Textile-to-textile recycling is scaling, but not at the level of its hype – new report finds

Textile-to-textile recycling is one of the most hyped topics in circular fashion right now, largely driven by the commercialization of chemical recycling currently underway. Although recycling can provide one of the core building blocks for closing the loop in the industry, industry professionals are raising the alarm on how difficult it is to build the infrastructure and get brands on board.

According to the European industry alliance ReHubs, building textile-to-textile recycling infrastructure in Europe requires 8-11B euros in one-off investment and 5-6.5B euros in recurring annual costs. Right now, funding for the industry is dragging, mostly because of a lack of clear incentives: using recycled fibers still carries a price premium, which hinders brand adoption and partnerships. And when brands don't commit to future purchasing agreements, innovators struggle to secure funding, build commercial factories, and enable the wider collection and sorting infrastructure the industry needs to take shape.

These are the tensions the industry is up against as it tries to scale textile-to-textile recycling. In H1/2026, the commercial momentum kept building through funding, partnerships, and factory announcements, even as collection and sorting infrastructure continued to lag behind. The same six months also brought major regulatory developments, in addition to renewed pressure from industry NGOs over the environmental and ethical impact of textile recycling.

Commercial momentum keeps building

One of the biggest updates in H1/2026 was Circulose, formerly Renewcell, restarting commercial-scale production at its Swedish factory, producing CIRCULOSE®, a recycled pulp made entirely from discarded cotton textiles. "The preparations are in full swing, and new pulp is expected to roll out of the factory by the end of the year, ensuring there is no gap in supply," said Jonatan Janmark, CEO of Circulose. Per the company's own announcements, brands are already lining up to integrate the recycled pulp into their supply chains. During H1, Circulose confirmed partnerships with four new fashion brands: Marimekko, Samsoe Samsoe, King Louie, and Eileen Fisher.

Reju, another textile-to-textile recycling solution developer, was awarded 135 million euros in funding under the Netherlands' Nationale Investeringsregeling Klimaatprojecten Industrie (NIKI) program to support its planned industrial-scale Regeneration Hub at Chemelot Industrial Park in Sittard-Geleen. The Dutch facility is part of Reju's strategy to build multiple commercial-scale regeneration hubs worldwide, with others planned for France and the US.

Other recycling solutions, still in development or preparing for commercialization, that announced significant funding during H1 included Renasens, a Swedish startup developing a solution to separate and decolour blended textiles and recover fibers without using water or toxic chemicals, and Epoch Biodesign, a startup developing an enzymatic recycling technology for recycling nylon 6,6.

On the flip side, H1 also served as a reminder of how hard these solutions are to scale, and how optimistic announced opening dates and running capacities can turn out to be. Carbios, the French enzymatic recycling innovator Carbios delayed its recycling plant in China to 2028, pushing back an opening originally planned for the first quarter of 2027. The company said its enzymatic PET recycling process needs additional technical work to adapt to the specific characteristics of the production site.

Click on the visual to enlarge

Keeping tabs on the state of Europe's recycling system

Even though recycling solutions have moved from research to commercialization, a significant bottleneck exists in the system: the infrastructure for collecting and sorting post-consumer textiles.

In recent years, multiple industry bodies have expressed concern over the viability of the European textile recycling landscape. In 2025, EuRIC stated in its EU Recyclers' Manifesto: "The textiles collection, sorting for reuse, and recycling sector in Europe is facing an unprecedented crisis with rising sorting costs, dropping sales of second-hand clothes, and a lack of demand for recycled textile content. The rise of ultra-fast fashion sold online has further increased those challenges, with a serious impact on the environment."

In H1/2026, these same pressures played out clearly in the French market. The country's textile producer responsibility organization (PRO) was fined 170,000 euros for waste management breaches, while used textile collector Le Relais announced it would remove almost 4,300 textile collection containers, citing unsustainable business conditions. Amid these challenges, France's Ministry of Ecological Transition announced a temporary increase in textile collection aid, from 228 euros/tonne to 268 euros/tonne for 2026. This can be seen as one of the signs of how much government support the sector still needs.

Beyond France, Sweden's municipally owned waste operator Sysav announced it would sell Siptex, described as the "world's first" fully automated textile sorting line, while in Germany, textile collection, sorting, and recycling company Texaid concluded a restructuring process with plans to scale down its German operations. Together, these H1 events capture just how hard it still is for the European market to build out the collection and sorting infrastructure the industry depends on.

