No Price Parity Ahead: The JRC Assesses the Economic Viability of Chemical Recycling

In July 2026 the European Commission’s Joint Research Centre published Economic viability of chemical recycling – Current and future perspectives (Gaudillat, Marschinski and Saveyn; JRC147061, EUR 40766). Commissioned by DG GROW, the report sets out to answer a deceptively simple question: what does it actually cost to convert one tonne of plastic waste back into new polymer via pyrolysis or solvolysis in the European Union?

The answer, in one sentence: considerably more than virgin plastic costs, and no amount of technological fine-tuning will close that structural gap.

The finding itself is not news to the industry. What is new is the granularity and the source. The JRC is not a sectoral lobby but the scientific service that prepares legislation, and for this exercise it obtained confidential cost data from four European solvolysis plants under construction, plus written consultation input from more than twenty organisations — from BASF, ExxonMobil, Neste and OMV through Plastics Recyclers Europe to Zero Waste Europe. One methodological caveat matters: the bulk of the analysis was drafted during the first three quarters of 2025 using data collected between Q3 2024 and Q1 2025, so developments in the second quarter of 2026 are not everywhere reflected.

The starting point: two orders of magnitude

Begin with volumes, because they frame every subsequent argument. Of the 54 million tonnes of plastics produced in Europe (EU27+3) annually, roughly 7.1 Mt comes from mechanical recycling of post-consumer plastics and a further 3.1 Mt from pre-consumer waste. Chemically recycled post-consumer plastic, by contrast, accounts for less than 0.1 Mt.

Capacity tells the same story. ICIS data from March 2026 put installed European chemical recycling capacity at around 190 kt, split roughly 80% pyrolysis and 20% solvolysis. Set that against Europe’s 13.2 Mt of mechanical recycling capacity: two orders of magnitude apart. Europe nonetheless leads globally — according to the Nova Institute more than half of the world’s operational chemical recycling installations are located here, although in capacity terms that translates to only about a quarter of the global total.

Announced plans are far larger. Pyrolysis capacity under construction stands at roughly 440 kt (against 50 kt of hydrolysis); Plastics Europe points to 44 projects across 13 Member States, €8 billion of investment and 2.8 Mt of output by 2030; ICIS projects 3.3 Mt of input capacity by 2029. The report treats these figures cautiously: sources differ systematically because some count plants that are planned but not yet operational — or that have since gone out of business.

Three readings of “viability”

The report’s most useful conceptual contribution is the observation that economic viability means three sharply different things depending on which market logic applies.

Hard market. Technically, chemically recycled polymer is a perfect substitute for virgin polymer, so it should fetch the same price. On this reading, viability requires unit production costs below the observed market price for virgin plastic. The technology currently and unambiguously fails this test.

Soft market. Chemically recycled plastic carries a “green” attribute that some buyers will pay extra for. Here the JRC offers a precise economic framing: recycled content is a credence good — a buyer cannot verify it by looking at or using the plastic, and must believe the claim on documentary evidence alone. This explains why third-party certification (ISCC PLUS, RSB) is central to the sector, and why fraudulent green claims are a realistic risk. The weakness of the soft market is that it rests on voluntary corporate pledges, which can vanish abruptly in a recession or when consumer interest fades.

Regulatory market. This is now becoming dominant in the EU. Where recycled content is mandatory, chemically recycled plastic no longer competes with virgin plastic; the premium is set essentially by the mark-up recyclers require to bring the needed volumes forward, and that premium can be considerably higher than on a voluntary market. An important consequence follows: the locus of competition shifts. It runs not between virgin and recycled producers but within the recycling sector — which recyclers can deliver the required quality, typically food-grade material, at the lowest cost.

The report closes this discussion with a warning. If the domestic price of recycled plastic rises far above an acceptable green premium, downstream users will resort to mitigation strategies. In the extreme, the regulation could become unenforceable — if non-compliance penalties fall below compliance costs — and might need revision.

Pyrolysis: yield is the binding constraint

The pyrolysis model is the most valuable part of the report, because it does not offer an aggregate estimate but tracks the entire chain: pre-processing → pyrolysis → post-processing (purification and fractionation) → steam cracking → polymerisation. Three scenarios are run: current (performance achievable today), baseline (near-term scale-up of existing technology, assuming no breakthrough) and best-case (theoretical optimum at every step — which the authors themselves describe as highly unlikely).

Baseline chain yields:

In other words, 3.67 tonnes of mixed plastic waste are needed per tonne of recycled polymer. In the “current” scenario the yield is 19.7% and the input requirement 5.08 tonnes; even in the theoretical best case the figure only reaches 56.2%.

