Across Europe, momentum behind textile circularity has never been stronger. Recycling technologies continue to emerge and reach higher TRLs, brands are raising their recycled content ambitions, and policymakers are introducing legislation designed to accelerate the shift towards a circular textile economy. This movement was visible as over 5,000 people filled the halls at the Textiles Recycling Expo on June 24th and 25th to meet, learn, and build partnerships.

Yet despite the growing momentum, textile-to-textile recycling remains far from industrial scale. The reason is not a lack of innovation or commitment. It is that today's economics simply do not support a circular system at the scale Europe needs. As Robert van de Kerkhof, CEO of ReHubs, put it during the day-two opening keynote at the Textiles Recycling Expo, "If there's no money to be made, then it's going to be very difficult to scale."

That may sound like a pessimistic conclusion. It isn't, but it is the reality the industry must confront if it wants to build a viable future for textile recycling. Circularity will not become commercially competitive on its own. It requires coordinated action, new financial models, investment, and collaboration across the entire value chain.

This was the central message of Robert's keynote, and it sits at the core of the latest ReHubs and Boston Consulting Group report on the future of textile circularity, published in March 2026. The challenges ahead are significant, but they are solvable, provided the industry focuses on overcoming the economic barrier.

The supply-demand deadlock

At the heart of the challenge is what ReHubs describes as the supply-demand deadlock. Recyclers struggle to justify investing in industrial-scale facilities without long-term demand for recycled fibres. At the same time, brands cannot reliably commit to large-scale purchasing because supply remains limited, fragmented and expensive. Investors, meanwhile, hesitate because the commercial returns remain uncertain. The result is a system where every stakeholder is waiting for another to move first. Breaking this deadlock is one of the greatest challenges facing the industry.

Value creates opportunity. Economics determine whether it can scale.

One of the most important distinctions in the keynote was between value and economics, two terms often used interchangeably that describe very different things. Value is the positive impact a solution creates such as reduced dependence on virgin raw materials, less textile waste in landfill and incineration, stronger resource resilience for Europe, new jobs, and a better answer to regulatory and consumer expectations. Economics is a separate question entirely, from who finances the investment, to who carries the operational risk, who captures the value that's created, and whether every participant in the chain can generate returns sufficient to justify staying in it. As Robert explained, "Value is what the solution creates for the various stakeholders. Economics is whether that value can be captured, distributed and financed." That distinction explains why so many promising circular initiatives remain stuck at pilot stage despite broad industry support, because a system can create enormous environmental and societal value while still failing to generate a sustainable commercial return.

A waste problem growing faster than the system built to manage it

Europe generated an estimated 15.2 million tonnes of textile waste in 2025, the large majority of it being post-consumer. That's a bigger number than earlier forecasts anticipated, as ReHubs' 2022 report with McKinsey had estimated post-consumer waste at closer to 9–10 million tonnes. "We have much more post-consumer waste than we had expected," Robert explained. "The numbers are getting bigger, faster than we had expected."

Today, only about a third of that textile waste is collected, and only a fraction of what's collected is sorted into streams suitable for recycling. Less than 1% ultimately becomes new textile fibre, while the rest is exported, down-cycled, incinerated, or landfilled. That's not only an environmental problem, as every garment that fails to re-enter the value chain deepens Europe's dependence on virgin material while shrinking the recycled feedstock the industry needs to become competitive.

At today's prices, there is no business model

"If you ask me about the economics of a circular value chain, there is no business model at today's prices," Robert said. "Impossible." Under current market conditions, ReHubs and BCG's analysis shows collectors holding on to their margins, sorters tipping into loss-making territory, and recyclers, who require the greatest capital investment, facing the steepest losses of all.

