Reframing Waste Sorting as Infrastructure: The Circular Economy’s Missing Link
By Dweep Chanana
Petrochemical and consumer brand owners face a growing feedstock challenge. Despite billions committed to chemical recycling and circular packaging, less than 20% of the sorted plastic inputs required to run these facilities exist today. Europe alone has announced 2.8 million tons of chemical recycling capacity by 2030, yet only about 500 kilotons of feedstock is available. Unless new approaches emerge to finance and scale waste sorting, much of this planned capacity will remain underutilized, jeopardizing both growth and circularity goals.
The bottleneck is structural: sorting sits between industries and investment models, creating a gap that traditional stakeholders are reluctant to fill. But if reframed as critical infrastructure—backed by long-term offtake and financed externally—sorting can unlock capital, lower feedstock costs, and bring stability to the system, just as renewable energy scaled two decades ago.
The Feedstock Gap
By 2030, over 2.8 million tons of chemical recycling capacity is expected to come online in Europe. But only about 500 kilotons of feedstock is available today. That leaves a gap requiring a 5–6x increase in sorting capacity, demanding €5–8 billion in new investment.
This mismatch isn’t limited to one polymer stream. From polyolefins to PET and textiles, the gap between recyclable material and actual sorted feedstock is widening. Even well-funded projects often secure less than one-third of their long-term feedstock needs.
Why Traditional Models Fall Short
Waste sorting delivers systemic benefits but occupies an awkward middle ground:
Too far from the core of petrochemical operations.
Too uncertain for waste managers to fund at scale.
Too volatile for infrastructure investors under current models.
Margins remain thin, bale sales fluctuate, and trust between waste managers and petrochemical buyers is limited. As a result, investment into sorting capacity lags far behind demand.
A New Model: Treating Sorting as Infrastructure
The solution lies in reframing sorting as infrastructure. Much like renewable energy projects two decades ago, sorting facilities can be financed externally, underpinned by long-term offtake contracts from petrochemical companies and brands.
This model is not hypothetical. Companies such as TetraPak have already sponsored sorting equipment upgrades to secure stable access to recovered materials. In the renewable energy sector, independent power producers (IPPs) unlocked trillions in capital by combining external financing with long-term agreements. Waste sorting can follow the same path.
Benefits of the Infrastructure Approach
Access: External capital flows into the system, scaling feedstock supply.
Stability: Long-term contracts provide predictable pricing.
Cost Efficiency: Lower financing costs reduce overall feedstock expenses.
For petrochemicals and brands, this approach secures reliable feedstock without the burden of owning or operating sorting plants directly. For investors, it creates a new category of infrastructure-like assets.
Why Now?
The economics of recycling are deteriorating. Virgin polymer prices remain low, petrochemical margins are under pressure, and waste managers report recycling EBIT margins of just 5–8%. At the same time, regulatory momentum in markets like the UK and EU is unlocking new streams of potential feedstock. Unless sorting capacity keeps pace, this material risks being incinerated or exported instead of recycled.
By treating sorting as a “common good” of the circular economy, the industry can shift from under-investment to scalable solutions. Just as renewables scaled through innovative financing, sorting can attract infrastructure investors once risk is reduced through partnerships and structured agreements.
The Way Forward
The circular economy will not advance through plant announcements alone. Scaling requires solving the feedstock bottleneck. Those who act early to anchor new development companies (DevCos) — combining waste managers, petrochemical firms, brands, and infrastructure investors — will be the ones to secure long-term feedstock and lead the next phase of circular growth.
The opportunity is not just to close the feedstock gap, but to redefine how the circular economy structures its most critical common-good assets.
This article draws on Anchor’s advisory and project development work with petrochemicals and brands. To explore collaborations, contact us at info@aii-group.com.
