A Netherlands circular economy fund that backs recycling solutions for plastic’s impact on climate change and the environment
Jeroen Kelder spent most of his career in corporate finance and investment, where he financed small and medium-sized companies and invested in key economic sectors such as healthcare and renewable energy. With the increasing focus on circularity, he realised many of the things he had learned could be applied to resource transition and, in particular, to plastics.
“Only a low percentage of plastic is being recycled in Europe,” says Kelder, now managing partner at Infinity Recycling, a fund investing in the circular economy. “We currently lack the solutions to adequately recycle our end-of-life waste, so a lot of it ends up either incinerated or sent to landfill, which is a pity because 7% to 9% of the world’s CO2 comes from plastics. Reducing this should be akin to picking low-hanging fruit.”
Jeroen Kelder
He wanted to make an impact and he knew that mobilising capital to help companies develop advanced technology and get recycling plants up and running as soon as possible was where he could step in. “It’s disheartening to see innovations and good ideas die because they don’t have the help or funding that they need,” says Kelder. “The world is running out of time.”
The technology to carry out many advanced forms of recycling has often been around for years. But operations have been “sub-scale, too costly and inefficient. And given the disruptive nature of a transition from a centralised, linear economy to a distributed circular economy, the incumbent industry is unlikely to embrace change.” Kelder says. “What the sector needs is independent risk capital and hands-on support.”
Kelder first approached the European Investment Fund in 2019 to test his investment thesis. Following additional discussions on the strategy and structuring, the EIF in 2023 invested €50m in Infinity Recycling’s Circular Plastics Fund, one of its largest ever investments in a first-time fund, which has enabled it to attain a more optimal size and well on its path to reach its €150 million target size.
Plastic’s massive footprint makes recycling key
Plastic has a tremendous climate footprint and poses a serious threat to ecosystems and habitats, representing 80% of all marine pollution. Despite the negative impact of plastic waste, the use of plastic is expected to triple by 2060. The Circular Plastics Fund, one of the first European funds to focus on plastic recycling, is pioneering advanced recycling technologies that can address the issue and enable the transformation of plastic waste back into its original state for use as a raw material, closing the industrial loop.
“The European Investment Fund’s meaningful commitment to the fund is expected to have a strong signalling effect and aligns with our objectives of investing capital and building a specialised European investor ecosystem in key underserved climate and environmental policy areas,” says João Ramos, an investment manager in the EIF’s equity investments and guarantees team.
The European Investment Fund has continued to ramp up its investment activity in climate and environmental impact funds and, in 2023, committed close to €1 billion in over 25 venture capital and private equity funds, doubling its 2022 investment.
Through its fund commitments, the European Investment Fund seeks to address persistent funding shortfalls in key and underserved markets by supporting new funds in the energy, agrifood, circular and blue economy sectors. The acute lack of capital for late-stage growth and the scaling of climate and environmental technologies has also been an area of attention, with the European Investment Fund supporting a number of new funds that address this critical segment of the market.
Back to its roots
Only 20% to 25% of plastic is mechanically recyclable using today’s technology.
Henning Jensen, chairman of Pryme, one of Infinity Recycling’s portfolio of companies, explains the process developed by his company. “Using so-called advanced technology and chemical processes, the molecules in the plastic are broken down into pyrolysis oil, also called liquified plastic waste, which can then be fed into the more typical chemical or petrochemical process systems,” Jensen says. “The result is the creation of what is essentially virgin plastic made from recycled plastic.”
This ‘new’ plastic can then be repurposed for food and medical purposes, amongst others, and it has an almost infinite life, with only a small proportion being lost each time it is recycled. Pryme will soon be able to process 40 000 tonnes of plastic per year through its first plant, which is expected to start production in early 2024. It expects its next plants to process 160 000 tonnes of plastic annually.
“The challenge is really to get this to be technically and commercially feasible on a meaningful scale, because the market is there, the supply chain is essentially there, and the end consumer demand is there,” says Jensen.
Henning Jensen
Plastic recycling a circular economy win-win
Kelder believes there are many long-term opportunities for Europe to export the circular economy solutions on a global scale to countries that have limited recycling infrastructure. In the meantime, additional investment is needed to increase advanced recycling capacity.
“There is an obvious consumer desire to recycle more and better, to produce less CO2 and to progress towards less dependence on fossil feedstock,” he says. “There needs to be a disruptive transition in the way we deal with waste and secure feedstock for our chemical industry. But the result needs to be sustainable. Then it’s a win-win for everyone.”
- Read about the European Investment Bank’s support for a circular economy project in the clothing industry here.
