Explainer: Recycling systems & material recovery — the concepts, the economics, and the decision checklist
A practical primer: key concepts, the decision checklist, and the core economics. Focus on KPIs that matter, benchmark ranges, and what 'good' looks like in practice.
Despite a 200-million-tonne increase in recycling volumes between 2018 and 2021, the global circularity rate has actually declined from 9.1% in 2015 to just 6.9% in 2025, according to the Circularity Gap Report 2025. This paradox—more recycling yet less circularity—reveals a fundamental truth about material recovery: raw throughput matters far less than systemic efficiency, economic viability, and infrastructure sophistication. With the global waste management market projected to grow from $1.01 trillion in 2024 to over $2 trillion by 2035, understanding the mechanics of recycling systems has never been more critical for sustainability professionals seeking to drive meaningful environmental outcomes.
Why It Matters
The economics of material recovery sit at the intersection of environmental imperatives and industrial transformation. Municipal solid waste (MSW) generation reached 2.3 billion tonnes globally in 2023 and is projected to surge to 3.8 billion tonnes by 2050 (UNEP Global Waste Management Outlook 2024). Only approximately 19% of this waste is currently recycled, while plastic recycling rates have stagnated below 10% globally for years.
The financial stakes are substantial. The U.S. EPA estimates that modernizing domestic recycling infrastructure would require $36.5 to $43.4 billion in investment but could unlock an additional 82-89 million tons of recovered materials annually, potentially raising the national recycling rate from 32% to 61% by 2030. For corporations facing mounting Extended Producer Responsibility (EPR) obligations and Scope 3 emissions reporting requirements, material recovery represents both a compliance necessity and a competitive opportunity.
From a climate perspective, recycling currently prevents approximately 700 million tonnes of CO2 emissions annually, with projections suggesting this could reach 1 billion tonnes by 2030 through infrastructure improvements and expanded capture rates. The carbon intensity differential between virgin and recycled materials—particularly for aluminum, steel, and plastics—makes material recovery a critical lever in corporate decarbonization strategies.
Key Concepts
Material Recovery Facilities (MRFs)
MRFs serve as the industrial backbone of modern recycling systems, processing commingled recyclables into commodity-grade feedstocks. The United States operates between 300-521 MRFs, with the market valued at $6.6 billion in 2019 and projected to reach $21.58 billion by 2033 at a 7.4% compound annual growth rate (CAGR).
MRF performance varies significantly by design and input stream. "Clean" MRFs processing source-separated materials achieve recovery rates of 85-95%, while "dirty" MRFs handling mixed municipal waste typically recover only 5-45% of incoming materials. Key performance drivers include optical sorting technology, robotics integration, and the degree of upstream contamination.
Capture Rate vs. Recovery Rate
These metrics are frequently conflated but measure distinct phenomena. Capture rate refers to the percentage of a target material successfully separated from the waste stream at the MRF level. Recovery rate encompasses the broader system, including collection efficiency, processing losses, and end-market yield.
Current U.S. MRF capture rates by material (2024 data from Greyparrot AI):
| Material Category | Capture Rate | Notes |
|---|---|---|
| Aluminum cans | 93% | High value, magnetic separation |
| Cardboard/OCC | 93% | Strong fiber markets |
| PET bottles | 90% | Established bottle-to-bottle pathways |
| HDPE containers | 90% | Consistent demand from CPG sector |
| Steel cans | 85% | Ferrous separation effective |
| Mixed paper | 90% | Varies with fiber quality |
| Glass | 70% | Breakage contamination challenges |
| Flexible films | <40% | Major infrastructure gap |
| Mixed plastics (#3-7) | <40% | Limited end-market demand |
Extended Producer Responsibility (EPR)
EPR frameworks shift end-of-life management costs from municipalities to producers, creating financial incentives for design-for-recyclability and material recovery investment. Eight of the top ten global recyclers operate in jurisdictions with robust EPR legislation, demonstrating the policy mechanism's efficacy in driving system-level improvements.
Digital Product Passports (DPP)
Emerging EU regulations will require digital product passports containing material composition, recyclability characteristics, and chain-of-custody data. DPPs enable more precise sorting decisions, reduce contamination, and create data infrastructure for verified recycled content claims. Implementation is expected to begin in 2027 for priority sectors including batteries, electronics, and textiles.
