If you’ve been paying attention to any green/clean/environmentally friendly investment themes over the past few years, you know that plastic recycling is broken. You also may know there are ‘advanced recycling’ technologies (mostly pyrolysis-based) that are supposed to help solve the problem but have not demonstrated financial or technical feasibility. And you should certainly be aware of laws, regulations, initiatives, and corporate commitments aimed at creating a truly circular economy for plastic over the next decade or so.
If you’ve been paying attention to this space, you might also have heard of Aduro Clean Technologies (Nasdaq: ADUR) (TSX: ACT) (FSE: 9D5), its Hydrochemolytic™ (HCT) water-based technology, and the company’s steady progress toward a commercial launch scheduled in the next year or so. The HCT platform offers several advantages over the pyrolysis approach: lower energy usage, lower emissions, lower operating temperature, ability to handle multiple types of plastics, reduced need for cleaning and sorting, and scalability to name a few.
Aduro’s demonstration plant is up and running, and the company just announced results from recent testing of the system’s capabilities. Here we’ll take a look at how HCT compares to pyrolysis based on these results.
HCT vs. Pyrolysis
To enable a circular economy for plastic recycling, the goal is to produce liquid hydrocarbons that are the equivalent of virgin-oil-derived naphtha. Naphtha is the basic building block of almost every plastic type, and it is processed in massive facilities called crackers. If we are to make new plastic out of recycled plastic oil, that oil needs to meet the stringent characteristics that allow processing in these existing crackers.
The HCT advantages listed above are real, but they are just now being tested and proven in a continuous operating environment in Aduro’s fully operational Next Generation Process demonstration unit. Utilizing the data from this facility, the company is designing its commercial scale pilot plant which should be operational in H1 2027 or so. What does the recent data release tell us so far?
Aduro already demonstrated through a third party that its HCT oil can be dropped into the naphtha cracker production line without the expensive hydrogen upgrading required by pyrolysis oils. And the most recent results show high efficiency in producing HCT oil from waste plastic. Aduro tested polypropylene (PP) derived from waste and was able to recover 86% of the waste volume in the form of HCT oil. Of that amount, 85% was suitable for naphtha cracker processing without upgrading. Doing the math, that means 73% of the waste was turned into ready-to-process oil, with another 13% available for other uses.
With pyrolysis, the picture is varied and sometimes murky. To start with, most studies of pyrolysis oil use virgin plastic as the feedstock, which is obviously not comparable to the use of waste plastic. The most common output of pyrolysis recycling is fuels like diesel and gasoline. Pyrolysis is not able to produce a naphtha equivalent without extensive upgrading in the form of catalytic hydrocracking. To quote one of the studies, “the results demonstrate that, although there is a very small fraction of pyrolysis oil consisting of saturated alkanes and naphthenes, pyrolysis oil obtained from PP exhibits distinct compositional differences than naphtha and cannot be used as a substitute for it.”
But even before the energy-consuming and emissions-producing upgrading occurs, pyrolysis isn’t as efficient as the HCT platform. Pyrolysis systems vary widely due to the temperatures achieved and the catalysts used. An environmentally friendly approach using florisil and salt as catalysts in the 350° – 430°C range recovered about 57% pyrolysis oil. A variety of thermal and catalytic pyrolysis processes recovered from 78% to 83% liquid oil, and that oil had the general properties of gasoline and diesel with none of it usable in the naphtha cracking process.
The Investor Takeaway
In other words, there is no known method for creating a direct naphtha substitute in the production of plastic building blocks. Other than Aduro’s HCT technology, that is. And the fact remains that if a circular plastic economy is to be achieved, recycled plastic oil will have to somehow be competitive with naphtha derived from virgin crude. And it will have to be competitive without adding carbon emissions to the process, in order to meet corporate and governmental goals of emission reduction.
As far as the available literature and the current competitive landscape shows, Aduro appears to be the only solution that fits the bill. Even if we are missing some technical approach that doesn’t show up in current research, Aduro’s advanced stage and near-term commercialization put the company well ahead of any potential emerging competitors.
In a huge global market searching for technical solutions to one of the world’s largest environmental problems, controlled by a massive petrochemical industrial complex that is not known for nimble and adaptable development, Aduro finds itself in a remarkable position for a company valued under $600 million.
Author’s Disclosure:This article reflects the author’s independent analysis and personal views. The content is provided for informational purposes only and should not be considered financial or investment advice. Readers are encouraged to conduct their own independent research and due diligence before making any investment decisions.
