Is chemical recycling economically viable? Key findings from new European Commission report

In this edition of the Brief, we examine the European Commission’s recent report on the economic viability of chemical recycling, covering the main findings, conclusions and details such as technical considerations, regulatory context and potential policy support. 

Titled ‘Economic viability of chemical recycling’, the report from the European Commission’s Joint Research Centre provides an overview of the current state of the economic viability of chemical recycling of plastics in the European Union as of 2025, highlighting the key challenges and opportunities. It discusses different types of chemical recycling technologies and focuses on the economic viability of solvolysis and pyrolysis.  

Solvolysis is described as a process where polymers are broken down into oligomer or monomer building blocks by a solvent under reaction temperatures of 80-300°C; and pyrolysis is a thermochemical decomposition process that breaks down polymers under high temperatures (typically 300-700°C) in the absence of oxygen. 

It’s worth noting that the viability of gasification – a thermochemical process that converts polymers into a gas mixture called syngas (synthesis gas) through the application of very high temperatures (typically 700-1200°C) in the presence of a controlled amount of oxygen or steam – was not assessed in the report due to ‘lack of economic data and evidence from operational facilities’. 

To define how economic viability is assessed, the report states:  

“As the main criterion of economic viability, we compare unit production costs with expected sales prices.” 

However, production and investment costs are also considered, as well as the maturity and limitations of these technologies. Several challenges are also highlighted, such as the structurally high costs of chemical recycling processes and the uncertainties regarding potential demand for chemically recycled materials, especially of EU origin. 

Cost implications  

From the outset the report states that chemical recycling produces high-quality plastics (comparable to virgin plastics) at generally much higher costs than those of primary plastics. Apparently, cost modelling in a baseline scenario shows a cost for pyrolysis-derived naphtha that is 1.5 to 3.5 times higher than that of virgin naphtha, leading to a cost per tonne of chemically recycled polymer that is 1.4 to 3.7 times higher than that of virgin polymer, depending on virgin fossil fuel prices. 

This translates to recycled polymer prices of around 3000 €/tonne in a baseline scenario (1500 to over 4000 €/tonne under varying assumptions). Contributing factors to the higher costs of chemical recycling via pyrolysis compared to virgin polymers include physicochemical constraints and relatively low material recycling yields (typically ~30-50% relative to plastic waste feedstock). 

Incremental innovation, economies of scale and efficiency savings are ‘not expected to significantly alter these fundamentals in the near foreseeable future’. 

Comparison with mechanical recycling 

Mechanical and chemical recycling are often viewed as complementary processes rather than directly compared with each other. The report cites 2024 data from Plastics Europe which shows that of the 54 million tonnes of plastics produced in Europe, about 7.1 million tonnes (MT) came from mechanical recycling of post-consumer plastics and 3.1 MT from mechanical recycling of pre-consumer plastics, compared to less than 0.1 MT from chemically recycled post-consumer plastics. 

It adds that there is growing interest in chemical recycling due to increased ambition to recycle plastic waste into high-value applications (including hard-to-recycle plastic waste); export restrictions on plastic waste; a further push to reduce incineration and landfilling of plastic waste; new quality requirements on recycled plastics and mandatory recycled content requirements for a variety of plastic products. 

When considering the costs of both methods, mechanical recycling appears to be more advantageous when compared to chemical recycling, as the higher technical complexity required for the chemical processes results in a higher cost. The report says chemical recycling’s best chance of success is when these higher costs can be compensated by lower feedstock cost due to the unsuitability of feedstock for mechanical recycling and sale-price premiums. 

However, the advantages of chemical recycling are also outlined. These include being able to treat certain mixes of plastics or plastics with non-plastic materials (such aspolyester with cotton in textiles) together; being able to treat thermoset polymers (in particular polyurethane) which constitute about 16% of the European plastic converters demand and cannot be recycled mechanically into new polymers (according to Plastics Europe, 2022); and fewer greenhouse gas emissions compared to incineration (GarcíaGutiérrez et al. 2023), which makes it a relevant option for plastics that cannot be recycled mechanically and would otherwise be disposed of by incineration or landfilling. 

