After several delays in 2023, the pyrolysis chemical recycling industry needs to maintain momentum this year, writes Will Collins
Many European pyrolysis projects are taking longer than anticipated to be delivered, or pausing altogether, highlighting the challenges that firms face bringing the new technology to the market. Enthusiasm remains bright throughout the value chain that chemical recycling has an important part to play in Europe's future, but the industry must work hard to keep momentum going as it develops.
Challenges
As of December 2022, Argus' track of capacity announcements has indicated that at least nine new 10,000 t/yr (input) capacity pyrolysis or hydrothermal chemical recycling units were scheduled to come on line in Europe in 2023. Of those, only two are known to have achieved production by the end of the year, with one more announcing first production last month and at least one other currently in the commissioning phase.
The delays may not be enormous — with many of the remaining plants reportedly close to start-up — but they demonstrate the challenges faced by companies looking to scale up in the nascent sector, which are also affecting future projects. It is common for the timelines for final investment decisions (FIDs) and start-ups of projects in Argus' Chemical Recycling Project Tracker database to be extended. And since the start of the year, Austrian petrochemical company Borealis and Finnish refiner Neste have announced that they have put major pyrolysis projects on hold after feasibility studies.
Numerous factors have contributed to delays to projects, including a shortage of labour and equipment — possibly exacerbated by the pandemic years — and technical difficulties to overcome. Valentijn de Neve, chief executive of BlueAlp, which provided the pyrolysis process installed at Renasci's 20,000 t/yr pyrolysis unit in Ostend, Belgium, highlighted challenges with feedstock combined with uptime as a particular development area.
"The whole purpose of advanced chemical recycling is to take the dirty stuff and the mixed stuff, and we see different compositions over time," de Neve said. "If you want to have good uptime and there are inert parts [in the waste stream], how do you handle that in the right way?" De Neve added that his firm had worked on solutions to tackle this challenge.
He also noted that the first commercial-scale plant that BlueAlp constructed was built on a "shoestring" budget. The plant has since been upgraded — majority owner Borealis told Argus that it is "steadily advancing towards operating at full commercial capacity, with the team successfully demonstrating continuous and reliable production over an extended period of time" — and de Neve said that the next version of the technology has benefited as a result. He added that the involvement of technological development partner Shell had brought significant improvements in the reliability and safety of its design.
The future's bright
Chemical recycling's supporters — particularly plastics producers and downstream buyers — are enthusiastic about the industry's development and continue to see a need for the technology in the European and global circular economy picture.
Whenever new legislation has been proposed that would mandate recycled content in plastic products — such as the Packaging and Packaging Waste and End-of-life Vehicle regulations that are currently being debated at EU level — industry groups have been quick to call for clarity on how chemical recycling will help their members meet obligations. In January, Braskem and Shell announced a strategic partnership under which Shell will supply Braskem with propylene manufactured from pyrolysis oil to produce chemically-recycled PP.
And upstream firms are continuing to show their confidence in the future of pyrolysis by investing in supplementary infrastructure. Examples include OMV and Alba Group's plan to build a secondary sorting centre to provide plastic waste for pyrolysis, and Neste's plan to build a 150,000 t/yr on-purpose upgrader for "liquefied plastic waste" pyrolysis oil alongside its Porvoo refinery. Both projects progressed past FIDs since June, joining other projects on the feedstock and upgrading sides of the supply chain from companies including LyondellBasell and Shell.
There are up to 16 10,000 t/yr+ pyrolysis plants still scheduled to come on line in Europe in 2024 and 2025, according to the Chemical Recycling Project Tracker. And investment has continued to come, with Infinity Recycling announcing three new partners for its Circular Plastic Fund that took it to 90pc of its target just before Christmas. De Neve also told Argus that BlueAlp has "multiple" pipeline projects with funding in place, and sees increasing interest from the waste management industry to invest in chemical recycling on the back of tightening laws around landfilling and incineration of plastic. And the company is working on a scaled-up version of its design, with about 70,000 t/yr input capacity in a single reactor, which will result in savings on capital and operating expenditure, he said.
But too many delays could risk unsettling momentum of the industry development, particularly with respect to the confidence of some potential investors. There is a general feeling that new investment has become harder to secure in recent years. A worse global economic environment and higher interest rates are factors, but investors would also undoubtedly be encouraged by further evidence of the technology and supply chain operating at commercial scale. That makes the current round of start-ups particularly important, with interested parties inside and outside the industry likely to be watching closely.
Critical mass
One additional factor is the prolonged uncertainty over the EU's intended rules for mass balance attribution of chemically recycled content, which has been a particular bugbear for the industry.
After initially seeming to be leaning towards permitting the "fuel-exempt" allocation model for recycled credits that is favoured by the industry, there were signs at the end of last year that regulators were more inclined to a more restrictive "polymer-only" model, which industry associations have warned will significantly worsen pyrolysis plant economics and stifle development in the industry. This year, with at least one EU member state reportedly declaring its support for the fuel-exempt model, the pendulum may be swinging back in the industry's favour, although at the time of writing the European Commission is yet to submit its draft implementation act for member states' approval.
Based on the current timeline, member states are scheduled to vote on the issue by the end of March. A positive outcome regarding mass balance, from the industry's perspective, would be a very important step in shaping its future, and de Neve highlighted that any firm decision would help in terms of providing "clarity on the rules of the game".
Currently, mechanical recycling alone cannot supply recyclates to all applications in Europe. "I still believe that chemical recycling will play an important role because many applications cannot be served with mechanical recycling today, and there is not a lot we can see on the way forward that is changing the picture totally," Borealis chief executive Thomas Gangl — whose company has been one of the most active among petrochemical players in developing mechanical recycling — told Argus. The industry needs firm answers from regulators — and from within — to keep the momentum going if it is to scale up to make a meaningful contribution to the European and global recycling picture in the coming year.
