Speaker 1: This is Dana Perkins and you're listening to Switched on
Speaker 1: the BNAF podcast. So, as mister McGuire said to Ben
Speaker 1: in the graduate, just one word plastics, there's a great
Speaker 1: future in plastics. Think about it all right. I'm pretty
Speaker 1: sure that it was delivered slightly better in the movie
Speaker 1: and possibly on this show, because I don't think it's
Speaker 1: the first time we've actually used that quote, but I
Speaker 1: think about it every time when we talk about plastic recycling.
Speaker 1: So here we are at Biennia doing some thinking about
Speaker 1: plastics again. Plastic production is set to double between twenty
Speaker 1: twenty two and twenty fifty, so action is needed to
Speaker 1: address the inefficiencies in the existing recycling process. At the moment,
Speaker 1: only seven to ten percent of it is actually recycled.
Speaker 1: So four years ago on this show, we discussed chemical recycling,
Speaker 1: and at the time it was an up and coming
Speaker 1: technology that could potentially help address issues with lower grade
Speaker 1: feedstocks that the existing system can't recycle. So on today's show,
Speaker 1: four years on, we're going to revisit chemical recycling and
Speaker 1: look at what's chained in the intervening period. I'm joined
Speaker 1: today by Kirti Vasta, who's a senior associate from our
Speaker 1: Sustainable Materials team. Kirti recently wrote a two part note
Speaker 1: which reviews the science behind chemical recycling. She also gets
Speaker 1: into the expanding capacity in the near term and the
Speaker 1: forecast for the longer term, and she also thinks about
Speaker 1: the investors who are in this market. To access parts
Speaker 1: one and two of Karti's recent research on chemical recycling
Speaker 1: of plastics, B and e F subscribers are going to
Speaker 1: be able to find it at BNF dot com or
Speaker 1: on the Bloomberg terminal. Now, if you like this podcast,
Speaker 1: make sure to subscribe to receive updates on future shows,
Speaker 1: and if you want to share us with others, give
Speaker 1: us a review. But right now, let's jump into our
Speaker 1: conversation with Kirti Vasta to find out what is the
Speaker 1: latest in chemical recycling. Kerti, thank you for coming on
Speaker 1: the show today.
Speaker 2: Thank you for having me.
Speaker 1: We are here for an update on the chemical recycling space. Now,
Speaker 1: for those who aren't familiar, we're going to talk about
Speaker 1: this and actually get into some more detail. But really
Speaker 1: what's happening from a policy standpoint, economics, market dynamics, and
Speaker 1: we're going to update because actually on switched on we
Speaker 1: add a whole show dedicated to the fundamentals of chemical
Speaker 1: recycling back in twenty twenty. But let's just assume that
Speaker 1: nobody's listening to every single one of our episodes and
Speaker 1: they remember exactly what we said four years ago. So, Katy,
Speaker 1: can you just talk a little bit about chemical recycling
Speaker 1: from a definition standpoint and how it differs from mechanical recycling.
Speaker 2: So maybe before I dive into exactly what chemical recycling is,
Speaker 2: it might be helpful to just take a step back
Speaker 2: and explain the majority of recycling processes today and how
Speaker 2: they work and how it relates to chemical recycling. So,
Speaker 2: the majority of recycling infrastructure in place today is mechanical recycling. Now,
Speaker 2: this is a fairly simple process. What it essentially involves
Speaker 2: is plastic waste being sold by grade and type and
Speaker 2: then being washed and shredded and melted back into pellets
Speaker 2: which can then be used to produce plastics.
Speaker 1: Again.
Speaker 2: Now, this is, as I mentioned, a fairly simple process
Speaker 2: and often leads to waste that is of quite a
Speaker 2: low grade, doesn't always go back into high quality packaging materials,
Speaker 2: and can often have a few challenges associated to it
Speaker 2: around the efficiency of that yield, and of course the
Speaker 2: sorting process can be quite a challenge. It it has to
Speaker 2: be very meticulously sorted, and of course that can be
Speaker 2: costly considering the different types of colors and grades and
Speaker 2: types of plastics that are in our packaging and our
Speaker 2: materials today.
Speaker 1: So this is an industry ripe per disruption. It's too complicated.
