Finnish refiner Neste recently commissioned a 150,000t/yr upgrading facility for liquefied plastic waste, including plastic-derived pyrolysis oil, in Porvoo, Finland, to supply recycled plastic-based feedstocks to the petrochemicals market. Neste's director of polymers and chemicals Maiju Helin spoke to Argus about expectations for the market, their views on EU mass balance rules, and hopes for bio-based content targets for plastic packaging.
What are your current experiences and future expectations for the demand for plastic pyrolysis oil and circular feedstocks in Europe?
The market is gradually on a growth trajectory, but developing slower than we expected. We see there will be demand when the regulation kicks in, but now we are between the adoption of the Packaging and Packaging Waste Regulation (PPWR) and recycled content targets coming into force so it's really not affecting the market as heavily as we would have wanted to see. Other aspects such as high energy costs, the competitive pressure towards the European petrochemical industry coming from outside of Europe, delays that we see in chemical recycling plans and geopolitical uncertainties have slowed the development of the market.
Nevertheless, we now have the world's largest upgrading capacity and are ready to grow with the market and ramp up as supply/demand develops.
The upgrader has an input capacity of 150,000 t/yr, significantly more pyrolysis oil capacity than is available in the European market — how quickly do you anticipate being able to fill this?
I can't comment on our current state of operation. But you are absolutely right that today we will not be able to run this unit at full capacity. We hope to as soon as possible, but we need to see how quickly the market develops and how the supply pool develops. And then, we are there to do this together with our suppliers and customers at scale.
What is Neste's position on the mass balance accounting rules being adopted in the EU for allocating recycled content from chemical recycling in the Single-Use Plastic Directive (SUPD), and ahead of discussions about the rules to be adopted for the PPWR?
Our new facility processes liquefied waste plastic, and then the upgraded pyrolysis oil is co-processed with intermediates coming from crude oil refining [in the Porvoo refinery]. The rules that were laid down for the SUPD make it rather difficult for the refineries to create value from their contribution towards the recycled content targets. We want to ensure that the refineries will enable the scale-up of chemical recycling within Europe.
Refineries have a role to play for several reasons. It is about a lower investment overall, because refineries have existing infrastructure that can be used at a lower cost than greenfield. We know from the Draghi report [a 2024 report by Italy's Mario Draghi on Europe's competitiveness and the EU's future] that Europe doesn't have that much investment money on the table.
The Porvoo refinery is able to remove impurities and optimise chemical compositions. This allows liquefiers to use more difficult-to-recycle waste streams and eases the raw material competition with mechanical recycling. We hope Europe readjusts the mass balance recycled content calculation rules for the PPWR, so that we can really unleash the potential of this upgrading unit that we have finalised.
What could those amendments look like? One idea is to add detail about specific refinery processes, to allow more recycled "credits" to be assigned to petrochemical feedstock if only certain units of the refinery are used to co-process pyrolysis oil, rather than requiring credits to be allocated proportionally across all the refinery output…
We are analysing how we could do a credible, credit-based mass balance within the refinery and make it technically and economically feasible at the same time. What you mentioned is potentially one of the ways this could work. But without knowing the exact details, it is difficult to say if it would work for us. We are supporting the fuel use exempt model. We are not advocating for free attribution. But we just need to find ways, for the calculation rules to address the specifics of refineries in a way that they can be eligible within the framework.
Neste also owns the European technology licensing rights for pyrolysis company Alterra Energy. How do you perceive the current investment environment for new chemical recycling installations in Europe?
We continue to see interest in investing in liquefaction in Europe and we work together with our partners Technip Energies and Alterra to commercialise Alterra's technology. Some investments are being idled or delayed. I guess because players want to wait for clear EU-wide rules on mass balance and end-of-waste criteria. Pyrolysis is one of the most promising technologies to handle the multi-layer packaging waste, mixed plastic waste and other difficult-to-recycle plastic waste streams. Legislative uncertainty is not the only hurdle, but probably the biggest one... also the geopolitical situation and costs in general have an impact.
Would Neste invest itself in pyrolysis capacity in Europe?
Our role today is in the upgrading part of the value chain. The aim of the licensing is to create supply and accelerate the scaling up of chemical recycling.
If the mass balance rules remain unfavourable towards an upgrading process such as the one you have, involving co-processing in a refinery, for PPWR, are there other uses for this upgrader? And what is the future for the asset?
Our priority is on upgrading liquefied waste plastic even if we have recognised the restricted raw material availability at the moment. The investment was made solely for liquefied waste plastic and we created a segregated liquefied waste plastic input for the upgrading facility. All in all, it's too early to talk about something like that, because we primarily want to see the liquefied waste plastic succeeding in the polymers and chemicals market. We are not looking at the fuel pool as an alternative market for liquefied waste plastic-based products.
Neste is also a major biofuels producer. Would you support bio-based polymers being allowed to count towards existing recycled content targets in PPWR, or would you prefer them to have separate targets?
We're in favour of including bio-based plastics within PPWR, and how we would want to see it happen is with separate targets for bio-based material and recycled material. We are a firm believer in the need to move away from the use of fossil raw materials and need to enable all possible raw materials and technologies to be eligible and to thrive. Recycled and renewable raw materials for the petrochemical industry work well together and can make the greatest impact in moving away from the use of fossil.