What's Working
AI-Powered Sorting Technology
Artificial intelligence has transformed MRF economics by enabling rapid identification and sorting of complex material streams. Greyparrot AI detected and analyzed 40 billion waste objects in 2024, providing unprecedented visibility into material flows and identifying 35,000 tonnes of recyclable plastics lost to residue that could have saved 52,500 tonnes of CO2 emissions if recovered.
Companies like TOMRA Systems ASA (Norway, $3.67 billion market cap) have deployed optical sorters across thousands of facilities worldwide, achieving near-infrared spectroscopy-based identification at speeds exceeding 9,000 objects per minute. This technology has proven particularly effective for PET and HDPE separation, contributing to the 90% capture rates observed for these materials.
Deposit Return Schemes (DRS)
Jurisdictions implementing bottle deposit programs consistently achieve 80-95% collection rates for beverage containers, compared to 30-40% in curbside-only systems. Germany's Pfand system, operational since 2003, recovers over 98% of deposit containers. Taiwan and Singapore, both achieving 96.7 on the Environmental Performance Index waste recovery metric, leverage deposit mechanisms alongside comprehensive source separation requirements.
Battery Recycling Infrastructure
The electric vehicle transition has catalyzed massive investment in battery material recovery. Redwood Materials and Ascend Elements have collectively raised approximately $6 billion in equity and debt financing to build domestic lithium-ion battery recycling capacity. These facilities recover critical minerals including lithium, cobalt, nickel, and rare earth elements, reducing dependence on primary extraction while addressing supply chain security concerns.
What's Not Working
Flexible Plastics Recovery
Despite representing a significant portion of packaging waste, flexible films and multi-layer pouches achieve capture rates below 40% at conventional MRFs. Greyparrot detected over 7 billion film objects escaping capture in 2024 alone. The technical challenges—static cling, tangling in sorting equipment, mixed polymer compositions—require specialized processing infrastructure that remains economically marginal without policy intervention.
Contamination Economics
The "wishcycling" phenomenon—consumers placing non-recyclable items in recycling bins—creates systemic contamination that degrades material quality and increases processing costs. Industry estimates suggest contamination rates of 15-25% in curbside programs, with some MRFs rejecting loads exceeding 10% contamination thresholds. The resulting material downcycling and landfill diversion undermines both environmental and economic outcomes.
Global Circularity Decline
The central paradox remains unresolved: despite absolute increases in recycling tonnage, material consumption growth outpaces recovery improvements. The 2.2 percentage point decline in global circularity since 2015 reflects structural limitations in current recycling systems' ability to close material loops at scale. Virgin material remains cheaper than recycled alternatives for most applications, absent carbon pricing or regulatory mandates.
Key Players
Established Leaders
Waste Management, Inc. (Houston, TX): The largest U.S. waste services company with $20.7 billion in 2024 revenue, operating 120 recycling facilities, 267 landfills, and 17 waste-to-energy plants. Their network processes millions of tons of recyclables annually, with recent investments in automated sorting technology and plastics recycling infrastructure.
Republic Services, Inc. (Arizona): The second-largest U.S. operator with $15.3 billion in 2024 revenue, recognized on Ethisphere's "World's Most Ethical Companies" list. Their Polymer Center network focuses on circular plastics solutions, targeting food-grade recycled content production.
Veolia Environnement SA (France): A global environmental services leader with approximately $47 billion in 2023 revenue, operating across water, waste, and energy sectors. Veolia's 2024 merger with Suez created the world's largest resource management company, with significant material recovery operations across Europe, Asia, and the Americas.
TOMRA Systems ASA (Norway): The global leader in sensor-based sorting solutions with a $3.67 billion market cap. TOMRA's reverse vending machines and optical sorting systems are deployed in over 100,000 locations worldwide, enabling high-purity material recovery across beverage containers, mixed recyclables, and industrial streams.
Emerging Startups
DePoly (Switzerland): Raised $13.3 million in Series A funding (May 2024) for their chemical recycling technology that breaks down PET and polyester at room temperature without pre-sorting requirements. Their process yields virgin-quality monomers suitable for food-contact applications.
Sorted (London, UK): Secured £1.65 million seed funding (April 2024) for AI-powered computer vision systems that augment human sorters in MRFs. Their spectroscopy-integrated platform identifies material types in real-time, improving capture rates for complex streams.
