The textile industry is a significant contributor to global greenhouse gas emissions, responsible for between 5-10% of annual emissions (MIT). Within this sector, the fashion industry alone accounts for a substantial share of these emissions. The fashion industry must cut its emissions by 45% in order to align with global efforts to limit warming to 1.5°C. However, the industry is currently falling short of that goal, with an average increase in GHG emissions by 4% each year, while a decrease of 13% is needed to stay on track with targets for 2030 (Textile Exchange). While many fashion brands have committed to sustainable practices to reduce their environmental footprint, the available options to reduce emissions are insufficient to make meaningful changes. Simply slowing the growth of textile manufacturing to 1% per year will not be sufficient to meaningfully reduce emissions. To curb the increase in GHGs stemming from this industry, new solutions are needed. Technologies relating to material manufacturing are a key opportunity for innovators and brands as fabric sourcing and manufacturing alone account for 78% of Scope 3 emissions. New technologies in this space include incorporating low-carbon fibers, and building out and scaling up new systems such as recycling infrastructure and manufacturing methods for next-generation materials. This report focuses on startups working on the challenges and opportunities within the development of next-generation materials, including materials from circular sources.

*Sources:* *Fashion For Good*
*Figure modified from Textile Exchange 2022 Market Report*

Brands are motivated to incorporate changes to drive down their GHG emissions due to pressure from consumers and regulations. Consumers worldwide are increasingly prioritizing sustainability, with a Fashion Revolution survey showing that 33% of respondents value environmentally friendly clothing (Fashion Revolution). Additionally, new and upcoming regulatory pressures in the US and EU focused on responsible waste and the circular economy are pushing the fashion industry to enhance supply chain transparency and reduce environmental impacts. Because of these pressures, the fashion industry is highly motivated to support the development of technologies that curb emissions. Luxury and high-end brands, in particular, are active in supporting new technologies and setting trends that others in the industry follow, making them pivotal in advancing the use of more sustainable materials.

Venture-backed companies are targeting biomanufacturing and chemical recycling to create next generation materials

*Source: Crunchbase*
*Leather biomaterials not included
*Y-axis represents number of companies

The technologies currently available are not enough to meaningfully decrease GHGs from the textile industry. Two opportunities that can address this gap include the development of next-generation materials and circular systems. Notably, most startups working in this space are using alternative feedstocks to produce common and novel textile materials. These alternative feedstocks are primarily textile waste or alternative sources of biomass, such as agricultural waste. Other feedstocks include captured carbon or standard bioreactor feedstocks as inputs for manufacturing processes.

In addition to alternative feedstocks being utilized, there is also a rise in the development of new processes for manufacturing next-generation materials. New processes mainly fall into two categories: biomanufacturing and chemical processes. Companies starting with textile waste and producing recycled polyester materials typically use a chemical approach. Chemical recycling is gaining popularity for its ability to break down textiles into their molecular components, allowing the production of high-quality fibers with properties similar to virgin materials. However, other methods such as bio-based recycling and mechanical recycling are also used to repurpose textile waste. Bio-based recycling is an emerging approach that utilizes biological processes to degrade textile waste and convert it into new materials. Both chemical and bio-based recycling methods can recycle textile waste without compromising on fiber quality, offering promising alternatives to mechanical recycling. While recycling technologies are key in producing raw materials for fiber production, not all groups are focused on textile recycling. Others are instead focused on producing novel materials, with many groups using other types of waste, such as agricultural waste, for the production of new textile types. Companies using biomass or agricultural waste as their feedstock often use a biological process to make their product, which is often cellulosic fibers or pulp.

Interestingly, most startups are focused on producing synthetics and cellulosic pulp. The large focus on both of these products contrasts with the current market, where over 50% of textiles produced each year are synthetic, predominantly polyester (Textile Exchange). In comparison, natural cellulosic fibers like cotton only make up 27% of the market while man-made cellulosic fibers only make up 6% (Textile Exchange). This disparity might highlight the challenges in producing polyester from recycled materials. For example, impurities that remain following the recycling process pose a problem as they can hinder machinery and affect the material's final aesthetic (Fashion for Good). Groups working towards making these processes more effective and efficient have the potential to propel the industry forward in their goals of utilizing recycled materials. The focus on cellulosic pulp highlights the opportunity for this new fiber. Companies producing cellulosic pulp may be drawn to opportunities for increasing yield or output from various feedstocks that can decrease the cost of MMCF production to be equal to the natural and synthetic counterparts.