Speaker 1: Inter Chemical recycling, yes.
Speaker 2: So chemical recycling is a broad term that refers to
Speaker 2: new forms of recycling using chemical processors. And an analogy
Speaker 2: I like to use here is something quite similar to
Speaker 2: unbaking the cake. Right, so assume your plastics is the cake.
Speaker 2: You're basically stripping down plastics back to its original ingredients.
Speaker 2: So this is in some cases your flour, your sugar,
Speaker 2: your eggs, but in the case of plastics, it would
Speaker 2: be the hydrocarbons. So this is the oil that has
Speaker 2: originally gone into producing plastic. And the best part of
Speaker 2: chemical recycling is that you can actually make virgin quality
Speaker 2: plastics again given that you strip down your waist into
Speaker 2: the original ingredients that it was made of, and that
Speaker 2: can go back into producing high quality plastics. Again that
Speaker 2: can go into packaging and your sensitive contact materials.
Speaker 1: So getting it to that virgin grade must be really
Speaker 1: important because when I think of the plastics that are used,
Speaker 1: for example, that are possible to be used for food
Speaker 1: preparation or to hold food, is actually what I'm thinking of,
Speaker 1: is that where needing virgin quality plastics is really really
Speaker 1: important or is it across all applications that virgin materials
Speaker 1: are actually preferred.
Speaker 2: That the area of packaging is currently where the biggest
Speaker 2: demand is for chemically recycled or high quality recycled plastics. So,
Speaker 2: as we know, there's the plastics crisis ongoing, Mismanaged waste
Speaker 2: is ending up in our oceans and our environment, and
Speaker 2: a lot of brand owners of companies like Pepsi, Coca Cola,
Speaker 2: do None are setting targets now to really manage that
Speaker 2: waste and improve their packaging to incorporate more recycled material now.
Speaker 2: In order for them to do that, they need a
Speaker 2: high quality material that can be food contacts approved, it
Speaker 2: can be going into packaging materials and the like. So
Speaker 2: this is where chemical recycling really poses as an opportunity.
Speaker 2: Considering the mechanically recycled material that's currently on the market,
Speaker 2: as I mentioned, is often of quite a low grade.
Speaker 1: So consumer brands that are actually using plastic packaging are
Speaker 1: now coming up with different targets to try and get
Speaker 1: more of the plastic recycled, which then makes the question
Speaker 1: how much of existing plastic waste actually is being recycled
Speaker 1: right now.
Speaker 2: So right now it's extremely low. Globally, plastics recycling is
Speaker 2: around seven to ten percent, and that's extremely low. That's
Speaker 2: way too low, absolutely, and that can vary right between
Speaker 2: different markets. So in Europe it's a little bit better
Speaker 2: because the infrastructure for recycling is already in place, but
Speaker 2: if you look at developing countries, it's extremely low. Often
Speaker 2: plastic waste just ends up getting incinerated and land filled,
Speaker 2: and so there is a real challenge here. And what's
Speaker 2: exciting about chemical recycling actually is that a lot of
Speaker 2: this waste that's often mismanaged it cannot be recycled, can
Speaker 2: actually be recycled through chemical recycling processes. So chemical recycling
Speaker 2: can accept mixed bales of plastic waste, so this is
Speaker 2: all of your different types and colors and grades of
Speaker 2: plastics with a certain level of contamination. It can then
Speaker 2: take that waste and process it and produce the hydrocarbons
Speaker 2: that can then go into making plastics again.
Speaker 1: So such a small amount of plastics are actually being recycled,
Speaker 1: and I am thinking back to the show that we
Speaker 1: did over four years ago on this time, and I
Speaker 1: think the number was roughly the same back then. There
Speaker 1: just isn't a lot that's actually being recycled. So the
Speaker 1: exciting thing about chemical recycling is that we could get
Speaker 1: more of our plastic waste recycled. Are there projects that
Speaker 1: are happening right now or reasons that we might see
Speaker 1: in the industry to believe that this might be the
Speaker 1: right time to see chemical recycling scale and actually fulfill
Speaker 1: its potential to increase the amount of our waste stream
Speaker 1: that's actually being turned over.
