Act quickly for chemical recycling security, industry told

Chemical recyclers in Europe are being warned it could take up to 30 years and at a cost of at least EUR 400 billion to achieve cost parity with virgin production – but early adopters can get a head start.

The guidance comes in Bain’s 2026 Paper & Packaging Report, a detailed assessment of the fibre markets. The authors warn that chemical recycling cannot achieve cost parity with virgin through market forces alone, because volumes will be too limited to generate significant cost benefits. They note it is a market driven by policies and believe that current policies are unlikely to be sufficient to close the gap between supply and demand.

Opportunities

However, they believe that while chemical recycling costs remain high, economically attractive opportunities exist and those who act quickly can secure premium positions as the market ramps up. They say early leaders will develop a flexible strategy and invest in feedstocks, strategic partnerships, and recycling technologies and capabilities. Europe’s Packaging and Packaging Waste Regulation (PPWR) is seen as a step forward but its 2030 recycling mandates are said to rely on optimistic assumptions about how quickly industry will increase supply. ‘Furthermore, we’re hearing companies express wariness about the uncertainty surrounding the regulation’s implementation and the implications of potential penalties,’ the authors write.‘This situation creates a risk gap: Market fundamentals remain unattractive, raising the bar for investment while shortening the runway for scaling. Meanwhile, margin pressures on virgin plastics leave limited financial headroom for capital expenditures. The result is that many companies are standing still on chemical recycling, and the industry and customers aren’t on track to hit 2030 recycling targets.’

Triple strategy

The report suggests recyclers should follow three routers in their strategy:

• Shaping the ecosystem. The winners will capture value today by proactively co-creating offtake opportunities in close collaboration with value chain partners while setting themselves up for long-term advantage. Early movers can lock in premium waste streams and serve high-value customers, creating a virtuous cycle of scale and performance.
• Joining the discussion. Leading companies will understand which policy levers are most important to their business and they will engage constructively with regulators to make them real.
  Equally important is reframing the public dialogue around plastics.  ‘For years, the industry has taken a defensive posture as consumer sentiment toward plastic has worsened. The opportunity now is to go on offence, not only advocating for circularity but also reminding stakeholders of the material’s unique value and critical role in modern life.’
• Developing a flexible strategy. Winning in chemical recycling will require the agility to adapt to market changes faster than competitors.
  ‘To do that, producers must be willing to rewrite the playbook because traditional tactics won’t cut it in a market still taking shape. Leaders will experiment with new business models, novel sourcing strategies, and unconventional partnerships.’

The authors conclude that chemical recycling is more than a ‘technology play’ for plastics companies. ‘Chemical recycling may not be the only answer to developing circular supply chains but it’s a critical one. The leaders won’t be the ones waiting for conditions to be perfect. They’ll be the ones shaping the conditions and the industry around them.’