These examples represent just some of the innovations in the textile manufacturing space. Other exciting developments include alternative leathers made from plant-based materials, biomanufactured dyes, and methods for producing personalized clothing with less waste. Although these innovations aren't the focus here, they all contribute to the growing momentum for making the fashion and textile industry more sustainable.

Recycling alone will not be enough

Today, fibers coming from recycled materials are minimal. While there is a slow and steady increase in recycled fiber manufacturing, continuing at this current rate will not be enough to make meaningful changes. The Apparel Impact Institute underscores the potential of scaling sustainable materials and processes, with an emphasis on scaling recycled materials. For instance, scaling up mechanical recycling processes twofold could reduce emissions by 23 million tonnes, while introducing chemical recycling by up to 30% could further reduce emissions by 9.7 million tonnes. Overall, increasing textile recycling capacity will be essential for reducing carbon emissions within the fashion industry. However, going from our current recycling capacity to what would be needed to meaningfully drive down emissions from the industry will be difficult in the short time scale that changes are needed.

The recycling process is complex, requiring the collection of both pre-consumer and post-consumer waste, which involves establishing a robust network of facilities for waste collection. Currently, textile waste constitutes only 2% of the USA's recycling waste, indicating that existing facilities are ill-equipped for textile recycling (EPA). Increasing textile recycling necessitates building new infrastructure specifically for textile collection and processing. Collecting the 11 million tonnes of annual textile waste in the USA would increase the nation's recycling rate by 10% (EPA), requiring unique systems distinct from what is already established for the current recycling system that primarily focuses on paper and plastics. Identifying disposal locations for textile waste today is challenging, necessitating the establishment of new collection facilities or routes. Coordinating these efforts is particularly complex in the fragmented US recycling system managed by private and government entities. Finally, post-collection, materials must be sorted, prepped, before going through either chemical or biological processes to convert waste into valuable outputs like pulp and pellets, which can then be spun into new fibers. Scaling up textile recycling requires significant investments in infrastructure, collection methods, and processing capabilities, with an estimated $218 billion needed to develop processes for manufacturing sustainable materials at scale by 2050, as projected by Fashion for Good and the Apparel Impact Institute (FFG and Aii).

Companies focused on Circular Systems

*For a complete list of companies considered in this write-up please reach out to* *https://www.linkedin.com/in/ivyfernandes/*

The startups highlighted above are working on developing and scaling systems for recycling textile waste. Right now, mechanical recycling is the primary method used for textile recycling in the United States. Mechanical recycling involves breaking down textiles into smaller fibers for reuse which often leads to downcycling and a decrease in fiber quality. Currently, there is a lack of scaled systems that can recycle products back into raw material types. To increase the volume of recycled materials being used, there is an opportunity for startups to develop and scale technologies that are capable of textile-textile recycling. Chemical recycling is gaining traction as a method to accomplish this due to its ability to break down textiles into their molecular components, enabling the production of high-quality fibers similar to virgin materials. Bio-based recycling is also an emerging approach using biological systems for recycling. Both chemical and bio-based recycling methods hold promise for maintaining fiber quality.

While these methods are promising, developing drop-in solutions using advanced recycling methods faces several challenges. Ensuring that recycled materials can be seamlessly integrated into existing manufacturing systems is a major hurdle. Imperfections in recycled products, such as impurities, can have cascading effects on manufacturing processes. For instance, discoloration in recycled pellets may require new formulations, residual chemicals might necessitate adjustments in additives, and certain components could potentially clog machinery. This highlights the unique issues that startups will need to address when developing technologies to integrate within an existing and established manufacturing supply chain.

The current state of fiber recycling highlights the urgent need for new materials

Looking at the large quantity of textiles wasted annually compared to the small amount of textiles recycled each year highlights the daunting challenge of capturing and converting this waste into new products on a comprehensive scale. Estimates show that approximately 90 million tonnes of consumer textiles are discarded each year. A significant portion of this waste is actually deadstock waste, or products that never made it to a consumer to begin with. The volume of waste being produced annually underscores the need for efficient processes to effectively capture and repurpose waste streams into new materials. However, while recycling facilities may be able to be built out, that won’t solve all the challenges with incorporating recycling textiles back into the textile manufacturing chain. Varied sources of waste make scaling harder because it incorporates inconsistencies within the product and economies of scale cannot be applied. The reliability of the source is also unclear when it is coming from certain waste sources; for example, agricultural waste may be estimated faithfully each year, but municipal waste such as textiles may be harder to predict. This presents a hurdle for companies aiming to build out recycling systems, as they must develop reliable methods for sourcing recyclable materials despite the current lack of infrastructure. This could involve sourcing deadstock materials from brands, trimmings and deadstock fabrics from manufacturers, and post-consumer waste from collection facilities. These new recycling technologies could also be integrated directly into a brands manufacturing supply chain. For example, H&M Group is a co-founder of Syre, a chemical-based recycling company. Their offtake agreement of over $600 million across seven years to produce recycled polyester illustrates the potential for vertical integration within companies (H&M Group).

