How can European chemical recycling scale up in 2025?

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Valentijn De Neve:

The key message is, we need to scale up jointly, the size of the advanced recycling market. The larger we size up and scale, the broader this market becomes, the lower the cost will be.

Daniel Pelosi:

Hello, and welcome to the Chemical Week Podcast by S&P Global Commodity Insights. My name's Daniel Pelosi, I'm the Senior Ed Reporter for the European C3 chain at S&P Global Commodity Insights. And you join us here today for a discussion on European chemical recycling sustainability outlook for 2025, and broader conditions across the markets across the year ahead.

2024 was a critical year within the European sustainable and recycled polymers markets. We generally saw a variety of developments and positive news for the industry, whether this be capacity growth or the initiation of new legislation, in terms of content mandates, forward-looking kind of encouragement of the use of such materials. But also, the industry has a long way to go with regards to broader consumption, commoditization, and concerns surrounding European competitiveness against both virgin polymers and other regions. So, this is a fruitful area of discussion, and we're joined by a panel today to go into a bit more depth regarding this industry and the way in which it operates.

So I'm joined today by Dias Kazym, the Price Reporter for European NAPTHA at S&P Global Commodity Insights in London. And Valentijn De Neve, Chief Executive Officer at a chemical recycling company, BlueAlp. Without further ado, let's dive right into things. Gentlemen, thank you for joining me today. And I'd like to start with asking a question to Valentijn. Just could you introduce us a bit to BlueAlp and your operations? Would you like to share with us more about your current perspectives on the development of chemical recycling and its industry within Europe?

Valentijn De Neve:

Good afternoon, and thanks for being on your podcast. It's an honor to join this conversation around why the industry is safe. I'm Valentijn De Neve, I'm the CEO at BlueAlp, and if I look at the fundamentals of chemical recycling or advanced recycling, then the fundamentals are right. There's more and more feedstock that no longer should be incinerated, and where policy is also driving this out of incineration, and there's more and more policies and consumer end demands for recycled products. But at the same time, I think when we look at 2024 and 2025, we are also in a difficult market. I'm happy to share a bit more about that in a moment.

What is BlueAlp? We are an advanced recycling company. We started more than 10 years ago in the Swiss Alps. That does give a hint about our name. And we had a three-kiloton plan there to turn mixed plastic waste into oil. And since then, we have been working on scaling up this technology, ensuring that we have a broader footprint. We're a licensor and we built installations. And the three-kiloton plant in Switzerland was great for learning, but is not a commercial operation. Our first commercial plant is in Belgium, it's Renasci. In 2020, a bit more than 20-kiloton plant, single train that we built started up. The plant now is largely owned by Borealis, and that's the first commercial plant where our technology is deployed.

Since then, we've built lines for different customers, and one of the first ones that will go online is for an Italian waste manager, Ares, in Italy, also roughly 20 kiloton. BlueAlp is a scale up company. We roughly have 100 employees, and we have five different shareholders. Shell, Borealis, and Mourik, Den Hartog, and Rumali, as Dutch family owned companies. And we operate in this market of advanced recycling.

And I think you asked the question on where does the industry stand now. And coming back on the fundamentals are clear, I think. There is a drive for independence and making profit circular, help with that. But I think we're also all aware that the chemicals market in Europe at the moment is in a tough economic condition. And we also see that some of the mechanical recyclers are struggling, but at the same time, there is clarity that these operations are profitable if it has the right technology, and that there is clear demand. What of course is a bit difficult is that the true regulatory support with mandated recycling content targets is only there in 2030, and currently we're in 2025.

Daniel Pelosi:

Excellent. Yes, no, fully agreed. And I think in my coverage of the mechanically recycled polypropylene industry, something that I really took away from 2024 was the need for a holistic and collaborative approach to plastics recycling and increased its sustainability in the European petrochemicals industry. I wanted to ask, Valentijn, what would you say are some of your key takeaways from 2024 as we've entered the new year at the time of recording, regarding the future of the plastics recycling environment and the required measures to ensure more progress in 2025?

Valentijn De Neve:

Well, thanks a lot, and not an easy question to answer, but I do believe that we will be in an important year. I mean, just in December, the support from the new EU Commission in Parliament on the PPWR solidifies the fundament that we will be going towards higher and higher circularity requirements in packaging. What will be key this year is how national governments implement these roles. The first signs of how countries plan to implement it are promising, but in the end, it's important to have it fully implemented, because one I see for investors, for them it's key that there are clear rules of the game. And I think this implementation of PPWR and getting full clarity on the mass balance approach will really unlock, I think, a series of projects that are in the pipeline of BlueAlp and competitors of BlueAlp.

Daniel Pelosi:

Thank you very much. Let's open up the floor a little bit here to Dias, who's also joining us on the panel today. Dias, your work is obviously focused on, from a chemicals' perspective the upstream industries, specifically the NAFTA sector. With regards specifically to chemical recycling, what do you see, and more importantly, I suppose, what does the NAFTA market see as the main points of focus with regards to chemical recycling for 2025?