On the front of developing the sorting and pre-processing infrastructure the sector needs, one project stands out from H1/2026: Fashion for Good launched Feedstock Activation Europe (FAE) to channel post-consumer textiles into textile-to-textile recycling at scale. Adidas is the lead sponsor, with Bestseller and Inditex as supporting brand partners. The project aims to assess the feasibility of advanced pre-processing technologies and develop a business framework for large-scale regional sorting and pre-processing hubs across Europe.

Click on the visual to enlarge

Regulation keeps advancing

Regulation is often seen as the backbone for building textile-to-textile recycling infrastructure and getting brands on board. H1 delivered concrete regulatory developments, but also a wave of industry guidance and proposals on how that framework should be built.

In the US, California's Extended Producer Responsibility policy advanced to the next stage, requiring fashion and textile brands to register with the state-approved Producer Responsibility Organization (Landbell USA) by July 1. In the EU, a ban on the destruction of unsold clothing entered into force. From 19 July, large companies across the EU are prohibited from destroying unsold clothes, clothing accessories, and footwear. Medium-sized companies will be subject to the same rules from 2030.

Alongside these concrete milestones, H1's industry position papers and recommendations focused heavily on getting the EU's Extended Producer Responsibility (EPR) framework right. Textile PRO Forum and EURATEX both pushed for a centralized EU registration system, while WRAP and Zero Waste Europe's blueprints argued for prioritizing reuse over recycling and for spreading EPR fees across more than just end-of-life waste management.

As funding and momentum dominate the conversation, environmental and social questions get less attention

While part of the industry is focused on building the infrastructure needed for commercialization and securing enough funding for the scaling phase, organisations outside the industry keep raising the alarm about the ethical and environmental issues that might arise as textile-to-textile recycling scales.

One report released in H1/2026 was the OECD's “Industry NGOs flag worker issues and environmental risks in textile-to-textile recycling”. It found that while recycling can reduce environmental impacts, it can also shift or amplify labour, environmental, and governance risks. The report pointed to structural issues like informality (around 80 per cent of recycling jobs globally are informal), thin margins in sorting and recycling, and the continued reliance on manual classification by fiber, colour, and quality.

During H1/2026, Textile Exchange also published an in-depth Life Cycle Assessment (LCA) study on virgin and recycled polyester. For chemically recycled polyester, the study identified the most significant environmental hotspots as energy consumption for electricity and the use of chemicals in the recycling process, including solvents like methanol.

The text continues below the photo

Despite challenges persisting in building the infrastructure, the industry continues to grow. According to Valuates Reports, the global textile recycling market is projected to grow at a 5.9 per cent CAGR through 2031, while Europe, per State & Prospects of circular fashion in Europe by KPMG and Circular Fashion Federation, is growing at nearly twice that rate, at 10.5 per cent CAGR.

The signals the industry should pay attention to in H2/2026 include whether brand partnerships and purchasing agreements hold and advance, how much funding keeps flowing to recycling and sorting innovations, and whether regulatory timelines stay on track.

References
- France: Advancing Textile Circularity in Europe – The Case for System-Level Scale-Up, 2026, BCG (ReHubs)
- Circulose Restarts Commercial-Scale Production at Ortviken Plant in Sundsvall, Sweden, 2026, Circulose
- Circulose Expands Brand Network as Eileen Fisher, Marimekko, Samsøe Samsøe and King Louie Integrate Circulose, 2026, Circulose
- Reju Secures €135 Million Dutch NIKI Funding for Industrial-Scale Textile-to-Textile Recycling, 2026, Reju
- Reju Announces Selection of Regeneration Hub as One of Its First Industrial-Size Textile Facilities, 2026, Reju
- Deeptech Startup Renasens Lands €10M to Scale Textile Recycling in Europe, 2026, Tech.eu
- Lululemon Bets Epoch Biodesign Can Eat Its Shorts, Literally, 2026, TechCrunch
- Carbios Delays China PET Biorecycling Plant to 2028, 2026, Apparel Insider
- EU Recyclers' Manifesto: Removing Barriers to Textile Circularity, 2025, EuRIC
- France Fines Refashion €170,000 for Textile Waste Collection Failures, 2026, Modaes
- France: Le Relais to Significantly Scale Back Waste Textile Collection, 2026, EUWID Recycling
- France Raises Aid for Textile Collection to €268 per Tonne to Preserve Its Scrap, 2026, Modaes
- Världsunik Anläggning för Textilsortering till Salu, 2026, SVT
- Texaid Concludes Restructuring and Slims Down German Operations, 2026, EUWID Recycling
- Due Diligence on Recycling Processes in the Garment and Footwear Sector, 2026, OECD
- Textile Recycling Market to Reach $20bn by 2031 – Report, 2026, Ecotextile News
- State & Prospects of Circular Fashion in Europe, 2026, KPMG / Circular Fashion Federation