It is interesting to watch the pivot between recycled versus virgin polymer to the carbon footprint of the various options as outlined in the chart below. We are assuming that the numbers in the chart are averages as there is a sizeable range for everything. As we note in today's daily report, ethylene feedstock will impact the carbon footprint of ethylene and consequently, the footprint of polyethylene – HDPE made from ethane based ethylene in the US where the ethylene producer is recycling hydrogen back into the furnaces, will have a much lower carbon footprint than HDPE made from naphtha based ethylene in Europe, for example. On the recycling side, there will also be a range based on transportation costs for collection and sorting and then distribution to a customer.
The chart below on recycling progress by the major FMCG companies is timely as it bumps into plenty of “national recycling day” headlines which include as many stories around recycling polymers into new applications as stories about like for like recycling. The more polymer that moves through collection and sorting and into roadbeds or composite particleboard replacement, etc., the less there is available for the FMCG companies to meet recycling goals. We see this as a major opportunity for the renewable polymer makers, but it is unlikely that there will be enough renewable-based polymers available to close the 2025 gap for most of the companies listed below. What is likely, in our view, is that the packagers will embrace chemical recycling as a way to increase their recycled content and will strike very specific deals with those able to show a chain of custody from collection through new polymer production.