INDUSTRY INSIGHTThought Leadership

Chemical recycling: Progress, drivers and the potential future for Middle East participants

By Will Collins, Global Editor, Recycled Polymers, Argus

Chemical recycling is in vogue, with strong demand from the packaging industry for like-virgin recycled plastics and considerable investment towards rolling out technologies to commercial scale, what steps can Middle East market participants take to advance in the space?

A lot of work continues to go in on a global basis, to scale chemical recycling as a compliment to mechanical recycling and drive towards circularity in the plastic industry. The aim to direct plastic waste away from landfill aligns with the targets set out in Middle Eastern countries’ plans, and development is being supported by polymer producers’ need to offer products compatible with the voluntary targets and impending legislative requirements of their customers.

Category

Typical target material Description
Pyrolysis Mixed difficult-to-recycle polyethylene/polypropylene waste Plastic waste is broken down into an oil via pyrolysis, which can then be refined to produce feedstock for steam cracker production
Depolymerisation Single stream difficult-to-recycle plastic waste (particularly PET) Single stream plastic waste is broken down into monomers or intermediates, which can then be repolymerised
Solvent-based Multi-layer product waste, single stream difficult-to-recycle plastic waste Polymer waste is separated from contaminants by a process of dissolution and recovered

*Adjacent technologies that are not strictly pyrolysis fit into this category e.g. Licella/Mura Technology’s “Hydro PRS” process

The majority of early capacity development for pyrolysis chemical recycling is taking place in Europe and the US, meaning potential to grow in other regions, including the Middle East. But there are still challenges to overcome.

Busy project pipeline

Chemical recycling can broadly be split into three categories (see table on the left). This article will focus on pyrolysis.

At present, global plastic pyrolysis capacity remains small in the context of plastic production, and is overwhelmingly focussed in Europe and the US. But there are big plans for the industry, with a number of new commercial scale units are scheduled to start up in the US and Europe this year, and the pace of development set to accelerate thereafter if all of the projects that are currently in the pipeline come to fruition.

In the Middle East, the desire to make something more of plastic waste has been made clear. Saudi Arabia, the UAE and Oman have announced plans to divert 80-100pc of waste away from landfill, and several initiatives have recently taken place including Dubai’s January resolution to phase out single-use packaging and promote recycled materials, and Omani state-owned producer OQ’s move to establish downstream polymer projects – including a plastic recycler – in Sohar Industrial City from last December.

Category

Typical target material Description
Pyrolysis Mixed difficult-to-recycle polyethylene/polypropylene waste Plastic waste is broken down into an oil via pyrolysis, which can then be refined to produce feedstock for steam cracker production
Depolymerisation Single stream difficult-to-recycle plastic waste (particularly PET) Single stream plastic waste is broken down into monomers or intermediates, which can then be repolymerised
Solvent-based Multi-layer product waste, single stream difficult-to-recycle plastic waste Polymer waste is separated from contaminants by a process of dissolution and recovered

*Adjacent technologies that are not strictly pyrolysis fit into this category e.g. Licella/Mura Technology’s “Hydro PRS” process

The majority of early capacity development for pyrolysis chemical recycling is taking place in Europe and the US, meaning potential to grow in other regions, including the Middle East. But there are still challenges to overcome.

Busy project pipeline

Chemical recycling can broadly be split into three categories (see above table). This article will focus on pyrolysis.

At present, global plastic pyrolysis capacity remains small in the context of plastic production, and is overwhelmingly focussed in Europe and the US. But there are big plans for the industry, with a number of new commercial scale units are scheduled to start up in the US and Europe this year, and the pace of development set to accelerate thereafter if all of the projects that are currently in the pipeline come to fruition.

In the Middle East, the desire to make something more of plastic waste has been made clear. Saudi Arabia, the UAE and Oman have announced plans to divert 80-100pc of waste away from landfill, and several initiatives have recently taken place including Dubai’s January resolution to phase out single-use packaging and promote recycled materials, and Omani state-owned producer OQ’s move to establish downstream polymer projects – including a plastic recycler – in Sohar Industrial City from last December.

But, compared with Europe and the US, there are currently fewer announced projects in the Middle East.  No further news has yet followed a Memorandum of Understanding that Sabic and Saudi Investment Recycling Company (SIRC) — a subsidiary of the Public Investment Fund of Saudi Arabia — signed in 2021, which proposed a feasibility study into building a pyrolysis unit in Saudi Arabia. And a Dubai-based pyrolysis project between Norwegian chemical recycler Quantafuel, BASF and Dubai Holding – which progressed to the Front-End Engineering and Design (FEED) phase in August 2022 – remains at pre-final investment decision stage.

Bodour Al-Meer, sustainability director at Qatar’s Supreme Committee for Delivery & Legacy for the FIFA 2022 World Cup told delegates at the GPCA conference in May 2022 that availability of pyrolysis capacity to convert plastic waste collected at the tournament back into feedstock was a challenge, and appealed to the industry for assistance.

New requirements

Demand to develop chemical recycling comes from two fronts. On one hand, there is a desire to increase recycling rates by finding a way to tackle difficult-to-recycle plastic waste which is currently being incinerated, landfilled, or worse leaking into the environment. And, on the other hand, as the investor profile into current projects shows, global petrochemical and polymer producers see an imperative to adjust their portfolios to the new “sustainable” requireaments of their customers. Many global brands have committed to using more recycled plastic in their products and, increasingly, policymakers are moving to turn these voluntary targets into legal requirements.

