New Guidelines Issued to Standardize Mass Balance Approach in Chemical Recycling
The EU Commission has released new proposals supporting the use of mass balance for chemical recycling, adopting a fuel-exempt accounting approach under the Single Use Plastics Directive (SUPD). The Commission emphasized that “the calculation methodology will serve as a model for future recycled content rules in other sectors, such as packaging, automotives and textiles. This approach is designed to give investors’ confidence in the long-term stability and potential of these technologies.
Mass-balance acceptance is regarded as a critical facilitator for chemical recycling – most notably pyrolysis oil, since pyrolysis oil acts as a naphtha replacement in crackers. Uncertainty about regulation has witnessed demand from the chemical industry for pyrolysis oil decline during 2024 and 2025 (though from a high level) and rendered financing for new projects and infrastructure problematic.
Varying accounting principles for mass balance can significantly change possible profitability, and a lack of transparency has made it difficult to forecast returns on investment, as well as determine Europe’s relative competitiveness vis-à-vis other areas likely to follow varying mass-balance accounting principles.
The EU Commission has launched a consultation on the proposals, which also covers the calculation, verification and reporting of recycled content under the SUPD. The consultation will run until 19 August. The Commission will then conduct a review before presenting a final draft to its technical committee to vote on.
It aims to adopt the proposals under an implementing decision in Autumn 2025. Previously, the EU Commission had said that it was aiming to adopt the implementing decision in the fourth quarter of 2025.
Under the proposal, the EU will adopt “fuel-use excluded” mass-balance accounting, whereby material that is processed into fuel or process losses cannot contribute to recycled content targets. Free allocation (a method of mass balance that allows for the total allotment of recycled material to be attributed to any output) would be permissible for the remaining tonnage. This is provided that:
- It is only attributed to outputs where it is possible to prove there is a feasible chemical process that could transform the input material into the chemical building blocks for each output
- The attributed amount of a specific output does not exceed the share of those parts of the output that can come from the used input eligible material
- The inputs, outputs, or both are chemical building blocks but not polymers.
This would also apply to dual-use material – material that can be used in both fuel and non-fuel applications – in liquid or gas form. Solid material such as char would be excluded from the calculations.
The Commission considers that “mechanical recycling technologies are in general preferable to chemical recycling technologies from an environmental point of view” and states that material that can be mechanically recyclable should not be used by chemical recyclers where it can produce recyclates with similar quality or performance characteristics. As a result, the proposals include allowances for the Commission to review the methodology and allocation rules under the decision.
For liquid inputs fed into a steam cracker, the calculation steps to determine the allocation volume of recycled material would involve defining the maximum allowable boiling point at the steam cracker (or where the eligible material is processed by different steam crackers, the weighted average of the maximum acceptable boiling points of all the individual steam crackers), measuring the evaporation between eligible input material and total input material, calculating the ratio between the two and then applying that ratio to the total input weight at the cracker. This would involve using a standard test method for boiling range distribution of petroleum fractions by gas chromatography.
For non-liquid material or processes not involving steam cracking, material would be distributed proportionally based on share of total input. For dual-use outputs, evidence would be required to prove that the material is being used in recycled plastics.
The new implementing decision and annex does not appear to give any further clarity on the use of imported material counting towards the 25% recycled content required in polyethylene terephthalate (PET) beverage bottles from 1 January 2025.
ICIS published an article in June following confirmation from the European Commission that only recycled polyethylene terephthalate (R-PET) produced using plastic waste in the EU can currently count towards the 25% recycled content target set out under the SUPD.
However, following publication, market participants challenged this statement from the Commission’s Directorate-General for Environment highlighting the use of the word “imported” in formulas contained in the Implementing Decision annexes, which those participants understood allowed the use of R-PET flake and food-grade pellet from third countries outside the EU to count towards the target.
Imported material is still mentioned in the draft annex and ICIS is currently seeking further clarification from the Directorate-General for Environment over the status of imported material in counting towards the 25% target.
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