Bain Report What It Will Take for Chemical Recycling to Compete in Europe

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Bain and Company

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Chemical recycling in Europe could rival virgin plastics production within 20–30 years — but only with over 400 billion euors in investment and strong regulatory support. A new Bain & Company report outlines the path forward and what plastics producers must do now to lead the transition.

Despite impending mandates and ambitious corporate targets, chemical recycling in Europe remains nascent today mostly due to unattractive economics. A new report published by Bain & Company revealed that the industry is worth over 400 billion dollars in cumulative capex and cost parity with virgin plastics production could be achieved in 20-30 years. Plastics companies now have a window of opportunity to be early movers and reap material benefits, the experts argue.

Recycling polyolefins — a common type of thermoplastics — in Europe costs more than twice as much as producing virgin polyolefins today. “Market forces alone are insufficient to drive change as customer demand is highly price sensitive and volumes are too limited to generate substantial cost benefits”, Bain & Compan states in their report.

Policy could play a significant role to close the supply-demand gap. Like the sustainable diesel and aviation fuel mandates, European plastic companies could start small and gradually increase recycled material blending requirements, the report said. For instance, country-level or regional blending mandates that increase chemical recycling market penetration by 1–2 % annually could unlock over 15 % share of the plastics market by 2040. This pathway can deliver a smooth ramp-up with manageable capital requirements, healthy returns, and minimal margin erosion or unintended substrate switching.

Longer term, maturing technologies and accumulated operational experience could unlock cost efficiencies, eventually closing the gap with virgin plastics. The industry is developing technologies across the recycling process, from waste sorting to pre-treatment of waste. “Our analysis shows that chemical recycling could become competitive with virgin production once cumulative global volume reaches 650 million metric tons of polyolefins recycled through pyrolysis, assuming a virgin price of 1,250 euros per metric ton and depending on gate fees and broader market conditions,” said Mark Porter, head of Bain & Company’s global Chemicals practice. “This would take at least 20 to 30 years and by then recycled plastic would account for approximately 20-30 % of total plastic demand.”

Getting to cost parity with marginal producers in Europe would require cumulative global capital expenditures of at minimum 400 billion euros in a base case, at a cumulative cost premium of approximately 270 billion euros. That premium includes the sum of price premiums that would be paid by customers, regulatory mechanisms, and margin investment by the value chain.

“Moving the needle will require a systems approach with regulatory support. Once scale reaches critical mass, chemical recycling can transition from a subsidy-reliant push to a demand-driven pull. That inflection point could fundamentally shift the economics, turning chemical recycling into a competitive, market-driven solution,” said Porter.

The report identifies three key strategies for plastics producers aiming to establish leadership in chemical recycling. First, companies are encouraged to co-develop offtake agreements with value chain partners to secure access to high-quality waste streams and build early competitive advantages. Second, active engagement with policymakers is considered essential to shape supportive regulatory frameworks and to help shift public perception by emphasizing both the performance and sustainability potential of plastics. Third, producers are advised to adopt flexible business models, explore new sourcing approaches, and enter long-term agreements with innovative pricing structures, positioning themselves for future market shifts.

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