IFAT opinion: Why plastics recycling and pyrolysis are entering the next scaling phase

15 May 2026

Last week, representatives from enespa ag – including CEO Steve Döring – visited IFAT, the world's leading trade fair for environmental technology, in Munich. The numerous discussions held there confirmed our assessment that the environmental technology sector remains robust despite the current challenging market environment. While many industries are under economic pressure, the circular economy continues to grow. This is particularly evident in the field of renewable energies.

Of particular interest to enespa is, of course, the question of how the recycling market, and especially plastics recycling, will develop in the coming years. A closer look reveals a picture of an industry that is currently at a crucial turning point.

Because in the coming years, between structural growth and short-term market challenges, it will become clear which recycling providers will actually reach the next phase of industrial scaling.

Plastic recycling continues to grow, but under changed circumstances.

Globally, plastics recycling continues to experience solid growth. Market analyses predict annual growth rates of around 8%, while the relatively new chemical recycling process is expected to grow even more strongly than established mechanical methods in the coming years.

The main drivers are regulatory requirements, rising recycling rates, and pressure on companies to establish sustainable supply chains – the structural market environment therefore remains intact. Nevertheless, the investment climate in the recycling market has changed noticeably in recent years.

While capital was relatively readily available as a result of the COVID-19 pandemic and green recovery measures such as the European Green Deal, investors are now much more selective. Rising interest rates, higher demands on business models, and a stronger focus on profitability mean that plastics recycling projects are being scrutinized more closely.

Especially with regard to the ecological consequences of growth, this has left its mark on economic thinking to this day. For example, production limits are repeatedly proposed in connection with global plastic pollution – and just as regularly fail due to resistance from oil-producing countries. According to the United Nations, global plastic production is likely to triple by 2060 without a binding limit. Even today, over 460 million tons of plastic are produced annually, half of which is single-use plastic. At the same time, the global recycling rate has stagnated at below ten percent for years.

IFAT clearly demonstrated that the industry is in a challenging market phase. This makes it more important than ever to focus on robust business models, operational excellence, and successful project completion. Regulatory developments are clearly playing into the hands of the circular economy in the long term – the pressure on industry and policymakers is increasing worldwide. However, the crucial factor will be not to think about technologies in isolation, but to consistently align them with customer needs and industrial realities. This is precisely the integrated service and solution approach we pursue at enespa.

Dr. Steve P. Döring, CEO enespa ag

Investments in recycling are less dynamic and more selective today.

Recent developments in Europe illustrate this trend. According to analyses by Deloitte, installed recycling capacity has even declined recently. Industry associations such as Plastics Recyclers Europe report increasing economic pressure on recycling companies.

One reason for this is that, in the past, recycled materials were more expensive than virgin plastics due to low raw material prices, and the industry is increasingly suffering from the import of cheap recycled materials from Asia. This puts pressure on margins and leads to investments in new recycling plants being postponed or reduced. At the same time, consolidation pressure within the industry is increasing.

The resulting picture is therefore very mixed: While capital is still available, it is being used more strategically. Investors are paying closer attention to robust business models, stable cash flows, and clear industrial scalability.
Plastics are virtually irreplaceable in many applications: in medicine, food preservation to combat food waste, the supply of clean drinking water, and weight reduction in vehicle manufacturing, for example in electric cars. Plastics are deeply integrated into industrial value chains and are therefore more likely to gain in importance than lose it in the long term.

Advanced Recycling combines complementary recycling approaches.

Modern recycling systems emerge where the perceived contradiction between mechanical and chemical recycling is overcome. These two approaches are not in competition, but rather complementary components of the circular economy. Mechanical processes are now the industry standard and particularly efficient for single-stream plastics – however, they reach their limits with mixed or heavily contaminated waste.

This is precisely where chemical recycling comes in, for example pyrolysis, which can also process more complex material streams. At the same time, this area still faces challenges in terms of industrial scaling – from high investment costs to regulatory uncertainties.

Therefore, an integrated understanding of both technologies is crucial: only through their interaction can a high-performance system be created that can efficiently return different waste streams to the cycle. This is what we at enspa understand by Advanced Recycling.
Accordingly, the circular economy approach is less an expression of idealistic environmental goals than the economic consequence of rising raw material prices, regulatory pressure, and increasing resource scarcity. A circular economy means rethinking industrial value creation – making it scalable, measurable, and economically viable.

Mastering recycling technologies alone is not enough.

As crucial as technical expertise is, practical experience clearly shows that success in the recycling market depends not primarily on individual processes, but on control over the entire value chain. This includes secure access to suitable input materials, efficient processing and manufacturing processes, and reliable sales markets for the resulting products.

With projects in Europe and North America, we are systematically driving the development of reference plants. These serve not only as technological demonstrations but also as the basis for developing standardized, scalable solutions. In parallel, we are integrating key value chain steps – from processing to marketing.

In doing so, we are responding to the changing demands of the market: investors and partners now expect robust, economically viable models instead of mere technological promises.

Circular economy needs industrial implementation

The recycling market – particularly in the plastics sector – remains a key growth sector of the global economy. Demand is driven by structural factors, such as regulation, ESG requirements, and the increasing need for sustainable materials.

At the same time, the market environment has changed: The phase of readily available investments is over. Instead, industrial maturity, operational excellence, and integrated value chains are taking center stage.

The crucial question is no longer whether recycling will grow – but who will control this growth industrially. The industry stands precisely at this crossroads. And this is where enespa positions itself.