Listen: BASF's view on the potential of chemical recycling

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Christian Krueger:
The big advantage of depolymerization compared to mechanical recycling is that you get virgin grade quality.

Iris Poon:
Hello and welcome to this episode of Chemical Week Podcast. My name is Iris Poon and I'm a recycle polymer editor for European Chemicals at SMP Global Commodity Insights. I have my colleague Aziz with me co-hosting this podcast. Aziz, what will this podcast be about?

Abdulaziz Ehtaiba:
Thank you, Iris. In recent years, we've seen an acceleration in companies announcing new chemical recycling or advanced recycling projects, and today we have a very special guest with us to talk about just that. Christian Krueger is the Net Zero Accelerator at BASF and really he's the specialist in his field. Now Christian, welcome to our podcast. Could you introduce a little bit about yourself and also what you do in your role?

Christian Krueger:
Yes, thank you for this question. And starting first with my unit where I'm engaged in the Net Zero Accelerator unit here at BASF in the corporate center, we have bundled the projects to accelerate BASF's transition to climate neutrality. So that means if we're reducing our greenhouse gas emissions and demand for fossil raw materials, we are focusing on several topics. First would be renewable energy, so the energy transformation do become to emit less CO². The second are general CO² abatement measures, for example, low steam generation, and the third is circularity, and that's the main thing, but we're increasingly using renewable and recycled feedstocks as well as raw materials based on the use of CO² in order to move from the linear value chain to closed material cycles. And what is my role here? And I'm personally working the field of circularity and I'm the advocacy expert with the deep expertise in life cycle assessment and mass balance.
And these concepts of circularity are essential for the transition towards recycled and renewable feedstocks for the chemical industry where we're still at the beginning of our big journey as BASF and as whole industry. And by engaging with policymakers, with governments and regulatory, my team and me, we are discussing necessary adaptions of the policies and regulations that support the use of alternative resources instead of fossil resources. So that means de-fossilization, and that helps us really to enable the green transformation of our customers by providing them with products with a reduced carbon footprint and making a contribution to plastic recycling and plastic circularity.

Iris Poon:
To start with Christian, for the sake of our listeners who may not know as well in the first place, could you tell us what exactly chemical recycling is and the industry's state of play at the moment?

Christian Krueger:
Yeah. Chemical recycling is much more complex than mechanical recycling in terms of a process. It's a process that recycles plastic waste by not melting it like for mechanical recycling, but you break down by chemical process into basic chemical building block and chemical recycling that uses thermochemical and depolymerization processes. And that means that the plastic waste is converted into raw materials that can be used to produce new plastic. In this way, chemical recycling can handle much more challenging waste streams than mechanical recycling, which requires well-sorted waste structures. And the process always starts for all recycling processes by collecting mixed plastic waste or end-of-life tires and which cannot be recycled with existing technologies like mechanical recycling.
So mixed plastic waste usually is chemically recycled by thermochemical processes like pyrolysis or gasification. And pyrolysis itself as a process involves heating plastic waste in the absence of oxygen, which helps to break down complex polyolefins in a more controlled way than gasification. And those recycling chemical compounds like pyrolysis oil can be purified and can be off-taken by PSF at the beginning of our village chain to substitute fossil raw materials. And then we are using the third-party audited mass balance approach where the share of recycled feedstock is attributed to two products manufactured in PSF production network. So chemical recycling always comes with a mass balance here, and in this way pyrolysis and gasification is an important complement to mechanical recycling because they can handle waste streams which is difficult to recycle by usually mechanical recycling.
The alternative is depolymerization and depolymerization need purer waste streams. Similar like for mechanical recycling. The big advantage of depolymerization compared to mechanical recycling is that you get virgin grade quality and the same you also get for sure for pyrolysis and gasification, which is especially interesting for food application where usually outside of PST it's not accessible by mechanical recycling, but chemical recycling industry still a lot room to grow and regulatory frameworks and standards are not yet prepared and needs to be adapted to enable the chemical recycling industry to play out its strength in reducing plastic waste and conserving fossil resources.