That creates a vicious cycle, because without profitable economics, investment stalls, and without investment, capacity can't grow, and without capacity, recycled fibre stays scarce and expensive, and without reliable, affordable supply, demand never fully develops. This is the supply-demand deadlock playing out in numbers. Breaking that cycle means looking at the economics of the system as a whole rather than any single business case in isolation. ReHubs and BCG estimates the industry needs €8–11 billion in one-off capital investment across the value chain, plus roughly €5–6.5 billion in recurring annual operating costs, much of which won't disappear even once the system matures. As Robert put it: "A circular economy will always be more expensive than the linear economy we're confronted with today." Collecting and sorting, in this framing, sit outside today's linear value chain entirely and folding them in adds real, permanent cost that a linear system never has to carry.

Scale isn't the reward, it's what makes the economics work

It's tempting to think of scale as something a circular textile industry earns once it succeeds. Robert's argument is closer to the reverse: scale is the precondition for success in the first place. ReHubs’ and BCG’s modelling put the tipping point at roughly 2.7 million tonnes of annual textile-to-textile recycling capacity, meaning about 15% of Europe's post-consumer textile waste. Below that threshold, the system stays fragmented: good pilots, but not a viable industry model. Above it, the dynamics start to shift, as logistics get more efficient, sorters can justify automation, plants run closer to full capacity, feedstock becomes predictable, and investors start seeing sustainable commercial performance instead of isolated projects. "We believe that if we have 2.7 million tonnes, we're reaching a tipping point," Robert said. "Today we have many good initiatives and we need those. But the industry will only become self-sustaining once we reach that level of capacity."

The pre-EPR valley of death

If scale is the goal, the obvious question is how the industry gets there. Extended Producer Responsibility (EPR) schemes are expected to become one of the most important financial mechanisms behind textile circularity, but they're unlikely to be implemented uniformly across Europe before 2028–2030. Many of the companies building tomorrow's recycling infrastructure need capital now. Robert calls this the industry's "pre-EPR valley of death." "We have amazing startups here that need to get financed now. If EPRs come by 2029 or 2030, it's too late for them." Bridging that gap will likely require public and private finance working together, with public funding to de-risk early infrastructure and first-of-a-kind facilities, and private capital to scale the business models once they're proven.

Learning from packaging, without repeating its mistakes

Textiles isn't the first sector attempting this transition. Packaging has decades of head start, well-established EPR schemes, and far more mature collection systems, which presents, on paper, a blueprint. In practice, it's more of a warning. Robert pointed out that European packaging recycling capacity has been shrinking since 2020, as recyclers face weak demand, volatile pricing, and insufficient returns despite the regulatory infrastructure being in place. "If packaging is not a success story, we're going to be faced with much bigger challenges in textiles," he said, and the numbers back him up, as the cost gap between virgin and recycled polyester in textiles is roughly twice as wide as the equivalent gap in packaging, largely because textiles have to contend with thousands of fibre blends, trims, coatings, and inconsistent feedstock quality that packaging doesn't. The lesson isn't that circularity can't work, it's that regulation alone isn't sufficient. Textiles has a chance to design more harmonised EPR systems and stronger recycled-content incentives from the outset, rather than fragmenting first and fixing it later.

An ecosystem challenge, not a single fix

No single technology, company, or piece of regulation will solve this on its own. Progress in one part of the chain without matching progress elsewhere just creates a new bottleneck. As Robert closed the keynote: "We need to continue to work on the economics. We need to get support to make the economics more attractive through EPR schemes and de-risking funds. We need to get the scale, and we need a coordinated approach, and this is exactly what we are doing as ReHubs."

The textile industry already understands why circularity matters. The challenge now is creating the economic conditions that allow textile-to-textile recycling to compete, attract investment and scale.

That will not happen by itself. If every decision continues to be made using today's economics alone, circularity will struggle to compete against an established linear system. A different approach is needed, one that combines long-term investment, supportive policy, market demand and collaboration across the entire value chain.

The challenges are significant, but so is the opportunity. The industry has already demonstrated its willingness to innovate. Now it must demonstrate its willingness to work together to build the market conditions that make circularity commercially viable.

Want to learn more about ReHubs, our work to scale textile-to-textile recycling in Europe, and how your organisation can get involved? Join our growing community and help shape Europe’s circular textile future.

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