Speaker 2: Absolutely yes. So Actually, in the last two or three
Speaker 2: years at BINF we've been tracking capacity of chemical recycling projects,
Speaker 2: and since twenty twenty, we've tracked around forty new chemical
Speaker 2: recycling plants being announced. That accounts for about two point
Speaker 2: three million tons of expected capacity that's likely to be
Speaker 2: commissioned by twenty thirty. So this is really exciting because
Speaker 2: it can really fill that gap that's currently in the
Speaker 2: market in terms of managing and dealing with this this
Speaker 2: waste that's very difficult and hard to recycle. Of course,
Speaker 2: this is still only announced capacity, but it is quite
Speaker 2: exciting to see that companies are really jumping on board
Speaker 2: now and planning to build this capacity in different parts
Speaker 2: of the world.
Speaker 1: So these new projects and these new plants that are
Speaker 1: going in, what type of chemical recycling are they actually
Speaker 1: going to be? Because there are kind of two subsets
Speaker 1: of this, which is feedstock recycling and monomer recycling, And
Speaker 1: I want to know which of the two is getting
Speaker 1: better adoption and might be the bigger one of the two.
Speaker 2: So let me start with monomer recycling. So this is
Speaker 2: essentially a process whereby plastics like polyethylene territhylate also known
Speaker 2: as PET, so this is what your clear plastic water
Speaker 2: bottles are made of and polystyrene are basically broken down
Speaker 2: into that monomer level, so they go from a polymer
Speaker 2: to a monomer. And this is often a fairly energy
Speaker 2: intensive process. But what it then means is that plastics
Speaker 2: which previously would not be easily recycled, can then go
Speaker 2: through this process and we get a higher grade, a
Speaker 2: high equality of scrap, but also more feedstock can actually
Speaker 2: go through this process and produce the monomers to then
Speaker 2: go back into plastics. Now, what's really exciting about monomery
Speaker 2: recycling is that it's not only plastic packaging materials that
Speaker 2: actually can go through this process. So actually just last
Speaker 2: month we had an announcement from BASF who is basically
Speaker 2: using the same process to actually produce recycled nylon which
Speaker 2: is going into jackets that are being sold in Zara.
Speaker 2: So this is actually a really interesting application for all
Speaker 2: types of polymers which can go through this process of
Speaker 2: monomer recycling.
Speaker 1: So when I see this item is made from recycled
Speaker 1: plastic bottles, that is essentially the process it's going through,
Speaker 1: and we can think about chemical recycling as really the
Speaker 1: technology that was used to make that possible.
Speaker 2: Yes, now there is still a gap in terms of
Speaker 2: how much material is being chemically recycled. So for example,
Speaker 2: pet bottles, that is actually one of the most easily
Speaker 2: recycled plastic today, and a lot of it can actually
Speaker 2: be mechanically recycl called quite well. But where chemical recycling
Speaker 2: is really going to make a dent in the market
Speaker 2: is for the flexible wrappers and films that are very
Speaker 2: hard to recycle today, and that's something that isn't quite
Speaker 2: on the market yet as a chemically recycled product. And
Speaker 2: then the other type of recycling process that we look
Speaker 2: at is feedstock recycling, and this is often a process
Speaker 2: called pyrolysis, which is basically heating up plastic waste in
Speaker 2: the absence of oxygen to produce a type of naptha
Speaker 2: or a pyrolysis oil, which can then be used to
Speaker 2: produce your plastics again. Now, this is actually the most
Speaker 2: popular form of chemical recycling capacity that we're seeing being announced.
Speaker 2: About seventy percent of all the capacity we've tracked actually
Speaker 2: is for feedstock recycling, and a lot of this is
Speaker 2: actually being led by plastics producers, including companies like Exomobile,
Speaker 2: Lined or Bizell Borealis to Some of these companies are
Speaker 2: the traditional oil and gas companies who are thinking about
Speaker 2: ways in which they can introduce more sustainable feedstock into
Speaker 2: their value chain and also are basically responding to what
Speaker 2: their customers are now demanding, which is more recycled, more
Speaker 2: greener products for their products and packaging.
