BASF and Texas-based Encina are deepening their relationship with a strategic collaboration that supports development of Encina’s planned chemical recycling plant and positions the chemicals giant as a potential future equity partner in Encina’s global expansion.
In addition to its previous long-term offtake agreement for Encina’s chemically recycled benzene, BASF will provide strategic support during project development, including advice on procurement strategy and planning for project execution, according to a press release.
BASF also will have rights to participate in future Encina project development opportunities, including as a potential equity partner – above and beyond a typical buyer-seller relationship.
Thomas Ohlinger, senior vice president of traded products at BASF, said the agreement “demonstrates our strength as a partner with distinctive capabilities to support and shape early-stage projects beyond what pure off-takers can offer.”
Following project kickoff, Encina expects the process of reaching final investment decision on its first commercial-scale facility to take about 18 months, “assuming normal progression of engineering, permitting, commercial, and financing activities,” said founder David Schwedel.
The company did not disclose a specific site location for the planned facility, which is expected to produce about 175,000 metric tons a year of circular benzene, as well as “significant volumes” of circular methane and other co-products.
“Encina’s technology was specifically developed to accommodate feedstock variability, which is important when operating at commercial scale,” Schwedel added, noting that capacity figures may change during the engineering and development stages.
The agreement names only benzene, and not toluene and mixed xylenes, two related chemicals.
Schwedel noted that benzene is a key product within the BASF collaboration “and aligns with BASF’s circular feedstock requirements,” while toluene and mixed xylenes are not currently a primary focus for the project.
“The product slate for the US Gulf Coast facility has evolved considerably over the past several years as we have worked closely with customers to optimize their growing needs,” Schwedel said in an email.
The facility design has expanded from about 40 tons per hour of processing capacity to 50 tons per hour, or about 375,000 metric tons a year of input. He cited the increase in planned capacity as the reason for “our move from PA to USGC.”
In 2024, Encina canceled plans for a project in Pennsylvania, amid community opposition, and has more recently faced legal fallout.
As with many agreements for circular feedstocks, the announcement did not specify exactly how the circular benzene would be used, and criticism of non-physical recycling methods often focuses on the lack of transparency regarding circular outcomes.
“The intent of the collaboration is for BASF to utilize circular feedstocks derived from Encina’s facilities within BASF’s own manufacturing operations and product portfolio, including support of its Ccycled offerings and broader sustainability initiatives,” Schwedel told Plastics Recycling Update.
In a late April BASF earnings call, CFO Dirk Elvermann pointed out that the company has its own dedicated trading business for key feedstocks, providing flexibility to source key raw materials including benzene “either globally or locally, whichever makes more sense at the time.”
He went on to say, “Importantly, our trading activities typically handle volumes that are significantly larger than what we use to cover BASF’s own demand. This gives us broad access to the market, increased flexibility and the ability to respond quickly when supply chains are under stress.”
On June 2, Schwedel said, “While I can’t comment on specific commercial arrangements, the strategic rationale behind the agreement is to expand BASF’s access to circular feedstocks for use within its integrated chemical value chains, rather than to serve solely as a marketing or brokerage intermediary.”
He added, “More broadly, Encina’s business model contemplates supplying circular chemical products to multiple customers, and we expect demand for circular benzene and other circular feedstocks to continue growing across the chemical industry for decades to come.”
Encina uses a catalytic conversion technology to make circular products from plastic waste, and “final product yields remain subject to feedstock mix and ongoing engineering work,” Schwedel said.
Encina’s place in the BASF value chain
Benzene is an aromatic compound – so named because of its sweet smell – with a stable ring-shaped structure that is particularly suitable for applications requiring durability: synthetic rubber used in vehicle tires, nylon, polyurethane foams and more. Two grades of polystyrene – EPS foam and clear rigid general purpose PS – are common benzene derivatives used in packaging. Other grades are used in medical applications, mechanical parts and durable goods.
Another chemical derived from benzene is methylene diphenyl diisocyanate (MDI), used in making rigid polyurethane foams and other products.
In Geismar, Louisiana, BASF is on track to complete an MDI capacity expansion in midyear, ramping up production quickly toward the end of 2026, according to Elvermann in April. The expansion will bring the company’s North American MDI capacity to 600,000 metric tons/year, a nearly 60% increase from 2019, before the expansion began.
Geismar features a concentrated cluster of chemical producers, many connected by pipeline for easy transport of feedstocks. Sabic also produces styrene monomer there at its joint venture plant with Total.
In Texas, BASF consumes benzene at its facilities in Freeport, part of the state’s massive energy and chemicals corridor.
BASF’s global headquarters are in Ludwigshafen, Germany, and North American headquarters are in New Jersey.
Encina also has a supply agreement with styrenics producer AmSty, a relationship Schwedel said “is excellent, and remains active. In addition, Encina maintains commercial relationships and agreements with a number of other leading global chemical companies, including Covestro and others.”
