By Aline Rotzetter, Senior Investment Manager - Advanced Materials & Sustainability
When a single maritime chokepoint can disrupt energy flows, tighten feedstock availability, and cascade into chemicals and industrial materials, it exposes a deeper truth: the global production system remains optimized for efficiency, not resilience.
Across the chemicals and materials industries, large corporations, including many of our fund investors, are not asking whether to respond, but which technologies can meaningfully reduce exposure.
And the answer they are coming up with is neither a wholesale replacement of the current system nor a defense of the status quo. It is both.
Existing infrastructure will continue to anchor industrial production for decades. Their immediate task is to make current systems more robust through efficiency gains, process improvements, and greater feedstock flexibility. And in parallel, they must discover (either internally or external innovation) and then build new value chains to reduce structural dependencies, particularly on imported fossil inputs and concentrated supply routes.
The Circular Economy as a Resilience Strategy
This is where circularity takes on a different role. Long framed primarily as a sustainability concept, the circular economy is increasingly being recast as a resilience strategy. By reducing reliance on virgin, fossil-based feedstocks and strengthening material loops, circular systems offer a way to mitigate supply risk, dampen volatility, and anchor production more locally or regionally.
Two pathways are central to this shift: biomass valorisation and circular plastics. Biomass valorisation seeks to convert renewable feedstocks into industrial intermediates and chemicals, thereby substituting fossil inputs. Circular plastics aim to retain material value within the system through mechanical and chemical recycling, reducing dependence on virgin production.
Both are now firmly embedded in the European policy agenda. Bioeconomy is explicitly framed as a contributor to competitiveness and industrial resilience, particularly through the substitution of imported fossil products. And the EU Plastics Strategy is designed to steer the design, use, and recycling of plastics in ways that improve the economics of recycling and create more reliable demand for recycled materials. This direction is being reinforced through regulation: the Packaging and Packaging Waste Regulation (PPWR) embeds circularity across the entire lifecycle of packaging, acting as a central driver for circular material solutions in Europe.
The Future is Built by Layering Solutions
Yet neither pathway offers a simple or immediate solution. In the bioeconomy, industrial processes are typically capital-intensive, and the transition from demonstration to first-of-a-kind commercial plants remains constrained by financing gaps and elevated execution risk. Feedstock heterogeneity, logistical complexity, and demanding process control requirements further complicate scale-up. As a result, economic viability has so far been demonstrated only in selected applications, often where high-value outputs can absorb higher production costs.
Circular plastics face a similar set of structural challenges. Value chains are fragmented, investment requirements are significant, and the economics of many recycling pathways remain uncertain. Mechanical and chemical recycling each have distinct strengths and limitations, depending on waste stream characteristics, energy intensity, and integration into existing infrastructure. There is no universally superior solution; trade-offs persist between material recovery, cost, and energy use.
Resilience will not come from abandoning the current system, nor from betting exclusively on future ones. It will be built by layering solutions: improving the performance and flexibility of existing assets while selectively integrating new technologies and feedstocks where they are economically viable.
For our fund investors, this narrows the field. The most relevant opportunities lie where technological differentiation aligns with clear economic logic: in high-value chemicals and functional ingredients with pricing power, and in enabling technologies that enhance the efficiency, robustness, or scalability of existing production systems.
The lesson from Hormuz is not that globalization is reversing, or that fossil systems will disappear quickly. It is that concentration risk is no longer abstract and that resilience must be engineered into the system as it exists today.
Circularity, in that context, is no longer just about sustainability. It is about security of supply.
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