Dias Kazym:

Thank you so much for the question, Daniel. And thank you very much Valentijn for your view on the 2025 outlook and the takeaways from 2024.

I think with response to that question, Daniel, if I may, I see that from the NAFTA side, the circular NAFTA that's produced out of the chemical recycling of waste plastics, is playing a much bigger role now as a renewable alternative to fossil feedstocks. As the global economy is shifting its focus towards more decarbonization and sustainability, especially the petrochemical industry, requires the renewable feedstocks, like oil-based circular NAFTA that's produced out of the chemical recycling.

I think another important part, and I think drawing on Valentijn's point about the cooperation with regulators, and I think Valentijn mentioned PPWR, if I may ask, Valentijn, what do you think is the role of that cooperation of all stakeholders, including the producers, the buyers of the end material, but also the regulatory stakeholders and NGOs in driving the production capacity in chemical recycling industry?

Valentijn De Neve:

Well, thanks. I really appreciate how you put this so holistic, because I think a lot of people think it's just around building a couple of plants, but if we really want to scale this industry, a much wider investment is required. Let me start with the feedstock. The feedstock, the plastics, is clearly there. Most of it is it's generated today. But to make this feedstock accessible for the various projects, investment in additional sorting is required. If we then look at the chemical recycling itself, then we need more support on faster permits. Quite a number of projects in Europe are not progressing as fast as they could because of hindrance around these permits. And if we then think about the transport shipping potential upgrading, then that's also requires additional investments and cooperation. And if we then think about the processing and the onwards end customers buying it, it also often requires different types of contracts and commitments to make this value chain work.

And actually, I'm quite positive on this. I do see the different players in the industry coming together to form these partnerships across the value chain. And I do believe that most of the players also see more direction it needs to go. The only thing is, I would love it to go faster. And we do try this of course by organizing ourselves across the value chain. So with Chemical Recycling Europe as an association of all companies active in advanced recycling, we try to help point at where can regulation help. But apart from policy, it's as important to work with the olefin producers, the off-takers, and the various waste management companies.

Dias Kazym:

Thank you so much for your view on this, Valentijn. And I appreciate you mentioned the Chemical Recycling Europe Association. I had a chance to attend the forum in November of the previous year, and please accept our sincere congratulations on becoming the president of this association. As a new leader of this group, how do you think you can help fostering that cooperation between various stakeholders in the chemical recycling industry?

Valentijn De Neve:

Wow, thank you very much. And it's an honor to, with the whole team, the whole new board of Chemical Recycling Europe, to take over from Carlos and his team, and to see what they have done in the last years.

And I think as we're entering such an important phase in shaping the implementation of the rules that will foster an acceleration of chemical recycling, I think it's key that we as an industry provide transparency on what the needs and the choice points are. Now, we don't do this in isolation, but that with an open ear we listen also to the other participants in the value chain, and try to find pragmatic solutions to make sure we can move forward faster. Because in the end, I believe to make sure that we go to a world where a significant portion of plastics is circular, we need to have more capacity from various players in this industry to succeed.

Dias Kazym:

May I please slightly change the topic now towards a more narrow conversation about what makes BlueAlp so special in the industry? I mean, you mentioned the impressive path in the last few years of turning the capacity from just three kilotons in the Swiss Alps into the 20 kt, and now with ambition of having the capacity of 70 kt of waste per year recycled. May I ask in terms of the quality of that pyrolysis oil that is produced in the end following the recycling process? What makes the BlueAlp technology is so special? And if you can comment on that, what do you think is so good about the current chemical specifications of that of oil including its boiling point stability, or any other chemical characteristics that you can mention?

Valentijn De Neve:

Well, indeed, we started with three kilotons, and the 20-plus kiloton that we currently have. And the 70 kiloton is not only inhibition, but we finalized the upscaling together with Shell and the process design package is now available, and working towards implementing this at the first project. But for all those sizes, what we have seen is making a high quality pyrolysis oil is key to making sure that this is the right solution and the economic solution. And I would say there are fundamentally two different elements when we talk about quality at our elements. One is around the final boiling point, so in what type of cracker does it fit? And the other one is the contaminant level. Let me start with the final boiling point range. We see that in our technology we have the ability to go to a high or a low final boiling point, doing operation with a very efficient process. Not by distillation, by cutting it off, but by actually making sure that we crack to a certain level that allows to be within a certain final boiling point range.

And with that, we see we can both target the heavier and the lighter crackers. But of course, if you're on spec with the final boiling point range, then it is also key that the contaminant level is acceptable to a steam cracker. And what we see is that in our process we have two specific steps, for example, to get rid of halogens, because obviously having PVC in the feedstock can easily result in halogens in the pyrolysis oil, which is not something that cracker operators would like to have. And what we've done over the past years is looking critically at what are the different contaminants that we need to manage, and what's the right approach. And I do believe that with the learnings that we have had over the last years, and the technology improvements that we're able to produce a high quality oil, at the fine boiling point that a customer needs.

