Australian scientists say their new technology could make all plastic recyclable.

Dr Len Humphreys and Sydney University professor Thomas Maschmeyer say their new Catalytic Hydrothermal Reactor (Cat-HTR) uses a form of chemical recycling to change plastics at a molecular level, using high-pressure hot water to turn them back into oil.

The resulting oil can be turned into bitumen, petrol or back into plastic.

Cat-HTR technology uses a different method to existing plastic-to-oil technologies like pyrolysis, which involves heating materials at a very high temperature.

It also does not require plastics to be separated according to type and colour, working on everything from milk cartons to wetsuits and even wood by-products.

The technology has been tested for past decade at a pilot plant on the NSW central coast, and a company called Licella has been formed to take the idea to market.

The company will soon open its first commercial recycling plant in the United Kingdom, after receiving government grants and working in a policy environment much more favourable than in Australia.

“They incentivise the market,” said Dr Humphreys, Licella's co-founder and chief executive officer.

“We don't do that here. We're not incentivising the market here.

“We're five or six years behind the thinking of what really stimulated the market in Europe.”

The Federal Government says it is in talks with Licella.