Speaker 1: So there are two benefits here when we think about recycling,
Speaker 1: and this really a broader conversation around circular economy. One
Speaker 1: is the reduction of waste and the things that you'd
Speaker 1: pointed out with plastic ending up in the ocean and
Speaker 1: you know, in some cases ultimately our food. But then
Speaker 1: there are the emissions associated with recycling plastics and reducing
Speaker 1: the overall emissions through not using virgin materials and the
Speaker 1: emissions associated with extraction. Are these waste streams through these
Speaker 1: new plants ultimately being made more local and also reducing
Speaker 1: the shipping and supply chain related emissions, or are their
Speaker 1: centers of the world where most of this chemical recycling
Speaker 1: is likely to be placed and we're going to be
Speaker 1: strapped with those shipping related emissions for some time to come.
Speaker 2: That's a great question. And right now, because the market
Speaker 2: is still quite new, a lot of this capacity that
Speaker 2: has been announ hasn't yet come online officially. Right we're
Speaker 2: just starting to see the first large scale plants actually
Speaker 2: come online. It's going to be really interesting to see
Speaker 2: how this kind of dynamic evolves and where exactly chemical
Speaker 2: recycling plants are located. There's currently this debate if chemical
Speaker 2: recycling plants are located close to existing waste management facilities.
Speaker 2: What's really great is what could happen is all of
Speaker 2: the waste that can be mechanically recycled using the existing infrastructure.
Speaker 2: Would be mechanically recycled first, so that would be like
Speaker 2: your rigid plastics, your pet bottles, your shampoo bottles, and
Speaker 2: detergent bottles, which are made of HDPE high density polyethylene.
Speaker 2: That's often an easily recycled material. And then all of
Speaker 2: the rest of the plastics which can't be easily recycled,
Speaker 2: will go through a chemical recycling plant. And what that
Speaker 2: means is for a chemical recycler is they're located very
Speaker 2: close to the existing feedstock stream that might be the
Speaker 2: remainder of waste from a material recovery facility site. And
Speaker 2: so that's kind of one way that they could be positioned.
Speaker 2: It would reduce their car in terms of shipping the
Speaker 2: feedstock that they need from maybe other areas of the country. Now,
Speaker 2: another way which we see potential chemical recycling plants being
Speaker 2: positioned is at a petrochemical facility. So this would be
Speaker 2: integrated within a large petrochemical complex, for example, and the
Speaker 2: benefit there would be that they would have the existing infrastructure,
Speaker 2: so this is like the pipes and the tanks to
Speaker 2: store the different types of feedstocks that are being produced
Speaker 2: and This would also result in a cost saving if
Speaker 2: the chemical recycling plants were to be located here, and
Speaker 2: then the feedstock produced would go straight into a steam
Speaker 2: cracker at the petrochemical facility and also result in a
Speaker 2: cost saving.
Speaker 1: Can you talk about some of the companies that are
Speaker 1: actually in this space. Are there big brands that are
Speaker 1: doing this and is it being spun out from existing
Speaker 1: companies like, for example, the chemical recycling companies or the
Speaker 1: petrochemical companies or are they new companies that are looking
Speaker 1: to join partnerships with these existing players in this space.
Speaker 2: Yes, So what's really interesting in this market is that
Speaker 2: there is a really diverse group of players. So you've
Speaker 2: got the pure play chemical recycling companies. These are fairly new,
Speaker 2: early stage startups. So companies include mirror technology, plastics, energy,
Speaker 2: and what they're doing is they are in many cases
Speaker 2: partnering with plastics producers. So this is companies like Dow
Speaker 2: Lined or Bezel to actually sell the feedstock that they're
Speaker 2: producing from their chemical recycling plants to these companies that
Speaker 2: want to produce more recycled plastics. The other really interesting
Speaker 2: area that we've seen companies get involved in is the
Speaker 2: brand owners companies like the non Nesle, Coca Cola that
Speaker 2: have targets to really increase the amount of recycled material
Speaker 2: in their products are forming partnerships directly with chemical recyclers
Speaker 2: like Loop Industries, for example. And this is mostly around
Speaker 2: pet given that that's really one of the areas where
Speaker 2: a lot of demand for the recycling material is today.
