INTERVIEW: Avangard Innovative CEO discusses challenges, opportunities of chemical recycling feedstock

HOUSTON (ICIS)–Often considered the “silver bullet” to complete the plastic circular economy, chemical recycling is seen as the much needed complement to mechanical recycling in order to boost recycled resin supply. Though similar to mechanical recycling, the chemical recycling industry is challenged by feedstock supply, especially in the face of recent larger than life facility capacities.

This paradigm was highlighted by Rick Perez, CEO of Avangard Innovative, in a recent interview with ICIS.

The mechanical recycling supply-demand imbalance

Over the last year, the US mechanical recycling industry has experienced surges in demand unlike any year prior. Under pressure from this demand and systemically short recycled plastic supply, recycled resin markets have seen record-breaking prices and increased market volatility.

Increased demand in the US primarily stems from the sustainability targets of consumer brand companies, such as Coca-Cola, Unilever, Nestle and many more. These companies have committed to incorporating post-consumer recycled (PCR) content into their packaging over the next 5-10 years, some with recycled content up to 100%.

Despite the growing demand, recycling behaviours, plastic collection and mechanical recycling infrastructure has been slow to change.

According to ICIS supply and demand analytics, the US recycled plastics market will need 145 new mechanical recycling facilities, with an average output of 18,000 tonnes/year of post-consumer material, to meet 30% PCR by 2025 within polyethylene terephthalate (PET), polyethylene (PE) and polypropylene (PP) in the packaging sector.

Source: ICIS Recycling Supply Tracker – Mechanical 2022, ICIS Supply and Demand Database, and ICIS Analytics

But additional capacity alone will not solve the problem. In order to quickly meet the need from the industry, new waste streams for recycled plastic must be utilised to boost overall supply.

Chemical recycling as a complement to mechanical recycling

Though mechanical recycling technology has its limits in terms of plastic waste feedstock, chemical recycling technology presents a complementary opportunity to tackle hard-to-recycle feedstocks and boost recycled resin supply.

“We are trying to solve an issue and we needed both technologies. And if there is a new technology, we will adopt that,” said Perez.

In recent years, there has been a tidal wave of chemical recycling facility announcements from new market players and petrochemical giants building out their sustainability portfolios. By 2025, the US is expected to have over 5m tonnes of chemical recycling input capacity, based on data from the ICIS Chemical Recycling Supply Tracker. That data is based on company announcements. Most of this capacity will be from pyrolysis based facilities.

Source: ICIS, Recycling Supply Tracker – Chemical, 2022

Challenges in Chemical Recycling Feedstock

While these players may be new to the plastic recycling value chain, they bring chemical recycling technology expertise and scalability. But as operations grow from pilot to commercial scale, the challenge of feedstock supply for even chemical recycling operations has become more apparent.

“A lot of people think just because you have access to [material recovery facility] MRF material, you can put this in. It does not work that way.” commented Perez. “It’s a whole lot harder than people believe… chemical pre-treatment is not a cake walk, there is a perception there, just throw it all in.”

Beyond technical limitations, chemical recyclers also face feedstock cost pressures. Early financial models may have assumed reduced feedstock costs based on historic values.

“Everyone thinks they will get it for free…That is not going to happen, when you make something valuable, now it’s a different world, now you have to make the economics work off of a feedstock that costs you money, not based on tipping fees,” commented Perez.

In Europe, mixed plastic waste input for chemical or mechanical recycling is already trading at a premium due to supply shortages. Monosorted waste bale shortages and high prices of recycled polymer flakes and pellets have led waste managers and mechanical recyclers to explore the use of mixed polyolefins to make up shortfalls, particularly for non-packaging applications such as construction.

Historically due to higher wastage loss than monosorted material, and the difficulty in sorting mixed plastic waste, using mixed plastic waste (particularly mixed polyolefins) was not previously economically viable. This has now changed.

Although chemical recycling can take waste fractions that are not possible to mechanically recycle, there are still a number of technical requirements for waste input. Pyrolysis for example, typically requires the minimisation of chlorine content (typically to 0.1% or less) due to its corrosive effect, the removal of PET because it oxygenates the process and does not depolymerise using pyrolysis, and the avoidance of nylon and flame retardants.

As chemical recycling capacity scales in Europe, particularly pyrolysis facilities, mixed plastic waste is expected to further tighten. As mechanical recyclers have entered the mixed polyolefin market, pushing prices higher and limiting availability, chemical recyclers have increasingly explored the use of high-plastic content refuse derived fuel (RDF) suitable reject bales.