Keeping up with these changes in their key markets will also be important for Middle Eastern producers, and some have already reacted. Sabic is building a joint-venture pyrolysis plant in the Netherlands in joint-venture with Plastic Energy, which is due to start up this year. And, whilst not a new pyrolysis project, Aramco, Sabic and TotalEnergies also announced that they had produced circular polymers using pyrolysis oil at the Satorp refinery and Petrokemya manufacturing complex in Jubail.

Chemical recycling is seen by many as a necessary development to contribute to the targets and laws that are being set out. The latest progress report from the Ellen MacArthur Foundation (EMF) – with which many global FMCG brands registered voluntary pledges to increase recycled content – showed that signatories were on track to come up some way short of their commitments by the 2025 deadline (see graph). Being able to source recycled polymers at the right quality is seen as the biggest challenge to increasing recycled content, and availability of chemically recycled polymers which could be used as a “drop in” replacement for virgin plastic in packaging could accelerate progress.

There are also calls for further development in chemical recycling to meet developing – although as yet largely unconfirmed – legislative requirements. For example, in Europe – a key market for Middle Eastern polymers – EU bodies recently agreed to progress the Packaging and Packaging Waste Regulation (PPWR) that would mandate 10pc recycled content in polyolefin food packaging by 2030, despite a dearth of mechanically-recycled options with the sufficient approvals for food-contact use.

EMF signatories’ progress to recycled content targets

Outside of packaging, the European Commission has also proposed an End-of-life Vehicle (ELV) Directive that would mandate 25pc recycled content in automotive plastics in the EU by 2025, which PlasticsEurope said would require chemical recycling to meet.

On a global level, discussion of binding recycled content targets in the UN negotiations over a global plastics treaty will be seen as encouraging to the pyrolysis industry, although a resolution remains some way off. Ahead of the second round of negotiations last year, the UN Environment Programme (UNEP) expressed considered support for chemical recycling in a report published ahead of the second round of negotiations last year, noting “important shortcomings”, but still calling for further investment and suggested that legislators should consider incentives to its promote development.

Given that buyers will have to pay a significant premium for chemically-recycled polymers, compared with virgin material, at least in the early stages of the industry, legislation is seen as a more definitive way of underpinning future demand than voluntary commitments.

Challenges to overcome

The direction of travel is supportive in many ways for pyrolysis, but there are still challenges to overcome.

The technology has detractors, particularly on the grounds of its high carbon intensity compared with mechanical recycling, which has sometimes prolonged discussion around its position within legislative targets (see the EU’s debate about the rules around attribution of chemically-recycled content via mass balance). And it is generally reported that the investment needed to build new pyrolysis plants has become harder to secure in recent years amid a tighter economic environment and ongoing uncertainty about legislation.

Petrochemical investments in pyrolysis feedstock

Company

Location Capacity (input) Start up
Source One (LyondellBasell/23 Oaks Investments Joint Venture) Eicklingen, Germany 70,000t/yr Started Feb ‘24
OMV/Interzero Waldurn, Germany Up to 260,000t/yr 2026
Cyclyx (Agilyx/LyondellBasell/ExxonMobil joint venture) Houston, Texas 150,000t/yr Mid-2025

It has been common for projects to encounter delays before and during start-up, owing to a combination of practical and economic factors, although the hope would be that future developers could build upon the experience of early adopters. In particular, the Middle East’s wealth of recent experience with large petrochemical projects could also be useful if and when projects start to be developed in the region.

One of the challenges for potential Middle Eastern investors is likely to be feedstock availability. Pyrolysis plants are built to handle difficult-to-recycle waste, but there are varying limits to what they can can use. Most prefer a polyolefin-rich feedstock with limited quantities of certain contaminants, including PET and PVC. In Europe and the US, this is leading to the development of sorting capacity specifically geared towards producing pyrolysis feedstock, which would also need to develop in other regions (see table on the left).

Petrochemical investments in pyrolysis feedstock

Company

Location Capacity (input) Start up
Source One (LyondellBasell/23 Oaks Investments Joint Venture) Eicklingen, Germany 70,000t/yr Started Feb ‘24
OMV/Interzero Waldurn, Germany Up to 260,000t/yr 2026
Cyclyx (Agilyx/LyondellBasell/ExxonMobil joint venture) Houston, Texas 150,000t/yr Mid-2025

It has been common for projects to encounter delays before and during start-up, owing to a combination of practical and economic factors, although the hope would be that future developers could build upon the experience of early adopters. In particular, the Middle East’s wealth of recent experience with large petrochemical projects could also be useful if and when projects start to be developed in the region.

One of the challenges for potential Middle Eastern investors is likely to be feedstock availability. Pyrolysis plants are built to handle difficult-to-recycle waste, but there are varying limits to what they can can use. Most prefer a polyolefin-rich feedstock with limited quantities of certain contaminants, including PET and PVC. In Europe and the US, this is leading to the development of sorting capacity specifically geared towards producing pyrolysis feedstock, which would also need to develop in other regions (see above table).

In regions with a less formalised recycling infrastructure, the investment required is likely to be greater. Lee Hodder, the managing director of Quantafuel’s now-owner Viridor, said of its Dubai project “we have progressed our understanding of what it would take to deploy a Plastics-to-Liquids (PtL) plant in the region and together with partners we are closely monitoring the ability to secure the required volumes of feedstock at the suitable quality to support chemical recycling.”

Much ado

Further development of pyrolysis in the Middle East would fit with targets to divert waste away from landfill, and could help local producers to adjust their offering to the growing sustainable requirements of their customers. Local companies such as Sabic have also shown that investment can also mean building plants or forming offtake agreements in regions with a more established recycling history, at least in the first instance. But there are challenges to overcome on the practical side, and uncertainties on the legislative side that still await clarity. Many potential investors will be watching developments over the next 1-2 years closely.