WINNING IN

A CIRCULAR
ECONOMY
Practical steps for the
European chemical industry
Preface

Dear reader,
At a time of multiple global sustainability challenges, This has been recently outlined in our Mid-Century Vision
the circular economy has been listed as one of the biggest report titled “Molecule Managers” which kicked off a dialogue
market opportunities for delivering the Sustainable about the future of the chemical industry and its role in
Development Goals. The incremental opportunities building a prosperous and more sustainable Europe by 2050.
for circular economy manufacturing are estimated at
US$ 1,015 billion by 2030, based on estimated savings or Especially in the area of plastics, we’ve seen an ever-increasing
projected market size across all manufacturing sectors.1 number of initiatives being announced by the chemical industry,
on its own or through partners, aimed at closing the loops
Not only is the circular economy considered an important for plastic waste where today no economic or technological
piece of the puzzle in addressing the resource challenge, solution exists. In this new report, Accenture develops a
there is growing awareness that a circular economy could also comprehensive view on the unfolding industry transition which
be a contributor towards the Paris goals by reducing the overall they consider to be driven by regulators and consumer demand.
level of greenhouse gas emissions. Beyond offering solutions Also, on supply and demand dynamics; on the building blocks
to become less dependent on primary raw materials, moving to close loops, such as recycling technologies, reverse logistics,
towards a circular economy has additional environmental circular product design, and enabling technology; as well as the
benefits. Giving value to wasted materials by setting up overall impact on value chain dynamics, business models, and
appropriate waste management and recycling infrastructure will breakeven economics of secondary raw materials versus virgin
help reduce environmental littering—bringing several benefits. fossil feedstock-based chemical products.

The European chemical industry sees itself at the center We welcome Accenture’s study as a valuable input to the
of this trend, acting both as a producer of products necessary dialogue between all stakeholders so that Europe can
valued by society and a leader in recycling. Products are truly become a circular hub with the chemical industry at its heart.
increasingly being designed to stay longer in the loops,
to be recycled more easily, or being based on renewable Marco Mensink
feedstock. The industry has the expertise and knowledge Director General,
to transform waste into valuable, new raw materials. Cefic

Winning in a Circular Economy 2

Contents
6
The Accelerating Shift to Circularity

12
Closing the Circular Economy Loops

24
Moving into Circular: Options
for Chemical Companies

32
Call for Action

Winning in a Circular Economy 3

Introduction

The concept of the circular economy The number and variety of regulations in individual countries
and the EU has increased significantly. Many established and
is not new, but over the last two startup companies are investing in the development of new
years, activity related to circularity recycling technologies. And a broad range of public and private
has increased dramatically—and it is initiatives around the globe have been established, from the
changing the chemical industry fast. European Commission’s “European Strategy for Plastics in
a Circular Economy” to the global Alliance to End Plastic Waste,
Since the publication of our first report, “Taking the European which includes over 40 companies.
Chemical Industry into the Circular Economy” in early 2017,
six factors have accelerated the move to the circular economy. The shift towards circularity brings significant opportunities.
End-consumer preferences have shifted to sustainable The circular economy seeks to replace today’s linear,
and eco-friendly products, and people are willing to pay “take-make-dispose” approach to resources with one in which
a premium for those products. Brand owners have announced materials are kept at their highest material value and constantly
voluntary sustainability commitments that are changing cycled back through the value chain for re-use, resulting in less
the structure and the dynamic of existing markets and demand. energy and resource consumption. With their connections that
Investors now apply strict sustainability targets in their investment reach both upstream and downstream, and products that are
decisions, and participants all along the value chain are seeking woven deeply into everyday life, chemical companies can help
ways to contribute to greenhouse gas (GHG) reduction targets. society as a whole to address some of its biggest environmental
and sustainability challenges.

Winning in a Circular Economy 4

Introduction

“The circular economy train

Indeed, they will find growth opportunities in designing
chemical products for circularity, in enabling downstream

is leaving the station soon—

value chains to keep materials in use for longer, in fulfilling
the demand for new materials, and in creating and

and chemical companies

operating molecule-circulating loops.

have a decision to make.”

However, the move to circularity requires vigilance
and decisive action, as it promises to disrupt the industry’s
value chains, profit pools and demand patterns while
creating new opportunities for growth. The transition is
in full swing and has arguably passed the point of no Or they can play a more active role, laying the tracks that
return, so that corresponding action is a strategic necessity make the journey possible or even driving the train, and
for the chemical industry and the value chains it serves. thus helping to determine the pace and arrival time of the
As a consequence, a race to occupy key “sweet spots” journey—positions that will let them shape and benefit
is underway. Engaging in circularity is no longer a “nice from the emerging circular economy. And although
to have”—it is a key source of competitive advantage. chemical companies have been exploring circularity, they
still have considerable work to do. The sooner they make
The circular economy train is leaving the station soon— these decisions and move forward with comprehensive
and chemical companies have a decision to make. actions, the better—for the industry and society.
They can simply be passive passengers on this journey.

