Chemical recycling of plastics remains economically uncompetitive with virgin plastic production and may require cumulative global investments exceeding €400 billion to reach cost parity, according to a new analysis from Bain & Company.
In its latest report, Chemical Recycling: Plastics Firms Must Move Now or Miss Out, the consultancy highlights the steep cost differential associated with advanced recycling technologies such as pyrolysis and gasification. Currently, the cost of chemically recycling polyolefins in Europe is estimated at more than twice that of producing virgin materials, significantly limiting its adoption to niche markets willing to absorb higher price points.
Bain’s analysis outlines that achieving cost parity will be a decades-long process, hinging on major capital outlays and supportive regulation. “It would take at least 20 to 30 years and by then recycled plastic would account for approximately 20–30 per cent of total plastic demand,” said Mark Porter, Head of Bain & Company’s global Chemicals practice.
A Prolonged Path to Cost Parity
Bain estimates that reaching cost parity for chemically recycled polyolefins would require a global cumulative volume of 650 million metric tonnes recycled via pyrolysis — a scenario dependent on favourable gate fees and broader market conditions. The pathway to this target, however, comes with an additional cumulative cost premium of €270 billion, comprising margin compression, regulatory offsets, and customer-paid premiums.
A separate report from Zero Waste Europe reached similar conclusions, suggesting that pyrolysis may not become commercially viable for up to 50 years under current conditions.
While technological innovation — including hydraulic sorters and enzymatic decontamination processes — is expected to reduce operational costs over time, Bain warns that cost parity is unlikely to be achieved through market forces alone. “Moving the needle will require a systems approach with regulatory support,” Porter noted. “Once scale reaches critical mass, chemical recycling can transition from a subsidy-reliant push to a demand-driven pull.”
Regulatory Frameworks Hold the Key
The report concludes that existing policies, including the European Union’s Packaging and Packaging Waste Regulation (PPWR), remain inadequate for closing the supply-demand gap. Though the 2030 recycling targets set by the regulation represent a positive step, their efficacy depends heavily on the speed at which the industry can scale supply.
Companies remain cautious in the face of implementation uncertainties and the risk of non-compliance penalties. This hesitancy is compounded by thin margins in the virgin plastics sector, which restrict capital expenditure capacity for long-term investments in chemical recycling.
Bain advocates for regulatory pathways similar to those deployed for renewable diesel and sustainable aviation fuel in Europe — specifically, graduated blending mandates that incrementally increase recycled content requirements. The consultancy argues that annual blending increases of one to two percentage points could unlock a recycled polymer market share of over 15% by 2040.
Such measures could effectively decouple recycled polymer prices from volatile virgin plastic markets, reduce investment risk, and accelerate deployment of chemical recycling capacity across the EU and beyond.
Until then, the report warns, the sector faces a risk gap: a mismatch between the scale of investment required and the limited market readiness to absorb chemically recycled output. Without coordinated policy intervention and early-stage incentives, chemical recycling risks remaining on the periphery of the plastics value chain.