Speaker 1: So you've mentioned some of the consumer brands that have
Speaker 1: created these targets. How are they incentivizing people to actually
Speaker 1: recycle these things properly if you will? Are they just
Speaker 1: going into the usual municipal waste streams and it's about
Speaker 1: how well things are then collected from that point, I mean,
Speaker 1: I guess my question is really how are they going
Speaker 1: about achieving their targets.
Speaker 2: Yeah, it's a really good question. So for some companies
Speaker 2: like Denan Nesle, they have targets to increase their post
Speaker 2: consumer recycled content in their products and packaging by fifty
Speaker 2: percent by twenty twenty five. Now twenty twenty five is
Speaker 2: round the corner, and we know that that material isn't
Speaker 2: quite on the market and isn't available for these brand
Speaker 2: owners to really make use of and incorporate today. So
Speaker 2: it's a really interesting question to see kind of what
Speaker 2: exactly will happen and how these companies will reach their
Speaker 2: targets by next year. One thing they should absolutely be
Speaker 2: doing more of is thinking about the end of life
Speaker 2: management options for their plastic packaging. What we have seen
Speaker 2: is some companies redesigning their packaging to make it more recyclable.
Speaker 2: I know Coca Cola has recently introduced right bottles without
Speaker 2: the label around the side of it, which is basically
Speaker 2: reducing the amount of packaging needed but also improving that
Speaker 2: recyclability of that material. So these are sorts of design
Speaker 2: changes which we're likely to see more of as this
Speaker 2: material becomes kind of more in demand and required on
Speaker 2: the market.
Speaker 1: Is there a policy pressure in policy incentives to increase recycling.
Speaker 2: Yes, So policy is the one thing that I would
Speaker 2: say has really changed since the last time that we
Speaker 2: looked at this area of chemical recycling and the impact
Speaker 2: it can have. So in the last few years, we've
Speaker 2: seen governments introduce post consumer recycle content mandates. For example,
Speaker 2: in the UK, there's currently a thirty percent recycled content
Speaker 2: mandate for all plastic packaging on the market today, and
Speaker 2: if that isn't met there's a plastics tax which is
Speaker 2: imposed on companies, so this is really driving demand now
Speaker 2: for more recycled material on the market. Now, we did
Speaker 2: some number crunching to really understand what the demand and
Speaker 2: supply looks like currently in the UK, and we believe
Speaker 2: there's quite a significant supplied deficit of around thirty thousand
Speaker 2: metric tons of recycled plastic, which is high grade and
Speaker 2: can go back into some of these packaging applications. In
Speaker 2: other markets as well, Europe is considering a similar post
Speaker 2: consumer recycled content mandate. France Spain that have also introduced
Speaker 2: similar mandates, So this is really pushing corporates that maybe
Speaker 2: don't have their targets in place already to have to
Speaker 2: abide by these rules as well.
Speaker 1: So policy makers want to see more recycled, the brands
Speaker 1: themselves want to see more recycled, and I think most
Speaker 1: everyday citizens I'm just going to speak from my own
Speaker 1: heart here, would like to see less plastic in the
Speaker 1: waste stream and more things being turned around in the
Speaker 1: circular economy. But then that brings us to the economics
Speaker 1: of it all and whether or not that really holds up.
Speaker 1: So let's just talk a little bit about the green
Speaker 1: premium that's currently associated with certain types of pet and
Speaker 1: really how big that is.
Speaker 2: So at BINGF, what we did was some economic analysis
Speaker 2: to really understand how profitable chemical recycling plants could be. Now,
Speaker 2: the advantages, of course, chemical recyclers have a low feeds
Speaker 2: doot cost because they're using a low quality scrap which
Speaker 2: would otherwise be incinerated or landfilled, and they're producing a
Speaker 2: very high quality, potentially virgin quality material, which means that
Speaker 2: you can sell it on the market at the same price.
