Plastic recycling requires an entire ecosystem of value chain stakeholders responsible for collecting recyclable waste, preparing it for recycling, and processing the recycled outputs into new products. To ascertain differing perspectives on the value chain dynamics of advanced plastic recycling technologies and uncover insights that could accelerate their advancement, Lux analyst, Marcian Lee, Ph.D., recently conducted a series of interviews with industry stakeholders. Below, we highlight three key themes from his voice of industry interviews.
As advanced plastic recycling technologies aim to process hard-to-recycle plastics, the current plastic recycling value chain is not prepared to support either the feedstock demands or outputs of the novel technologies.
General waste management systems typically don’t have the equipment to process hard-to-recycle plastics, including nonbottle polyethylene terephthalate (PET). Recycling these materials typically involves a few specialized players that perform siloed recycling operations with little interaction with municipal waste management systems. Here, unlike with municipal waste management systems, revenue generation drives plastic recycling. However, with customers unwilling to purchase the outputs of these processes, there is little incentive for collection. One interviewee from a Malaysian extended producer responsibility organization stated, “As there is little to no price for postconsumer flexibles, with the cost for collection, sorting, and cleaning far outweighing any benefits, there is little appetite for the collection.” Moreover, the mismatch between what the waste supply chain is familiar with and the type of feedstocks that advanced plastic recyclers require leads to bottlenecks in feedstock supply. Stakeholders upstream of the value chain are unfamiliar with sourcing and processing new types of plastic waste into feedstocks that meet the specifications of advanced recycling technologies.
Gaps in the plastic recycling value chain have forced stakeholders to undertake nontraditional roles and build new value chains through collaborative partnerships.
The roles of some value chain actors have started to change in response to developments in advanced plastic recycling and slow-moving regulations. Advanced recycling technology operators are building new plastic recycling value chains — even vertically integrating upstream of the plastic value chain itself — to gain access to the feedstocks for advanced plastic recycling operations. For example, chemicals companies like LyondellBasell, packaging producers like Tetra Pak, and even consumer goods companies like The Coca-Cola Company — all stakeholders sitting at different stages of the plastics value chain — are adding plastic recycling operations into their portfolio of operations. Waste management companies that traditionally perform mechanical recycling have also started looking into advanced recycling technologies. But, as one Japanese advanced recycling startup stated, “A lot of recyclers want to do chemical recycling. However, they do not understand that they are not operating a mechanical recycling site but a chemical factory.” All successful advanced plastic recycling projects must include stakeholders from the three primary value chain activities: waste collection, preprocessing (usually sorting), and recycling.
There are still technical hurdles for integrating advanced recycling technologies into existing value chains, but a greater mismatch lies between the expectations of technology developers and supply chain partners.
Advanced plastic recycling technologies are intended to integrate seamlessly into existing plastic manufacturing processes — they are makeshift technologies that produce substitutes for virgin fossil-based feedstocks in plastics production. For example, pyrolysis oil is a drop-in replacement for virgin naphtha in stream crackers, while the monomers recovered from PET solvolysis can be added to PET manufacturing lines to be polymerized into virgin-like PET. However, early advanced recycling pilots and scale-up projects have shown that the integration is not perfect, and the performance of advanced recycling technologies is feedstock sensitive. Technology operators must adapt feedstock management, output purification, and operating parameters to suit local conditions when bringing new recycling facilities online. The interviewees generally agreed that technology implementation must be a joint effort between the value chain stakeholders and technology developers. Yet, in reality, the technology developers and value chain stakeholders expect quite different things from these partnerships. As one American textiles brand owner posed, “What are recycling startups looking for from brand owners? Do they want to collaborate for small [industrial partnership] stories, or are they looking to become commodity suppliers?
Ultimately, advanced plastic recycling technologies need to integrate with the existing plastic recycling value chain, and technology adopters must commit to changing the value chain into a circular one. Eventually, the line between waste management and chemical manufacturing will blur in a circular economy. While an overhaul of the existing value chain is unnecessary, stakeholders in the plastic recycling value chain will take on nontraditional roles.
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