Abdulaziz Ehtaiba:
Christian, earlier you mentioned that a lot of your work is about standardization and also industry practice for the chemical recycling process. Now there's a lot of that come from legislation, especially with PPWR, which for the listeners who don't know, that's the European Packaging and Packaging Waste Regulation that's been implemented by the European Commission for calculating recycled content in a mass balance approach. Is that method really set in stone from a regulatory aspect?

Christian Krueger:
The policy process in the European Union is quite complicated. If you think it's already final, there is still something which shows you, which is not final, but the status of the PPWR is very close to the finishing line. And there is a trilogue in the policy process in Europe where the European Commission, the member states and the Parliament has to agree to the basic PPWR and that was successful already. So we can expect the final PPWR to be published by end of this year. Chemical recycling, where is it in the PPWR, needs mass balance and therefore it needs some standardization also in the legislation and the finalization of the so-called fuel use exempt mass balance model is expected in the Single-use Plastics Directive, not in the PPWR Single-use Plastics Implementing Act, which act as a blueprint for upcoming legislation like the PPWR.
Formally that will be worked out in a secondary legislation in the PPWR for methodology to calculate the recycled content with mass balance in the next two years should have the same mass balance rules like the single-use plastics and bags. So complex answer, yes, we are very close to the finishing line. I'm very optimistic that by end of the year there will be a publication. Second is there needs to be some secondary legislation, for example, to rule out the mass balance for the recycle content calculation and other things as well like the sustainability criteria. But that's the task for the next two, three years.

Iris Poon:
Since we talk about legislation, may I ask a little bit more about, as we understand, it seems that the 10% recycled content target for contact-sensitive packaging goal is not here anymore for PPWR according to the latest text. Is that the correct understanding? If so, will this affect the demand that's going to be impacted to chemical recycling or you're still very optimistic because since you mentioned Single-use Plastic Directive or Regulation right now is already recognizing chemical recycling?

Christian Krueger:
In the PPWR you have this 10% recycled content for contact-sensitive packaging as you said. So that means every packaging which is placed on the market has to have a minimum 10% recycled content besides PET. And technically this can only be achieved by chemical recycling. So this target is specifically for chemical recycling. And why is that? Because contact-sensitive, for example, in food means food contact. So you need food contact compliance not only achievable by chemical recycling, by thermochemical and depolymerization processes and not by mechanical recycling. And this is why this 10% goal, which is a market of more than 1 million tons a year equivalent to it is integral part of this PPWR, which gives a regulatory framework and an incentive for chemicals like the recycling to grow.

Iris Poon:
To follow up. We understand that there's been a little bit of a hiccup session right before PPWR is being passed at the parliament level. Since then, of course the news is already out now, but at the Envy's Committee for SUPT, they got a little bit of a support right, the day before to potentially divert the chemical recycling efforts for SUPT. But of course this is all passed now. My question is what's your take on the potential legislative discussion regarding chemical recycling and mass balancing for PPWR? Do you foresee potentially similar opposition from people who may support mechanical recycling a little bit more and how would this be tackled if it's coming in later sessions? Thank you.