Speaker 2: But in the last few years, what's also been really
Speaker 2: interesting to see is the green premium that's been stacked
Speaker 2: on top of that virgin price for some of these
Speaker 2: recycled plastics. And so we think currently for materials like
Speaker 2: pet and polyethylenes which are chemically recycled, given the green
Speaker 2: credentials of those materials, there's roughly a fifty percent green
Speaker 2: premium above the virgin price in markets like the US
Speaker 2: and Europe. So fifty percent is of course a huge
Speaker 2: markup right, And as a result, what we also looked
Speaker 2: at is the internal rate of return of projects. So
Speaker 2: we looked at a typical chemical recycling plant in the
Speaker 2: US and what we found is that the IRRs can
Speaker 2: be in the range of fourteen percent to twenty two percent,
Speaker 2: which is really quite high.
Speaker 1: As we think about the future, do you expect to
Speaker 1: see these IRRs staying at this relatively high place or
Speaker 1: do you think things are going to actually get cheaper
Speaker 1: in the future making this an easier market to enter.
Speaker 2: Yeah, so that's a great question. What we did in
Speaker 2: our report was we broke down the different cost components
Speaker 2: associated with a chemical recycling plant. So we looked at
Speaker 2: the capex costs, the opex costs, and of course the
Speaker 2: feeds dot costs as well. And what we found actually
Speaker 2: is compared to the previous year when we looked at
Speaker 2: the economics of these recycling plants, that capex costs have
Speaker 2: actually risen quite a lot and it's had a pretty
Speaker 2: significant impact if we look at the overall costs associated
Speaker 2: to building these plants. And that's of course, because construction
Speaker 2: costs have increased over time, energy costs have as well,
Speaker 2: material costs have, and so a lot of the plants
Speaker 2: that were planned to come online back in twenty twenty
Speaker 2: one and twenty twenty two actually got pushed back and
Speaker 2: delayed because of these rising costs and in some cases
Speaker 2: because of permitting delays as well. So if capex continues
Speaker 2: to rise over time, this could pose a problem to
Speaker 2: the returns that these plants could make, but we are
Speaker 2: hoping to see them stabilize somewhat and that to get
Speaker 2: easier over time. The other area that is really interesting
Speaker 2: here is the feedstock costs. So currently there isn't really
Speaker 2: a commoditized, transparent market for plastic scrap, and it's a
Speaker 2: challenge for chemical recyclists to really get hold of the
Speaker 2: scrap that they need in the correct format at a
Speaker 2: price which is affordable for them to process. Scrap Prices
Speaker 2: for pet for example, in the US, have been particularly
Speaker 2: volatile over the last three or four years, as have
Speaker 2: hdpe prices. So these are really interesting market dynamics which
Speaker 2: can have a really big impact in terms of how
Speaker 2: it can change the economics of these plants.
Speaker 1: Let's talk a little bit about how people may be
Speaker 1: perceiving the recycled plastics and actually why with an end
Speaker 1: consumer item, I might see, you know, ninety percent recycled
Speaker 1: plastics instead of one hundred percent recycled, and where there
Speaker 1: are needs to actually blend the recycled with the virgin feedstocks.
Speaker 2: So today the industry is still very far from producing
Speaker 2: one hundred percent chemically recycled plastics, but as the technology
Speaker 2: scales and more capacity comes online, we do expect to
Speaker 2: get closer to that one hundred percent mark. But currently
Speaker 2: what actually happens is, particularly from feedstock recycling, we get
Speaker 2: the pyrolysis oil, and often that pyrolysis oil doesn't meet
Speaker 2: the specifications that are required to produce plastics because they
Speaker 2: still have some forms of additives that are used in
Speaker 2: the original plastic manufacturing process. So that pyrolysis oil it
Speaker 2: has two options that either can go through an upgrading process,
Speaker 2: which is purifying that oil to make it meet the specifications,
Speaker 2: or it can be blended with virgin feedstock, so that
Speaker 2: could be your napther, and that would then produce a
Speaker 2: higher grade plastic, again with a certain share of that recycled. Now,
Speaker 2: a lot of the plastics that use chemically recycled feedstocks
Speaker 2: today use the blending approach because often it's cheaper to do.
Speaker 2: What we've found in our research is the upgrading the
Speaker 2: purification stage can be fairly costly and really is only
Speaker 2: an advantage to chemical recyclers that have access to some
Speaker 2: of these hydrotreaters and upgrading plants.
