What chemical recycling is and why it matters
Mechanical recycling — shredding, washing, and re-pelletising plastic — can only process relatively clean, single-polymer waste streams. Multi-layer films, contaminated post-consumer packaging, and mixed plastic fractions that represent a significant share of real-world plastic waste are typically unrecyclable through mechanical processes. Chemical recycling offers an alternative: converting this residual plastic into usable products through thermal or chemical treatment processes that break the polymer chains apart.
The relevance to plastic credit markets is straightforward: chemical recycling projects can address waste streams that mechanical recycling cannot, expanding the range of plastic that can generate credits while also handling the difficult material types — multilayer packaging, flexible films, polystyrene — that cause the most persistent environmental problems when mismanaged. Understanding the three principal technologies, their capabilities and limitations, and how Verra's VM0046 methodology governs credit issuance from chemical conversion projects is essential for any buyer considering this emerging credit category.
Pyrolysis: the dominant commercial technology
Pyrolysis subjects plastic waste to elevated temperatures — typically 400 to 600 degrees Celsius — in an oxygen-free or low-oxygen environment, causing thermal decomposition of polymer chains. The primary output is pyrolysis oil, a hydrocarbon mixture with a composition similar to crude oil that can be used as a feedstock in petroleum refinery cracking units, displacing virgin naphtha in the production of new plastic monomers. Secondary outputs include pyrolysis gas (used as an energy source within the process) and char (a carbon-rich residue used as a secondary fuel or, in some processes, as a carbon black substitute).
Commercial pyrolysis operations achieving Verra certification include reCLEAN Technologies (Batam, Indonesia), Plastic Energy (Spain and the Netherlands), and Quantafuel (Denmark and Norway). Plastic-to-oil conversion rates range from 65 to 80 percent by mass for target feedstocks of polyethylene and polypropylene — the dominant polymer types in flexible packaging. Mixed feedstocks with PVC or halogenated content require pre-treatment to remove chlorine, adding processing cost and reducing yield.
The principal criticism of pyrolysis from a circular economy perspective is that pyrolysis oil is used as fuel — burned to produce energy — rather than as a feedstock for new plastic production. When pyrolysis oil enters a refinery cracking unit, it contributes to the production of new polyolefins, representing a genuine circular pathway. But when it is blended into fuel streams or used for process heat, the plastic carbon is ultimately combusted and released as CO₂, making the net climate benefit dependent on what it displaces rather than on inherent carbon sequestration. Verra's VM0046 methodology accounts for this through a lifecycle emissions accounting requirement, but critics argue the methodology is too permissive in its treatment of fuel-output pathways.
Gasification: higher tolerance, lower efficiency
Gasification subjects plastic waste to partial oxidation at temperatures of 700 to 1,200 degrees Celsius, producing synthesis gas (syngas) — a mixture of hydrogen and carbon monoxide. Syngas can be used to generate electricity, produce heat, or serve as a feedstock for Fischer-Tropsch synthesis to produce liquid fuels or chemical building blocks including methanol, which can in principle be converted back to ethylene for plastic production.
Gasification's competitive advantage over pyrolysis is its greater tolerance for mixed, contaminated, and wet feedstocks — including waste fractions with high halogen or sulphur content that would damage pyrolysis reactors. This makes it particularly suited to processing the residual waste fractions left after mechanical recycling operations have removed the most recyclable material. The trade-off is lower energy efficiency: syngas energy density is lower than pyrolysis oil, and the capital cost per tonne of plastic processed is typically 30 to 50 percent higher than comparable pyrolysis capacity.
Solvolysis: the chemical route
Solvolysis uses chemical solvents — acids, bases, alcohols, or water under elevated pressure (hydrolysis) — to break polymer bonds and recover individual monomers that can be polymerised into virgin-equivalent plastic. Unlike pyrolysis and gasification, which produce hydrocarbon mixtures, solvolysis is capable of delivering a genuine closed-loop circular outcome: plastic in, plastic-grade monomer out.
Commercial solvolysis is currently limited to specific polymer-solvent combinations: PET glycolysis to BHET or DMT monomers (pursued commercially by Carbios, Loop Industries, and Eastman), and PA6 hydrolysis to caprolactam. Polyolefins — PE and PP, which dominate plastic packaging waste by volume — are not currently amenable to solvolysis at commercial scale. This limits solvolysis's near-term contribution to plastic credit supply, though investment in polyolefin solvolysis pathways is accelerating.
Verra VM0046: the methodology in detail
Verra published methodology VM0046 (Plastic Waste Reduction through Chemical Conversion Processes) in 2023, establishing the first formal crediting framework for pyrolysis, gasification, and solvolysis projects. VM0046 follows the same MRV architecture as VMR0006 for mechanical recycling, with three additional requirements reflecting the complexity of chemical conversion processes.
First, lifecycle emissions accounting: VM0046 requires projects to quantify and subtract the net greenhouse gas emissions associated with the chemical conversion process itself — energy inputs, process emissions, and the emissions attributed to combustion of output fuels — from the gross tonnes of plastic diverted. This lifecycle adjustment can reduce the credit yield per tonne of plastic collected, depending on the energy intensity of the conversion process and the carbon intensity of the local energy grid. Projects using renewable energy for process heat achieve the most favourable lifecycle emissions balance.
Second, output fate documentation: the methodology requires project developers to document the end use of conversion products — whether pyrolysis oil is used as a refinery feedstock displacing virgin naphtha, or combusted for energy — and applies different accounting treatments to each. Feedstock displacement generates a larger net credit than energy substitution, creating an incentive for project developers to establish and document supply chain agreements with refineries capable of using pyrolysis oil as a cracking feedstock.
Third, additionality for processing operations: beyond the standard additionality demonstration for plastic collection, VM0046 requires projects to demonstrate that the chemical conversion step itself is additional — that the mixed plastic waste diverted to chemical processing would not otherwise have been processed commercially. Given the high capital cost of chemical recycling facilities, this is typically straightforward for projects in LMICs without existing chemical recycling infrastructure.
Market pricing and the circular economy debate
Chemical recycling credits traded at $180 to $350 per tonne in 2024, according to South Pole market data — above mechanical recycling credits at $120 to $220, reflecting the premium for handling difficult waste streams, but below ocean-bound plastic premiums. The price premium over mechanical recycling is supported by the processing cost premium (chemical recycling has significantly higher capital and operating costs per tonne than mechanical processing) and by the additionality argument: chemical recycling projects handle waste fractions that have no viable alternative commercial pathway.
The ongoing controversy over whether pyrolysis-to-fuel pathways constitute genuine recycling is likely to affect regulatory treatment of these credits as EPR frameworks mature. The EU PPWR's recycled content targets explicitly specify mechanical and chemical recycling as eligible pathways for compliance credit — but only where the chemical recycling output is used as a feedstock for new plastic production, not where it is combusted as fuel. This distinction is critical: projects that sell pyrolysis oil to refineries may be able to supply the certified recycled content market alongside or in lieu of plastic credits, while those that sell to fuel blenders will remain in the credit-only market.
About the author
Dr. Marloes van den Berg
Policy Research Director
Marloes leads policy research on plastic regulation, EPR schemes, and the intersection of plastic credits with emerging compliance frameworks. Former advisor to the Dutch Ministry of Infrastructure and Water Management.