Overall, technology development alone will not drive the necessary increase in recycling. Instead, developing a comprehensive recycling system within the fashion sector will require collaboration, consumer engagement, regulatory enforcement, and substantial infrastructure development. Undoubtedly, this will require significant time and effort from multiple stakeholders. To meet goals of driving down GHG emissions within the industry, parallel approaches, such as the development of next-generation materials, are also important opportunities to pursue.

Advancing MMCF Production: Sustainable Innovations and Alternative Feedstocks

*Sources:* *Oak Ridge National Labs*, *USDA*, *Fashion for Good*

Another major category that innovators in the textile space are focusing on is next-generation materials, which are environmentally preferable direct replacements for conventional fibers. These materials include recycled synthetic fibers, alternatives to animal-derived materials like leather, fur, and silk, and substitutes for both natural and synthetic fibers (MII) (Textile Exchange). Exploring new ways to produce fibers using alternative and regenerative feedstocks, such as biomass, offers a promising path to sustainable textile production. Manmade cellulosic fibers (MMCFs) are a notable example of sustainable fibers, currently making up only 6% of the fiber market. The production of MMCFs involves processing wood into sheets of cellulosic pulp that are then dissolved and extruded into fibers through a wet spinning process (FFG). MMCFs like viscose, lyocell, and modal are valued for their diverse performance characteristics that makes them great substitutes for natural and synthetic fibers. While these characteristics of the fiber paired with their more environmentally friendly manufacturing methods make them attractive substitutes for other fiber types, the current cost of MMCFs remains higher than synthetic fibers, and sourcing predominantly relies on virgin wood from forests, raising concerns about cost as well as sustainable sourcing of raw materials.

Startups are exploring alternative methods to producing cellulosic pulp, including utilizing biomass waste and fermentation. For groups using a biomanufacturing approach, captured carbon can also be used as a feedstock to mitigate emissions and create low-impact materials. Currently, 60-65% of MMCF feedstock comes from forests as virgin raw materials, while only 0.5% comes from recycled sources, and 36% have an unknown but considered an uncertified virgin source. These sources are all recognized and certified by FSC and PEFC, which ensures the sustainability of MMCFs. However, according to Fashion for Good, recycling cotton to cellulosic pulp is ~3X more efficient than using wood. This difference in efficiency demonstrates a potential opportunity for groups to seek alternative feedstocks for cellulosic pulp production. Popular biomass sources that are only more recently being explored include agricultural waste, woody biomass, seaweed, and algae. Other alternative feedstocks encompass captured carbon and standard bioreactor inputs. These are often used in biomanufacturing with yeast and other organisms, which act as factories to produce materials, like pulp, in bulk.

Unlocking Biomass Resources for Sustainable Materials

*Sources:* *Oak Ridge National Labs*, *Fashion for Good*, *NHS Forest*

One of the primary hurdles to scaling the mass production of MMCF is securing a reliable source of biomass. Currently, most biomass comes from agricultural and woody sources, with only about 10% derived from waste resources. While MMCF production primarily relies on certified virgin wood, past shortages highlight the need to explore additional sources such as agricultural waste (FSC) (FSC). In the United States, a significant portion of biomass waste is used for energy generation, but a mature biomass market could provide 1.1 to 1.5 billion tonnes annually (DOE). Replacing all textiles with MMCF would require about 350 million tonnes of biomass, with 3 tonnes needed for 1 tonne of MMCF (Fashion for Good). The 2023 Billion-Ton Report predicts that utilizing agricultural residues and cultivating specific crops could double biomass supply by 2025. While there seems to be more than enough biomass available to reach this goal, developing a robust supply chain and diverting biomass from energy production is challenging. Biomanufacturing groups could address this by producing cellulosic pulp using fermentation. Substantial investments, estimated at $272 billion, are needed for next-generation materials like MMCF, with over $450 million raised in 2022 and $3 billion over the past decade, mainly for plant-derived materials (Fashion for Good)(Material Innovation Initiative).