Winning in a Circular Economy 5

Chapter 1

The Accelerating
Shift to Circularity

Winning in a Circular Economy 6

The Accelerating Shift to Circularity

Figure 1

Drivers of circularity

Accenture has identified six driving forces behind 81 percent of customers

the accelerating shift towards a circular economy prefer environmentally
(Figure 1). friendly productsi End
consumer
awareness
First, end-consumer awareness of the issue is growing.
In a 2019 Accenture study, 72 percent of consumers
said that they bought more environmentally friendly
products in the last five years, and 81 percent expected More than 100 Circular Brand owner Dozens of global
sizeable recycling technology voluntary consumer goods
to buy more environmentally friendly products in the development commitments
technology startupsiii brands
next five years. In addition, 50 percent stated that they
are willing to pay more for a product that is designed
to be re-used or recycled. Although survey results on
“willingness to pay” generally warrant a bit of caution,
these findings highlight a new demand and thus,
an opportunity for chemical companies.2 Bans, quotas, taxation US$31 trillion
Increasing Responsible
and Extended Producer regulatory invested in
Responsibility (EPR) investments sustainability
pressure
schemes in the EU fundsii

CO2
reduction

45%+ cut in greenhouse

gas emissions from 1990
i Accenture Research
levels targeted by 2030
ii Global Sustainable Investment Alliance
iii Accenture, AngelList, angel.co, Closed Loop Partners Source: Accenture

Winning in a Circular Economy 7

The Accelerating Shift to Circularity

Second, brand owners are adapting to consumer preferences According to the Global Sustainable Investment Alliance,
on circularity and taking a strong position by making voluntary sustainable investments grew from US$23 trillion in 2016 to
commitments to increase the percentage of recycled and US$31 trillion in 2018,9 an increase of 35 percent in just two years.
bio-based content in their products.3 For example, Coca Cola In this environment, access to capital will become increasingly
has committed to making its packaging recyclable by 2025 challenging for companies that don’t adjust their strategies.
and its bottles and cans of 50 percent recycled material by
2030.4 Unilever has committed to reducing its virgin plastic Fourth, the EU has committed to achieving a 45 percent
packaging by 350 kt by 2025, with 100 kt coming from an reduction in GHG emissions by 2030, compared to 1990
absolute plastic reduction.5 To fulfill these commitments, new levels. Reaching this target will require a reduction in the CO2
value chain collaboration will be required. And the consequences emissions of the chemical industry. But even more important,
of these commitments are clear: The demand for plastics it will also require the chemical industry to contribute
and chemicals will not be the same in the future—but there significantly to the reduction of CO2 emissions in downstream
is a massive new market opportunity for solutions that industries. In 2017 in the EU, the GHG emissions from the
help brand owners meet their circularity commitments. chemical industry’s energy consumption accounted for
3.3 percent of overall GHG emissions from final energy
Third, there is an ongoing change in the investment criteria consumption.10 By contrast, the combined GHG emissions
of debt and equity investors. For example, in a pioneering of the transport, commercial and residential sectors accounted
move, the sovereign wealth fund of Norway has started to invest for 72 percent of emissions caused by final energy consumption,
only in businesses that adhere to high ethical standards that indicating a potential reduction from those sectors that is more
were agreed upon by the Norwegian parliament.6 The European than 20 times greater than the chemical industry’s target.
Investment Bank has announced that it will stop financing Achieving these targets will require more lightweight materials,
fossil fuel projects.7 And leading global investment management more insulation materials, new processes and manufacturing
firms are increasingly likely to factor in a company’s impact technologies, new solutions, and new behaviors.
on the society and the environment to determine its worth.8

Winning in a Circular Economy 8

The Accelerating Shift to Circularity

Fifth, these changes are taking place against a

backdrop of increasing regulation related to product
or material re-use and recycling in both developed
and emerging economies (Figure 2).

The number of sovereign states with circular economy-

related regulations, and the variety of regulations,
has increased significantly, leading to a heterogeneous,
fragmented regulations landscape. At the same time,
increased regulation means that more and more end-
of-life (EoL) material will become available. Recycling
methods that are not yet profitable will benefit from
regulation, such as EPR schemes, which are gradually
shifting breakeven economics in favor of secondary raw
materials. However, a fragmented regulations landscape
creates fragmented markets, with niche models
tailored to the individual country regulation, thereby
compromising the efficiencies and economics needed
to migrate to a true, widespread circular economy.

Winning in a Circular Economy 9

The Accelerating Shift to Circularity

Figure 2 Raw Chemical Converters OEMs/brand owners End user Waste manager
materials industry
Regulation Material ban Global ban on

is taking chlorofluorocarbons (CFCs)

many forms Bans

Application ban Single-use plastic bans

Import ban Waste import

restrictions

Export ban OECD plastic export limit

Recycling quota Batteries & accumulators

Quota on domestic waste recycling
and packaging waste EU 2030

Quotas Recyclate use quota Not yet applied

Types of regulation

Collection quota
(WEEE)* >70-80% EU WEEE collection

Taxation of low UK tax on packaging

recyclate usage with <30% recyclate
Recyclability Lower fees on recyclable packaging
tax incentive in upcoming packaging law in Germany
Taxations
Taxes on certain Taxes on virgin feedback-based plastics
materials in packaging in UK and discussed in Canada
Taxes on certain Plastic bags
applications taxed in the US

Take-back policy Retailers have to take

WEEE back in Europe
Private waste-specific
disposal organization Eco-mobilier for furniture in France
EPR
schemes
Waste orchestrator Dual system pays licensed waste manager for kerbside packaging collection in Germany

State-owned
organization US, E.g. batteries, carpets, electronics, mattresses, tyres

*WEEE: “Waste Electrical and Electronic Equipment recycling

Source: Accenture

Winning in a Circular Economy 10

The Accelerating Shift to Circularity

And sixth, new players are entering the market to

address the need for new technologies, and some
established players are developing their own recycling
technology units or cooperating with startups.
One study found that there are more than 100
technology providers, mainly startups, targeting an
estimated US$120 billion market for recycled plastics.
The need for recycling technologies is by no means
limited to waste processing; it also involves platforms
to trade recyclates*, enterprise software to reduce
waste, and sorting technology, among other things.

Altogether, these facts and figures imply substantial

change for the chemical industry. Currently, the
narrative and media imagery around sustainability and
the circular economy is compelling—driving consumers,
brand owners, governments and others to act.

*Recyclates definition: Output materials from a waste recycling plant or materials

recovery facility which can be further processed in similar ways as virgin materials.

