Circular fashion in Europe: Turning waste into value

Today, more than 15 kilograms of textile waste is generated per person in Europe. The largest source of textile waste is clothing and home textiles discarded by consumers, which accounts for approximately 85% of total waste. The production of textile waste is problematic, as incineration and landfills, both inside and outside Europe, are its main final destinations. This has several negative consequences for people and the environment. But a significant transformation lies ahead that could create a significant and sustainable new industry that turns waste into value.

There are several ways to solve the waste problem, including reducing overproduction and overconsumption, extending product lifespans, and designing products for increased circularity. One of the most sustainable and scalable levers available is fiber-to-fiber recycling, which transforms textile waste into new fibers that are then used to create new garments or other textile products. This space is characterized by rapid innovation and a race to scale. Some technologies, such as mechanical recycling of pure cotton, are already established. Other technologies, such as the chemical recycling of polyester, have been the subject of intense R&D and are on the verge of commercialization. Once mature, our estimates indicate that 70% of textile waste could be recycled fiber to fiber. The remaining 30% would require open-loop recycling or other solutions such as the production of syngas by thermochemical recycling. However, today, less than 1% of textile waste is recycled fiber to fiber due to several barriers at scale that must be overcome.

Collection, sorting and pre-treatment limit the amount of textile waste made available for fibre-to-fibre recycling. Collection rates are currently 30 to 35% on average and a large proportion of unsorted raw waste is exported outside Europe. Additionally, most fiber-to-fiber recycling technologies have stringent fiber composition and purity requirements – for example, spandex is problematic for many of these technologies. Therefore, textile waste must be scanned and sorted according to the relevant entry requirements. Another example is jeans that need to be stripped of zippers and buttons, a problem that needs to be solved by pre-treatment. Advanced, accurate and automated fiber sorting and pre-processing is not yet developed. Finally, to reach their full potential, fiber-to-fiber recycling technologies still need to expand their ability to handle fiber blends, reduce their costs and improve the quality of their production – these bottlenecks prevent the circular textile economy from grow. Our analysis indicates that by overcoming these barriers, fiber-to-fiber recycling could reach 18-26% of raw textile waste by 2030, as shown in Figure 1.

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To reach this scale, we estimate that capital investments in the order of €6-7 billion would be required by 2030. The entire value chain, including collection, sorting and recycling textiles, requires investment to reach scale. Our analysis indicates that this industry could, once it matures and evolves, become a self-sustaining and profitable industry with a profit pool of 1.5 to 2.2 billion euros by 2030. The value chain textile recycling could create a valuable new raw material. which allows for more apparel production in Europe, which may lead to additional value creation beyond what is quantified in this report.

Beyond the direct economic benefits, scaling up textile recycling unlocks several environmental and social benefits. For example, in our baseline scenario, around 15,000 new jobs could be created and CO2Emissions could be reduced by around 4 million tonnes, equivalent to the cumulative emissions of a country the size of Iceland. By quantifying in monetary terms several other dimensions of impact such as secondary effects on GDP of job creation, the CO2reduced electronic emissions and water and land use, our analysis shows that the industry could reach €3.5-4.5 billion in total annual holistic impact by 2030, a annual return on investment of 55 to 70 percent (Exhibit 2).

Scaling up textile recycling in the EU-27 and Switzerland under the base-to-base scenario could have an overall annual impact of €3.5 billion to €4.5 billion in 2030.

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To seize this opportunity, collaboration and innovation will be essential

The identified bottlenecks preventing scale are significant and will require multiple stakeholders to act boldly. Textile recycling in Europe will not reach a favorable state by 2030 unless significant steps are taken soon. This report identifies five key ingredients for success.

  • Critical scale. The textile recycling value chain cannot operate on a small scale. Critical scale across the value chain is needed to supply enough raw materials
    to the necessary fiber-to-fiber recycling technologies, and to enable these recycling technologies to operate at scale. Therefore, the industry needs to set bold scaling targets and achieve them.
  • True collaboration. Many of the major challenges ahead are best solved in a highly collaborative manner. Business leaders from across the value chain, investors, and leaders of public institutions should come together in an unprecedented way to engage in a highly operational joint effort to overcome barriers to scale.
  • Transition funding. Although our analysis indicates that the textile recycling industry could, once it matures and grows, become self-sufficient and profitable, transitional funding will be required in the short term. Examples of such funding include subsidies (potentially extended producer responsibility [EPR] funding) and a green bonus (potentially shared by brands and consumers). Public-private solutions may be needed.
  • Investments. Several links in the value chain must be built almost from scratch, which requires significant investment. Our analysis indicates that sufficient economic value can be realized to offset the required risk. Private investors would lead this journey by taking the initiative to finance the construction of the value chain.
  • Push of the public sector. Leaders of public sector institutions should help stimulate textile recycling. Measures include increasing collection rates, limiting the export of unsorted textile waste, stimulating demand, creating harmonized frameworks for increased circularity, and other initiatives.

Large-scale fiber-to-fiber recycling can help solve Europe’s waste problem by turning waste into value. The European clothing and textile industry can start today to expand the infrastructure required for closed-loop collection, sorting and recycling. This report establishes the opportunity at play for textile circularity and highlights the actions needed to seize it. Furthermore, we hope that this report can serve as a basis for further research and collaboration to establish large-scale textile recycling in Europe.

Mary I. Bruner