Molecular recycling, aka chemical recycling, is a technically proven way to put waste plastics back into circulation as virgin plastics — a 100% circular solution. But to succeed in the marketplace, technology is not enough: It’s also about business and execution.
In 2013, I was discussing Tesla with an ex-automotive CEO, and the points he made then mimicked the challenges facing plastics recycling today. He argued, “Tesla has zero chance of success. The automobile business is complicated, execution is critical, and electrification technology, around for some time, isn’t economic. Look at all the failures,” he added.
I disagreed. Based on research into Tesla’s business plan, execution ability, and technology, I bought a car and some stock. I figured I would either own a paper weight and a piece of paper or a great car and valuable stock. Since then, Tesla has launched four models, developed auto-drive capabilities, built supporting infrastructure, and is executing across the business. The stock is up 2,500%.
I also disagree with today’s plastic recycling doubters regarding chemical, rather molecular, recycling’s odds of success. What I do agree with? Like electrification of cars, solving the waste plastics problem is of critical importance and it too will require building businesses through execution around viable technologies in order to succeed. The upside to solving this problem is equally significant.
Once this pandemic has been tackled, the value of plastics — hygienic, low cost, flexible, and abundant — will mean greater demand and production. Proper disposal has been and will remain a top priority for consumers as well as producers and brand owners. Consumers, knowing they need to use more plastics post COVID-19, will insist on it.
Companies that had aspirational recycling goals before COVID-19 appear to be keeping them intact. Like many others, they aspire to achieve a significant reduction of the 79% of waste plastics currently going to landfills or, worse, into the oceans. Of the remaining 21%, only 12% of waste plastics can be reused, repurposed, or mechanically recycled while the rest is often burned.
Molecular recycling is a technically proven way to put used or waste plastics back into circulation as virgin plastics. The technology is often referred to as chemical recycling, and sometimes advanced recycling. Molecular recycling is more accurate, because it uses neither chemical additives nor catalysts, only carefully balanced heat and flow to ensure efficiency and profitability. The concept has been around since the 1960s. Further, plastic waste is reduced to its molecular origin. Therefore, molecular recycling is a 100% circular solution that can infinitely convert waste plastics back into virgin material by repurposing waste plastics into feedstocks to make plastic precursors.
In theory, with enough molecular recycling capacity for the landfill-bound 79% of waste plastics, all plastics currently above ground perhaps would be all we will ever need, since they could be infinitely returned to virgin uses — 100% circular. And, like auto electrification, “technically proven” is not enough. Execution of molecular recycling is complex and reaches beyond just technology.
The business side covers collection infrastructure upstream and processing infrastructure downstream; it must meet strict regulatory requirements; and requires experience in science, technology, operations, safety, and administrative execution to balance the myriad variables to consistently produce high-quality volumes. Above all, it must be profitable to be sustainable. And, by the way, this must all be done while continuously innovating on the fly.
In spite of the shadow of COVID-19, times are very encouraging for the molecular recycling industry and the positive environmental impact it could have. Numerous recycling companies worldwide have made announcements about future plants, production, partnerships, breakthroughs, and more. All of them, Nexus included, are focused on how best to reduce waste plastics for the betterment of all.
There is no winner-take-all scenario. Like electric cars, the market is far bigger than any one company, or any 10. There is ample space for successful ones; however, these companies will emerge only if technologies are economic and are surrounded by an end-to-end business that is well executed.
So, with so many players out there, how does one know who might succeed?
When stakeholders, like large industrials, sustainability/policy leaders, investors, and others, have toured Nexus’ commercial operation after researching others, the opening questions focus on technologies and what has been reported in the press. It quickly becomes apparent technology is not enough. The conversation shifts to issues focused on the business being built, who is executing it, and how.
With industry success in mind and using the same lens that was applied to Tesla, below are suggested questions along with commentary specific to molecular recycling.
These questions are meant as a starting point and have proven useful to others evaluating specific molecular recycling or similar companies and the industry.
They are provided in the spirit of ensuring the molecular recycling industry can succeed overall to achieve the ultimate goal we all share — solving the thorny waste-plastics problem, globally.
Your comments and additions are welcome by posting them in the comments box below this article.
Suggested questions to assess molecular recycling success and commentary:
Note: Complex industries do not lend themselves to today’s soundbite style if important information is to be conveyed. Combining engineering and finance, by its nature, requires details like below.
- Is the molecular recycling company an end-to-end business or just a technology?
- An innovative technology is at the center of any successful company. However, to migrate from a “science-project” pilot to a commercial-scale operation that is profitable and, therefore, sustainable requires cross-disciplinary skills. Molecular recycling is no different.
- Entrepreneurial spirit with a passion to solve a worldwide problem must be coupled with expertise in engineering, operations, software, regulation/policy, strategy, marketing/communications, legal, and human resources, which are all driven by financial and performance metrics. Ideally, with a leadership and implementation team that is scientifically, technically, operationally, and financially literate, success is achievable with strict cost-control limitations.
- Are complexities managed?
- Converting plastics to marketable products requires doing a few things well and thousands of little things very well. Molecular conversion is only one part of that equation. Also required is upstream handling of a diverse feedstock, logistics to identify and aggregate these feedstocks, ability to remove undesirable contaminants, both obvious — metals, non-plastics, undesired plastics #1, #3, #7 — and less obvious — inks, glues, labels, fillers, fire retardants, moisture.