Winning in a Circular Economy 11

Chapter 2

Closing the Circular

Economy Loops

Winning in a Circular Economy 12

Closing the Circular Economy Loops

Closing the circular economy loops will require several

key building blocks: material flows, infrastructure to
handle the material flows, a broad evolution of technologies,
and last but not least, favorable economics associated
with these factors. Each building block involves some
uncertainties that could compromise the ability to close the
loops. Material flows, and especially waste streams, are not
transparent. The magnitude of investments in infrastructure
and assets for handling material flows depends heavily on
how technologies are being developed—in an orchestrated
manner, or separately within each value chain step, which
could lead to challenges when it comes to integrating
them into circular material flows. And finally, a single
industry cannot achieve circularity alone. By definition,
it requires collaboration between value-chain segments.
The uncertainties of how value chains will rearrange
themselves are significant and can only be addressed
through new collaborations and partnerships.

Winning in a Circular Economy 13

Closing the Circular Economy Loops

End-of-life materials as alternative

sources of feedstock
There are numerous efforts underway to explore However, there are challenges to doing so. In contrast
bio-based materials as alternative feedstock sources, and to crude oil, which is generally concentrated in specific
today approximately 10 percent of the organic feedstock is locations, chemical product-based material streams reach
bio-based.12 While the benefits of this are clear—a renewable their EoL points in a geographically dispersed manner and
source, consumption of CO2, lower energy intensity than often as only a small fraction of a waste stream that is poorly
production from fossil feedstock—there are practical limitations sorted or not sorted at all, with few or no specified standards.
to the amount of bio-based feedstock that can be produced: To establish basic transparency into the material flows,
Accenture estimates that it would require harvesting the especially waste streams, Accenture has mapped the material
biomass from an area comparable to the size of Romania year flows in Europe. Fragmented data (often at the community
after year13 to replace the EU’s current demand for fossil-based level), insufficient classifications, and a lack of standardized
feedstock. Therefore, the exploration of EoL materials as definitions are among the major challenges for developing
alternative sources of feedstock will be a necessity. circular economy concepts, and turning those concepts
into operational, circular business models (Figure 3).

Winning in a Circular Economy 14

Closing the Circular Economy Loops

Figure 3 Chemical� End-of- Accessibility at Waste � Recycled

Application
Mass balance
industry lifecycle end-of-lifecycle management today

of consumed Glycolic acid

1.7 Agricultural appliances Recycled

chemicals to
2.0 Technical applications Recyclable
Silicone Consumer chemicals
23.8 31.2
Surfactants
EoL materials in Other 21.3 Packaging
Chemical recycling
<0.1

EU28 in 2018 3.5 Household, leisure & sport Defined end-of-life

Mech. recycling (export)
3.4
(in million tons) Nitrogen fertilizer
Phosphate fertilizer Inorganics 3.2 Electrical & electronics
101.2
Mech. recycling (local)
Potassium fertilizer 26.9 5.8
Other inorganics
22.8 Consumer products Landfill
8.9

PP Incineration
LDPE & LLDPE 12.9
HDPE 27.9 Agricultural consumables
PVC Polymers
PU 56.7
PET
15.6 Process chemicals
PS & EPS
Other polymers Dispersed/non-separable
Permanent use 70.0
17.2 Building & construction 35.8
Paints & coatings
Lubricants
Carbon black Specialties 10.0 Automotive
Solvents 31.5
Catalysts
Crop protection 13.8 Others

Source: Accenture analysis

Source: Accenture

Winning in a Circular Economy 15

Closing the Circular Economy Loops

“Chemical firms in today’s

Accenture’s research shows that compared to the
approximately 140 million tons per annum (Mtpa) of chemical

value chains don’t have

products consumed across various applications, only 101 Mtpa
reach their EoL point. The balance falls into the “permanent

access to these fragmented

use” category—that is, it will reach its EoL later, potentially
many years into the future. And about 70 percent of the

waste streams, and waste

material reaching its EoL point is not accessible, due to its
being dispersed in the environment or being inseparable

managers don’t have

from the products it is contained in. Out of the 31 Mtpa
remaining accessible chemical EoL products, the majority

customers for raw materials.”

(approximately 22 Mtpa) still ends up being incinerated
or even landfilled, and only 9 Mtpa becomes available
in recyclable, and typically fragmented, waste streams.

Chemical firms in today’s value chains don’t have access What’s more, Accenture’s analysis clearly reinforces the idea
to these fragmented waste streams, and waste managers that further innovation in sorting and processing technology
don’t have customers for raw materials. As a result, it is is needed to reduce the amount of materials being incinerated
highly probable that raw material supply will shift, creating or landfilled; that separability of materials needs to be improved
new dependencies and driving circular value chain integration. (design for circularity); and that new solutions will be required
For example, chemical firms could become involved in the to handle the “permanent use” materials, such as materials used
steps preceding EoL stream processing, or waste managers in buildings, when they eventually do reach their EoL points.
might forward-integrate into raw material supply, resulting
in new competition.

Winning in a Circular Economy 16

Closing the Circular Economy Loops

Infrastructure transition Figure 4

Density of plastic waste in Europe

An emerging circular economy in Europe will likely
require an asset base that is different from that of
today. This will affect everything from product design,
chemical manufacturing, transport and EoL points
to waste stream collection, reverse logistics, sorting,
pre-treatment and processing into recyclates and
back into chemical monomers.

Recycling facilities, for example, can only operate

economically at a certain industrial scale and therefore
need a stable supply of appropriate waste streams that
consist of a single material or product and are free of
contaminants. The less densely populated a geographic
area is, the less waste is generated in that area. Thus,
the tradeoff between scale economies of the recycling
plant and the transportation costs within the catchment
area will be a key factor in economic viability.
Waste (tons/km2 p.a.)

