Abstract Plastic waste has become a significant environmental concern, with millions of tons generated annually, leading to severe ecological and climate-related challenges. Recycling has emerged as a crucial strategy to mitigate these impacts by reducing resource depletion and greenhouse gas emissions. This study focuses on the Life Cycle Assessment (LCA) of mechanical recycling as a sustainable waste management solution, comparing its environmental footprint with other waste treatment methods, such as incineration. The research further explores the integration of plastic credit mechanisms, which provide financial incentives for sustainable plastic recovery and contribute to the transition toward a circular economy. A case study approach was employed, analyzing a real-world mechanical recycling plant, where primary data on energy consumption, emissions, and material recovery rates were collected.