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EU to emerge as a leader in pyrolysis as the rest of the world catches up on mechanical recycling

| Global themes | Lux Research | Boston, MA | United States

A combination of negative consumer sentiment, regulation, and a global focus on sustainability has combined to push the issue of plastics sustainability to the fore. Future projections of a circular economy emphasize that a combination of recycled and bio-based resources will serve as a feedstock for our plastic needs. A new analysis from Lux Research, a leading provider of tech-enabled research and innovation advisory services, highlights the state of these emerging technologies today and how these technologies must grow to fulfill a circular economy.

A combination of negative consumer sentiment, regulation, and a global focus on sustainability has combined to push the issue of plastics sustainability to the fore. Future projections of a circular economy emphasize that a combination of recycled and bio-based resources will serve as a feedstock for our plastic needs. A new analysis from Lux Research, a leading provider of tech-enabled research and innovation advisory services, highlights the state of these emerging technologies today and how these technologies must grow to fulfill a circular economy.

“Our likely case presents a mixed outlook for the future of plastics,” explains Anthony Schiavo, Research Director at Lux Research and lead author of the report. “Certainly, major strides are made in both plastic waste reduction and the substitution of fossil-based resources with more sustainable alternatives; both approaches will triple in volume in the next decade. Still, the plastics industry has a long way to go: Around 285 million tons of plastic waste will not be recycled in 2030, and there will still be major pain points like polypropylene lacking a sustainable solution.”

Lux’s likely case scenario for the state of sustainable plastics in 2030 highlights regional differences in policy and infrastructure. The U.S. will dramatically expand its mechanical recycling footprint for polyester terephthalate (PET) and high-density polyethylene as brands respond to consumer demands and government mandates to increase recycling; it will catch up with the EU in PET recycling capacity by 2030. However, pyrolysis will likely fail to make an impact in the U.S. due to poor economics, despite the support of the chemicals industry. Low tipping fees and oil prices in the U.S. mean pyrolysis is unlikely to be profitable. Lux does not expect that a strong enough regulatory environment will emerge to change this outlook.

While the U.S. catches up on mechanical recycling, the EU will emerge as a leader in pyrolysis, building around 8 million tons of capacity by 2030. This rollout is strongly dependent on a favorable regulatory landscape, however. Without clear recognition of pyrolysis as a form of recycling at the EU level, rollout will suffer. Both China and Japan will ramp up pyrolysis capacity as well, building 6.8 million and 3.8 million tons of capacity, respectively, by 2030. Fuels, rather than plastics, will be the main use case for pyrolysis oil in this region. China will maintain its position as the world leader in mechanical recycling, while Japan’s mechanical recycling capacity will only grow marginally, reflecting its far more mature initial state.

The rest of the world will expand on mechanical recycling of PET and HDPE, as it’s cheap to build, profitable, simple, proven, and can be built at both small and large scales. There will be a substantial expansion of recycling globally, with India, Indonesia, and Brazil leading the way as these economies continue to grow.

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