Figure 4 shows the current density of plastic 0.00 70.00

waste generation in Europe. As one might expect,
that density is higher in metropolitan and more Source: Accenture
populous areas. Waste density is particularly high
in the Benelux region, the western part of Germany
and metropolitan regions such as London and Paris.14
Winning in a Circular Economy 17
Closing the Circular Economy Loops

A typical chemical cracker processing fossil feedstock at scale Figure 5

today has a capacity of about 1 Mtpa. A similar scale operation Scenarios for chemical product circularity in Europe
for plastic waste processing would require a catchment area of
33,000 km² in a typical metropolitan agglomeration—more than
20 times the area of London. For a more realistic region that has
urban and rural parts, it would require a catchment area larger
than the size of Hungary. And if the waste per capita were to
decline due to changing consumption patterns, the catchment
area would need to be even bigger. In a catchment area of such Free flow Semi-orchestrated Re-invent
dimensions, the cost of transporting waste from its EoL point to
the processing facility would become prohibitively high.
• Competitive race for • Balanced disruption • High degree of innovation
Smaller facilities could be attached to and use the infrastructure “sweet spot” niches to existing value chains and scale benefits
of existing waste management facilities. Even mobile units for • Disjunct loops, • Some central coordination, • Centrally controlled,
value chains and assets semi-connected loops, fully connected loops,
chemical recycling are possible, and have already been tested.15, 16
• Mutually beneficial value value chains and assets value chains and assets
On the other hand, large-scale plants acting as centralized hubs
chain collaborations • High leverage of existing • Fast transition
could efficiently access large logistics infrastructure such as asset configurations
• Potentially sub-optimal • Typical disadvantages
railroads and harbors. In any case, waste processing at scale
scale and pace of transition • Good fit with characteristics associated with
will require massive investment, which makes it critical to have of EU’s political structure “planned economy”
certainty on key assumptions, as well as smart approaches to
infrastructure transition.

Accenture has investigated three principal scenarios

for orchestrating waste flows across Europe (Figure 5).
Source: Accenture

Winning in a Circular Economy 18

Closing the Circular Economy Loops

First, in a “free flow” approach, market forces would govern all

development. Market players would establish their own loops
and value chains, consisting of partnerships, ventures or simply
long-term contractual agreements. Second, a semi-orchestrated
approach based on existing asset configurations and locations
would involve an orchestrating entity recommending and/or
incentivizing the development of new business opportunities.
Finally, a third approach could involve a complete reinvention of
the European asset and infrastructural landscape, with a central
authority fully coordinating and integrating value chains and
material flows into loops. This would entail large-scale investments
in new assets, such as chemical recycling plants with state-of-the-art
technology, as well as transportation infrastructure to move waste
streams and recycled feedstock.

Each of these scenarios has its pros and cons. For example,
having a strong and active central authority might speed up the
transition to a circular economy. But it also could run the risk of
acting like a planned economy, which is typically associated with
short-term improvements and long-term runaway costs, as actual
market forces are dampened. A free flow scenario, on the
contrary, while ensuring alignment and economic viability, may
not achieve potential synergies and transition speed, and may
turn out much more costly than a fully re-invented or orchestrated
scenario. The extent to which the transition is managed by a
central entity, or even by states, is a key question for the future.
Winning in a Circular Economy 19
Closing the Circular Economy Loops

Evolution of technology
There are five distinct loops for circulating molecules: There is an immense emerging need for more powerful
using renewable feedstock, reusing products, mechanically technologies to sort and clean EoL streams prior to
or chemically recycling EoL materials, and capturing mechanically or chemically recycling them, without
and utilizing carbon. Many of these have material- and causing severe degradation in material quality and asset
application-specific challenges.17 The biggest challenge performance. Machine learning, for example, is expected
is current product design that features multiple blended, to enable completely new ways of sorting plastic waste.
compounded or layered materials, which end up as Sorting systems using image recognition software are
dispersed mixed waste. If current product design is not already operating in various companies. But these have
changed, then mixed waste, which accounts for just 9 Mtpa their limitations, because they must be trained manually
today, will be the main secondary raw material source— to recognize different objects—and thus do not work well
literally, a non-specified mix of materials with highly varying when sorting through the numerous shapes and patterns
quality, amounts of contaminants, etc. For example, while found in many waste streams. With machine learning,
natural gas is tracked on a per-minute and m³ basis for each on the other hand, a system could keep learning over time
pipeline in Europe, there is currently a complete lack of such automatically, as it inspects every single piece of garbage,
standardization, classification and tracking for EoL material strengthening its ability to recognize many types of
flows. If, then, dispersed mixed plastic waste is to become objects in a very short time.
such an important raw material source, machine learning-
based sorting, digital product passports and other material
identification technology, and new material-processing
technology will be key to address the challenges it brings.

Winning in a Circular Economy 20

Closing the Circular Economy Loops

“Novel and more effective

Digital passports of products could also improve waste
sorting.18 These could be applied to numerous products

methods for material

in the form of codes or implanted chips, letting interested
parties know at any time exactly which components are in

processing are now

the product. This information could be stored in a blockchain,
making it possible to retrieve product-component data for

being developed.”
many separate parts from different manufacturers, without
any manufacturer having to disclose its complete product
design. With such clear and error-free labeling, sorters could
know exactly what they are working with. Using digital track-
and-trace solutions could give brand owners an opportunity Chemical recycling technologies are needed to close the
to prove clearly their circularity claims to consumers, helping loops and complement rather than compete with traditional
to build trust and fuel the further adoption of circularity. mechanical recycling.19
And digital technologies applied to manufacturing could
help chemical producers reduce waste generation, a key All in all, a broad range of technology development is under
step in implementing more circular operations. way. However, implementing new solutions at an industrial
scale will require substantial research and development
Novel and more effective methods for material processing efforts to address technological challenges, and large
are now being developed. Molecules obtained from chemical investments will be needed to build assets. The voluntary
recycling routes, for example, can be inserted back into the commitments by brand owners to utilize recycled content
chemicals value chain at different places, including much are important; what’s needed now are supply-focused
further upstream as feedstock for petrochemicals or as a direct commitments to entire value chain steps in order to provide
precursor for plastics or other chemical products (Figure 6). more certainty and make investment cases more attractive.

