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From Bankruptcy to Breakthrough: Inside the Evolution of Textile-To-Textile Recycling

On February 25, 2024, the Swedish fiber-to-fiber recycler Renewcell filed for bankruptcy. The textile recycling company backed by some of fashion’s biggest corporations such as H&M, Levi’s, Inditex, and Ganni was an early adopter that turned cotton textiles into a feedstock for other yarns like viscose or lyocell and was viewed by some as a guinea pig for the industry. “This is a sad day for the environment, […] and it is a testament to the lack of leadership and necessary pace of change in the fashion industry,” said Chairman of the Board of Directors, Michael Berg back in February. After almost four months of uncertainty around the start-up’s future, Renewcell was now bought by Sweden-based investment firm Altor and will continue to run under the name Circulose, their most

 



 

While it is a welcome surprise that Renewcell found a new buyer after its initial filing for bankruptcy, it still seems difficult to comprehend how its major high-profile shareholders and lenders could not see a future for textile recycling. As such, the bankruptcy statement sent waves of uncertainty through the industry and ignited a sorely needed conversation that remains relevant today: Is fiber-to-fiber recycling simply not ready for scale yet?

 

 

Let’s first delve into what fiber-to-fiber recycling is and how it works. Essentially, fiber-to-fiber recycling shreds existing textile waste and turns clothes into a pulp that can be used as a feedstock for spinning new fibers, such as Renewcell’s CIRCULOSE®. Renewcell works with textiles with a high cellulose content, such as worn cotton jeans and cotton production scraps. Dissolving pulp cellulose is used to make viscose, lyocell, modal, acetate and other types of regenerated fibers used to create new clothes.

 

Shannon Welch, former Global Brand Director at Renewcell, views textile-to-textile recycling as a “key component in creating a circular economy for the fashion industry”. There is no denying of the increasing quantities of textile waste with decreasing quality. While innovations like fiber-to-fiber recycling are an essential part of the solution to cope with the amounts of textile waste, there is a massive gap between its status quo and its potential: McKinsey estimates that at least 20% of the textiles on the market are fit for recycling, however, less than 1% of clothing is currently turned into new textiles.

 

The prevalent approach for used textiles is selling them to large recycling companies that export them to countries in South America and Africa. To make matters worse, the practice of exporting used clothing from the Global North to the Global South has been intensified by fast fashion, massively impacting the environment, and social and human rights in importing countries. With 700.000 tons of used textiles in 2021, the USA is the biggest exporter of used clothing globally. As we deal with textiles’ continuously deteriorating quality, the share of exported clothes with reuse or resale value declines rapidly. Essentially, the Global North exports its responsibility for handling its garment waste and leaves the Global South to grapple with piles of textile waste in countries with commonly deficient recycling infrastructures – this phenomenon is often described as Waste Colonialism.

 

 

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During Renewcell’s four-month bidding process, former Global Brand Director Welch emphasizes: “There is a long-term business case for textile-to-textile recycling solutions, but not when it is only measured in terms of short-term financial returns. Renewcell’s filing for bankruptcy should be seen as a wake-up call that circular innovations need more time and support to compete with ultra-low-cost materials like virgin polyester.” While innovations always come with a price premium, the price is expected to go down once the innovation scales up. However, the fashion market is often not able or willing to shoulder that cost. This goes to show that fashion has a problem with innovation: Market adoption is much slower than innovative technologies burgeoning from small startups or other innovative players. It takes time – especially for big brands – to adopt innovation into mainstream practices and entrenched supply chains; and it takes transition funds and subsidies to offset these prices.

 

One of the more promising textile-to-textile endeavors could be Syre; a Swedish recycler aiming to “decarbonize and dewaste textiles”. In contrast to Renewcell, Syre recycles polyester clothing, creating a truly circular supply chain instead of the current focus on rPET bottle-to-textile recycling methods. Promisingly, they recently scored a $600M investment by H&M (which single-handedly secured more than half of the H&M Group’s long-term need for recycled polyester) and proclaim they want to expand “industrial operations at hyper-scale”.

 

 

With polyester being the most widely used textile fiber in the world, Syre may constitute a more viable business case than Renewcell which focuses on recycling cotton clothing. Emma Stjernlöf, Chief Communications and People Officer at Syre breaks down the recycling process: “Our technology chemically recycles polyester by breaking it down into monomers, which are then restructured to create polyester fibers used to make polyester yarn. The output is circular polyester with equivalent quality and versatility to virgin polyester but with a superior sustainability performance.” If they can prove that to be the case, they are already ahead of other textile-to-textile recyclers in the industry grappling with the issue that shredding clothes weakens the fibers and makes them more susceptible to fray. Syre also claims its ability to reduce emissions by up to 85% compared to the production of oil-based polyester. As feedstock, they use the waste from textile producers as well as post-consumer waste; securing assets from a myriad of industries such as automotive, apparel, and home interior. What’s more, the technology can handle polyester blends down to 60-70% polyester; a huge competitive advantage in a market in which recycling mixed fibers appears as one of the biggest issues.

While Stjernlöf views recycling polyester as a “key part” of mitigating fashion’s waste crisis, she also stresses the importance of collaboration across the value chain. It lies in Syre’s business model that the startup can be integrated “as a plug and play solution into the existing textile value chain”. That way, “Syre will be key in enabling delivery on ambitious sustainability targets for all polyester intense industries”, according to Stjernlöf. Knowing that textile recyclers often grapple with scalability, she puts it this way: “The technology is ensured to be massively scalable worldwide and effectively manage substantial increases in demand.” Having convinced other investors as well, Syre was able to raise another $100M through a mix of high-profile investors to help finance the construction of their pilot plant. They currently have one blueprint plant up and running and aspire to have three plants by 2027. By 2032, they aim to have twelve plants that will produce more than three million metric tons of circular polyester – giving the impression that they weren’t using the term “hyperscale” lightly.

Of course, recycling is only part of the solution as we cannot recycle our way out of the initial issue of overproduction. There is a systemic issue in the fashion industry, becoming irrevocably obvious in pictures of waste piles in places like Chile’s Atacama Desert (where the mountains of textile waste predominantly exported from the US can already be seen from space). With as little as twelve percent of fashion brands declaring how many items they produce and how they discard them, it becomes apparent that the industry has a massive transparency issue. Emily Macintosh, Senior Policy Officer for Textiles at the European Environmental Bureau, claims: “The infrastructure and technology to turn ever-increasing volumes of clothing back into clothing is virtually non-existent, and the recycled fibers that do appear in ‘eco’ ranges make minimal environmental gains.”

 

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There’s no denying that circular economy endeavors don’t factor in the communities in the Global South that sit on the short end of the stick when it comes to dealing with fashion’s global waste problem. Considerations around the potential of recycling technologies are generally far removed from the reality in the import countries of used clothing and tend to benefit actors in Europe and the US. Involving and financially supporting actors at the end of the value chain in decision-making is essential to ensure that developments in these areas are truly sustainable and equitable.

Fiber-to-fiber recycling is still in its infancy and will always stay a band-aid solution if major fast fashion companies are not held accountable for the amount of clothing produced. With Renewcell acquiring new buyers and ventures like Syre emerging from the industry, it looks like there’s still momentum propelling fashion forward. The EU is paving the way for more regulation around brands and retailers soon having to reveal how many items they put on the market and discard under extended producer responsibility (EPR) schemes. Simultaneously, fashion needs to make more space for burgeoning circular economy startups and subsidize innovative solutions to cope with fashion’s waste crisis.

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