Due to the on-growing demand for recycled plastics, along with the ever-changing legislations for recyclability and increasingly bold commitments of large brand names, the development of chemical recycling is bound to greatly increase in the next few years. However, for that to actually happen, future investments will have to be made across the whole plastics value chain.
The McKinsey Report on Recycled Plastics Demand
In a recent report of “McKinsey”, it is revealed that, in order for circular plastics to achieve the expected 20 to 30 % of recycled plastic for new plastic packages by year 2030, a maximum number of investments reaching $100 billion might be needed. In addition, investments will have to be made across all plastics value chain and will be covering collection, sorting, and both mechanical and chemical recycling technologies.
With brands committing to use the aforementioned 20 to 30 % recycled content in plastic packaging applications and the ever-increasing number of legislations regarding the percentage of recycled plastic used in packaging, “McKinsey” mentions the growing demand for recycled plastics and its possibility to reach 40 million tons in a 7-year period.
Changes In Collection And Sorting
This report then goes into detail describing the changes that need to take place in order for the expected target on demand for recycled plastics to be met by 2030.
For the increase in recycled content from 4 to 26 %, capacity of plastic waste collection will have to be quintupled (x5) from that of 2020. The report also states the importance of separated collection and its significant role in recycling quality, while also enhancing Extended Producer Responsibility (EPR) and expanding the collection capacity by implementing material-focused MRFs (Material Recovery Facilities).
With regard to sorting, the development of advanced capabilities (e.g. AI), further automatization and enhancement of eco-friendly designs are mandatory in order to expand sorting efficiently and beyond bottles, while at the same time tackle household presorting errors.
For the previously mentioned changes to happen, an additional capacity of 67 million tons in collection and sorting is needed, “McKinsey” describes.
Changes In Mechanical And Chemical Recycling
Furthermore, investments will include the increase in plastic waste capacity for mechanical recycling, which will add 23 million tons and will represent 52 % of the total global recycling capacity.
Chemical recycling, on the other hand, which greatly contributes in the circularity of plastics, will have to become more advanced. Specifically, “McKinsey” refers to an increase of 31 million tons of capacity for chemical recycling to become a viable solution by 2030, along with the most required capacity deriving from the development and scaling of feedstock recycling.
Company Collaborations And Decreasing Risk
Due to the risk of all the aforementioned investments but also to ensure the development of new technologies, some leading investors have averted the risk by forming partnerships, signing memorandums of understanding or entering into off-take agreements with large chemical companies. Likewise, waste and chemical companies are turning towards joint ventures (JVs) to gain access to waste supply and increase their security in offloading agreements. “McKinsey” also reports that investments are being made to enable access to low-cost and consistent quality plastic waste raw materials and waste management companies are investing in MRF (Materials Recovery Facility) upgrades and waste collection infrastructure to increase access to recycling.
Conclusion
With the introduction of the foregoing business model innovations, as well as alternative financing arrangements and partnerships, risk of investment in the EU recycling capacity is reduced. Thus, further development and investment on chemical recycling will significantly increase the recycling rate of plastics and hopefully satisfy the demand on recycled plastics, while reducing plastic waste and benefiting the economy of Europe on a greater scale.
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