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H&M has teamed up with private equity group TPG and the investor that started battery group Northvolt to roll out factories designed to reduce fast-fashion’s carbon emissions.
The world’s second-largest clothing retailer, TPG and Vargas have committed about $60mn to Swedish start-up Syre to build a factory in North Carolina to reduce polyester emissions by up to 85 per cent.
The global textile industry is responsible for up to 10 per cent of global emissions, and makes little use of recycled material or waste. Oil-based polyester represents about 54 per cent of the global fibre market and only about 1 per cent of it is currently recycled.
“We want to set a mark to start the great textile shift,” Dennis Nobelius, chief executive of Syre, told the Financial Times. “It’s really needed. All polyester is made from oil. We need to make it circular. When and if we find other technologies or other fibres that can complement this, we will do that.”
Vargas, the Swedish investor that has started Northvolt, H2 Green Steel, and heat pump group Aira, is aiming to decarbonise swaths of European industry. Syre follows its well-established playbook of securing a big customer such as H&M as a leading shareholder — Northvolt had Volkswagen — and using offtake agreements to secure large parts of its future production.
H&M has signed a $600mn deal with Syre to buy enough of the start-up’s production in the next seven years to cover about half of its total need for recycled polyester.
The Swedish clothing group currently sources its recycled polyester from plastic bottles. But Nobelius said that such material — rPET polyester — could only be used once whereas Syre’s circular — or cPET — could be re-used and turned into new products.
Syre will need “a couple of billion dollars” to finance the planned construction of 12 factories in North America, southern Europe and Asia, according to Nobelius.
He added that the start-up would turn to other fibres, with cotton the next “obvious” target because it accounts for more than 20 per cent of the global market.
Nobelius said Syre was in talks with “all the major global brands” such as flat-pack furniture pioneer Ikea and “see a good interest to join as an investor or as an offtaker”. He added: “They see the need, and the scarcity to come.”
Syre is aiming to produce 3mn metric tonnes of circular polyester by 2032, equivalent to a market share of about 3 per cent, it said.
It is not just looking at the clothing industry. Nobelius said there was significant potential in the automotive sector where carmakers use polyester in products such as seat coverings and airbags, and home interiors for products such as sofa coverings and carpets.
He estimated that using circular polyester would add $0.50 per garment in cost.
