Strong demand for circular plastics, combined with changing regulations and increasingly ambitious company commitments, has led to healthy margins in advanced recycling, find partner Jeremy Wallach and coauthors. However, for circular plastics to ultimately meet demand, investment will be needed across the value chain, including collection, sortation, pretreatment, and advanced recycling technologies. Our research shows that achieving 20 to 30 percent of recycled content in plastic packaging by 2030 globally could require investment of as much as $100 billion.
Image description:
A line graph shows the profit margins for advanced recycled materials from 2017–23. In the past 3 to 4 years there has been a clear emergence of outsize margins. The graph also projects 3 scenarios for the future margins from 2023 to 2028, with 1 heading steadily upward, 1 continuing at the current level, and 1 gradually curving down toward 0. Dotted lines indicate margin projections for different scenarios based on McKinsey analysis, and they reinforce that recycling is at a tipping point.
Footnote: Recycling margin refers to normalized oil and utilization. Brent price is $80 per barrel, with global utilization of 85 percent.
Source: IHS Markit; Oil Price Information Service; McKinsey analysis.
End of image description.
To read the article, see “A unique moment in time: Scaling plastics circularity,” August 16, 2023.