Christian Krueger:
I mean, we were also surprised that the European Parliament was initiating an objection against the mass balance rules for recycled content and the framework of the Single-use Plastics Implementing Act. But you could see already in the environmental committee the vote was 26 to 24 and that was supported by the Greens and the Greens were in the end, which I don't understand actually are very much influenced by the mechanic recycler because what they think still are parts of the mechanic recycler that they don't have a level playing field, which I don't understand because chemical recycling outside of PET, the food contact or contact-sensitive application can only be achieved via chemical recycling, so only accessible by chemical recycling and all the rest, the big ones applications is anyhow done already by mechanical recycling still has a lot room to grow so they can both grow in a complementary way.
And thanks to the plenary in the European Parliament where there was a clear vote against this objection and a clear vote to give chemical recycling the chance to grow and to show that it can help to solve the waste issue in Europe, because we have still 30 million tons of plastic waste every year, only 18% can be current or is currently recycled by mechanical recycling. The rest is still incinerated and going to landfill. And there's still huge potential for still both technologies to grow. This is why I don't understand that the mechanic recycler think there is no level playing field thanks to the clear majority of the Parliament that there is not an objection against mass balance and in the end against chemical recycling and therefore I'm still quite optimistic that this will also be the way to go in the next two to three years. But there will still be for sure in the policy framework development still for sure discussions from the different stakeholders. That's clear. But I'm optimistic.

Abdulaziz Ehtaiba:
And Christian really kind of zoning into the technology itself. Of course some of the main positives for chemical recycling itself is being able to absorb some of that feedstock stream that the mechanical recycling process can't handle. What are some of the limitations with chemical recycling and how does the end product compare to a virgin chemical?

Christian Krueger:
It's still a young technology, chemical recycling and therefore it needs to be scaled up to handle really large volumes and that needs further investments. And before companies invest, you need a clear regulatory framework that gives you the company's certain reliability in the long-term planning because when you invest for more than 10 to 15 years into something and to enable a fast integration of different circular feedstock at different feeding points of complex production systems, the mass balance attribution matter is a chain of customer which that fits best. Also, here you need a certain fixed mass balance in the end and what we believe is a flexible attribution method, it's important to have a certain flexibility in the feedstocks off taking into complex production networks in the chemical industry. What are other limitations? And when we compare chemical recycling to the virgin production of plastics, there's a lot of sustainable benefit it can reduce or it will reduce the use of fossil resources.
And also we have disproven environmental impact also that we have less CO₂ emissions. But nevertheless, these are all studies which are still on a smaller scale, but it has to be proven also for a larger scale as well. Sure. But I'm pretty sure also from CO₂ we have in comparison to the virgin also a very big benefit which has still to be proven also by a big scale. The next thing is also for sure if you have a certain reactor design, which also works, then also for larger scales we have to do a safe handling of let's say the chemicals and therefore that has to be proven how much do you emit, what is it compared to? Which plastic waste stream you're feeding in? Which product do you get out?
So it means the oil, for example, for pyrolysis, can you off take that already to a chemical production network? Is it meeting the specification? There are a lot of technical questions which are relating to the scale up, but I'm pretty optimistic that everything turns out as we thought, that we get also what we see in a small scale environmental benefit on CO₂ and also on environmental health safety aspect. And we also can see that in after the scale-up.

Abdulaziz Ehtaiba:
On that subject of taking the process to a larger scale. On the consumption side, what really needs to be changed in existing steam cracker facilities in this case to make them adopt more renewable feedstock? I hear that currently you can only blend maybe a few percents of pyrolysis oil overall as part of the feedstock for crackers.

Christian Krueger:
Yes, that's right. I mean, for example, if you take pyrolysis oil, it's a raw pyrolysis oil and that meets only the cracker specification when you dilute it. And therefore it's limited in terms of off-take of volumes. Therefore, purification technologies has to be in place. And there is one company like Sabic they've already built such a plant where they can purify pyrolysis oil to become a cracker or NAFTA quality, which is the main feedstock for a cracker.
So that has to become more for sure. Yeah, and I know from other companies also, BASF is also thinking always on purification of pyrolysis oil to make them, let's say, meet the specification of off-take plans like a cracker, but there are other off-take plans which needs maybe no purification or which need maybe other kinds of purifications than for the cracker.

Iris Poon:
Thank you. Christian, to follow up a little bit further as well, since you mentioned about the market players scaling up, how many more years would it take do you think for chemical recycling market in Europe to become, let's say a more mature market? For example, we may be able to see more players that will be entering industrial scale operation. How far are we from there? Thank you.