The report also points out that most chemical recycling processes can produce virgin-like and food-grade quality. 

Regulatory context 

According to the report, most stakeholder inputs indicated expected baseline demand for chemically-recycled plastics, especially the need to supply recycled material to meet the obligations of the EU’s Single-Use Plastics Directive - such as 25% recycled plastic in PET beverage bottles from 2025 and 30% in all plastic beverage bottles (PET and non-PET) from 2030 - and the Packaging and Packaging Waste Regulation, such as Article 7’s requirement of 10% plastic recycled content for contact-sensitive packaging made from plastic materials other than PET (except single-use plastic beverage bottles) by 2030, increasing to 25% by 2040. 

Expected demand  

The report draws on 2024 data from Plastics Europe which shows that of all plastic packaging, 35-40% of the European market for plastics as a whole was 58.8 MT(production) and 54.1 MT (consumption) in 2022), with almost half (9 MT) estimated to belong to the categories of food-grade (4 MT) or other contact-sensitive (5 MT) packaging according to SIA Partners in 2024. 

Bearing this in mind, the report predicts that:  

“If the market does not shift substantially to avoid non-compliance, the PPWR alone creates demand for approximately 10% of this ~9 MT recycled food-grade or contact-sensitive packaging, which can only partially be met by conventionally recycled PET. This means it is likely that 500kt-1Mt/y of chemically recycled plastics would be needed.”  

If focusing on non-PET plastics such as polyolefins and potentially styrenics (for example, if treated through pyrolysis) with a typical process efficiency of 30-50% yield, this corresponds to an installed input capacity of around 1-3Mt/y of waste plastics to be chemically recycled. 

How could policy support economic viability? 

The report recommends multiple policy measures that could be implemented to improve the economic viability of chemical recycling, such as a gate fee at the waste disposal stage; a green premium at the plastic conversion stage (how willing downstream actors would be to pay for recycled plastics to comply with voluntary sustainability goals or legal obligations, such as recycled content incorporation); and trade instruments including tariffs on imports or subsidies on exports. 

It also suggests a recyclate subsidy - for example, eco-modulation of Extended Producer Responsbility (EPR) and an incentive per weight of incorporated post-consumer recyclate - and a subsidy for recycling, such as a direct subsidy of the recycling activity based on recycling plant processing capacity to level the playing field compared with virgin materials. 

Final conclusions 

Ultimately, the report finds that:  

“Although chemical recycling in the EU does not achieve cost parity with virgin plastics, it could have a significant role to play in supplying markets with recycled plastics required for compliance with the Packaging and Packaging Waste Regulation and Single Use Plastics Directive recycled content requirements, and potential future regulation of a similar nature.” 

More specifically, for pyrolysis best case scenario yields could theoretically achieve over 50% plastic recycling, although “in current practice, the process typically converts only about 1/3 of plastics back to plastics or other high-value chemicals; 1/3 is lost as heat or material losses and another 1/3 is used for fuels production.” As things stand, using chemically-recycled waste-plastics as a feedstock for polymer production (taking naphtha-equivalent as a benchmark) results in a naphtha-equivalent intermediate that is “1.5 to 3.5 times more costly to produce” than virgin-derived feedstock, and is expected to remain “substantially more costly for the foreseeable future”. 

In the case of solvolysis, the report states there is “considerable variation and uncertainty in the available cost figures” compared to pyrolysis or gasification as solvolysis is less commercially established, with no current facilities at industrial scale. However, it also notes that securing access to feedstock and establishing off-take agreements is “critical” for the economic viability of solvolysis projects, and availability of public financial support could tip viability above acceptable thresholds, for example from below to above a 10% internal rate of return. 

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