London, July 24: The chemical recycling industry is witnessing a slowdown across Europe and the United States as several recycling plants shut down, projects are postponed or cancelled and companies cite policy uncertainty and weak commercial viability as major challenges.
Chemical recycling, which converts plastic waste into oils or raw materials for manufacturing new plastics, has struggled to scale despite technological progress. Industry experts say inconsistent regulations, high production costs and limited investment certainty are slowing the sector growth.
According to industry representatives, the broader plastics recycling sector is facing structural challenges, resulting in slower recycling growth, increased exports of sorted plastic waste and continued dependence on landfill and incineration. In the European Union, around 70% of plastic waste is still sent to landfill or incineration while chemically recycled materials accounted for only 0.2% of total plastics production in 2024.
Several companies have recently announced closures or financial setbacks. Waste management company Viridor shut down its three Quantafuel chemical recycling plants in Scandinavia, stating that the business was not commercially viable despite achieving pyrolysis oil yields of around 70–75% by weight. UK based Plastic Energy also entered administration earlier this year, citing the European market downturn although its plants in Spain continue to operate outside the insolvency process.
Industry leaders say chemical recycling technologies are technically effective but remain significantly more expensive than producing plastics from fossil based feedstocks. They argue that stronger regulatory support, financial incentives and long term policy certainty are needed to attract investments worth hundreds of millions of dollars.
Research indicates that Europe currently has an estimated chemical recycling capacity of about 289,000 tonnes per year with dozens of projects proposed. However, several planned facilities have already been cancelled due to changing market conditions and uncertainty over future regulations.
Companies have also highlighted challenges related to the availability of suitable plastic waste, energy costs and access to nearby petrochemical infrastructure. In Germany, plans for a chemical recycling plant were shelved after the closure of a neighbouring steam cracker that was expected to process recycled feedstocks.
Despite the challenges some companies continue to expand operations. Mura Technology plans to commission its first commercial plant in the United Kingdom later this year using supercritical water technology to recycle difficult to process plastic waste. The company is also planning expansion in Singapore, citing strong government support for recycling initiatives.
Industry bodies have called on governments to strengthen policies that promote plastic collection, sorting and recycling while introducing incentives for products containing recycled materials. They warn that without stable regulatory frameworks and sustained investment chemical recycling may struggle to play a significant role in achieving circular economy and plastic waste reduction goals.