EU approves Eur500 million chemical recycling aid scheme from French government

The European Commission approved plans for a Eur500 million aid scheme from the French government to support chemical recycling.

As part of the grant, the French government will invest up to 40% of eligible costs, "which are the extra investment costs calculated by comparing the total investment costs of a project of chemical recycling of plastic waste with those of less environmentally friendly projects," the EC said in a Feb. 3 statement.

French chemical recyclers of any size and operating in any sector will be eligible for investment, but the scheme will support the recycling of certain variants of plastic waste, including trays, films, non-beverage bottles and textile materials with a certain level of polyester content.

The EC said it assessed the proposal under EU rules targeted at creating an efficient transition to a circular economy in the region, finding that the scheme was necessary to develop chemical recycling in France.

The EC also found the scheme has an "incentive effect," with beneficiaries previously not carrying out investments without public support. Critically, the scheme was also found to have "a limited impact on competition and trade within the EU," being limited to the necessary amount to undertake projects and ventures.

"The French scheme approved today ... will contribute to the EU's objective of reaching climate neutrality by 2050, by promoting the use of existing resources through efficiency and circular economy practices," Teresa Ribera, executive vice-president for Clean, Just and Competitive Transition at the European Commission said. "At the same time, the scheme will ensure that any potential competition distortions will be kept to a minimum."

The scheme will be welcomed by players in the European chemical recycling industry, who have typically viewed governmental backing as critical for wider commoditization within the market.

While the appetite for chemically recycled chemicals and polymers exists in the market, with sellers noting consistent inquiries for small volumes, strong pricing premiums have prevented wholesale consumption and have limited liquidity in the sector.

This scheme also comes as part of the EU's wider objective of a circular plastics economy, with the body previously adopting mandates on recycled content inclusion targets in plastic packaging under their Single-Use Plastics Directive and Packaging and Packaging Waste Regulation.

Those mandates will legally bind the amount of recycled content required in polymer products, with targets increasing over the coming decades.