Overview

In Indonesia, an estimated 165 million people lack access to formal waste management services, resulting in millions of tons of waste leaking into the environment annually. The national government has set ambitious targets to reduce waste generation by 30% and ensure 70% of waste is properly managed by 2025, alongside a goal of reducing marine debris by 70%. Achieving these objectives will require additional support and investment. 

As a global hub for manufacturing and trade, Indonesia has strong linkages with international markets, particularly in plastics and petrochemicals. However, fluctuations in the global oil market, regulatory changes, and shifting consumer preferences toward sustainability are shaping the future of plastic production and recycling. Government policies, such as the National Plastic Action Partnership (NPAP), aim to achieve a 70% reduction in plastic pollution by 2025, further driving the need for investment in waste management solutions like Project OCEAN. 

Project OCEAN, an initiative co-led by Borealis and Borouge, builds on this foundation by integrating mechanical recycling (m-Rec), advanced sorting technologies, and commercial partnerships to establish Indonesia’s first fully integrated waste and recycling ecosystem. Project OCEAN aligns closely with Indonesia’s updated NDC (2025). 

The Challenge

Indonesia generates approximately 6.8 million tons of plastic waste annually, yet around 165 million tons lack proper waste management. An estimated 620,000 tons enter the ocean each year, making Indonesia the second-largest contributor to marine plastic pollution globally.

This crisis stems from three critical failures:

• Climate impact from virgin plastic production: Rising petrochemical-based plastic consumption drives greenhouse gas emissions across the entire product lifecycle—from extraction and production to waste disposal—accelerating global warming and resource depletion.
• Fragmented recycling infrastructure: Indonesia’s recycling value chain lacks integration. While demand for post-consumer recycled (PCR) plastics grows among multinational brands, persistent challenges in feedstock quality, processing efficiency, and supply chain coordination between collectors, recyclers, and producers create systemic inefficiencies.
• Low recovery rates and poor output quality: Inefficient collection, low recycling rates (~10-15%), and underutilized infrastructure result in poor-quality recyclates that fail to meet market standards, leading to significant value leakage.

An integrated solution addressing collection, processing, and commercialization is needed—one that can scale across Southeast Asia’s emerging markets facing similar waste management challenges.

Technical Assistance

The Subnational Climate Fund, through its Technical Assistance facility managed by IUCN and executed in partnership with Catalytic Finance Foundation, has commissioned a comprehensive feasibility study to assess the establishment of a greenfield plastics recycling facility in East Java, Indonesia. The project will be carried out in partnership with local waste management and recycling partners in Indonesia. The study focused on the integration and technical feasibility of key process components, including OSBL systems (Outside Battery Limits), to ensure an optimized and economically viable recycling operation, and aimed to cover the full process chain, from the sorting of incoming mixed plastic waste feedstock to its conversion into recycled resin products – also known as recyclate.

What the study found

• The study found that a greenfield mechanical recycling plant in East Java can produce recycled resin that competes with virgin plastic, with average operating costs of from USD 500-900 per ton depending on the waste feedstock used.
• The design combines proven sorting, washing and extrusion technology, prioritizing consistent product quality and an expected average yield of approximatively 70%.
• East Java offers competitively priced plastic waste in small scale: community waste banks buy from residents at around IDR 2,000–3,500/kg.
• If approved, the project would create around 200 new jobs and support the formalisation of the local waste sector, giving waste collectors more stable income.

What makes it hard

• Virgin plastic sets the ceiling. Prices spiked in 2026, but long-term global levels are lower (around USD 900–1,500 per tonne), and margins on recycled resin narrow when virgin plastic is cheap.
• Low-cost feedstock is hard to secure at scale. The cheapest material sits with many small waste banks and collection points; aggregators supply usable volumes and arrange logistics, but at higher prices.
• Feedstock, not technology, is the strongest predictor of success. Supply must be stable in both quantity and quality, including moisture and residual contaminations.