Availability of high-plastic, high calorie content RDF bales is also becoming increasingly limited, with high biomass content bales now more common. Even more recently, mechanical recyclers are also increasingly turning to high quality RDF grades, further tightening supply.

Prior to Q4 2021, RDF-bale grades had always been sold at negative values, with sellers paying buyers to remove material based on saving against alternative disposal methods. In Europe, RDF bales are now commonly priced depending on plastic content and calorific value – with lower calorific value and bales with plastic content of less than 80% continuing to attract negative prices, and bales with high plastic content currently priced at up to €300/tonne ex-works Europe.

In order to successfully scale this technology, it is critical for industry players to understand the availability, quality and financial limitations of plastic waste feedstock.

“If ‘sustainability’ is not economically sustainable, it does not work,” said Perez.

Seizing this opportunity, Avangard Innovative, a veteran mechanical recycler of low-density polyethylene (LDPE) and linear low-density polyethylene (LLDPE) film, has announced plans to build a chemical recycling facility by 2023.

The facility, co-located with their existing mechanical recycling facility in Waller, Texas, will utilise Honeywell’s UpCycle modular pyrolysis process technology.

“Here’s the thing that makes us a little different than anybody else, we have direct sourcing for 30 years, we have delivering to a network and understanding the sources of materials,” stated Rick Perez, CEO of Avangard Innovative. “[As a mechanical recycler] we knew what couldn’t take for a long time.”

Building off their industry knowledge and network of plastic waste suppliers, Perez expects the facility to reach its full 30,000 tonnes/year processing capacity of mixed plastic waste.

But Avangard will not be alone in their supply journey.

“As you talk about supply, you will see more strategic partnerships,” said Perez, highlighting the need for collaboration across the industry and across the value chain.

Avangard will be sourcing chemical recycling feedstock material from three primary sources: non-mechanically recyclable waste from their own facility, plastic waste sources from their existing industry network, and new waste streams from MRFs, such as mixed plastic bales or post-consumer film.

In recent months, other feedstock partnerships have been announced, such as the memorandum of understanding (MoU) between the city of Houston, the waste management company FCC Environmental, and chemical recyclers Cyclx, ExxonMobil and LyondellBasell.

Support from all angles: Legislation

As feedstock supply pathways continue to evolve for chemical recycling operations, recent legislative support for the chemical recycling industry opens the door for end market applications.

Just this week, New Hampshire signed into law Senate Bill 367, a piece of legislation which supports chemical recycling operations, which they deem “advanced recycling”. New Hampshire is the 19th state to adopt such legislation, following Mississippi, Kentucky, West Virginia and South Carolina earlier this year. Missouri Governor Mike Parson has yet to sign House Bill 2485 into law, which would bring the total up to 20 states.

This bill will amend the legal definitions of chemical recycling processes such as pyrolysis, solvolysis, gasification and depolymerization such that they would no longer be categorised under categories like “solid waste processing” or “incineration”.

Adopting the legal definition of recycling opens the door for chemically recycled material to be used in future post-consumer recycled content mandates or as marketable recycled material.

More controversially, this would mean the investment, construction and running of chemical recycling facilities covered under these laws could grant them funding, taxation or environmental regulation as a recycling facility rather than as a waste to fuel or disposal facility.

LCA Debate

Despite the advantages of chemical recycling technologies, in that they can handle more difficult waste streams and produce plastic resin with virgin like quality, the overall environmental impact of these processes continues to be investigated.

Current data provided through various life cycle analysis (LCA) studies can be difficult to compare, due to differences in study scope and estimations.

Though the industry has largely accepted mechanically recycled plastic resin has a lower carbon footprint than virgin resin, emissions data from various chemical recycling technologies is still under review.

Despite the gray area, Perez still strongly supports chemical recycling on the grounds that it reduces plastic waste, reminding us all that recycled plastics are only part of the broader environmental and circular strategy.

“If we are trying to solve an environmental issue, then let’s enhance any and all technologies that are willing to help us do that,” said Perez.

In November 2021, ICIS launched a mixed plastic waste pricing service covering European prices for mixed-polyolefins waste bales, reject refuse-derived fuel (RDF) bales and reject materials recovery facility (MRF) bales. Along with this, the new service covers emerging trends in the chemical and mechanical recycling markets, as well as the burn-for-energy sector. To subscribe to the new pricing service, or for further information, please contact clientsuccess@icis.com.