Winning in a Circular Economy 21

Closing the Circular Economy Loops

Figure 6 • Contaminated/other materials

Overview of • Mixed plastics/multi-layer

• Mixed additives
• Mixed plastics/multi-layer
• Mixed additives
• Single plastic/multi-layer
• Mixed additives
• Single plastic
• Single additives (mainly color)
plastics recycling
routes and Curbside mixed waste
Removal contaminants
and other materials
Plastic sorting Additive sorting

corresponding
waste stream Multi-layer Single plastic type
feedstock

No-recycling Breakdown/cracking Depolymerization Dissolution Mechanical recycling

H2
CO
CH4

Syngas/ Monomers/ Solved

Polymer resin
synthetic oil precursor polymers

Raw material Chemical industry Plastic converter

Source: Accenture

Winning in a Circular Economy 22

Closing the Circular Economy Loops

Break-even economics
The economic viability of engaging in particular loops is highly However, there is also a growing number of emerging waste
dependent on the combination of materials in the specific streams, such as textiles, lithium-ion batteries, photovoltaic
waste stream and the application that the secondary raw cells, wind turbine rotor blades and even fertilizers, for
material made from that waste stream will be used for. which breakeven economics and technical feasibility are
Today, there are already chemicals waste streams with clear still challenges. There is greater promise, however, when
breakeven economics, such as PET. High levels of homogeneity, sufficient amounts of high-value components, such as cobalt
a focused application spectrum and defined EoL points, in lithium-ion batteries, are contained in waste streams.
coupled with easy identification, few contaminants, and the
material properties of PET, are enabling low handling and The key value drivers of breakeven cases include the revenue
processing costs, and thereby ensuring competitiveness potential (for both the recyclate and valuable side products,
compared to virgin material. For several additional plastic such as precious metals) and cost drivers (of collection or
waste streams, such as polystyrene (PS), polyethylene (PE) and waste purchase, pre-treatment, sorting, cleaning, reverse
polypropylene (PP), there appears to be good potential for logistics and the recycling process).
positive business cases.

Winning in a Circular Economy 23

Chapter 3

Moving into Circular:

Options for Chemical
Companies

Winning in a Circular Economy 24

Moving into Circular: Options for Chemical Companies

In the EU, about 51.2 million tons of plastics were consumed Figure 7
in 2018, but only 29.1 million tons of
plastic waste were collected.20
EU28 chemicals consumption across all products:
Volume and unit value projection 2018-2030
In the absence of disruptions, Accenture expects plastics
consumption to grow to 60.5 million tons by 2030. But consumer
Unit value (€/t)
preference and brand owner commitments are reshaping
current demand patterns, while bioplastics and non-plastics are 2,400
partially substituting fossil volumes, and single-and short-term
uses are increasingly being banned.21 The pursuit of reduced
energy consumption, more re-use, higher durability and greater +€50B 2030
2,000
recyclability requires advanced material properties. Helping brand circularity
case
owners meet their commitments and enabling circularity in the 2030
base case
2018
downstream value chain offers considerable growth potential for
Base demand Incremental growth from down-
chemical companies. stream enablement for circularity
1,600 growth projection

1,200
0 140 160 180 200

€50 billion market size Consumption

volume 1 (Mt)
Note: Data refers to chemicals sold to industry customers, not counting basic chemicals and intermediates
that are further processed within the chemical industry
Source: Accenture

Winning in a Circular Economy 25

Moving into Circular: Options for Chemical Companies

Incremental demand growth is likely to bring a price premium,

relative to base demand growth. Taking into account all
chemical products—not just plastics—and integrating numerous
assumptions, the Accenture model projects consumption
growing from 139 million tons in 2018 to 180 million tons in
2030, along with an increase in average unit value from €1,770
per ton to €1,960 per ton (Figure 7). Compared to the 2030
base case projection, circular economy-driven incremental
growth represents a €50 billion value upside potential. The
circular growth drivers can vary widely by product, and even
within one product across various applications (Figure 8).

To take advantage of the huge opportunities that lie ahead,

chemical companies should continuously challenge and
develop their product portfolios, be on the lookout for cross-
value-chain design partnerships, and evolve their organizations
and capabilities by, for example, understanding EoL material
streams, mastering the reverse value chain, and developing
and marketing applications for secondary raw materials.

Winning in a Circular Economy 26

Moving into Circular: Options for Chemical Companies

Figure 8 Chemicals/chemical group

Heat map of circular

Crop protectionof chemicals

economy impact on

Polyesters paints & coatings

Acrylic paints & coatings

Other paints & coatings

Epoxy paints & coatings
Alkyd paints & coatings
demand by chemical

Other thermoplastics

Titanium dioxide
product and application

Specialty silica
Ketone solvent

Other solvents
Other plastics
LDPE & LLDPE
Carbon black

Glycolic acid
Ester solvent

Surfactants
Lubricants

PA 6 & 66
Fertilizers
ABS; SAN

Pigments
Catalysts

Silicone
PMMA
HDPE

PTFE
Dyes
Projected overall CAGR 2018 – 2030

Wax
PVC

SBR
EPS

PET
Segments

PC

PU
PP

PS
as the sum of base growth and circular
Agricultural
economy incremental growth appliances 0.7% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%

