The Rise of Textile Recycling Infrastructure in the US: A Strategic Investment Opportunity

The U.S. textile recycling industry is undergoing a transformative shift, driven by a confluence of regulatory momentum, technological innovation, and growing consumer demand for sustainable solutions. For investors, this sector represents a compelling opportunity to capitalize on the circular economy while aligning with global sustainability goals. With market valuations projected to surge in the coming decade and pioneering regulatory frameworks reshaping industry practices, the infrastructure underpinning textile recycling is poised for exponential growth.

Market Dynamics: A Sector on the Cusp of Breakthrough

The U.S. textile recycling market is forecasted to grow at a compound annual growth rate (CAGR) of 4.2% from 2025 to 2033, reaching USD 1,538.2 million by 2033, according to Grand View Research [1]. However, other analyses suggest even more aggressive growth, with Expert Market Research estimating the market could hit USD 3.23 billion by 2034 at a CAGR of 5.90% [2]. These divergent projections underscore the sector’s volatility but also its immense potential, particularly as polyester—driven by advancements in chemical recycling—emerges as a key growth driver. Cotton currently dominates revenue shares at 70.43%, but polyester’s scalability and compatibility with technologies like glycolysis and molecular regeneration position it to outpace traditional materials [1].

Regulatory Tailwinds: EPR Laws as Catalysts for Change

The absence of federal mandates has not deterred states from leading the charge. California’s Responsible Textile Recovery Act (SB 707), enacted in 2024, is a landmark example. This Extended Producer Responsibility (EPR) law mandates the creation of a Producer Responsibility Organization (PRO) by July 2026 to oversee a statewide program for textile collection, repair, and recycling [4]. By imposing eco-modulated fees—charging higher costs for non-recyclable designs and offering discounts for sustainable ones—the law incentivizes brands to rethink product lifecycles [5]. Similar legislation in Massachusetts (Textile Waste Ban) and New York (Textile Reuse and Recycling Act) further solidify the regulatory tailwinds propelling the sector [1].

Federal interest is also gaining traction, with proposed bills like the FABRIC Act signaling potential national-level support. These developments create a predictable policy environment, reducing long-term risks for investors while ensuring compliance becomes a competitive advantage for early adopters [1].

Technological Innovation: Scaling the Circular Economy

The sector’s growth is underpinned by breakthroughs in recycling technologies. Companies like Circ and Syre are pioneering industrial-scale solutions: Circ’s $500 million plant in France aims to process 70,000 metric tons of polycotton annually, while Syre’s North Carolina facility targets 10,000 metric tons of circular polyester per year [1]. Reju’s glycolysis technology, capable of regenerating 300 million garments annually, and Ambercycle’s molecular regeneration partnerships with brands like Highsun Holding Group, exemplify the shift toward high-value, closed-loop systems [1].

Startups are also gaining traction. Infinited Fiber Company’s cellulose-to-fiber process, which transforms textile waste into a cotton-like material, is set to produce 30,000 metric tonnes annually, addressing the limitations of blended fabrics [2]. These innovations not only reduce environmental impact but also create new revenue streams from waste streams previously deemed non-viable.

Investment Opportunities: From Infrastructure to Partnerships

The sector’s infrastructure is attracting both capital and strategic alliances. For instance, Circ’s collaboration with Selenis in Portugal to polymerize recycled polyester at scale highlights the importance of vertical integration [3]. Similarly, Ambercycle and Samsara Eco have secured partnerships with brands like Lululemon and Ganni, leveraging corporate sustainability goals to fund R&D and scale operations [3].

While U.S.-based startups like Tereform have raised $1.25 million in equity funding as of February 2025, larger players such as Ambercycle (which secured $5 million in 2023) and Evrnu (with a $375,000 raise in 2024) demonstrate the sector’s ability to attract venture capital [3]. Federal entities like the EPA are also exploring national strategies, potentially unlocking public-private partnerships that could accelerate infrastructure deployment [4].

Strategic Considerations for Investors

Investors should prioritize companies with scalable technologies, regulatory alignment, and strong brand partnerships. The California PRO model, for example, could serve as a template for national expansion, creating opportunities for firms that can manage logistics and compliance. Additionally, startups focused on polyester and blended fabric recycling—segments with higher growth potential—are likely to outperform in the long term.

The sector’s risks, including technological bottlenecks and regulatory uncertainty at the federal level, are mitigated by the rapid pace of innovation and state-level momentum. For those willing to navigate these challenges, the U.S. textile recycling industry offers a rare intersection of environmental impact and financial returns.

Source:

[1] US Textile Recycling Market Size & Outlook, 2024-2033 [https://www.grandviewresearch.com/horizon/outlook/textile-recycling-market/united-states][2] Textile Recycling Roundup 2025 [https://www.textileworld.com/textile-world/fiber-world/2025/06/textile-recycling-roundup-2025/][3] Textile Recycling - 2025 Market & Investments Trends [https://tracxn.com/d/trending-business-models/startups-in-textile-recycling/__Xjm9P3STBqc31JdlJYYeyfNaM44OVof7hByMM09P2DM][4] GAO-25-107165, TEXTILE WASTE: Federal Entities ... [https://files.gao.gov/reports/GAO-25-107165/index.html][5] California Passes First U.S. Law Addressing Textile Waste [https://www.printing.org/content/2024/10/05/california-passes-first-u.s.-law-addressing-textile-waste]