Report: a financially viable Fibre-to-Fibre sector in the Netherlands

Building a dynamic financial model for the Dutch Textile Recycling industry

A simulation model of how legislation, technological innovation, capacity and market demand shape the earning capacity of the Dutch textile recycling sector

The potential of Dutch fibre-to-fibre (F2F) recycling cannot be understood by looking at collection volumes or recycling capacity alone. Whether the system can scale successfully also depends on the quality and suitability of available textiles, recycling technology and costs, demand for recycled fibres, and funding during the transition. These conditions do not necessarily develop at the same pace. As one constraint is solved, another can become the bottleneck.

To understand how these factors interact, Circular Innovations developed a dynamic financial scenario model as part of the Ketendoorbraakproject Circulair Textiel, initiated by Dutch Circular Textile Valley. The model connects the physical development of the F2F system with its commercial viability and explores how the Dutch market could develop between 2025 and 2036 under different policy, technology and market conditions.

Rather than predicting one future, the financial model allows us to test what changes when individual conditions improve, where the next constraint appears, and which interventions have the greatest effect on the business case.

How we built the analysis

To assess the influence of policy, the model examines how the F2F system develops under the Extended Producer Responsibility (EPR) framework and the Ecodesign for Sustainable Products Regulation (ESPR).

The model follows the system from textile collection through to recycled-fibre sales. It considers how much material is collected, how much is technically suitable for F2F recycling, how much processing capacity is available, the costs and yields of recycling, how much of the resulting fiber can find a market, and whether market revenue and producer funding are sufficient to support the business case.

By varying these conditions individually, the model shows how different interventions affect the system and where constraints emerge. Combining them then shows how the different parts of the system interact and how progress in one area can depend on developments elsewhere.

What did the model show?

By having this extensive model, we were able to show that the starting point is challenging. Under the reference conditions, the Dutch F2F system is not commercially self-sustaining. In 2030, the model still shows a commercial viability gap of around €22 million. Even by 2036, approximately €80 million in market revenue needs to be combined with around €21 million in legislative (EPR) support to produce a surplus in the market.

But our model show that this can change with the right market interventions:

• Stronger demand improves the business case while market uptake is limiting output.
• Faster technological development lowers processing costs and improves yields, directly strengthening the economics of recycling.
• More collection or processing capacity, however, has limited effect when other constraints remain.

The strongest result appears when several conditions improve together. In a coordinated transition where technology, processing capacity, demand and producer funding reinforce one another, the market can flourish. By 2036, market revenue alone is sufficient to cover the modelled system cost and required returns, meaning extra funding is no longer needed specifically to close the operating-commercial gap.

This creates room for producer funding to be reassessed and potentially redirected towards other remaining needs in the system.

The message is therefore two-sided: F2F recycling is not commercially self-sustaining under the reference conditions, but the model shows that it can become viable when the right conditions improve together.

What does this financial model mean for stakeholders?

The model points to different priorities for different actors. Policymakers can focus on creating demand, supporting technology and making sure collection and capacity are matched by the conditions needed to use them. Producer Responsibility Organisations (PRO’s) can align producer funding with the remaining commercial gap and reassess its purpose as the market develops. Brands and fibre buyers can strengthen the business case through more predictable demand and offtake, while recyclers and investors need to assess new capacity alongside feedstock, technology, utilisation, fibre prices and credible demand.

Across all of these, the key is coordination. The model is not a prescription for one fixed pathway. Instead, it helps identify where the bottleneck sits, what intervention is most relevant at that stage, and which actor is best placed to address it.