Agricultural
consumables 2.1% 0.2% 1.7%

Automotive 0.6% 0.2% -0.3% 0.1% <0.1% 1.1% -0.1% -0.1% -0.1% -0.1% 0.1% 0.6% 0.4% 0.2% 0.1% -0.1% 0.9% 0.9% -0.1% 0.4% -1.4%

Building &
construction 7.5% 7.1% 6.6% 7.8% 7.2% 6.9% 7.0% 7.0% 7.0% 7.0% 7.0% 8.2% 7.0% 8.4% 7.8% 6.5% 8.3% 7.3% 7.6% 7.4%

Consumer
products 5.6% 1.3% 1.6% 5.1% 1.2% 1.7%

Electrical &
electronics 1.2% 1.2% 1.0% 1.0% 1.0% 1.1% 1.9% 1.0% 2.3% 1.4% 0.1% 1.7% 1.5% 0.8% 1.7%

Household,
leisure & sport 1.1% 2.2% 0.3% 2.8% 2.8% 3.3% 3.4% 3.4% 2.4% 2.4% 2.5% 3.4% 2.1% 2.4% 2.4% 2.9% 1.8% 2.9% 1.8% 1.5% 1.6% 2.1% 3.1%

Others 4.3% 1.2% 1.9% 1.6% 2.3% 5.2% 2.0% 2.5% 1.1% 0.9% 1.1% 1.0% 1.0% 1.0% 5.4% 0.7% 1.0% 1.0% 3.1% 1.9% 2.5% 1.6% 0.8% 1.6% 2.1% 1.5% 0.9% 2.5% -2.8% 1.7% 0.6% 1.1%

Packaging -1.0% 1.1% -0.9% -0.2% -0.2% -0.4% -0.4% -0.4% 0.8% <0.1% 0.4% 3.5% 0.4% -1.2% 0.7%

Process
chemicals 3.9% 1.2% 2.6% 2.5% 0.8% 0.9% 3.5% 1.8% 3.5% 11.8% 5.0% 3.1%

Technical
applications 2.0% 1.2% 1.9% 2.5% 2.3% 1.6% 1.2%

Source: Accenture

Winning in a Circular Economy 27

Moving into Circular: Options for Chemical Companies

Designing Figure 9

for circularity Designing for circularity

The redesign of products for

1 Durable materials 2 Resource 3 Certification of 4 Material tagging
circularity will need to be efficient materials circular provenance for sorting
far-reaching and widespread. (e.g. light-weight)
Otherwise, massive investment
will be required, inefficiencies will
increase due to the large portion
of waste that cannot be handled,

» » » »
and a costly system that consumes
Raw Products End user Waste Resource
large amounts of energy will materials manager
emerge. Chemical companies
have an opportunity to help avoid
those problems by supplying
high-performance materials that
PE Layer ALU PE
are resource-efficient, durable,
separable, sortable, and recyclable—
and thus enhance circularity in the 7 Applications for 6 Sortability, e.g. 5 Separability
downstream value chain (Figure 9). bio-based and single-material
recycled feedstock products, fewer grades

Source: Accenture

Winning in a Circular Economy 28

Moving into Circular: Options for Chemical Companies

For example, multi-layer and multi-material packaging classification of materials and transparency on EoL
is not easy to recycle due to the difficulty involved in streams, the move to circularity is bound to involve
separating the layers to produce single-material streams— trial and error—an approach that would be uncertain,
which implies a need for more high-performing single-layer prone to poorly targeted investments, costly, and slow.
materials, as well as adhesives that are easier to split up.
On the positive side, some policymakers are requiring
There are very few rules or guidelines that obligate product manufacturers to introduce more modular designs for
manufacturers to enable upcycling in the design of their their products,22 and to design longer lasting products.23
products or to ensure that individual product components
can be replaced. In fact, manufacturers are often motivated Being the first in the market with new circular-material
to do just the opposite, since it is currently more lucrative solutions could provide a chemical company with a unique
to sell a completely new product than just a few individual chance to tap into new sources of revenue and profit.
replacement components. Thus, many products, such as Adjusting their organizations for circularity, identifying
mobile phones, are disposed of completely when only brand owners for development partnerships, and quickly
a single component, such as the battery, has reached the building cross-value-chain pilots will be key to success.
end of its lifetime, resulting in an immense waste of raw
materials and energy. Without much more comprehensive

Winning in a Circular Economy 29

Moving into Circular: Options for Chemical Companies

Occupying key Figure 10

“sweet spots” Races for “sweet spots” in future value chains

1
In this environment, chemical
Race for value
companies will need to embrace
chain partnerships
the disruptive change that is

8 2
reshaping the industry.
Race for innovations Race for applications
The emerging circular value chains and circular solutions for secondary materials
will provide an opportunity for
chemical producers to go beyond
the traditional business models of

7 3
simply making and selling molecules, Race for Race for
and instead participate in more Basic Polymers/ Downstream End
bio-based chemicals
Intermediates
specialties value chain consumer
consumers
portions of the value chain. The race chemical preferring
to occupy “sweet spots” in the future value chains eco-friendly
value chains is already on (Figure 10). offerings