- Maintenance of systems beyond upkeep are needed to maintain 24/7 operations to meet yield and throughput targets. Final products must meet strict specifications consistently and, preferably, without cost-adding efforts like hydro-treating and post-production cleaning or distillation.
- Is it operationally economic without grants or incentives?
- Like any business, recycling is unsustainable unless it is financially profitable for all parties.
- This may seem obvious, but discussions often focus narrowly on the technology either working or not. Cost and the economics of operating that technology is too often a secondary consideration.
- Grants and incentives cannot be relied upon for commercially scalable projects for the simple reason that they run out and expire.
- Plastic feedstocks are not free unless they are so contaminated, which adds costs, that they become unusable.
- Are capital costs reasonable to allow for rapid replication/scaling?
- All-in costs to build out and commission a system must be considered when evaluating operational performance and economic returns. These costs include hardware to software, maintenance, laboratory support, on-going working capital, regulatory compliance, insurance, training, property, and related expenditures.
- Although obvious, discussion usually overemphasizes only equipment and installation costs. Low capex can be achieved through expertise, efficient procurement from vetted vendors, and knowledge in setting up a plant, and when complemented by low Opex in the “Is it economic?” question above, it dramatically improves the operation’s risk/return ratio.
- Is operation efficient and output consistently high quality at commercial volumes?
- Efficiency dictates economics. For example, the Energy Returned Over Energy Invested (EROEI) number captures all inputs (feedstock, energy, and others) and compares them to the energy value of the off-take produced.
- The higher the EROEI, the better and more economic, but this parameter does not stand alone. Product quality measured as the ability of a produced feedstock to meet a certain specification consistently and at scale is just as important.
- Any post-processing operations add costs and complexity while limiting the use and value of the off take.
- The softer element of high-level customer service also plays a significant role. Processing transaction orders accurately, especially for larger partners, is essential in an on-going business relationship.
- Does it meet all regulatory requirements and is it reasonably insurable?
- End-to-end air, water, safety, transportation, product load-out, area classification, electrical and piping compliance require proper review, approval, and implementation at the federal, state, and local levels.
- Insurance companies are shying away from established recycling operations and even some refineries while requiring minimum engineering, technical, and environmental compliance to established standards. A single significant accident could have a chilling effect that would ripple throughout the industry.
- Larger buyers also insist on minimum operating standards from the companies they do business with to ensure their own interests are protected. The best product will be rejected if produced in conditions inconsistent with their corporate standards.
- Are hardware, software and other systems integrated to address complex operating parameters?
- Hardware is only part of an end-to-end solution. Adjusting temperatures, flows, pressures, and residence times on the fly is just as important within any operating scenario. In some cases, artificial intelligence (AI) linked to the production system’s numerous input/output points may be required to achieve consistent and reliable performance.
- Plastics-to-oil is an imperfect science given the broad array of inputs and cannot rely solely on human reaction. A combination of soft and hard solutions is necessary to achieve desired production and economics.
- Is the company’s profit model about licensing its chemical recycling technology?
- The current state of molecular recycling is not well suited to licensing the technology to non-experts. There are simply too many technical and operational nuances and “soft” factors to reliably and economically run a plant unless one possesses specialized skills and knowledge. Unfortunately, some past licensing efforts have proven this out.
- Over time, at the point when all the elements above have been compiled within system software and detailed operational and maintenance procedures, licensing will no doubt prove to be a powerful tool for scaling within the industry.
- What is in-house versus third-party driven?
- Institutional knowledge is critical for developing and deploying any early-stage technology. Rapid innovation and improvement are the norm. Outsourced software development, engineering, plant operation, feedstock sourcing, and even construction do not allow for the rapid iteration required to keep any novel business on course when changes or improvements are needed.
- Possessing an in-depth knowledge of every aspect of the business can only come from actually “doing it,” which goes a long way toward increasing the odds of that business surviving and thriving.
- This knowledge is not easily obtained, and while it may be found in detailed operations manuals, those manuals are only rarely read and more rarely is the information in them assimilated, which can ultimately slow growth and even destroy the business (see point about licensing above).
- What is the make-up of feedstock?
- No plastic stream is pristine and will contain a range of all plastics and more. Like any input to a system, a specification must be defined and met at a cost to deliver sustainable economics.
- The chemistry involved with pyrolytic molecular recycling is straightforward: #2, #4, #5, and #6 plastics can be molecularly recycled while others cannot. Taking #1s and #3s through #7s is possible (and they will appear in all streams no matter how “clean”), but when they are found in higher quantities within incoming feedstocks, this means higher sorting and disposal costs as well as significant operational impacts.
- Other non-plastic contaminants creep in even if pre-sorted, especially at scale. Metals, glass, organics like paper and food waste, colorants, glues, fire retardants, and moisture require a laboratory analysis before introducing them into a system. Municipal waste, though abundant, has all these contaminants in such high quantities the cost/benefit skews negative. Over time this may change as consumer-sorting improves. Catalysts and other technologies may address some of these issues as well, but it will take time to reduce costs to a manageable level.
- Since no source is perfect, in order to take #1s and #3s through #7s, a system must be able to handle reasonable amounts of all contamination economically, either upstream before entering conversion or within the conversion system itself. Economics must be the driver, not “wish-cycling.” Volumes of targeted material need to be readily available at a price that accounts for collection, aggregation, logistics, and processing on location.