This is a physical rather than an organisational limit, and the report’s reasoning is elegant. The chain involves three high-temperature steps, each consuming roughly 10% of the plastic’s calorific value. The theoretical efficiency ceiling is therefore 0.9³, or about 70% — closer to 50% in practice, and around 30% today. Hence the report’s sharpest observation: a refinery-integrated pyrolysis route typically splits its output roughly one third material recycling, one third fuels or energy recovery, one third heat and material losses. The authors go so far as to note that on these shares, pyrolysis might be viewed as a mixed recycling/energy recovery process rather than primarily a recycling operation.

The cost chain in figures

The baseline cost profile can be followed end to end: mixed plastic waste at €90/t, pre-processed pyrolysis feedstock at €365/t, raw pyrolysis oil at €1,304/t, upgraded pyrolysis oil at €1,698/t, ethylene and propylene at €2,551/t, final polyolefin at €2,968/t. Pyrolysis-derived naphtha comes out 1.5–3.5 times more expensive than virgin naphtha, and the final polymer 1.4–3.7 times more expensive than its virgin equivalent, with a full uncertainty band running from €1,500 to over €4,000 per tonne.

Two cost details deserve attention. The first is feedstock: one industry stakeholder cited typical pyrolysis feedstock costs of €100/t in the United States against €300–400/t in the EU, attributing the gap chiefly to the greater American availability of homogeneous pre-consumer plastic waste. The second is the absence of scale economies. Examining announced investment data for 105 pyrolysis plants, De Tommaso et al. (2024) derived a power-law exponent of 0.87 — meaning that doubling plant size raises capital cost by 83%, so there is effectively no meaningful economy of scale. No known operating facility exceeds roughly 30 ktpa of commercial production, while the literature places minimum viable plant size anywhere between 20 and 115 kt/y.

Market price signals are equally telling. According to ICIS, the annual average spread between naphtha-substitute pyrolysis oil and virgin naphtha held at its 2024 level through 2025 — around €1,400/t above naphtha, close to €2,000/t in absolute terms — well above 2023 levels. Meanwhile contracting logic shifted from a “naphtha plus” basis to a “feedstock cost plus” basis, precisely the decoupling from virgin price paths that a regulation-carried market produces. The report attributes the early-2026 retreat to weakness across the chemicals sector, adverse macroeconomics and the then-unresolved question of how pyrolysis oil would count towards regulatory mandates.

On the medium term, both Plastics Europe (2023) and Bain & Company (2025) consider cost parity conceivable — but over two to three decades and under favourable market conditions. The modelled OpEx path reaches €1,800/t by 2030, €1,400/t by 2040 and below €1,200/t by 2050.

Solvolysis: strong yields, expensive European context

Solvolysis (glycolysis, methanolysis, hydrolysis and enzymatic variants) has a very different profile. It applies to condensation polymers — chiefly PET and polyester — and reported material yields reach 90% or above on pre-treated feedstock. Yield is not the problem here.

Cost level is. Data received by the JRC put total unit costs for a tonne of chemically recycled PET in the EU at €2,150 ± 500. Measured against 2023–24 virgin PET prices of roughly €1,000–1,100 per tonne, that is a mark-up of 1.5–2.7 times. (Food-grade virgin and mechanically recycled PET prices ranged between €1,500 and €2,000 in 2021–22, and between €1,000 and €1,700 in 2023–24.)

The cost structure:

• OpEx: European facilities average €1,840/t with substantial dispersion. Utilities including process reagents are the largest item, followed by feedstock. The North American reference (Closed Loop Partners) shows 58% utilities, 23% feedstock, 8% labour, 8% maintenance and 3% waste management — a similar structure at a markedly lower absolute level.
• CapEx: typically above €5,000 and possibly above €6,000 per tonne of annual input capacity in Europe, against €1,500–2,000 in the US and Canada. Spread over a twenty-year plant life this comes to slightly above €300/t (±€50) in the EU and below €100/t in North America. CapEx represents around 15% of total costs in the EU and rather less than 10% in North America.
• Scale: most industrial-scale solvolysis plants planned or under construction in the EU are designed for 30–50 ktpa, with a single exception targeting 100 ktpa. Unlike pyrolysis, solvolysis does show demonstrable economies of scale (scaling exponent 0.695), though limited ones.

An important caveat: at the time of writing no industrial-scale solvolysis facility was operating in the EU. The figures therefore derive from business plans, pilot-plant extrapolation and modelling rather than from mature commercial reality.

Business models diverge sharply. Converting mechanical recycling rejects into packaging-grade PET is considerably cheaper than fibre-to-fibre polyester recycling. Petcore’s (2024) fibre-route breakdown — €500 collection and sorting, €600 pre-processing, €800 depolymerisation, €300 repolymerisation and spinning — sits at the top of the range.

The financing dimension is quantified too: Systemiq (2025) estimates that de-risking could bring the average cost of capital for solvolysis projects down from 17.5% to 12%, and public financial support can move an individual investment from below to above a 10% internal rate of return. This is where most projects are decided.