Additional reporting by Mark Victory.

changed heading and sourcing for the chart shows announced US chemical recycling capacity

adds sentence, paragraph 10

HOUSTON (ICIS)–Often considered the “silver bullet” to complete the plastic circular economy, chemical recycling is seen as the much needed complement to mechanical recycling in order to boost recycled resin supply. Though similar to mechanical recycling, the chemical recycling industry is challenged by feedstock supply, especially in the face of recent larger than life facility capacities.

This paradigm was highlighted by Rick Perez, CEO of Avangard Innovative, in a recent interview with ICIS.

The mechanical recycling supply-demand imbalance

Over the last year, the US mechanical recycling industry has experienced surges in demand unlike any year prior. Under pressure from this demand and systemically short recycled plastic supply, recycled resin markets have seen record-breaking prices and increased market volatility.

Increased demand in the US primarily stems from the sustainability targets of consumer brand companies, such as Coca-Cola, Unilever, Nestle and many more. These companies have committed to incorporating post-consumer recycled (PCR) content into their packaging over the next 5-10 years, some with recycled content up to 100%.

Despite the growing demand, recycling behaviours, plastic collection and mechanical recycling infrastructure has been slow to change.

According to ICIS supply and demand analytics, the US recycled plastics market will need 145 new mechanical recycling facilities, with an average output of 18,000 tonnes/year of post-consumer material, to meet 30% PCR by 2025 within polyethylene terephthalate (PET), polyethylene (PE) and polypropylene (PP) in the packaging sector.

Source: ICIS Recycling Supply Tracker – Mechanical 2021, ICIS Supply and Demand Database, and ICIS Analytics

But additional capacity alone will not solve the problem. In order to quickly meet the need from the industry, new waste streams for recycled plastic must be utilised to boost overall supply.

Chemical recycling as a complement to mechanical recycling

Though mechanical recycling technology has its limits in terms of plastic waste feedstock, chemical recycling technology presents a complementary opportunity to tackle hard-to-recycle feedstocks and boost recycled resin supply.

“We are trying to solve an issue and we needed both technologies. And if there is a new technology, we will adopt that,” said Perez.

In recent years, there has been a tidal wave of chemical recycling facility announcements from new market players and petrochemical giants building out their sustainability portfolios. By 2025, the US is expected to have over 5m tonnes of chemical recycling input capacity, based on data from the ICIS Chemical Recycling Supply Tracker. Most of this capacity will be from pyrolysis based facilities.

Source: ICIS, Recycling Supply Tracker – Chemical, 2021

Challenges in Chemical Recycling Feedstock

While these players may be new to the plastic recycling value chain, they bring chemical recycling technology expertise and scalability. But as operations grow from pilot to commercial scale, the challenge of feedstock supply for even chemical recycling operations has become more apparent.

“A lot of people think just because you have access to [material recovery facility] MRF material, you can put this in. It does not work that way.” commented Perez. “It’s a whole lot harder than people believe… chemical pre-treatment is not a cake walk, there is a perception there, just throw it all in.”

Beyond technical limitations, chemical recyclers also face feedstock cost pressures. Early financial models may have assumed reduced feedstock costs based on historic values.

“Everyone thinks they will get it for free…That is not going to happen, when you make something valuable, now it’s a different world, now you have to make the economics work off of a feedstock that costs you money, not based on tipping fees,” commented Perez.

In Europe, mixed plastic waste input for chemical or mechanical recycling is already trading at a premium due to supply shortages. Monosorted waste bale shortages and high prices of recycled polymer flakes and pellets have led waste managers and mechanical recyclers to explore the use of mixed polyolefins to make up shortfalls, particularly for non-packaging applications such as construction.

Historically due to higher wastage loss than monosorted material, and the difficulty in sorting mixed plastic waste, using mixed plastic waste (particularly mixed polyolefins) was not previously economically viable. This has now changed.

Although chemical recycling can take waste fractions that are not possible to mechanically recycle, there are still a number of technical requirements for waste input. Pyrolysis for example, typically requires the minimisation of chlorine content (typically to 0.1% or less) due to its corrosive effect, the removal of PET because it oxygenates the process and does not depolymerise using pyrolysis, and the avoidance of nylon and flame retardants.

As chemical recycling capacity scales in Europe, particularly pyrolysis facilities, mixed plastic waste is expected to further tighten. As mechanical recyclers have entered the mixed polyolefin market, pushing prices higher and limiting availability, chemical recyclers have increasingly explored the use of high-plastic content refuse derived fuel (RDF) suitable reject bales.

