By Andrea Bassetti, Americas team lead, plastics recycling; Corbin Olson, senior analyst, plastics recycling; and Joshua Dill, analyst, plastics recycling, ICIS
From the ongoing fallout surrounding the UN Plastics Treaty negotiations to the ever-evolving regulatory landscape, the recycled plastics industry is as hectic and unpredictable as ever.
The recycling industry is no stranger to uncertainty, having been stuck in a perpetual cycle volatility for years. Now, with mounting pressure to advance circularity and reduce plastic waste, the industry is under increasing strain to scale up capacity and deliver high-quality, cost-effective recycled materials.
Achieving this, however, is easier said than done.
Mechanical recycling, the most established method for processing post-consumer plastics, faces significant challenges. Chief among them is the dependence on feedstock quality — something heavily influenced by domestic collection and sortation systems, which still have considerable room for improvement. Mechanical recycling also remains best suited for monolayer material, predominantly rigid plastics, which limits its applicability across the broader spectrum of plastic waste.
In addition, low virgin plastic prices, uncertain economic conditions and the uneven implementation of recycling-related legislation further complicate the industry's efforts. While recyclers continue to maximize the efficiency and output of existing infrastructure — squeezing every last drop from current processes — there remains a portion of plastic waste that is not technically or economically viable to recycle through mechanical means.
However, as demand for recycled content continues to grow, attention is increasingly turning to advanced recycling technologies — including both thermal and chemical processes — as promising solutions to the limitations of traditional mechanical recycling. These technologies offer the potential to process hard-to-recycle materials, such as multilayer packaging and more heavily contaminated plastics, which are typically excluded from conventional recycling streams.
With their ability to complement existing infrastructure and extend the range of recyclable materials, advanced recycling methods are poised to play a critical role in the industry’s evolution. As momentum builds, several key developments within the advanced recycling space are emerging — developments that could significantly reshape global recycling capacity and infrastructure in the years to come.
The current advanced recycling landscape
Advanced recycling is an umbrella term that encompasses a variety of different depolymerization processes that either depend on heat or chemicals to break plastic polymers down into their constituent monomers. Thermal processes — gasification and pyrolysis — are used primarily for PE and PP feedstocks, while chemical processes are generally deployed for PET.
Although both processes are still in their relative infancy in comparison to mechanical recycling, chemical depolymerization capacity is significantly larger than thermal capacity. For example, according to our own insights, as of 2024, chemical depolymerization capacity is nearly 25 percent higher than thermal capacity. Moreover, the average chemical facility processes over five times the amount of recycled plastics per year vs. thermal facilities. However, data from announced projects suggests that this balance is likely to shift within the next 5 years.
Why the disparity?
This disparity stems from differences in feedstock collection and processing approaches. Mechanical recycling has traditionally focused on PET due to its abundance and relatively uniform waste streams. Leveraging this established infrastructure, chemical depolymerization technologies have been developed to process PET variants that are difficult to recycle mechanically, such as colored or textured PET. As a result, some industry players have been able to quickly adapt and address niche feedstock gaps.
In contrast, thermal depolymerization technologies primarily target polyolefins, such as PE and PP, which are largely untapped by mechanical recycling due to higher contamination levels and more complex sorting and purification requirements. Consequently, thermal depolymerization — particularly pyrolysis — has garnered significant interest. Most existing facilities remain in early stages of development, often limited to pilot and demonstration-scale operations. This cautious approach reflects an industry-wide emphasis on refining process reliability and efficiency before scaling up to full commercial deployment.
The next frontier: startups and expansions
Even as investors remain cautious, given the interest that is swirling around these spaces, the startup and expansion landscape begins to heat up. Driven by the largely yet untapped potential of pyrolysis, thermal depolymerization is projected to grow by more than five times its current size by 2030 based on announced plants.
That said, the true extent of this growth could be tempered. Advanced recycling facilities — particularly pyrolysis facilities — are notoriously prone to delays and cancellations due myriad economic, technical and legislative delays. This is evidenced by several high-profile players such as Fulcrum Bioenergy, Regenyx and Encina all cancelling projects over the last year. Nonetheless, players including ExxonMobil and Revalyu have announced plans for additional thermal and chemical facilities that are set to bring significant capacity online this year and next.
Looking forward
Despite the external pressures that the recycling industry has continued to face, the sector has proven to be incredibly resilient and is poised to continue on its modest growth trajectory in the years ahead. Of course, several obstacles could curb this progress. However, if investments in regional infrastructure and recovery efforts can be delivered, and the industry can find ways to navigate the technical, capital and legislative landscape surrounding advanced manufacturing, the capacity ecosystem in the U.S. could begin to look much brighter in the years and decades ahead.
