Allocation of recycling credits to final products in plastics production

In recent years, chemical recycling has emerged as a complementary technology that enables treatment of plastic waste that cannot be mechanically recycled. A specific feature of the chemical treatment is that it produces recycled feedstock that is chemically indistinguishable from virgin feedstock. This property gives rise to a new planning problem for plastic manufacturers, namely, how to allocate the recycled material content - and corresponding certificates - to different final products produced from a mix of recycled and virgin feedstock. Current legislation surrounding this decision is quite lenient, leaving chemical manufacturers room to choose a suitable allocation. NGOs criticize the current practice as prone to greenwashing and ask for more restrictive allocation rules. In this project, we contribute to the ongoing debate by systematically analyzing the implications of different allocation rules using a game-theoretic approach. We investigate the manufacturer’s choices and the implied economic and environmental performance for different allocation rules. By comparing the results, we are able to highlight the consequences of different policies referred to in the current debate