6 Race for technologies

(waste separation/
chemical processes)
4 Race for reverse
logistics partnerships

5 Race for homogeneous

raw materials
Source: Accenture

Winning in a Circular Economy 30

Moving into Circular: Options for Chemical Companies

Increasing collaboration across These partnerships already are starting to appear and
the value chain coalesce into circular ecosystems along the value chain.
For example, in a project supported by the European
Commission, BASF and Adidas are working together
In the circular economy, there is a need to ensure constant
to develop a textile fiber reinforced composite for infinite
quality and quantity in the supply of waste streams as feedstock;
recycling loops. And the SABIC chemical company is
to gain access to the reverse logistics infrastructure; to operate
partnering with chemical recycling startup Plastic Energy
recycling assets (or find partners to do so); and to drive
and several customers to substitute recycled plastic waste
continuous demand for recycled products. None of today’s
for petrochemical feedstock.24 Going forward, Accenture
players have the capabilities and experience needed to meet
also expects to see collaboration enhanced by an increasing
all these requirements on their own, especially when it comes
transition from the traditional domain boundaries of the
to chemical recycling. Therefore, it will be increasingly vital to
established industry associations towards outcome-driven
collaborate across the value chain and forge new alliances in
cross-value-chain associations, such as the Alliance
order to take advantage of many of tomorrow’s opportunities.
to End Plastic Waste that was established in early 2019.
Potential collaboration models range from chemical company/
waste manager cooperation to a variety of combinations that
For chemical companies, it will be important to make
could involve multiple parties, such as chemical recycling
value chain collaboration part of a systematic overall
technology providers, converters and brand owners.
circularity strategy, and to enter strategic partnerships
sooner rather than later.

Winning in a Circular Economy 31

Chapter 4

Call for Action

Winning in a Circular Economy 32

Call for Action

Most chemical companies are now recognizing the

importance of adapting to the circular economy.
They often have an executive or department charged with
circular economy-related activities, but those activities tend
to be fragmented. And they are often not fully embedded in
the strategic context of the company. Massive opportunity
exists for those who craft a circular vision, place strategic bets,
build new niche business models and take advantage of novel
technologies in this emerging world. That will require significant
change—and deciding how to proceed can be daunting.

Winning in a Circular Economy 33

Call for Action

However, the following sequence of steps

can serve as a high-level guideline:
1. Re-evaluate the target product portfolio for expected 5. Capture opportunities from brand owners’ voluntary
changes in demand patterns and integrate an commitments. Build cross-value-chain pilots rapidly,
understanding of the associated opportunities and in areas such as identifying brand owners for development
risks into business strategies. partnerships and securing access to EoL streams and
reverse logistics capabilities.
2. Shift capital investments from assets designed for linear,
virgin materials to new, circularity-focused assets—with an 6. Pressure-test and redefine existing business models,
eye toward large-bet investments in unproven technology business by business.
such as chemical recycling or carbon management.
Develop a long-term ramp-down/exit strategy for assets 7. Build trust with consumers by proactively driving circularity
and applications where demand is likely to decline. in operations, and by developing communication strategies
to build public confidence in chemical companies’ messages
3. Systematically develop circular capabilities across the about environmental impact and, ultimately, help regain
entire organization—e.g., train the sales force to locate control of the circularity narrative.
customer segments that are willing to pay price premiums
for circular products.

4. R eorganize for circularity. Legacy organizations

optimized for linear business models will block the shift
to more circular approaches. Consider setting up separate
new companies/organizations to focus on circular growth
and accelerate time-to-market for circular solutions. 

Winning in a Circular Economy 34

Call for Action

Chemical companies have a powerful

opportunity to lead the way to a more
circular and sustainable world. But much
of what will be required in the circular
economy represents new territory.
As a result, it will take time to develop and execute circular
economy plans and build the new capabilities and business
models that will be needed. But the world is already moving
ahead: The circular economy train is leaving the station, and
chemical companies need to pick the role they will play in its
journey. This makes it critical for them to develop systematic,
strategic approaches. Those that do will be positioned to
help set the agenda for change—rather than simply react
to events—and ultimately thrive in the circular economy.

Winning in a Circular Economy 35

About the research
This executive summary is based on a comprehensive
report produced by Accenture that explores the practical
implications of the circular economy for chemical companies.
The report acknowledges that bio-based feedstock,
as well as carbon capture and utilization, will play a role in
the circular economy, too. However, with the growing interest
of economic stakeholders and increasing technological
readiness, it focuses largely on the opportunities from
end-of-life waste stream recycling and fossil feedstock
substitution, particularly through chemical recycling.

This report is a continuation of the conceptual research

completed in 2017 on what the circular economy means
for the chemical industry (“Taking the European Chemical
Industry into the Circular Economy”), as well as how changing
consumer demands and buying behaviors are impacting
the industry (“Chemical (Re)action: Growth Opportunities
in a Circular Economy”) and other Accenture research
on the circular economy in general.

Winning in a Circular Economy 36

References
1. Better Business, Better World: The Report of the Business & Sustainable Development Commission, 8. Business Insider, 2019, https://www.businessinsider.com/blackrock-larry-fink-investors-esg-
2017, http://report.businesscommission.org/uploads/BetterBiz-BetterWorld_170215_012417.pdf metrics-2018-11

2. “6,000 consumers, ages 18 to 70, in 11 countries: the United States, Canada, France, Germany, 9. 2018 Global Sustainable Investment Review, Global Sustainable Investment Alliance, 2019,
Italy, Mexico, the United Kingdom, China, India, Indonesia and Japan; More than Half of Consumers www.gsi-alliance.org/wp-content/uploads/2019/03/GSIR_Review2018.3.28.pdf
Would Pay More for Sustainable Products Designed to Be Reused or Recycled, Accenture Survey
Finds,” Accenture press release, 2019, https://newsroom.accenture.com/news/more-than-half- 10. European Environment Agency, Greenhouse gas data viewer, 2019, https://www.eea.europa.eu/
of-consumers-would-pay-more-for-sustainable-products-designed-to-be-reused-or-recycled- publications/data-and-maps/data/data-viewers/greenhouse-gases-viewer
accenture-survey-finds.htm
11. Accelerating Circular Supply Chains for Plastics, Closed Loop Partners,
3. “Over 290 Companies Sign Global Commitment on New Plastics Economy,” SDG Knowledge Hub, https://www.closedlooppartners.com/plastics
2018, https://sdg.iisd.org/news/over-290-companies-sign-global-commitment-on-new-plastics-
economy 12. “Renewable Raw Materials in the EU Chemical Industry,” Verband Der Chemischen Industrie, 2015,
https://dechema.de/Datei_Download-p-20014215-dateityp-ap-tagung-757-file-7206.html
4. Coca Cola, 2019, https://www.coca-colacompany.com/news/how-coca-cola-supports-recycling-in-
the-us 13. “Taking the European chemical industry into the circular economy,” Accenture, 2017,
www.accenture.com/_acnmedia/pdf-45/accenture-cefic-report-exec-summary.pdf
5. Unilever, 2019, https://www.unilever.co.uk/news/press-releases/2019/unilever-announces-ambitious-
new-commitments-for-a-waste-free-world.html 14. Accenture analysis based on Eurostat data

