This move by Shell Netherlands has sparked speculation about the future of pyrolysis.

It was reported that in July this year, Shell, the world's second-largest oil company, announced that it was abandoning its goal of converting 1 million tons of plastic waste into pyrolysis oil by 2025. Shell attributed this decision to a lack of available plastic waste feedstock, slow technological development, and regulatory uncertainty, but still considers plastic waste recycling to be an important chemical feedstock in its circular economy.

Since pyrolysis emerged as a technology in the chemical recycling market over the past decade, it has attracted the attention of major players in the plastic supply chain. Pyrolysis is expected to overcome the existing limitations of mechanical recycling and change the current situation where most plastic waste is either discarded or inadequately recycled. However, despite significant investment and interest, key issues regarding sustainability, economic feasibility, and new regulatory pressures have cast doubt on the future of this technology.

Pyrolysis is a promising alternative to mechanical recycling.

One limitation of mechanical recycling is the process itself, where plastic waste is cleaned, shredded, melted, and formed into new plastic materials. This process can degrade materials and introduce contamination, resulting in material properties inferior to those of virgin plastics. Another key limitation is that not all types of plastic waste can be recycled in this manner. Only single-material streams can be easily integrated into mechanical recycling facilities, excluding multi-layer packaging (common in food packaging) that may contain various polymers and metal layers. Additionally, plastic that is heavily contaminated with food waste or chemicals is not typically included.

On the other hand, pyrolysis involves heating plastic waste to high temperatures in an anaerobic environment, effectively converting it into hydrocarbons similar to those extracted from crude oil to produce new plastics. It is considered a technology that could be a part of a circular economy for plastics. One of its main advantages is its ability to process difficult-to-recycle items like multi-material packaging and some heavily contaminated waste, although contamination can pose issues for the pyrolysis system.

Economic Viability?

The economic aspects of pyrolysis are complex. Many companies claim that with scale, this technology becomes economically feasible. Several techno-economic analyses seem to support this view. However, the overall outlook might be more pessimistic, with success heavily dependent on oil prices, regulations, and most importantly, scalability. The market for pyrolysis oil is currently small, primarily consisting of partnership agreements where plastic supply chain participants agree to buy and use the product as a feedstock for their production. Pyrolysis oil is naturally more expensive and less available than crude oil, so companies need incentives to choose it.

Regulatory Environment: Complex and Rapidly Evolving

The regulatory landscape is broad and complex, but the most crucial regulations related to pyrolysis involve allowing companies to count plastics derived from pyrolysis oil as part of their recycling efforts. If jurisdictions do not permit this or provide other incentives, companies have little reason to choose pyrolysis oil over crude oil. The chemical recycling industry is also concerned about new regulatory classifications that exclude chemical recycling technologies from recycling processes. These laws primarily aim to curb carbon emissions released from these processes. Notably, due to the high temperatures involved, pyrolysis is energy-intensive. This energy is produced through the combustion of process gas itself, resulting in carbon release into the atmosphere. Additionally, it considers the relatively low yield of original waste materials becoming new recycled products.

Shell Abandons Key Chemical Recycling Goal

As mentioned earlier, Shell has abandoned its goal of converting 1 million tons of plastic waste into pyrolysis oil by 2025. While Shell attributes this change to slow technological development and a lack of available plastic waste feedstock, the fundamental issue is regulatory uncertainty.

Although they still plan to complete work on the company’s new pyrolysis oil upgrading facility in the Netherlands, with a planned capacity of 50,000 tons per year, this marks a shift in Shell’s priorities, which were more optimistic about the future of pyrolysis technology before. The question remains whether this will be replicated across the industry and if it will prompt more companies to reconsider their investments in pyrolysis.

Given that pyrolysis is currently the largest-capacity technology in the chemical recycling market, Shell’s announcement will have a significant impact on the market. While other technologies like depolymerization and dissolution may view this as advantageous, it is noteworthy that similar regulatory scrutiny is also moving in their direction. This highlights the close influence of European regulations on the industry, with legislators potentially having a decisive vote on the success of these technologies.

However, Shell’s move is specific to the Dutch market, and globally, many of the major players are still actively setting up pyrolysis plants, including BASF, ExxonMobil, LyondellBasell, SABIC, Covestro, Neste, and Sinopec.