Recycled plastics 30 years and €400bn away from cost parity with virgin plastics

Chemically recycled plastics could achieve price parity with virgin plastics within 20 to 30 years – but it will cost €400 billion in capital expenditure to get there.

A new report by Bain & Company shows that unattractive economics remain an obstacle to the development of the chemical recycling industry: in Europe, recycled polyolefins (produced by breaking down pre- and post-consumer plastic waste into new plastic molecules) still cost more than twice as much as their virgin counterparts.

However, the research finds that there is currently a window of opportunity to spur the recycled plastic market.

"Our analysis shows that chemical recycling could become competitive with virgin production once cumulative global volume reaches 650 million metric tonnes of polyolefins recycled through pyrolysis, assuming a virgin price of €1,250 per metric tonne and depending on gate fees and broader market conditions," said Mark Porter, head of Bain & Company's global Chemicals practice. "This would take at least 20 to 30 years and by then recycled plastic would account for approximately 20-30% of total plastic demand."

Call for policy action

The consultancy calls for European policymakers to mandate the inclusion of small amounts of chemically recycled plastics into new products, following a similar strategy as the one used to increase the market share of sustainable aviation fuel (SAF).

Like the ReFuelEU directive mandating 2% SAF content in all EU flights from 2025, and ramping up to 70% by 2050, the mandate could start small and grow gradually.

The research shows that country-level or regional blending mandates that increase chemical recycling market penetration by 1 to 2% annually could unlock over 15% share of the plastics market by 2040. 

"Moving the needle will require a systems approach with regulatory support. Once scale reaches critical mass, chemical recycling can transition from a subsidy-reliant push to a demand-driven pull. That inflection point could fundamentally shift the economics, turning chemical recycling into a competitive, market-driven solution," added Porter.

Three priorities to shift plastics business model

Beyond the €400 billion companies will need to invest to make chemical recycling a viable solution, Bain & Company outlines three strategies for plastics producers to shift their business models. First, they need to focus on creating an offtake market by working in close collaboration with value chain partners: “Early movers can lock in premium waste streams and serve high-value customers, creating a virtuous cycle of scale and performance,” the consultancy says.

Second, companies should actively engage with regulators on critical policy levers like the minimum recycled content mandate. Finally, producers should be “willing to be flexible and rewrite their playbooks”, experimenting with new business models, sourcing strategies and partnerships. “That could mean forming 10-year offtake agreements with dynamic pricing mechanisms – the kind of creative moves that may be invisible from the outside but lay the groundwork for future advantage,” Bain & Company writes.