6. The Guardian, 2019, https://www.theguardian.com/business/2019/jun/12/worlds-biggest-sovereign- 15. Recycling Technologies, 2019, https://recyclingtechnologies.co.uk

wealth-fund-to-ditch-fossil-fuels
16. BASF chemical recycling plant on Tenerifa
7. The Guardian, 2019, https://www.theguardian.com/environment/2019/nov/15/european-investment-
bank-to-phase-out-fossil-fuels-financing 17. “Taking the European chemical industry into the circular economy,” Accenture, 2017,
www.accenture.com/_acnmedia/pdf-45/accenture-cefic-report-exec-summary.pdf

Winning in a Circular Economy 37

18. “Harnessing the Fourth Industrial Revolution for the Circular Economy: Consumer Electronics
and Plastics Packaging,” World Economic Forum, 2019, https://www.weforum.org/whitepapers/
harnessing-the-fourth-industrial-revolution-for-the-circular-economy-consumer-electronics-and-
plastics-packaging

19. Positionspapier: Chemisches Recycling: Ein zusätzlicher Baustein für nachhaltiges

Abfallmanagement und zirkuläre Wirtschaft, PlasticsEurope & VCI

20. Plastics – the Facts 2019; PlasticsEurope, 2019, https://www.plasticseurope.org/application/

files/9715/7129/9584/FINAL_web_version_Plastics_the_facts2019_14102019.pdf

21. Deutschlandfunk, 2019, https://www.deutschlandfunk.de/nachhaltigkeit-stoffbeutel-sind-nicht-

besonders-oeko.697.de.html?dram:article_id=415385

22. HB 2279 - 2017-18, Concerning the fair servicing and repair of digital
electronic products, Washington State Legislature, https://app.leg.wa.gov/
billsummary?BillNumber=2279&Year=2017#documentSection

23. “EU recognizes “right to repair” in push to make appliances last longer”, 2019,
https://www.dezeen.com/2019/10/01/eu-right-to-repair-design

24. “SABIC Signs Memorandum of Understanding with Plastic Energy for Supply of Recycled Feedstock,”
SABIC press release, 2018, https://www.sabic.com/en/news/16043-sabic-signs-mou-with-plastic-
energy-for-supply-of-recycled-feedstock

Winning in a Circular Economy 38

Meet our authors

Rachael Bartels Bernd Elser Michael Ulbrich

Managing Director, Managing Director, Managing Director,
Accenture Chemicals & Natural Resources Accenture Strategy Accenture Strategy
rachael.bartels@accenture.com bernd.elser@accenture.com michael.ulbrich@accenture.com

Rachael Bartels is the Industry Managing Dr. Bernd Elser is a Managing Director who Michael Ulbrich is a Managing Director in
Director of Accenture’s Chemicals and leads Accenture Strategy’s Chemicals and Accenture Strategy’s Chemicals and Natural
Natural Resources practice. She spends most Natural Resources practice in Europe. Resources practice. He is Accenture’s lead for the
of her time working with senior executives He works with clients to address their most circular economy in the chemical industry, and
on transformational and disruptive change challenging and vital business issues, co-authored Accenture’s first circular economy
and has more than 30 years of experience drive growth, optimize business operations report with Cefic, “Taking the European Chemical
in consulting—working primarily in chemicals, and extract value at the intersection of Industry into the Circular Economy.” He was also
mining and energy. She is passionate about business and technology. His functional a jury member of Cefic’s Responsible Care Award
harnessing new technologies and processes expertise covers strategy development in 2016. He has supported global chemicals
to drive innovation and create growth and commercial, operational and functional producers in assignments such as assessments of
for clients. Rachael is located in London. excellence. Bernd is based in Frankfurt. circularity impact on portfolios and fossil feedstock
substitution. Michael is based in Frankfurt.
Connect with us About Accenture
@AccentureChems Accenture is a leading global professional services company, providing a broad range
of services and solutions in strategy, consulting, digital, technology and operations.
Accenture Chemicals Combining unmatched experience and specialized skills across more than 40 industries
and all business functions—underpinned by the world’s largest delivery network—
Accenture works at the intersection of business and technology to help clients improve
Key contributors
their performance and create sustainable value for their stakeholders. With 505,000
Sören Hörnicke people serving clients in more than 120 countries, Accenture drives innovation
Accenture to improve the way the world works and lives. Visit us at www.accenture.com.
soeren.hoernicke@accenture.com

Dr. Emma Persoon

Accenture
emma.sophie.persoon@accenture.com

Dr. Marvin Stiefermann

Accenture
marvin.stiefermann@accenture.com

The authors wish to thank the following people for

their valuable contributions to this report: Ann Dierckx,
Director of Sustainability, Cefic; Patricia Vangheluwe,
Director Consumer & Environmental Affairs, PlasticsEurope;
Jocelyn Doucet, CEO, and Michel Iliesco, Vice-President
Business Development and Marketing, both from Pyrowave.

This document makes descriptive reference to trademarks that may be owned by others. The use of such
Copyright © 2020 Accenture. All rights reserved. trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to
Accenture and its logo are trademarks of Accenture. represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.