Cyclic Materials (Canada): Raised $25 million (June 2024) to build rare earth recycling facilities. Their Kingston, Ontario plant will recover neodymium, praseodymium, and other critical minerals from end-of-life electronics, EVs, and wind turbines.
Cylib (Germany): Completed a $64 million Series A (Spring 2024) for their battery recycling technology extracting critical raw materials from end-of-life lithium-ion batteries using a water-based mechanical process with lower energy requirements than pyrometallurgical alternatives.
Key Investors
Closed Loop Partners (New York): A dedicated circular economy investment firm with over 90 investments across 5 continents. Their 2024 Impact Report documents 15.9 billion pounds of materials kept in circulation and 25.2 million metric tons of GHG emissions avoided. Their portfolio spans ventures, growth equity, private credit, and operating companies including the largest private recycling processor in the U.S.
Circulate Capital (Singapore): Managing $257 million in assets focused on plastic recycling infrastructure in Asia and Latin America. Their 2024 investments included Polyrec S.A.S. (Colombia, first Latin American investment) and Cirklo (Brazil, PET recycling). Portfolio impact: 622,000 tonnes of plastic waste circulated and 627,000 tonnes CO2 emissions avoided.
Breakthrough Energy Ventures: Bill Gates-founded climate investment vehicle backing industrial decarbonization including advanced recycling technologies. Portfolio companies include Boston Metal (steel decarbonization) and TerraPower (nuclear), with circular economy investments in material efficiency solutions.
Examples
SUEZ and Sorted AI Implementation (UK)
SUEZ partnered with AI startup Sorted to deploy computer vision systems across their UK MRF network in 2024. The technology augments human sorters by projecting light indicators onto conveyor belts identifying target materials in real-time. Early pilots demonstrated 15-20% improvements in capture rates for mixed plastics, with operators reporting reduced decision fatigue during shifts. The system's machine learning continuously improves accuracy based on regional material stream variations.
Closed Loop Partners' Midwest Recycling Ecosystem (USA)
Closed Loop Partners' investment in regional recycling infrastructure across the American Midwest illustrates the integrated approach required for system-level improvement. Their strategy combines MRF upgrades, collection route optimization, and end-market development for recycled commodities. By coordinating across the value chain—from municipal contracts to brand procurement commitments—they've increased effective recovery rates by 25% compared to fragmented regional operations while reducing per-ton processing costs through scale economies.
Circulate Capital's Polyrec Investment (Colombia)
In July 2024, Circulate Capital completed their first Latin American investment in Polyrec S.A.S., a Colombian flexible plastics recycler. The investment will double Polyrec's processing capacity for LDPE, PP, and BOPP films—materials that typically escape recovery in conventional systems. The project targets preventing 100,000 tons of plastic from ocean leakage while demonstrating the commercial viability of flexible plastics recycling in emerging markets where formal waste infrastructure remains limited.
Sector-Specific KPI Benchmarks
| KPI | Poor | Adequate | Good | Excellent |
|---|---|---|---|---|
| Overall MRF Recovery Rate | <70% | 70-80% | 80-90% | >90% |
| Contamination Rate | >20% | 15-20% | 8-15% | <8% |
| Residue to Landfill | >25% | 15-25% | 10-15% | <10% |
| Commodity Revenue per Ton | <$40 | $40-60 | $60-80 | >$80 |
| Processing Cost per Ton | >$80 | $60-80 | $45-60 | <$45 |
| Uptime/Availability | <85% | 85-90% | 90-95% | >95% |
| Carbon Intensity (kg CO2/ton) | >50 | 35-50 | 20-35 | <20 |
Action Checklist
- Conduct a material flow analysis to identify highest-value recovery opportunities in your waste stream, prioritizing materials with established end-markets (aluminum, PET, HDPE, OCC)
- Evaluate MRF partnerships using the KPI benchmarks above, requesting transparent reporting on capture rates, contamination levels, and end-market destinations
- Assess EPR exposure across operating jurisdictions, mapping current and pending legislation that will shift end-of-life management costs to producers
- Develop recycled content procurement specifications aligned with emerging Digital Product Passport requirements, establishing traceability from collection through reprocessing
- Invest in upstream contamination reduction through employee education, signage improvements, and collection stream simplification (fewer categories, clearer rules)
- Engage with technology providers (TOMRA, Greyparrot, Sorted) to understand AI-enabled sorting capabilities that could improve recovery from complex streams
- Establish offtake agreements for recycled commodities to provide market certainty for infrastructure investments, potentially through consortia with industry peers
FAQ
Q: What is the business case for investing in recycling infrastructure given volatile commodity markets?
