[Investment Story] Terracle, a pioneering depolymerization technology company specializing in high-purity recycled plastic materials
Moving Towards a Scalable Circular Economy in the Plastics Industry
Polyethylene terephthalate (PET), a versatile plastic type, has found widespread use across various products, such as food containers, owing to its attributes of non-toxicity, transparency, strength, and cost-effectiveness. Recognizing the imperative to curtail the production and disposal of fossil-fuel-based plastics, technologies for both mechanical and chemical recycling of PET have swiftly emerged, given its high market demand and relatively straightforward recyclability compared to other industrial materials. The global recycled PET (r-PET) market, valued at $10.8 billion in 2023, is projected to soar to $18.8 billion by 2028(1). Fueled by discerning consumers and ever-tightening plastics regulations worldwide, this surge is ushering in a new era in the decarbonization journey.
Global regulations primarily focus on mandating the incorporation of recycled plastics while penalizing the production and disposal of non-recyclable plastic materials. In North America, Canada has set a target of achieving zero plastic waste by 2030, necessitating that all plastic packaging contains a minimum of 50% recycled content by the same year (2). Similarly, California, U.S., implemented a law in 2020 mandating the use of recycled material (post-consumer resin) in plastic bottle production, with requirements escalating to a minimum of 25% by 2025 and 50% by 2030(3). The European Union has proposed imposing a €800 per ton tax on non-recycled plastic packaging, slated to commence in 2021(4). In the UK, a £200 per ton tax will be levied on packaging lacking at least 30% recycled plastic content, effective from 2022(5), while Italy introduced a €450 per ton tax on both imported virgin plastic and domestically manufactured plastic starting in January 2023(6).
Policies are also evolving to catalyze more profound shifts. The European Commission, for instance, is actively developing a proposal to institute Extended Producer Responsibility (EPR) for textile waste by 2023, with a mandate for adoption across all EU member states by 2025(7). This directive necessitates that producers of textile products assume accountability for the entire lifecycle of their goods, spanning production, reuse, recycling, recovery, and disposal. Producers will be compelled to factor in all impacts and costs associated with production and disposal even before the product reaches the market, prompting a fundamental overhaul of their economic models. Despite potential challenges in implementation, the aspiration is that robust accountability frameworks like EPR will serve as incentives for proactive resource recycling in the long run.
In South Korea, the Ministry of Environment has established a target to slash plastic waste by 20% by 2025 and elevate the utilization of recycled plastics to 30% by 2030(8). As of 2019, the global recycled plastic employment rate stood at 6%, contrasting starkly with the mere 0.2% reported domestically (as of 2020, Ministry of Environment). While a myriad of recycling technologies have emerged both domestically and internationally, and numerous collaborations and pre-purchase agreements are in progress to facilitate commercialization at scale, there exists a pressing need for a catalyzing force to support domestic enterprises — now significant players in the global market — in seizing this burgeoning trend. According to global PET trade data for 2021, the primary PET exporters include China (23.1%), Taiwan (8.07%), South Korea (6.89%), and India (6.28%), with Asia commanding the lion’s share of global PET supply. Conversely, major PET importers comprise the U.S. (12.3%), Japan (6.57%), and Italy (4.14%)(9). For manufacturers based in Asia, who not only procure PET but also export products utilizing it, acquiring premium recycled materials presents an opportunity to fortify their market standing while remaining agile and compliant with global regulations.
Terracle, a pioneering depolymerization technology company specializing in high-purity recycled plastic materials
Established in Busan in 2021, Terracle stands out for its ability to produce top-tier recycled plastic materials through a continuous production process, yielding significant energy savings compared to conventional methods. CEO Kibaek Kwon embarked on this journey with the realization that the often-touted ‘eco-friendly’ claims by manufacturers often fall short in practice. Recognizing the imperative for internalizing a circular economy approach to bridge this gap, Kwon assembled a team of experts to develop a technology dedicated to perpetual plastic recycling, leading to the inception of Terracle. Terracle has achieved a significant milestone by successfully commercializing high-purity recycled terephthalic acid (TPA) in Korea, setting a rapid pace of expansion compared to industry norms worldwide. TPA serves as a vital chemical material with diverse applications spanning packaging, textiles, films, engineering plastics, automotive, electronics, and beyond. Witnessing Terracle’s remarkable journey from its inception, Envisioning Partners spearheaded Terracle’s Series A funding round in March 2024.
