INSIGHT: Supply and demand for chemical recycling in North America polymers markets

Author: Paula Leardini

2021/09/24

HOUSTON (ICIS)--Targets set by brand owners and regulations have been contributing to growing demand for recycled plastics globally, particularly for use in food and beverage packaging. However, the supply of high-quality food grade recycled polymers remains limited.

In the long term, chemical recycling can be a potential complementary solution to mechanical recycling to secure supply of recycled resins suitable for food contact applications. However, there are uncertainties around the timeframe for scale, qualities of waste inputs, costs of the output and yields, as well as environmental impact.

Despite current investments in chemical recycling facilities, ICIS expects that industrial scale may not be achieved before the 2025 and 2030 deadlines for mandates and sustainability related pledges.

The ICIS Recycling Supply Tracker has identified nearly 40 chemical recyclers in North America, out of which only half are expected to have a commercial-scale capacity of at least 15,000 tonnes/year in the next 5 years. Also, only just over 20% of those are currently operating. Other facilities have been either announced, under construction, or commissioning.

Globally, in terms of number of companies identified, North America follows after Europe, where most plants have already started up in the past couple years.

Chemical recycling is an umbrella term for a variety of methods that use different production routes to create new material from waste. Common chemical recycling methods include pyrolysis, gasification, glycolysis, hydrolysis, methanolysis, and dissolution. In chemical recycling, chemical processes are used to revert waste back to an earlier molecular state. Waste can be reverted to monomer or all the way back to crude oil/energy.

POTENTIAL IN NORTH AMERICA
The industry has high expectations for the higher volumes of feedstock that chemical recycling can process. Also, any waste stream can potentially be used, including films and flexible packaging.

Unlike mechanical recycling, chemical recycling does not weaken the tensile strength of the material. Therefore, materials can be endlessly recycled. Also, recycled resins produced through chemical recycling have near-identical properties to virgin, which facilitates their use in food and beverage applications.

In North America, food grade mechanical recycled resins currently represent almost 20% of the annual capacity of recycled polymers of over 8m tonnes, according to the ICIS Mechanical Recycling Supply Tracker. The research includes recycled polyethylene terephthalate (R-PET), recycled polyethylene (R-PE), and recycled polypropylene (R-PP).

Source: ICIS, Recycling Supply Tracker – Mechanical, 2021

However, food grade availability varies extensively among the resins, as represented in the following chart. Almost 45% of R-PET capacity in North America is food grade in comparison with only slightly over 15% of polyolefins.

Source: ICIS, Recycling Supply Tracker – Mechanical, 2021

Chemical recycling can potentially support the supply of food grade recycled resins, especially from polyolefins or mixed plastics, to fulfil the growing demand.

ROADBLOCKS IN THE INDUSTRY
Some chemical recyclers have been building partnerships and offtake agreements to encourage their products to be used to produce new plastics. However, as waste can be reverted to monomer or all the way back to crude oil/energy, products can end up in end markets, such as fuel and energy; rather than contributing to a plastics to plastics circularity model.

Despite the progress made and potential of this industry, uncertainties remain.

Chemical recycling processes are typically more expensive than mechanically recycled polymers. Yields have been typically low, are now improving. Chemical recycling also requires a minimum quality of the waste feedstock to ensure high process yield and quality of products, which could cause sourcing challenges like those in mechanical recycling. As with mechanical recycling, though, waste collection infrastructure can potentially be a constraint.

According to the National Association for PET Container Resources (NAPCOR), the collection rate of polyethylene terephthalate (PET) post-consumer bottles in the United States was 28% in 2019, and it has been stagnant for the last decade. For reference, according to ICIS, PET bottle collection rates in Europe were 64% in 2019.

Source: NAPCOR

Considering other resin types used in bottles in the US,  2018 bottle collection rates of high-density polyethylene (HDPE) and polypropylene (PP) were 30% and 17%, respectively. Regarding films, which are mostly made of polyethylene (PE), collection rates are even lower, at a level of 8% in 2017, according to More Recycling.

Source: APR, MORE RECYCLING, and ACC

Although chemical recycling can be seen as a complementary solution to mechanical recycling, this is mainly true for processes using mixed plastic waste or fractions that are not usable by the mechanical recycling industry. However, some chemical recyclers have started using feedstocks, such as PET bottles, creating yet further competition for mechanical recyclers.

In addition, the magnitude of environmental impact of the chemical recycling process is still unclear with few, if any, independent life cycle assessment (LCA) studies available.

IMPACT OF REGULATIONS
Chemical recycling has been adopted in fourteen states in the US since 2017, including Florida, Wisconsin, Georgia, Iowa, Tennessee, Texas, Illinois, Ohio, Pennsylvania, Virginia, Oklahoma, Arizona, Arkansas, and Louisiana, with five of these since January 2021.

There are expectations that New Jersey may be the fifteenth state to enact legislation to enable greater adoption of chemical recycling. The bill was introduced to the Assembly Environment and Solid Waste Committee and amended by the Assembly Floor last June.

Nevertheless, nationwide in the US, the Break Free from Plastic Pollution Act, that was reintroduced to Congress in March, currently discounts chemical recycling as recycling under the bill’s definition, which goes against the path of at least these fifteen states. Uniform policies in the US, at both federal and state levels, are lacking to this day.

Source: ICIS

In Europe, there has been a growing debate in recent months over how chemical recycling should be classified under the EU's Waste Framework Directive and whether it should count towards recycling targets.

At present, EU legislation does not grant chemical recycling legal status as recycling. The EU previously indicated that it would take a decision on chemical recycling’s legal status in the near term, and that it would be contingent on a cradle-to-grave life cycle analysis (LCA).

THE FUTURE OF CHEMICAL RECYCLING IN NORTH AMERICA
Improvement in waste management is needed in North America, like many other regions, in order to supply both mechanical and chemical recyclers with feedstock to generate new products, while reducing plastic pollution.

Chemical recyclers can potentially process waste that is not suitable for mechanical recycling as well as providing the market with food grade resins that are currently more constrained if produced via a mechanical route.

Uniform policies are needed and partnerships between stakeholders are encouraged to overcome any restraints to progress of the industry.

Insight by Paula Leardini