Speaker 1: So we're talking a lot about how we essentially make
Speaker 1: plastics from plastics and really some of the challenges, whether
Speaker 1: they're economic or actually chemical in this process. But there
Speaker 1: is another place where these recycled plastics can actually go.
Speaker 1: And I'm not talking about the materials in you know,
Speaker 1: my zip up jacket from whatever store I bought it from,
Speaker 1: but actually that's fuels. Can you talk a little bit
Speaker 1: about the adoption on that end and some of the
Speaker 1: issues that might be posed from a market dynamic standpoint.
Speaker 2: So coming back to feedstock recycling, since the output from
Speaker 2: pyrolysis process is something like a hydrocarbon mix like a
Speaker 2: naptha or a diesel. What we've seen in very early
Speaker 2: stages of chemical recycling back in twenty twenty and twenty
Speaker 2: twenty one with some of that feedstock actually not going
Speaker 2: into producing plastics but actually being diverted to fuel in
Speaker 2: ships and trucks. Now, in our view, this is not
Speaker 2: a circular economy solution. We want to see feedstock remaining
Speaker 2: in circulation for as long as possible, and if it's
Speaker 2: being burnt through being in the fuel markets. That is
Speaker 2: not the place where we see this the market for
Speaker 2: this product. Instead, it should really be directed back into
Speaker 2: the plastics market, and that's really in the last few
Speaker 2: years where we've seen the highest amount of demand and
Speaker 2: where we do believe that the recycled feedstock is going,
Speaker 2: especially because there is this green premium that I mentioned
Speaker 2: which can actually really incentivize recyclers to divert their feedstock
Speaker 2: to the plastic market.
Speaker 1: So this would not be then considered a sustainable fuel
Speaker 1: because I think about sometimes like sustainable aviation fuel that's
Speaker 1: made from feedstocks that actually come from different plans. A
Speaker 1: recycled feedstock going into fuel would not then be considered
Speaker 1: a sustainable fuel in these circumstances.
Speaker 2: It would not know And the reason why is because
Speaker 2: that carbon, the embodied carbon in that material is released
Speaker 2: back out into the atmosphere.
Speaker 1: So, Kurty, you tell me a little bit about where
Speaker 1: you see this as going and if this is a
Speaker 1: space that is really growing quite quickly, or if we
Speaker 1: did this episode in another four years we would be
Speaker 1: standing still.
Speaker 2: Yeah, great question. Well, so I'm quite an optimist when
Speaker 2: I think about chemical recycling, particularly because of the whole
Speaker 2: attention that plastics and plastics recycling is getting At the moment.
Speaker 2: We also have the UN Global Plastics Treaty which is
Speaker 2: currently in negotiation, and that's moving towards a binding legal
Speaker 2: agreement across these UN member states to actually come up
Speaker 2: with a way to end plastic pollution. And chemical recycling
Speaker 2: could really play a crucial role in achieving this by
Speaker 2: having the ability to process the hard to recycle waste. So,
Speaker 2: in my view, I think we are likely to see
Speaker 2: a lot of this capacity come online just because we're
Speaker 2: seeing the policy incentives, We've got the green premiums on
Speaker 2: the market, and companies are really getting on board in
Speaker 2: terms of really pushing to build this capacity. It's really
Speaker 2: just going to be a question of how quickly and when.
Speaker 1: Great. Thank you so much for sharing an update and
Speaker 1: your views on where this really exciting market is going.
Speaker 2: Thanks so much for having me.
Speaker 1: Tana Switched On is produced by cam Gray with production
Speaker 1: assistance from Kamala Shelling and Lushi Karunarete. Bloomberg NEIF is
Speaker 1: a service provided by Bloomberg Finance LP and its affiliates.
Speaker 1: This recording does not constitute, nor should it be construed
Speaker 1: as investment and vice investment recommendations, or a recommendation as
Speaker 1: to an investment or other strategy Bloomberg ENNIF should not
Speaker 1: be considered as information sufficient upon which to base an
Speaker 1: investment decision. Neither Bloomberg Finance LP nor any of its
Speaker 1: affiliates makes any representation or warranty as to the accuracy
Speaker 1: or completeness of the information contained in this recording, and
Speaker 1: any liability as a result of this recording is expressly disclaimed.