strategy acknowledges that advanced recycling “can have a powerful effect” in reaching a circular economy.

In basic terms, advanced or chemical recycling splits polymer chains, converting hard-to-recycle plastics into crude oil, naphtha or fuels. More established mechanical recycling maintains a material’s molecular structure.

PackagingInsights explores the rise of advanced recycling technologies with Susan Hansen, global strategist for F&A supply chains at Rabobank.

Hansen shares insights on global investments, including COVID-19 impacts, and discusses why advanced recycling is not a silver bullet for the plastics circular economy.

Huge activity
Rabobank has seen a “huge amount of activity” in advanced recycling since 2019. According to the bank’s estimates, there were around 70 plants installed worldwide in 2020, with approximately 1.1 million tons of capacity.

Rabobank expects advanced recycling plants to double globally by 2025 (Image credit: Rabobank).“By 2025, we expect the number of plants to double and the capacity to triple or maybe even quadruple,” says Hansen.

“Unsurprisingly, Europe and the US are the biggest investment areas, considering this is a nascent industry and a highly capital-intensive investment.”

“Europe is the hottest region with about 45-50 percent of the plants and the announcements, but, as a single country, we see that the US is the most active.”

COVID-19 impacts
Hansen adds that many people were surprised by the pandemic’s lack of impact on advanced recycling investment after the virus’ first wave.

“When the pandemic first started exploding in the Western world, we saw a huge focus on simply getting food on the shelves.”

“The whole focus on sustainability and sustainable packaging was shelved for a couple of months.”

“However, we did see after three or four months, the whole sustainably debate and focus on plastics and making packaging more sustainable came back with a vengeance.”

Rabobank logged numerous new initiatives in sustainable packaging innovation and sustainability target announcements, while advanced recycling projects announcements also exploded and continued into 2021.Susan Hansen, global strategist for F&A supply chains at Rabobank.

Big player partnerships
In notable examples, November 2020 saw Mars announce a partnership with SABIC and Huhtamaki to include food-grade recycled polypropylene plastic in its pet food packaging in 2021.

In the same month, Ferrero announced an agreement with INEOS Styrolution to explore advanced recycling.

In October 2020, Nestlé and Plastic Energy revealed they are exploring the possibilities of building a pyrolysis plant in the UK.

At the same time, Unilever announced a joint project with Neste and Recycling Technologies to use advanced recycling processes to recover and reuse plastic packaging currently incinerated, landfilled or exported from the UK. 

A silver bullet?
Although Hansen believes advanced recycling is an important tool in the fight against plastic packaging waste, she does not view it as the entire solution.

“When we started seeing this enormous growth in announcements in 2019, we needed to understand what happens in all aspects of packaging, including the recycling part.”

Europe and the US are the biggest investors in capital-intensive advanced recycling (Image credit: Rabobank).“When we saw the number of announcements and articles being written on chemical or advanced recycling, we probably expected more.”

“If all the projects we have logged were completed, we would see a doubling in the number of plants and three or four times the capacity we have today, but even then, we would be looking at 140 plants and still that is from large scale to commercial scale and a maximum of about four million tons of capacity.”

“So it’s not going to rock the boat that much and not going to be the silver bullet, but it’s a start, and it could be one of the many tools to deal with plastic packaging waste.”

Supply chain security
Rabobank foresees several major challenges to advanced recycling’s growth as well as opportunities. The challenges are varied, including technological, supply chain, legislation and cost-effectiveness. 

“There are many technology providers still developing their technology and scaling up, so they need to prove their technology is working and cost-efficient,” explains Hansen.

“But then you have issues like feedstock. A lot of people think we have so much plastic waste, so it’s not a problem to get plastic feedstock, but everyone wants the best feedstock.”

“Even if you have mixed plastic waste, the converters have quality requirements. It’s not like you can just dump any type of plastic and then an advanced recycling plant can magically turn it into another usable product.”

These pressures make supply chain efficiencies essential to the success of advanced recycling. The different technologies within advanced recycling depend on a reliable supply of the relevant materials, be it polystyrene, polypropylene or PET. Even mixed plastic has conflicting definitions for different recycling streams.Advanced recycling splits polymer chains, converting hard-to-recycle plastics into crude oil, naphtha or fuels (Image credit: Rabobank).

Definition disruptions
Meanwhile, legislation can be both an enabler and inhibitor to advanced recycling, Hansen explains. For example, it is useful for setting targets for recycling rates but can confuse how “chemical” or “advanced” recycling is defined.

“Even the word ‘advanced’ or ‘chemical’ – there’s a lot of debate around what terminology to use and how you define the sector and when it is sustainable.”

“And then we have the environmental footprint. When we looked at these projects, every technology provider would say they have the best carbon footprint and conversion rate.”

“There’s a lot of question marks still, and a lot of debate and criticism from many stakeholders saying only plastic-to-plastic models are really circular, and that plastic-to-fuel or energy is cheating and a detour from incineration.”

“Finally, what does it cost to convert plastic packaging waste via any of these technologies and how does that compare to virgin material?” questions Hansen.

Rabobank expects advanced recycling to develop in different directions in the coming years. Different technologies will evolve due to a variety of stimuli, it says, and there will not be just one winner.

By Joshua Poole