Christian Krueger:
I think that depends on the regulatory framework. As I said, the PPWR when it comes into place and when there's a certain investment security, I would expect in 2028, a rising investment into plants or where plants are launched because as I said, this 10% target is equivalent to more than 1 million tons of new plastics in the market. The same I would expect also for other kinds of regulations like automotive and maybe later also textile and other. So therefore there is a regulatory driven market development where automatically it will have as a consequence the investment of scaling up the technology. So therefore I would expect that the next four years that you see a massive increase investment in chemical recycling, but depending on how much regulatory incentives and how much they are reliable regulatory incentives we will have.

Abdulaziz Ehtaiba:
Sticking onto the technology itself more on tires now, can you absorb tires in terms of feeding it into the chemical recycling units and the aspects of pyrol oil and integration into petrochemical facilities?

Christian Krueger:
Yeah, coming back there's this mixed plastic waste pyrolysis oil coming from packaging, mainly packaging waste, which is the typical pyrolysis. What most people speak about BASF is also investing here into Quantafuel and Arcos. Quantafuel, for example, they have started operating a plant in September 2020 with 20,000 tons already of a theoretical capacity. So this is one stream, but what's BASF and also other chemical companies are going, yeah, BASF is also going a very special way in addition, and we are also investing into partnerships to make also that happen that we get pyrolysis oil from end-of-life tires. We have 3 million tons of tires here in Europe. So also a large, let's say a feedstock base you can say. And the feedstock is the entire pyrolysis oil, which can be feeded also into chemical plants.
And we have invested in Pyrum, we have a partnership with them and they are now in the beginning of scaling up, they have just invested and launched the line two, and three. So therefore we also ramp up here and we know from other companies who are also more and more interested in this type of pyrolysis oil that is also a very attractive technology, which works quite well with high yields and also with coming with the CO2 abatement or CO2 reduction, that's also important for our society. So therefore I'm quite optimistic that this tire pyrolysis oil will also develop in a quite nice way because of the availability of tires, which is 3 million. And because packaging waste for example, it's much more I see the mixed plastic waste in general in the market higher scale up development, but still it's a very nice possibility which where we BASF and maybe also others are engaged. Yeah.

Abdulaziz Ehtaiba:
Thank you for that, Christian. And just on investment, you mentioned that having a clear regulatory structure can promote and will make companies confident in investing. Could you compare the market landscape in the US, versus here in Europe, which is more supportive for advanced recycling methods?

Christian Krueger:
Yes. So I think first the market is very similar in terms of from the perspective of startup companies. So there are also several new chemical recyclers there like New Hope or others or Altera similar like in Europe. So from the offer side it's quite similar from the regulatory side, it's different than in Europe because in the US, the legislation's not driven by the federal government, it's driven by the state, but a different state and you have more than 50 states. So every state has its own legislation in terms of recycling. And then you have a split in the US that you have the Republican-governed states which favor landfill. And you have the more Democratic-governed states who favor more also recycling or do much more in recycling. So you see more in this, let's call it blue countries, more acceptance of chemical recycling in general. And so therefore you have the offer.
Yes, it's there. And for the framework we see it very different in the US because there are some states, yes, favorite and others not, but they're not so advanced in the legislation. As I said in the PPWR, that's the most advanced legislation probably in the world currently for chemical recycling when in terms of really significant change in the market. This is not yet there in the US we are waiting for that, but I'm pretty sure that the state regulation is slowly, but it'll also come and give also more incentives to chemical recycling in the US. But surely market mechanisms are playing a bigger role in the US than in Europe. Yeah.

Abdulaziz Ehtaiba:
Thank you very much Christian for that insight. And thank you for joining us today it has been fantastic to have you on as a guest and really hearing from an experts what's been happening in the chemical recycling space. To our listeners, this has been Abdulaziz Ehtaiba, Iris Poon, and our guest, Christian Krueger. Thank you for tuning into this week's episode of Chemical Week Podcast.