Mass balance as an economic — not an accounting — variable

One of the report’s most valuable pedagogical achievements is to present mass-balance allocation as an economic question rather than a bookkeeping formality.

The logic runs as follows. Where pyrolysis oil is processed alongside fossil feedstock in an existing petrochemical plant, recovered material typically represents less than 1% of input, and high-value plastics only around 10% of output. The JRC’s rule of thumb: if a recovered input costing €100/t more is fed in, but the rules mean only 10% of each input unit yields creditable recycled output, the extra cost carried over to the creditable product is €100/0.1 — that is, €1,000 per tonne. That is the price premium generated by the stringency of the accounting rules alone.

Which explains a hard finding tucked into a footnote: under strict mass-balance rules the cost gap could widen to a factor of ten and beyond. And, from the other direction: no mass-balance approach can close the cost gap for as long as pyrolysis oil costs more than crude petroleum. Regulatory fine-tuning can redistribute the burden; it cannot eliminate it.

Where the rules stand: mass-balance calculation rules for single-use plastic beverage bottles were laid down in Commission Implementing Decision (EU) 2026/1425 of 30 June 2026, repealing Decision (EU) 2023/2683. The equivalent rules under the PPWR are not yet in place.

The size — and fragility — of regulatory demand

Four instruments carry the demand:

• SUPD (EU) 2019/904: 25% recycled content in PET beverage bottles from 2025, 30% in all plastic beverage bottles from 2030.
• PPWR (EU) 2025/40, Article 7: 10% recycled content in non-PET contact-sensitive plastic packaging by 2030, rising to 25% by 2040.
• Regulation (EU) 2022/1616 on recycled plastic food contact materials: pyrolysis and gasification routes are likely to comply, while most solvent-based technologies are not and must therefore operate fully in accordance with the Regulation.
• The 2026 end-of-life vehicles Regulation (adopted by the Council on 29 June 2026): 15% recycled content in the plastics fraction after six years, rising to 25% after ten, including at least 20% from end-of-life vehicles.

On volumes: a 10% requirement applied to roughly 9 Mt of food-grade or contact-sensitive packaging — which conventional PET recycling can meet only partly — implies demand for 500 kt to 1 Mt of chemically recycled plastics annually. For non-PET material, working back through a 30–50% pyrolysis yield, that corresponds to 1–3 Mt/y of input capacity. CEFLEX’s independent estimate requires 0.7–1.1 Mt/y of capacity for flexible contact-sensitive PE and PP packaging plus a further 0.9–1.4 Mt/y for rigid formats; e-cube identifies a shortfall of around 1 Mt/y of pyrolysis capacity by 2030.

Why that demand is nonetheless not secured

This is the report’s central message to investors, and the chapter the sector likes least. If chemically recycled polymer remains persistently 1.5–3.5 times more expensive, competition opens up for other routes to compliance. The JRC’s list:

• “Drop-in” substitution from other sources: advanced mechanical recycling, traceable recyclate from closed or controlled loops, or — if legally permissible under PPWR Article 8(2)(c) — bio-based plastics; any of these sourced domestically or imported.
• Switching to another regulated polymer that is easier or cheaper to source (HDPE to PET, for instance).
• Switching to a plastic type not subject to recycled content obligations, such as compostables.
• Material substitution: liquid packaging board, glass, paper, metal.
• Redesign to reduce packaging or plastic components, or introduction of reusable packaging within a deposit return system.
• Redesign to incorporate non-functional recyclate: added deadweight or non-essential decorative parts, purely to hit the percentage target.
• Non-compliance. PPWR Article 68 calls for penalties that are “effective, proportionate and dissuasive”, but the concrete rules are still pending. If fines are low, paying them becomes the rational choice for some producers.

The conclusion the report draws is unambiguous: demand for chemically recycled plastic should not be considered secured whatever its production costs may be.

The sector’s list of grievances

Consulted stakeholders raised twelve issues. Most frequently, mass-balance determination and EU-wide harmonisation of end-of-waste status — the latter would reduce legal risk for monomers and pyrolysis oil, and lower feedstock costs for pre-treated waste by enabling unrestricted cross-border sourcing.

Point six deserves separate attention, connecting directly to the ongoing European debate on bringing waste incineration into the EU ETS. If incinerators must pay for their emissions, their purchasing power on plastic waste markets falls, pushing prices down and easing feedstock access for chemical recyclers — provided they can actually process the fractions in question. For the sector, then, this is not an abstract climate policy question but a direct feedstock cost item.