A: The business case has shifted from purely commodity-driven economics to a multi-factor value proposition. Revenue streams now include: (1) processing fees from municipalities and EPR organizations, typically $30-80 per ton; (2) commodity sales, averaging $40-80 per ton depending on material mix and market conditions; (3) carbon credit potential as methodologies mature for recycling-based emission reductions; and (4) brand value from verified recycled content claims. The EPA projects that infrastructure investments yielding 61% recycling rates would generate net positive economic returns when externalized environmental costs are included.
Q: How do emerging chemical recycling technologies compare to traditional mechanical recycling?
A: Chemical recycling (pyrolysis, gasification, solvolysis) addresses materials that mechanical recycling cannot process economically—mixed plastics, contaminated streams, and multi-layer packaging. However, current energy requirements and yields make chemical recycling 2-5x more expensive per ton than mechanical alternatives. The technologies show promise for closing loops on flexible plastics and textiles but should be viewed as complementary to, rather than replacing, optimized mechanical systems. Companies like DePoly are advancing lower-energy chemical processes that may shift this calculus.
Q: What role do digital product passports play in improving material recovery?
A: DPPs create data infrastructure enabling three critical improvements: (1) sorting precision through machine-readable material composition data, reducing contamination and enabling higher-value recovery; (2) chain-of-custody verification for recycled content claims, addressing greenwashing concerns; and (3) design feedback loops connecting end-of-life outcomes to product development decisions. The EU's DPP requirements beginning in 2027 will establish the first mandatory digital material traceability system, likely becoming a global template.
Q: How should organizations evaluate AI-powered sorting technologies for MRF upgrades?
A: Key evaluation criteria include: (1) demonstrated capture rate improvements for your specific material streams, ideally validated through pilot deployments; (2) integration requirements with existing conveyor and baling systems; (3) ongoing performance—does the system learn and improve from local material variations?; (4) data outputs—does the platform provide analytics on material flows, contamination sources, and system optimization opportunities?; and (5) total cost of ownership including maintenance, software licensing, and potential commodity revenue improvements.
Q: What metrics should sustainability teams track to demonstrate recycling program effectiveness?
A: Move beyond simple diversion rates to a balanced scorecard including: (1) true recycling rate—material actually reprocessed into new products, not just collected; (2) contamination rate at MRF intake; (3) commodity revenue per ton as a quality indicator; (4) carbon intensity of the recovery system including collection, processing, and transport; (5) end-market destination transparency—where materials actually go; and (6) cost per ton including collection, processing, and residue disposal. Platforms like Greyparrot now enable real-time tracking of these metrics across material categories.
Sources
- Circularity Gap Report 2025, Circle Economy Foundation (https://www.circularity-gap.world)
- UNEP Global Waste Management Outlook 2024, United Nations Environment Programme
- U.S. EPA Recycling Infrastructure Assessment 2024 (https://www.epa.gov/smm/us-recycling-infrastructure-assessment-and-state-data-collection-reports)
- Greyparrot 2024 Waste Intelligence Report: "What we learned by detecting 40 billion waste objects in 2024" (https://www.greyparrot.ai/resources/blog/2024-recycling-data)
- Closed Loop Partners 2024 Impact Report (https://www.closedlooppartners.com/impact/)
- Circulate Capital Annual Impact Report 2024 (https://www.circulatecapital.com/impact/)
- Materials Recovery Facilities in the United States: Operations, Revenue, and the Impact of Scale, Waste Management Journal (2024)
- Reloop Global Recycling League 2024 (https://www.reloopplatform.org)
Related Articles
Interview: the builder's playbook for Recycling systems & material recovery — hard-earned lessons
A practitioner conversation: what surprised them, what failed, and what they'd do differently. Focus on KPIs that matter, benchmark ranges, and what 'good' looks like in practice.
Case study: Recycling systems & material recovery — a startup-to-enterprise scale story
A concrete implementation with numbers, lessons learned, and what to copy/avoid. Focus on KPIs that matter, benchmark ranges, and what 'good' looks like in practice.
Deep dive: Recycling systems & material recovery — the fastest-moving subsegments to watch
What's working, what isn't, and what's next — with the trade-offs made explicit. Focus on data quality, standards alignment, and how to avoid measurement theater.