Companies focused Next Generation Materials

A large proportion of startups are exploring new methods to develop next-generation materials, with many focusing on cellulosic pulp for man-made cellulosic fibers (MMCFs). They are using diverse feedstocks like agricultural waste, captured carbon, and fermentation techniques. Despite the potential of MMCFs, increasing the usage of this new fiber type faces several significant challenges. The most common form of MMCF is viscose, which is produced using toxic chemicals (FFG). More recently, lyocell has gained popularity as it is produced with non-toxic chemicals, offering a safer and more environmentally friendly alternative. Expanding on processes that allow for safe production of MMCFs using non-toxic materials will be key in scaling the overall use of this fiber type. Additionally, cost is still a hurdle for MMCFs compared to cotton and polyester. Opportunities lie in increasing the efficiency of extracting cellulosic pulp by developing new methods or additional feedstocks. Beyond MMCFs, biomanufacturing through fermentation allows for the production of biodegradable, high-performance fibers like spider silk, and tissue culture methods grow cotton fibers. Biomanufacturing of biomaterials has the benefit of the textiles being biodegradable and readily produced by biological organisms. However, integrating new materials like biopolymers into the supply chain also presents challenges, as they may not be compatible with existing manufacturing machinery or formulations.

Scaling technologies will involve integrating with brand’s existing manufacturing and supply chains

Both increasing textile recycling and producing next-generation materials offer promising opportunities but have not been widely deployed. Integrating these initiatives into the fashion supply chain requires partnerships between brands and manufacturers, with challenges for each method. MMCFs are already used in various textile applications, offering versatility and sustainability benefits compared to traditional synthetic fibers. Similarly, recycled polyester fibers closely resemble existing polyester products, facilitating their market integration. High-end and luxury brands like Inditex, H&M, Ganni, Stella McCartney, and LVMH are leading the support for these new initiatives by co-developing or investing in companies before launching products. Not-for-profit organizations such as Fashion For Good and the Material Impact Initiative also play a key role in connecting innovators with brands working towards incorporating new fibers and processes into their supply chain.

Luxury brands are a good starting point for developing new technologies due to their ability to incorporate changes with small-scale manufacturing and charge a higher premium. For example, cut-make-trim processes used by luxury brands allow them to retain significant decision-making power, including fabric selection. However, eventually these technologies will need to be deployed on a mass scale to make an industry-wide impact. This will involve integration and partnerships with large-scale manufacturers that mass-market brands use, such as full production process (FPP) manufacturers. These manufacturers are attractive due to their operational scale but are tied to their established supply chains and volume requirements. To appeal to FPP manufacturers, startups must operate at a scale sufficient to supply mass-market orders. Although some products are novel and have not yet faced scaling issues, many integration challenges are engineering problems that can be addressed by developing clear supply and logistics chains. Startups working on recycling technologies and next-generation materials can leverage different points of the fashion supply chain to drive change, ultimately aiming to scale these innovations to make a significant environmental impact.

To reduce emissions from the textile industry, we need to significantly cut the current increase rate of 4% per year. To meet goals of reducing emissions, focusing on textile manufacturing, which is a major part of scope 3 emissions, is a great place to start. Reducing scope 3 emissions can be done by using existing technologies, such as scaling up renewable energy usage. More innovative approaches include developing and scaling the production of next generation and preferred materials as well as increasing building out processes for efficient textile recycling to produce low-carbon fibers. Both of these categories have some progress made but need to be further developed and scaled. For recycling fibers, building out systems for material collection is essential. For next-generation materials, securing new sources of cellulosic pulp from biomass can help scale MMCF production and reduce costs. Looking ahead, chemical and biological recycling methods need to be proven at scale, and their outputs integrated into existing manufacturing processes. Additionally, other bio-based materials must be efficiently scaled and shown to be compatible with current supply chain manufacturing.

I would like to thank Jyotsona Gopinath at the Fashion for Good as well as Thomasine Dolan for their thoughtful conversations while I researched this thesis. I would also like to acknowledge the multitude of resources that are available from Fashion for Good, the Textile Exchange, the Material Innovation Initiative, and the Apparel Impact Institute. Without the open source materials that these groups put together, this research would not have been possible. I would highly encourage everyone who wants to learn more about the textile industry to explore the resources from these groups. Finally, I would like to thank my mentor Dee Zheng from Orca Climate Fund as well as the entire Orca team for supporting me during my fellowship.

Decarbonizing the Textiles Industry