Availability of high-plastic, high calorie content RDF bales is also becoming increasingly limited, with high biomass content bales now more common. Even more recently, mechanical recyclers are also increasingly turning to high quality RDF grades, further tightening supply.

Prior to Q4 2021, RDF-bale grades had always been sold at negative values, with sellers paying buyers to remove material based on saving against alternative disposal methods. In Europe, RDF bales are now commonly priced depending on plastic content and calorific value – with lower calorific value and bales with plastic content of less than 80% continuing to attract negative prices, and bales with high plastic content currently priced at up to €300/tonne ex-works Europe.

In order to successfully scale this technology, it is critical for industry players to understand the availability, quality and financial limitations of plastic waste feedstock.

“If ‘sustainability’ is not economically sustainable, it does not work,” said Perez.

Seizing this opportunity, Avangard Innovative, a veteran mechanical recycler of low-density polyethylene (LDPE) and linear low-density polyethylene (LLDPE) film, has announced plans to build a chemical recycling facility by 2023.

The facility, co-located with their existing mechanical recycling facility in Waller, Texas, will utilise Honeywell’s UpCycle modular pyrolysis process technology.

“Here’s the thing that makes us a little different than anybody else, we have direct sourcing for 30 years, we have delivering to a network and understanding the sources of materials,” stated Rick Perez, CEO of Avangard Innovative. “[As a mechanical recycler] we knew what couldn’t take for a long time.”

Building off their industry knowledge and network of plastic waste suppliers, Perez expects the facility to reach its full 30,000 tonnes/year processing capacity of mixed plastic waste.

But Avangard will not be alone in their supply journey.

“As you talk about supply, you will see more strategic partnerships,” said Perez, highlighting the need for collaboration across the industry and across the value chain.

Avangard will be sourcing chemical recycling feedstock material from three primary sources: non-mechanically recyclable waste from their own facility, plastic waste sources from their existing industry network, and new waste streams from MRFs, such as mixed plastic bales or post-consumer film.

In recent months, other feedstock partnerships have been announced, such as the memorandum of understanding (MoU) between the city of Houston, the waste management company FCC Environmental, and chemical recyclers Cyclx, ExxonMobil and LyondellBasell.

Support from all angles: Legislation

As feedstock supply pathways continue to evolve for chemical recycling operations, recent legislative support for the chemical recycling industry opens the door for end market applications.

Just this week, New Hampshire signed into law Senate Bill 367, a piece of legislation which supports chemical recycling operations, which they deem “advanced recycling”. New Hampshire is the 19th state to adopt such legislation, following Mississippi, Kentucky, West Virginia and South Carolina earlier this year. Missouri Governor Mike Parson has yet to sign House Bill 2485 into law, which would bring the total up to 20 states.

This bill will amend the legal definitions of chemical recycling processes such as pyrolysis, solvolysis, gasification and depolymerization such that they would no longer be categorised under categories like “solid waste processing” or “incineration”.

Adopting the legal definition of recycling opens the door for chemically recycled material to be used in future post-consumer recycled content mandates or as marketable recycled material.

More controversially, this would mean the investment, construction and running of chemical recycling facilities covered under these laws could grant them funding, taxation or environmental regulation as a recycling facility rather than as a waste to fuel or disposal facility.

LCA Debate

Despite the advantages of chemical recycling technologies, in that they can handle more difficult waste streams and produce plastic resin with virgin like quality, the overall environmental impact of these processes continues to be investigated.

Current data provided through various life cycle analysis (LCA) studies can be difficult to compare, due to differences in study scope and estimations.

Though the industry has largely accepted mechanically recycled plastic resin has a lower carbon footprint than virgin resin, emissions data from various chemical recycling technologies is still under review.

Despite the gray area, Perez still strongly supports chemical recycling on the grounds that it reduces plastic waste, reminding us all that recycled plastics are only part of the broader environmental and circular strategy.

“If we are trying to solve an environmental issue, then let’s enhance any and all technologies that are willing to help us do that,” said Perez.

In November 2021, ICIS launched a mixed plastic waste pricing service covering European prices for mixed-polyolefins waste bales, reject refuse-derived fuel (RDF) bales and reject materials recovery facility (MRF) bales. Along with this, the new service covers emerging trends in the chemical and mechanical recycling markets, as well as the burn-for-energy sector. To subscribe to the new pricing service, or for further information, please contact clientsuccess@icis.com.

Additional reporting by Mark Victory.