Sustainability Atlas
Circular Economy·12 min read··...

Trend watch: Chemical recycling & advanced sorting in 2026 — signals, winners, and red flags

Signals to watch, value pools, and how the landscape may shift over the next 12–24 months. Focus on data quality, standards alignment, and how to avoid measurement theater.

The global chemical recycling market reached $815 million in 2024 and is projected to surge to $18.5 billion by 2034—a 36.1% CAGR that masks significant uncertainty about which technologies, business models, and regulatory frameworks will ultimately prevail. For product and design teams navigating EU circular economy requirements, the stakes are becoming concrete: the Packaging and Packaging Waste Regulation (PPWR) mandates increasing recycled content targets, and the technologies enabling compliance are evolving faster than most design cycles can accommodate.

Why It Matters

The EU's regulatory trajectory is forcing a fundamental reckoning with plastic circularity. By 2030, packaging must contain minimum recycled content percentages (30% for PET, 10% for contact-sensitive plastics, 35% for other plastics). Meeting these targets at scale requires recycling technologies capable of producing food-grade materials from post-consumer waste—something mechanical recycling alone cannot achieve for many polymer types.

Chemical recycling offers a pathway to virgin-equivalent materials from mixed plastic waste. Unlike mechanical recycling (which degrades polymer quality with each cycle), chemical processes break plastics down to molecular building blocks, enabling unlimited recycling without quality loss. Pyrolysis, the dominant technology with 40-43% market share, converts mixed plastics to oils that feed existing petrochemical infrastructure.

However, the promise comes with complexity. Chemical recycling requires consistent feedstock—mixed post-consumer plastics must be sorted to remove contaminants that poison catalysts or degrade product quality. This is where advanced sorting enters the picture. AI-powered sorting systems achieving 95% purity represent the enabling infrastructure that chemical recycling depends upon.

For product designers, the implications are bidirectional. First, design choices today determine recyclability in 5-10 years—multi-material packaging, problematic additives, or non-standard formats may become stranded assets as recycling infrastructure matures. Second, recycled content requirements affect material selection, cost structures, and supplier relationships. Understanding the chemical recycling landscape is no longer optional for teams responsible for EU-market packaging.

Key Concepts

Chemical Recycling Technology Landscape

Three primary chemical recycling pathways are competing for market share:

Pyrolysis heats plastics in oxygen-free environments to 300-700°C, breaking polymer chains into pyrolysis oil. This oil feeds existing refineries and crackers, producing virgin-equivalent monomers. Pyrolysis dominates with 42% market share because it handles mixed plastics and integrates with established petrochemical infrastructure. ExxonMobil's Baytown facility expansion (40,000 to 80,000 tonnes/year, $200M investment, Q4 2025) exemplifies industrial-scale deployment.

Depolymerization uses chemical agents to reverse polymerization reactions, recovering monomers directly. Best suited for specific polymers (PET, polystyrene, polyamides), depolymerization produces the highest purity outputs but requires sorted feedstock. Loop Industries and Eastman are leading PET depolymerization, with Eastman's French facility processing 50,000 tonnes/year.

Gasification converts plastics to synthesis gas (syngas) at very high temperatures, which can then be synthesized into chemicals or fuels. Less common for plastics than the other approaches but applicable to highly contaminated waste streams where pyrolysis struggles.

TechnologyMarket ShareFeedstock RequirementsOutputKey Players
Pyrolysis40-43%Mixed plastics, moderate contamination tolerancePyrolysis oil → naphtha → monomersPlastic Energy, Brightmark, Quantafuel
DepolymerizationGrowing fastestSorted single polymers (PET, PS)Direct monomers (rPET, rPS)Loop Industries, Eastman, Carbios
Gasification<10%Heavily contaminated wasteSyngas → chemicals/fuelsEnerkem, Sierra Energy
SolvolysisEmergingSpecific polymersMonomersPureCycle (PP), Worn Again (textiles)

Advanced Sorting: The Enabler

Chemical recycling economics depend critically on feedstock quality. AI-powered sorting systems are rapidly improving both accuracy and throughput:

Near-Infrared (NIR) Spectroscopy remains the industry standard for polymer identification, distinguishing PET from HDPE from PP at commercial speeds. TOMRA's GAINnext platform (launched March 2024) achieves 95% purity for food-grade HDPE, PET, and PP separation.

Raman Spectroscopy provides chemical fingerprinting capability that NIR cannot match, enabling identification of additives, colorants, and food-contact compliance. Canon's June 2024 system uses tracking mechanisms to identify mixed plastic fragments with exceptional accuracy.

AI/Deep Learning overlays on sensor data dramatically improve sorting decisions. Greyparrot's analytics platform detected over 40 billion waste objects across 180+ material recovery facilities in 2024, classifying 111 distinct waste categories. The data feedback loop continuously improves model accuracy.

Robotic Picking integration enables positive sorting (picking target materials) rather than just ejection (removing contaminants), improving both purity and recovery rates.

The implications for product design are direct: packaging designed for sortability—clear PET instead of colored, monolithic materials instead of multi-layer, standardized formats—will command recycled content premium pricing as sorting infrastructure expands.