Terracle’s Competitive Edge
1) Quality, Environmental Impact, and Economics: Providing Recycled Materials with Marketable Characteristics
Mechanical recycling of PET flakes, which entails collecting, cleaning, and crushing waste PET to produce recycled materials, often faces challenges in meeting the market’s stringent quality standards, particularly for products like PET film. Consequently, there’s a growing focus on chemical recycling methods to generate recycled materials. Terracle specializes in the chemical recycling of diverse plastic waste types, including mixed plastics and textile waste, to produce renewable monomers like terephthalic acid (TPA) and ethylene glycol (EG).
In 2023, during the Ministry of Environment’s green technology certification process, Terracle not only met but exceeded the recycling conversion rate standard of 95%, achieving an impressive 97%. This exceptional performance earned Terracle the distinction of being the sole company in Korea to receive green technology certification for monomer production via chemical decomposition. Moreover, Terracle has showcased its superior product capabilities through technical demonstrations conducted in collaboration with various large-scale manufacturing entities in Korea. One notable instance is Terracle’s partnership with the Basic Materials Research Center of Hyundai Motor Company’s Advanced Vehicle Platform (AVP) Division. Through a demonstration study on the chemical recycling of vehicle waste components, Terracle successfully transformed composite wastes into high-purity TPA without the need for pretreatment, affirming its technical prowess and efficacy.
The environmental footprint of Terracle’s recycled material production process stands as a significant competitive edge over conventional methods. Unlike traditional techniques necessitating high temperatures and pressures, Terracle’s chemical process operates at temperatures below 60 degrees Celsius and atmospheric pressure (1 bar), resulting in notable reductions in capital expenditure (CAPEX) and energy consumption. Furthermore, this process boasts substantial environmental benefits, including markedly decreased emissions of hazardous substances. Additionally, the system enables the continuous recycling of solvents and catalysts, further enhancing its sustainability credentials.
2) Proposing an Industry-Adoptable Approach
Terracle’s technology, based on depolymerization via hydrolysis, yields TPA as a direct output — an essential monomer in PET composition. Importantly, this output can seamlessly integrate into existing TPA-based PET production facilities, serving as a drop-in solution(10). Terracle helps customers recycle and reuse waste from their manufacturing processes and product waste, integrating them back into their products to establish a fully circular economy system.
Since the validation of the technology, they have engaged in collaborations with numerous manufacturers on real-world projects involving the recycling of film waste and discarded clothing. This has led to the accumulation of purchase contracts and investments. By the end of 2024, Terracle aims to construct a depolymerization facility with a capacity exceeding 3,000 tons per year (equivalent to 10 tons per day), while concurrently refining our technology to align with the specific requirements of individual customers.
The Expected Impact and SDGs
Terracle specializes in transforming challenging-to-recycle plastic wastes — including plastics, textiles, automobile parts, and marine waste — into high-quality recycled materials using low-impact chemical recycling methods. In contrast to traditional recycled materials, which have often lagged behind virgin plastics in terms of physical properties and economic viability, Terracle provides a consistent volume of recycled materials with over 99%+ purity for industry adoption. This, in turn, facilitates the advancement of a circular economy system
SDG 12. Ensure sustainable consumption and production patterns
SDG 13. Take urgent action to combat climate change and its impacts
Key Impact Performance Indicator (Impact KPI) | As of March 2024
Envisioning Partners share the key impact metrics that we actively manage and track with our portfolio companies. Despite the early stage of Terracle, disclosing these impact metrics serves the purpose of establishing a baseline for future management while laying the groundwork for assessing and monitoring environmental and social impact. We anticipate a significant increase in the total impact as Terracle’s supply of recycled materials reaches full operational capacity.
- Waste PET feedstock: Approximately 1 ton per day
- Recycled TPA production: Currently at 1 ton per day through continuous production, with an expected increase to 10 tons by the end of 2024
- Recycled TPA supply: Tracked internally
- Reduction in carbon emissions from TPA production and disposal (virgin TPA vs. Terracle TPA): Estimated at approximately 90%
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(1) Loop Industries Annual Report 2022, 2023.
(2) “Phase 1 of the Canada-wide Action Plan on Zero Plastic Waste”, Link
(3) “Plastic Minimum Content Standards and Reporting for Beverage Manufacturers”, Link
(4) European Plastic Strategy, European Commission, Link
(5) Plastic Package Tax, U.K. Government, Link
(6) “Italy’s plastic tax will enter into force on 1 July 2024”, EY, Feb 21, 2024, Link
(7) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL, July 5, 2023. Link
(8) Household Waste De-plasticization Measures, Ministry of Environment, December 2020.
(9) OEC World Data
(10) Adoption without changing existing production equipment and infrastructure