Point twelve is the most unsettling. The EU plastics sector — recyclers and petrochemical producers alike — is under such near-term cash-flow pressure that medium- and long-term planning has become impractical. Large-scale operations, steam crackers among them, have been driven out of business by the combination of European energy prices and Asian import competition. As the report puts it, businesses struggling to keep operating over the coming months have little room to weigh investments against targets that bite in 2030. Hence a pointed observation in the policy implications chapter: speculation about whether domestic capacity can meet PPWR and SUPD demand may become largely irrelevant if plastic production within the EU itself becomes uneconomical in the meantime.

The policy toolkit

The report identifies five intervention points, which act on price signals at different stages of the value chain and can be combined:

1. Gate fees at the disposal stage. Where incineration and landfilling face sufficient constraints, waste holders pay for treatment — which lets recyclers charge for acceptance too, so feedstock arrives at a negative cost. Tomić et al. (2024) find that small-scale thermochemical conversion of industrial plastic waste is not viable without a gate fee.
2. Green premium at the conversion stage. It has a ceiling, set by non-compliance fines and the cost of substitution.
3. Trade instruments: tariffs, export subsidies, local content requirements — with WTO exposure.
4. Recyclate subsidy, for instance through EPR fee eco-modulation based on the weight of post-consumer recyclate incorporated.
5. Recycling subsidy applied directly to the activity, based on capacity or actual throughput.

Relevance for Hungary

Hungary has no material chemical recycling capacity, yet the report’s conclusions bear on the domestic market at several points.

The PPWR compliance burden arrives whether or not the technology does. Hungarian packaging producers and distributors face the same 10% non-PET contact-sensitive requirement from 2030 as anyone else in the EU. If supply is expensive and tight, the escape routes the JRC catalogues — material switching, polymer switching, redesign and, in the last resort, the fine — will be equally rational responses here. The outcome will be settled by the interplay of the deposit return system, EPR fee structures and packaging design, not by progress in chemical recycling.

The co-location logic is structurally available. The report finds the economically most defensible pyrolysis configuration to be siting alongside existing, largely amortised petrochemical infrastructure — with steam cracking, hydrotreatment, heat integration and internal valorisation of co-products. The petrochemical complex at Tiszaújváros fits precisely that profile. What the report illustrates through the OMV–Interzero construction — up to 200 ktpa of ReOil capacity paired with joint-venture sorting of up to 260 ktpa of mixed plastic waste — is the structural advantage of integrated feedstock access, and in Hungary the concession model institutionalises control over waste flows. That is both an opportunity and a question, since on the JRC’s analysis access alone does not solve the yield problem.

The deposit return system works against solvolysis — for good reason. Hungary’s DRS produces exactly the high-purity PET stream that mechanical recycling can handle more cheaply and at roughly one ninth the carbon intensity per kilogram (Öko-Institut 2022: 0.311 kg CO₂e/kg for mechanical against 2.91 kg for chemical recycling). Solvolysis’s realistic domestic niche is therefore not the bottle stream but mechanical recycling rejects and polyester textiles — and textiles carry no EU recycled content obligation as yet, which leaves that business model dependent on voluntary green premiums.

The ELV Regulation is the next major domestic item. Given the scale of Hungarian automotive manufacturing and its supplier base, the 15% and subsequently 25% recycled content requirement for the plastics fraction — including at least 20% from end-of-life vehicles — touches significant domestic capacity even more directly than packaging does. The eighth industry concern on the JRC’s list, cross-sectoral competition for the same polymers, will become tangible here first.

What to take away

The JRC report is not a case for the prosecution against chemical recycling. It states plainly that the technology can handle waste streams and quality requirements mechanical recycling cannot — above all food-contact-grade polyolefins, which are effectively absent from the market today.

What it does settle is the argument about cost. Chemically recycled material will remain 1.5–3.5 times more expensive than virgin over the short and medium term, and current production rests on green premiums of 100–200%. This is not a financing or scaling problem that the next investment round resolves: for pyrolysis it is a physicochemical limit, and for solvolysis it is the level of European energy and feedstock prices.

Two practical conclusions follow. First, anyone financing chemical recycling capacity in Europe is betting on regulatory demand rather than price competition — and that bet stands or falls on the stringency of mass-balance rules, the strength of penalties and the availability of substitute compliance routes. Second, and addressed to legislators: the JRC explicitly recommends investigating who pays the societal cost of forcing a deliberately more expensive material onto the market — where the extra cost lands between recyclers, petrochemical producers, brand owners, retailers and consumers. The report offers no answer. But in posing the question it signals something clearly: the future of chemical recycling is no longer primarily a technological question but a distributional one.

Source:

Gaudillat, P., Marschinski, R. and Saveyn, H., Economic viability of chemical recycling – Current and future perspectives, Publications Office of the European Union, Luxembourg, 2026, JRC147061, EUR 40766. DOI: 10.2760/6105801. A European Union publication, licensed under CC BY 4.0.