What's Working

Pyrolysis Achieving Commercial Scale

Multiple pyrolysis projects reached commercial operation in 2024-2025:

  • Plastic Energy Seville (March 2024): 33,000 tonnes/year TACOIL production integrated with petrochemical infrastructure
  • OMV Austria ReOil plant (March 2025): 16,000 tonnes/year capacity demonstrating refinery integration
  • Mitsubishi Chemical + ENEOS Japan (July 2025): 20,000 tonnes/year using Mura Hydro-PRT technology

The consistent pattern: successful projects integrate with existing petrochemical infrastructure rather than attempting standalone operations. Pyrolysis oil feeds crackers; monomers flow through established supply chains. This integration strategy reduces capital requirements and accelerates permitting compared to entirely new value chains.

Average plant throughput has increased from 10 tonnes/day (2020) to 16 tonnes/day (2024), with continuous systems now handling 24 tonnes/day. This scale-up is driving unit economics toward viability—though subsidy dependence remains for most operations.

AI Sorting Exceeding Human Performance

TOMRA's GAINnext platform deployment across European MRFs demonstrates AI sorting operating "dozens of times faster than manual sorting with fewer errors." The 95% purity achievement for food-grade plastics unlocks recycled content applications that mechanical recycling cannot address.

Equally significant: the data infrastructure emerging from AI sorting. Greyparrot's 40+ billion object dataset provides unprecedented visibility into actual waste composition, enabling better capacity planning, contamination identification, and ultimately, feedback to packaging designers about real-world recyclability.

Breakthrough Catalyst Research

Northwestern University's 2025 publication on nickel-based catalysts enabling "no-sort upcycling" of mixed plastics with 95% olefin selectivity suggests future scenarios where sorting requirements relax. By converting mixed polyolefins (PE, PP) directly to valuable chemicals without separation, such catalysts could fundamentally change chemical recycling economics.

While commercial deployment remains years away, the research trajectory indicates that today's sorting infrastructure investments may enable increasingly valuable outputs as catalyst technology matures.

What's Not Working

Economic Fundamentals Remain Challenged

Despite investment momentum, chemical recycling faces persistent economic headwinds:

Feedstock costs: Circular feedstock costs $0.70-1.20/kg at current quality requirements. Unlike fossil naphtha with stable pricing, recycled feedstock supply fluctuates with collection systems, sorting capacity, and competing uses (energy recovery, export).

Output price competition: Pyrolysis oil competes with virgin naphtha; recycled monomers compete with virgin monomers. Without recycled content premiums or policy support, chemical recyclers cannot achieve positive margins at current costs.

Capital intensity: Chemical recycling facilities require $100-300 million investment with 3-5 year development timelines. This capital intensity means only well-funded players can scale, limiting competitive dynamics that might drive cost reduction.

Most operating projects rely on multiple support mechanisms: recycled content premiums from brand commitments, policy incentives (plastic taxes, EPR credits), or offtake agreements at above-market prices. Pure-play commercial viability remains elusive.

Feedstock Quality and Consistency

Chemical recycling theoretically handles mixed plastics—but reality is more constrained. Contaminants including PVC, brominated flame retardants, and certain colorants poison catalysts or produce unacceptable output quality. Food contact certification requires consistent, verifiable feedstock sourcing.

The gap between "technically recyclable" and "practically recycled" remains substantial. Post-consumer packaging entering collection systems often fails quality thresholds, requiring extensive pre-processing that increases costs and reduces yields.

Measurement and Standards Gaps

Controversy persists over how to measure chemical recycling performance and allocate recycled content claims. Mass balance accounting—which allocates recycled content across all products from an integrated system rather than physically tracing molecules—enables recycled content claims that critics argue overstate actual circularity.

The EU is developing certification standards, but until frameworks mature, brand claims based on chemical recycling face credibility challenges. Organizations making recycled content commitments must navigate an evolving and contested measurement landscape.

Key Players

Established Leaders

BASF (Germany) — Major player in chemical recycling through ChemCycling project; partnership with Quantafuel targeting 100,000 tonnes/year mixed plastic waste capacity by 2026. Integrating pyrolysis oils into existing petrochemical operations.

Eastman (USA) — Leading PET methanolysis technology; 50,000 tonne/year French facility operational. Demonstrating that depolymerization can achieve commercial scale for specific polymers with virgin-equivalent output.

ExxonMobil (USA) — Baytown pyrolysis expansion representing aggressive investment thesis despite sector controversy. Leveraging refinery integration to reduce capital requirements and accelerate deployment.

SABIC (Saudi Arabia) — Certified circular polymers through TRUCIRCLE portfolio; partnering across value chain from waste collectors to brand owners to develop closed-loop systems.

Emerging Startups

Plastic Energy (UK/Spain) — Pioneer in pyrolysis with Seville and Geleen (Netherlands) plants operational; technology licensing strategy expanding footprint faster than captive ownership.

PureCycle Technologies (USA) — Solvent-based purification converting post-consumer polypropylene to virgin-equivalent material; commercial facility in Ohio with expansion underway.