Dias Kazym:

That's really impressive to hear. Thank you so much for sharing. Do you think, you mentioned the partnership with the major chemical producers including Shell, Borealis. Do you think in terms of the improvement of the chemical specifications and the key learnings on the quality of that pyrolysis oil, do you think that partnerships help with regards to the improvement of the technology?

Valentijn De Neve:

Yeah, absolutely. We see those partnerships as fundamental. If I see where we stand now is where we were three years ago. And with the help of our chemical partners, we've been able to develop much faster, have faster learning loops of feedback on what the market needs. And I do believe when you're building such a new value chain, that you can only do that successfully when you get the feedback fast. And also realistically, if we see in our projects, in our technology development, with our joint development agreement, while we jointly develop IP that sits in BlueAlp, then the contribution of these large companies with experience is really something that has accelerated our technology development and operational knowledge.

Dias Kazym:

Thank you so much for sharing, Valentijn. And it's really impressive to hear about the progress that the company has achieved on the quality on the side of pyrolysis oil, but an important building block in the quality of pyrolysis oil is of course the feedstock, as you mentioned, and the contaminants that it can bring. So I just wanted to bring in my colleague Daniel to bring us with more insight on the side of the waste recycling industry, and the feedstock that can be used for the chemical recycling.

Daniel Pelosi:

Indeed. And I think with regards to BlueAlp, Valentijn, this is certainly relevant to the project with RESS you mentioned towards the start of the podcast. When we're looking upstream to the feedstock dynamics, I think one of the critical aspects that I've noticed on the mechanical recycled side is access to consistent and quality feedstock product. And this is especially true for the chemical recycling industry. To start with, could you go into a bit more detail regarding your collaboration with RESS and the role as a waste operating company? Could you elaborate on why this is important for European advanced recycling?

Valentijn De Neve:

We see the partnership with RESS as a key building block. I think in the end when we think about the need for more capacity of advanced recycling, and I think this is not the field that will only be for the chemical players. And RESS shows that for a waste operator that already does waste sorting and mechanical recycling, pyrolysis is a perfect activity that fits in such a portfolio. And when you think about their operations, and they have certain fractions that currently cannot be recycled and go to incineration or landfill. By implementing the pyrolysis plan there enables them to make sure that this fraction is also recycled. And we do see that they have a lot of knowledge about the relevant feedstock and how to manage it, and that this perfectly complements their business.

Daniel Pelosi:

Thank you. That's very interesting, and great to hear such a process being made, especially with regards to the collaboration that we were discussing earlier in the call. Clearly it's a critical juncture in ensuring that the goals and targets of players across the industry are met across the year to come.

I wanted to touch slightly more towards year ahead and BlueAlp's role and plans for 2025. Firstly, before getting into more clear market outlook, could you share slightly more about what type of players and geographies are part of the BlueAlp pipeline for your plans in 2025 and some of the projects that you have coming up across the year as a whole?

Valentijn De Neve:

Yeah, thanks a lot. And if we think about the portfolio, then I think we see different dynamics in different regions. If we look in Asia, for example, South Korea is a market that's clearly active. There's quite some progress. And there are also some other countries in Asia where we see the development really come.

I think in the US we also see that there are quite a lot of announcements, and that there's a lot of traction, and that we also see that there is quite some capital availability in the US. And in Europe, we do see that different types of players are active in this field. We do, of course, see chemical players who start to think about the larger scale units. We see waste managers like RESS who really see this as an add-on. But we also start to see that waste incinerators that see the changing regulation and additional costs for incineration of plastic that become more and more interested in this field. And it's fair to say that in our portfolio we really see a balance across geographies and across different customers. And I do believe that regulation combined with how the different segments will do economically of the next years will play a key role in what will be the larger, relatively larger size in the portfolio.

Dias Kazym:

Thank you so much, Valentijn. And perhaps just as a final point, could you please ask if there was one single message that you wanted to share with the wider market of the chemical recycling industry, what would be your view on the industry ahead?

Valentijn De Neve:

I think that it's a very simple one. Then I think the key message is we need to scale up jointly the size of the advanced recycling market. The larger we size up and scale, the broader this market becomes, the lower the cost will be. We are committed to keeping innovating to drive down costs, but with the right momentum, I'm sure jointly will drive down the cost curve, and can make sure that recycled materials become the standard of the future.

Daniel Pelosi:

Thank you, Valentijn, and we really appreciate the insights here. It's clearly a very fruitful area for conversation, discussion, and speculation for the year ahead. But unfortunately, this draws us towards the close of today's podcast.

I'd like to thank Valentijn for joining us and sharing the insights from BlueAlp on the view for the year ahead, and also some of the more granular dynamics in the market. And also thank you to Dias for joining us from the NAFTA team here at S&P Global Quality Insights. I've been Daniel Pelosi, and thank you for listening to the Chemical Week Podcast.

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