Itero Technologies CEO Simon Hansford sits down with Richard Carter, independent consultant and former senior executive at BASF, to paint a picture of the chemical recycling sector today and envision its future – discussing decarbonization and electrification, end-to-end collaboration across the industry, chemical recycling’s position in the waste hierarchy, and more.
SH: Looking at the demand for recycled polymers, what changes have you seen in recent years and how do you see that changing in the future?
RC: There has been a massive surge in demand for recycled polymers in recent years; this has occurred alongside rapid development of the market, and an increased willingness to pay premium for sustainable materials. This increase in demand can be split into three distinct product groups: bio-based polymers, recyclate from mechanically recycled polymers, and pyrolysis oil-derived polymers.
In terms of how that demand will change in the future, underlying changes are happening and how that unfolds will impact overall demand. One of the key drivers is the EU ETS (European Union Emissions Trading System) and the associated regulatory framework for European carbon pricing. The trajectory is clear for the price of carbon. At present, the cost of EUA (European Union ETS Allowance) is oscillating between around €80 to €100 per tonne for carbon in Europe, expected to increase by at least 50% over the next five years due to various factors including the reduction of fee allowances by the EU.
Combined with the Carbon Border Adjustment Mechanism (CBAM) which will impact imports into the EU, any forward-thinking company strategy must not only consider but assign a cost to carbon. It’s not a matter of ‘if’ but ‘when’ companies will be paying tax for carbon if they do not significantly reduce their carbon footprint and/or inputs.
For chemical recyclers supplying pyrolysis oil for the steam cracker, they can contribute to reducing the carbon footprint and, consequently, lower potential carbon tax obligations. Mechanical recycling, given its larger scale within a more established industry, will also be a multiplier in reducing carbon emissions as new facilities come onstream.
SH: I’ll come on to the next question which you had also touched on, namely, that collaboration across the value chain is central to a circular transition. Where do you see collaboration working well for new circular technologies and where could you see some improvements?
RC: Now that’s a hard question to answer because everyone has their own personal experience of collaboration. However, there are dynamics at play that impact the effectiveness of collaboration, as well as areas for improvement.
One of the challenges I see for collaboration in the new circular value chain for chemical recycling is the inherent contrast between large-scale, and global, petrochemical industries with capital-intensive operations, and the very small but highly innovative chemical recycling companies in early stages of development. When you add to this the large brand owners and supermarket chains, also key links in the circular value chain, the challenge becomes clearer.
To ensure effective collaboration, it’s crucial to create an atmosphere where the larger partners do not “drown” the smaller ones in administration or onerous decision pathways in a way that stifles that innovation and speed to delivery. I think most large multi-national organizations understand this, but the challenge is to delegate enough control to the smaller partners – which takes a lot of trust and courage.
SH: What do you see as the most important role of established chemical and petrochemical companies in a circular transition for plastics?
RC: My view is very clear: the commitment to decarbonize.
Currently, major global players in this industry are still investing in new plastics capacities worldwide, even though there’s already an overcapacity issue.
If these companies have not yet internalized the need to leave the old model and move to the Net Zero focused trajectory, then momentum to develop the required circular infrastructure will be slowed, alongside the associated negative consequences of more fossil plastic.
So, what must change is to include decarbonization as the leading KPI in company strategy metrics. It can no longer be the earnings per share or the dividend but should include carbon intensity and carbon reduction.
SH: How do you see decarbonization working for the recycling industry?
RC: First, it’s essential to consider the entire waste hierarchy pyramid, starting with reduce, redesign, and reuse. Then comes the recycling stage, where the benefits of decarbonization – especially for chemical recycling - perhaps are less obvious, but extensive evidence supports the fact that one tonne of recycled material in the pyrolysis process can substantially reduce CO2 emissions and carbon intensity vs incineration of plastic waste, or production of virgin naphtha.
To put it together: decarbonization in the recycling industry requires regulatory support, collaboration, mass balance adoption, and standardization. Regulatory support is essential to incentivize the build of infrastructure and increased supply of recycled materials. Another key aspect of decarbonization is collaboration and standardization. There has been commendable work but it’s imperative that trade associations work more intensively together to address the broader carbon footprint challenge.
And a key point that requires standardization and validation is Mass Balance. If I want to prove the sustainable/carbon footprint advantages, then a watertight chain of custody system is required to develop and expand the chemical recycling industry.
SH: What made you interested in chemical recycling?
RC: Given my background, circular solutions were really close to my heart. I spent many years in the chemical industry involved in cracker feedstock procurement and recycling strategies, and when I became independent, I further explored chemical recycling and circular solutions in this industry that I’m so passionate about.
Incorporating the experience of “the plastics challenge” as a citizen (e.g. pollution) and the end of “business as usual” in the chemical industry led me to focus on the topic of chemical recycling. It made sense to me, particularly chemical recycling via pyrolysis. Pyrolysis oil plays a key role in creating value from “waste” resources and circularity from specific waste streams, and this is what brought me to wanting to work with Itero. Itero is targeting a missing link in the circular value chain, diverting precious resources that have been treated as waste from incineration or landfill, and then offsetting the use of virgin fossil products. I am excited about the collaboration because I see a very positive trajectory ahead.
SH: Do you see any particular trends in terms of infrastructure in the chemical industry?
RC: Let me give you the short answer: electrification.
This is a crucial element, primarily because electrification impacts Scope 1 and Scope 2 emissions, making it a prerequisite for wide scale decarbonization.
Various petrochemical companies are working in consortia to electrify the steam cracking process which is a CO2 emissions-intensive process, mainly due to the energy needed to heat furnaces, accounting for a substantial part of emissions.
However, a significant challenge in this electrification process is to fulfill the need for the significantly increased power requirements which must come from renewable wind and solar sources. It’s not enough to electrify the processes; the energy source must be sustainable.
SH: My final question today is: How do you see robust recycling infrastructure with chemical recycling as a part impacting plastic pollution?
RC: I take the view that everything is connected.
Robust recycling infrastructure, with chemical recycling as a component, has a significant role to play in addressing plastic pollution. This influence extends to both mitigating existing pollution and preventing further pollution. The connections between these aspects are intricate, and regional and global perspectives are essential.
It’s fundamental to acknowledge that the solutions needed to address plastic pollution aren’t one-size-fits-all. Different countries and regions have distinct waste management systems and cultural norms, requiring tailored approaches. Learning from and implementing strategies developed in one region into another can be a promising step.
We’ve got to clear up, clean up, and prevent waste, not just in the oceans, cleaning it up on land is actually the first step and precursor to preventing ocean waste. So, everything we do, the more we can prevent escaping from the system and getting into waterways and oceans, the better. But again, we’ve got to be aware and avoid dictating to the rest of the world how to avoid pollution and create circularity.
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