Carbios (France) — Enzymatic PET depolymerization using engineered enzymes; demonstrating biological rather than thermal/chemical conversion pathway. Commercial plant targeting 2025 operation.

Key Investors & Funders

Circulate Capital — Impact investor focused on circular economy infrastructure in emerging markets; portfolio includes sorting and chemical recycling ventures.

Closed Loop Partners — Infrastructure investment across circular economy value chain; Beyond the Bag initiative and recycling infrastructure investments.

Corporate Venture Arms — Dow Ventures, SABIC Ventures, Shell Ventures actively investing in chemical recycling technologies.

Examples

  1. BASF + Quantafuel Partnership (September 2024): The collaboration targets 100,000 tonnes/year mixed plastic waste processing capacity by 2026, with pyrolysis oil feeding BASF's Ludwigshafen verbund. The partnership model—technology developer plus petrochemical integrator—may represent the dominant structure for scaling chemical recycling. BASF's offtake commitment de-risks Quantafuel's capacity expansion while securing recycled feedstock for BASF's certified circular polymer production.

  2. Brightmark Georgia Facility (July 2024): The $260 million financing for a 200,000 tonnes/year facility demonstrates that chemical recycling can attract substantial project finance. The Georgia location—selected for feedstock access, logistics, and policy environment—illustrates how site selection drives project economics. Brightmark's development timeline (announcement to projected operation: 3+ years) shows realistic deployment pacing.

  3. TOMRA GAINnext Deployment (March 2024): TOMRA's AI-enhanced sorting platform achieving 95% purity for food-grade polymers across European MRFs demonstrates that sorting technology is no longer the bottleneck for high-quality feedstock. The significance: design-for-recyclability efforts can now assume sophisticated sorting infrastructure will exist, changing the calculus for packaging material selection.

Action Checklist

  • Audit your packaging portfolio against chemical recycling feedstock requirements—identify materials that may become stranded as recycled content mandates tighten
  • Engage with chemical recyclers in your supply geography to understand offtake availability, quality requirements, and certification pathways for recycled content claims
  • Model recycled content cost impacts across your product range; chemical recycling-derived materials currently carry 20-50% premiums that may persist or narrow depending on capacity buildout
  • Evaluate design changes that improve sortability and chemical recyclability—clear instead of colored plastics, mono-material instead of multi-layer structures, elimination of problematic additives
  • Track EU regulatory developments including PPWR implementation timelines, mass balance certification standards, and Extended Producer Responsibility fee structures that create financial incentives for recyclability
  • Develop measurement and verification capabilities to substantiate recycled content claims; third-party certification requirements are intensifying

FAQ

Q: Should we wait for chemical recycling to mature before changing packaging designs, or act now? A: Act now, but with flexibility. Design changes made today (mono-materials, standardized formats, avoiding problematic additives) will benefit from both current mechanical recycling and future chemical recycling infrastructure. However, avoid over-optimizing for specific chemical recycling technologies that may not become dominant. General recyclability principles—material simplicity, sortability, contaminant avoidance—remain robust across technology scenarios.

Q: How do we evaluate recycled content claims based on mass balance accounting? A: Request certification details (ISCC PLUS, REDcert², RSB) specifying the mass balance methodology applied. Understand that mass balance claims mean recycled feedstock entered the production system—not that specific molecules in your product are recycled. For marketing claims, consumer communication must accurately represent what mass balance means. Regulators are increasingly scrutinizing claims that suggest higher physical recycled content than mass balance mathematically implies.

Q: What recycled content cost premium should we plan for in chemical recycling-derived materials? A: Current premiums range from 20-50% over virgin equivalents, depending on polymer type and certification requirements. For planning purposes, model 30-40% premiums through 2028, declining to 15-25% as capacity scales. However, significant uncertainty exists—capacity buildout delays, feedstock constraints, or regulatory changes could maintain or increase premiums. Build flexibility into supplier contracts to accommodate evolving economics.

Q: How does Extended Producer Responsibility (EPR) intersect with chemical recycling investments? A: EPR fee structures increasingly differentiate by recyclability—packaging designed for effective recycling pays lower fees than difficult-to-recycle formats. Chemical recyclability may qualify for fee reductions as EPR schemes recognize advanced recycling pathways. However, scheme-by-scheme variation means organizations operating across multiple EU markets must track diverging requirements. Engage with EPR scheme operators to understand how chemical recycling credentials translate to fee modulation.

Q: What design-for-recyclability changes have highest impact for chemical recycling compatibility? A: Priority order: (1) Eliminate PVC and PVDC barrier layers—these contaminate pyrolysis and are increasingly targeted by regulation. (2) Avoid brominated flame retardants and certain pigments that persist through chemical recycling. (3) Prefer mono-material structures over multi-layer laminates. (4) Use clear or light-colored plastics over carbon black-pigmented materials (invisible to NIR sorting). (5) Ensure packaging is readily identifiable by standard sorting infrastructure through appropriate size, shape, and material composition.

Sources

Topics

chemicalrecyclingtransition plancompliancedesign for disassemblymaterial recoverycapex

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