Well done LyondellBasell, for one of the most sensible moves we have seen today concerning polymer labeling. The “Circulen” labeling will tell customers what they are getting and where it came from – mechanical recycling, chemical recycling, or a renewable feedstock. This should eventually lead to tiered pricing as customers, especially packagers try to solve for ambitious more sustainable packaging solutions that look very hard to achieve today.
In theory, LyondellBasell could come up with a fourth product – a recycled polymer that came from a renewable source, but this is likely years away as the renewable-based volumes would need to rise meaningfully for it to be worth relabeling and sorting for specifically. A few small “closed-loop” applications could emerge to allow for specific recycling of a renewable-based polymer. LyondellBasell is likely to get tiered, but better, pricing for these products, with the chemically recycled material the lowest priced of the group because of the conversion inefficiency and the carbon footprint of the recycling process. Also, from a “chain of custody” perspective, these operations will likely need to be close to LyondellBasell ethylene units – easier in Europe than in the US, as there are fewer competing facilities looking for the same pyrolysis feedstocks nearby. In the US, there could be bidding wars for pyrolysis feedstock at several points along the Gulf Coast. LyondellBasell may have some competition in Central Germany, but not as much in the South and not in France.
Separately, today's Trafigura headline may be a boost for carbon capture in the US if the industry can participate in the voluntary carbon credit markets by virtue of the CO2 sequestered. If CCS and CCU can qualify as a carbon offset in addition to the 45Q tax credit available, this may be the additional economic “nudge” that the industry needs to make investments more attractive both for the companies with the CO2 problems for the sequesters. Even if this were only to apply to low-carbon products hitting the international markets it may boost blue hydrogen/ammonia, LNG, fuels, and methanol interest on the US Gulf.